Instead of writing about what we believe 2011 holds for the financial markets (google 2011 Financial Outlook and you will get hundreds of takes) we thought it might be interesting to pretend we were the head of a few entities and design some New Years Resolutions that we think would be constructive for our country. Our interest in writing on this topic is the financial hole our country is mired in and the thought process that got us here. What will be the catalyst that sparks a new train of thought that helps find the strategies that extricate us from this quagmire? Every superpower that has ever been has eventually become not a super power (British monarchy, Roman Empire, etc.) and there are definitely some economic chinks forming in the United States' long term armor. So at the risk of appearing somewhat soapboxish, here are some of our proposed New Year's Resolutions for these folks:
The Fed and Treasury
1. I resolve to deal with financial challenges that face the country on a pro-active basis rather than a reactive plug-the-dikes basis.
2. I resolve to pull the cheap money punch bowl away before bubbles appear so that we can experience a more dependable and typical business cycle.
3. I resolve not to buckle to Washington and their election cycle vision in solving the countries financial/economic issues.
4. I resolve not to tilt the playing field in the favor of the firm I used to work at.
Politicians and Politicos
1. I resolve to put the interests of the country ahead of my political party.
2. I resolve to engage in long term planning to resolve the issues we face knowing that it does not fit into my campaign cycle.
3. I resolve to refuse to resort to pork-barrel-politics even though “everyone else does it.”
4. I resolve to stop the “kick the can down the road” conversation regarding the liabilities our country has on (and off) its balance sheet. In fact all government stats will now be on the up and up.
Wall Street
1. I resolve to treat the investing public with respect and not as potential easy marks.
2. I resolve to stop playing hide the pea with regulators and help them craft effective regulations.
3. I resolve to create products that benefit more than just our bottom line.
4. I resolve to work with Main Street to resurrect our manufacturing industries
Most of these resolutions have one thing in common, and that is for these entities to tell the truth. It seems to me that there is a perception that if these entities told the truth about the dynamics that drive their world the leverage/power they possess could be threatened. We believe that partisan interests have become so inculcated in the system that many of the players actually believe they are telling the truth when it is relatively obvious they are not. Politicians are probably the best at this practice, but we believe the Wall Street crew gives them a run for their money (pun intended). The drive to be politically correct does not help promote the truth of a situation.
On a personal side we have gleaned some of our best insights in sifting through our own contradictions. We found ourselves sometimes saying one thing and then doing something completely counter to those statements (actions speak louder than words). As we looked closer at the process we realized we were spinning some conversations/situations so we would not have to deal with the truth of a particular matter. Often in these scenarios We found ourselves acting in some self-serving fashion that we did not want to give up. When we challenged ourselves to square up these inconsistencies we found that what we thought we would be losing was not as valuable as we previously thought. More importantly, we started to see the dynamics of the playing field more clearly (connecting way more dots) and freeing-up access to information that we did not previously have. We are convinced this increased bandwidth has led us to make better decisions. We realize this is not your typical financial conversation, but hopefully you see the point we are attempting to make.
Maybe the people involved in the above institutions might benefit from taking a closer look at the contradictions they bring to the table and attempt to square them up? There is a saying that we think rings true on this topic; “The truth will set you free, but first it will just piss you off.” The initial upset we believe has to do with the thought you might be losing something, like votes for a politician or profits for a Wall St./CEO type. We think the freeing standpoint comes from stopping the deception and the new information that can be revealed. Maybe that information will lead to creative long term strategies to solve our deficit issues and strengthen our economy and financial system.
The last group that we’d like to suggest some resolutions for is We the American people. We do not think that it is an elusive thought to most that we have become increasingly apathetic over the last few decades. Many dynamics have led to that outcome, but now the consequences of inaction have piled up significantly. Combined with this apathy is a growing sense of entitlement that compounds the issues. It is easy to blame Wall Street and our leaders, especially over the last decade, for putting us in this precarious spot. They do have a tendency to take advantage of uninformed investors and voters. We truly only have ourselves to blame and owe it to our future generations to stop the bleeding. Austerity is a bitter pill to swallow, just ask the Greeks. We believe even small steps toward responsibility can result in noteworthy improvement.
So here are a few resolutions for We, the people –
1. I resolve to turn off the reality show and watch the news (from more than just one source!)…at least sometimes.
2. I resolve to not only vote, but make an attempt to spend the time to make it an informed vote.
3. I resolve to stop taking personal shots at people who disagree with my views.
4. I resolve to hold politicians accountable, especially if they represent the party with which I am registered.
We started writing this piece with the intent of pointing out some of the changes we believe our leaders could make without condescendingly wagging a finger. It has become too easy for the talking heads, amongst others, to make "them" the scapegoats for our break downs. It appears our missive has morphed into more of an attempt at collective responsibility/accountability. Someone once deftly pointed out “people get the government they deserve.” Talk about a bitter pill. If we have truly gotten the leaders we deserve, then that is enough of a statement to inspire some significant reflecting.
If we are to retain our super power status, our economic prowess is key. With the economy struggling to recover, balancing the budget becomes extremely tricky. Maybe that new information that purportedly will come from telling the truth helps reveal information that could remedy these challenges. We guess we have to hope that Jack Nicholson is wrong and we can handle the truth (A Few Good Men). We can’t imagine it would make things worse?
Did You Know
Housing Numbers - At the end of 1989, there were 60 million families that owned a home and 34 million families that rented a home or an apartment. At the end of 2009 there were 75 million families that owned a home, an increase of 25% and 37 million families that rented an increase of just 9%.Of the 51 million households that own a home and have a mortgage, the average outstanding debt is $200,000. There are another 24 million households that own their home free-and-clear. 52% of retirees are still making monthly payments on home mortgage debt. And finally 48.4% of home mortgages modified by lenders in the 1st quarter 2009 were 90 days or more delinquent just 1-year later. (source: Department of Housing and Urban Development).
Final Thought
“It has to be a little worrisome if your New Year Resolutions are cut and pasted from last year's document” - Us
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