 |
 |
| Make a Smilebox slideshow |
Wednesday, December 24, 2008
Sunday, November 30, 2008
The Abolition of Man- Some semi-heavy stuff by C.S. Lewis but well worth reading.
It is a compilation of three essays. My favorite is entitled Men Without Chests. It is about the role of an educator and what their role is not. In the essay he is critiquing a text book by authors he named Gaius and Titus so that he would not embarrass them. A few quotes I really liked... "Parents would be annoyed if their son returned from the dentist with his teeth untouched and his head filled with the dentist's philosophies." "They conclude that the best thing they can do is to fortify the minds of young people against emotion. My own experience as a a teacher tells the opposite tale. For every one pupil who needs to be guarded from a weak excess of sensibility there are three who need to be awakened from the slumber of cold vulgarity. The task of the modern educator is not to cut down jungles but to irrigate deserts. For famished nature will be avenged and a hard heart is not infallible protection against a soft head." "Aristotle says that the aim of education is to make the pupil like and dislike what he ought."
Lewis' comments on the definition of the Tao... " It is in reality beyond all predicates. the abyss that was before the creator Himself. It is Nature, it is the Way, the Road. It is the way in which the universe goes on, the way in which things everlastingly emerge, stilly and tranquilly into space and time. It is also the Way which every man should tread in imitation of that cosmic progression, conforming all activities to that great exemplar." But what is common to them all, is something that we cannot neglect. It is the doctrine of objective value, the belief that certain attitudes are really true, and others really false to the kind of thing the universe is and the kind of thing we are." He also says something that I struggle with from time to time... "The heart never takes the place of the head: but it can, and should obey it." We are sometimes told to "just follow our heart" it is hard to know the times when the head or the heart should lead out.
"The head rules the belly through the chest- the seat of magnanimity, of emotions organized by trained habit into stable sentiments. The Chest-Magnanimity-Sentiment- these are the indispensable liaison officers between cerebral man and visceral man. It may even be said that it is by this middle element that man is man: for by his intellect he is mere spirit and by his appetites mere animal. And all the time- such is the tragi-comedy of our situation- we continue to clamour for those very qualities we are rendering impossible. You can hardly open a periodical without coming across the statement that what our society needs is more 'drive' or dynamism., or self-sacrifice or 'creativity'. In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honour and are shocked to find traitors in our midst. We castrate and bid the gelding be fruitful.
It is a compilation of three essays. My favorite is entitled Men Without Chests. It is about the role of an educator and what their role is not. In the essay he is critiquing a text book by authors he named Gaius and Titus so that he would not embarrass them. A few quotes I really liked... "Parents would be annoyed if their son returned from the dentist with his teeth untouched and his head filled with the dentist's philosophies." "They conclude that the best thing they can do is to fortify the minds of young people against emotion. My own experience as a a teacher tells the opposite tale. For every one pupil who needs to be guarded from a weak excess of sensibility there are three who need to be awakened from the slumber of cold vulgarity. The task of the modern educator is not to cut down jungles but to irrigate deserts. For famished nature will be avenged and a hard heart is not infallible protection against a soft head." "Aristotle says that the aim of education is to make the pupil like and dislike what he ought."
Lewis' comments on the definition of the Tao... " It is in reality beyond all predicates. the abyss that was before the creator Himself. It is Nature, it is the Way, the Road. It is the way in which the universe goes on, the way in which things everlastingly emerge, stilly and tranquilly into space and time. It is also the Way which every man should tread in imitation of that cosmic progression, conforming all activities to that great exemplar." But what is common to them all, is something that we cannot neglect. It is the doctrine of objective value, the belief that certain attitudes are really true, and others really false to the kind of thing the universe is and the kind of thing we are." He also says something that I struggle with from time to time... "The heart never takes the place of the head: but it can, and should obey it." We are sometimes told to "just follow our heart" it is hard to know the times when the head or the heart should lead out.
"The head rules the belly through the chest- the seat of magnanimity, of emotions organized by trained habit into stable sentiments. The Chest-Magnanimity-Sentiment- these are the indispensable liaison officers between cerebral man and visceral man. It may even be said that it is by this middle element that man is man: for by his intellect he is mere spirit and by his appetites mere animal. And all the time- such is the tragi-comedy of our situation- we continue to clamour for those very qualities we are rendering impossible. You can hardly open a periodical without coming across the statement that what our society needs is more 'drive' or dynamism., or self-sacrifice or 'creativity'. In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honour and are shocked to find traitors in our midst. We castrate and bid the gelding be fruitful.
Sunday, November 23, 2008
Fencing
Brock, Seth and I had a great time working on the fence last Saturday. This is one of the reasons I really like living on a little bit of land. Every little boy should grow up somewhere that he can pee in the back yard and play in the mud with his dog. We miss some of the ammenities of living next to a city. Great plays and restaurants, the krishna temple- where you can take your kids to something that is very different than their every day life. We miss the diversity and sometimes wonder if there is a happy medium. In the end we feel like being close to family and having enough room for goats so that Seth can drink out of thier water is more important than convenience.
Brock, Seth and I had a great time working on the fence last Saturday. This is one of the reasons I really like living on a little bit of land. Every little boy should grow up somewhere that he can pee in the back yard and play in the mud with his dog. We miss some of the ammenities of living next to a city. Great plays and restaurants, the krishna temple- where you can take your kids to something that is very different than their every day life. We miss the diversity and sometimes wonder if there is a happy medium. In the end we feel like being close to family and having enough room for goats so that Seth can drink out of thier water is more important than convenience.
Friday, November 21, 2008
We went to Haiti again last week. We were a bit nervous to see Mackson again, we wondered if he would have forgot us or would be mad for us leaving him last time we went to Haiti. Within 1 minute he was hugging Becky and would not let her put him down. He is a sweet little boy and we are looking forward to bringing him home in a couple months. The only real hurdle we have left is finding his birth mother again. She has signed papers with the Haitian government saying she is giving Mackson up for adoption, but she needs to do it again for the US government. Her home was destroyed by the recent hurricanes and she was displaced. Hopefully they will be able to find her. If not, it could take us another 3-4 months to have him declaired "abandoned" We should have him home some time between the end of January and Easter.
Monday, November 10, 2008
Thomas Jefferson Biographay
I finished a book on Thomas Jefferson- after reading John Adams biography I saw Jefferson as a man who was into appearances was fickle in his opinions. This book helped me see another side of Jefferson and help me understand why he did some of the things he did.
A few things that Jefferson was accomplished at…
Speaking, writing, the law, farming, gardening, playing the violin, a voracious reader with thousands of books in his personal library, a natural philosopher, inventor, architect (designed the University of Virginia), created the plan for public education from elementary school through college (he did this during his retirement), An amazing problem solver and thinker.
Jefferson was a champion of states rights. This is one of the main arguments he and Adams had. Adams was a Federalist and believed in a strong federal government. Jefferson wanted decisions to be made as local as possible with states having the authority to make decisions on many issues that the federal government presides over today.
Jefferson believed in a “natural” aristocracy- an aristocracy of merit and ideas. Adams on the other hand still believed in an “artificial” aristocracy like England had. An aristocracy of money and family name.
“Throughout his life, one of Jefferson’s most cherished notions has been the creation of independent farmers, at once self-sufficient and mutually dependent. No other mode of living was as conductive to true democracy or the health of the state and the individual than an existence based on the soil. Jefferson took every opportunity to contrast the virtues of rural life with the vices of the city, the pleasant advantages of farming versus the cruel hardships of manufacturing.” He later stated that he had come to realize the importance of manufacturing on America remaining free and promoted the growth of manufacturing.
“Jefferson was always far less interested in the building than the planning. Build something and it is over and done; its tense is past. Create an idea, however and it is always becoming.
America is a land of contrasts…
1- A huge central government built by a people who inherently distrust big central governments
2- A massive military-industrial war machine raised in the name of peace.
3- Defenders of freedom of religion rushing to embrace federal subsidy of sectarian private schools.
Jefferson had many contrasts as well…
1- A lawyer who distrusted the law.
2- A man of peaceful rationality who relished revolution.
3- A lover of scholarly solitude who enacted his thoughts upon a nation and broadcast his philosophy to the world.
4- A hater of slavery that kept slaves.
5- A lover of ageless liberty who never quite saw beyond the racism of his day.
6- A radical modernist most comfortable among the heroes and architecture of ancient Greece and Rome.
7- An advocate of a presidency subordinated to the legislature who nevertheless assumed executive powers that even his high handed Federalist predecessors shied away from.
Fact is that these contrasts may be what made Jefferson MOST American.
A very interesting book that I am glad I read…
I finished a book on Thomas Jefferson- after reading John Adams biography I saw Jefferson as a man who was into appearances was fickle in his opinions. This book helped me see another side of Jefferson and help me understand why he did some of the things he did.
A few things that Jefferson was accomplished at…
Speaking, writing, the law, farming, gardening, playing the violin, a voracious reader with thousands of books in his personal library, a natural philosopher, inventor, architect (designed the University of Virginia), created the plan for public education from elementary school through college (he did this during his retirement), An amazing problem solver and thinker.
Jefferson was a champion of states rights. This is one of the main arguments he and Adams had. Adams was a Federalist and believed in a strong federal government. Jefferson wanted decisions to be made as local as possible with states having the authority to make decisions on many issues that the federal government presides over today.
Jefferson believed in a “natural” aristocracy- an aristocracy of merit and ideas. Adams on the other hand still believed in an “artificial” aristocracy like England had. An aristocracy of money and family name.
“Throughout his life, one of Jefferson’s most cherished notions has been the creation of independent farmers, at once self-sufficient and mutually dependent. No other mode of living was as conductive to true democracy or the health of the state and the individual than an existence based on the soil. Jefferson took every opportunity to contrast the virtues of rural life with the vices of the city, the pleasant advantages of farming versus the cruel hardships of manufacturing.” He later stated that he had come to realize the importance of manufacturing on America remaining free and promoted the growth of manufacturing.
“Jefferson was always far less interested in the building than the planning. Build something and it is over and done; its tense is past. Create an idea, however and it is always becoming.
America is a land of contrasts…
1- A huge central government built by a people who inherently distrust big central governments
2- A massive military-industrial war machine raised in the name of peace.
3- Defenders of freedom of religion rushing to embrace federal subsidy of sectarian private schools.
Jefferson had many contrasts as well…
1- A lawyer who distrusted the law.
2- A man of peaceful rationality who relished revolution.
3- A lover of scholarly solitude who enacted his thoughts upon a nation and broadcast his philosophy to the world.
4- A hater of slavery that kept slaves.
5- A lover of ageless liberty who never quite saw beyond the racism of his day.
6- A radical modernist most comfortable among the heroes and architecture of ancient Greece and Rome.
7- An advocate of a presidency subordinated to the legislature who nevertheless assumed executive powers that even his high handed Federalist predecessors shied away from.
Fact is that these contrasts may be what made Jefferson MOST American.
A very interesting book that I am glad I read…
Monday, October 20, 2008
USU Customer Service Seminar…
The first speaker was a fellow who had won The Apprentice on TV with Donald Trump. A summary of what he said would be as follows…”Do whatever is popular and that you feel people will want to see you do. It is not the substance of greatness but the appearance of greatness that matters.” It was a good reminder that you do not always need to follow correct principles to be successful in the short term. Sometimes we see companies or people who operate in this way and we are tempted by the short-term results that we see. Nothing really great was created on the foundation of appearances.
A fellow from Proctor and Gamble was there and had some great market data. It made me jealous that he had access to so much information. Most of it was from AC Nielson and IRI. He talked of the current economic situation in our country and a few things Proctor and Gamble are expecting to happen.
1- The “low income” bracket will be the fastest growing segment of the economy. People are going to be shopping more on price than they have in years past.
2- Stores like Whole Foods (maybe Real Foods) will struggle because people have fewer dollars to spend and it needs to stretch farther than it has in times past.
3- 27% of people will spend less on groceries than they did when the economy was more sound
4- He stressed the critical role of shelf presence and being able to tell our story to the customer at a blink of an eye.
5- Low income people will splurge on brands they love.
6- Two moments of truth- when she chooses and when she uses the product.
A good presentation on customer service by Richard Hanks, a couple key thoughts….
Our customers do not see our quality and service the same way we do.
If I put my head in the over and my feet in the freezer, on average I am warm… Customers do not experience averages- they experience their individual encounter with the company.
He suggested that we need to ask them more frequently. As Doug, Blake and I talked about it, I think we disagree with him. We feel we need to build a system so focused on the customer that we do not need to ask. I do not think Nordstrom’s is always asking “How are we doing?” they know how they are doing deep down and people continue to rave about their service to others.
I feel we should stop doing customer surveys and build a system of customer service that is beyond questioning.
The first speaker was a fellow who had won The Apprentice on TV with Donald Trump. A summary of what he said would be as follows…”Do whatever is popular and that you feel people will want to see you do. It is not the substance of greatness but the appearance of greatness that matters.” It was a good reminder that you do not always need to follow correct principles to be successful in the short term. Sometimes we see companies or people who operate in this way and we are tempted by the short-term results that we see. Nothing really great was created on the foundation of appearances.
A fellow from Proctor and Gamble was there and had some great market data. It made me jealous that he had access to so much information. Most of it was from AC Nielson and IRI. He talked of the current economic situation in our country and a few things Proctor and Gamble are expecting to happen.
1- The “low income” bracket will be the fastest growing segment of the economy. People are going to be shopping more on price than they have in years past.
2- Stores like Whole Foods (maybe Real Foods) will struggle because people have fewer dollars to spend and it needs to stretch farther than it has in times past.
3- 27% of people will spend less on groceries than they did when the economy was more sound
4- He stressed the critical role of shelf presence and being able to tell our story to the customer at a blink of an eye.
5- Low income people will splurge on brands they love.
6- Two moments of truth- when she chooses and when she uses the product.
A good presentation on customer service by Richard Hanks, a couple key thoughts….
Our customers do not see our quality and service the same way we do.
If I put my head in the over and my feet in the freezer, on average I am warm… Customers do not experience averages- they experience their individual encounter with the company.
He suggested that we need to ask them more frequently. As Doug, Blake and I talked about it, I think we disagree with him. We feel we need to build a system so focused on the customer that we do not need to ask. I do not think Nordstrom’s is always asking “How are we doing?” they know how they are doing deep down and people continue to rave about their service to others.
I feel we should stop doing customer surveys and build a system of customer service that is beyond questioning.
Monday, July 07, 2008
Grandpa Bastian Died at age 96- June 27, 2008
Everyone has a few people in their life that have shaped and molded them. You are not completely aware of the totality of their influence, you only know you would be a different person had they not been a part of your life. My Grandpa Bastian was one of those people for me. He died this Friday afternoon at 5:38 PM at the age of 96.
It is impossible to summarize in words what my Grandpa meant to me. Many of my earliest recollections of life are with me driving a tractor or combine between his knees as he would poke me in the ribs when I would veer too far to one side. As we were working the fields he would tell me the stories of his life. What it was like to grow up in an era when physical strength was so much more important than it is today. All of the contests they would have- seeing who could buck hay the highest, lift an anvil onto a table with one hand etc… He would also tell me the story of how he met my grandma and of their courtship and early life. A tape I made of his stories is one of my most prized possessions.One of the ways I feel I have been most cheated in life is not to have known my grandpa in his prime. He was 59 when I was born which means he was about 65 when I first remember him. Even at 65 he seemed larger than life to me, very strong in both body and mind. I wonder what it would have been like to know him when he was 35?
He owned a gas station in Aurora that I would help him run after schools and on weekends when I was about 12 years old. I loved when my uncles Jake and Garn and a few other farmers would come in and they would all pitch quarters for drinks and debate who’s corn was looking the best that year.
Until he was in his late 80’s I can not remember grandpa ever passing a child on the street without stopping and giving him a piece of candy. He did not do well at the gas station business because he would let everyone charge and never had the heart to aggressively collect from them. He never passed a hitchhiker without giving them a ride, paying them $5.00 for their pack of cigarettes, telling them to join the church and get a good job where they can make something of their life.
The last 15 years have been hard to watch grandpa slowly lose the ability to do the things that he loved to do. He had two loves in his life, his work and his family. And because he always worked with his family, it was even hard to separate those two loves. Up until a couple years ago he was feeding cows every morning and working on the farm as much as my dad dared let him. He was so frustrated that my dad would not let him do more, but deep down I think he knew he just was not able to hear and see well enough to work the machinery safely.
It has been so difficult for me to see my grandpa wither away over the past few years- almost more than I could bear at times. It was hard for me to learn that superman is mortal after all. I could go on for hours writing about him and probably will in my journal but won’t trouble all of you with that.
My grandpa was a living testament to the fact that a honest, hard working man that loves his family can leave this world a much better place than he found it. I find myself haunted by his example, and feel it unlikely to ever fill his shoes. It is an honor to call him my grandpa and to have been able to know him in such an intimate way. I have missed the real him for years as age has taken its toll on his body. I am so glad that he is now free to be himself again although he will be greatly missed.
Everyone has a few people in their life that have shaped and molded them. You are not completely aware of the totality of their influence, you only know you would be a different person had they not been a part of your life. My Grandpa Bastian was one of those people for me. He died this Friday afternoon at 5:38 PM at the age of 96.
It is impossible to summarize in words what my Grandpa meant to me. Many of my earliest recollections of life are with me driving a tractor or combine between his knees as he would poke me in the ribs when I would veer too far to one side. As we were working the fields he would tell me the stories of his life. What it was like to grow up in an era when physical strength was so much more important than it is today. All of the contests they would have- seeing who could buck hay the highest, lift an anvil onto a table with one hand etc… He would also tell me the story of how he met my grandma and of their courtship and early life. A tape I made of his stories is one of my most prized possessions.One of the ways I feel I have been most cheated in life is not to have known my grandpa in his prime. He was 59 when I was born which means he was about 65 when I first remember him. Even at 65 he seemed larger than life to me, very strong in both body and mind. I wonder what it would have been like to know him when he was 35?
He owned a gas station in Aurora that I would help him run after schools and on weekends when I was about 12 years old. I loved when my uncles Jake and Garn and a few other farmers would come in and they would all pitch quarters for drinks and debate who’s corn was looking the best that year.
Until he was in his late 80’s I can not remember grandpa ever passing a child on the street without stopping and giving him a piece of candy. He did not do well at the gas station business because he would let everyone charge and never had the heart to aggressively collect from them. He never passed a hitchhiker without giving them a ride, paying them $5.00 for their pack of cigarettes, telling them to join the church and get a good job where they can make something of their life.
The last 15 years have been hard to watch grandpa slowly lose the ability to do the things that he loved to do. He had two loves in his life, his work and his family. And because he always worked with his family, it was even hard to separate those two loves. Up until a couple years ago he was feeding cows every morning and working on the farm as much as my dad dared let him. He was so frustrated that my dad would not let him do more, but deep down I think he knew he just was not able to hear and see well enough to work the machinery safely.
It has been so difficult for me to see my grandpa wither away over the past few years- almost more than I could bear at times. It was hard for me to learn that superman is mortal after all. I could go on for hours writing about him and probably will in my journal but won’t trouble all of you with that.
My grandpa was a living testament to the fact that a honest, hard working man that loves his family can leave this world a much better place than he found it. I find myself haunted by his example, and feel it unlikely to ever fill his shoes. It is an honor to call him my grandpa and to have been able to know him in such an intimate way. I have missed the real him for years as age has taken its toll on his body. I am so glad that he is now free to be himself again although he will be greatly missed.
Thursday, May 08, 2008
EMPIRE OF DEBT
Finished Empire of Debt, here are some quotes I liked and learnings I took from it…
Watching the news is a bit like watching a bad opera. You can tell from all the shrieking that something very important is supposed to be happening, but you don’t quite know what it is.
Savings
Americans consume more than they earn. The difference is made up by thrifty Asians whose savings are recycled into granite countertops and flat screen TV’s all over the United States.
The savings rate in China is 25%. The savings rate in America is -.4%. Asians now own enough US dollar assets to buy a controlling interest in every company on the DOW. They have enough T-bonds to destroy the US economy on a whim.
And what about the millions of dead Americans who immigrated to the United States to find freedom- what would they think of our current situation? What would they thing of their descendants so deeply in debt and so dependant on Asian lenders that they can barely pass a Chinese restaurant without bending over and kissing the pavement?
When an economy comes to depend more and more on credit, it must get more and more of it or that economy will stop. A man who has borrowed heavily to finance a lifestyle he cannot afford must keep borrowing to keep up with appearance. Or else he must stop.
Housing
Houses are too expensive. They usually go up at a rate roughly equal the rate of inflation, income or GDP growth- no more. For the past 10 years however, they have gone up three to five times as fast House prices can not grow faster than income for very long; people have to be able to pay the price in order to live in them. So, you can expect housing prices to revert to their mean too. Prices will fall or else stop rising. These simple reversions to mean are hardly controversial. We don’t know what will happen or how, but that they will come about is practically guaranteed.
One dillusion that has been especially fetching lately. Alan Greenspan tells us that as long as house prices rise in parallel with household debt there should be no problem. He must know that this is not true. Relative to his assets, he says, the US consumer is not over indebted. This is a little like telling a man not to worry about drinking too much as long as he is getting fatter at the same time! The price of the house is only of interest if he is going to sell and live in a cave, or die. Otherwise, he has no way of realizing the inflated value of his house- except borrowing against it, which only makes the situation worse.
Stock Market
When people you know are of the opinion that stocks will rise 15% per year indefinitely, you are nearer to the top of the market than the bottom. When people believe the opposite- that stocks will never go up, most likely you are near a bottom.
The Dollar
A landmark in the history of America happened in 1971 when Richard Nixon said that the value of the dollar would no longer be calibrated with the value of gold.
We can measure the damage by looking at the price of gold. In 1970, each dollar would by an investor 1/34 oz. of gold. Thirty five years later, a dollar would buy us 1/425 oz. of gold. Today a dollar will buy 1/870 oz. of gold. For the many years after 1913 when the Federal Reserve was set up, gold remained as immoveable in it’s value as ever. It would buy roughly the same amount of good then as it did when Christ was born. As a result of losing it’s backing to gold- guess how much the dollar is worth in comparison to what it was worth in 1913 in purchasing power? 5 cents.
The USA economy has been so strong for so long, people all over the world have come to accept it’s currency as though it were real money; they take it and ask nothing in return. In exchange for a shipment of TV sets, the Japanese take a wad of $100 bills and call it even. And here is another remarkable thing: the bills tend to stay over seas wher they are uses to buy another form of USA paper, Treasury Bonds. The United States can print as many $100 bills as it wants. So can it issue as many bonds and notes as it pleases. As long as people don’t try to exchange them for other forms of wealth- all is well…
Taxes and Spending
I have been frustrated with our current administrations fiscal policy of wanting to have their cake and eat it too. President Bush cut taxes- which is wonderful. Tax cuts are a good way to stimulate the economy as people risk more when they do not feel most of it is going to be taken by the government anyway. On the other hand- Government not only needs to cut taxes, they need to curtail spending. Our current policy is to lower taxes, but not spending leaving a HUGE debt to be paid by us and our grandchildren. The debt equals more that $100,000 for every man, woman and child in America when unfunded liabilities are considered.
Thomas Jefferson was against this sort of debt. He said “ No generation can contract debts greater than can be paid in the course of it’s own existence.”
Defense
America spends as much on defense as the rest of the world combined. Do we really need to spend that much?
Conclusion
He ended the book with the following suggestions
1- Don’t get caught up in the whole- “spend more than you make” society we live in.
2- Invest in BUSINESSES not stocks- that have fundamental value. He is a big fan of Warren Buffett and his style of investing
3- A home is not an investment- It creates nothing of value that can be sold. It’s price may go up, but it’s value stays the same. The value comes from allowing my family a comfortable place to live.
4- Gold is a good way to protect value- its worth has been stable for thousands of years. Do not expect gold to be an investment either- it creates nothing of value.
5- Expect there to be a significant change in our economy at some future time. We can not spend more than we make as a country indefinitely without significant ramifications.
Somewhere in the still unwritten Essentialists Handbook it warns readers that “they cannot be too trusting in private nor too cynical in public.” Essentialists make private life paramount. They “sweep their own doorsteps” as Goethe put it, in hopes of making the whole world clean.
A final line from Benjamin Franklin- “So, we leave you a republic, if you can keep it.”
Finished Empire of Debt, here are some quotes I liked and learnings I took from it…
Watching the news is a bit like watching a bad opera. You can tell from all the shrieking that something very important is supposed to be happening, but you don’t quite know what it is.
Savings
Americans consume more than they earn. The difference is made up by thrifty Asians whose savings are recycled into granite countertops and flat screen TV’s all over the United States.
The savings rate in China is 25%. The savings rate in America is -.4%. Asians now own enough US dollar assets to buy a controlling interest in every company on the DOW. They have enough T-bonds to destroy the US economy on a whim.
And what about the millions of dead Americans who immigrated to the United States to find freedom- what would they think of our current situation? What would they thing of their descendants so deeply in debt and so dependant on Asian lenders that they can barely pass a Chinese restaurant without bending over and kissing the pavement?
When an economy comes to depend more and more on credit, it must get more and more of it or that economy will stop. A man who has borrowed heavily to finance a lifestyle he cannot afford must keep borrowing to keep up with appearance. Or else he must stop.
Housing
Houses are too expensive. They usually go up at a rate roughly equal the rate of inflation, income or GDP growth- no more. For the past 10 years however, they have gone up three to five times as fast House prices can not grow faster than income for very long; people have to be able to pay the price in order to live in them. So, you can expect housing prices to revert to their mean too. Prices will fall or else stop rising. These simple reversions to mean are hardly controversial. We don’t know what will happen or how, but that they will come about is practically guaranteed.
One dillusion that has been especially fetching lately. Alan Greenspan tells us that as long as house prices rise in parallel with household debt there should be no problem. He must know that this is not true. Relative to his assets, he says, the US consumer is not over indebted. This is a little like telling a man not to worry about drinking too much as long as he is getting fatter at the same time! The price of the house is only of interest if he is going to sell and live in a cave, or die. Otherwise, he has no way of realizing the inflated value of his house- except borrowing against it, which only makes the situation worse.
Stock Market
When people you know are of the opinion that stocks will rise 15% per year indefinitely, you are nearer to the top of the market than the bottom. When people believe the opposite- that stocks will never go up, most likely you are near a bottom.
The Dollar
A landmark in the history of America happened in 1971 when Richard Nixon said that the value of the dollar would no longer be calibrated with the value of gold.
We can measure the damage by looking at the price of gold. In 1970, each dollar would by an investor 1/34 oz. of gold. Thirty five years later, a dollar would buy us 1/425 oz. of gold. Today a dollar will buy 1/870 oz. of gold. For the many years after 1913 when the Federal Reserve was set up, gold remained as immoveable in it’s value as ever. It would buy roughly the same amount of good then as it did when Christ was born. As a result of losing it’s backing to gold- guess how much the dollar is worth in comparison to what it was worth in 1913 in purchasing power? 5 cents.
The USA economy has been so strong for so long, people all over the world have come to accept it’s currency as though it were real money; they take it and ask nothing in return. In exchange for a shipment of TV sets, the Japanese take a wad of $100 bills and call it even. And here is another remarkable thing: the bills tend to stay over seas wher they are uses to buy another form of USA paper, Treasury Bonds. The United States can print as many $100 bills as it wants. So can it issue as many bonds and notes as it pleases. As long as people don’t try to exchange them for other forms of wealth- all is well…
Taxes and Spending
I have been frustrated with our current administrations fiscal policy of wanting to have their cake and eat it too. President Bush cut taxes- which is wonderful. Tax cuts are a good way to stimulate the economy as people risk more when they do not feel most of it is going to be taken by the government anyway. On the other hand- Government not only needs to cut taxes, they need to curtail spending. Our current policy is to lower taxes, but not spending leaving a HUGE debt to be paid by us and our grandchildren. The debt equals more that $100,000 for every man, woman and child in America when unfunded liabilities are considered.
Thomas Jefferson was against this sort of debt. He said “ No generation can contract debts greater than can be paid in the course of it’s own existence.”
Defense
America spends as much on defense as the rest of the world combined. Do we really need to spend that much?
Conclusion
He ended the book with the following suggestions
1- Don’t get caught up in the whole- “spend more than you make” society we live in.
2- Invest in BUSINESSES not stocks- that have fundamental value. He is a big fan of Warren Buffett and his style of investing
3- A home is not an investment- It creates nothing of value that can be sold. It’s price may go up, but it’s value stays the same. The value comes from allowing my family a comfortable place to live.
4- Gold is a good way to protect value- its worth has been stable for thousands of years. Do not expect gold to be an investment either- it creates nothing of value.
5- Expect there to be a significant change in our economy at some future time. We can not spend more than we make as a country indefinitely without significant ramifications.
Somewhere in the still unwritten Essentialists Handbook it warns readers that “they cannot be too trusting in private nor too cynical in public.” Essentialists make private life paramount. They “sweep their own doorsteps” as Goethe put it, in hopes of making the whole world clean.
A final line from Benjamin Franklin- “So, we leave you a republic, if you can keep it.”
Subscribe to:
Posts (Atom)
