Sunday, October 26, 2008

A Stealth Business Plan for McCain Palin: Understanding the current crisis in terms of the future

I recently read an article entitled, The Giant Pool of Money and it was just terrific. It also clarified the circumstances of the meltdown in a way that directs blame away from partisans—at least to some extent. There was a good reason to keep a wall between banks and other financial institutions. The original intent of Glass Steagal was to protect the public against just these sorts of shenanigans. Financial firewalls tend to keep speculators from playing fast and loose with what should be long term assets.

“In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the “commercial” and “investment” banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions’ securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Seagull Act.”

Now while it is true that Clinton signed laws that did away with Glass Steagal, it is also true that Republicans had a big hand in putting the bill under his nose. He could have vetoed it but all the evidence indicates that there was a great deal of collusion on both sides of the aisle to look the other way based on the pressure of a great many financial interests. That being said, there is something to be said for the velocity at which money moves—things happen when money moves. On the other side of the banking crisis coin are the probably equally large numbers of people (compared to the defaulters) who bought homes, still have them and who were able to improve their lives with greater access to credit.

CDOs or collateralized debt obligations require a strong and growing economy to remain solvent. As indicated in previous emails, America’s economy has some obvious real weaknesses caused largely by a shift from making things here in the US to managing the production of goods overseas with foreign labor. The following is not entirely original thinking but it is worth reflecting on in the light of our current economic plight. McCain needs a visionary business plan that he can present to the American people. It should look something like this:

Vast multi-national development projects on scale so large that they should take the breath away of the average citizen.

Here in America the implementation of the following national and international projects (financed by long-term development bonds with a yield tied to future algorithms of prosperity) is vital for the future of humanity. Remember what happened when America’s national highway system was built? It cost billions but the additional hundreds of billions of dollars worth of goods and services that resulted from that far-sighted endeavor made it abundantly worthwhile. This is known in some economic circles as geometric growth. Geometric growth tied to algorithms of increased productivity based on the empowering of individuals in newly expanded economies with low energy costs is profoundly optimistic. This is essentially the long view of development versus the short term view, which is largely based on reaction rather than pro-action. (The annual American business plan on average does not appear to look much beyond 6 to 24 months, whereas some Japanese companies have 100, 200 and even 500 year business plans.) All of these projects would require hundreds of millions of tons of steel, cement and other building materials, and millions of manpower hours to enact. Billions of dollars worth of future goods and services would result from these projects. In short, millions of new jobs could be created and sustained by the following:

1. A bullet train network to link the west coast to the Southwest and later the Midwest beginning in the American Southwest where land is more easily accessed than in the East

2. The construction of thousands of new nuclear reactors to reduce long term energy costs

3. Massive water development projects that would seek to bring Canadian water to the US (they have more water than they will ever need)

4. The same sort of large-scale water projects from the former Soviet Far East to bring water resources to the parched areas of the Northern Asian landmass

5. Massive desalinization and energy projects beginning in North Africa financed by joint American and Euro bonds (Africa’s prosperity will make for huge new markets)

6. State sponsored research into creating factory made housing of a far higher quality and imaginative design than is currently operational within the present market of pre-fabricated homes. (This will help keep the cost of housing down.)

7. A ramping up of the production of the hydrogen car and the attendant and required infrastructure. (Energy/oil independence will cut off the money spigot from all of our enemies.)

Most of these projects would require a newly tasked set of financial instruments that would attempt to tie the spending of investment pools to international human development and consequential future prosperity based on geometric algorithms of growth. Much like a CDO that attempts to take a slice out of future earnings and pass those earnings to investors, international development bonds would tie lending to worthwhile projects with long-term, positive consequences. Long-term investors would receive a fair rate of return and enjoy the satisfaction of knowing their funds were being used in a worthwhile manner on the investment side. In order to do something like this on the political side of things, there would have to be a radical realignment of the intent and scope of many social and financial systems towards a more developmental, pro-human calculus than either the dog-eat-dog dynamics of classic capitalism or the current Luddite ideology that is creeping into the green movement.

Now some of you might say that international human development is the goal of enlightened socialism or even of the former Marxist Leninism but it really isn’t. International human development can only really be understood from one perspective. “Love Your Neighbor as Yourself.” This was what Jesus said was like the first commandment. The first commandment, if you recall, is: “And you shall love the Lord your God with all your heart, and with all your soul, and with all your mind, and with all your strength.”

I also have to say that the only “person” that I think has the ego to pull something even remotely like this off is McCain/Palin. I don’t think Obama/Biden has the stomach for it. In time maybe but not now and we need it now.

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