Where We’re Headed (Problems) and How to Mitigate the Damage (Solutions)

Where We’re Headed (Problems) and How to Mitigate the Damage (Solutions)

Key Problems

1.Our grocery and gasoline bills are set to increase dramatically at the same time a historic record percentage (36.3%) of Americans are not participating in the work force. Extremely high structural unemployment + extremely high inflation = extreme social unrest. Not rocket science. Smart money has been betting on parts of this scenario for some time now. Bill Gross – Founder and Co-CIO of PIMCO, the world’s largest bond investor: http://finance.yahoo.com/video/cnbc-22844419/bill-gross-plots-the-great-escape-28749463.html , or see my Investment & Social Commentaries: www.jackworthington.wordpress.com .
Solution A: “US Job Explosion Initiative” to bring quick prosperity: http://www.youtube.com/watch?v=Ff5tnfvrnvk&list=PL00096C320BF86917&index=1&feature=plpp_video
Solution B: “Federal Budget Deficit Reduction” driven by a strong economic expansion: http://www.youtube.com/watch?v=qnFWpQ1AoGg&list=PL00096C320BF86917&index=4&feature=plpp_video
Solution C: Reduce geopolitical instability in the Middle East, which plays a significant role in world energy prices. “Hells Bells now Libya”: http://jackworthington.wordpress.com/2011/03/26/hells-bells-now-libya/ , and “Again…Libya: One of the most Foolish Military Interventions in History”: http://jackworthington.wordpress.com/2011/10/24/again-libya-one-of-the-most-foolish-military-interventions-in-history/ .
Solution D: Develop nuclear and expand domestic drilling / shale exploitation with caution. http://www.youtube.com/watch?v=ThutlJ6o_fQ&list=PL00096C320BF86917&index=12&feature=plpp_video
2.In Problem 1 above, a highly plausible risk exists for extreme forms of socialism / collectivism to fill the vacuum; i.e. Nazism, Communism, et al. What rises out of the ashes this time? At best, socialism / collectivism are like wet blankets on human progress and individual freedom, and at worst, come at the risk of extremely violent ideological purges. Just historical facts and experience…not rocket science.
3.There are many people in America from all walks of life who believe “this time will be different…this time we’ll get socialism right!”. They are wrong. Freud the psychologist who had profound insights into the inner workings of the human mind was right, and Marx, the naive, idealistic, ivory tower economist was wrong. We live, and will die, in a tragically flawed world subject to the unavoidable and mysterious human condition. World peace and nirvana on earth are impossible as long as evil exists in the hearts, and foolishness in the minds of humanity. Look around you. Let’s get real…and deal with reality realistically, while we grapple with the mysterious human condition spiritually. http://jackworthington.wordpress.com/2011/09/24/oh-no/
4.Idealistic Madness: We’re in the process of dismantling a cynical, realpolitik system that protects our world from Islamic extremism…untethering the most dangerous enemies of Western liberal democracy, many of whom have a stated primary goal of facilitating the “final battle” of history and destroying us. This is one of the key reasons our traditional Western European allies were so against our idealism-driven military interventions in the Middle East. http://www.youtube.com/watch?v=Ye0PYmstjf8&list=PL00096C320BF86917&index=15&feature=plpp_video
Solution E: Back to the Future.
Solution F: Leave spiritual battles to God and do what Jesus said to do. People and nations ignore what Jesus said at their own risk.
5.The Obama administration’s approach to foreign policy is dangerous and naive. They appear naively idealistic, with an “ivory tower” lack of connectedness to how the playground works in the real world. We are emboldening America’s enemies and those deeply opposed to our interests and, or values. The Arab Spring has turned to the Arab Winter. North Korea and Iran are emboldened towards aggression. China is working with Iran to defy Western sanctions against Syrian oil sales. Russia thwarts our interests at every turn. French President Nicolas Sarkozy has filled the leadership void normally reserved for the US President and is the defacto spiritual leader of Western liberal democracy and capitalism.
6.We are embracing Canada’s failed “Mosaic” social model and discarding the “Melting Pot”, an American approach that changed the world in a profoundly positive way. You think racism in America is bad? Let me take you on a developed world tour of racism, then I’ll ask you again. The leaders of the UK and Germany, among others, have publicly declared the Canadian “Mosaic” social model a failure in their own countries recently.
Solution G: Multi-generation American families must provide leadership to newly arrived and, or cloistered ethnic communities and assist them with integration / show them how to succeed in the US and explain specific differences between the US social model and other countries. I.e. exactly why an immigrant can come to the US and have a better shot at personal success than if they immigrated to another country.
Solution H: We need to promote more “Horatio Alger” rags-to-riches stories. These are the bedrock stories, known to the entire world, that have attracted people to America since even prior to our nationhood. This “hope” is a key part of what America means to the world, and is one of our (now the West’s) key weapons in the fights vs. global Islamic extremism, and socialism/collectivism.
7.The European sovereign debt crisis is a ticking time bomb that has the potential to escalate into a situation which catapults our world into an extremely bad place economically and socially. This sovereign debt crisis is driving our strong US$. When that crisis is resolved, as it will be eventually (Europeans are in denial about the viability of a United Europe – the reality is unavoidable and will be dealt with eventually), if our federal budget deficit problem is relatively unimproved, the US$ will go through a significant fundamental devaluation which will result in significant inflation in the US. When that happens, inflationary pressures in the global emerging markets will also rise significantly (world commodities are priced in US$ / the world reserve currency – the instigator of the Arab Spring), and extremism / anti-Americanism / anti-capitalism will rise.
Solution I: These problems are highly interconnected. See solutions above.
Solution J: Provide credible counsel and leadership to our European allies in the resolution of the Eurozone sovereign debt crisis: http://jackworthington.wordpress.com/2011/11/09/reality-hits-the-eurozone-finally/

 

Jack Worthington Youtube Channel: http://www.youtube.com/user/jackworthington2/featured

JW
New York, NY
3 Apr 2012

Our Romney Problem

“Our Romney Problem”

We must face up to facts and act on them.

1.We have a major Profoundly Uninspiring Romney Problem. Although Mitt Romney appears to be a very fine American, ideal neighbor, and probably a rock solid business partner, he lacks the requisite magic to lead Americans nationally at this specific and unique moment in American history. I believe it’s not an “etch-a-sketch” campaign strategy…it’s Mitt. There are times in an organization’s life cycle when a leader like Mitt is the preferred choice. Now is not that time. We do not have the current luxury of electing a president whose avowed leadership style mentor is Dwight Eisenhower. Unfortunately, my managerial instinct tells me his leadership style would be most comfortable managing national decline with presidential grace…a president out of Hollywood’s central casting…a classic organizational “face man” that large, stable, unchallenged public companies typically hire as CEO’s…think Exxon.
2.Instinctively, Americans know this, and Mr. Romney will be cannon fodder for Barack Obama’s re-election. We’re looking at an Obama electoral landslide. Nothing against Mitt…he appears to be a fine and admirable man, and I very much appreciate his public service to enter this race and voice his ideas.

Mitt will lose in an electoral landslide. Now what? Well…

1.If you think we have no serious national / world problems, and, or believe that Barack Obama is uniquely able to solve whatever problems we have, then pipe down and support Barack. Do the patriotic thing and get behind our president.
2.If you think we do have serious national / world problems, and, or believe that Barack cannot solve them at best and compounds them at worst, and care about the future of our nation, then you must make hard choices. You should not vote for Mitt Romney. You must find another choice.

I’ve found myself in Camp 2.

Many high profile opinion leaders who know me have encouraged me to consider entering politics and, given the PURP, to do so now. I have not yet decided whether or not I will run, or even enter politics. Given the profound risks and challenges I see at our doorstep, the viable solutions I have for them, and my somewhat unique professional experience, I do feel a moral obligation to engage in the national political debate.

If people want me to run, they must encourage it now. If people want someone else to run, they must encourage it now. Otherwise, be satisfied with another Obama term and get behind the president and his policies. Don’t complain if things don’t work out under Obama. You voted for him, either directly, indirectly via Mitt, or indirectly by supporting a reject/failed traditional Dem/Rep candidate on Americans Elect.

The hard facts folks…

JW
23 March 2012
New York, NY

My Response to NY Mag “Worthington Running for President” Article

New York Mag Article (21 March 2012)

http://nymag.com/daily/intel/2012/03/rumored-jfk-son-jack-worthington-for-president.html

In response: A key part of my business is to study where the global economic and geopolitical landscape are heading. The extreme economic challenges I’ve been forecasting for the past several years are starting to unfold at a quickening pace. Three years ago I told investors the clouds were on the horizon even though they couldn’t see them (in a clear sky), and I told them specifically why they were gathering, and the likely investment impact. Those forecasts played out almost in lockstep with actual developments. Today, (in what appears to most people to be a clearing, generally improving sky) I see those same clouds now almost at our doorstep…coming in more quickly. That’s why I’ve “raised my hand” to voice my opinions and concerns aggressively. I believe we face a moment of “all hands on deck”…every American with something to add should do so now. The most pressing major crises we face are generally, though not entirely, rooted in the econ crisis-driven rise of an historically flawed socio-political-economic ideology (collectivism) and a hubris/fear-driven aberration in traditional US political conservative values.

In most developed countries, governments are designed to be constrained by bureaucratic inertia. In stable times, it’s a good thing. In difficult times, it can be calamitous. Recognizing this, I believe it’s our duty as citizens to “shake things up” as and when necessary.

Let’s shake this election up. Against the basic instincts of a typical politician working within a sclerotic bureaucracy, they desperately need our help to force them to address the storm ahead with courageous and perhaps unpopular strategies. They won’t do so on their own…like asking a chicken to bark.

If people agree with me, and want their voices to be heard outside traditional party politics, they could sign up on Americans Elect and give me a support click: http://www.americanselect.org/profile-candidate/371996/bio ,or get active in this election in any other way of their choice. As the old saying goes, “lead, follow, or get out of the way”. Complaining without personal action doesn’t cut it in my view, and I don’t see anyone running who I believe has what it takes to solve our most difficult problems. I do believe my experience living most of my adult life outside the US as a businessman in 8 countries / 4 continents, and my corporate turnaround leadership experience can contribute positively to our national debate.

My YouTube Channel answering the Americans Elect platform of 15 Questions: http://www.youtube.com/user/jackworthington2?ob=0&feature=results_main

Let’s roll.

JW
New York, NY
22 March 2012

Recent ECB Move Will Not Solve Eurozone Crisis

Recent ECB Move Will Not Solve Eurozone Crisis

The plan just doesn’t pass the common sense test. It asks extremely risk-averse commercial banks to assume a “hedge fund” / high risk carry trade in an environment where they’re not deploying cash to anyone, including each other, much less to deteriorating credits. Sure, sovereigns could force feed their own banks to the trade, but that’s a small percentage of the total sovereign financing need. When a commercial bank does take the trade, its stock is quickly hammered in the market, and shareholders lose, perhaps significantly. Shareholders aren’t public philanthropists. Won’t work.

It would work if the ECB backstopped the sovereign debt, ensuring a lucrative low risk carry trade. Bank balance sheets would be significantly improved, and Club Med Eurozone sovereign borrowing costs would drop or at least be stabilized quickly. The day of reckoning would be delayed. However, the glitch in the plan is that the ECB won’t backstop sovereign debt…politically impossible.

I.e. this deal won’t achieve its intended purpose. Its failure will be apparent eventually, keeping the world at the cusp of financial calamity rather than retreating from it. In my view, this is an attempt to buy time, put an emergency brake on rising Club Med sovereign borrowing costs, and control the news cycle for awhile with an announcement that appears positive. How many of these moves have we seen from Eurozone leadership over the past few years?!

This crisis will be fundamentally solved, no doubt. It will be painful, no doubt. I support sooner rather than later, as the level of pain increases significantly with time. Few humans accept pain readily, and that’s what we’re seeing. Plan on it, and be on the right side of this trade. No change to recommended strategy.

JW
New York, NY
22 Dec 2011

A Short Note of Frustration…

A Short Note of Frustration…

Reuters: “Credit rating agency Fitch told the euro zone on Friday it thinks a comprehensive solution to the bloc’s debt crisis is beyond reach.”

What would Homer Simpson say?? Dohhhhhhhhh…. Watching this slow motion bureaucratic train wreck in action is painful and frustrating, when viable, quickly implementable, albeit somewhat painful solutions exist. Germany appears ready to send the world to the brink of unprecedented economic collapse in order to preserve their captive Eurozone export market. We’ll know where to point the finger when a globally destablising Molotov cocktail party breaks out in the “Club Med” Eurozone over the painful bite of German-imposed austerity. What political horror show will arise out of those ashes? A dangerous combination of extreme stubbornness, greed, self-interest, and irrational pride is at the heart of this unnecessary crisis. Solution: immediate break-up into two-tiered Eurozone. No, no return to Lira, Drachma, Peseta, et al… Northern Euro anchored by Germany, Southern Euro anchored by France…asap please!

Reality Hits the Eurozone…Finally!

Reality hits the Eurozone…Finally!

It’s been so frustrating to watch the slow motion train wreck in Europe, orchestrated by feckless bureaucrats. Finally, the guy who I’d expect to lead Europe out of this crisis, and in my opinion the defacto leader of the Western world in spirit, Nicolas Sarkozy, is moving the ship away from the rocks, in the right direction!

Mr. Sarkozy is now advocating a “two-speed” Europe, and with that leadership, Angela Merkel is now finally calling for changes to EU treaties. In my opinion, as I’ve been advocating, this is the only truly effective solution for the Eurozone crisis. This will bring the world back from the brink.

Move quickly Monsieur…s’il vous plaît! This is your moment in history Mr. Sarkozy. There are other profoundly dangerous “black swan” events on the horizon for the world, and we need to get this issue resolved asap, while we still have time to focus on it. We don’t want to be juggling this ball as Israel strikes Iran.

The Eurozone Crisis Strategy:

1. Create Northern and Southern Eurozones; i.e. a two-speed Europe.
2. Include France in the Southern Eurozone. Yes, France. French leadership, balance sheet, and credit rating are needed for the stability of the Southern Eurozone.
3. Establish a Southern European Central Bank headquartered in Paris.
4. Issue Southern Euro currency.
5. Restructure PIIGS debt immediately, with appropriate haircuts and Southern Eurobond debt swaps, guaranteed by the Southern ECB.
6. Culturally, this is difficult but possible – Southern Europeans share commonality, and trust France more than Germany; i.e. they will be somewhat more willing to relinquish a modicum of sovereignty to the French, who somewhat share their culture if not their stage of economic development. From a purely technical perspective, it is not ideal to have France in a Southern Eurozone, but we don’t live in a perfect world. Culturally, the current Eurozone is not feasible, and never has been. It is a very discreet (not so discreet at the moment), German power-grab.

Likely Outcomes:

• Germany loses special access to an important export zone. German growth slows. This is why Angela Merkel is calling for “more Europe, not less”.
• The PIIGS experience a strong and quick economic rebound as the Southern Euro is unshackled and devalued to promote exports. Social turmoil subsides in Greece and other potentially explosive areas of Southern Europe. People have jobs again.
• The French will experience the economic benefits that Germany previously received from the Southern Eurozone.
• PIIGS creditors take their losses. A European banking crisis is dealt with by the free market. I.e. No public bailout of European bank shareholders! Healthy banks buy weak banks at distressed prices, and all raise fresh equity capital if needed.
• A “bank crisis” stated another way: Current bank shareholders take big losses, and new bank shareholders potentially win big. In my experience, bank shareholders in distress tend to scream loudly and do everything they can to frighten the public with pronouncements of imminent calamity if they aren’t bailed out. Ignore them. In my 25 years of international banking experience, through banking crises on three continents, the drop-off in credit extension is never as bad as current bank shareholders in distress claim it will be if they aren’t bailed out. Are the current bank shareholders encouraging credit extension?!! I think we all know the answer to that question. NO. No sympathy from me.
• One potentially bad outcome from this strategy: Two very solid, if not high growth, stable economic zones issuing highly attractive sovereign debt securities in competition to US treasuries. Collapse of the US$, and Northern Euro becomes the new world reserve currency. The US is in deep trouble…I don’t think most Americans fully realize this, or what “deep trouble” actually means in practical terms…even “Tea Partiers”.

JW
9 Nov 2011
New York, NY

Again…Libya: One of the Most Foolish Military Interventions in History

Again…Libya: One of the Most Foolish Military Interventions in History

On March 26, 2011 I published an article on the Libya war, “Hell’s Bells, now Libya”: http://jackworthington.wordpress.com/2011/03/26/hells-bells-now-libya/ . In the article I say the Libya war will be seen by historians as “…one of the most foolish military interventions in history, modern or ancient.”.

In that article, I state the probable outcomes from the overthrow of Gaddafi, and the dangers those outcomes pose to the world.

The situation is now unfolding as I predicted it would in that article. We are setting the stage for a period of almost unprecedented danger in our world.

Both Republicans and Democrats immediately and almost unanimously cheered the outcome when the Libyan rebels declared success and national liberation. Pardon me while I pick my jaw up off the floor as I watch mass, lemming-like group think in action.

A snippet of the outcome so far:

• Black Libyans have been herded into detainment and expulsion camps;
• Islamic Sharia Law has been declared immediately effective. I.e. they will hold a fair, transparent, democratic election and the outcome of that election will be “we do not want the right to vote in a democratic election”. Among other things, Libyan women will have a dramatically new lifestyle to say the least. Among other things, it’s highly likely that radical Islam will be tolerated if not nurtured in the new Libya, providing another expensive future fire to put out in the Middle East.
• But most disturbingly, radical Islamists will now have a blueprint for successfully dismantling the hypocritical realpolitik structure in the Middle East that was established by the West to contain them; i.e. start a revolution and use Western money to finance it! They win…we cheer…we go into a sovereign debt crisis…they laugh at us…they seek our destruction. Can we be more idiotic?? This is pure insanity.

Brutal, secular, anti-radical Islam dictators like Sadaam Hussein and Muammar Gaddafi hated, and were a threat to America, but radical Islamists want to, and have the credible ability to destroy America and change our world quickly in a profoundly negative way for Western freedom. It is far too simplistic to say “Gaddafi was a terrible guy. It’s great he’s gone.”. He, and people like him were installed by previous generations in a well-considered strategy. This didn’t just occur haphazardly. Yes, it is hypocritical and stands in stark contrast to everything America professes to be. Yes, it is realpolitik (hopefully temporary) in a deeply flawed world.

Please, will someone in Washington give me a reason to change my depressing investment thesis!

Suggested Middle East Foreign Policy:

• You cannot leave a void of economic depression and hopelessness in Iraq. The people will likely turn to radical Islam.
• Turn Iraq into a “Dubai” / icon of Islamic capitalism and economic success, with an “SBIC-type” US Federal Government co-investment program with private equity and venture capital firms operating in Iraq. We’re not completely throwing taxpayer money down the drain…if we co-invest with world class PE and VC firms, the American taxpayer should also win big.
• Use Iraq as “shining city on a hill” in a region of destitution. This powerful ideological symbol would be more impactful in effecting true liberal democratic change in the Middle East than any shock and awe carpet bombing sortie ever could.
• The danger of America to anti-Western elements in the Middle East is not in its military power, but in its ideology. To win, you must use your most powerful weapon, ideology. Carpet bombing empowers and emboldens your ideological enemies.
• Removing our military forces from Iraq makes it more difficult to support the winning strategy…American private equity and venture capital firms operating in Iraq to create material prosperity for the Iraqi people. THIS is what dictators and radical Islam fear! Finish the job!
• Eventually, with a sweet taste of economic success, the people of the Middle East will be weaned off dictators, and will lead true democratic revolutions that will bring true liberal democracy to the Middle East, thereby dramatically reducing the risk of radical Islam and unhinged dictators to the world.
• We cannot “bomb and leave”…just a terrible, foolish strategy. How many times does Obama plan to replicate this idiocy in the Middle East? Syria next? Then Africa? Who will pick up the winning blueprint next?
• Where they temporarily continue to exist as an interim stopgap solution, deal brutally, covertly and personally with dictators when needed to keep them in check until their exit. Realpolitik. Pull out the brass knuckles for the world’s safety.

I think the mainstream media are doing a great disservice to the American people by ignoring the white elephant in the room and declaring Obama a success in this idiotic Libya venture.

Investment strategy unchanged…unfortunately.

JW
24 Oct 2011
New York, NY

JW Speech China Leaders Forum 2011 NYC. Response to question “Is it just a matter of time before China takes over the world?”.

China Leaders Forum 2011 – 7 Oct 2011, NYC
JW Speech

When I accepted the opportunity to speak here and respond to the question “In light of current events, is it just a matter of time before China takes over the world?”, I was taken aback because I remember that less than 20 years ago, as a young China investment banker, China was still largely unnoticed on the world economic stage. Less than 20 years ago! It was a very difficult job getting investment managers interested in China. Entire nations on their doorstep were dismissive of China and its potential, but they were proven dramatically wrong in a very short period of time. China is a recent economic miracle. Let’s not forget that.

So, now that I’ve been asked a provocative question, you open the door for me to give a provocative answer. The thoughts I’m about to present have not yet reached the mainstream debate regarding how to avert world economic and social calamity, but I believe they will, perhaps sooner rather than later. They’re thoughts to begin considering. In fact, I’m sure they’re being considered, but not expressed publicly. Fuelled by populist anti-China sentiment in the US and Europe, in the US most recently, trade relations appear to be deteriorating rapidly as we speak. Provocative, creative language is entirely appropriate, if not mandatory at this stage.

Did the US, Japan, the UK, Germany, or Italy ever take over the world in a complete, lasting way? No…of course not.

So I changed the question, and ask “Will China establish a modern global empire to rival the major global empires of history?”. In light of the ebb and flow of world history, more specific questions…

1.How economically powerful will China eventually become?
2.How culturally influential will China eventually become?
3.How militarily powerful will China eventually become?
4.How geopolitically influential will China eventually become?
5.Does China have the potential to lead the world altruistically?

Key follow up questions: “How long will China’s economic miracle last?”. “Can China build on it’s early economic success to build a nation among nations?”.

I absolutely don’t doubt the national resolve of the Chinese people!

I’ll never forget the development of the Pudong New Area in Shanghai. In 1993 I started receiving videotapes and information about a “New Manhattan” being built across the Huangpu river in Shanghai, if I remember correctly by Sinophile investment banker Nick Whitlam, the son of former Australian Prime Minister Gough Whitlam, who was an important international advocate for the Chinese government’s official diplomatic recognition and entry into the UN. Nick was well connected into China deal flow. The plans seemed almost absurdly optimistic, and I chose not to get involved. But just seven years later, in 2000, I found myself having dinner at the Peace Hotel on the Bund overlooking the “New Manhattan” they’d built across the Huangpu river…awestriken at the national resolve!

I remember early travels in the Pearl River Delta. One vision I’ll never forget was ordinary pedestrians walking on the side of the road, many them carrying a few large rocks along with their shopping bags. I asked the obvious “Why?!” Apparently they considered it their civic duty to help build the road bed. They would carry the rocks and leave them in places where they were instructed. That’s formidable national resolve which says something profound about a people, about a nation.

Yet, there’s more to the high calling of building a nation among nations than just determination or economic success alone. Many characteristics and values form the base of national greatness and world leadership.

I believe, in the eyes of the world, the answers to those questions are still unclear for China, but we’re waiting, if not hoping for greatness in China at this stage of world economic and social turbulence. At this profoundly dangerous inflection point in world history, China stands at a major crossroads of its destiny. China’s place in the world’s future and modern history are at stake. China can make choices today that seal its fate in our modern world as either a great nation among nations, or a brief flash-in-the-pan, temporary economic miracle that turned to vapor at the first winds of global leadership challenge.

There are three clear paths forward…not only for China, but for all nations. Self interest, altruism, or self-interested altruism. One defining point of a truly great nation, a nation among nations, is the nature of its actions towards others and its sense of national purpose in the world. Are its actions primarily altruistic, or self interested? Can other nations trust its balanced engagement with the world, creating an environment where others respect and actively seek its leadership? If China has an interest in world leadership, it should try to see itself in terms of how others see it, and use this extraordinary confluence of perilous world events to take the high road and lead the world to safety…to take its place in modern history as a nation among nations.

China is in no way immune from the potential economic and social turbulence ahead.

The US and Europe are in desperate need of debt restructuring and jobs, and China is a major sovereign creditor with the ability to directly and immediately influence job growth in the West.

The US and some countries in Europe will never be able to repay their sovereign debts without significant inflation, or restructuring strategies. It’s just that simple.

If I were advising Chinese leadership, I’d put it this way: It’s inevitable that you’re going to get a haircut…you should at least put yourself in a position to choose your style. In other words, you’ll inevitably take a loss on your Western sovereign debt investments, you might as well do it preemptively on your terms and be seen as a magnanimous heroic world leader as you save the world and your own country from economic ruin and social turmoil, rather than allowing the world to be dragged into a bitter and contentious fight whose outcome we already know…debt restructuring at a minimum without any viable alternative safe haven. Just the announcement of a program like this would potentially save the world economy…which is driven by animal spirits and confidence.

There has been a tremendous wealth and job transfer from the West to China over the past 30 years. The pendulum swung very rapidly and extremely. An unsustainable percentage of traditional blue collar jobs in the West have been transferred to global emerging markets, and China’s economic miracle is a direct result of it. Western governments are left with skyrocketing social services payments which cannot be sustained.

My hope for China? Be seen as a world hero at this frightening juncture of history. Secure your destiny as a great nation among nations. Many are called, but few are chosen. The path to the highest echelons of world history is marked by altruistic world leadership. History tells us that self interest ultimately leads to personal and national destruction, while altruism leads to greatness. Rise above the pettiness and self interest of other nations.

Wisdom. If China takes the high road…immediately…world history could be changed…today. Recognize that the value of your sovereign debt investments ultimately came from the unemployed Western workers whose public benefits you are now financing. Restructure those sovereign debt obligations to a level which brings the US and Western Europe out of financial crisis…reviving the animal spirits of Capitalism and pouring the fuel of confidence onto the global economy at this critical juncture of world economic history. It’s also directly in China’s self interest…for the economic miracle to continue…for China’s long term prosperity.
Again, China will take a loss ultimately. Either China initiates it, or it happens on its own. The pendulum swung too far, too quickly for Western society to cope.

At the end of WWII, the United States created the Marshall Plan to rebuild war-ravaged Europe and prevent the spread of communism. It’s been called one of the most unselfish national acts in history. During WWII, the United States created the Lend Lease program to help Britain defend herself. At President Roosevelt’s eulogy, Churchill called it “the most unselfish and unsordid financial act of any country in all history.”…at other times he called it “the most unsordid act in the history of any nation.”. The bar is high, and this is no time to be playing economic poker. This is a time for magnanimous Chinese leadership.

Perhaps for China, their “Marshall Plan” for the world would include debt restructuring and exchange rate flexibility. Combine this with an immediate Eurozone restructuring…breaking up the Euro into Northern and Southern Euro’s, and I believe confidence would be quickly restored, and the world economic crisis well on its way to being over.

The social pressures on the US and Western Europe related to blue collar job losses have reached unsustainable levels. If China doesn’t step forward with proactive, self-interested altruistic leadership, I’ve seen a very creative strategy to reverse US blue collar job losses, and I believe the strategy is feasible, and has the potential to quickly and significantly bring blue collar jobs back to the US and Europe. Believe it or not. On the course we’re on, I’m certain the strategy will be adopted somewhere, at some point, and that would not be in China’s best interest whatsoever.

China, this is your crossroads, and one of history’s few calls to greatness. If your national vision is to build a nation among nations, the bar is high…the entry fee is steep…many are called, but few are chosen. Take your place of leadership on the world stage…we welcome you…join us. Can you just imagine the possibilities for humanity?

Thank You

Oh no…

Oh no…

Although I’ve never met the man, based on many of his public statements, I’m not a fan of Michael Moore. It appears our political positions and approaches to social issues are diametrically opposed, yet we seem to have common ground in our deep concern for the common man and the have-not’s of society. However, do not discount Michael Moore’s latest rant / warning for the rich. There is wisdom in what he says, and his comments are appropriate for the current moment…and timely. They mirror recent comments by typically moderate NYC Mayor Bloomberg, or really anyone who isn’t entirely disconnected from the plight of the average person in America. What Moore is saying really does jive with human history, and the response to his comments by what appear to be conservatives on a talk show also jive with human history. These are history’s typical responses to the situation we now face, and it is discouraging. We know how this game plays out…we know how it ends. Can humanity ever break from the axiom “The only thing man learns from history is that man never learns from history.”?

I’m a politically independent, moderate conservative, yet this “conservative?” response was troubling…they truly do seem completely disconnected from the reality on the street. In fact, to an embarrassing degree…if they truly do believe this, and it’s not just entertainment, they are on the wrong side of history and wisdom…it made me uncomfortable and more than a bit nervous:

Michael Moore’s Warning for the Rich:

http://video.foxnews.com/v/1178649248001/michael-moores-warning-for-the-rich

To answer the panel’s question, yes Sir, the “Power of the Left is based on an implied threat”. It always has been, and this won’t change in our imperfect world. We need to recognize that fact and deal with it wisely, regardless of “justified” righteous indignation. “They” will “get theirs” regardless…either you give it to them philanthropically, or they will take it. “It” is in the process of being taken, now. Whose fault is that? According to history…according to the Bible for that matter…who are the real fools in this scenario? Human wisdom says do it or you lose. God’s wisdom says do it or you lose.

Sadly, it appears Capitalism is in the process of destroying itself again, as Marx suggested it always would eventually, through cycles of excessive self interest / greed. Marxism is powerful, and always will be because it taps deeply into the innate, immutable flaws of the human heart. Combating Marxism effectively requires personal moral regeneration, and that has always been a traditional American virtue…until recently. In my opinion, it’s what insulated America from Marxism through our most challenging economic cycles. I believe we must take firm hold of what I believe is one of Marx’ enduring insights into our flawed human nature. In my view, it is the very driver of Marxism…the seed of socialist revolution…and it will always be with us in our imperfect world:

“A house may be large or small, as long as the neighbouring houses are likewise small, it satisfies all social requirement for a residence. But let there arise next to the little house a palace, and the little house shrinks to a hut. The little house now makes it clear that its inmate has no social position to maintain, or but a very insignificant one; and however high it may shoot up in the course of civilization, if the neighbouring palace rises in equal or even in greater measure, the occupant of the relatively little house will always find himself more uncomfortable, more dissatisfied, more cramped within his four walls.” – Wage, Labour and Capital, in Marx Engels Selected Works, Vol 1, Page 163.

This is why the wealthy of “Old Europe” are so much more discreet in their consumption…the wisdom of the ages. Yes, I’m a kettle calling the pot black…but it’s time many of us reversed course / thinking asap. We ignore a basic flaw of human nature at our peril.

In the US historically, a product of our deeply religious roots, the broader cultural identity was more along the lines of “little pink houses for you and me” and globally distinctive concern for your neighbors. Wisdom. Time for national moral regeneration…treating our neighbors as ourselves…quite literally…it’s called “self taxation”…in my view, and global living experience, it’s one root of historical American exceptionalism and greatness…it’s why we’ve been able to avoid dangerous, deeply flawed socialism where others have fallen.

A socialist may criticize our national response to hurricane Katrina, however, never forget that in the European heat wave of 2003 approximately 14,802 primarily seniors died in Paris when the socialist government employees and physicians responsible for the situation wouldn’t come home from summer vacation. 14,802 dead. http://en.wikipedia.org/wiki/2003_European_heat_wave . YTD total casualties of the Iraq and Afghanistan wars = 7,528. Katrina casualties: 1,833. Welcome to socialism.

What Marx didn’t account for in human motivation, but Freud did: In practice, Marx’ socialist theories repress much of the best of human nature and release some of its worst. US Katrina response: Flawed, yet, in the midst of the unfolding tragedy, the best of human nature was unleashed in many Americans. Many dramatic stories of heroism. French Heat Wave response: Flawed, and releasing some of the worst in human nature…horrifying selfishness. In a broader context, the contrast is also revealed in economic, artistic, etc…etc… achievements. It is another root of American exceptionalism and greatness. Yes, we have a flawed system…however it often pulls out moments of breathtaking human beauty, while minimizing the lowest of the lows. Socialism has proven itself to do the opposite. I have direct personal experience…lived in 8 countries outside the US, 4 continents…for most of my adult life…since 1987…primarily socialist countries.

Let’s save our American way while we still can…moral regeneration…a traditional strength of our nation…let’s “shock and awe” the world with a uniquely American response to our crisis…caring for our neighbors as ourselves. Let’s prove them all wrong…the American experiment is truly exceptional and isn’t dead. Let’s prove former British Prime Minister Margaret Thatcher right: the most important event of the past 2,000 years was “when a group of rogue Englishmen rebelled against their country and formed The United States of America”.

It’s in your hands friends…no feckless politician in the way of a solution…few Europeans will understand what I just said!

Shock and awe baby…let’s roll…

JW
24 Sep 2011
New York, NY

A Crisis Turnaround Program for America: Part 1

A Crisis Turnaround Program for America:  Part 1

Objective:

To rebuild our “Shining City on a Hill” to be an inspiration to all mankind, while acknowledging our human limitations, yet, also recognizing the profoundly dangerous global economic and social crises we face which require immediate, uncompromising action.

Important Recent Developments / Quotes to Consider:

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NYC Mayor Bloomberg: 16 Sep 2011 – Mayor Bloomberg predicts rioting in NYC if economy doesn’t create more jobs.  I strongly agree Mayor.  It seems only short a matter of time before NYC explodes.

Dallas Fed President Richard Fisher:  13 Sep 2011 – RE: Quantitative Easing:  “I do not believe we will continue down that path, and we cannot afford to do so.  We know what happens when central banks throw in the towel and monetize debt, and that is what happened in the Weimar Republic, Nationalist China, Argentina, and other cases.”

Mohamed El-Erian, CEO of PIMCO, the world’s largest bond fund:  13 Sep 2011 – “We’re getting close to a full blown banking crisis in Europe.  The light should be flashing yellow, if not red, in Washington D.C.”

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The greatest threat to the safety and wellbeing of Americans today is the debasement of the US$ and its potential replacement as world reserve currency.  In my view, there are no comparable, credible threats which could cause such devastating harm to such a large percentage of the American population, current and future.  The US$’s world reserve currency status is a key reason we have such a high standard of living vs. the rest of the world.  We obtained this privilege from the British in the aftermath of WWII.  We did not earn it.  We somehow escaped large scale war on our soil and obtained it by default from war-ravaged Europe.

Turnaround Priority #1: Preventing this outcome must be the overriding strategic focus of any leader elected to national public office.

A realistic outcome if we do nothing, or continue on our current path:

• High inflation, moving to hyper-inflation as the situation gets progressively worse in a vicious cycle.
• 15-20% of Americans currently live under the poverty line.  A broad segment of Americans could be unable to buy food or pay for their housing as whatever is left of their savings is quickly wiped out by inflation.
• Widespread social turmoil and potential violence across every state, city, town, and community in America.
• An immediate call for collectivist political solutions…the most dangerous, evil groups in modern history have risen from these situations.  If modern history repeats itself, some version of extreme socialism could take hold, and tens of millions of innocent people are killed in ideological purges.
• America’s enemies will take the opportunity to strike ruthlessly, however they can, wherever they can.  Expect routine Islamic terrorism within American borders, and chaos in the Middle East…causing a long term oil price spike.  Global chaos as Islamic radicals aggressively move to facilitate “the end”.

How we got into this situation:

• Post 9/11, America changed.  One of the most dramatic and visible changes occurred in the basic platform of the Republican party, which moved from its traditional conservative roots to a “NeoCon” platform which believed we must take the war to the enemy instead of waiting for more attacks on American soil, and that these wars could somehow change the Middle East to ultimately reflect moderate Western values and democratic government which were less of a threat to America and our interests.  That effort is in the process of succeeding with democracy…in a way that destabilizes the Middle East and makes the world a profoundly more dangerous place; i.e. the Arab Spring.  The NeoCons failed to understand the power of religion, and the need for non-governmental, capitalist follow-up to create prosperity quickly in one or more “demonstrator economies” which could rather quickly produce a domino effect.  Prosperity usually trumps most competing ideologies over time.  In an environment of continued, if not increased regional poverty, old, corrupt, yet stable secular regimes which were the glue of the region are in the process of potentially being replaced with anti-democratic Islamic theocracies extremely opposed to many of the West’s vital interests.  Yes, “I vote to be able to not vote” is the reality.  What realistic alternatives to radical Islam have we given these people…practically…on the ground…in their cities?  I suggest almost none.  Hence the outcome we face.  Given American interests, the NeoCon effort is in the process of failing dramatically.  Yes, in the face of existential threat I’m playing hypocritical realpolitik here. We’ve formed the outline of a future with profound existential threat where that threat was only moderate previously.  The Federal government borrowed heavily to finance this effort.  We have yet to pay the full price for that effort, in fact, we’ve only paid a small part of the final price tag for these adventures.  However, there are viable options for significantly reducing this increased threat and reducing the final price tag.
• Trickle-down economics, the traditional American model for business and social stability, far pre-dating Ronald Reagan to our very founding, broke down when personal economic opportunities skyrocketed over the past 30 years, followed by an orgy of greed and self interest rather than philanthropic interest in our neighbors and communities.  We not only broke the Golden Rule to care for our neighbors as ourselves, we shattered it and have laid a golden path towards social instability.  In my opinion, if we were to single out one primary cause of this paradigm shift cultural change, it was when publicly listed US corporations began managing themselves by a technical corporate finance approach called EVA, or Shareholder Value Added.  When EVA took hold in American boardrooms, companies began managing themselves by a purely quantitative technique for the almost exclusive benefit of shareholders, rather than more traditional, broader community interests.  As a young MBA banker out of Columbia, I was / am an expert in discounted cash flow analysis / EVA / SVA.  I saw first hand how the concept was being pushed out of the Ivy business schools, and made its way from Wall St and the major strategy management consulting firms into corporate boardrooms.  When this happened, it ushered in an era of hyper, quantitative, global competition.  EVA as a quantitative approach to management is perhaps one of the most impactful business concepts in modern economic history.  It changed our world, and I can’t see the realistic possibility of going back upstream at this point.  However, we can make EVA work FOR society also, and that is what I suggest.
• …therefore, socialists took legislative control of the US Federal government – Presidency, Senate, House of Representatives.  Socialists do not intuitively run capitalist economies well.  Free enterprise capitalism, which forms the basis of the world economy today, is driven by unhindered entrepreneurial individuals who are motivated by animal spirits.  Conversely, through central planning, socialists desire to engineer a better world by curtailing and manipulating those emotions.  When presented with a global economic crisis in 2008, the American socialists took the opportunity to borrow massively, on a historically unprecedented scale, to attempt what appears to be a radical transformation of America into an image in their own mind’s eye, without overtly telling the American people what that image was.  All we heard was “Change”.  At the heart of most socialist movements of history is social revolution.  Socialists are world best practice in the art of the revolution…revolution planned by academic elites; aka Le Caviar Gauche, Champagne Socialists, Ivory Tower Elites.  They are experts at orchestrating social instability…which must be dealt with…their way…because they have a better way…despite previous horrifying failures, this time it will finally work…we’ve finally got it right this time.  The failures of socialism litter human history with its darkest moments – Hitler, Stalin, Pol Pot, Mao, Kim Jong Il, Fidel Castro, et al, which have always included bloody ideological purges where millions of “unbelievers” are vilified, demonized, and finally, killed.  They brutally supplant traditional religion with their own.  Socialists never seem to be able to grasp the reality that human nature is innately and deeply flawed.  This is the monkey wrench in the best of their plans.  It is where Marx the economist was tragically wrong, and Freud the psychologist was right.  The early stages of their strategy in America are playing out magnificently.  America is on the verge of a socialist revolution.  My extraordinarily profitable investment thesis (est. late 2008) is driven by this belief.  However, there are viable options for preventing dangerous socialist revolution in America.

The Key Directional Foci of a National Turnaround:

1. Assist with immediate Eurozone restructuring.
2. Maintain US$ world reserve currency status.
3. Revive animal spirits and confidence.
4. Restructure federal, state, and local government debt.
5. Restructure the social compact.
6. Re-define national defence and its global implementation.
7. Re-affirmation of American values and role in the world.
8. Attract our best and brightest into temporary, non-career public service.

What, and when?  Quoting Gordon Bethune, successful turnaround CEO of Continental Airlines, “Right away, and all at once.”.

Emergency Action #1:

Immediately provide leadership with restructuring the Eurozone.  The Eurozone situation is leading us to the brink of a world financial crisis potentially far more devastating and long-lasting than 2008.  It could feasibly commence any day now.  My suggested strategy has been published.  With the Europeans in waffling gridlock, the US should provide leadership immediately.

Next… “How to Maintain the US$’s World Reserve Currency Status”.

JW

New York, NY

22 Sep 2011