Education – Our Greatest Investment

At a time when education budgets are being eroded it is actually a time to recommit to education. Education is the one thing that leads everyone to a better life, more life satisfaction, stronger marriages, a longer life, and less crime. The more educated people are, the more they contribute to the economy. It’s a virtuous cycle. It is time to commit to equal levels of education. The Hallam Charter schools send nearly 100% of their graduates to college. Education is our single greatest investment. We are foolish indeed to shortchange it.

Goldman Sachs Has Record Earnings

Those bankers are at it again. You have to admit that they are shameless. Goldman Sachs, who was a prime beneficiary of the recent taxpayer bailout, having just paid back 10 billion dollars last month, announced they had record earnings this quarter, the highest profit in their 140-year history. Because investment banks pay out their profits in bonuses the average employee is likely to earn between 7 and 8 hundred thousand a year with between 50 to 100 earning over 20 million. This is eye popping, especially given the fact that Goldman Sachs was a leader in creating some of the exotic instruments that brought us down. Yes, they significantly benefited by our taxpayer bailout. They had made a very toxic investment with AIG of 13 billion dollars that was paid of in full from yours and my money. The leaders of Goldman Sachs are defensive about these payouts after all the say, “We pay for performance!” Of course the core question is how to we define performance? There are really two economies, people who really work  for a living, and then the whole financial economies, which is based on a lot of people analyzing risks on computers, and making huge financial bets that trickle down in ways that affect the general economy, far beyond their initial intention. I think most of us want to see performance redefined before we get too excited about rewarding people, many of whom have created so much misery.

San Diego – The Center for Biofuel Research?

Today the San Diego Tribune reported that Exxon Mobil has pledged to invest 300 million dollars into a private venture in San Diego. It is headed by J. Craig Venter, who is a pioneer in the study of the human genome. Venter is a rock star scientist, a true genius that has allowed us to study the human genetics much more effectively. He says that he got involved with bio fuels in the 1990’s during the course of his work. He discovered that as algae grows it draws on sunlight and carbon dioxide and as a by-product produces fats and bio-oils that have a structure similar to crude oil. It’s also true that algae grows extremely fast, and is very resistant to disease and other problems common with crops. So, because of this its one of the only research areas that looks like it could be scaled up to provide a significant amount of our energy needs. The fact that Exxon is investing so much money in this project is startling. In fact, an official from Greenpeace, who has been really skeptical of big oil companies investments in alternative fuels remarked that he was very encouraged, that it looks like Exxon Mobil has finally decided to pursue alternative fuels and earnest. Obviously people in San Diego are pretty excited today both from the direct economic impacts of this investment and the long-term chance to become a world center for bio fuels research!

CSR Will Still Survive the Economy

This past February in my post, CSR Will Survive the Economy, I make a case for CSR initiatives still having a bright future despite the economic downturn.  But as the recession continues and companies struggle through recovery, it makes me wonder…Just how long will the triple bottom line prevail when profit is at the front of everybody’s mind?

In Bonus Rage and its Pitfalls John Robertson discusses how new restrictions for top executives has a downside, social responsibility initiatives in particular taking a big hit.  He contends that in order for companies to operate under the triple bottom line of people, planet, profit, executives need the freedom to exercise judgment.  He states, “If companies were to be more than simply cash registers, executives had to be empowered to make choices. Directors needed to decide how the value being created should be divided up: how much to employees, how much to suppliers, how much to shareholders, how much to deserving community organizations and at what cost to the physical environments in which the company operates.”  He continues, “Unfortunately, this is precisely the discretion being stripped from the repertoire of the modern corporate executive as he is forced to make an unequivocal commitment to financial success.”

Robertson also contends that this won’t get better any time soon with governments looking to maximize the financial returns from their recent equity purchases, executives trying to repay loans as quickly as possible, and employees too scared of losing their job to demand better from their employer.

While Robertson makes a convincing argument, I believe that it’s only an excuse, a reason for leadership to free themselves of any obligation to humanity and the environment.  You see, this viewpoint stems from the idea of corporate social responsibility being solely a cost, rather than an integral, revenue building part of the business model.  Companies and leaders alike that still hold to the belief that CSR is merely writing a check will most likely cut back or quit their CSR practices altogether in the name of financial strife.

On the other hand, however, there are others who will strongly embrace the great opportunities social responsibility presents and come out stronger on the other side of this recession. Will Marré, CEO of REALeadership Alliance, states, “When times are tough it’s hard not to be hijacked by fear. Thinking about how much good we can do becomes downright unnatural when we’re genuinely afraid we won’t have what we need.  But what if we turn that fear upside down?  Imagine that the key to security, prosperity, and happiness comes from doing good.  As much good as possible.”  According to Marré, now is the time to invest in social responsibility.  In fact, he contends that saving the world is the greatest economic opportunity of our time.

I do indeed stand by my original posting…CSR will survive the economy.  We cannot allow our values to be turned on and off depending on the weather of the current situation.  The triple bottom line is a way of doing business, not a fad that has run its course.

Economies that favor the Middle Class — The Path Forward?

I grew up in a pretty conservative family.  We were ranchers after all.  We weren’t rich but felt strongly middle class.  We had a pickup truck and a station wagon.  My mom bought clothes for us children twice a year.  Once for school and once for summer.  My play pants sported patches to go with all the grass stains.  Oh yes, we were happy.  One reason was all our friends were pretty much in the same boat.  The middle class society of the 50’s and 60’s didn’t happen by chance.  It was the direct result of public policy that made bank deposits safe, state college education free, 30-year mortgages available, a GI bill and a manufacturing economy that made the best stuff in the world.  It turns out these middle class building public policies were very good for society.  Now we know.

The Economist magazine, capitalism’s public voice, recently reported research that economies that favor the middle class are not only the healthiest economically, they are the most free and democratic.  They report that where government policy helps the growth of the middle class through education, affordable health care, infrastructure and access to capital we see an increase in tolerance, a reduction in violence, more free speech, religious freedom, free press, equality under the law, a concern for the environment and more happiness and optimism.  Period.  (A Special Report on the Middle Class). Not only that, middle class societies also create more jobs and invent more useful technology.  What’s insightful about the research is that it’s not capitalism that fosters freedom; it’s middle class building.  The Economist also advises us that America needs to change course because our real middle class has been shrinking since 1979.

That’s right.  According to the OCED America has the smallest per capita middle class of the 20 most developed nations except Russia!  We’ve pursued policies that have created a bipolar society not only of rich and poor but also of asset owners and debtors.  And it’s getting worse.  The children of the wealthy usually start adult life without college debt, a free car and a big down payment on a house in a nice neighborhood.  The rest of our children have a very difficult time ever catching up.  So wealth turns into privilege and privilege into political access and influence, which becomes aristocratic power.

This is not new.  Policies that are designed to create a stratified society that concentrate wealth and power at the top and also suffering and fear at the bottom have been around since the invention of government.  In our nation’s history the competition for policies that promote the middle class versus an aristocracy of wealth was the driving force of our first American Revolution.  Consider this:

1.    During the first American Revolution the focus of the wealthy and the powerful mostly supported the English rule of America.  These were Tories who were in cahoots with the English industrial cartels who corrupted the British monarchy to keep the colonists peasants and the slave trade booming.
2.    After the American Revolution this group of bankers and city living industrialists supported the policies of Alexander Hamilton who insisted our national security demanded strong centralized power, a national bank and little true democracy.  He was adamant that the smart guys with all the money should run things because they were sure that common farmers were too stupid to.
3.    On the other hand, Thomas Jefferson valued equality, liberty and democracy over a monied aristocracy.  He saw virtue in the common citizen and the promotion of opportunity as great new American values.  He envisioned a great middle class of farmers instead of a bipolar society of rich industrialists, banks and plantation owners ruling over masses of ignorant factory workers, dirt farmers and slaves that knew no better.
4.    Lincoln believed passionately in ending slavery and creating universal opportunity by establishing free land grant colleges and large public works projects of roads, bridges, and railroads to spur mobility and commerce.  He was vigorously opposed to industrialists who wanted financial monopolies by building profitable toll roads but leaving out the rural farmers access to eastern markets.  He opposed the monied class who considered freeing the slaves confiscating wealth.  (That’s what you think when people are considered property.)  These voices also fought against universal education as a waste of taxpayer money and cried that the end of child factory labor would destroy our economy.
5.    Most people today forget these same Herbert Hoover loving industrialists who ran America after Teddy Roosevelt attacked Franklin Roosevelt as a socialist.  (Later these same people claimed Martin Luther King Jr. was a communist.)  These neo-aristocrats said famine relief and unemployment insurance in the Great Depression would turn America into a country of freeloaders and that regulating Wall Street would destroy both capitalism and personal freedom.  These attacks were vicious and unrelenting
6.    So today these same voices, these descendants of early American Tories who financially benefited from the concentration of power and wealth, are suddenly screaming for fiscal austerity and further tax cuts.  They claim that tax cuts for the wealthy and for big business will create market solutions to our collapse (caused by unregulated markets!).  These are the same table pounders who spent a trillion dollars on non-strategic war and played with our nation’s bookkeeping worse than Enron’s off-balance sheet debt and championed a bank bailout that was little more than welfare fraud of America’s richest bankers are now sanctimoniously calling for financial conservatism.

You see the voices of neo-aristocrats always say the same thing.  We can’t afford it.  We can of course afford wars, no-bid contracts and corrupt sweet heart deals made by multi-millionaire former Congressmen lobbyists, but we can’t afford to invest in our real future.  When these strident voices of fear are asked what policies created our current collapse they change the subject.  You see the theory of “trickle down” economics has little basis in fact.  Instead healthy, free and vibrant societies get that way by “move up” economics driven by high quality, universal education, good health care a strong infrastructure and reasonable access to capital.  These in fact are the public policies that give us the platform of life, liberty, and the opportunity to pursue happiness.

Does this mean the far left whose bleeding hearts and victim-centered view of reality have the answer?  Absolutely not.  In many cases they are as corrupt as their opponents.  Too often they indulge mediocrity and perpetuate dependence.  The ideologies of right and left are simply out of step with our future.  But in America’s great moments of crisis there has always been a higher middle way.  A way up that brings more.  Both more genuine opportunity and more responsibility for all.  If we want a sustainable future we must pursue a society that is both fair and wise.  One that works on the basis of common sense and uncommon morality.  Corruption, greed, fear and selfishness have brought us to where we are.  As long as “me” is enthroned above “we,” we will suffer.

–Will Marre, Founder American Dream Project & ThoughtRocket/REALeadership

So what’s the best we can do? Be a voice for common sense.  Be an advocate for the common good.  Don’t become fearful because of the shrill voices of the extremes.  So what do you think?  Am I right about the neo-aristocrats?  Do you support Obama’s vision? Do you believe it’s an investment in our future or a futile waste?  Or some of both?  Where do you find hope today?

Sustainable Abundance and Our New Economy

Winston Churchill was always big on planning for the worst.  He advised something like,

“Imagine the thing you most don’t want to happen and plan for that.”

Good advice.  Most of the voices we hear talking about our economy are polarized.  Doom-sayers talk in words of deep depression and total collapse.  While others see a “bottom” to our economic downturn in mid 2009 and then steady progress ahead.  Well, fine and dandy.  The fact is no one knows.  The vast interconnected global economy is relatively new and the scale on which assets have evaporated is huge.  So everyone is guessing.  Perhaps the most important thing to do is to take the economy personally.  That is, make personal plans to “prosper” no matter what.  More on that in a second.

Consumer Economy is Unsustainable

First I, although like everyone doesn’t really know what’s going to happen, will tell you how I am planning on things being and what I am doing about it.  The core problem we face is that we built our prosperity on a consumer economy built on a scale that it is unsustainable.  For instance, in Italy there is 1 square foot of retail store space for every citizen.  In Britain there is 2.5 feet of retail shop space per person.  In the U.S. there is 20!  Maybe, just maybe we have too many stores.  Surveys show most Americans only wear 20% of the clothes and shoes we own.  We have more TV sets in a typical home than we have people living in the house.  The picture is clear.  Americans spend 40% more per person on consumption than the number two consuming nation.  That’s just not the way to build our future.

Now here’s the economic pie in our face.  We financed all this consumption with debt.  Even though American workers capitalized on technology to become far more productive since 1995, nearly all these gains showed up as increased business profits rather than increased wages.  So to keep the consumption machine rolling Mr. Greenspan lowered the cost of borrowing, deregulated credit rules and inflated real estates and said buy, baby buy.

That’s our old economy.  That’s over.  I don’t see how it will be revived.  Now as economist Jeffrey Sachs points out,

“Every major part of our economy—health care, energy, transportation, food and finance—is deeply troubled.”

And we’ve got another problem.  The largest group of consumers, baby boomers, is going to be increasing their savings and reducing their consumption.  We should.  We have no other choice. But the result will be an anemic consumer economy with lots of closed down stores.

Economic Crisis

Now our government is going to do everything it can to keep our boat afloat by spending and investing.  We are going to spend money on unemployment insurance and lots of other emergency safety nets to keep the out-of-work going.  We also are going to rebuild our roads, bridges, sewers, and grids.  And I think we should.  Heaven knows our infrastructure is blown-out, old, and creaky and millions of paychecks will keep otherwise unemployed families doing productive work.

But after a few months of Obama optimism, I think we’ll all get a big dose of the deeper reality.  I believe we’ll see we’ve got a long road ahead.  Years of work to re-invent our economy to be a primary producer of value instead of a consumer of stuff.  During that phase it’s quite likely most real estate will be finally valued at 50-60% of its price in 2006.  It seems inevitable because fewer people will qualify for loans and incomes will not be sufficient to pay bloated mortgages.  This will be hard, but the sooner we get “real” with real estate the sooner we can recover.

But the real economic engine of the future will come down to developing the technologies of sustainability.  Everything human beings use has to be re-invented to use less raw materials, less energy, and be recyclable or reusable or the earth will simply run out of minerals, water, and clean air.  Not to mention trees, oil, and fish.  If we focus on developing the processes, the products and the technical education for workers to invent and maintain and repair the technologies of sustainability, then the U.S. can be the world leader in creating a future of sustainable abundance.  If we do this right we may be able to get beyond grasping to increase our standard of living and truly increase our standard of life.  I believe this is our best shot at our best future.  If we fail we have to face a future of competing for scarcity that inevitably leads to mass suffering and eventually war.

So what’s the best thing you can do? Become engaged in the economy of sustainability.  Advocate it at work.  Learn about it, become an expert in it.  Re-train yourself.  It’s an opportunity for all of us.  It is a new way of looking at every profession, every industry, every job.  From accountants to actors, waiters to welders, all of us can up level our work to create sustainable strategies that save money, save resources, and create value.  That’s the mindset we need.

As for my personal quest, it’s to change the objectives of business leadership from personal wealth to create the greatest sustainable value for all.  Don’t be cynical.  It can happen.

How do you see the future?  What are you doing?

The Simple Truth About Economics

We have the potential to do great things, amazing things in fact. Each man and women, represents the currency of that potential. Each of us has skills, knowledge, and abilities that can be used to work wonders if given the opportunity.

The economic down turn that we are experiencing represents a failure to tap that potential. As a matter of fact, the solution is quite simple when one boils away the complications, and excuses that allow it to persist. It can be described in the following equation:

Identify needs – put a sufficient number of people to work producing those needs – put the remainder to work producing wants and improvements = healthy economy

If we were to do just that, everything we needed, and much of what we wanted would exist in abundance, and (in a healthy free market) exist at reasonable prices. Unemployment would be practically non-existent in terms of people who were willing and able to work, and we could achieve remarkable prosperity as a society.

Too simple you say?

Why? Does it have to do something with the infusion of capitol, or the circulation of money?

If it does, that is rather revealing of a fundamental problem with our economic belief system. It assumes that we are trying to produce money, and that our wants and needs are a by product of that money. Think about this for a moment. Is money what you really want to produce? Does the money have any intrinsic value beyond the paper it is printed on? Beyond that, money is only as valuable as the general public believes it to be, and in the wrong hands it can be used as a tool to deprive people of the real resources they need to survive, while producing nothing of real value in return.

Don’t get me wrong, money is a great tool to facilitate trade. But money is after all, only a tool. In reading “The Forgotten Man”  Amity Shlaes insightful look at the great depression, I was amazed by the manner in which some communities responded to the onslaught of the depression. As the local banks went dry, or shut down all together, they did not crumble in to despair or stop working all together, but reached deep in to their own innovation and set up small local economies to meet their basic needs. Many of those local economies began with basic bartering, and some even developed their own local currencies. They understood the need for self sufficiency, and went about the work of meeting their needs.

Each of our communities today should look to that example, and insure that there is no essential need that can not be met locally. Certainly our lives are deeply enriched through outside trade, and it is difficult to imagine a life deprived of things as simple as bananas or any of the many gadgets, brought to us from over seas, that make our lives simpler or more enjoyable. But we must stop to ask if we really want our lives, not only to enriched, but to depend on that trade? In many ways we have done just that through our dependence on foreign oil, and it has left the United States vulnerable in many respects.

We have the people, the resources, and the potential to do great things. We can create innovative new sources of energy, abundant housing, truly advance medical science in to the 21^st century, or any one of a thousand noble goals. That or we can worry about how to produce more money. Which one would you prefer?

It begins with a vision; it begins with you and me pushing to make that vision a reality, and with leaders who have the courage to point the way and give people the opportunity. We can turn things around by producing real things to meet real needs. It is, just that simple.

What is the Greatest thing we can produce to give people better lives?

5 Ways to Start Your OWN Economy

What’s happening is happening.  But we can refuse to be a victim.  There’s lots more we can do.  The point is don’t participate in the unwinding of the fake economy.  Start your own real one.  Become your own Dow Jones.

Why?

The world economy is staggering like a drunken sailor wielding a machine gun.  The geniuses who got us into this mess are now trying to get us out of it.  Good luck.  What’s wrong is not just foreclosure fever or credit constipation.  What’s wrong goes far, far deeper than the current nausea of these symptoms.  You see the “sailor” isn’t drunk.  It’s got a brain tumor.  The causes of our illness are many.  We have an economy created by choices like eating ice cream smothered in whipping cream and chocolate fudge accompanied by a milk shake followed by a plate of cheese fries and finished off with a pack of cigarettes.  It may have felt good going down but the greed binge is now killing us.

So what’s the best thing we can we do?

Let’s start by creating an independent personal economy.   Here are some ideas:

1. Prepare for whatever you most don’t want to happen. If you plan for the worst possible personal impact you’ll be more able to keep your head and not react in a fearful, helpless way.  The underlying problem with our economy is that key prices of housing, energy, education and health care have been inflated by reckless money supply management, and our incomes have not kept up.  Stabilizing housing prices will not solve years of living on credit.  The economy will only truly improve when our real incomes exceed our expenses.  If the only way to achieve that is to spend less our economy will shrink a lot.  Malls will close, businesses will fail and services will shrink.  So buckle down for a long storm.
   

   • The cost of housing, health insurance, education, and fuel is rapidly rising.  Prices in real terms of housing, education, and health care have risen nearly 300% more in the past 30 years, while individual incomes are stagnant.

   • The amount of monthly income it takes to buy a house today is nearly 23% vs. 17% in 1970.  People who pay 50% of their income for rent or mortgage payments are at an all time high.

2. Act now to initiate strategies to create economic independence from your employer. If you work for a public or large company, your employer is making cost saving plans that probably involve layoffs.  Remember in today’s world there is no social contract between employer and employee.  Whether we realize it or not we are all self-employed even if our paycheck is signed by someone else.
   

   • Profits are at a 40 year high for Fortune 500 companies ($705 billion) nearly 2X previous high.
   • And worker productivity is up 48% between 2000-2006.

   • But average wages only up 1% (inflation adjusted) (Bureau of Labor Statistics (BLS)).

   • Median personal income is actually down, below 2000 levels (BLS), and also below 1977 levels in real dollars! The real median income in 1977 was $51,223 (inflation adjusted).  In 2006 it was $50,700.  (National Center for Education Statistics (NCES)).

3. Become recession proof by becoming an extreme expert on something that interests you. An extreme expert is someone whose knowledge and skills put them in the top 10% of their field.  Select a niche.  Today it’s better to have deep expertise in a specific area.  For instance, if you’re a hairstylist become an expert colorist.  If you’re absolutely great, you’ll always have premium quality clients.  But you must be the best in your community.  The way you become an expert in anything is 1) read, attend seminars, keep up through trade specific websites, 2) recruit excellent mentors and mine their knowledge, 3) practice or perform more than anyone else but get feedback constantly.  Practice without feedback is very inefficient.  When I first started public speaking 25 years ago, I was horrible.  My first paying client was Aetna Insurance.  They asked for their money back.  I stunk.  My failure motivated me.  I spoke for free whenever I could, I taught free classes and I got a speaking coach.  Now public speaking is an effortless joy, but it was a climb.  If you are willing to out-practice and out-learn others you will excel.
   

   • Virtually all income gains have gone to the richest Americans, the owners of capital and senior management compensation, which is now an incredible 400 times the average employee wage.

   • We live in a country of 300 million people in which the richest 3 million own more than the bottom 256 million.  1% owns more than 90% of us put together!

4. Seek to stand out rather than fit in. I have a young friend who graduated in accounting and earned her CPA.  Then she went right to Hollywood.  It seems in Hollywood everyone can sing, dance or tell jokes.  What’s in short supply are people who can finish projects on time and on budget.  She works as a “physical” auditor for a major studio tracking the physical assets of a film: props, vehicles, costumes, jewelry and other things used in a particular movie.  It turns out that when you make a $50 million movie all these “things” can add up to a lot of money.  So a year ago last summer she spent 8 weeks in Greece keeping track of the movie Mamma Mia.  She got paid for Greece, beaches and hanging out with Pierce Brosnan.  Not bad.  The point is look for an unconventional job fit.  People value what they don’t have.
5. Consider bootstrapping your own business. Recessions always create a boom in business formation.  The key is being realistic.  Create a business that has low start-up costs, suits your interests and leverages your talents.  The majority of people who want to start businesses never do.  The primary barrier is money.  But if it’s what you really want to do figure out how to start right where you are.  A business professor who studies successful start-ups concludes that the most successful entrepreneurs are both wise and aggressive.  She tells the story of a woman who wanted to open an Indian restaurant but had no money. So she started helping friends host curry-flavored dinner parties. The hostess paid for the food she cooked.  The guests raved and soon she was asked to cater parties.  At one of the parties she was approached by a wealthy investor wondering if she’d like to open her own restaurant.  The point is she would have never attracted an investor without plunging in and cooking for her friends.  So what have you been wanting to do?

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Fair and Simple Taxation

Our tax system is complicated and unfair.  We all know that.  Individuals and businesses with very similar incomes pay very different taxes based on their tax “strategies.”  It’s all legal but unfair.  When state taxes, user fees, social security taxes, Medicare taxes, property taxes and sales taxes are counted most of us have 40-45% of our incomes going into our over $4 trillion state and federal tax machine.  And the people who pay the biggest percentage of their incomes are the poorest, those who work for a paycheck, and the middle class.  Most of us want to have a federal income flat tax and a state consumption tax that ensures every person equitably pays and every business that sells goods or services to our citizens pays.  Make it simple.  These two taxes and a legacy tax.  No social security, Medicare, or state income tax.  (The legacy tax is explained at www.americandreamproject.org/bigideas.)  And finally we need civil servants that have incentives to be efficient.  What if we distributed $1 million for every $20 million saved from public budgets as bonuses to entrepreneurial bureaucrats who are dedicated to efficiency and quality.  What’s the cumulative tax savings effect of having every letter carrier deliver mail to five extra homes than they currently are?   The only way to take the waste out of government is to reward our government employees for innovating more efficiency.  We need to raise our voices for tax reform.

This is our agenda.  And now we need you.  We need your best most thoughtful ideas about how we as a nation might create laws and establish policies to make these imperatives rise again in American life.  Every so often we’ll all vote on the best ideas and send them to our elected representatives and hold them accountable for real action. It’s past time.  Let’s put the future in our hands.

Solving the Housing Crisis

I just flew home tonight from Greenville, South Carolina where I spoke to a large group of community leaders and students.  It was sponsored by the Clemson University Capitalism Institute.  The format was to give a short opening statement and engage in a discussion with John Allison, the CEO of BB & T Bank, a large regional bank in the Southeast.  The topic was values-based leadership…what I call socially-strategic leadership, which is business leadership that creates sustainable value instead of just short-term profits.

Initially I was wary of John.  After all I am an aggressive critic of most commercial banks because they make so much profit from charging overdraft fees and immoral rates of interest to their customers.  Any industry that makes $40 billion a year charging fees for their customers’ mistakes is a sick, sick industry.  I don’t know first hand how BB & T handles that, but John was a very impressive advocate for the American taxpayer.  As a high level insider he took no prisoners criticizing the investment brokers of Wall St. and the sub prime games of Wamu and Wachovia.  (His BB & T bank didn’t offer or buy any sub prime loans.)

He said the core problem is not a so-called credit crisis.  It was an illusion caused by the investment banks themselves.  In fact, he said his bank had just borrowed a billion dollars for less than 1%.  I said the problem is overvalued real estate that has been the personal ATMs of the American consumer.  He confirmed that the house-of-cards financing of nothing down real estate was created by the Wall St. greed machine.  And that Hank Paulson’s friends at Goldman Sachs and J.P. Morgan will likely make billions from this bailout.  Meanwhile our economic crisis will continue.  We simply cannot electric-shock our economy into resuming consumer spending when consumers don’t have the income to support credit-based purchasing.  The problem is the nation’s net-worth has been hammered while our debt has soared.  But he did have an amazing idea about how to work out of the housing crisis very quickly.

He said right now we have about 1 million too many houses for sale with very few buyers.  In order to adsorb that many excess homes for sale we need to stimulate buying without waiting for home prices to fall whipping out more of our net worth.  His solution is for the government to offer a 10% tax credit based on the purchase price of the home you want to buy.  This means a $30,000 tax credit on a $300,000 house.  This would effectively lower the price of the house to $270,000 without destroying the values of equivalent houses in the same neighborhood.  It’s a sort of blue light special that would only be available for 120 days for the first million homes sold during that time.  John believes it would create the bargain-hunter energy we need to get credit-worthy homebuyers back in the market.  What’s worth considering this idea is that when the sale period was over home prices should stabilize.  Once consumers were confident we’ve reached bottom and reasonable 30-year mortgages were available the devastating drag of collapsing real estate should subside.  Yes it doesn’t solve all the deeper issues such as our lack of a productive economy, the corruption in Washington that enabled financial services lobbyists to buy Congress’ vote on the bailout.  But, hey, it is a creative idea that is far more interesting than most of the babble coming at us.

As for every single person who voted for the bailout that will create more Wall St. billionaires with our money, I have lost respect for all of them.  To say it was the only way to solve this crisis is a damn lie.  To say it is the best we can do means we’ve lost our moral imagination.

Everyone who supported this solution, Obama, McCain, and all the rest, have lost my respect because this was a crisis that called for leadership; it called for the authentic change we desperately want.  And what did we get?  What we always get.  The best government money can buy.  It was time to step up.  Instead, nearly everyone stepped down.

Over 95% of community banks and credit unions are financially healthy.  They represent an alternative financial system.  A good one.  If we severed the connection of these institutions to the octopus of Wall Street and created a responsible credit market the bailout could be buried under the weight of our will.

So what is the Greatest Thing We Can Do? Continue to bombard congress with a message that we need to rebuild our nation on real values.  And we, all of us, need to take total control of our economic lives.  Deposit your money in a local credit union.  Plan for a future in which you are self-employed in case you become unemployed.  That means know what your gifts are and become an expert at what you are interested in.  Spend your free time educating yourself, learning new skills.  Set personal goals that are both practical and inspiring.  In crisis there is always opportunity.  My grandfather started a trucking business in the Great Depression.  He built it into a great company by taking on difficult jobs and charging a little premium for it.  Don’t panic, but be decisive.  No one else will solve your problem.

Don’t forget, if you’d like to read my daily pre-election blog called the “Daily Revolution” based on my book, The 4th American Revolution, subscribe now.  We’ll send it with your comments every day to all of Congress.  Why am I doing this?  Because I have nine grandchildren and I am not going to just moan and complain.

Let’s offer real ideas for a future we can look forward to.