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Why Things Won't Change

January 18, 2010
Information in this day and age has become exponential but understanding remains incremental whilst changes will come later and be more painful.



Times change but people don't. The parade of charlatans and victims is as endless as time. The only things that change are the names, dates and amounts as well as the contents of the bottle. It used to be snake oil but in the last decade it became mortgage debt.

Mortgage debt cured nothing and also caused horrific side effects ranging from bankruptcy, homelessness and family breakdown as well as the ruination of the nation.

In the old days charlatans would be chased out of town, strung up or put in jail. These days, with the political, legal and financial assistance of government they remain firmly in control of both their palaces and wealth.

As the damaged landscape reveals both the personal and national devastation, people's understanding of how and why it happened has incrementally been augmented. Real change however remains a long way off.


Let me get one thing straight. Wealth per se is not obnoxious. Where it has been earned by industry, hard work and by seizing opportunities that others ignored, it cannot be seen as a negative in society. Furthermore it is this wealth that often provides the means for exploration, risk taking and seed capital for many of society's subsequent intellectual and technological advances as well as providing incredible charitable infusions.

Where wealth may have erred in this cycle is that it seems to have grown through financial alchemy and debt burdening the general populace, rather than through entrepreneurship which has much better flow on affects throughout the economy in general.


After the mega trillions that have been lost in wealth and the trillions that have been poured in by government to maintain a sense of calm, why aren't the culprits facing justice? Was Bernie Madoff singled out because of what he did or because of who he did it to?

Why aren't the perpetrators paying fines to government and compensation to victims?

Why isn't Glass Steagall being re-introduced?

Why are there no limitations on leveraging and derivatives?

Why aren't bonuses put away for 5 years until results are verified by time as well as audit?


Politicians have done nothing other than apply lipstick to the various pigs of their creation. The reddest lipstick has been applied to the national debt to the detriment of the nation's people and their children's future.

I repeat - change requires action. It must consist of more than Sheila Bair closing 2-3 banks every Friday and the FDIC guaranteeing bank deposits at what is ultimately at the public's expense. It must consist of more than the grovelling excuses of Blankfein that bankers erred with their risk modelling and the deluded belief of Messrs Bernanke and Greenspan that they could not spot or should not prick asset bubbles. It must consist of more than just grilling the perpetrators at Senate hearings.

It will be a sad day when individuals will be inspired to take the law into their own hands to remedy the ills and in the process probably creating others. One wonders how many politicians are incompetent, disinterested, "bribed" by campaign contributions, blackmailed by secret dossiers or just interested in securing pork for friends. There is no other way to explain the circularity of their motions as they beat around the bush.


Never before in history have so many incompetents and charlatans (mostly in banking) been so handsomely rewarded. The US now has a situation where big banks are too big to fail and small banks are too small to save. The result will be even bigger banks in the future and even less competition. Instead of big banks buying out little banks, the little banks are allowed to fail and the cost of the "takeover" lumped onto the public.


The populace at large must also make changes. Is it really necessary or even profitable for a nation to be consuming 20-25% of the world's resources when it only has 5% of the world's population? I suspect not. Historical as well as financial developments gave the US the upper hand for decades which unfortunately it squandered on excessive consumption, fruitless wars and a health system that resembles a badly run charity where the recipients become even poorer.

The populace must return to making things, selling things, repairing things, mending things, exchanging things and keeping things rather than succumbing to built-in boredom well before obsolescence.

For those of us that live far from American shores, the phenomenon of house owners walking out of their homes and loan obligations beggars belief. Even more amazing are the confessions of many that they are allowed to continue residing in their homes despite not making any payments intentionally.

Regardless of the equity position payments must at least reflect the capacity of the borrowers otherwise the current trend will eventually snowball into a self fulfilling death spiral of epic proportions that ends in chaos.

Furthermore, there must be much more than nominal equity in any house purchase by individuals. Lack of equity means they have no skin in the game and even greater debt servicing requirements.


It can only be hoped that a large percentage of the population can change in time. And that is the key - TIME. Even governments must put time limits in introducing changes otherwise a deleterious compounding of issues will exacerbate the problems and lessen the number of palpable alternatives.

The hopeful slogan of the President was "change you can believe in".

My motto is, "I will believe in change when I see it."

Until then, nothing will change.

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