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“The Greatest Generation”

Posted by Larry Doyle on November 14, 2008 7:45 AM |

I commend HRC for providing some real leadership at this point in time. There is no doubt that our country is screaming for real leadership. From Washington to Wall St. to Main St. our citizens are looking for people and programs that will look forward and take the vital and necessary steps to change our national mindset. Do you get the sense that perhaps some supporters of BO are getting a little nervous and now realize that he is a very high risk President-elect?

HRC’s stimulus proposal addresses a number of fronts (expanding unemployment insurance, addressing Medicaid, funding infrastructure projects and clean energy, modify mortgages) which will need focus from Congress to create a demonstrative impact on our economy. Some of the programs will clearly be impactful while others may have unintended negative consequences. We will have to take some prudent but necessary risks to achieve positive results.

The TARP bailout/rescue plan proposed to date has not inspired confidence nor generated any real impact for three reasons:

1. the banks have such sizable embedded losses that the funds already injected are being and will be used to recapitalize the balance sheets …

2. investors have little to no appetite to purchase loans currently on the banks’ books which were not properly underwritten and will likely continue to suffer an ever increasing level of delinquencies and defaults …

3. little to no demand for funds due to the fact that most individuals and institutions are looking to decrease their debt service not increase it …

As a result our economy spirals downward. HRC’s plan addresses some of our most serious needs. I commend her.

That said, I assume we will plod and muddle our way through this fiasco and come out the other side in a few years. Will anything have really changed? Will we have learned our lessons? Will we move forward in hopes that we leave our nation a better place for future generations? Let’s look at the trend lines on a number of fronts that have to change if we want to return to real long term prosperity. While each of these points is targeted at us collectively, we do not need to be reminded that the collective is merely a function of totalling the individuals. For all young readers, instill discipline in your personal lives from a financial perspective and otherwise!!

1. Personal Savings: during the ’80s we had on average a 9% personal savings rate, during the 90s that rate moved to 5%, now it is 1% and trending lower … this must change … we can’t be totally dependent on foreign financing …

2. Total Liabilities: across all our programs we have total long term liabilities of $52 trillion dollars … and growing … this must change …

3. Debt vs GDP: I find it somewhat hard to believe but a lot of what has happened is hard to believe, but a highly respected commentator this morning highlighted the fact that over the last 15 yrs that our total debts have outpaced our GDP by a rate of 3 to 1 … this must change consistent with point 1 …

4. Dropout Rate: as I have highlighted in a previous post, our inner city dropout rate is 50%. We will not be competitive economically with an education system that underperforms this dramatically … this must change …

5. Birth Rates: as I have highlighted in a previous post, 70% of new borne African Americans enter this world into single parent families (50% of Hispanics, 30% of Caucasians) … this must change …

While HRC’s proposal addresses some near term and long term needs, how do we change our national mindset and break the trend lines in points 1-5. If we do not break these trend lines, I firmly believe that our way of life will be seriously threatened and that future generations will be burdened with debts that will choke off their ability to grow the economy and achieve long term prosperity.

Through the powers of modern medicine our population is aging. Any country worth its salt is indebted to care for its elderly. Our elderly are largely children who came from “the greatest generation”.

I do think as a nation we should study that “greatest generation” because clearly they were products of the Great Depression. That generation sacrificed tremendously during and after World War II. They promoted the principles of work ethic, thrift, and love of country, faith, and family. In my humble opinion as a nation we do not have enough of those traits. Many make unbelievable sacrifices but many do not. It is pointless and counterproductive to highlight who may sacrifice and who may not. We are one nation.

How do we achieve a growth in those principles and what may come out of it?

I know that Barack Obama and Rahm Emanuel have touched on the idea of a mandatory civil service and/or civil defense. I think they have been delinquent in not offering more details or in being more careful with their wording on this topic. Some have parodied Obama and he deserves it because his wording in this area is fairly cryptic.

I love the idea of a genuine mandatory civil service. (***Hear me out before you think I have lost my marbles) I am all about work ethic, thrift, love of country, family, faith, private sector,and fiscal discipline personally and professionally.

I would propose a private-public partnership where applicable in a mandatory civil service program. I think the idea of a 3 month program is nothing more than a vacation. I think a year is reasonable and impactful. As a father, I think if a year is good, then two years is great.

There are numerous nations around the globe that have mandatory civil service. As the wealthiest nation in the world regrettably we have developed a sense of entitlement and it is very unhealthy.

Please review this wikipedia link to see which nations have and do not have mandatory civil service, both military and non-military.

I would propose a number of options for our population from ages 18-24 which represents approximately 10% of our population. Assuming one year of service we are talking about adding on average 5 million people per year working to support our nation and our economy. The options would include programs like the following (I do not pretend to think that I have all the answers or all the options … please add more ideas)

1. All parts of the military.

2. Student Conservation Association … fabulous organization that just celebrated its 50th anniversary … our family has personal experience … SCA is awesome!!!

3. Knowledge is Power Program … fabulous organization dedicated to working with inner city students

4. City Year … fabulous program that works with youth primarily in cities around the country …

5. Americorps … program launched during the Clinton administration to promote civil service …

6. Over and above these programs I would look to have a powerful teacher assistance program in all our public schools in order to lower the student-teacher ratios …

7. I would also look to partner with private social programs that are clearly effective and working to help those suffering from drug and alcohol abuse, family issues, at risk youth et al …

8. Provide workers and labor for infrastructure projects …

9 … the possibilities are endless …

In summary, I would hope that through this program as a nation we can break the cycle of entitlement, the polarization of haves vs have nots, the lack of thrift and personal responsibility, and on and on we go.

We will need to do more than implement a program like this to change those trend lines I highlighted above but as far as I can see the status quo is not an option. For those who may think or say that we can’t do this or that it won’t work, I would respond “show me a better option in which we can generate better returns on capital invested, both monetary and human,in the short term and the long term”.

God Bless America!!


***I should have been more explicit in my initial post. I am not saying that people would not be paid for their service. That payment could be in the form of cash, scholarship, et al.***

P.S. I would be remiss not to comment on today’s dramatic price action in the market. I was actually more focused on the Senate Banking Committee meeting with various reps from the large money center banks.

I saw that the Dow was down 300 which prompted me to nudge Susan to post my story from yesterday. At that point the market had a vicious short covering rally. I believe that was largely a function of GWB’s speech cautioning global governments not to interfere excessively in the marketplace going forward and that Congress realizes that they do not have the political will to give GM a quick fix bailout.

Against the backdrop of those two stories I think market participants felt, ‘well perhaps we may just be able to get government out of here so we can go back to work like we used to”.

I will attach links to those two stories.

Hopes for GM Bailout Dim

Bush Defends Capitalism Ahead of G-20 Summit

Again, stories like these are great for short covering rallies but the fact remains the direction of our economy is not changed by them.

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