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Sense of Perspective

by Kurt Griffith

 

For self-employed people, the sins of August, where we went to Sun Dance at Four Quarters, are visited upon September. The penance of October is not manifest ‘til November. When self-employed folk go on vacation, we pay for it twice. Once for the vacation, and again for the time not working. September was pretty darn lean in my studio. Meanwhile, with the current economic meltdown on Wall Street, I and just about everybody I know have been watching our net worths bounce like a fat kid on a trampoline with the springs coming undone one by one. Bad timing for our family, as for the first time, I got to see the “Line of Credit” line lit up on our statements. In a word, ouch. But our situation of not particularly unique, or so severe compared to many others.


As I watched the financial and economic crisis deepen, I took a long look and made a few observations.

Like most people of my generation, we grew up with savings accounts that paid 10% or more, when inflation was 3%. It was also fairly simple; most people could balance a checkbook, and the number at the bottom of the passbook was actual money that you actually had unless you spent it. Now fast forward to the 21st century, where we now have modern, sophisticated financial instruments, but bank accounts only pay 1.25%, on a good day, with a tailwind, with inflation sliding well up past 5%. For the most part, most people have recently seen their costs of living rise far more quickly than their income. So anyone above the poverty level has to be invested or suffer the Death of 1000 Mosquito Bites, one trip to the supermarket, gas station and mortgage check at a time. Most people with salaries above subsistence wages currently have a substantial portion, if not the majority, of their assets in various investments. But the tricky side is that Money Market Funds, 401k’s, IRA, Stocks, Bonds, Annuities, and the whole bestiary of many investment vehicles are all subject to market forces.

Broker_dude

So now our collected assets beyond our homes and vehicles are at the mercy of our Financial Advisors and the Markets, and its been fun to watch your 401k’s, IRA’s and Money Market accounts melt away while costs relentlessly rise. Part of what is making people particularly skittish in this economic downturn, is that unlike the last major recession in the 80s, where most people still had most of their assets in retail banking, this time around almost all working folk have much of their worth in investments at some level. With the revelations of September, people are worried whether the system itself is actually broken this time.

Which is why of course that people so distrust the bail out, correction, the bailouts. It looks like a series of “Get Out of Jail Free” cards for the folks who so massively messed up. Literally throwing good taxpayer’s money after debt so bad it sucks down entire investment banks into some black hole where capital is destroyed. Then there’s this entire matter of “Trickle Down Economics,” the economic model enamored of the Reagan years and enthusiastically deregulated. The theory suggests that you “prime the pump” by investing at the top, and goods, services, jobs and wealth shall “trickle down” to the general populace. The historical problem with that, is that capital invested at the top, has a disturbing habit of staying there. In other words, those sort of personality types who are drawn to big money capitalism rather like to keep the money. Some have revealed themselves to be downright pathological in their relentless greed. The Madoff ponzi scheme scandal was breaking while I was laying out this year’s Wheel of the Year Calendar.

Here’s another dose of perspective for you. I grew up in a house in an inner city neighborhood of Brooklyn that my parents mortgaged in 1960 for about $5000. In 1975, due to “urban renewal,” we were forced to move. We relocated about 5 blocks away to a larger place with tenants and a little land. The mortgage was $50,000. Still reasonably sane by the standards of the period. In  2001, our family moved to the northwest suburbs of the city, to a slightly smaller place, more land, but for a mortgage well over $300,000. At the height of the insanity, around 2006 or so, the property was market valued at nearly $600k. No, I didn’t do the math, but I don’t think as a Designer, I make over 100 times what my father earned as a NYC Cab Driver! So, we’re looking at some very reckless lending out there to sustain this trend. Hence exotic mortgage instruments like interest only, no money down Adjustable Rate Mortgages with 7 year balloon payments! And I thank The Great Spirit I don’t have one!

“Unlike the last major recession in the 80s, where most people still had most of
  their assets in retail banking, this time around almost all working folk have
  much of their worth in investments on some level.” 


These incredibly optimistic loans were all sold essentially on the American Dream of everybody moving up the career ladder. But the cold hard reality of the dream is that while anybody can move up, not everybody does. Given a thousand workers, not everybody gets to be CEO, typically about 50 foremen, ten department heads, two or three VPs and just one CEO. Even those folks who are in good situations with steady incomes, you toss in a layoff or serious financial glitch, and you’re a breath away from foreclosure. Furthermore, the financial markets were quite happy to make AAA rated bonds out of this absolutely reckless lending. But looking at the overall picture, should any of us be surprised that some of these loans are going bad? And we are now in what is being called the second tier of the housings crisis. As the first round of defaults and foreclosures largely triggered the housing crisis, then the credit and market crisis that resulted drags the economy into recession, leads us into the second, as people who had good jobs and were making their payments lose them in waves of layoffs.

Foreclosure

The very calendar you hold in your hands is a sign of the times. The glorious color from last edition is gone, as is the glossy color cover, and was going to be shorter as well. Though, even reduced, I still very much consider it a very credible publication for a book distributed for free. The Four Quarters InterFath Sanctuary is doing what we all have to do, take responsibility for the small bits of the world that we do have some control over. We try to act responsibly and intelligently within our own abilities. Learn what we can do to do more. Try to act in the best interests of ourselves, our families and the planet. And that may very well mean turning our backs on the relentless growth model to more sustainable and planet-friendly ways of life.

Is The System broken? Some would debate very loudly and with good arguments that it is. But broken or not, it still very ought to be reexamined and encouraged to change. I, and many people more learned and thoughtful than I, feel that it is misguided to pour our treasure into keeping the sickly behemoth lurching along. It merely serves to artificially sustain the status quo and the undeserving players that profit by it on the backs of the people. The past few decades have seen a relentless separation of the American Middle class into an increasingly small group of the very affluent versus a growing mass of what’s rapidly becoming the working and professional poor. Present company included.

So yes, The System, broken or not, really ought to evolve. The shifting global economy with
changing energy and resource scenarios, and the pressures of population, food production, housing, and climate change, is changing, like it or not. Business as usual is rapidly being overtaken by new realities and priorities.

The issues of stainability and global responsibility raised in the 2007 Edition of the Wheel of The Year Calendar have not gone away. If anything, those pressures have intensified. The American people and the American system must grow, adapt, and change or face unprecedented hardship. But there does seem to be a light of hope, strongly symbolized by the optimism and hope of the recent Election of a mixed-race President, that suggests that ordinary people, acting their conscience, can indeed bring change.


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