"Heidi 's Bar" - some thoughts on our political process

Dear Friends,  

The political season is shifting into high gear now. How can we prepare ourselves to make the most of this freedom, and get our part in it right ?  

I received this little piece from a friend today. It captures excellently the boom and bust we've experienced in real estate - especially the way the market was "supercharged" for extreme profits, and the consequences that's had for us all. 

As automobile drivers, we're subject to a lot of traffic laws. As a nurse, I'm subject to many regulations intended to keep patients safe. There are health and safety rules concerning food, cars, the construction of buildings and any number of other products and services. And those laws and regulations work - they keep people safe.  

Why shouldn't there be similar rules for the financial industry ?   The financial industry - and corporations generally - are not bad as such. But the temptation to make big money fast always clouds the judgment of some people, and is simply too much to resist. When these people wield immense wealth and power, their actions are especially dangerous - even to the whole world.  

We need precise rules, developed by people who know the financial industry well; rules regularly enforced and updated, to which even the most wealthy and powerful are accountable. This has now been started for the financial industry,  but it won't be accomplished easily, nor all at once.  

As citizens it's easy enough to become apathetic, given how many issues we face. It's also easy to get angry, and just be against something -  liberals, conservatives,  politicians or the government in general.  But we may keep things simple for ourselves only in the short run - and at our own risk.

It might help, perhaps, to think less about who and what we're against, and more about how we participate in the political process.

Politics is actually about rights - about agreements we make with each other, concerning how we treat each other. But it's not something that's resolved once and is finished. Human social relationships change all the time. Really, it needs, and must be, something more like a conversation.  

This "rights life" requires our best attention; real listening and real commitment to respect each other. It needs from us a high standard : is what we believe and what we say actually true ?

If we wreck our world for lack of clear thinking - or goodwill - we're the ones who must live in it ! 

I have a few more thoughts that I'll share soon - but in the meantime, best greetings, and take care.


Jeff


A LESSON ON HOW THE FINANCIAL SECTOR HAS BEEN WORKING IN OUR COUNTRY AND AFFECTING OUR ECONOMY ! ! !    

Heidi’s Bar  

Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers “ loans”).  Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar.  Soon she has the largest sales volume for any bar in Detroit.   By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit.
He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS. These securities then are bundled and traded on international securities markets.
Naive investors don't really understand that the securities being sold to them as AAA secured bonds really are debts of unemployed alcoholics.   Nevertheless, the bond prices continuously climb, and the securities soon become the hottest selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Heidi's 11 employees lose their jobs.
Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community. The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed valueof the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.   Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from their cronies in government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.

Now do you understand ?