Monday, September 29, 2008

Facing Economic Reality: What You Can Do About It

I share my business offices with another business that primarily depends on government contracts. The employees of that business have few or limited investments and so far the banks where they cash their weekly paychecks are still solvent. In short, the collapse of world financial markets seems like it is taking place in a different world from where they live their daily lives.

The 777 point crash in the NYSE today will impact everyone. Unfortunately the impact of such losses may take weeks or even months for to be noticed by people who have no investments whatsoever. Capitalism tends to spread out the pain of losses far more quickly than the benefits of good times. The millions that own stocks or have a 401k plan will know in days or whenever they dare to look at their devastated accounts. Unfortunately these last few months represent only the beginning of a long period of unemployment for millions.

They know that Washington Mutual failed on Friday, but some other bank bought them so that's OK. This morning Wachovia Bank was sold at a tremendous loss to Citigroup, but none of them bank at that institution so no worries there.

Downtown Charlotte 42493Wachovia Bank in Charlotte, North Carolina

Little people all over my community clearly understand that very rich people are losing money by the millions in places like New York but they cannot understand how the banking crisis will impact them or if it ever will.

This entire disaster hovers over every person in the world but only those who take the time to consider it can even begin to fathom the consequences.

#1 When a big business fails thousands of little Mom & Pop shops are also forced to close. Small restaurants are particularly feeling the pinch right now.

#2 The loss of many big firms, even banks and investment houses, means the loss of hundreds of thousands of jobs. People without jobs spend less but they also pay less taxes.

#3 The loss of tax revenue from corporate taxes and individual taxes is already destroying the national, state, and local budgets of many countries. In Maryland some local governments are already planning to furlough workers for several weeks. The state government is planning large cuts in most services.

State House, Annapolis 42290

#4 Normally, people, governments, and businesses would borrow money to get by until the economy recovers. In this disaster nobody wants to loan any money to any group. Those banks that loaned money in the past want the loans paid back quickly.

#5 If the above 4 problems continue to get worse, real unemployment in developed countries, including the United States and European nations, will possibly reach 50%. In the urban areas of underdeveloped nations the unemployment rates could reach 75%. Government unemployment figures will not be accurate, they seldom are, even in good times. Look at the history of the Great Depression era if you want to confirm these percentages.

Michigan Barn 00001

The people left working are farmers and essential services like hospitals, grocery stores, police, and military. Employees that any remaining businesses cannot possibly function without will keep their jobs, many will face pay cuts. Even some of the latter groups might find their paychecks getting delayed for lack of funds. Businesses wait longer and longer to pay each other. In later stages they only pay suppliers which would prevent them from remaining open.

The consequences of 50% unemployment also include massive homelessness, rampant increases in crime rates, widespread hunger, and even huge increases in mental illness. Essentially a breakdown of society into anarchy. Most developed countries will only see these consequences in certain regions.

While all of us would prefer to see some positive news that paints a more rosy picture of the future of mankind, we must confront the real possibilities now. In that way we might all be able to take some steps to forestall what seems now to be an inevitable decline into really nasty living conditions.


If you or your partner work in a private business or government agency and notice that activity has slowed considerably in your department, prepare for the possibility of a furlough or even being laid-off. Keep doing your work but think about how your family activities and expenses may need to change if someone loses a job.

Work on your resume now. Do it before you lose your job. Develop several versions of your resume that present your skills in different ways to reach the greatest potential number of employers. Talk to people you know about any openings, but be careful not to jeopardize the job you have now. A second job is not necessarily out of the question for many people, though they may dread the notion. When you interview, think about what your potential new employer sells and how it might be impacted by an ongoing business slump.

I suggest that people find ways to form tighter, closer communities. Teams, groups, and families are usually much better at confronting economic, physical, and mental challenges than lone individuals. Try to overlook small differences and resolve conflicts in the light of a more severe crisis.

Go to community meetings. There are always needs in every city or town, even in the most extreme economic conditions. See if you can find a niche where your abilities, skills, or positive thoughts can be of assistance to others.

Learn a new skill. Look around and see if there is an opportunity to learn something new. That new skill could turn out to be the most important talent you acquire in only a few months time.

Consider the possibility that you or someone close to you may lose their primary residence. If people cannot make mortgage payments or rent that is what happens. Try to be understanding if a member of your family asks for a place to live, consider the alternative if you turn them away.

I want to suggest that people reduce their spending to essential items only, however I also know that consumer spending is a critical part of a healthy economy. Look carefully at your budget, you certainly should have a detailed one by now. It certainly would not be a bad idea to stock up on canned goods and essential household items soon since prices go up rapidly if inflation spikes. I am not talking about hoarding but rather keeping more than one or two week's supply of essential items, perhaps a month's worth.

I want to suggest that people plant vegetables in their yards but winter is coming to the northern Hemisphere. Those living south of the equator already do a fairly good job of planting land that can grow crops. Consider planning to grow a vegetable garden next spring.

Market Day,  Purulia District 00018

People that know me casually sometimes ask how I know about surviving in truly hard times. I am a citizen of the United States and certainly not old enough to have lived through World War Two or the Great Depression.

Other than in my writing, I rarely mention my experiences in rural Puerto Rico, India, and Haiti. Lately, people who know me well have begun to ask me what happens when times get really rough.

While few people like a pessimist, many people value what a realist has to say.

I had a choice to go to those places or not, and live under those extreme conditions. I also remained when times got rough, really rough. As much as possible, I lived like my very poor neighbors, with very limited assistance from overseas. It was years ago, but I remember the details like yesterday. I remember the electricity getting cut off. I remember the empty pantry. I remember neighbors wondering about how they were going to feed their children. I remember working harder and longer in my gardens in Puerto Rico.

You never forget living though a severe extended drought or a massive hurricane.

I also remember myself doing all the things I suggested at the beginning of this section. I learned to keep bees. I often met with the other farmers or my neighbors. Most of all, I recall how good it felt when things started to get better in those places. I remember how people shared what little they had with each other. Finally, I remember clearly that local communities solved many of the major issues facing their members. That is likely how we will all get through this current global economic crisis.

Thursday, September 25, 2008

Why U.S. Dollars Remain So Popular

In Washington, DC it looks like Republicans and Democrats are debating whether to use $700 billion of U.S. taxpayers money to buy up mortgage debt for house loans that have already gone through foreclosure. Many of the actual homes behind the bad mortgages sit empty and decaying in communities all across America. That's what it looks like but if you inspect closer the U.S financial situation appears even more rocky.

That $700 billion is not U.S. taxpayer's money. Tax receipts from 2007 barely cover the interest payments on U.S. debt. That $700 billion really represents more foreign loans. U.S. Treasury Notes will have to be sold to China, Saudi Arabia and other willing buyers to cover more debt. There is some uncertainty about how long foreign nations and rich people will continue to buy U.S. debt.

Federal Reserve Bank Headquarters 13390

U.S. debt does not pay really good interest, in fact after you figure in the losses on exchange rates people that invest in U.S. typically lose money. People that buy the debt of other nations often decide to loan money based on the risk involved. Buying the debt of Mauritania, for example, is quite a bit riskier than buying U.S. debt.

The yield on 10-year Treasury was a little less than 4% on Tuesday. Most nations hold U.S. debt that pays an interest rate of less than 2%. They lose 10% on the exchange rate if they sell those notes. Inflation rates in China run about 6% right now. So China really earns negative 15% interest on U.S. debt. That's pretty poor returns for such big loans.

All those rates would grow even worse if U.S. debt soars higher.

Other countries like to hold reserves in U.S. dollars for the same reason moneychangers from Cairo to New Delhi like buying U.S. $100 notes. There always seem to be available buyers for dollars any time of day, anywhere in the world. Even though the U.S. financial system is a train wreck and U.S. debt is counted in the trillions of dollars, moneychangers still accept $100 bills in exchange for local currency anywhere. They may not give you as much local currency but they will always accept those green pictures of Ben Franklin.

Some moneychangers will accept Euro notes or pounds sterling, the money England uses, but not nearly as many as are willing to accept U.S. currency. This remains true even in places like Pakistan or Iran where people profess to a hatred of the U.S.. The value of the dollar is not really determined by the health of the U.S. economy. It has more to do with the security of the U.S..

USS Wisconsin 000033

People may have been able to destroy some New York skyscrapers but there will be no foreign armies invading U.S. soil anytime soon. If Russia tried that same stunt they pulled on the Republic of Georgia, by invading Alaska, for example, U.S. forces would come down on Russia like a megaton of bricks. Russian cities would burn before any Russian tanks even reached the outskirts of Anchorage, even before Governor Palin could come up with a witty remark.

This security blanket keeping the dollar warm extends way beyond U.S. shores. U.S. forces guarantee the safety of Saudi Arabia, Taiwan, Korea, Japan and Israel, to name a few places. Even China needs the U.S., if only for the shelves of WalMart stores that stock so many China products. If the Chinese decides to use its $500 billion of U.S. Treasury notes like some kind of economic weapon they would be hurting Asia's economy at the same time.

Seoul Korea 000013

So why don't foreign nations keep their reserves in Euros? The value of Euro notes depends on the stability of the European Union. The EU, especially after a recent vote in Ireland, looks about as stable as sandcastle. If the Euro notes keep soaring in value against the dollar the countries that make up that Union will not be able selling their wares, even in other parts of Europe much less Asia or the Americas.

Moneychangers in market places around the world only know that the dollar is here to stay. They only know that every other moneychanger is always ready to accept dollars. They also know that the U.S. military is ready to defend all those places where the U.S. does plenty of business so the dollar is here to stay, for now. It will probably be decades before that situation changes in any significant way.

Korean War Memorial 13552


Washington Post article
New York Times article

Tuesday, September 23, 2008

Reaching The Millennium Development Goals

U2 0115

Bono, the lead singer for the band U2, has spoken up. Oxford professor, Paul Collier, has shared his wisdom. Perhaps now is the time for a former Third World project manager to say something about the Millennium Development Goals.

To begin humbly, I am not a rock star or a college professor, I am a business owner, manager, and a commercial photographer. Cumulatively, I worked for six years on overseas aid projects in some very poor places. There are many people with more experience, more degrees, and more fame already talking about how wealthy nations can reach out and lift up the poorest people. Whenever possible, I listen carefully to the suggestions made by these people. However I also look closely at the existing processes already in place. In addition, I look at what is not happening, at the wasted opportunities that litter the landscape in all parts of the world.

To those unfamiliar with the effort, the Millennium Development Goals are eight concrete goals for international development. These goals are:
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

I am not going to address each one individually, I think most of them are pretty easy for the average person to understand.

What I am going to offer are some very concrete suggestions for achieving these goals that all nations can implement quickly.

New York City 036590

When I look closely at the community where I live now, in the United States, I see many intelligent, educated, and strong people being paid to doing nothing. Some are recently unemployed as a result of the recent economic downturn. Others are going to jobs at businesses that are, frankly, not doing much business. Others are in so-called "early retirement." Some of the them are technically disabled, but that is only because they are unable to perform their prior jobs, they can and do want to get back in the work force in some capacity.

When I talk to these people about their situations not a one of them wants to continue sitting at home watching television. They are tired of filling the bird feeders, reading the newspapers, or waiting for a customer to come sit at their tables. They all want to get back to work, real work. As I understand it, there are millions of people in this same situation, in wealthy, developed nations all over the planet.

In the meantime there are millions of people waking early each morning in impoverished nations with no work and few possibilities for employment.


What is preventing us from pairing up these two massive groups of idle humans?

When I first volunteered to work on a USDA farming project in Puerto Rico in the late 1970s I requested an application, completed the application, and received an assignment, in less than six weeks. I was on-site less than two months after expressing an interest in working overseas. In the mid-1980s I applied and interviewed to manage a project in Bihar, India and was at the project site in less than a month. It took about two months for the background check and reference checks that landed me in Haiti several years after that.

Building a Rural Hospital 00001

I recently looked into the possibility of serving as a project manager in the Peace Corps or possibly the United Nations. The chances that those organizations could have me serving on a project in less than 8 months were zero. The application process alone was nearly beyond comprehension and I am a college-educated business professional, complete with references and plenty of verifiable skills and experience. Since I last served overseas, bureaucracy and fear has almost completely strangled the application process for those willing to manage projects in the Third World.

Ossanite, Haiti 00002
(click photo to learn more about Haiti)

I realize that governments and private aid organizations have grown wary of sending people from Western nations into areas of dire poverty and disease. I understand that, just like the hiring process for most major corporations and governments, lawyers have introduced hundreds of safeguards and rules to keep out the risky people. However, all these organizations also have the benefit of advanced computer systems, telecommunications, and the Internet to use to scope out potential applications. Disease prevention, vaccinations, and methods of personal hygiene have never been more advanced than they are now. Training programs are computer-based or held in state-of-the-art facilities and should be used to accelerate the process of putting "boots on the ground."

We need to accelerate the process of putting qualified people in place.

At every project site where I worked I was usually the lone overseas aid worker. I was taught that the most effective way to introduce lasting change in a community was to involve the young and talented people already living in that community. My budgets were extremely slim, I was taught to educate the wealthier people in the places where I served. When made aware of the situations their countrymen face, many people that can afford to help will do so. Yes, there are some wealthy people in Haiti and India, and even Africa, so I understand. There are also people from those nations working in other parts of the world. We need to enlist their aid with better communication about the specific needs.


Mariani Haiti 00002

It was not especially hard for me to get primary schools going, to get a new pump installed at the local well. It was a little tougher to conduct the public health surveys and establish a medical clinic. It was not hard to begin adult education training but it was tougher to introduce new ways of farming or get workshops built. In each case I combined my own experience with answers that smart people provided by phone, mail, and later, e-mail.

Many of the under-employed, unemployed, and disabled people I mentioned in the beginning of this essay could serve overseas without even leaving home. College professors and smart business people could contribute from the comfort of their existing offices, just by answering important questions from the people serving overseas. These collaborations on the knowledge required for aid projects might well lead to collaborations on trade initiatives. It certainly is easier to do business with people you have interacted with in the past rather than with strangers. That would provide a lasting benefit for people in all nations.

Professor Paul Collier hit the nail on the head when he stated that the Millennium Development Goals are "devoid of strategy." Bono declared that there is too much emphasis on aid and not enough focus on trade. My experience and the people I served taught me that poor people really do not want a hand-out, they want to go back to work. They would rather have a role in society than a bowl full of cooked food. They would rather have the self-respect that goes with plying a trade than that denigrating feeling that comes from standing in a line.

If the people in-charge of bringing about the Millennium Development Goals and the existing aid organizations could see past the immediate, obvious needs, for just a moment, to envision what a long-term solution might look like, more effective, lasting solutions might quickly be put in place. Of course there needs to be security established prior to real economic progress. Barriers to honest agricultural trade must be torn down. Trade in commodities like oil and minerals must be linked with local economic progress. Angola is a better example of what oil wealth can accomplish than Nigeria. Zambia certainly shines over Zimbabwe. Agricultural improvements including reforestation in rural India are certainly accomplishing more than what is going on in Haiti. This is where a real live knowledge-sharing forum, complete with living conduits to distribute this knowledge on the ground, would be most valuable.

Mountain Village of Ossanite 00004


I fully realize my suggestions here represent only a kernel of the ultimate solution. There is nothing in this world I would rather do than work closely with other people who really want to see the Millennium Development Goals reached. However I doubt the bureaucracy and other roadblocks preventing myself and others from making meaningful contributions are about to go away anytime soon. In the meantime millions of people will starve, die of curable diseases, or sit idle in their shanty towns. Other people willing to help implement solutions sit in fine townhouses reading about this situation but are unable to step in and help. All for lack of a solid bridge, electronic or brick, between the two.

Thomas H. Williams, Annapolis, Maryland

Sunday, September 21, 2008

Are Attacks in Sanaa and Islamabad the Start of a Plan?

September 20, 2008 Bomb destroys Marriott Hotel in Islamabad, Pakistan, at least 60 people estimated killed.

September 17, 2008 U.S. Embassy in Sanaa, Yemen hit by car bomb, 17 people reported killed.

This analyst believes these two attacks on U.S. interests represent the early stages of some type of larger Islamic fundamentalist plan. Both attacks required extensive advance planning and were clearly meant to send a message about the United States to other nations, or more likely to the United States itself.

Annapolis Marriott 073810

The Sept. 20 bombing in Pakistan was very similar to the embassy bombings in Nairobi and Tanzania, carried out in the 1990's. The perpetrators certainly planned all three attacks to draw the attention of U.S. authorities. Access to the U.S. embassy in Pakistan is so restricted that attackers could not hope to approach the facility, so they picked a relatively softer target. In the past I was under the impression that security in Islamabad, as opposed to Karachi, presented formidable challenges to these types of attacks. The Marriott appears to have been protected with walls, guards using metal detectors, and electronic surveillance, yet the hotel was completely destroyed nonetheless.

Pakistan's Parliament was in session at this time however, according to Pakistani news sources, the security around that government buildings, such as the Prime Minister's residence, would have prevented a truck of the size seen burning just prior to the blast in Islamabad. Some sources are even stating this is exactly what happened. The hotel might have been more of a second choice. In the video released the driver does not appear to have anticipated the amount of speed required to breach the security barrier. A specific plan designed with this exact hotel in mind might have considered that obstacle.

The U.S. Department of Defense has announced that two servicemen were killed in the blast. It would be surprising if foreigners escaped all harm, given the popularity of this hotel with foreign visitors.

It was strange how the top floor of the Marriott appears to have been struck by another bomb at the same time. It is possible that cooking gas containers might have been jarred loose by the massive truck bomb. From what I can tell about the layout of the restaurant facilities at that Marriott location there does not appear to have been a dining area on the top floor.

In any event, if I were advising Marriott officials I would immediately implement additional security measures at their hotel in Karachi. This is not due to any perceived threat to Marriott itself but simply out of concern for copycat attacks or even spontaneous protests against any U.S. presence, anywhere in Pakistan.

At first glance, the bombing of the Marriott in Islamabad appears to stand as a presentation for the incoming president, Asif Ali Zardari. It does look like a response to Pakistan's increased military efforts in the Tribal Areas. There is also a remote but still real possibility of a relationship between this bombing and the July 7, 2008 bombing of the Indian embassy in Kabul, Afghanistan. Investigations may reveal some connection though this analyst doubts it. The attack on the Indian embassy in Kabul was more likely a response by Taliban elements to increasing support of India for the Afghanistan regime.

When examined in light of the attacks in Yemen and Kabul, Islamabad seems to be more related to Pakistan and U.S. actions in the Tribal Regions. Here they have attacked a U.S. icon (though the Islamabad Marriott was owned by a Pakistani businessman) and very close to Pakistan government operations. News sources in the region are reporting that an attack was threatened in recent statements made by Tribal Region leaders. It would be foolish for authorities to ignore the proximity in time of all three bombings: Kabul, Sanaa, and Islamabad.

All these events absolutely have their roots in extremist sentiments and the communities that support them, in predominantly Islamic nations. Intelligence officials and FBI investigators also must not discount the possibility that these bombings are only the start of a larger effort to strike at soft targets as the Muslim holy month of Ramadan comes to a conclusion. Ramadan ends on September 30th this year. Timing has always been an important part of the statement made by any similar attacks.

Big Ben & House of Lords, London UK

Considering the evidence contained in these two attacks I would suspect that extremist organizations in other predominately Islamic regions are now expected to carry out similar operations, perhaps prior to September 30th. Besides ongoing attacks that must be expected in Baghdad and Kabul, my analysis suggests Jakarta, Cairo, Madrid, Dubai, and Paris would present additional relatively "soft" targets for similar fundamentalist groups to match their brethren in Islamabad and Yemen. I hold no evidence other than years of research regarding populations of disaffected Islamic individuals, government efforts to uncover any existing plots, and distinctive U.S. properties. For example, Riyadh or London are not likely to suffer an attack due to the high level of government efforts to thwart such plans combined with certain restrictions on individual freedoms (CCTV, for example), especially for extremist sympathizers.

Waikiki Beach, Oahu, Hawaii 100429

Of course the United States holds no immunity to bombings and has a substantial population of Islamic believers. However any U.S.-based Islamic fundamentalists themselves must be under extreme scrutiny or extremely quiet about where their sympathies lie.

Wednesday, September 17, 2008

When Governments Fail

If the largest insurance company in the world, AIG, fails what could possibly happen next?

The United States government could fail, defaulting on debts, for one thing.

Sound absurd to you? Well, many smart people would have laughed in your face twelve months ago if you told them AIG or Lehman Brothers or Merrill Lynch could fail. All but one of those events has happened just this week. Fannie Mae and Freddie Mac failed last week.

It is important to consider worst case scenarios. In my work as a disaster project manager, in Haiti, India and even SE Washington, DC, I was required to do exactly that on a regular basis. Projects did fail, for reasons I could not control. I got plenty of experience at managing projects during worst case scenarios.

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Haiti: A Worst Case Scenario

A common reason for project failure in Haiti was that the national government completely failed. That is not unusual in Haiti or Africa.

When national governments fail some things are certain. The national currency becomes almost worthless. Stores raise prices daily and sometimes even hourly. This is happening right now in Zimbabwe. It is called "runaway inflation."

Another thing that happens when governments fail is that banks fail. In other words, you go to the bank to make a withdrawal and the doors are locked. If the heavily-armed guard does decide to let you in, you can only withdraw a very small amount of your money. Right now the Federal Deposit Insurance Corporation or FDIC has admitted there are 117 banks on it's list of troubled institutions. After bailing out several banks already this year the FDIC does not have enough money in the kitty to cover too many more bank failures, and especially not big banks like Wachovia or Washington Mutual.

Downtown Charlotte 42493

When governments fail wealthy people hire small armies of security guards to protect their homes and businesses. You see, some businesses, like food stores and taxis are still able to stay in business since people still need those things. All other people lose their jobs, including most government workers, except the army. After a few days people start to get hungry and they gather in mobs to loot the food stores and warehouses. The taxi drivers drive quickly past you unless you wave money at them.

When governments fail the military takes over control of the country. It is important that people realize this now. If the U.S. government defaults on debts and banks fail, the U.S. Army may be required to establish martial law to restore order.

I am not kidding, this happened three times in Haiti and once in India.

Most foreign people leave countries that fail. They go home to places that are not so dangerous and chaotic. As a U.S. citizen I was ordered to leave Haiti by my embassy but I chose to stay. I did not want the people that were served by my projects to starve to death. The U.S. embassy staff did not like the fact that I remained in Haiti.

When all the foreign project managers leave their projects the local people often loot the project's store rooms. It takes a few days for people to realize they can do this. So during emergencies I decided to immediately go and visit as many other projects as possible. I went to the Catholic Charity project site, the Norwegian government-sponsored site, Peace Corps, CARE, and many other sites. All told, I went and inspected about 15 different project sites and assured the people that everything would be OK in a few days. I inspected the stores, made sure food distribution continued, and sometimes gave the managers or teachers one or two dollars during my visits.

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The sites that I kept visiting were never looted but all the others were.

When the foreign workers finally returned, weeks later, they were surprised that the sites had not been looted. When they asked, they were told that Mr. Williams had taken care of the projects while they were gone. They all asked the same question, "Who is Mr. Williams?"

After each emergency I never even got around to those projects to explain what I had done. I was too busy keeping my own clinic, feeding program, orphanage, soybean-planting work, and schools operating. In that way I became somewhat of a mysterious hero that never really cared he was a hero. I was too damn busy to care about myself.

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The people who stay calm during disasters are the same people everybody looks to for confidence, ideas, and support. Oddly enough, that is happening with me right now during this financial disaster in the U.S..

The Haitian military did not like me staying in Haiti. My presence made it difficult for them to shoot people without getting caught. They somehow had the notion that I would file a report to the U.S. government and the U.S. Marines would then arrive.

I could hardly make a phone call to donors in Port au Prince much less call the U.S. government in Washington. Besides, who would I call anyway? The president? I did not even work for any government agency. I was an independent relief worker associated only with a businessman's association in India. My funding came mostly from wealthy local Haitian people that lived up on the mountain tops.

The military men sometimes came to my project sites to arrest me. I was usually not there when showed up so they would go away after an hour or two. People would tell me the military were going to come for me so I knew when to not be at a particular location.

When they came for me at night, and I was at a project, I would crawl into the water cistern and wait in the shallow water until they went away. This only happened a few times. Once a soldier even lifted the lid to the cistern but it was night and he could not see me inside.

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The reason the local people warned me and did not rob me was that I ran the schools their children went to, and sometimes fed them, and my clinic provided low cost or free health services. Total strangers step up to defend foreign aid workers, it is amazing to see that happen, especially when you are aid worker under attack!

One day I was walking back to the project when shooting started. I heard and saw the shots hitting the buildings next to me. Just then a group of local women came by with baskets of fruit on their heads, shaking their rear ends and singing loudly. I put my briefcase on my head, started swinging my skinny little butt, and singing out of key as I walked behind them. The revolutionaries and the soldiers stopping shooting at each other and started laughing out loud at the crazy, foreign aid worker, me.

Once I had gotten past they started shooting at each other again.


Washington Post article #1

Washington Post article #2

Maryland Flags at Half Mast

State House, Annapolis 073685 State House, Annapolis 073679

If you look closely at the above photographs you will notice that the State of Maryland is flying the U.S. flag at half mast today. This is being done to honor the service and sacrifice of Marine Captain Jesse Melton of Randallstown, Maryland. Captain Melton was killed by a roadside bomb on September 9th while serving in Afghanistan with the 12th Marines, 3rd Marine Division.

Note: A new federal law was passed that authorizes state governors to take this action.


Baltimore Sun article
State of Maryland details about Maryland flag

Tuesday, September 16, 2008

So What Happens When Markets Crash?

Households, governments, and bankers living beyond their means.

This is the reason given for the current credit crisis. This is a cause offered by newspaper columnists for the sub-prime mortgage lending meltdown.

Perhaps so.

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How long can a major nation go on financing overseas wars when their national debt is soaring beyond their ability to ever pay it off?

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How long can bankers going on loaning money to people that do not have the means to pay back these loans?

How long can families run up credit card debt before someone puts a foot down and says no more?

Not long, not long at all.

It does not matter if the foot belongs to Dad & Mom, Treasury Secretary Hank Paulson, or the committee in China that keeps underwriting U.S. debt.

What matters is what happens when that foot comes down.

When bankers stop loaning money the economy rapidly slows down. Businesses lay-off employees.

When governments drastically slow spending and reduce staff, national and local economies really suffer.

When families and individuals stop shopping and stay home, serious problems soon develop. But what else can people do?

Like an airplane that has lost a wing, almost every organization, large or small, begins a rapid downward spiral. Owners of restaurants send staff home and start waiting tables themselves. Retail stores cut prices 50%, then 75%, and finally close their doors forever. Government offices are open fewer days each week and stay open fewer hours. Schools cut back on all non-essential programs. In suburban Maryland, Prince Georges and Montgomery counties are already talking about forcing workers to take unpaid time-off. These actions will spread across the nation.

Strangely enough, prices of many things begin to drop as businesses compete for the reduced amount of cash circulating in the economy. The prices of new items drop while the prices of used cars and other items might actually increase.

Credit card companies raise interest rates and minimum payments, just to cover the costs of those who stop making payments altogether. Desperate for money, some banks will actually try to request that some loans be paid-off earlier.

As these trends accelerate even more serious problems develop. Crime rates go up as desperate people steal to pay for habits that cannot be curtailed. After a few months of this, hungry people start to steal simply to feed themselves and their children. Prostitution and gambling also increases. People will do anything to stay alive.

The poorest people in the poorest nations suffer a little more. Oddly enough they are ones that have already developed strategies for coping with far less. In Haiti they eat clay when there is no food to eat. Many people still die of starvation, mostly children and older people.

People in deep debt begin to develop certain types of mental illness, mainly depression. Suicide rates spike. However, sick people with no money will often not go to the hospital or see a doctor until their conditions get real bad.

Family on the Beach in 1919 16815

During the Great Depression of the 1930s major national governments, including Germany, fell. The new leaders, namely Hitler, initially offered jobs but in the end delivered only war and more mayhem.

Very wealthy people do not suffer physically but some do break down mentally. They count their losses and take to drinking more, smoking more, or engage in risky behaviors that appear to bring relief. So they do sometimes do suffer physically but not for lack of food or health care.

Really smart rich people acquire assets at low prices. They buy good companies for less. They hire talented people at lower salaries. The wealthy can make more money in a recovering economy than they do in supposedly good times. They will often donate more money to charities, perhaps to make it easier for them to sleep at night. Some even hire more people than they need, in an attempt to rebuild the local economies around their business empires.

In the end it takes solid leaders, like Franklin Roosevelt, to bring nations back to some sort of normal routine. It also takes years and years of hard work for low pay for most little people to recover. Some never really do.

There is not a lot of good things to say about the situation the entire world faces today. However those that do make it through the tough times do come away stronger. In the same way that some seriously ill people who recover from their ailments become stronger than before, economies can emerge from bad times even stronger than they were before. The weakest parts are gone.

Start preparing now by cutting back on things you and your family really do not need to survive. Plan budgets and look for a second job perhaps. Sell things that you are not using. Read a book instead of going to a movie. The book "Hard Times" by Studs Terkel is an interesting read as is Steinbeck's "The Grapes of Wrath." However, you might want to read books on more uplifting topics. Drive your car less, although with the recent spike in gas prices your probably already do that, huh? Of course these moves do not help certain parts of the economy but you have to look out for your family, right?

NOTE: The author worked as a disaster management project manager in Puerto Rico, rural India and urban Haiti for extended periods in the 1970s, 80s, and 90s. If this crisis deepens and an organization can identify a specific need for his services, he will return to manage projects where required. If your social service, church, or other aid group would like to learn more about the important techniques the author learned and used daily to stay healthy and deliver aid in extremely poor living conditions, he is available for speaking engagements or more formal training programs. He is also available to prepare and train the workers already assigned to serve in Third World nations. He can be reached by e-mail at:

Click on the following image to learn more about the author's experiences in Haiti.

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Pearlstein at Washington Post

Washington Post cover story

New York Times cover story

London Financial Times cover story

Monday, September 15, 2008

Bad News and Good News, The Essence of All Life

Harry got up
Dressed all in black
Went down to the station
And he never came back
They found his clothing
Scattered somewhere down the track
And he won't be down on Wall Street
in the morning - New York Minute by the Eagles

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Today is a day of real turmoil for people that pay attention to financial markets. The events of today will also impact billions of people that pay no attention to stocks, bonds, and bankers.

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The price of a barrel of oil has fallen by nearly $5.00 so far today. However, the price of gasoline at the pumps is rising rapidly. Many large oil rigs in the Gulf of Mexico were destroyed, or at least severely damaged by Hurricane Ike. Refineries near Houston, Texas were very badly damaged.

Several of the largest financial institutions are rapidly crumbling. Lehman Brothers, 158 years-old, will not make 159. Merrill Lynch was sold to Bank of America, on a Sunday, after it became so unstable the bankers feared it might follow Lehman Brothers down the tubes. AIG, an extremely large insurance firm, is turning to mush. The investments AIG made with people's insurance premiums turned sour, real sour.

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U.S. federal and state tax revenues for 2008 will fall far, far below the most pessimistic estimates of government accountants. This is partially due to the bank failures and hurricanes but also a result of ordinary consumers sensing bad times ahead. When people stop shopping tax revenues plummet.

So where might the good news be?

Banks, brokers, and the government agencies that barely regulate them are now being forced to closely examine the situation. Accountants and the auditors that may have overlooked the value of certain financial instruments must absolutely put a value on things. The infamous CDO's or collateralized debt obligations, that is, collections of loans like home mortgages will need to be examined more closely than ever before. Short sellers, people that gamble on falling prices, will be confronted with new, tougher SEC rules designed to prevent fake fire sales of otherwise profitable companies. Buying and selling is normal in any marketplace. Tricking people into buying and selling by spreading false rumors should not be the norm.

Downtown Charlotte 42502

Trying to reform thieves may be an impossible task but efforts must be made when the looters are literally stealing the thin floorboards remaining under the U.S. economy

Speaking of looters, the oil firms will need to rebuild those refineries and oil rigs. That will require BP, Shell, Exxon, and others to spend some of the billions in profits they recently reaped from inflated oil prices. Insurance companies will need to pull billions from their deep pockets to pay for some of the damages from the hurricanes. Weak insurance firms, like AIG, may well fail under the stress of these obligations. While those are mostly Texas-specific events, there will be some ripples from that re-construction spending spreading to other parts of the U.S..

Smart Car Annapolis 57993

In a New York Minute
Everything can change
In a New York Minute
Things can get pretty strange
In a New York Minute
Everything can change
In a New York Minute - The Eagles

Beer, wine, and liquor sales will no doubt increase as many people try to drown their sorrows.

Parents still need to buy their children clothes for school, new shoes, and gifts for the holidays.

Finally, politicians that spend tax money like it is an endless source of wealth will now be required to face the truth. Earmarks and boondoggles designed to buy votes and get a Senator or Representative re-elected will no longer be tolerated. The Chinese simply will not keep covering U.S. debt forever.

Reaching The Bottom

Rich people may decide that now or perhaps in the next few weeks is a prime time to buy huge amounts of stocks. While this is always an uncertain guess, the prices of certain major firm's stocks are unlikely to get much cheaper. For example, now that Merrill Lynch has found a buyer, Bank of America, their stock has recovered 25% from Friday's prices.

Consumer products firms like Procter & Gamble or Wal-Mart will probably see business as usual. People need their soap and a place to shop for such products. While new car sales will continue to fall people still need transportation so used car buying and selling will benefit. Auto parts sales and repair shop incomes may well see a boom ahead.

Human life and all the activities tied to it will still continue. In fact, as young couples cut back on the number of times a month they go out for dinner and a movie more babies will probably be conceived. Internet activity and the telecommunications and computer-based firms tied to that activity could very well increases in revenue. After all, it costs less to use the Internet for human activity than it does to get in your car and drive somewhere.

Technology may well cause economic slumps, like the current one, to be shorter. People can that know how to use technology can make changes in their lives much more quickly.

And in these days
When darkness falls early
And people rush home
To the ones they love
You better take a fool's advice
And take care of your own
One day they're here;
Next day they're gone - The Eagles

Humans and the markets they create always follow cycles, up and down. Deep drops, even the Great Depression of the 1930's, are eventually followed by increases in the future. On a day like today it is tough for people losing their careers to see any bright side but that is exactly what is needed. Most of us will wake up tomorrow morning hungry and thirsty and eager to find something new to do with our lives. That is what being human is all about, right?

Note: The author is an investor, but owns no shares in any of the companies mentioned above.

Sunday, September 14, 2008

Greed, Debt, and the Collapse of the U.S. Economy

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While most Americans sat watching NFL football games on a hot Sunday afternoon their nation fell to pieces. American oil refineries in Texas are just now discovering how badly damaged they are from Hurricane Ike's visit on Friday. Lehman Brothers, a 150-year old major bank is about to declare bankrupcty. AIG, one of the nation's largest insurance firms, is about to crumble. Merrill Lynch, a huge brokerage house, slipped away under the wing of Bank of America.

New York City 036590

Even if you don't know much about the names Lehman Brothers, Merrill Lynch, or AIG, what happens to them will still impact you, in some way. These firms are huge and tied-in to the money your pension fund has invested. Don't have a pension fund? Watch as your 401k dwindles to a much smaller pile. Don't have a 401k or any retirement plans whatsoever? You were in deep trouble before today anyway.

Work for the government? They don't have any money to pay your salary any more, read on and see why.

Any dollars left in your pocket today will buy far less tomorrow, count on it.

Never On Sunday?

It was a Sunday, right? How did the U.S. economy crumble on a Sunday?

Federal Reserve Bank Headquarters 13390

It didn't. It started crumbling years ago when the government borrowed more money than U.S. citizens could ever repay. Another major reason our country is in pretty bad shape is related to the huge pile of credit card statements you have in the desk where you keep your bills. The nation fell apart some more when mortgage brokers sold you or a neighbor or somebody in Florida or California more house than they could afford. Foreclosures, where people lose their house and any money they had invested in it, are now happening at a record pace.


Lehman Brothers is just a really big bank run by very greedy people. These people paid themselves over $5 billion dollars in bonus checks at the end of 2007. Now they are going bankrupt like so many ordinary Americans and small business owners. So, instead of paying taxes these people will be claiming huge losses on corporate or personal tax returns.


Merrill Lynch gave themselves nearly $10 billion in bonuses last year, as did another banker, Morgan Stanley. The rude thing is that these extra payments were for doing deals that are now causing their banks to fail. And they want you, Mr. and Mrs. Taxpayer to bail them out.

Nobody is giving back a penny of those bonus checks either. That money is theirs to keep though many of their jobs may be gone tomorrow.

Total Collapse

The real weird thing is that much of this money tied up in all this mess is Chinese money. Your government borrowed and spent huge amounts of money in the hopes that these very rich institutions would be making large tax payments on profits this year. That tax money is never getting paid. The U.S. owes so much money to China that most of what the government spends is actually a Chinese loan.

How is your household doing? Got an extra $60,000 to send to the Communists in Beijing? That's about what you owe them, thanks to the loans your politicians took out over the years to buy bombs and bullets and other essential household items.

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The house of cards came crashing down today, a Sunday. Hope your team won the big game. They would be about the only winners in the U.S. today.

Saturday, September 13, 2008

Price of Gas Rises After Ike Strikes

Once again we are repeating the financial disaster that comes after the natural disaster. Oil prices may spike in the aftermath of Ike.

In a country led by thinking people we would have expanded refining capacity in other parts of the nation after seeing the effects of Hurricane Katrina on southern oil production. Of course it takes years to plan and build additional refining facilities but none of that is taking place. People may not want refineries in their backyards but they do want cheap gas in their tanks. The oil companies and oil politicians are quite content with the status quo, and huge profit margins/political donations.

Smart Car Annapolis 57993

We still remain at the mercy of oil speculators who may use Ike as opportunity to leach a few billion out of consumer's pockets. Drive less, people, and deprive the speculator gambler of their take!

Royal Dutch Shell Station, Annapolis 48997


CNN article
Washington Post article