RISMEDIA, March 3, 2009-No! But, one of the lessons often forgotten when economic news gets this gloomy is that these are also times of great opportunity for some. As a matter of fact, sucking the prosperity out of America has already been very lucrative for a few, such as Halliburton and Exxon Mobile, and a host of investment firms.
It isn’t sinister, that looting has always been the plan. It is in our DNA. It’s what brought us to North America. We didn’t come to North America seeking freedom; we came to plunder her great natural resources. Specifically, we came for fashion.
That’s right, fashion! And, not women’s fashion either. From 1550 to 1850 the rage in Europe was the beaver hat. But, by the late 1500s, the beaver was extinct in Europe, Russia, and Scandinavia. So, the next time some politician drones on about how this country was settled by men seeking freedom, you’ll know the truth; we came for the beaver.
A more recent plundering of America occurred in the mid-eighties and resulted in the collapse of the Savings and Loan industry. A whole lot of our money went to pay for hookers and personal jets for a handful of industry leaders and their elected cronies who made it all possible.
Is something like that happening again? Yes. And, the winners are the people who understand these things:
1. Money is on the move. One way to view the current housing crisis is to see it as a transfer of wealth. During the better part of the last decade, the middle class has seen it’s prosperity eroded by a loss of high wage jobs, loss of manufacturing jobs, large migration of extremely low cost menial labor to do the jobs that cannot be exported, ongoing global conflicts at a cost few of us can truly fathom, a string of costly natural disasters, crumbling infrastructure, record budget deficits, rising inflation,* and a loss in the value of our currency.
But, the wealth really isn’t gone; it’s just showing up in other places. It’s showing up in India, Asia, and Europe. When we buy a Samsung, the money winds up in South Korea. The equity in your home, for example, might have wound up in some Senator’s campaign fund, but it didn’t go away.
When we spend a fortune to fill our gas tanks, oil companies report record profits. They can tell us there is no connection between what we pay at the pump and how much profit they make, but who really believes that?
The money we pay in taxes is used to provide a host of social services to offset the low wage workers who do not earn enough to pay for them on their own. That, in turn, helps large employers earn higher profits than if they had to pay a living wage.
New winners mean new losers; so, the key is to move to the winning side, figure out the next big thing, and get in on the front end not the back…or move to New Delhi and go to work in a call center.
2. Everything is temporary…and subject to change without notice. One day you are cruisin’ large in your behemoth, gas-guzzling SUV and the next you’re checking the want ads for a used Vespa. The economy is cyclical and life is short. Economists tend to study past economies and try to predict the future based on the theories that evolve from that research.
But, there is no return to that prior economy. My childhood was filled with memories of the remnants of an agrarian economy but, we were really in the waning hours of our industrial superiority and were moving toward an information based economy. Those were powerful fundamental shifts in the very foundation of the economy. Who could have predicted them or their consequences? We were headed to places no nation had ever gone before.
Even the change from where we are is well underway. Populations are growing and shifting, arable land is shrinking, food production is becoming more difficult and energy conservation will become a way of life.
3. Paradigms are shifting. How about yours? Wise men have said, “Change the way we look at things and the things we look at change.”
Once we accept that there is no going back, no going back to a bucolic existence, no going back to Mayberry, no going back to a time of hope and promise, we can let go. Life, the human experience, is a relentless effort to make things better and we had things pretty good for a while. Now, there are unimagined challenges that must be met. Herein lays adventure, experience, a sense of purpose, opportunity, and a reason to be.
At a time when the globe seems more fractionalized by conflict than at any time in history, we must find the means to cooperate to solve what are fast becoming everyone’s problems. Our water is the only water our planet will ever have. Rain isn’t new water; it comes from our lakes and rivers and ponds, and whatever is in them remains in our water. Just addressing this problem will make someone rich.
4. New needs are being created. Inventions like the refrigerator, the television, and the Blackberry are considered by many to be necessities. But, ten years ago we got along fine without a Blackberry; twenty years ago we got by without the ubiquitous bottle of water; and refrigerators and television have been around less than a hundred years. I never saw Starbucks coming either. I didn’t know that there was a need for a $29 half-caf, banana, caramel, black walnut frappe masquerading as coffee.
In the future, there will be many new “needs” created. “Green” will be one of them. Anything that can demonstrate a link to being planet friendly will be in vogue.
The next ten years are likely to be a volatile time in America as the baby boom generation confronts the harsh reality of aging in a society that has made no provision for it. If you are waiting for the return of normal, you’ll be waiting for a long time.
*Inflation figures are far from accurate as they do not include food and energy prices. As the cost of energy goes up, so does the cost of everything else as our current gasoline crisis has demonstrated. Let me take food and energy out of my monthly expenses and I can just make it.
George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(UÂ²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.
Mantor can be reached at GWMantor@aol.com.