• REVERSING AFRICA'S RESOURCE CURSE

Forty years ago, television images of semi-naked and starving children in poverty-trapped nations were broadcast to solicit financial donations for aid to feed the hungry. Two generations later, almost identical videos make us aware that the hunger not only persists, there are now hundreds of millions more who need feeding. Donations are needed. The Bono, Angelina and Madonna led save-Africa chorus appears perplexed and split between adopting/feeding and punishing. The confusion results in more of the same without amelioration.

Africa is rich in natural resources from which resurrection can be launched, however the overwhelming problem lies in the nature of the exploitation of such resources. Foreign corporations and investors make deals with whoever controls the guns, sharing the wealth with an elite powerful few, thereby strengthening and entrenching dictatorships and autocratic governments, or failed corrupt democracies. These rulers, their families, friends and military supporters are enriched with guarantees of wealth in foreign accounts that they can run to in the event of inevitable regime change. The vast impoverished populations of these countries are left to squeeze their soil for a meager existence while education, family planning, and good health remain vague concepts. The vicious cycle of poverty, violence, and lawlessness on the streets pursues a recursive loop.

In the meantime we continue to receive the message that if only we can send two dollars a day, a child’s life will become fulfilled with prospects of nourishment and education. Problem solved.

Some prescribe to the Chinese non-colonialist, and non-interventionist, no-strings-attached, type of investments as more reasonable approaches to the exploitation of Africa's natural resources. This of course assumes the West made deals with strings attached. It didn’t. Not the real deals. Only aid has self-serving and face saving strings attached. Exploitation of natural resources had no such imposition of humanitarian preconditions. This has been a gross misrepresentation of facts by government and UN representatives, as well as the Western media.

The right approach is for the private sector, in conjunction with the federal government and even with some of the UN auspices, to establish broader perspectives when addressing a country for its natural resources. This requires contractually committing to financing the infrastructure that will bring about positive change to a society while its natural resources are taken out of the ground. Even a deal with a dictator should include the building of schools to enhance the human capital, as well as hospitals, roads and other physical capital, with funds separated out at the source and segregated as national trusts.

Such deals should be made in very public ways, placing pressure on all parties involved so that the population of each country is enjoined of the deals, and is made aware of the process. The population also becomes knowledgeable of the structure governing the exploitation of the resources and commodities it owns. Local and initially some international oversight and accountability would reduce corruption and pillaging. This also enjoins the people in the process and knowledge of the benefits that the people can expect to accrue from such exploitation of their gifts from nature.

Back room deals between dictators and executives with little vision or care for long term consequences of their actions will only lead to more of the misery we have all been witnessing. It is not easy to make a deal with a well-entrenched dictator, however where there’s a will there’s a way, and using the media to maintain the tenor of any negotiation should be fair game. Such approach will also require an attitude different from the historically self-serving deal making methodologies that have been served up as the only way to do business. The resource curse needs eradication. Only then will the wall isolating the sub-Saharan Africa population from the world economies begin to dissolve. Their countries will become healthy cogs in the global community, participating in world markets.

It all begins with corporate executive resolve. Cynicism and narcissistic greed needs to be uprooted from its concentration on immediacy, and replaced with some wisdom giving attention to the long-term sustainability of all humanity. OK, so maybe we just need to be a little less human, and think and act outside the box. We’re all in this together and collectively beneficial solutions are the only ones that will work.

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• HOUSING – CONSUMPTION NOT INVESTMENT

The U.S. housing market is mired knee-deep in that stressful muck called recession. Homeowners have historically enjoyed hearing the word inflation, since it usually resulted in a rising value of homes. As the value of homes rose, so did their principal asset. On the way to that utopia, homes became viewed as an investment, rather than an expense. They became perceived as valuable repositories of equity rather than goods of consumption. That perception has to change.

It has been a well-crafted marketing campaign of the past sixty years that instilled in the North American psyche, the notion that owning a home was the ultimate dream. The fact that almost no one could afford the price of a home didn’t matter. Twenty-five or thirty year mortgages were financing vehicles created to make you believe you could own a home. The fact that ninety percent of your monthly payments were covering interest on your loan and the bank was your landlord didn’t seem to matter. The magic was in this thing called inflation. While you slept, your home would go up in value. You were getting rich as you rested.

The promotional financing boondoggle that really found broad footing through the past decade was the PR exercise that suggested all this equity shouldn’t lay dormant. This free newfound wealth should be put to use, for your own good and for the good of the economy. Whose economy, … well never mind, but go out and purchase a new giant flat-screen TV and exotic sound system, and wouldn’t you rather bring it all home in a new SUV? So swing by the auto dealer on your way out and do your patriotic duty. Your kids will love you for it and won’t football games look so much better in digital. Come on, who doesn’t have a home theater?

All financial institutions, big and small, flooded all media to affect consciousness. Your house wasn’t your home, it was your piggy bank. A minor increase in monthly payments was a minimal price to pay compared to the tens, if not hundreds of thousands you could get your hands on. The best part was that inflation would keep your piggy bank growing, and you would be able to go back for more. There was a sale on truck-sized barbecues, and the one with your name on it was emanating a siren’s song. Thank you inflation.

Now inflation is growing, however it is no longer our friend since the fast rising price of goods is strangling us, and we still have to make rising mortgage payments. North America has just borrowed too much. Deflation wouldn’t help either since that would only mean continued downward pressure on the value of what has become our principal asset but is really our overwhelming debt. The FBI is chasing a few lenders, brokers, real estate agents and appraisers to bring some straggling scapegoats to slaughter for recent mortgage frauds. Good luck to the investigators, but don’t hold your breath on any fixes.

There is an urgent need for another shift in consciousness. It is time to view a house as an expense. That perception will adjust our relationship with what is for most of us the biggest expense we incur. It might also lead us to treat it with more respect than the statistics indicate we have done as we saddled our homes with historically record high debt. If your home is an asset, it is not a piggy bank, and it is to be protected from all predatory lenders, including that giant bank you think is your friend.

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• COLIN POWELL’S DIFFICULT CHOICE

The man who might have held the top position on any Potential President list eight years ago, today delivers lectures on leadership. Had he attended such a lecture in 2003, he might today be introduced as the leader of the Republican Party, and a shoe-in for the White House. His current cat-and-mouse replies to questions on who will receive his vote in the coming election isn’t the difficult choice he suggests it is. His difficult choice was made five years ago.

Few will forget the feeling of disbelief as we watched someone we thought was a great man, being decimated by a sequence of judgment faux pas’s, with the first one performed live in front of a global audience. From there, he went on to co-lead the charge into Iraq as Secretary of State. His credibility was used, and abused. Powell not only allowed it, he participated in its defamation and destruction. Such is not a sign of leadership, but evidence of weakness.

He explains that the intelligence community had verified the flawed intelligence on which his 2003 United Nations presentation was based. Wouldn’t it be more honest to state that he, we, all of us, are provided the confirmations we seek? The more supposedly credible the source of such information the greater the momentum provided to the intelligence presented, and the greater the likelihood a predetermined perception will be achieved. Powell’s “I didn’t know,” is completely disingenuous since it was evident when first aired, that his speech was stilted, unnatural, and most importantly, it was evident from his voice and body language that he felt discomfort with his charade.

Powell’s lectures proffer on a subject he long ago lost any credibility to claim expertise in. He still prevails with the obfuscation of the truth with, “much of the information in the speech turned out to be wrong,” is a fairly typical pass-the-buck excuse. This is not an archetype of leadership when evidently the intelligence agencies that provided input did not agree on the information, and the administration went well beyond or contradicted what was apparently known. Mr. Powell would have better exemplified leadership through resignation. Today he would do leadership more justice if he acknowledged acquiescence, and active participation in one of the most critical and divisive decisions of any Presidency, the cost of which will endure for generations.

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• ASSUMPTION: THE FED KNOWS WHAT IT’S DOING

We assume that those who have reached positions of power, or positions of influence greater than ours, must know something we don’t. We also assume that those positions of power cannot or should not be challenged, since perception suggests that an individual who has realized high office, or has accumulated wealth, knows much more than we do. What universal truths could a farmer, or a truck mechanic possibly know that the oracle at the head of the U.S. Federal Reserve doesn’t?

The very fact that a person holds the powerful position of Fed Chairman automatically imbues that human being with more knowledge than the rest of us. We assume so, don’t we? Whether his name is Bernanke or Greenspan has little import. Through all media the position is treated with respect, even reverence, and the myth is patronized and further popularized. No need here to revisit the progeny of most assumptions, however, the Fed’s decisions of the past decade have resulted in an economic quagmire traumatizing most Americans that all economists are conflicted over.

With an oil price bubbling to extremes that is leading price surges in most commodities, there is urgent need to bring these spikes under control and back to economically sustainable levels. With the general economy slowing, raising the specter of deflation, the Fed is sounding the alarm of inflation. Does this really mean that the Fed is now cheerleading the chimerical utopia of inflation, since it would be preferable to deflation? Does saying it, make it so? Can we expect the printing presses to continue unabated spinning more dollars in answer to the overwhelming debt, which seem to be the Fed’s universal undisciplined answer to economic problems? Are we witnessing an international PR promotion for preemptive increases in the dollar’s value matched by an upward crank on the interest rates? Would this not be a jibe on the demand for China to allow its currency to float and appreciate against the dollar?

With home prices sinking, Americans’ biggest asset depositories are shrinking in value, countering the inflation calculations. Most Americans believe the economy is in a recession. Raising interest rates will hardly be helpful. What will it take for some truth and effective leadership to emerge from the Fed or Treasury? What will it take for a return to a strong and stable currency?

I have discussed in a past article the absolute necessity for the next President to get a firm and confident grip on inflation’s realities. Only then can sound economic strategies emanate from the Oval office. Making no assumptions on leadership expertise, including the Fed’s will also be an expectation of the new President. This is a call for leadership. In the meantime, save your pennies before they are pulled out of circulation from lack of value.

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• ELECTION 2008 AND THE FINANCIAL CRISIS

With the Presidential election heating up, America’s taxpayers are demanding solutions to their rapidly growing financial discomfort. Most are struggling to address an onslaught on their shrinking dollars from all fronts. The housing slump, layered with astronomical oil prices and rapidly rising food costs, are building a wall of confusion that most economists cannot climb. Relying on supposedly expert council, McCain and Obama are taking very opposing stances to salve taxpayer wounds. Are they doling out short-term painkillers or are they presenting a long-term cure?

Predictably following party lines, McCain is promoting a continuation of Bush tax cuts that have benefited the high incomes, in a warped belief in the trickle down theory, anticipating that pennies will rain on the lower echelons of the economy, which will in turn scurry to wipe the food store shelves bare of Spam. McCain’s advisors should present him a demographic map of the United States laying out incomes so that he understands whom the term middle class encompasses as it applies to America. McCain suggests that he will cut pork barrel spending and reduce government. That is an unlikely reality, since he will do nothing to curtail military spending without which other spending cuts will be meaningless. He should understand that spending reductions will be a necessity on the road to recovery.

Obama, also predictably rhyming with the party song, is calling for tax increases on the Democratic version of the wealthy, those making above $250,000, although he is apparently beginning to ‘skate’ on that, much the way he is now backtracking on getting out of Iraq. One wonders how much Obama can really collect from a few souls making millions and how much impact that can possibly have on the burden that the current administration has placed on America. The fact that the average household income in the U.S. is less than $50,000 (and that’s Household, not individual) seems to make his tax program a wash. OK, so he wants also to eliminate taxes on anyone earning less than $50,000, which should get plenty of votes, but where will the cash come from to fix the current economic challenge? Overall, Obama’s intent is to maintain tax cuts, therefore the net balance will not represent much increase on the revenue side.

Given the running deficit and the size of the debt, neither candidate can continue with Bush type stimulus packages, which would mean borrowing the money and increasing the depth of the well, nor should either print more dollars and reduce the dollar’s value even further. Borrowed stimulus packages are not sustainable. Although both candidates want to energize new industries, such stimulation will have to be carefully, if not creatively structured with the private sector, and depend on it for a majority of any long-term and capital investment, and management. Governments can be useful in leadership and emphasis, but inept and wasteful at execution. Give new industries some impetus then get out of the way.

America allowed its leadership to overspend throughout most of the past decade. Of the two candidates, Obama’s plan at least begins down a path suggesting a little more awareness of current reality. Increasing the treasury revenue is a no choice gambit for the new administration. The follow-up move will be to shave hundreds of billions from the budget.

A skillful financial magician well versed on reality will be required as the cardinal eminence grise advising the Oval office, guiding the country through the most difficult economic challenge since the depression of the 30’s. Neither McCain nor Obama may be experts in economics but both better present some knowledgeable remedies to the financial ills facing the voters lining their path to the White House.

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