I just got back from screening the film I.O.U.S.A., complete with a live roundtable discussion following that included Warren Buffett, CEO of Berkshire Hathaway; William Niskanen, chairman of the CATO Institute; Bill Novelli, CEO of AARP; Pete Peterson, senior chairman of The Blackstone Group and chairman of the Peter G. Peterson Foundation; and Dave Walker, president & CEO of the Peter G. Peterson Foundation and former U.S. Comptroller General.
Here’s the message in a sentence– federal deficit spending is out of control and we are headed for severe solvency issues in the next 50 years. Let me see…if I place it in alphabetical order it falls somewhere after Energy Dependence (foreign), Campaign Finance Reform, before Global Warming, Inflation, Housing, and Pork Barrel Spending. It, unfortunately, is another calamitous problem that we Americans must face now or deal with the consequences later.
In truth, the film was very good, as was the excellent discussion by the panel and I don’t discount the validity of the issue. (I did find Buffett’s contrarian views negating much of the arguments, interestingly enough.) I do recommend seeing it and calling for action as citizens within a representative government.
As it pertains to LeadMarketWatch and it’s relevancy to this industry so heavily tied to the housing market, I did have a question which if called upon, I would have been ready to vociferously address to the panel. (However, they were in Omaha and I was in a theater in Ohio)
Among many points, they discussed as part of the solution that we as Americans should save more of our income. In fact, Bill Novelli went so far as to suggest we may need to get used to “forced” savings plans (they are all the rage around the globe, I guess). They made a valid claim that throughout our history, we have been a nation that regularly saves a portion of our salaries for the proverbial rainy day. However, with progressively increasing legislation, a governnmental safety net has enticed us from squirreling away money as we should be, thereby creating, in my parlance, a “nanny state”, ready to catch us whenever we fall.
So…my question to the distinguished panel would have been (and still is if any choose to respond) “Gentlemen. You say that building our savings accounts as Americans is critical to reducing our debt load as a country. You state that by saving and not squandering we will be helping to increase research and development of new products, new ideas and companies will spring forth from the opportunities given by the increase in borrowable funds. We will ensure the solvency of programs as funds will be made available.”
“Gentlemen, I respectfully say to you that we have. In fact, for the last seven years Americans have taken matters into their own hands and specifically away from external influences by putting their money in their homes, an asset that has throughout time, appreciated. In the wake of Enron and pension plan fiascos that soured us against putting money in our companies hands, America went to their own backyard and socked money into their OWN asset–their homes, in order to create home equity that they could draw on. Yet, in the span of 18 months America’s “savings” disappeared simply by the writing down of home values, causing a ripple effect wherein people lost their savings, others lost jobs with no HELOCs to buy or sell, and others lost business due to the lack of leads and loans, not to mention a loss in savings, buying power, taxable funds, and in some estimates $1.5 Trillion in American net worth–vanished. Roughly equal to 10% of the national deficit.”
“So, distinguished panel, I ask you, we have tried saving our money in the most expedient fashion we thought proper given the financial climate yet Wall Street foiled that plan…so, what else do you have? What investment vehicle is next for the American public? Maybe we can try that one out until someone gets wise.”
