Suze Orman’s Top 10 Money Tips for Women

Suze_Orman_Senate_Committee

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Suze Orman‘s Top 10 Money Tips for Women

by CNBC Staff
Thursday, October 29, 2009

When it comes to women and finance, sometimes there’s a disconnect between what women know and how they act, their ability as achiever and their financial underachieving, and between the power they have within reach and the powerlessness that rules their actions.

Financial expert Suze Orman gives her list of the top 10 money tips for women to follow:

1. Listen to Your Gut

Women are compassionate toward those in need. Instead of going with their gut, they sometimes overlook the obvious and make an emotional money mistake. “A friend, relative, loved one will approach you saying, ‘I need to borrow $5,000.’ You’ll think ‘I don’t want to’ and yet you say ‘OK,'” Suze explains. So, think twice before you say yes if your gut is saying no.

2. NEVER Co-Sign for ANYONE

If a friend or family member asks for you to co-sign on a loan, it’s probably best to say no. Suze says more often than not, the borrower will default or pay late and you risk losing money or lowering your credit score because as the co-signer, you are ultimately responsible for the loan. Say no out of love, not out of fear.

3. Save Yourself First

If you don’t have enough to save for your child’s college fund and your retirement, your retirement takes precedence.

As explained in Suze’s book “Women & Money,” women think they are actually helping their children by paying for their college or wedding. It’s a myth. You help your children by saving yourself first. If you retire without ample money to support yourself, you will become a financial burden to your children. There are plenty of loans for college, but there are no loans for retirement.

4. Don’t Hand Over Finances to Your Husband or Partner

Suze says women often hand over their family financial matters to their partner because they are either scared, lazy or following an old-fashioned role.

Being in control of your financial destiny requires that you be an active participant — not just by paying bills, but in overseeing your investments, too. Suze: “Take this step and I think you will be surprised how this helps your relationship.”

5. Don’t Put Yourself on Sale

Don’t treat yourself like you’re on sale. If you’re reluctant to put a real value on what you do, then it diminishes who you are. As Suze explains, women tend to devalue what they do.

This creates a vicious cycle: “When you devalue what you do, it becomes inevitable that you — and those around you — devalue who you are.” Women will settle for less. They may offer discounted prices on their services or accept a smaller raise, even when the company is doing well. They have to ask for what they know is “right.”

6. Protect Your Assets: Get a Pre-Nuptial Agreement

The basic rule is that you are jointly entitled to assets accrued during a marriage and you are on the hook for debts accrued during the marriage. Anything you bring into the marriage is not automatically shared. Protect your assets.

7. No Blame, No Shame

Two of the heaviest weights women carry (invisible twin obstacles of the past) are the burden of shame and the tendency to blame. Suze explains: “If you don’t feel confident in your knowledge of how money works, you hide behind the shame of it, deferring decisions to others or staying stuck in a pattern of inaction. You blame society, your parents, your husband/partner or all of the above. Blame renders you powerless and shame only serves to hold you back.” You have to go and find out about personal finance for yourself.

8. Take Care of Your Money

Women nurture people and things that are important to them. So take care of your money the way you do your husband/partner, family, friends, pets, plants and clothes. Cherish money like all of the other irreplaceable items in your life. Find wise investments, save and don’t throw it away on meaningless things.

9. Don’t Make Your Underage Children Life-Insurance Beneficiaries — It’s a No-No!

Life insurance companies will not make a payout to children under 18 years of age. Suze suggests you create a trust account and name the trust as the beneficiary of your life insurance policy.

10. Own the Power to Control Your Own Destiny

Give to yourself as much as you give of yourself. Power comes from who you are, not what you have, and the transformation starts with how you allow others to treat you. Do what’s right, rather than what’s easy.

Suze says, “Remember to muster up your courage and silence your fear … keep your eye on the goal, on what you really want to accomplish, no matter what anyone says or does to deter you. Just keep moving forward.

Entrepreneurs Build Successful Businesses With This Key

Entrepreneur's Success Key

Entrepreneurs Build Successful Businesses With This Key

For the past thirty years I have been working with people in different parts of the world through our programs, including Money & You® and the Excellerated Business School® for Entrepreneurs to uncover what holds people back from having money, building successful businesses or achieving financial success. Over and over again, what comes up is that we must clear our consciousness from emotional blocks in order to receive the level of abundance we desire or to enjoy the financial resources we may already have.

If you want to enjoy an abundant life—including a beautiful home (or homes), automobiles for yourself and your family, a great education for your children (and yourself) and a business that provides you with profits, royalties, rents or other residual income—financial literacy is key.

Being educated about the basics of money—how to start, manage, build and expand a business—is key. It is my hope that in the near future, financial literacy becomes a subject for children in primary school, along with reading, writing, grammar, math and all other key subjects necessary to be a fully educated, functioning human being.

In the mean time, most of us learn to be financially literate without proper guidance, sheerly by trial and error. It’s easy to see around you. The result is a society riddled with debt, fearful of the future, investing in ventures we know very little about, or enslaved to jobs or businesses that bring us very little profit or joy.

For those of us who wish to have more than our basic needs met and do not wish to live in debt, financial literacy is as important as breathing and having clean water and nutritious food. Having a sound understanding of financial systems allows us to grow our financial independence with much more ease and joy.

Become a great student of financial literacy to allow your dreams to come true. Learn the different systems and choose the one that works best for you. Be sure to call upon financial advisors who have succeeded in their area of endeavor; do what is congruent with your inner knowing and the knowledge you have gathered through your educational process.

Do not leave the task of building your wealth to others. While others—financial advisors and masters—may support you, ultimately you are responsible for your results. In our programs we say, “Education is the highest form of leverage.” Once you acquire the techniques and tools, you now must allow yourself to be wealthy by clearing any blocks that may be in the way of your dreams coming true. Herein lies the secret to financial health and wealth.

With loving thoughts,

DC Cordova
CEO, Excellerated Business School® for Entrepreneurs and the Money & You® Program

You can also read my original article that appeared in Networking Times

Creative Commons License photo credit: Lora <3

Doing Life? How One Woman Saved NY State $1 Billion

Crime Cutting

Doing Life?

How One Woman Saved NY State $1 Billion

“As of 2008, there were 2.3 Million in prisons in the United States, that is one in each 100 people in the United States. With just 5% of the word’s population, the US has the highest incarcerated population in the world. I have worked in this system since 1973, focused on one intention: to transform prisons from places of punishment to places of healing. Throughout my journey, I  have been blessed to learn from the best, to study and apply the most effective strategies to my work.

Interpersonal ResponsibilityWhen I attended Money & You® for the first time in 1982, with 66 of my core staff at the time, I experienced that it encompassed the best of all that I had learned so far. After more than 27 years of continuing to work with DC Cordova and these distinctions, M&Y remains the best of phenomenal opportunities I have had.

In three-and-a-half days, Money & You® offers an elegant, efficient and highly-effective process that works in any environment. It is also a portal to so many other resources, including The Quantum Learning Network of Bobbi DePorter, the co-creator and one of DC’s original partners in this work.

Money & You® was the first step into an area rich with opportunities and world-class leaders  who have greatly enriched my life, and that of the more than 6,000 staff and more than 40,000 graduates of the Total Learning Environments I created and implemented in prisons.  By 2004, with 35,000 graduates, the Shock Incarceration program had saved the State of New York more than $1.18 Billion, to say nothing of the families and children affected by their parent’s success.

Dr. Cherie  Clark
President/Co-founder Doing Life® International Inc.
http://www.doinglife.com

Cherie Clark

For more on Dr. Clark’s extraordinary results, see her profile below

http://doinglife.com/company.html#clark

Dr. Cheryl L. Clark
As well as President and co-founder of DOING LIFE!® International Inc., Cherie Clark is also the Director of Shock Incarceration and the Willard Drug Treatment Campus (DTC) for the New York State Department of Correctional Services (NYS DOCS).

Shock Incarceration is internationally recognized as the leading program of its type in the world. In 2004, research documented more than $1 billion in cost savings to the taxpayers of New York State for the institutional phase alone.

Dr. Clark has worked in human services since 1966, first in Social Services then Juvenile Justice. She started in Criminal Justice in 1974, where after other management positions, she researched, designed and implemented a Total Learning Environment™ (TLE™) for the NYS DOCS, the Network Program.

In 1985, Dr. Clark was appointed Director of Staff Development for the NYS Division of Parole, to assist with the implementation of the Division’s Regional management system. She developed supervisory and Management Training Programs for the Division, in addition to streamlining and improving training programs for all levels of Parole staff. She considers one of her most significant accomplishments for that agency the design and implementation of the first Street Survival course for Parole Officers.

Dr. Clark returned to DOCS in 1987 to develop the Shock Incarceration program and has directed this initiative since its inception. Because of the outstanding, unprecedented success of Shock, in 1995 Dr. Clark was asked to design the Willard DTC and expand Shock staff training to include all staff of the DTC. The Willard DTC is unique as a stand-alone correctional Drug Treatment Campus. Based in both military and Network community models, Shock Incarceration and the DTC have an equal emphasis on self-discipline, treatment and life skills education.

Dr. Clark earned a Ph.D. in the School of Health and Human Services at Columbia Commonwealth University and holds a Master’s Degree in Educational Psychology from the College of St. Rose in Albany, NY. She has studied accelerated learning and transformation technologies for more than 30 years. Her doctoral dissertation, 12° Of Freedom: Synergetics and the 12 Steps to Recovery , is considered a ground-breaking work in the field of substance abuse treatment. It includes a comprehensive overview of the model she named Social Synergetics™, offering an innovative, fully integrated model for recovery from addictions.

In 1990, Dr. Clark was awarded the Governor’s Productivity Award for outstanding contributions to State Government. In 1995, the American Correctional Association acknowledged her for her outstanding contributions to corrections, as “Best in the Business”. Dr. Clark is internationally recognized as a leader in her field and an expert in substance abuse treatment. She is the principal author of DOING LIFE! A Life Skills Program for Recovery From Addictions® and SMART Choices: A Guide for Making Choices That Work .

The Buckminster Fuller Annual Memorial Lecture – 1997

bucky-dymaxion

The Buckminster Fuller Annual Memorial Lecture – 1997

(Introduction: I found many of Bucky’s writings to be pivotal in my education . So I decided to piece together those words that have had an tremendous impact on my life — and read them for you — as if Bucky were here. I think you will forever see the world in a whole new way.)

Specialist verses Comprehensivist

I thought her essay, Women in the Nineteenth Century, was so important that I published it in my book, Ideas and Tensegrities. When I heard that Aunt Margaret said, I must start with the universe and work down to the parts, I must have an understanding of it, that became a great drive for me. I saw that in my education I was being pushed to be a specialist – everybody is being pushed to specialize, to where they can’t be synergetic and can only know about the parts instead of the whole – I switched very vigorously; very deliberately, I became a comprehensivist.

Global Thinking and Planning

I was then sent to the United Stated Navy Academy. Then I became involved in the great transport operations that moved millions of people and supplies across the oceans of the world. This got me to thinking very big. I found the Navy was thinking in terms of the total world, of global planning, and that was an extraordinary experience for me.

Food for Humanity

When I came out of the Navy I went into Armour and Co.’s great packing house. They made me assistant export manager. I began thinking about the total foods of humanity around the world. You see how by this comprehensive anticipatory way of looking at things and thinking about the total needs of total man, I came a few years later to invent the words, Spaceship Earth. Because I began to think about the total planet as being as beautifully designed and equipped as a ship.

Think for Yourself

Anne came from a large family; she was the oldest of ten children. Her father, James Monroe Hewlett, was a prominent architect and he introduced me to the world of architecture. For the first time I met people who were building on the land. And for the first time there was a father again, who said to me, Don’t pay attention to what people say. What you think is the most important thing. Pay attention to your own thoughts.

Commit to Humanity

I had good cause with our first child to feel that children are endowed with a great deal more than many of us know, that every child may be born a genius but may simply be degeniused at an early age because parents and environment lack the ability to recognize these faculties. I said, I’m really going to give the rest of my life to the new young life. I pledged, both to the daughter who died and to the daughter now born, that I was committing myself to humanity.

Individual Initiative

I said, What can a little man effect toward such realizations in the face of the formidable power of great corporations, great states, and all their know-how, guns, monies, armies, tools and information? Then, self-answering: The individual can take initiatives without anybody’s permission. Only individuals can think, and can look for the principles manifest in their experiences that others may be overlooking because they are too preoccupied with how to please some boss or with how to earn money, how to take care of today’s bills. Only the individual disregards his fears and commits himself exclusively to reforming the human environment by developing tools that deal more effectively and economically with evolutionary challenges. Humans can participate -consciously and competently – in fundamental ways, to changes that are more favorable to human life. It became evident that the individual was the only one that could deliberately find the time to think in a cosmically adequate manner.

Fifty-Year Experiment

This was to be a fifty-year experiment to prove that man, like nature, was not a failure but a success; to rethink everything I knew. It was an experiment in which I myself was the guinea pig. I had to begin from the beginning. I had to find out what man has and see how it can be used for the advantage of others. I became convinced that we’re here for each other. Once I’d committed myself to that kind of program I had to expand what I’d already learned by a great deal, and unlearn a great deal that I had been taught was so that I’d found out was not so. And that was the most difficult discipline I took on. I scarcely spoke at all for two years. I couldn’t be completely free of words, but my wife had to talk to people for me. I didn’t want to say anything, make any sounds, until I was pretty sure what those sounds meant and why I wanted to use them. I had to make a complete disconnect in order to start my own thinking.

Reform Environment

I said, how do we find out how to use our minds and experience to the highest advantage of others in the shortest possible time? That was the challenge. Out of this then, in due course, came a great many designs, because I said to myself, I must commit myself to reforming the environment and not man; being absolutely confident that if you give man the right environment, he will behave favorably. By employing the kinds of capabilities used in building a battleship, you do more with less. I’m convinced that by more with lessing we could take care of everybody and there need not be any suffering around the world.

Man An Extraordinary SuccessBucky Fuller Stamp

I decided man was operating on a fundamental fallacy: that man was supposed to be a failure and therefore had to prove his right to live. Each man then said, I must show I can earn my living, and let other people go die. I decided the fallacy was that man was, in fact, designed to be an extraordinary success. His characteristics were just magnificent; what was needed was to discover the comprehensive patterns operating in the universe. The universe is a success. How could metaphysical man, using his mind, master the physical? Clearly, the possibility of a good life for any man depends upon the possibility of realizing it for all men I must be able to convert the resources of the earth, doing more with less, until I reach a point where we can do so much as to be able to service all men in respect to all their needs.

World Game™

I review planetary resources in terms of today’s gained know-how, to see whether there’s any way we might be able to do much more with much less, to be able to take care of everybody. All political systems and wars based on scarcity would become obsolete. World Gaming is played, not like checkers against an enemy but against ignorance, inertia, and fear. The World Game proves that John Von Neumann’s theory of war gaming, which holds that one side or the other must ultimately die, either by war or starvation, is invalid and offers a heretofore unconsidered alternative way to play the war game in which, as in mountain climbing, the object is to find all the moves by which the whole field of climbers would win as each helped the other so that everyone reached the mountaintop successfully. I think of my World Game as a way to bypass politics, human ignorance, prejudice, and war and put the facts before man and the whole world to try to deal with them coherently. We have never so far made the attempt to take our collective destiny into our own hands, and shape it.

Malthus is Wrong

It could be, I thought to myself, that Malthus is really not pertinent today because he didn’t know, for instance, that we were going to have refrigeration. I said, What else did Malthus leave out? I began to inventory the many discoveries that were not available to him in 1810: there was no modern technology at all; no refrigeration; no production steel; no electromagnetics. He left out doing more with less. In 1917 I began to realize we actually had the possibility of doing so much with so little and might be able to take care of all humanity at the highest standard of living anyone has ever experienced, and to do it by 1985. And if we did that, the whole raison d’etre of war would disappear.

Be a Trim Tab

I would never try to reform man – that’s much too difficult. What I would do was to try to modify the environment in such a way as to get man moving in preferred directions. It’s like the principle of a ship’s rudder, which is something I thought a lot about as a boy here on Bear Island. The interesting thing about a rudder is that the ship has already gone by, all but the stern; and you throw the rudder over, and what you’re really doing is making a little longer distance for the water to go round. In other words, you’re putting a low pressure on the other side, and the low pressure pulls the whole stern over and she takes a new direction. The same in an airplane – you have this great big rudder up there, with a little tiny trim tab on the trailing edge; and by moving that little trim tab to one side or the other, you throw a low pressure that moves the whole airplane. And so I said to myself, I’m just an individual, I don’t have any capital to start things with, but I can learn how to throw those low pressures to one side or the other, and this should make things go in preferred directions, and, while I can’t reform man, I just may be able to improve his environment a little. But in order to build up those low pressures I’m going to have to really know the truth.The child is really the trim tab of the future.

150 Admirals

I do know that technologically humanity now has the opportunity, for the first time in it’s history, to operate our planet in such a manner as to support and accommodate all humanity at a substantially more advanced standard of living than any humans have ever experienced. This is possible not because we have found more physical resources. We have always had enough resources. What has happened that now makes the difference is that we have vastly increased our know-how of specialized innovations, all of which invisible realization integrates to make possible success for all. I also know that this can be realized only by a technological revolution involving total Spaceship Earth, using all the resources and know-how as an integrated regenerative system, as in the design of any successful seagoing ship or any biological organism.

Spaceship Earth now has 150 admirals. The five admirals in the staterooms immediately above the ship’s fuel tanks claim that they own the oil. The admirals with staterooms surrounding the ship’s kitchen, dining rooms, and food refrigerators claim they own all the food. Those with a stateroom next to a lifeboat claim that they own the lifeboat, and so forth. They then have an onboard game called balance of trade. Very shortly the majority of admirals have a deficit balance. All the while the starboard-side admirals are secretly planning to list the boat to port far enough to drown the portside admirals, while the portside admirals are secretly trying to list the boat to starboard far enough to drown the starboard-side admirals. Nobody is paying attention to operating the ship or steering it to some port. They run out of food and fuel. They discover that they can no longer reach a port of supply.

Energy Grid

Thinking about humanity on board our planet, the Spaceship Earth, and playing the World Game, I became fascinated by the question, How do we get energy from here to there to help each other? If you look at the world map, you could see, not only crossing time zones and reaching Alaska, where the Russians are putting up dams, hydroelectric dams, in all their northerly flowing waters – all the way over there! I suddenly found I could reach the Russian network -1,500 miles. Boy! This would mean something because of all that standby power – that is, at off-peak times when 50 percent of the generating capacity is not being used. I found then that by integrating these networks to produce a global energy grid, we could integrate night and day and double the generating capacity operative around the world – immediately.

Why Utilities Link

The best customers that power companies have are industries. And they discovered that to hold their industrial customers, public utilities had to anticipate increased uses, for if the industrial customers turned on the juice and didn’t get it from the public utility, they’d go and put in their own energy production plants. So the utility company had to study the needs of their customers, and they have the most incredibly accurate charts of when the peak loads come in every day of the year, every minute of the day. The utilities have standby power for peak hours. This excess power is always being generated at a loss – a complete loss. But the company discovered that if it hooked up its wires with the next town’s, where the peak loads occur at just a little different time of day or night, what had been a complete loss could go over there and become a profit. With interlinked networks, the loss could be turned to a profit. But within 350 miles, the company couldn’t cross time zones. When it reached 1,500 miles, it suddenly was able to go right across the time zone to a different peak time; which meant of course, that there was a much better chance of selling that standby power.

Trudeau and USSR

In early years of Trudeau’s premiership of Canada, when he was about to make his first visit to Russia, I gave him my world energy network grid plan, which he presented to Brezhnev, who turned it over to his experts. On his return to Canada Trudeau reported to me that the experts had come back to Brezhnev with: feasible…desirable I therefore predict that before the end of the 1980s the computer’s politically unbiased problem-solving prestige will have brought about the world’s completely integrated electrical – energy network grid. This world electric grid, with it’s omni-integrated advantage, will deliver its electric energy anywhere, to anyone, at any time, at one common rate. This will make possible a world-around uniform costing and pricing system for all goods and services based realistically on the time-energy metabolic accounting system of Universe.

Kilowatt Hours

When Buckminster Fuller was asked by a 12-year-old boy, How do you suggest solving international problems without violence? He answered:

“I always try to solve problems by some artifact, some tool or invention that makes what people are doing obsolete, so that it makes this particular kind of problem no longer relevant. My answer would be to develop a world energy grid, an electric energy grid where everybody is on the same grid. All of a sudden there would be no problems anymore, no international troubles. Our new economic basis wouldn’t be gold or dollars; it would be kilowatt hours.”

Blood Clots

The world energy network grid will be responsible for the swift disappearance of planet Earth’s 150 different nationalities. We now have 150 supreme admirals, all trying to command the same ship to go in different directions, with the result that the ship is going around in circles – getting nowhere. The 150 nations act as 150 blood clots in blocking the flow of recirculating metals and other traffic essential to realization of the design science revolution.

World’s Highest Priority

Electrical-energy integration of the night and day regions of the Earth will bring all the capacity into use at all times, thus overnight doubling the generating capacity of humanity because it will integrate all the most extreme night and day peaks and valleys. From the Bering Straits, Europe and Africa will be integrated westwardly through the U.S.S.R., and China, Southeast Asia; India will become network-integrated southwardly through the U.S.S.R. Central and South America will be integrated southwardly through Canada, the U.S.A., and Mexico.

Graphs of each of the world’s 150 nations showing their twentieth-century histories of inanimate energy production per capita of their respective populations together with graphs of those countries’ birthrates show without exception that the birthrates decrease at exactly the same rate that the per capita consumption of inanimate electrical energy increases. The world’s population will stop increasing when and if the integrated world electrical energy grid is realized. This grid is the World Game’s highest priority objective.

Not You or Me

In 1970 it could, for the first time, be engineeringly demonstrated that, applying the most advances know-how to the conservation and use of the world’s resources, we can, within ten years of from-killingry-to-livingry reoriented world production, have all humanity enjoying a sustainably higher standard of living that any humans have ever heretofore experienced. It could further be demonstrated that we can do this while simultaneously phasing out all further Earthians’ use of fossil fuels and atomic energy.

Humanity is so specialized and these epochally significant technological facts are so invisible that it seems an almost hopeless matter to adequately inform humanity that from now on, for the first time in history, it does not have to be you or me -there is now enough for both- and to convince humanity of this fact in time to permit it to exercise its option and save itself.
Integrity of Everyone

Now we’ve reached the point of discovering that muscle is nothing, mind is everything. Evolution is integrating us and we’re no longer so remote from each other. Clearly we are here to use our minds, to be information gatherers in the local universe, problem solvers in relation to the maintenance of the integrity of the eternally regenerative universe. Muscle is nothing; mind is everything. But muscle is still in control of human affairs. In about ten years, if we come out with muscle in control, we will have chosen oblivion; if we come out with mind in control, it’s going to be utopia and eternity. Yes, we do have the option to make it, but it’s absolutely touch and go, a matter of the integrity of every human being from now on.

What Can I Do?

Each year I receive and answer many hundreds of unsolicited letters from youth anxious to know what the little individual can do. One such letter from a young man named Michael – who is ten years old – asks whether I am a doer or a thinker.

The things to do are: the things that need doing: that you see need to be done, and that no one else seems to see needs to be done. Then you will conceive your own way of doing that which needs to be done – that no one else has told you to do or how to do it. This will bring out the real you that often gets buried inside a character that has acquired a superficial array of behaviors induced or imposed by others.

You have what is most important in life-initiative. Because of it, you wrote to me. I am answering to the best of my capability. You will find the world responding to your earnest initiative.

Presentation By: Peter Meisen
President, Global Energy Network Institute
Sources:

Fuller’s Earth, Richard J. Brenneman, St. Martin’s Press, 1984.

Buckminster Fuller: An Autobiographical Monologue Scenario, Robert Snyder

Critical Path, Fuller and Kuromiya
Peter Meisen is a San Diego native and Money & You® Graduate, Mr. Meisen founded Global Energy Network Institute (GENI) to investigate Buckminster Fuller’s premier global strategy — the electrical interconnection of renewable energy resources around the world. This solution has been called one of the most thoughtful strategies in solving many of the world’s problems.

To contact GENI:

P.O. Box 81565
San Diego, California 92138, USA
Phone +1 619-595-0139
http://www.geni.org/
info@geni.org

Davos, Debt & Systemic Failure

Too Much Credit

Davos, Debt & Systemic Failure

When West Meets East

The preferred diet of most Davos attendees is a fusion inspired composition of individual, government, and corporate debt combined with a free-market frisee of lax regulatory oversight held together by a roux of central bank credit that dissolves instantly when paired with matching counter-party risk.

The January 2008 gathering in Davos, Switzerland at the World Economic Forum is similar to the 1957 meeting in Palermo, Sicily of American and Sicilian Cosa Nostra crime families who met to discuss mutual problems and opportunities. The notable difference being that those in the Cosa Nostra live outside the law; while those at the World Economic Forum in Davos make them.

Those in Davos, however, share with the Cosa Nostra a common problem—the success of both depends on inherently unstable systems. The Cosa Nostra model is based on violence and greed which is both its strength and weakness. Capitalism, the source of wealth for those in Davos, is based on greed and leveraged debt, a combination as powerful and effective as the system of the Cosa Nostra—and just as unstable.

WHEN SYSTEMS FAIL

Unstable systems can function for years without serious problems. But over time, unstable systems will always break down. We are witness to such a systemic failure today. Global credit markets are slowing and contracting. The capitalist system responsible for economic expansion and wealth is in disarray.

Debt, in capitalist systems, is a wondrous device. That is, until it can’t be paid back. Under capitalism, credit fuels expansion but it does so at a cost. As capitalism expands, credit becomes debt and the greater the expansion, the greater the debt.

EXPANSION BEGETS DEMISE

Capitalism’s fatal flaw is apparent only in its later stages. As capitalism matures, its inherent systemic instability manifests. The very expansion of capitalism sets in motion its demise. The Achilles heel of capitalism is its perpetual need to expand.

Only perpetual capital expansion can create sufficient capital flows to service and retire previously created debts, the amounts of which are always increasing because of the accruing compound interest being charged. While any slowdown is cause for worry, a contraction bodes far worse.

FEAR IN DAVOS
WHAT A DIFFERENCE A YEAR MAKES

One year ago, the mood at Davos was one of quiet, almost smug, confidence. The on-going economic expansion appeared to be endless, the profits of investment bankers skimmed off the top of productive enterprise was greater than ever. Private equity, the investment banker’s equivalent of flipping real estate, was the hottest game in town.

It is no longer. Today in Davos, the scent of Armani is now mixed with the acrid smell of anxiety produced by falling markets and uncertain futures. Concern has replaced confidence. The major pheromone in Davos today is fear.

WHEN WEST MEETS EAST

A year ago, the confidence of those gathered in Davos was based on the belief that if an economic slowdown occurred, it would be offset by (1) the expansion of Asian economies and (2) the ability of global markets to decouple from slowing American demand. Both assumptions have proved themselves wrong.

The recent expansion of Asia was made possible by the debt-based consumption of American consumers. Now that America’s consumers have run out of cash and credit, the economies of Asia—China, India, Japan, Korea, Taiwan, Malaysia, etc. will slow. When capital markets slow, you know what happens; and, if you don’t, you soon will.

WHEN CREDIT MEETS SAVINGS

As capitalism expanded from the west to the east, western bankers hoped their success would be repeated. They were wrong. Asians responded to the new paradigm and their new found wealth by saving, not spending.

Western bankers were dismayed by this unexpected reaction. If Asian economies continued to save instead of spend, it would slow the expanding juggernaut of capitalism; and if capital expansion slows, like bicycles, capitalism doesn’t do as well at slow speeds.

CHINA AND GOLD

As western bankers run out of markets to exploit, leaving behind tapped out and overextended borrowers, e.g. consumers, governments, corporations etc., it was hoped Asia would provide the new horizon needed for capital markets to expand.

Asia instead will be a conundrum to the west. Not the surrogate state, militarily and economically, that Japan is in danger of becoming, China will prove to be less amenable to the western bankers hoping to economically colonize the last great prize of imperialism’s global puzzle.

While Chinese spend, they also, as do most Asians, save. They are currently holding $1.2 trillion in foreign savings—and this ingrained tendency to save will not give western bankers the acceleration they need to keep capital markets expanding as western markets contract.

At Davos, Dominique Strauss-Kahn, the Managing Director of the IMF, urged emerging economies with sound balance sheets to run fiscal deficits in order to offset a slowdown by US consumers. Will Asian economies choose to encumber their balance sheets in order to save the west’s capital markets? It is not likely.

Asians, in times of fiscal stress, prefer the safety of gold to credit and debt; and, although gold is no longer viewed as a mainstream investment in the west, gold still retains its traditional appeal in the east:

In Caishikou Department Store, a popular physical gold dealer in Beijing, more than 100 people lined up to purchase bullion for the Lunar Year of the Mouse on Nov. 22, the first trading day of the products. More than 200 kilograms of the gold bars were sold within 1.5 hours. Moreover, the total subscription amounted to two tons.
Xinhua, January 19, 2008

Gold will be the choice of Chinese seeking safety and profit in the coming year. India, another large emerging Asian economy, values gold as much, if not more, than China. This does not bode well for bankers in the west.

Davos will not be the same next year. If you’re planning on going, be sure to take some air freshener.

Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com

Creative Commons License photo credit: Andres Rueda