More danger signs about the economy

I am increasingly concerned about the health of the US (and global) economy. The most unnerving recent event was the Federal Reserve's announcement that it will stop reporting "M3." This may sound like an arcane thing, but it is actually quite important. M3 is basically the number of US dollars out there. Why would the Federal Reserve decide to stop reporting such a basic and important number? My feeling, and that of a number of observers, is that the money supply is out of control. (See http://www.goldmoney.com/en/commentary/2005-11-17.html and
http://www.solariactionnetwork.com/phpBB2/viewtopic.php?p=9790#9790.) Over the past years, more and more money has been created. This has the effect of devaluing each dollar that's out there. What then is a dollar worth? That's a very good question. I think not much. This chart indicates how much gold is backing this money that's out there. http://www.bullandbearwise.com/GoldFearChart.asp. It's the lowest it's been in the past 50 years! Not good.

No one wants to the US economy to fail because the entire globe is dependent on it, which has propped it up for a while, but we can live in denial only so long. I think the day of reckoning is coming. Here's one more chart: the S&P 500 index in terms of the gold price: http://stockcharts.com/def/servlet/SC.web?c=$SPX:$GOLD,uu[d,a]wjlanyay[pb20!b50][vc60][i][J63685568,Y]&listNum=1. The S&P 500 has gone nowhere in the past 2+ years, and the recent downward breakdown does not look good for the future. I think we will see the economy struggle more and more.

This devaluing of the dollar will effect everyone, especially the poor because everything they need will cost more. How can we help them? The time to intervene to put in place protections is now, but of course, Bush will never do anything like that. Until we have a more capable and responsible president, we will need to take care of ourselves. Perhaps states can take action.

At the individual and community level, protect yourself by investing in gold and other real, tangible hard assets. Get your money out of the "tapeworm" economy and invest in your local economy. (See www.solari.com for more info on this idea.) The authorities will not take care of the people, so we must take care of ourselves.

The economic environment has been dominating my thoughts recently. I will get back to other thoughts in my blog in the near future.

Impending economic problems?

I've decided that I want to make notes about my economic predictions here. I hope to look back later and see how well I've anticipated future trends.

I believe that the US dollar is in bad shape and that a serious correction is due. James Turk uses a "fear index" that computes what percentage of the US dollars in circulation (M3) is backed by the Treasury's gold reserves. Right now it's just above 1% an it's NEVER been that low in the past 50 years (or probably more)! If people lose faith in the dollar, we will see gold prices skyrocket and the US economy fall apart, correcting the imbalance between gold and dollars. (Note that gold is making progress against most major currencies too.) The S&P 500 has been losing value against gold in the past couple years, which is not apparent when viewed in dollars. The US debt (government, personal, and trade) has skyrocketed. I think we have reached a decadent peak and we are in for a major correction. The housing boom sustained us for a while, but that is precarious now too.

I suggest getting into gold and investing for a bear market (short selling finance, housing, etc. investing in US exporters and gold stocks). I have shifted my small savings in this direction.

I am afraid that the most vulnerable will be hurt (as usual) in this impending crisis. I wish I knew what communities could do to protect themselves. I wish the government would institute policies to protect the most vulnerable, but they won't. Doing so wouldn't be rocket science, just a matter of will.

Capacity building: Beyond the personal responsibility vs. welfare debate

We all know the party lines. Democrats argue for an expanded welfare state to address market failures and take care of the needy. Republican argue for personal responsibility and strengthening existing private institutions (churches and families) to get the job done. Neither of these demostrates a very nuanced understanding of the problem that needs to be solved: how to build the capacity of people to be able to take care of themselves and then prosper. It's not about big government or small government, socialism or capitalism, public or private. welfare or personal responsibility.

Yes, the ultimate goal is for people to be able to stand on their own two feet and be productive citizens. But how does that happen? It would certainly be a bad idea to simply keep giving a needy person assistance: they will come to depend on it. On the other hand, ignoring their problem is also likely to lead to it worsening: if he or she doesn't know how to invest in themselves and their future, they are unlikely to start doing it without help. It is a reality that without a certain level of capacity, it is impossible for someone to invest in themselves, much less the world around them. All of their efforts slip away through the entropy of living. Sustainability first, then growth later, require putting in place a self-maintenance system that provides what one needs. One this foundation is in place, people have the space to explore and then grow. As successive foundations are put in place, a person gradually moves from survival to thriving. From dependence to independence to contribution.

For example, I can't look for a job without an address and a decent outfit. I can't protect my family and possessions from a hurricane if I don't have a car. I can't save for my own house until I have enough income to pay my monthly expenses. I can't stop smoking or drinking until I have reduced the pain in my life that has me reach for them. I can't spend enough time studying for my degree if I am the sole caregiver for an infant or my "friends" are always pulling me into trouble. I can't achieve the inner peace that comes from knowing and trusting oneself without having time to slow down and reflect.

Can a federal burearacy support people in the ways they need suppot? No, or not cost effectively anyway, but it is only the federal government that really has the power to raise the necessary resource. (State governments will never be able to tax sufficiently because they are in competition and cannot keep people from moving away.) The solution will certainly require making use of existing community institutions: this is cost effective leveraging of exisitng infrastructure and makes it possible to put social (relationships) as well as financial capital to work.

How can we build capacity? The devil is in the details of implementation of course. We need something that can operate at scale but also addresses the unique need of each individual case. We need a performance measurement system that measures real improvement (rather than absolute attainment), and competitively supports the approaches that generate the most rapid improvements. And we need to acknowledge that a few people may need sustained ongoing support and may never achieve true self-sufficiency, but also never give up investing and believing that they can make progress. We need long term monitoring and support that is phased out over time to address the wobbliness that is normal for anyone in a new situation. We need to remember that the service institutions cannot build the capacity of others if they do not invest in an maintain their own capacity (a major problem in the nonprofit sector). We need to believe that people want to feel and be powerful, and the provide a gentle stretch to help them get there.

This can never just be a "program." It requires a chain of caring and love that builds capacity at all levels, while reaching down and being motivated by those who most need the assistance. No bureaucrats can do the job. The parenting skills and attitude that supports children in to growing into strong, capable, contributing citizens is exactly the same as the skills and attitude that is needed to address poverty and need across the US by building the capacity of its citizens to take care of themselves. It's not "sink or swim," nor spoiling. It's starts with believing that each person can achieve anything they want to achieve, and that people want to achieve great things for themselves and others. It requires creating a space of love, acceptance and support, that allows people to experiment, learn about themselves and grow. It requires holding people accountable to what they say they want for themselves. It requires holding the stretch (painful at times) between where someone wants to go or needs to go and where they are. It's a matter of identifying what's at someone's core, reflecting it back: this creates a positive feedback that builds capacity.

Can we develop a nation that provides this to every person? I believe so. We will start making progress when we believe that it is possible and offer our love, acceptance and support to institutions and individuals around us. A web of care and support will gradually grow until all of us are provided with what we need when we need it. Because there are plenty of resources in the world: we're just not using them very well yet. That will require that we stop wasting them, and we stop wasting them we put systems in place that build capacity. This creates a virtuous cycle that leverages each resource better and better over time, and ensures that people get more and more of what they need over time.

Collective action problems in real estate

I have heard more than one person say that the most important role that a developer plays in risk management. The developer is responsible for finding a good concept, testing it for general feasibility, and then taking actions to get it built in the face of often daunting uncertainty. This requires dealing with the need to make working assumptions by establishing risk-mitigating contingency plans and protections. (An aside: I don't know if its ever been applied explicitly to real estate development, but the concept of "Discovery Driven Planning" formalized by Rita McGrath and Ian MacMillian seeks like a great way to understand the developer's process.)

Developers are well versed in dealing with market risk, credit risk and construction risk, but what about "collective action risk?" What do I mean by this? Basically, that there is a risk that the full value of a development will not be realized unless other beneficial development occurs on adjacent properties in a timely fashion. (I guess it could be called "neighborhood risk" too.) There is the potential for both positive and negative externalities from their adjacent properties, which creates a lot of uncertainty that need to be managed. It's your quintessential non-zero sum game. There are a few ways to deal with it:

• Planning: Having the area master-planned and zoned. This is still not fool-proof and most parts of the US this kind of top-down approach is not very welcome.
• Control: Own all of the properties and develop them all as needed. This control-based strategy can work, but it requires deep pockets and so is not compatible with my vision of democratic development. A related strategy is holding options on adjacent properties: cheaper but still imperfect.
• Avoidance: Build junk that can make money on its own in the short run, but does nothing for the broader neighborhood. This is the parasitic approach and is quite common. It is an integral part of sprawl: build low density crap that you can recover your investment on in a 5-7 year period, but that will need to be demolished later. It is not suitable for building dense, lasting, beautiful, pedestrian friendly communities where what is next door is critically important to the overall "ecology" and functioning of the community.
• Engagement/Value creation: Figure out a way, through collaboration, to address the collective action problem directly and eliminate risk. In some (rare) highly active areas, this happens naturally through the partnering of developers who know each other well. The problem with this is that it is basically an elitist and closed old boys club. Such networks are "efficient" in some way, but they are not creative (creativity requires diversity) and not innovative. In other words they may be operationally effective, but they do not problem solve well. So you end up with more of what didn't really work well in the first place.

What can we do to foster creative solutions to the collective action problems present in development? I see a combination of complimentary approaches that will greatly improve the situation. they all have the goal of reduce barriers to entry: making it possible for collections of investors to get into the development game and act in a coordinated fashion.

• Get little guys into the game by developing more creative financing options that allow small investors to pool resources. More people involved, especially people who have been traditionally excluded, will stimulate innovation.
• Improve information availability about land and the housing market through the creation of publicly available GIS systems that allow the easy visualization and "what if" planning by average folks to spot opportunities.
• Improve the ability to act collectively through online tools that improve the efficiency of the market. These tools should make it possible for people to signal interest, find partners, form contractual relationships, secure financing, engage and oversee contractual professionals as needed, etc. (It is important to remember that the owner/inbvestor role can be separated from the development manager role. This means you should be able to invest in projects without knowing how to get them built.)

Figuring out how to do this will make the most different in places off the beaten track. Those neglected cities and towns that have seen disinvestment and decline, usually as a the result of manufacturing jobs pulling out. These places have cheap land and great opportunities for redevelopment, but no one is willing to do work there because it would take a critical mass of folks to turn them around, and it is almost impossible to reach that critical mass without the kind of tools described above.

Imagine if it were possible for interested developers to learn about these locations, to put out proposals, find partners, and coordinate a sequenced, phased development plan that would address the problem of jobs, services, housing, office space, etc. all in the right order to maximize value creation and reduce risk? It would really be amazing. The land is so cheap in these places, we could really do very high-qality development, even for average folks, and still make good money. There is much we know about the process of the sequence and ecology of successful redevelopment. It's more a matter of being able to make it happen. (My favorite authority on the subject is Chris Leinberger, who has served as a Fellow at the Brookings Institution and written some papers for them.)

Let's get these collective action problems solved so we can really get to work...

Lost selves

I often feel angry with western culture (my culture) because I feel like my authentic self is slowly dying a little bit every day. It's inexorable. It feels like there is nothing I can do to stop it. I feel cut off from the deepest parts of myself and a feeling of real connection with the deepest parts of other people.

I can feel authenticity slipping away and I wonder what it would be like to live in a culture that actually embraced and nutured the authentic self. It's the thing I long for most in life, I think. I catch glimpses of what it would be like and it is so delicious that I can't help but want to figure out how to have more of it, and to help create a culture that supports it. It would be a much more vital and sustaining life.

I want to live in a community of people with a commitment to growing into our own selves and seeking ways to connect and share it with others. I am not talking about some sort of group therapy. I am simply talking about living a life that springs spontaneously from my core. A life that represents the play of my spirit with the spirit of others. A place without judgment, a place that cultivates love and acceptance, because these are the things that allow our spirit to grow and mature.

One of the best ways I know to experience authenticity with others is to participate in a Bohmian dialogue (or generative dialogue): a space that is free to be co-created by the participants. Musicians who improvise with others or athletes who are playing a loved sport together may also have the experience of shared authenticity. Some peple who do LSD together also report similar experiences. ("Flow" is what some people call an experience of shared authenticity, others call it collective intelligence.) The boundaries within oneself and between people drop allowing a free flow of ideas and feelings. In a very real way, the whole becomes more than the sum of the parts.

I long for that unity: the freedom that comes from transcending one's self, one's ego. Why is it so rare? It is really not that hard: it just takes the shared intention to do it, and the patience to practice. What is most hard is deciding to try it in a culture that glorifies the individual over the group, planning or exploration and and the known over the unknown.

Last night I participated in a dialogue session. At first I wondered why I was there. After a while, I remembered. As we sought to be real and authentic with each other, I only got hungrier for it. Our dialogue lasted only 2 hours. I wanted it to last for a weekend. Or really, a lifetime. What would it be like to live that way? All my experience with experiments in shared authenticity tell me that it would be much more satisfying that the current "real world."

What would a nonviolent army look like?

I personally think that THE biggest challenge facing the globe right now is the prevalence of fear-mongering, violence and coercion. In our current world, the people that win or get ahead are the people most willing to do anything. How can they be stopped? I would propose a nonviolent global volunteer army. I will explain more what I mean, but first lets look at the problem:

• Inflaming fears as a way to justify seizing control, undermining normal accountability mechanisms, and being able to operate behind closed doors. This is most often used by people in positions of authority. The prime example in my mind is George W. Bush, but it is used by everyone from school principals to fire-and-brimestone priests. The way he throws terrorism around as a bogey-man is completely irresponsible and has let him avoid the accountability a president should normally have. This is a new target, but an old tactic. The previous bogey-man was communism. And before that were the Native American, etc. Americans are easily scared by anything we don't understand (the "other"). This is something for us to grow out of rather than indulge. When we are afraid we seek protection from our authorities (running to mommy or daddy), and this can be self-defeating when those authorities are corrupt or misguided. What is really needed is for us to face our fears, investigate them, and develop the courage to deal with them. The good news is that we often find out that our fears were unfounded. In large part this is because fears are usually self-perpetuating. By seek to distance and protect ourselves from something, we unwittingly give it more life than it would otherwise have. This is certainly true of terrorism. Most impartial observers see strong evidence that the threat of terrorism is much worse since we began our "war" against it. Instead of trying to protect ourselves from it, why don't we try to understand its roots (which means actually talking to those scary "others": we can't understand it on our own), and address them?
• The next step beyond fear-mongering for those who will stop at nothing is coercion. This means forcing people to do things they would rather not do. There are many times of coercion, but all rely on abusing power. It can be physical coercion or emotional coercion. It can be blatant (bullying on a schoolyard, or financially preying on the elderly) to the subtle (frequently reminding someone who is overweight of their weight). Coercion can be active or static. Active coercion is the usual kind: getting someone to do something they don't want to do. Static coercion is keeping someone from doing what they want, or in some cases even becoming aware of what they really want. An example of this kind of coercion would be modern capitalism, which has elements of fear-mongering and coercion: it says that you happiness depends on owning certain products, which distracts one from what truly brings happiness but cannot be sold (e.g. love, acceptance).
• The final step is actual violence. There are many examples around the world right now of men (they are almost always men) who use violence to get their way. The more violent and bloodthirsty they are, they more they get their way. Genocides in Africa and the Balkans come to mind, but more local, smaller examples are mafioso.

What can we, the regular joes, do to stop these people and take our cities, country and world back? The trick is stopping them without becoming them in the process. As soon as we start using violence wer are just as bad as they are. Violence is a force that quickly gets out of control, leaving physical and emotional scars that fester for years after, and can erupt into more violence.

Imagine a world in which we have figured out how to stop these people? What would a world look like in which people actually had choice and the freedom to follow their own instincts? It is certainly a prerequisite to a deep democracy in which we are co-creating our future together from our aspirations and dreams.

The answer I keep coming up with is a volunteer, world-wide, nonviolent citizen army. The central guiding principle would be to NEVER use violence and coercion. How would such an army work? A nonviolent army could only really stop the violence if there were sufficient people actually willing to die as part of the cause. I know that is scary, but it is the only way it could work. Like white blood cells rushing to the site of an infection, people in the army would rush to the scene of violence and seek to prevent harm, swarming as many people as needed to stop the violence. In reality, it is not too different from what fire fighters currently sign up for. Yes, we have many protections for them, but fundamentally they are willing to die to protect your and my safety.

How would this work? It doesn't seemt to make sense. This is why it would work. To stop someone willing to do anything, you need to be willing to do anything, including be willing to make the biggest sacrifice: giving your own life. A violent person quickly induces fear in others that allow them to continue to act with impunity. The way to stop that is to say NO, I will not let you proceed.

I believe that there are a small enough number of truly evil people on the planet that we could quickly smother and stop their efforts if we acted together, and acted quickly. It would never work if you couldn't coun't on the other people in the army to be willing to lay down their life as well. Viewd this way, violence is a collective action problem, which can be solved.

Would I be willing to join such an army? Yes I would. I am tired of feeling powerless to stop the injustices in the world, and this is the only way I can see to address them with true integrity. BUT, I would not be willing to join unless there were a sufficient critical mass of others willing to join and pledge their lives a well. There would also need to be serious penalties for abandoning duty, just like in a violent army, because you need to be able to count on each other when it comes down to it. Many of the lessons the military has learned about how to instill esprit de corps would be needed here, but they are reasonable well understood at this point.

I know that I am not the first to think of this idea and that there are some exampes of this kind of nonviolent army already in action, but at a scale that is still too small for me personally. I recently read about such "peace armies" in Ode magazine (Nov 2005). They include Nonviolent Peaceforce, Voices in the Wilderness and Peace Brigades International . See also nonviolence.org. The more of us who sign up for these peace armies, the fewer people will actually get hurt and the more effective we can be. Maybe those of us who are not as brave as the current "soldiers" can pledge our support to the idea, and then, with further discussion and mutual support, figure out how to make the leap to actually participating. Can we get the risk involved down to the level of fire-fighting? If so, I think we will have reached a turning point in taking back our world.

Are you with me?

Craftsmanship

Our pusuit of the bottom line is destroying our natural inclination to be craftsman and craftswomen. We are giving up on work that grows from our love and knowledge of a subject in favor of what is most expedient. This leaves us empty and litters the landscape with crap that loses its value in a matter years if not weeks.

Let's slow down enough to remember that are some things that we love and that we'd like to throw ourselves into. Things that are intrinsically satisfying to us. Instead of chasing profits, let the profit flow from the value that is naturally created when we infuse our work with love and care. This applies to homebuilders, educators, politicians, business people, etc. Step out off the treadmill and remember who you are and what really gets you going. Then act on it and trust that the universe will reward you for it.

Passion vs. experience

Employers tend to hire people with experience over people who may be inexperienced but have a great passion for the work. Banks generally lend their money to proven business people taken on proven project types. This is extremely conservative system that slows innovation and change, and I would argue actually produces a lower return on investment.

What if we hired for passion? What if we funded passion, even when unproven? I think this would unlock tremendous potential in our society. We are greatly undervaluing our human capital, satisfied for meager returns because we don't know what's possible.

A person with a genuine passion to produce some real world change will not stop until it is achieve. He or she will figure out how to surmound any obstacle and get the job done, learning what is needed along the way. They will work much harder and without constant supervision than a experience but passionless person.

Let's channel resources to these people and see what happens. In the long run I think we will be amazed at the results and wonder how we could have waited so long to try it.

Who thrives in politics today?

I was reading about Rep. Patrick McHenry in the Washington Monthly recently, and his rise to power. It got me thinking about the kinds of people that are attracted to politics right now. Who enjoys the intense competition? The constant spotlight? Is this kind of person the best kind of person to run a highly diverse nation in need of profound cooperation and healing? I personally don't think so. Our current system selects for the most ruthless competitors and party loyalists out there: those are the ones who succeed. What if we set up a system that selected for the best collaborators? The people most able to participate in deep dialogue and deliberation? This would certainly be possible, but it would be a much different process...and produce much different legislators...

Craig Robbins: An inspiring developer

I recently heard Craig Robbins of Dacra talk about his work in South Beach and Miami. I was impressed and glad to see that some developers are really led by a vision of what they would like to create. It's my impression that too many developers, primarily focused on profit, start with a pro forma rather than a vision of the world they'd like to create. They focus on managing risk rather than creating something beautiful or timeless.