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alstry (< 20)

When Morals and Investing Merge



May 20, 2010 – Comments (7)

This could be one of my most important blogs as we are now at the crossroads between the Industrial Age and the Digital Age.

In the past ten years....America and Americans have borrowed an incredible amount of money.....about $30 trillion dollars....more than was borrowed in the prior two hundred and 25 years since our nation's founding.

Borrowing and spending that money built lots of buildings/homes, purchased lots of goods, created many jobs, and built incredible wealth in the form of ownership of corporate, municipal, federal, and syndicated debt.

The ownership of this debt is seated in our banks, insurance companies, pension plans and investment accounts.  From a dollar standpoint, the debt is the primary asset class backing America's and American's wealth.

As many know, borrowing and spending can be intoxicating.  When such behavior becomes systemic and unprecedented in scale, a nation becomes dependent on borrowing and spending to survive economically.  If the nation is not borrowing enough, the system eventually crashes due to slowing cashflow as the outstanding debt becomes dependent on issuing new debt to be serviced.

Unfortunately.....once an economy becomes debt dependent, moral issues become blurred as each struggle to stake their claim to dwindling cashflow.

For example, should we allow government to borrow to pay for food stamps and unemployment benefits.  In the Great Depression, when the funds didn't exist, no such payments were made. 

Should we allow government to borrow to pay salaries of government employees?

Should we allow familes to borrow money to buy food or pay their mortgage?  What about purchasing a large screen TV?  When payments are missed, the credit card company nor courts distinguish the reason for the debt.....

Should we allow hospitals to borrow money to pay nurses and doctors?

What about families to borrow to pay for medical treatment?  If we don't let the families borrow, how will the hospital pay the staff?

What about the school districts to pay for teachers?  Or the cities and counties to pay for firemen and police officers?

In the end, when one is operating under a deficit, if they don't borrow they fail.  When the system is running a deficit, if credit is not available, the system fails.

The moral quesion now that we have reached this crossroad is who should we let borrow and how much? 

If we don't let the money losing public corportion borrow, its debt collapses and the pension/retirement funds suffer along with the employees and customers of that company.

If we don't let the family borrow, they lose their house and the neighborhood suffers as foreclosures increase.

If we don't let the government borrow, services shut down and massive numbers are fired and lose incomes resulting in lower tax receipts.

In the end, our entire economy, the wealth of our nation and its people is dependent on the continued borrowing by its citizens, corporations and governments. 

The moral problem comes in on who is permitted to borrow and how much?  In the past our nation prospered as a result of its the past ten years, we have functioned primarily as a result of borrowing.

Once we cut off credit to housing and constructionn.....the industry basically imploded to levels not seen in 50 years when our population was much smaller.

Going forward, our nation, and much of the world faces a massive moral issue......who gets to borrow and how much.  Peoples lives will depend upon we as citizens confront the issue will mold our destiny collectively and individually as we enter the Digital Age.

Just as Alstrymous will be the question is how will we resolve this moral issue.

Should we borrow money to wage war or feed the hungry of our nation?  Should we borrow money to fund other countries or take care of our own.....what if we don't have enough for either?

In the end of the Industrial Age....our prosperity became our the moral and investing question is how will we allocate it going forward?


7 Comments – Post Your Own

#1) On May 20, 2010 at 8:15 PM, alstry (< 20) wrote:

Once a large enough segment of the population believes debt is not being allocated fairly....that is when social issues arise.  If the group becomes too large...then entire systems can fail.....

Social Unrest Spreads to Slovenia and Spain; Images Around the Globe; US Not Immune to Protests

Again, going through this logic is not easy......but failing to address it can be lethal.

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#2) On May 20, 2010 at 9:51 PM, alstry (< 20) wrote:


The technetronic era involves the gradual appearance of a more controlled society. Such a society would be dominated by an elite, unrestrained by traditional values. Soon it will be possible to assert almost continuous surveillance over every citizen and maintain up-to-date complete files containing even the most personal information about the citizen. These files will be subject to instantaneous retrieval by the authorities.

Zbigniew Brzezinski in his book Between Two Ages: America’s Role in the Technetronic Era


Carrier Strike Group 10, headed by the USS Harry S. Truman aircraft carrier, sails out of the US Navy base at Norfolk, Virginia Friday, May 21. On arrival, it will raise the number of US carriers off Iranian shores to two. Up until now, President Barack Obama kept just one aircraft carrier stationed off the coast of Iran, the USS Dwight D. Eisenhower in the Arabian Sea, in pursuit of his policy of diplomatic engagement with Tehran.

For the first time, too, the US force opposite Iran will be joined by a German warship, the frigate FGS Hessen, operating under American command.

It is also the first time that Obama, since taking office 14 months ago, is sending military reinforcements to the Persian Gulf. Our military sources have learned that the USS Truman is just the first element of the new buildup of US resources around Iran. It will take place over the next three months, reaching peak level in late July and early August. By then, the Pentagon plans to have at least 4 or 5 US aircraft carriers visible from Iranian shores.

The USS Truman's accompanying Strike Group includes Carrier Air Wing Three (Battle Axe) - which has 7 squadrons - 4 of F/A-18 Super Hornet and F/A-18 Hornet bomber jets, as well as spy planes and early warning E-2 Hawkeyes that can operate in all weather conditions; the Electronic Attack Squadron 130 for disrupting enemy radar systems; and Squadron 7 of helicopters for anti-submarine combat (In its big naval exercise last week, Iran exhibited the Velayat 89 long-range missile for striking US aircraft carriers and Israel warships from Iranian submarines.)

Another four US warships will be making their way to the region to join the USS Truman and its Strike Group. They are the guided-missile cruiser USS Normandy and guided missile destroyers USS Winston S. Churchill, USS Oscar Austin and USS Ross.


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#3) On May 20, 2010 at 11:49 PM, JGus (28.22) wrote:

Hey Al,

It's too bad you closed out all your picks. I'm sure you'd be back to allstar standing by now.

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#4) On May 20, 2010 at 11:57 PM, alstry (< 20) wrote:

Quite frankly...I think from an ethical standpoint....I had to close out the positions.

When I am accusing the market of being a fraud....playing caps would be hyporcritical.


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#5) On May 21, 2010 at 12:05 AM, starbucks4ever (89.76) wrote:

This is one of the few cases when I agree with alstry. Yes, who gets to borrow and how much. That is the question that will define the 21 century economy. And the social repercussions will be nasty. The socially conscious investor will have to hold his nose while he's making money.

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#6) On May 21, 2010 at 12:32 AM, goalie37 (87.79) wrote:

Good post Alstry

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#7) On May 21, 2010 at 9:35 AM, mtf00l (42.87) wrote:


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