Dark clouds over America - 3 million poor souls not worth counting

I came across the following video at one of my regular financial haunts, Danielle Park’s Juggling Dynamite. You may remember Danielle as the ethical financial advisor.

The interviewee is economist Stephen Roach. (That reminds me of a joke about economists, but I digress). Mr. Roach works for Morgan Stanley and after listening to him in this interview my opinion of Morgan Stanley has gone up a couple of notches. Mr. Roach rightly points out that the unemployment figures released recently of 9.7% take no account of the three million U.S. citizens who have given up looking for a job. “For some bizarre reason,” says Mr. Roach, “the U.S. statisticians do not count these poor souls as unemployed.” The actual unemployment rate is 11.5%.

So not only are detainees ‘not persons’, neither are the discouraged jobless. What happened to equality and justice?

Speaking of justice, Mr. Roach ironically ends his analysis with the injunction that, because of the ‘noise’ in the unemployment data, “It’s important for your viewers to keep watching the pithy commentators you get on your show for clarity, truth and justice.”

In other words, don’t expect it from your administration’s statisticians. Damn, I like that guy.

OK, here is my economist joke, but in honour to Mr. Roach, let’s make it a statistician joke instead, it’s much more à propos:

There are three kinds of government statisticians: those who can count, and those who can’t.

Dark clouds over America - Captain Bernanke and the Navy Rule

I recently read Paul B. Farrell’s article Warning: Captain Bernanke sinking the USS Titanic just before the reconfirmation of Ben Bernanke as Federal Reserve Chairman. Farrell compares Bernanke to Captain Queeg in the film ‘The Caine Mutiny’. I’m not familiar with the film but I can imagine Captain Queeg has some issues.

Worse, Obama's giving ol' Capt. Ben a second chance to pilot into new icebergs dead ahead. The Economist calls them "asset bubbles." Problem? Capt. Ben can't see through his ideological Greenspan/Reaganomics goggles, clouded by his obsessive allegiance to Wall Street's "fat cat bankers."
Nothing new: He failed to see warnings of "icebergs" back in 2007. Yes, and he'll miss any new icebergs, sink the global economy and plunge the world into the eerie depths of the Great Depression 2.

Farrell goes on to quote Jeremy Grantham in his recent letter to investors ‘Lessons Not Learned: On Redesigning Our Current Financial System.’

"Imagine the company representatives on the Titanic II design committee repeatedly pointing out that the Titanic I tragedy was a black swan event: utterly unpredictable and completely, emphatically, not caused by any failures of the ship's construction, of the company's policy, or of the captain's competence. 'No one could have seen this coming' would have been their constant refrain.'"
Sound familiar? You bet. Capt. Ben's "Titanic II design committee" would include his ol' buddies, Alan Greenspan, Henry Paulson, Lawrence Summers and Tim Geithner. "Their response would have been to spend their time pushing for more and improved lifeboats," says Grantham.

I have liked Jeremy Grantham ever since I saw him in this far-reaching interview at Wealthtrack after the meltdown last year (which I encourage you to watch in its entirety to get valuable insight into what has happened in this crisis, including utter condemnation of Greenspan and his protégé Bernanke). My favourite Grantham quote from the interview is this:

Interviewer: New rules of investing: is permanent bullishness about equities out?

I certainly hope it’s out. I like to say that in the short term we learn an enormous amount from these crises, and in the intermediate term we learn a little, and in the long term we learn absolutely nothing.

So a ‘nearly dysfunctional Congress’ dominated by special interests has plucked the Captain of the Titanic from the sea and has promptly given him command of a new ship. ‘Is that wise?’ you may ask. By pure coincidence I came across the following from (Warren Buffet’s partner) Charlie Munger’s book ‘Poor Charlie’s Almanac’:

I like the Navy’s system. If you’re a captain in the Navy and you’ve been up for twenty-four hours straight and have to go to sleep and you turn the ship over to a competent first mate in tough conditions and he takes the ship aground – clearly through no fault of yours – they don’t court-martial you, but your naval career is over.
You can say, ‘That’s too tough. That’s not law school. That’s not due process.’ Well, the Navy model is better in its context than would be the law school model. The Navy model really forces people to pay attention when conditions are tough – because they know that there’s no excuse.
It doesn’t matter why your ship goes aground, your career is over. Nobody’s interested in your fault. It’s just a rule that we happen to have – for the good of all, all effects considered.
I like some rules like that. I think that civilization works better with some of these no-fault rules. But that stuff tends to be anathema around law schools. ‘It’s not due process. You’re not really searching for justice.’
Well, I am searching for justice when I argue for the Navy rule – for the justice of fewer ships going aground.

Well, in the case of Captain Bernanke the Navy rule would doubly apply: the Captain was at the helm of his ship the whole time and was fully responsible for running the ship aground. The Captain would have been court-martialed, found guilty and dismissed the service. Next case. Instead, here we are again with the same captain, doomed to live through the whole scenario again. As Grantham points out, in the long term we learn absolutely nothing.



Image from Jeremy Gilby.com

Dark clouds over America - the annual tribute

I have been reading ‘The Essays of Warren Buffet: Lessons for Corporate America’. There is much gold to be mined here by the moral philosopher. Here is one important theme: the transfer of wealth from the US to the rest of the world.

In 2003 Buffet wrote:

(I)n recent years our country’s trade deficit has been force-feeding huge amounts of claims on, and ownership in, America to the rest of the world. For a time, foreign appetite for these assets readily absorbed the supply. Late in 2002, however, the world started choking on this diet, and the dollar’s value began to slide against the major currencies.

In 2004:

Last year we had $1.15 trillion of such honest–to-God trade and the more of this, the better. But, as noted, our country also purchased an additional $618 billion in goods and services from the rest of the world that was unreciprocated. This is a staggering figure and one that has important consequences.
The balancing item to this one-way pseudo-trade … is a transfer of wealth from the US to the rest of the world. … This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote to you last year. Consequently, other countries and their citizens now own a net of about $3 trillion of the US. A decade ago their net ownership was negligible.

Buffet goes on to project that a decade from now (in 2014) net foreign ownership of the US would amount to about $11 trillion and at 5% interest, the US would need to spend $.55 trillion annually to ‘service’ this foreign investment. With a GDP of about $18 trillion, 3% of GDP would go to the rest of the world as 'annual tribute’ for financing Americans’ overindulgences.

If the US were running a $.6 trillion current-account (trade) surplus, commentators worldwide would violently condemn our policy, viewing it as an extreme form of ‘mercantilism’…
Our spendthrift behaviour won’t, however, be tolerated indefinitely. And though it's impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners.

In 2005 the situation continued to worsen and in 2006 Buffet notes another ‘milestone' in the deteriorating financial health of the US:

Already the prediction I made last year about one fall-out from our spending binge has come true: The ‘investment income' account of our country – positive in every previous year since 1915 – turned negative in 2006. Foreigners earned more on their US investments than we do on our investments abroad. In effect, we’ve used up our bank account and turned to our credit card. And, like everyone who gets in hock, the US will now experience ‘reverse compounding’ as we pay ever-increasing amounts of interest on interest.

This situation will only change if the US ‘massively under consumes and begins to run consistent and large trade surpluses’.

Buffet points out that the huge US budget deficits do not transfer wealth. Only when we buy more than we sell is wealth transferred to the net seller.

However, when we also borrow money to buy more than we sell, we are hastening our financial demise, and that is what we see today.

And let us not even mention what road we are taking if we don’t even borrow but merely print the money out of thin air…

I leave you with this video about the opening of the world’s tallest skyscraper in Dubai, the ‘Burj Dubai’. It is an impressive architectural achievement and a proud symbol of Dubai’s economic power. But while I watched in awe, I couldn’t help thinking that I was witnessing possibly the most spectacular manifestation of the transfer of wealth out of the US.

Dark clouds over America - Bill Gross: What has become of the American nation?

Thank you to Shocked Investor for the heads up on the publication of Bill Gross’s new Economic Outlook for 2010.
Bill Gross is managing director of Pimco ‘a leading global investment management firm with more than 1,200 employees in offices in Newport Beach, New York, Amsterdam, Singapore, Tokyo, London, Sydney, Munich, Toronto and Hong Kong.’
This is the same Pimco that recently announced it would be a net seller of UK Government bonds this year and that it would reduce its holdings of American treasury debt (see this post at The Market Ticker).

Shocked Investor comments ‘You’d think something is about to give.’ Since being so shocked, he’s so cool about everything now.

Here is the beginning of Bill Gross’s Economic Outlook 2010 (my bold letters):

Quixotic journeys often make for great literature, but by definition are rarely productive. I am, after all, referring to windmills here - not their 21st century creation, but their 17th century chasing. Futility, not productivity, was the ultimate fate of Cervantes' man from La Mancha. So it is with hesitation, although quixotic obsession, that I plunge headlong into a discussion of American politics, healthcare legislation, resultant budget deficits and - finally - their potential effect on financial markets. There will be windmills aplenty in the next few pages and not much good can come of these opinions or my tilting in their direction. Still, I mount my steed, lance in hand, and ride forward.

Question: What has become of the American nation? Conceived with the vision of liberty and justice for all, we have descended in the clutches of corporate and other special interests to a second world state defined by K Street instead of Independence Square. Our government doesn't work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people. Washington consistently stoops to legislate 10,000-page perversions of healthcare, regulatory reform, defence, and budgetary mandates overflowing with earmarks that serve a monied minority as opposed to an all-too-silent majority. You don't have to be Don Quixote to believe that legislators - and Presidents - often do not work for the benefit of their constituents: A recent NBC News/Wall Street Journal poll reported that over 65% of Americans trust their government to do the right thing "only some of the time" and a stunning 19% said "never." What most politicians apparently are working for is to perpetuate their power - first via district gerrymandering, and then second by around-the-clock campaigning financed by special interest groups. If, by chance, they're ever voted out of office, they have a home just down the street - at K Street - with six-figure incomes as a starting wage.

Read the full report here.

Dark clouds over America - what happened to the Vision?

You have to go deeper than the mainstream media to get an idea of what is really going on in the US. If you listen to the mainstream media you may think that now is the time to get back into the market, the recession is behind us, the government has handled the crisis well and has the situation in hand and things are looking up. If you believe all this I urge you to visit some of the blogs and sites that I follow.

Remember my post last year, A Vision for America , about President Obama’s inaugural speech? Remember these lines?

As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us, watching to see what we do with this moment, waiting for us to lead.
(…)
It is time to put in place tough, new commonsense rules of the road so that our financial market rewards drive and innovation and punishes shortcuts and abuse…

What happened? Via Danielle Park’s Juggling Dynamite I found this article at Rolling Stone by Matt Taibbi:

Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." (…)What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

Read the full article Obama’s Big Sellout.

For knowledgeable and detailed information and no punches pulled commentary and insight on the financial crisis and government’s action and non action in the face of it, you must read Karl Denninger’s The Market Ticker. For a great overview of 2009 and what 2010 holds (not pretty) do yourself a favour and read Where we are, where we’re heading 2010. Here is an excerpt:

If you take nothing else away from this Year in Review Ticker, it should be that singular chart above and a decent understanding of what it means:

To come back into equilibrium, assuming we do not decrease debt in the system at all, we would have to shrink GDP by about 20%. But shrinking GDP means that money available to pay down debt would also decrease which would generate even more defaults.

This is how deflationary depressions happen - years, even decades of playing Ponzi by layering debt upon debt. Bernanke and Geithner, along with President Obama, are well-aware of these facts which is why they are all pounding the table demanding that banks "loan more."

The problem with such a prescription is that the wise person won't borrow, for he knows what's coming. The unwise has no collateral to pledge, and thus can't borrow.

If the government forces (either by persuasion or legislation) lending to those who can't pay they only extend the Ponzi and in doing so make the inevitable collapse WORSE.

Before you get a headache, I will just leave you with a video I found through this post at Shocked Investor. It closes the loop on the opportunity that existed for Obama and that he seemed poised to seize in his inaugural address to reform the banking industry. Instead we are simply back where we started but when this bubble bursts there will be no more stimulus, no more money and no more bubbles to save us.

The eyes of all people in all nations are upon the US alright but what they see, including these eyes, is not good.

Bill Moyers speaking to Simon Johnson of the Peterson Institute for International Finance and representative Marcy Kaptur:

Dark clouds over America - the Supreme Court rules detainees are not persons

One of the blogs I read for insight into the economy is Humble Student of the Markets by Cam Hui. Here I read of an alarming development in his post Two more steps toward Argentina. The original story is this, as told by Chris Floyd at Empire burlesque:

While we were all out doing our Christmas shopping, the highest court in the land quietly put the kibosh on a few more of the remaining shards of human liberty.

It happened earlier this week, in a discreet ruling that attracted almost no notice and took little time. In fact, our most august defenders of the Constitution did not have to exert themselves in the slightest to eviscerate not merely 220 years of Constitutional jurisprudence but also centuries of agonizing effort to lift civilization a few inches out of the blood-soaked mire that is our common human legacy. They just had to write a single sentence.

Here's how the bad deal went down. After hearing passionate arguments from the Obama Administration, the Supreme Court acquiesced to the president's fervent request and, in a one-line ruling, let stand a lower court decision that declared torture an ordinary, expected consequence of military detention, while introducing a shocking new precedent for all future courts to follow: anyone who is arbitrarily declared a "suspected enemy combatant" by the president or his designated minions is no longer a "person." They will simply cease to exist as a legal entity. They will have no inherent rights, no human rights, no legal standing whatsoever -- save whatever modicum of process the government arbitrarily deigns to grant them from time to time, with its ever-shifting tribunals and show trials.

Cam Hui asks what happened to ‘inalienable rights’ and compares the road that the US is now taking to that taken by Argentina:

This Supreme Court ruling sets up the preconditions for a Dirty War that Argentina saw in the late 1970s and early 1980s, where government forces made suspected left-wing guerrillas and their sympathizers “disappear”. Just as the repeal of the Glass-Steagall did not result in immediate consequences, I don’t believe that we will see the effects of this ruling overnight but the long term effects are potentially disastrous.

What about ‘Land of the free, home of the brave’? What about the Constitution?

This ruling tramples on the Constitution and one of the most powerful symbols of America. Just understand this - that Constitution was paid for by blood, not only of the Founding Fathers, but by every American soldier. Every G.I. that ever enlisted swore an oath, not to the president of the day, but to the Constitution of the United States.

When the Supreme Court of the nation that champions freedom and justice in the world comes out with a ruling like this, at the fervent request of the President of the nation, one has to take note and wonder where this is all going to lead.
Some may say that in war there are no rules. Certainly Churchill made it clear to Hitler that if he invaded Britain, the British would use all means available to them to defend themselves, the implication being biological weapons would be used. But where is the threat to the US today that faced Britain in her darkest hour?
I would say this: war can be waged without rules but the nations that wage war without rules always lose in the end. War can be waged without rules but philosophy teaches that life cannot. Such victors sow the seeds of their own ultimate destruction. Remember: sincerity is the treasure of a land and by sincerity we also understand integrity and the moral life. The US has a proud record of going to war to defend those values, now it must look in the mirror. The US does not need such a ruling, it is an act of weakness, an act of fear, and it is a shame and a disgrace to all the American men and women who have given their lives so we can enjoy freedom and justice, not just Americans but the whole world.

Yves Smith at Naked Capitalism points out that Romans of 2,000 years ago now enjoyed more rights than Americans today:

Roman citizens enjoyed a right to a trial, a right of appeal, and could not be tortured, whipped, or executed except if found guilty of treason, and anyone charged with treason could demand a trial in Rome. We have regressed more than 2000 years with this appalling ruling.

I am reminded of my recent reading of ‘The Peloponnesian War’ by Donald Kagan. The Athenians were blessed with a noble and capable leader in the form of Pericles of whom Plutarch says:

For whereas all sorts of distempers, as was to be expected, were rife in a rabble which possessed such a vast empire, he alone was so endowed by nature that he could manage each one of these cases suitably, and more than anything else he used the people's hopes and fears, like rudders, so to speak, giving timely check to their arrogance, and allaying and comforting their despair. Plutarch

While Pericles lived the Athenians kept to the noble path and could hope for victory. When he died, the war became more desperate, more brutal and hope receded. I can’t help but think that the US is in need of a Pericles today.

The Bailout Bubble

In my last post Amy Luft’s question on Answers I said ‘the lack of morality in the financial system has brought us to the brink of disaster.’ I was speaking from the generally accepted viewpoint that the worst of the credit crisis is over. But perhaps the worst is still to come.

My view of the present financial crisis, as conceived by my being a regular reader of certain financial sites, compelled me to move from equities to cash in my retirement plan many weeks ago (since the TSX reached 10,200 and the Dow 9,000). So I was already very sceptical about the strong recovery priced into the market at this level and expected a pullback. But the last few days (just as the mainstream media is getting lathered up about ‘the end of the recession’) I have come across some articles that frankly give me the willies.

First there was this post at Danielle Park's Juggling Dynamite, Risk aversion is back on :

At present levels, the S&P 500 is pricing in a significant earnings rebound for 2010 and emerging markets have been pricing a hearty resumption of western consumption. Both of these assumptions are seriously in doubt.
Today the Singapore Minister of Trade and Industry threw a blanket again on resurgent decoupling hopes, saying there were "few signs of a decisive turnaround in final demand in Singapore's key export markets." (…)
This time, thanks to the massive credit overhang, rate cuts alone are not able to revive the housing sector. Without the housing catalyst to kick-start and lever renewed consumption, growth has a massive headwind.

Danielle includes a clip, ‘Housing Mess is not over’, which gives a sobering update on US housing.

Then it was Marketwatch’s Paul B. Farrell and his article New bull, new bubble, new meltdown by 2012.

Yes, folks, a new bubble cycle is already in motion. You can feel the energy building, the kind that fuelled the meltdowns of 1998, 2000 and 2007. We never resolved the problems fuelling the dot-com insanity. We made matters worse feeding the subprime credit-derivatives disaster with cheap money, Reaganomics ideology and two costly wars. Lessons were never learned, nothing was resolved. Today matters continue deteriorating.
Behind the hoopla, the Wall Street conspiracy has dumped $23.7 trillion new bailout debt on taxpayers. The bill will come due.

What we are seeing is a new market bubble in the making fuelled by bailout-money. Instead of lending, banks are putting the money into the stock market. (I read that 75% of trades since the March low have come from the desks of Goldman Sachs). When this bubble bursts, it will be ugly.

Expect a major house-cleaning, a second American Revolution. We predicted the "Great Depression 2" around 2012. Well, we doubt taxpayers will passively sit one more time, like in the 1930s, in 2000, and the past few years. Next time voters will take a page from the history books about past revolutions in the American Colonies, France and Russia. A perfect storm will erupt in a massive global credit meltdown, bringing down Wall Street and the clandestine $670 trillion shadow central banking system.

But the article that really gave me the willies was this one from Global Research, Entering the greatest depression in history, by Andrew Gavin Marshall.

While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. Indicators show that the next possible burst is the commercial real estate bubble. However, the main event on the horizon is the “bailout bubble” and the general world debt bubble, which will plunge the world into a Great Depression the likes of which have never before been seen.

Marshall ties together many threads and introduces us to Gerald Celente, head of the Trends Research Institute, the major trend-forecasting agency in the world.

Celente’s forecasts are not to be taken lightly, as he accurately predicted the 1987 stock market crash, the fall of the Soviet Union, the 1998 Russian economic collapse, the 1997 East Asian economic crisis, the 2000 Dot-Com bubble burst, the 2001 recession, the start of a recession in 2007 and the housing market collapse of 2008, among other things.

And what is Gerald Celente predicting will happen in the present financial/economic/moral crisis?

Phantom dollars, printed out of thin air, backed by nothing ... and producing next to nothing ... defines the ‘Bailout Bubble.’ Just as with the other bubbles, so too will this one burst. But unlike Dot-com and Real Estate, when the "Bailout Bubble" pops, neither the President nor the Federal Reserve will have the fiscal fixes or monetary policies available to inflate another.

And just when you thought it couldn’t possibly get any worse. Guess what? It gets worse:

Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war... While we cannot pinpoint precisely when the 'Bailout Bubble' will burst, we are certain it will. When it does, it should be understood that a major war could follow.

You can watch a video of Gerald Celente embedded in the above article, and at the end of the video there is a selection of related videos.

I know all this has very little to do with my blog about Healing Philosophy, but I felt I had to share it with you since we are facing very challenging times and the more we can all be forewarned the better chance we have of getting through it.

And then again, perhaps it has a lot to do with philosophy and, eventually, healing.

A Vision for America

As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us, watching to see what we do with this moment, waiting for us to lead.

Among the eyes of all people of all nations watching President Obama’s first address to Congress were my eyes. And they saw an inspiring, charismatic leader, leading. Of course, he is a product of the times. He not only has ‘the Mandate of Heaven’, he has the mandate of an angry American people who want action and a more enlightened and effective government.

Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more… Now, if we're honest with ourselves, we'll admit that for too long we have not always met these responsibilities, as a government or as a people. I say this not to lay blame or to look backwards, but because it is only by understanding how we arrived at this moment that we'll be able to lift ourselves out of this predicament… The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank.

My italics. Straight talk, honest words, sincerity! Compare Obama’s words with this from the I Ching 41st hexagram: ‘What matters here is to understand the time and not to try to cover up poverty with empty pretence’. Only when you recognize and accept the truth of a situation can you hope to correct it.

Now, I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and the results that followed. So were the American taxpayers; so was I.
So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you: I get it.
But I also know that, in a time of crisis, we cannot afford to govern out of anger or yield to the politics of the moment.

Ah yes, anger; we know about the evils of anger on this blog, but what about the politics of the moment? I am put in mind of a quote by Joseph Campbell: ‘Economics and politics are the governing powers of life today, and that’s why everything is screwy’. The governing powers of life should be universal truths, spiritual values. Of course there is need of economic discipline. But is the present method of 4-year terms of office propitious to a wise, consistent, impartial, enlightened approach to public finance? Someone said that a nation is too important to be run by politicians (maybe it was me). I don’t know the answer, but a kind of politically independent ‘Supreme Court’ of Economic Planning might be worth considering.

It is time to put in place tough, new commonsense rules of the road so that our financial market rewards drive and innovation and punishes shortcuts and abuse…

Yes, the way of the swamp plant will not be tolerated any more. A pity that we had to look over the brink into the abyss of financial meltdown to admit the problem and to gather the political resolve to do something about it. Still, we are there now. Every crisis brings its opportunity. Perhaps this recognition of the swamp plants in the system will be the positive development out of this financial crisis, the tipping point that allows us to weed out the problem. Whenever I have a personal Waterloo, I always try to look at what the lesson is and I even tell myself ‘This was a cheap lesson’. In other words, the lesson, though expensive, will allow me to avoid even costlier mistakes in the future.

The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care, the schools that aren't preparing our children and the mountain of debt they stand to inherit. That is our responsibility… I see this document differently. I see it as a vision for America, as a blueprint for our future.

Could it be that Big Oil and Big Pharma lobbyists stood in the way of energy and health care reform? Could it be that a nation as technologically advanced as the United States could not have developed advanced biofuels 10 years ago? Could not have developed electric cars 10 or 20 years ago? Could not have been the leader in solar and clean energy use decades ago? Could not have implemented universal health care reform and efficiency? ‘Economics and politics are the governing powers of life today…’

History reminds us that, at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas… Now, none of this will come without cost, nor will it be easy. But this is America. We don't do what's easy. We do what's necessary to move this country forward.

The sleeping bear has gotten a wake up call. Whether Big Oil, Big Pharma, Big whatever-you-care-to-name like it or not, there will be changes around here, oh dearie me yes. That swamp-plant special-interest mentality has bankrupted America. Energy, health care and education reform will go forward now. How sweet it is.

Finally, because we're also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead 10 years and accounts for spending that was left out under the old rules and, for the first time, that includes the full cost of fighting in Iraq and Afghanistan.

A deficit of trust. What a telling phrase. Such a deficit is worse than a budget deficit because it undermines the moral fabric of the nation. Sincerity is the treasure of a land.

To overcome extremism, we must also be vigilant in upholding the values our troops defend, because there is no force in the world more powerful than the example of America…Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege, one that has been entrusted to few generations of Americans, for in our hands lies the ability to shape our world, for good or for ill.

For all its faults, I still feel that the United States is the closest thing to a utopia that we have on earth (perhaps with the exception of Canada!) The people are generous, hard working, tolerant and courageous. It only needs a leader and a government to harness those values, that strength and channel it in an enlightened way.

These words and these stories tell us something about the spirit of the people who sent us here. They tell us that, even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres, a willingness to take responsibility for our future and for posterity.

Here are echoes of the I Ching again: ‘If a time of scanty resources brings out an inner truth, one must not feel ashamed of simplicity. For simplicity is then the very thing needed to provide inner strength for further undertakings’. Churchill said the same thing: ‘We shall draw from the heart of suffering itself the means of inspiration and survival.’

Obama closes his address in a charismatic appeal to a simple, basic truth and common interest: love of country.

There are surely times in the future where we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed…That must be the starting point for every debate we have in the coming months and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground. And if we do, if we come together and lift this nation from the depths of this crisis, if we put our people back to work and restart the engine of our prosperity, if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then some day, years from now, our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, "something worthy to be remembered."

Something worthy indeed. The stakes are high. Failure is not an option. Time to roll up the sleeves and work, sincerely, for a new vision.

.

Photo from Wikimedia