Marc Sussman's Money Message Blog

Cause and effect. It is amazing how disconnected we can be from the cause of our problems - we are so focused on the effects. It is the reason that little is learned from history. One thing is certain--Barack Obama is not the cause of our problems.

In the coming year, we’ll see a continuation of our economic decline. The housing market collapse will continue along with an epidemic of corporate consolidations and bankruptcies. The future of the auto industry is in doubt. Credit markets will continue to remain tight. 2009 sizes up to be an historically bad year. Eventually we'll see inflation, reminiscent of late 70's early 80's. We won't see our way clear until the beginning of 2011. We'll be smaller, simpler, and better.

It has always been termed socially responsible investment – and I’ve always had a non-specific aversion to this description. The issue - so compelling - reduced to that word. Responsible. Yuck. It sounded like the castor oil of the investment world.
Not only did it not identify the problems, it took all the excitement and energy out of the possibilities. For me, It wasn’t about being responsible – it was about being human, connected and more importantly, courageous.

Now, we enter the age of investment we will call ESG – Environmental, Social, Governance. All the issues are contained in the clarity of these three words, these three letters. As the financial tragedy we are living through unfolds, these words will become part of our common lexicon.

The Obama administration will bring with it a groundswell of environmental activism. The financial disaster we’ve created has set the stage for different priorities, slowed us down. Extravagance is taboo. Authentic is what we will admire.

There will be difficult challenges. Barack Obama’s support of clean coal technology was easy, a political maneuver necessary for him to carry certain states. It’s easy to support a technology that doesn’t exist, because it is so easy to abandon it. The coal industry is perceptive in mounting one of the great public relations campaigns supporting the future of what they call “clean coal”. Coal is an industry on the verge of extinction. Carbon sequestration and capture, the theoretical process of injecting CO2 into the ground, is no more a reality than Santa Claus (sorry kids). We are decades away from anything resembling such a technology, and we just don’t have the time.

As not to downplay the importance of the upcoming election, let me say that if you don't kmow who to vote for at this point, I will pray for you. Moving on.

Some time ago, I began writing a series of articles called America in Recovery. I did this because addiction is very easily identified – if you’re an addict. Let me be direct about what I see. I have been there.

We’ve all known family members who seem to be able to hold it together, to keep jobs, have relationships, to function in spite of something so destructive really going on.This is exactly what has been developing in our country for decades, and now accelerates in our financial system. Our financial infrastructure is crumbling, despite the frantic efforts being made to shore it up. America is fast approaching its bottom, (the addict bottom- not the market one) and our financial problems though seemingly insurmountable are not our biggest problem - but more on that later.

Now, I have never made the short list of those considered for the Nobel Prize for Economics. In the past I’ve needed an interpreter to understand the comments of then Fed Chairman Alan Greenspan. My financial credentials and background do not include MIT, Princeton or any of the many impressive think tanks that have produced so many of the “smartest guys in the room”. It’s not investing acumen that caused me to begin to reallocate client money to CD’s 2 years ago. I just know an addict when I see one. Most of the finance world trusted, blinded by our “apparent” success, but forgot that good ideas are nothing without good intentions.

A trillion here, a trillion there, pretty soon you’re talkin’ about real money.

Ladies and gentleman, we’re seeing the greatest grift in our history. If you look up a grift in the dictionary, its defined as a swindle - a confidence game.

We’re told by regulators, bankers, politicians, that they didn’t know that deregulating the banking industry would lead to problems. They didn’t know that if you bypassed the process of actually qualifying for residential loans you’d have problems later on. If your breath could fog a mirror - you qualified.

In other words, the people lending the money were not concerned about how it would be repaid. We should have asked why. It was simple - they sold the loan the minute the loan closed. Other institutions bought these questionable loans. Again, we should have asked why.

They say they didn’t know that the loans were questionable. That’s one big pile of cowchips, boy. These are the smartest guys in the room.

They packaged these risky loans into investments called CDO’s. Collateralized Debt Obligations. Then they sold them back to us. As the loans were becoming worthless, they sold them to us.

This is what is called a grift.

And so, in the twilight of their careers - at just the right moment - many, many Chief Executives at financial firms cashed out to the tune of hundreds of millions of dollars in phony profits. Are these grifters going to jail? No. Are we getting any of this money back? If we are, I haven’t heard about it.

No, instead we’re signing a promissory note to the tune of $850 billion dollars for starters.

It’s the greatest travesty of social and economic justice in our history. Before its over, every dollar that baby boomers were going to inherit from their parents will be used to stop the bleeding. No inheritance, no property values, nothing.

You had to be impressed with Hillary Clinton last night. She did what had to be done. She asked her troops - why were they in this fight? Was it for the America, or was it for her? It was the pivotal question of this Democratic Convention. She was powerful, and although we may not have a woman in the White House yet, Hillary has certainly paved the way.

Perhaps it was because Labor Day approaches, but I heard the theme woven throughout her speech - the fight for the rights of working men and women.

My father was a garment worker, a pattern maker, a man who left for work in the dark, came home in the dark. A member of the International Ladies Garment Workers Union. Growing up I saw what it was like, to work for people who refused to treat you with common human decency. I met many listeners on the Air America Cruise who had family in the Labor movement. Union organizers who were beaten, some lost their lives fighting for workers rights. Today, management still treats workers as a cost of doing business. If you want to where the gap is, there it is. Nothing really trickles down.

I was shocked last year when there was no Labor Day Parade. Union leaders just shrugged. This year the parade is back. Maybe that’s a message, a sign - one that we should pay attention to.

Without progress, without respect, we’ll never be able to march proudly on Labor Day. Until we can, we should call it what it is - marching in place.

Marc Sussman is an investment professional for the past 30 years. He asks that you forgive him.

In 2005, for no apparent reason, he launched a radio show on the Air America network called the Money Message.

Please keep it under your hat that this individual has been allowed to join The Climate Project, Al Gore’s army that presents a Powerpoint for the ages.

“If they think the story of our environmental impact is An Inconvenient Truth, wait until they get a loada me.”

Observations from the Edge

If I have any talent of merit, it is that I can plagiarize with the best of them. Read on.

A lack of investment acumen has turned out to be a valuable asset - I can focus on what is real, leave the frustration to others trying to know what cannot be known.

We’re finding out that good ideas are less important than good intentions. Some very smart people have brought us to the brink.

Two days after the Fannie/Freddie revelation, the shot not heard round the world, financial shows were in party mode.

I realize that I‘ve got some attributes that are unconventional. If you want to know whether I’m a trusted advisor, take a look at my office plants now. They’re thriving. Its unlikely that I would allow anything less for my clients.

These are times of subjective value. There is really nothing that you can recommend on its investment merits alone. You begin to see that there is only one thing left that jumps off a client’s statement. We can fall back on purpose - we call it socially responsible investment. A Purpose Driven Portfolio.

Socially responsible investment needs the marketing department in a hurry. Money for its own sake is one-dimensional - the how much. SRI is three-dimensional - the whole enchilada.

I never realized why my pro-bono work has been transformative. Now I might want a maximum account limit, not a minimum account size.