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what happened and where are we going ?
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Patrick Hines
Quantitative Solutions for Business / Family Wealth TransitionUnconflicted Investment CounselPragmatic Wealth Management &
Now what?Now what?
THE ECONOMIC STORM
The Rainier Group …complex analysis resulting in simple solutions … Strategic Investment Advice…
HIT !
So So
WHATWHAT was that ?was that ?
THE ECONOMY GREW ON DEBT THE ECONOMY GREW ON DEBT
Credit CardsTelevision
Creation of credit cards /easy credit Creation of credit cards /easy credit
SAVINGS RATE USA
BUT BUT
THE ECONOMY… THE ECONOMY…
DID NOT CRASH WITHOUT SAVINGS !DID NOT CRASH WITHOUT SAVINGS !
WHERE DID THE MONEY COME FROM ?WHERE DID THE MONEY COME FROM ?
BANK’S FOUND A WAY …BANK’S FOUND A WAY …
when the FED closed the window when the FED closed the window
BANKS hocked their mortgages …BANKS hocked their mortgages …
AND AND CREATED CREATED MONEY!MONEY!
FED CLOSES WINDOW
SECURITIZATIONSECURITIZATION
WAS THE ANSWER !WAS THE ANSWER !
FANCY WORD FOR HOCK
LENDING STANDARDS TAKEN OFF
LENDING TAKES OFF !
By The way By The way Where did the Banks Go ?Where did the Banks Go ?
They used to be consultative They used to be consultative Where did the Securities firms Go ?Where did the Securities firms Go ?
They used to be consultativeThey used to be consultative
THEY MORPHED INTO SALES THEY MORPHED INTO SALES
DRIVEN PAPER MILLS DRIVEN PAPER MILLS
And we ended up with the And we ended up with the
Great Great RecessionRecession
No illiquidity in the EconomyNo illiquidity in the Economy
Inability to repay debt Inability to repay debt
So So
Now whatNow whatLessons from history Lessons from history
DepressionDepression
Depth ‘33 over ‘36Depth ‘33 over ‘36
But double dip But double dip
Needed jolt !Needed jolt !
The CRASH
RESPONSIBLE SPENDINGRESPONSIBLE SPENDINGREALISTIC BUDGETSREALISTIC BUDGETSCULTURE OF AUSTERITYCULTURE OF AUSTERITY
Get the Nation Going Get the Nation Going
UNIFYING FORCEUNIFYING FORCE
How did we unify national How did we unify national interest ?interest ?
How did we Drive the Savings How did we Drive the Savings That created Capital ?That created Capital ?
Found a common enemyFound a common enemy
Increased Production Increased Production
Increased ECONMYS CashIncreased ECONMYS Cash
Maximised UtilityMaximised Utility
Accepted ASTERITY Accepted ASTERITY
We grew savings We grew savings
Foundation for growth of the economyFoundation for growth of the economy
Growth of GDP Growth of GDP
So where are we nowSo where are we now
Savings going upSavings going up
GDP GDP
Clawing back Clawing back
To Avoid the Double DipTo Avoid the Double Dip
Unify Unify Find common groundFind common ground
We repeat historyWe repeat history
Good will prevailGood will prevail
disciplinediscipline
Politicians Politicians Marion Zioncheck (D-WA) Marion Zioncheck (D-WA) Killed after he jumped or was possibly pushed Killed after he jumped or was possibly pushed
out a window in Seattle, WA while still in office. He was known to have been out a window in Seattle, WA while still in office. He was known to have been feuding with J. Edgar Hoover. feuding with J. Edgar Hoover.
Halsted Ritter (R) U.S. District Judge of Florida, impeached for secretly U.S. District Judge of Florida, impeached for secretly taking a $4,500 fee from a former law partner. Convicted of bringing the taking a $4,500 fee from a former law partner. Convicted of bringing the judiciary into disrepute (accepting free meals and lodging during receivership judiciary into disrepute (accepting free meals and lodging during receivership proceedings.) Removed from office. proceedings.) Removed from office.
George English (D) George English (D) U.S. District Judge of Illinois, impeached for taking an U.S. District Judge of Illinois, impeached for taking an interest-free loan from a bank of which he was director. Resigned before his interest-free loan from a bank of which he was director. Resigned before his Senate trial. Senate trial.
Warren G. Harding (R-OH) Warren G. Harding (R-OH) President His administration was marred by President His administration was marred by scandals stemming from men in his administration who followed him from scandals stemming from men in his administration who followed him from Ohio who came to be known as the Ohio Gang.Ohio who came to be known as the Ohio Gang.
Albert Fall (R-NM) Albert Fall (R-NM) Secretary of the Interior who was bribed by Harry F. Secretary of the Interior who was bribed by Harry F. Sinclair for control of the Teapot Dome federal oil reserves in Wyoming. He Sinclair for control of the Teapot Dome federal oil reserves in Wyoming. He was the first U.S. cabinet member to ever be convicted; he served two years was the first U.S. cabinet member to ever be convicted; he served two years in prison. in prison.
Politicians continuedPoliticians continued Edwin C. Denby (R-MI), Edwin C. Denby (R-MI), Secretary of the Navy: resigned for his part in the Secretary of the Navy: resigned for his part in the
Teapot Dome oil reserve scandal. Teapot Dome oil reserve scandal.
Hiram Bingham Senator (R-CT) Hiram Bingham Senator (R-CT) Censured for hiring to his staff aCensured for hiring to his staff a
lobbyist employed by a manufacturing organization. lobbyist employed by a manufacturing organization.
Harry M. Daugherty (R-OH), Harry M. Daugherty (R-OH), Attorney General: resigned on March 28, 1924, Attorney General: resigned on March 28, 1924, because of an investigation about a bootlegging kickback scheme by his chief because of an investigation about a bootlegging kickback scheme by his chief aide Jess Smith. Found not guilty. aide Jess Smith. Found not guilty.
Jess Smith (R) Jess Smith (R) aid to Attorney General Daugherty (R) who destroyed aid to Attorney General Daugherty (R) who destroyed incriminating papers and then committed suicide.[270] Charles R. Forbes (R) incriminating papers and then committed suicide.[270] Charles R. Forbes (R) appointed by Harding as the first director of the new Bureau of Veterans appointed by Harding as the first director of the new Bureau of Veterans Affairs. After constructing and modernizing VA hospitals, he was convicted of Affairs. After constructing and modernizing VA hospitals, he was convicted of bribery and corruption and sentenced to two years in jail.bribery and corruption and sentenced to two years in jail.
Thomas W. Miller (R-DE), Thomas W. Miller (R-DE), Head of the Office of Alien Property: convicted of Head of the Office of Alien Property: convicted of fraud by selling valuable German patents seized after World War I for far fraud by selling valuable German patents seized after World War I for far below market price as well as bribery. Served 18 months.below market price as well as bribery. Served 18 months.
tTean ptTean p
Oil businessman Edward L. Doheny (second from right, at table) testifying before the Senate Committee investigating the Teapot Dome oil leases in 1924.
Teapot Dome Teapot Dome
He took the fall He took the fall
Or Or
He was the “Fall Guy”He was the “Fall Guy”
Took the fall Took the fall
Senator Albert B. Fall, the first former U.S. cabinet official sentenced to prison.
Warren G. HardingWarren G. Harding
We survived them…We survived them…
But the banks are gone !But the banks are gone !
Yes Yes
And that is good because you And that is good because you have the capital and characterhave the capital and character
There are positive signsThere are positive signs
We did it beforeWe did it before
We will do it again We will do it again
But But
We are going We are going to have to do to have to do it together it together
