The Pluranomics Blog

I Do Not Know Why the L.A. County Employee Retirement Fund Owns A 5-Star Hotel in Hawaii. Do You?

Do you know how long it takes the L.A. County Employee Retirement Association to save 100 Million Dollars, the minimum cost of such a hotel? Do you? Imagine how many court cases and clerk hours worked by the Employees to actually save 100 Million Dollars? So what in the world are these hard working L.A. County Employees doing owning the prestigious St. Regis Hotel on Kauai in Hawaii. First of all, Hawaii is nowhere near L.A. And second of all, Hawaii is nowhere near L.A.

The story goes something like this. I must first tell you that I worked 10 years as an investment advisor in real estate for these large pension funds like L.A. County Employee Retirement Fund. So back to the story. An Investment Advisor (that was me), in this case from Connecticut, convinces the Pension Fund Investment Board that it would be a good idea that they buy a 5-Star Hotel in Hawaii. Why, I can not tell you. I could think of many reasons then, but now I honestly can not think of one good reason.

The real reason is that the Investment Advisors for L.A. County Employees are making $100 Million annually (check annual report) on such unconscious, super-risky investments; like foreign currencies and swap agreements. Do you remember how many days or hours you thought the L.A. County Employees had to work to save $100M – well it goes right out the door…annually, to people that most of the L.A. County Employees have never met.

These stories are happening all over America. And in the end, as we are learning, the retirement dollars are not going back into our own pockets. That is stupid. I am personally guilty of it in my own 401K account. These savings are completely disconnected from our economic reality. What I am trying to say is that in my opinion, The L.A. County Employees, as do I, have much more important business to conduct at home, like taking care of ourselves and our own economy with our hard-earned savings.

There needs to be a conscious shift in the investments and assets that our pension funds, 401Ks, IRAs and good old-fashion savings, own in our economy. The simple reason: for the direct benefit of the hard working American – You! This shift will not only save a flailing economy, it will lead it towards unknown prosperity. Remember, these unconscious pension fund investment schemes have been going on since before the Great Depression!

Imagine the possibilities. I envision that local investments lead by these pension funds and individual retirement accounts will create the next Economic Boom! The institutional investments will include local renewable energy, local real estate, and local entrepreneurs; three simple, secure and diversified investment allocations. Imagine 100 Million Dollars invested in L.A. County renewable energy, local entrepreneurs and its real estate; instead of 3,000 miles across the Pacific Ocean in a 5-Star Hotel in Hawaii. These local investments will immediately generate true currency back into the people’s hands that simply created it in the first place . Otherwise known as consciously investing in oneself and one’s economy.

Evolve or Die

Illustration by Genna Wolkon

“Money Is the Root of All Evil”. I remember hearing it as a young boy but always thought, “if everyone is using it, how could it be true?” But now I have come to appreciate the unconscious evil in accumulating the paper mirage we so desperately desire called money. And ironically, the more you have the more you want, and the less you have the more you need. Whoever created it got exactly what they hoped for, a bunch of morons working for it as if it represents the higher vibrations of life like love, courage and energy. We must all realize now that it represents nothing more than a bunch of moronic humans using a simple paper, printed at will by the Wizard of Oz to distinguish life’s value.

I write this editorial from a tropical farm in Hawaii with food growing all around me. On one end, I must admit that Capitalism has treated me quite well. On the other end, I am fully aware that we must move on. We must figure out what we like about Capitalism and what we don’t like. Keep the likes, get rid of the dislikes and move on. Teach Capitalism in history class and no longer in our economic reality. Devise a new plan. A plan that is based on what is best for all the people, because the people will be carrying out the economic plan and the happier and healthier the people, the better our economic reality.

The change will come from each of us putting our individual entrepreneurial talents to work. We all think that the “Economy” is out there and I’m just sitting in my office. But if everyone just busted their hump working entreprenuerally out there, we wouldn’t have that disconnect. We’d understand that our economy is our reality, as opposed to percentages and numbers. The economy and our lives should be one and the same. We tend to allow the economy to be analyzed by government, economist, or financial analysts; yet as active participants in the economy, we are our economic reality. We are looking at it like it’s a school system. Its not a school system to be graded, its our lives, including the health and happiness of all those in our local community. We are all entrepreneurs. We all have something to give and create, yet we are looking to everyone else to do it or change it. The change will not come from government, political activists or wall street. It will come from each and everyone of us.

In our economic system, we the people are ignorantly enabling the system to increase our cost of living. If you have a bank account you are enabling the system. Plenty of the people “Occupying Wall Street” are enabling the financiers through their 401Ks, IRAs, or basic bank accounts. Wall Street and the rest of the financial sector is using that capital savings to invest and pay themselves handsomely in the process. I see nothing wrong with Wall Street acting like a used car salesman. Although they may not have the best reputation, the economy has a lot of used car salesman. We are not only all part of the problem, we are the problem. Each and everyone of us. Whether we are investing in gold that perpetuates strife in South Africa; or passively investing in golf course developments on critical farm land through our pension funds, we are the problem.

The most intelligent thing that Wall Street can do is to evolve itself based on a new decentralized financial system, as opposed to current Wall Street which is centralized. In a decentralized system, the money savings can be invested in the communities that it was originated in. Such a local system would consciously invest to produce both financial returns as well as lower living costs. And Wall Street employees could still be the active investors in that decentralized, local economic system, using many of the skills they have been taught. If Wall Street doesn’t see the writing on the wall that their time is up…that centralized banking has no profits left, they will die with the system. This was proven in the bailout. Just so we all understand, when placing a “bet”, there is no such thing as a hedge. Next time they will not be so LUCKY!

The biggest issue of the government is that they are supporting the enemies of a healthy economic future, because they are subsidizing things that are bad for the economy. We aren’t asking them to save the economy, we are only asking them to stop messing it up by subsidizing things like oil, financial service profits and supporting costly wars.

The greatest economists during the life of Capitalism knew that it would one day come to an end. Shumpeter new it, Say knew it, Hayek knew it and Marx knew it, to name just a few. In a nutshell, they knew as we now know the truth, that eating more of the earth every day does not constitute “economic growth” (i.e. GDP). And here we are, as Shumpeter termed it, creative destruction in action. I say it differently, that “The Great Depression” is finally coming to an end and a new, more efficient system bustling with entrepreneurial creativity to produce lower and lower living costs has been born. The protestors are a sign of things to come. The system is in its final inning. Evolve or Die!

A New Economic Paradigm

Hanalei Valley, Kauai

What if there was a move we could all make that would redirect and dramatically improve our economy? In the game of chess it would be like taking your opponents queen out of nowhere or even a checkmate while being down several pieces.

I mean, at any moment, doesn’t the economy have a chance to boom, just like it does bust? So what if there was one move we could all make that would allow a boom, as opposed to a bust. A game changer to create a new economic paradigm. So what is it? Well, for each one of us the strategic move may be a little bit different, but conceptually it is the same for all of us. WE MUST INVEST OUR SAVINGS DIFFERENTLY.

So let me try to explain our next move. And let me please say that I hope you act to spread the word so that we can change the economic system that currently feels so vulnerable. Let me also remind you, this is a private sector solution, by the people, for the people, driven by the private markets. In other words, we the people have the resources and we don’t need permission to do this – just action.

What in the world are you talking about? One move to change our economy? I will now try to explain. For example, lets take the State of Wisconsin Employee Retirement Funds. What could they do to better their economic situation, even maybe create boom time for themselves and the people of Wisconsin?

First as pertinent background information, did you know that the State Employee Pension Funds are by far the richest entity in the State of Wisconsin – yup, that’s right, they invest $82+ billion dollars and have more cash in their bank account than anyone in the State of Wisconsin. I bet they and so many other Public Pension Funds didn’t even realize that, and maybe thats why they are investing their hard earned savings unconsciously, without sound reason, allowing it to leave the State economy of the very people that it is intended to benefit. And maybe that is why they mistakenly act like they are the poorest, always worried about their future obligations not being met, and forgetting to invest their riches in their present-day, real Wisconsin economy for the benefit of their own well-being. The retirees in Wisconsin can no longer afford to passively invest their retirement savings in other States or Countries through national and international investment markets. They must actively invest their $82+ billion dollars in the local State economy to become the biggest real estate owner, renewable energy utility and entrepreneurial lender in the State of Wisconsin – and QUICKLY! Continued »

Open for Localism

Why is our ability to economically coexist together so dam complicated? If we are so smart, why is our economy so stupid? Future contracts, derivatives, insurance. Did we build this global economy house of cards, or did we inherit it? Either way, can we please take it down before it crumbles?

With China raising interest rates twice in the past month; and oil, electricity and gold perpetually rising in US Dollar terms, the purchasing power of the US Dollar is nearing panic mode. A frenzy-like rise, if you will. Gold is trending like it may even be the next Google, or will it be oil? The continued rise in oil specifically, will have dramatic effects across the U.S. and Europe’s economy that will be felt for years to come. It is no help that our seemingly long time best bud, China, is now in control of world interest rate levels, and on their way to world economic dominance. In my opinion, such a rising interest rate environment will instantaneously crater what’s left of the fragile US housing market, bankrupt Wall Street (again), and take down our interest-tied, debt-ridden municipalities with it.

Personally, I find myself at odds with the whole thing. Please let me explain. I saw and bought Gold at $400 per ounce in 2004 and hung tight with it as it tripled in price, right up until this moment. And in my opinion, as the U.S. and Europe are forced to borrow more and more to pay for increased borrowing costs (higher interest rates), and caught in a perpetual cycle; Gold is ripe to double or triple in price again from this point forward. However, I am at the point where I am fearful to root for Gold’s rise any longer. You see, I am betting my personal investment savings on Gold, and as Gold rises in price, the dollar is plummeting in relative terms; and although it seems like I am “winning” the financial poker game, I view myself truthfully shortsighted in my financial glory. I am very concerned that if Gold continues to rise further and further, the economic riches that find their way into the American economy will be gone for a long, long time; and potentially chaos may even pursue.

I am fearful of such an outcome; the unknown of it all. But inside, I hope things will turn out different. I hope we won’t depend on bailout funds this time around, because the tens of trillions of dollars required won’t be there. I hope we consciously shift our intentions now, so there will be a new outcome, while the U.S. Dollar’s purchasing power is still trusted. I hope we become  aware of our economic reality, embrace a different financial strategy, and start saving some usable acorns like renewable energy just in case its a long, long winter.

In my opinion, we have two choices: 1.) we can freeze-up and hoard our tremendous personal and institutional savings, which will only create more panic, more empty houses, more unused cars and higher unemployment, or  2.) we can invest it calmly and intelligently to our own benefit. You see, our weakness is also our strength. As I described above, the economic system is currently very weak, so a strategic attack or aggressive investment now would be both economically and financially advantageous. Makes sense, right?

Attached is an outline of such a strategic attack called a Local Investment Fund, with a focus on renewable energy and real estate. As investors, our timing to acquire local assets at rock bottom prices, as well as create energy competition in the local markets, is impeccable. Remember, only a 5-10% allocation of our savings towards such a fund would dramatically shift the economic energy to the local economy. The local economy will soon prove to be the best place to protect our savings while improving our lifestyle and happiness. The Local Investment Fund will be invested locally, in front of our own eyes. Such a local investment strategy allows us to physically touch and feel the assets that comprise our savings, actually explain how our financial return is generated, and personally meet the team that is responsible to protect and grow our savings; all the while igniting local job growth and lowering cost of living.

Happy New Year!

Local Funds Coming Soon!

It sure feels like its high time to mix things up. Federal, State and Municipal governments are failing. Investment Ponzi Schemes are becoming more popular in the digital investment world. And our own Federal Government is using one credit card to pay off another. Isn’t it time we made things a bit simpler, less stressful, more playful, and have work available for all that want it?

What if, we the people, tried something new, brand new. An original plan that not only invested to secure our savings, but also made investments to positively impact the quality of our own lives. What I am suggesting is we organize our investment savings differently.

Please consider the possibilities of an all new Local Investment Fund. A Local Investment Fund will create investment return by acquiring local real estate, as well as building and generating wind and solar energy. The Local Fund would even lend money to a few local businesses that had staying and/or growing power. The Fund would be a community-minded landlord, utility, and bank, all-in-one; formed by local residents to invest in their own Counties and communities. The investments would help stabilize living costs, as well as grow the local economy and generate a strong dividend yield to its local investors.

A Local Investment Fund will be the first of its kind to provide both an offensive and a defensive engine to the local economy. For example, if the local savings and investment community owned the real estate leased by the local coffee shop or brew pub, wouldn’t it think twice about raising their rents? Or said differently, wouldn’t such a rent rise just equate to a more expensive cup of coffee or draft beer for that local resident investor? Wouldn’t the investor be in effect, raising the rent on itself? The same balanced investment characteristics are true for local renewable energy investments as well.

The new strategy would make investments in our lifestyles, in the here and now, contrary to some unknown place and time like in “retirement”. I personally, don’t want to think about the future anymore. I want to invest in the now. To invest to organize our economies with minimal commutes, and educate our communities through the act of sustainability. To invest until we discover a way to lower our energy costs while minimizing our impact on the land that feeds us every day.

Could you imagine the implications of this new way of organizing our economy? Entire Counties would go completely off-the-grid. Local jobs would be humming with billions of dollars being directly pumped into the local markets, businesses and economies. Local innovation would sky-rocket as new ideas would flood the streets. Local tax revenues would also rise, bolstering the desperate city coffers.

Local Funds are the true contrarian play in today’s most finicky global economy. The people of each community have to be the ones to change the direction of their economy by investing in their own land, in their own energy, and in their own people; with their own savings.

Localism: County Style

Just got back to Kauai after a 2-month trip to the U.S. Mainland. I had not been back to the Mainland but for a few weeks over the past year. In any case, there was one idea that I could not drop throughout my 2-month economic study, during which time I visited several Counties, including 12 days in Broward County, FL;  13 days in Palm Beach County, FL;  a few days in Westchester County, NY;  10 days in Fairfield County, CT;  5 days in Suffolk County, MA (Boston);  and 6 days in Jefferson County, CO;  and finally back to Kauai County, HI.

The idea was a Local Investment Fund, with all the power and might of a national or international private equity fund; but funded by the residents of the County and for the benefit of the County. The Fund would be investing in high-yield real estate and renewable energy assets that a local investor could touch and feel as opposed to the digital or virtual investment world where most of us currently have all our investment eggs.

Jungle Cottage

“Counties!”  I first realized it while staying in my jungle cottage within the concrete jungle of Downtown Ft. Lauderdale. Yes, it would be the Counties that would lead America through the Economic Revolution; the Counties, who are unencumbered by the high debts and expenses of our other authorities including towns, cities, states, and federal governments. Huh, Counties. What in the world are you talking about?

Lets use my former, Fairfield County, CT, which maybe the wealthiest County in America – a place where many billionaires and thousands of millionaires call home; Say that the residents (rich and poor) of Fairfield County allocated just 5-10% of their savings towards a local investment fund, which invested in local assets that an investor can touch and feel. This strategy would be executed at a time when real estate is having a fire sale. First, with billions and billions of dollars to invest, such an investment fund would ignite the Fairfield County economy, spurring job growth, creating competition in the energy markets, and replacing out of town or absentee landlords with a locally-minded investor fund.

As I travelled from County to County, my vision only became clearer in my mind. This will be the first of many blog posts on this topic among others, as this Mainland trip certainly got my juices flowing. With bond yields rising and inflation in the air, the time is now for Localism to take hold – County Style!

In a land called…

In a land called Nacirema, things are a bit backward from what you might expect.

Imagine walking down the street mid-day in Nacirema and a complete stranger stops and asks you to give him your hard-earned money. Not just all the money in your pocket, but all your life’s savings. He introduces himself as the “money-keeper” of the Nacirema tribe and promises you that he’ll watch over your money. He cannot tell you exactly where that is for security purposes and although you can’t see or touch the money once you give it to him, you are assured it will be safe. Since you’ve never met this person before in your life, he pulls out a small piece of paper and writes down three little letters “I.O.U.” to ensure you that he is good for it, and then asks you to sign it. He says you can present this piece of paper to him every time you want some of the money back or to give him more of your savings in the future.  He further reassures you that he has possession of many, many Naricema people’s hard-earned money and again promises that your money is safe in his hands.

“This is crazy” would be an honest first reaction. How could anyone in their right mind give their life savings to a complete stranger? But as mentioned, everything is backwards in Nacirema, and if you flip the letters around you’ll learn that Nacirema backwards spells American. In America this complete stranger is better known as a “bank”. But unlike in Nacirema, we do not even get the privelege to meet this stranger on the street. However, we somehow accept this mysterious “bank” entity as being safe and secure, just because…

Perhaps it is time we reconsider this false notion by trusting and investing our money in ourselves and our communities so as to protect the very livelihood we’ve worked so hard to attain. Or would that be considered “crazy”?