Saturday, May 22, 2010

The Bottom Line

[This should be my last post for a while on American life].

The Bottom Line

Now that financial regulation is looking like it will pass the gauntlet of Congress and politics, I'd like to share a few simple thoughts drawn from the writings of my teacher, and friend, Swami Kriyananda, and especially from his dynamic course, Material Success and Happiness through Yoga Principles.

The idea that we can take our savings and invest in the stock market and make money by doing absolutely nothing creative or participatory is not a far step from superstition, or gambling, at best. Trading on the efforts of other people is just shy of exploitation. Now, don't worry, I know the basics of investing as much as most people. And it could be said that my savings represents MY energy and investing it represents putting my energy into action cooperatively (as capital) with those who contribute their time and creative efforts.

The problem with saying that "I am earning my return, too, and legitimately" starts with one's intentions and ends in the overall or macro effect of millions of people doing this and the combined effect of their intentions and actions. Investing in a stock, e.g., brings no current capital to the benefit of the creative and productive efforts of that particular company. Your buying and selling is simply among other people like you, hardly different than gamblers assembled on the casino floor. It is true that have an active and liquid market for stocks enables and facilitates the raising of new capital for ventures, but the former outpaces the latter by a huge margin.

These days you can trade or bet on just about anything, perhaps even the weather, through the stock markets. With electronic trading and borrowed money and the terms of investing in certain types of hedge instruments, you can go wild with speculative trading. It is this "something for nothing" and gambling pyschology that is, ethically and pyschologically (and "karmically"), hurtful to both individuals and society. (Adding to it the consumerism that has given rise to mountains of debt and we have the makings of a "perfect financial storm.")

I seriously doubt the new regulation amounts to much of anything. You can't legislate greed and the scheming that greed incites. If the act of regulated investing, nationally or globally, were re-directed and restricted to discourage speculation and encourage long term investing (of savings, not borrowed money) we might achieve far greater stability. Too much human creative and energetic capital is, I believe, invested in the financial markets around the world. The riches sought and produced by this giant industry is nothing less than obscene. If the industry can be reduced in size by half or even two-thirds, back to a dull, conservative "invest-for-retirement" purpose in relative simply-to-understand stocks and bonds, the markets could return to their most socially beneficial function of raising capital for worthwhile public (both governmental and corporate) ventures. Such would stabilize jobs, new technology, and the proper act of saving for retirement. Only those who have "long" holdings in certain commodities or stocks have anything legitimate to hedge. Mortgages shouldn't be bundled and sold unless the issuers remain primarily responsible for their collection and who legitimately raise funds by essentially borrowing (not selling) against their mortgage portfolio. Limits on size and incentives to be localized, serviceful, and involved with local communities or regions should be imposed. Global movements of capital should be cooperatively regulated to minimize speculation and rapid turnovers.

Similarly with basic investing: short term and rapid turnovers should be taxed or otherwise regulated in favor of true investing that sees in a company a long-term (well, medium term at least) positive potential.

Of course none of this will happen. So, instead I favor and encourage us to look to the creation of new communitiy investment vehicles where people who know each other or at least live in the same area and share common ideals can invest their savings in worthwhile projects of mutual benefit.