Be Ye a Bear, or Be Ye a Bull?

By Peter H. Lester, Sr.

In recent days, the market is back to setting records beating the all-time highs experienced by the major Indexes.  I thought it might be good to reflect on that, and from an economic standpoint, what policies are in place to sustain or even derail the climb.

 
To many, the financial crisis and corresponding market declines of 2007-2009 (the S&P reached its low point of $756.55 on March 13, 2009) is a distant memory. Whether through mergers, retirements and reorganization, I have been told that over 1/3 of the Fund Managers have turned over since that time – which means, many of them have looked smart for their entire career. And, with a 300% climb, it is easy for all of us to feel pleased with our own investment prowess.

For those of us who are students of economics, vested participants with “skin in the game”, or simply voyeurs who are like the NASCAR fan that only watches the race to witness the crash, there are some interesting developments taking place that we should be watching.

First, the numbers. Several things are different now than they were in the last market downturn. Employment is as close to full employment as we have seen in a long time. The most recent corrected report from February 2018 states that the unemployment rate is at a 17-year low of 3.8%. Since 1974, the unemployment rate has spiked at a rate over 8% three times.

Second, one of the triggers for the “Great Recession” was the amount of consumer debt. Specifically, debt related to home mortgages. The euphoria around buying a home, selling it 2 years later for a handsome profit encouraged many people to purchase homes on a purely speculative basis. Coupled with relatively easy lending practices, and the blur of securitizing these loans in the secondary market, our economy had a toxic mix that created a financial black hole in the marketplace. When the economy slowed, jobs were lost, and mortgage defaults increased. Our economy entered the sphere of that black hole – and its gravitational pull was hard to escape. Additionally, we have seen younger consumers who normally would be moving vertically up the housing spectrum, delay these purchases, making sustained demand for new homes difficult to forecast.

To be clear, for the most part, we are not seeing the same over-building and speculative real estate trends. The troubling sign here is that the Federal Reserve is stating that they expect Consumer Debt to top $4 trillion by the end of 2018. In July, the Federal Reserve reported consumer credit debt increased at an annual rate of 5% (seasonally adjusted) and that non-revolving credit increased at an annual rate of 6.5%. Consumer Credit Debt is debt that is easier to walk from – non-mortgage debt: auto loans, student loans, and credit cards. It is estimated that 10% of income is now going towards servicing this non-mortgage debt – a new high for our consumers.

Thirdly, be ye a Trump supporter or a “Never Trumpster”, there is an amount of uncertainty generated by this administration. Some of it, like the pro-business lifting of regulations, is positive.  Other policies, like the aluminum and steel tariffs, are unsettling. With each tweet, however, the market seems to be getting a little less reactionary.  Since April, the VIX (CBOE Volatility Index) has recently been indicating less nervousness in the market, falling from the low 20’s to 12.29 (as of October 1, 2018).

Forth, I would prefer to focus on economic conditions and policies, and stay away from speculating on future financial market performance. I will simply say that for value investors, when the S&P 500 is trading at a PE of 21.62 (based on trailing earnings as of October 1, 2018), it becomes increasingly difficult to find upside. To put this in perspective, when the S&P peaked in May of 2009, the S&P 500 had a trailing PE of 123.73. From there, it fell to a low of 13.50.

Fifthly, small business sentiment, key to new job growth, is positive. At the same time, the pay and quality of jobs offered is not generating the kind of real wage growth one would anticipate in such a tight labor market.

Sixth, while inflation seems to be in check, there is cause for concern, and the Federal Reserve must be diligent in keeping inflation checked. It is not out of the question that we could have full employment, rising interest rates, improving economy, and declining equity prices simply due to increased inflation and higher interest rates (see the blog Titled – "And Now, It's Time for Something Completely Different: Quantitative Tightening").

Several years ago, I attended a conference and one of the key speakers related that one of the cornerstones of his investment philosophy was: “don’t fight the Fed.” To this end, he related that in the past, the yield curve has been a solid predictor of major financial downturns. The spread between the Fed Funds Rate and the 10-year Treasury is about 100 basis points; and, to take it a step further – the spread between junk bonds and treasuries is relatively low as well. Typically, investors seek quality over return during a recession… they prefer safer investments. For this reason, we see spreads widen considerably as investors reallocate their portfolio to favor lower-risk investment grade assets.

Due to the monetary policy during the Great Recession, it may be the case that the yield curve’s dependability as an indicator will be impacted. This time around, the spreads will be impacted as the Federal Reserve continues to liquidate assets on its balance sheet.  So, as an indicator, the yield curve may not be the best harbinger of things to come. Many believe that the next recession will be the result of a central bank or banks being too aggressive in balance sheet reduction.

Given market conditions, the best indicator may be unemployment and/or a rise in unemployment jobless claims.   A rise in these metrics would indicate that the consumption party is ending, spending will slow, defaults will increase, and a recession is underway.

Moreover, this time, the market decline will be different. With over $2.5 Trillion invested in Exchange Traded Funds (ETFs), if investors decide to move away from equity, the decline will be broad. This time, Investors will not be picking one stock over another, they will be getting out of the market entirely.

And Now, It's Time For Something Completely Different: "Quantitative Tightening"

By Peter H. Lester, Sr.

During the Great Recession, the Federal Reserve took unprecedented steps to stabilize the economy.

Historians and researchers will no doubt discuss for years the factors that led to the financial meltdown. And, no doubt, critics of central planning and command economics will wonder why the “central planners” did not anticipate the crisis.  Those same critics will most likely condemn the steps the Federal Reserve took as too invasive.

Having said this, many believe Ben Bernanke was uniquely qualified to lead the Federal Reserve through the financial crisis. Earlier in his career, Mr. Bernanke studied and wrote a great deal about the Fed’s potential role in avoiding a period of deflation.  This was one observation economists from the monetarist school of thought (namely Milton Friedman) made as they looked back on the 1930s. They have proffered that monetary policy during that period was too constrictive.

Out of these presuppositions came Quantitative Easing (QE).

Quantitative Easing starts with the Federal Reserve making large purchases of securities. Due to our fiat monetary system, the Federal Reserve was able to make these purchases by expanding the money supply.  The European Central Bank, Bank of Japan and many other central banks followed.

QE was intended to lower interest rates which they hoped would lead to economic expansion in the housing sector, or, at a minimum, stabilize home prices. It was hoped that QE would also encourage capital investments by corporations. Both of these would encourage higher stock prices which would elevate consumer confidence and spending.  When spending increased, corporate profits would improve and unemployment would drop elevating personal incomes.

In retrospect, many of these goals were met: the unemployment rate is at 3.8%, consumer confidence is high and the stock market indexes are setting records.  However, it did not occur without a few stumbles

• Initially, monetary velocity slowed to a crawl and lending was slow to increase 
• Companies and individuals alike, hoarded cash
• Economists may have under estimated just how over-extended households had become
• Consumer spending, according to the Federal Reserve, has yet to pierce the pre-housing crisis long-run average
• Pre-Recession, household debt as a share of disposable personal income topped  out at 115%. It now hovers at 86% (as reported by New York Fed/BEA/Haver Analytics) – that is Aggregate Debt of $13.29 trillion compared to disposable incomes of $15.46 trillion.
• Stock prices have increased over 300% (as of October,2018) from the market’s low in 2009.
• While household incomes have risen, there are concerns about the quality of new jobs.

Since August of 2007, the Federal Reserve’s balance sheet has “grown in size and changed in composition”, growing from $869 billion to over $2 Trillion.¹

So the question is – as the Federal Reserve begins to reduce its balance sheet and enters a phase of “Quantitative Tightening” (QT), what will the impact be on the economy? Will asset prices deflate?

Many investors have benefited from the low interest rate environment.  US corporations have taken advantage of the low rates to sell nearly $10 Trillion in corporate debt, over a third of which was used to repurchase shares.  Private equity firms have also become highly leveraged. Interestingly, for various reasons (whether driven by valuations, regulations, reporting requirements of Sarbanes-Oxley, etc.), many companies have gone private, leaving rank-and-file investors chasing fewer investment offerings on the various exchanges.

It very well could be that the harbinger for the next financial crisis might come from the debt markets:

-          Increasing defaults on consumer loans, and home loans
-          Downgrading of both corporate and government debt
 

¹ Board of Governors of The Federal Reserve System, updated August 28, 2018.

Our Growing Pension Crisis

Our Growing Pension Crisis

By Peter H. Lester

There are certain words and phrases that can be over-used.  One such word may be “crisis”. Having said this, our states are facing a growing financial crisis and very little is being written about it.

The pension benefit obligations facing our states and local governments has grown over the last few decades and, unfortunately, the improving economy and market performance is not providing the hoped-for relief.

During the recession, revenues fell and they have yet to recover to pre-recession levels. While revenue has improved in recent years, it has not been enough to allow governments to address their pensions. In a recent report by the Pew Foundation, 23 states report having less revenue today than they did prior to the recession. For states relying on sales tax revenue, this is not surprising as many consumers constricted their spending during the recession.  Additionally, as internet purchases become more prevalent, states are losing revenue as many of these purchases are not subject to state sales taxes.

Another reason for this drop in revenue is due to the fact that while unemployment rates have declined, many people who have found employment are working for less. One would hope that as the economy improves, wages will increase. Additionally, people who are “under employed” or have accepted a job for less play will have an opportunity to migrate to higher paying jobs. As this happens, states should see revenues improve.  But at this point, state budgets are still lagging.

State Pension Managers however own the crisis associated with pension funding, or more clearly stated: they are responsible for the LACK of funding to pay state employee retirement benefits. They have been hoping that an improving economy would bail them out – but the funds have not arrived to do so.

More importantly, encouraged by actuaries, they continue to use discount rates (one of the key assumptions in calculating the liability) that defy logic.

The National Association of State Retirement Administrators (NASRA.org – see the issue brief dated February 2016) reported that 127 pension plans report using an average annual investment return of 7.6%.  It has been difficult for managers to select a reasonable basket of assets to keep pace. As performance lagged, pension managers increasingly took more risky positions investing in hedge funds and real estate. 

Currently (assuming they can earn 7% year-over-year) the underfunded status of these obligations totals over $1 Trillion.  If conservative actuaries got their way and a more achievable rate of return of 3% is used, this underfunded obligation grows to $3 Trillion. Frankly, the target rate should probably be somewhere in the middle. 4.5% - 5% seems about right.

It is noteworthy that of the 127 funds participating in the NASRA survey, over half have reduced their discount rate (which is to be applauded), but that rate has been reduced to an average of 7.62%.

Government officials have been slow to address this problem.  The issue is most likely to be ignored until the pain becomes chronic. At which point, it will be interesting to see what our government does – as these state governmental plans are not covered by federal pension law. For this reason, there is no central authority pressing government administrators to adjust the funding assumptions that they use.

For now, the high discount rates make the problem seem large by any measure, but one that an improving economy and more tax receipts might fix. Higher discount rates seem to be a license to seek higher returns – which also increases the risks to us all.

The Economics of Snow

BY PETE LESTER

February 3, 2016

 

Last week’s record breaking snowfall had an enormous impact on our economy.

Aside from the accelerated demand for milk and bread (which I am not sure I really understand; how about some fruit or dessert?), a significant snowfall like the one we had impacts virtually the entire economy.

For grocery stores, there are certainly accelerated purchases of certain items. While we could maintain that these purchases would have been made at some point and the prospect of significant snow simply accelerated those purchases, the punctuated demand certainly led to shortages.

As the snow began to fall, I made one last trip to the store, and shelves that normally are full were pretty much empty. The same was true at Home Depot: Snow blowers, snow shovels and ice salt had all been purchased. There was very little left, and what was left was not suitable for the 30 inches of snow in the forecast.

While demand for certain items certainly spiked, it was also the case that the snow had an inverse impact on other businesses.

While everyone was home drinking their milk and eating their bread, they were NOT out golfing, shopping for clothes (unless it was for a new winter coat) or eating at Chili’s. So, while demand for some items shifted dramatically, demand for other items fell just as dramatically. Not only that, for some on tight budgets, the purchase of a snow blower might delay the purchase of some other item.

The snow also impacted supply. Of the four gas stations in my community that I frequent, two ran out of gas due to the fact that their company could not get trucks to our community to re-supply the stations. Because of this, customers were driven elsewhere to make their purchases.

Those of us who have jobs were also impacted. While I worked from home, it was certainly the case that I was not as effective or productive. In fact, I was supposed to have flown out of town on business, but my flight was cancelled.  Many schools were cancelled for the week, this certainly altered the plans of some parents who needed to work, but also had to make arrangements for their children. Forget the increased travel time, many of us lost wages due to the fact that we were shoveling out our cars instead of working and not getting paid to do so.

For municipalities, storms like this can entirely change their budget. Money that could have been spent on text books, teacher and police salaries or a new library were used to plow streets. Some of those streets may have been damaged in the clearing process and now require repairs. While most cities have money in their budgets to cover a certain amount of snow, due to the amount of snow in this single storm and the amount of time it took to remove it, budgets may be strained. This will be particularly true if there is another storm in the next few weeks.

Post snowfall, there are certain business segments that probably benefit: the automobile repair shop may see increased activity due to accidents that occurred on the slippery roads; heating (HVAC) companies may receive calls to service a home because the climate systems were not working properly; I broke a snow shovel – and must replace it. So, the snow storm may have a slight residual impact on our economy impacting demand for certain goods and services.

In all of the above, I would ask you to reflect on the simplest definition of Economics: “Economics is the Study of Choice.” Storms like the blizzard we just experienced can force us to make certain choices or accelerate them.  That day off that we were saving so that we could go fishing, to the doctor's office or shopping, it was used because we needed to stay home with our children who did not have school. That snow blower that we were thinking about purchasing NEXT year… well, we made it in 2016, and are probably glad we did. Had the snow not come, the city in which we live was going to put a new roof on the courthouse and a new playground at the park. Now, those projects may get postponed.

Yes, we are economic beings. We are often rationale in our actions. Sometimes, however, we must make choices due to unexpected events.

Unions & College Athletes

Published: March 7, 2014
Peter H. Lester, Sr.

College Players at Northwestern University, lead by Kain Colter (a quarterback for the school’s team), are petitioning the National Labor Relations Board to allow college football athletes to form a union. The NCAA, the governing body that regulates college sports, is against the measure.  However, Mr. Colter’s efforts are supported by a number of his teammates, players at other schools and the United Steelworkers Union.

This action is interesting for several reasons, and it is complex and impossible to condense to a one-page blog. But, that does not mean it is not interesting to discuss from an economic point-of-view and unworthy of addressing at least in-part.

The Money:

Like it or not, “Big College Football” is also “Big Business”. It is estimated that in 2012-2013, major colleges and universities generated $4.7 Billion in revenue from its two biggest sports – Football and Basketball.  According to the Southeastern Conference’s own website (press release dated 5/13/2013), the SEC distributed $289.4 million to its 14 member institutions in 2013 – a record for the conference, and an increase of $45 million over the previous year.

So, as the saying goes, “if we say the issue is not the money… it’s the money.” And in this instance – it is clearly the money. Players see the TV revenue, jerseys emblazoned with their name, video games, and none of that revenue is going to them.

At the heart of the issue is the question: are football players and other athletes employees of the university or are they students who participate in athletics? If they are declared employees, a Pandora’s Box of issues could be opened. Questions in my mind include:

·   Are they simply employees because there is money involved? If it has to do with time commitment, then what about swimmers, gymnasts, volleyball players, baseball/softball, track and field? In many instances their time commitment is as great if not greater.

·   Moreover, there are a lot of graduate students (think chemistry lab, or someone working on that PhD paper concerning Shakespeare) who work for free, certainly committed to their craft, and they do so for a higher degree. Should they not be considered employees and get “paid” as well?

·   Does this “commitment" not extend to athletes in the lower divisions (smaller colleges and universities) that frankly do not receive the revenue and attention of the larger schools?

As with most things created by man, there are inherent weaknesses and no system will be perfect. Here are a few of the weaknesses...

First, there is the notion of the "Student-Athlete". Colleges are institutions of higher learning. When they compromise the “learning” expectations, then issues arise. Athletes are admitted who frankly cannot handle the scholastic expectations. It is also the case that students who are serious about their studies are definitely challenged by the commitment required and in fact demanded if they desire to compete at the best of their ability.

Second, the NCAA closely regulates what scholarship athletes can do to make money. Signing autographs for-pay, even working a wage-per-hour paying job can be restricted. At first-glance, this may seem petty, but you must remember there were players in the 70’s who were paid to water people’s lawns – and the sprinklers were on automatic timers (i.e. they did nothing to earn the wage). Jesse Owens, when he was at Ohio State, was a state congressional page. It has been said he worked very little and received $60 per month for holding this job, but providing no service - other than winning races for his University (and this was in the1930's). So there are reasons for the rules. In my mind, if the NCAA is going to limit a student’s ability to earn wages, they must compensate them adequately for that lost opportunity.

This issue is exacerbated by the fact that we have athletes who are thrown into an environment where they do not have “walking around” money, and no way to earn it. While everyone around them can earn money and many have money. They do not "fit in" without some cash. If they wanted to pay for a pizza, they cannot. If they have a wife and child, the player can eat on campus at the training table, but his wife and children cannot. How is the  athlete to support them? If a parent dies and they need to travel home for the funeral, how are they to pay for the bus ticket?

If the NCAA was to provide for a stipend to be paid (say $200 per month), that may be adequate for a player at Auburn or Clemson, but I am pretty sure that money would not go as far in LA for a player at UCLA. It is also the case that while the University of Texas may have the money to pay athletes, I am not sure that the University of Texas El Paso does. So, how does that school compete for talent?

In general, I do not agree with unions. Rather, I believe in the free-market and the mobility of the worker. If the worker does not like the wage, they can move to a different job. If the employer does not like the workers they have, they may need to increase pay to attract better workers. I think what needs to happen is: A scholarship should include health insurance, the cost of tuition (I will come back to this), the “normal costs of attending college”, room and board. In normal costs I would include: cell phone, laptop, and a cash stipend (monthly wage) adjusted for an area’s cost of living.

When it comes to education, I believe athletes should be allowed to attend college for free for up to an additional 2 years (tuition is covered), after completing their athletic eligibility (an athlete has five years to get in four years of athletic participation). So we are saying, if they leave college after their Junior year to become a pro, and they blow out their knee, the school must accept them back and provide them with two years of tuition so they can finish their education.

I believe scholarship athletes receive a lot. While much is demanded, much is provided: scholastic tutors, food, nutritionists, coaches, trainers and potential life-memories, not to mention room, board and tuition. No one forces a student to accept the scholarship.

To be clear, for some, it is their only way out of their current environment – they would not be going to college if there was not a scholarship; and a college scholarship is a great opportunity.

Okay, it is time for full-disclosure. I played College Football and ran track & field in Division III. I was on a "leadership" scholarship which required me to maintain a certain grade point average and stay involved in two extra curricular activities (which both happened to be sports). The scholarship was provided by the Presbyterian Church, but I had to attend a short list of church-affiliated schools. As the last of four children, this scholarship was important to my family and allowed me to exit college largely debt-free.

So, I understand something about: needing a scholarship, having to attend class and compete.

On some level, colleges need to pony up and pay the full cost of college if the NCAA is going to continue to limit income opportunities for students. It is also the case that athletes need to understand that there is an academic component to the agreement, and they must abide by those requirements too.

It is also a truth that some schools have no business trying to compete at the highest level. They need to stop trying. They should field teams for the pure sport of the sport in a spirit of true amateur athletics. 

Lastly, the NFL and NBA benefit greatly from the current arrangement. Essentially, colleges are the minor league system for those sports.  A part of me wants to say that the professional leagues should write a check to the NCAA that would be distributed to all scholarship athletes so that the “walking around money” is funded by them. In this way, schools that do not have money in their budget to pay the wage, would have a source of revenue. Currently, the NFL does not bear a proportional cost for player development.

Who Do We See About This?

In 2009, Bernie Madoff pleaded guilty to 11 felony charges in connection with a "Ponzi Scheme" that he had run for several decades and resulted in investors being defrauded of approximately $18 billion.  For this, he was sentenced to 150 years in prison. It has yet to be determined if others with his firm (sons, brother, accountant) will be jailed as well (note: revised 1/20/2013 - Bernie Madoff's brother will serve 10 years in jail).

What is a Ponzi Scheme?

According to the government's website (sec.gov), " A Ponzi Scheme is an investment fraud that involves payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk." [1]

It goes further to state what causes a Ponzi Scheme to collapse:

"With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when large number of investors cash out." [1]

How does the US Social Security System Meet this Definition?

Going forward there are fewer and fewer people paying into the system compared to those who will be receiving benefits. All of the baby boomers will be over the age of 65 by 2029. With fewer people contributing to the system, and more people claiming benefits, this will place a greater burden on the Federal Government. It will become increasingly difficult for the government to meet these obligations without either increased revenue or serious changes in the way benefits are calculated.

Interestingly, the blame for this situation is bi-partisan. The drug benefits signed into law by George W. Bush certainly added to the growth of the obligations aging America will come to expect.

So, if we as citizens are paying into a system that relies upon future contributions for us to see "a return of our capital", what should we call it?

Truly, most of us do not want to see people currently relying on payments, to take less out of the system. At the same time, our elected officials need to come clean. They are making promises they cannot keep. They are building up expectations that will be difficult to meet. It is time for them to deal with the baby boomer bubble so we can better understand what will/will not be there for our retirement.

Lastly, it gets worse. If not properly dealt with, entitlements become the budget. In 1962, defense spending accounted for 51.7% of every federal dollar spent; in 2011 it is 22.6%. Conversely, Social Security accounted for 14.8%. There was no Medicare at the time. Medicaid was 1% of the budget (15.8% total). In 2011, Social Security accounted for 19.8%, Medicare 13.1%,  and Medicaid 10.1% - or 43% of the total Budget (this does not include government-sponsored safety-net programs like Food Stamps - which have grown from 5.8% to 12.6%). [2]

 

 

[1] www.sec.gov/answers/ponzi.htm

[2] Office of Management and Budget - Lam Thuy Vo of NPR is credited with the research.

Its Greek to Me

Its Greek to Me

 

I am wondering why Greece is consuming so much airtime on the nightly news.

To be clear, I love Greek history, have collected a few ancient Greek coins, and do not have any animosity towards the country. In fact, I have attended a few Greek weddings and I will say, they are the best. I do not travel internationally often, but if I had my pick of places to visit, Greece would be at the top of the list.

I could even take it one step further and state that we owe Greece a lot: Democracy, Literature, Philosophy, Art and Architecture, not to mention the city-states stand against the Persian Empire. If they fail in that struggle, the world is most likely a very different place.

Having said all of this, I do not understand the focus Greece is consuming in the news. A point could be made that if Greece defaults on their debt, others (Italy, Spain, Portugal) could follow. It is also the case that an unfavorable resolution could mean the beginning of the end for the European Union.

My issues here are two-fold.

My first issue I will pose as a question: If the state of Washington defaulted on its debt, would that change your life? I don't think it would. The economy of Washington state is roughly the same size of Greece. In this instance, size does matter - and it matters very little to most of us.

In the 1980's when we had a mountain of toxic commercial loans dragging down the US financial system, we created the Resolution Trust. Essentially what we did then was create a good bank, where solid performing loans were placed; and a bad bank, where the assets no one wanted were placed. The good assets were bundled and sold off quickly. The bad assets were dealt with in an orderly fashion over time. Can we not treat Greece like this? Wall it off so that it is not a virus infecting the rest of the international monetary community.

My second issue is much more broad: no one seems willing to pay the price for bad decisions. If you are the auto industry and you over-promise on benefits and wages and find that you can no longer compete because of the obligations you have assumed and your products are not competitive, don't worry, the Government will bail you out. If you have purchased insurance on some financial instrument, and the insurer goes belly-up, don't worry about the risk, the US Taxpayer will prop up the insurer. If you have leant money to a government and that government cannot meet its obligations, are we now expected to bail out those lenders too?

This really has to stop. And frankly, it needs to stop before problems arise that are so big, they cannot be fixed. Can you imagine what would be taking place if this was one of our major trading partners (Great Britain, China, Russia, Germany, Japan), and not just a major tourist destination (that is harsh, and a statement for dramatic purposes)?

There is risk everywhere. No one is bailing out the restaurant owner who cannot keep his doors open because in this Great Recession, fewer people are dining out. No one is lining up to offer loans or extended credit to the custom home builder who owns a few lots, and builds a few houses each year, but now, because of the subprime mortgage crisis, his business is at a standstill, and the land debt is pulling him under.

I have no doubt we will eventually emerge from this period of muddling through. But there is still some pain to come:

• Consumer debt needs to be reduced
• Public debt, must be contained
• International Trade barriers need to be lifted
• Uncertainties (tax rates, the status of the new healthcare law) need to removed, so sound business decisions can be made
• Regulations need to be softened so that the velocity of ideas can resume with speed, and investment encouraged

But mostly, as citizens, we must take ownership of our decisions and seek to be productive, not simply consumptive.

I started out by stating that "we owe" Greece. They have contributed much to the world. I am not sure we are doing Greece any favors by lending them more money and providing greater debt for future Greeks to pay.