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Tithing is about putting God first in your life. Put God first in your life, and you can count on God doing his part.
— John-Roger, DSS

Tuesday, June 30, 2009

Demographic Collision Course

Great summary from Nielsen on the the demographic collision course we are on. Best parts below. If it is any comfort, it's a lot worse for Japan and China in the years ahead.

The recession of 2007–2009 has placed a great deal of strain on marketers and retailers of consumer products. Price and value have become more and more important, challenging marketers to rethink product and distribution. Everyone just wants things to get back to normal, but will they? While discretionary spending will return to moderate levels as markets rebound, the economy of the United States—as well as the rest of the more developed World—is well on the road to longer-term difficult times. The economic hard times to come do not stem from the misuse of arcane investment instruments that can take a degree in calculus to understand, but rather from simple demographics. The emerging marketplace will be very different than today, and filled with wide-ranging challenges.

Since the early 1970s, birth rates in the United States have been at least 40% lower than at the heights of the Baby Boom. When a falling birth rate is combined with a very large generation like the Baby Boom, the effect is a gradual aging of the population. The median age of the population increases as the large group grows older because there aren’t enough babies being added to balance them out. For much of the large group’s life cycle, they are typically a boon to the economy—especially when they reach their prime economic productivity years (usually from the early 40s into the middle 50s). However, as this large group continues to age, they stop being an economic asset and begin to become a burden—as the Baby Boom generation will become over the next several decades.

Aging populations place stress on an economy in two ways. First, if the generation is sufficiently large, retirement can lower the size of the labor force—particularly its most skilled and most experienced component—lowering overall economic productivity. Starting in the next two years until 2030, the number of persons who reach the retirement age of 66 will increase by over 100,000 each year throughout the Baby Boom retirement years. For many of the early years in that period, the number of persons who reach the age of 19 and enter the labor force will actually decline by more than 40,000 per year for the next decade.

The second impact of an aging population is perhaps larger—the costs incurred by society to care for a large number of retirees. Social Security will begin to run at a deficit in about eight years and will deplete its trust fund by 2041 unless changes are made now. At that point, money coming into the program would only cover about 70% of the money paid out each year. Medicare and Medicaid will deplete their trust funds in only about ten years and will be the largest component of all U.S. government spending by 2030.

Additionally, many private pension plans are currently under-funded, and given the current economic difficulties, may not have time to recover adding more people to the public dole. The Baby Boom generation has suffered a disproportionate share of the $11 trillion in lost market equity and $3 trillion in lost real estate value from the current recession and they will find it near impossible to retire and sustain their current standard of living—particularly the 38% who will be eligible to retire in the next ten years.

Posted by Paul Kaye at 1:55 PM
Keywords: Getting Ready, Retirement, The Economy
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Tuesday, June 30, 2009

The Ilusion of Time

Brilliant short post from Seth Godin today:

There's always room for Jello

This is one of the great cultural touchstone slogans of our era. A culture where there's so much to eat we need to try to find a food that we can eat even if we're stuffed.

Often, we'll decide that something is full, stuffed, untouchable but then some Jello shows up, and suddenly there's room.

Think about your schedule... is there room for an emergency, an SEC investigation, a server crash? If you took a day off because of the flu, is your business going to go bankrupt? Probably not.

So, if there's time for an emergency (Jello), why isn't there time for brilliance, generosity or learning?

Posted by Paul Kaye at 12:40 PM
Keywords: Art
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Monday, June 29, 2009

The Madoff Lesson

From The Curious Capitalist:

If Madoff's clients had only put 5% or 10% of their assets in his Ponzi scheme, it just wouldn't have been that big a deal. Instead we have for months been hearing story after story about individuals and families and even foundations that put all their money with the guy. These weren't the kind of folks who spend much time reading Harry Markowitz or Burton Malkiel—instead, they didn't want to have to think about their investments at all. They wanted to leave their money with somebody they trusted, and get on with their lives. Which is a pretty reasonable desire. But, it turns out, a dangerous one.

Posted by Paul Kaye at 10:02 PM
Keywords: Basics, Letting Go, Security, Trust
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Thursday, June 25, 2009

Stunning!

SImply stunning art work using just sand on glass.

Posted by Paul Kaye at 3:50 PM
Keywords: Art
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Wednesday, June 24, 2009

Echolocation

I had heard of dolphins using echolocation but I was truly blown away when I first heard of echolocation being used by blind people to negotiate their way through life. This fascinating article explains the process. Truly a miracle--one of life's wonders.

Excerpt:

I am 6 years old and it's my first day at school. The bell rings for recess and all my classmates run gleefully away. But unlike them I cannot see. At least, not with my eyes. Instead, I click my tongue, listening for echoes from the wall to my left. I walk with my hands slightly outstretched to keep me from running into chairs that may have been left askew. I hear kids laughing and shouting through the open door, and by clicking I also hear the presence of the sides of the doorway in front of me. I go through it to the playground for the first time.

Echoes can be used to perceive three characteristics of objects: where they are, their general size and shape and, to some extent, what they are like - solid versus sparse, sound-reflective versus sound-absorbent. This allows the brain to create an image of the environment.

For example, I perceive a parked car as a large object that starts out low at one end, rises in the middle and drops off again. The difference in the height and slope pitch at either end helps me identify the front from the back end; typically, the front will be lower, with a more gradual slope up to the roof.

Distinguishing between types of vehicles is also possible. A pickup truck, for instance, is usually taller, with a hollow sound reflecting from its bed. An SUV is usually taller and sounds blockier.

A tree has narrow and solid characteristics at the bottom - the trunk - broadening and becoming more sparse towards the top. More specific characteristics, such as the size, leafiness or height of the branches, can also be determined.

Passive sonar that relies on incidental noises such as footsteps produces relatively vague images. Active sonar, in which a noise such as a tongue click is produced specifically to generate echoes, is much more precise. My colleagues and I use the term FlashSonar for active sonar, because for us each click is similar to the brief glimpse of the surroundings sighted people get when a camera flash goes off in the dark.

Posted by Paul Kaye at 12:07 PM
Keywords: Abundance, Health, Letting Go, Practice
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Monday, June 22, 2009

Inspiration

Absolutely stunning shots of ice in Greenland. It will transport you to another world.

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A must read short article on the thoughts of a 90 year-old vibrant Rabbi, 6 Reasons to Grow Old. Excerpt:

Tranquility tops his list. “You have achieved in old age what you have wanted to, if you are fortunate,” he said. The important battles have been waged, the decisions made. “You no longer have to do the pushing, the striving, the struggle.”

“You don’t rush to quick action,” Rabbi Haberman explained. “You’re more likely to stop and think.” These days he’s hardly indifferent to the world’s problems, he added, but he’s less inclined to think he can solve them, or that they’re soluble at all.

Americans are activists by nature, but “more happens to us than we cause to happen,” he has found. “You have to accept the unalterable.”

Moreover, the rabbi confessed, he’s increasingly apt to consider the possibility he’s wrong, a gift of old age (fourth on the list) he labeled “liberation from the compulsion to set everyone else straight.” He has loosened up, he told me, since his more dogmatic youth.

Each night before bed, he recites in Hebrew a passage from Psalm 31: “In God’s hand I entrust my spirit, when asleep and when awake/My body and spirit, God is with me, I shall not fear.”

“And I leave it at that,” the rabbi said.

Posted by Paul Kaye at 11:42 AM
Keywords: Attitude, Happiness, Joy, Letting Go, Practice, Values
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Tuesday, June 16, 2009

Three Important Trends

Number One

Last year, for the first time ever, the developing world consumed more energy than the developed. And this year, the US, Canada and Europe will generate less than half of global economic output, according to the Centre for Economics and Business Research. The emerging markets have come of age. We now need some new tag to describe an admittedly vast region that in many respects has better fundamentals than the West: better growth prospects; larger foreign reserves; less sovereign indebtedness; better GDP per capita growth; a stabler banking system; superior household finances and savings rates. Resurging markets, perhaps ?

Tim Price PFP Wealth Management Newsletter

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Number Two

American children have it easier than most other children in the world, including the supposedly lazy Europeans. They have one of the shortest school years anywhere, a mere 180 days compared with an average of 195 for OECD countries and more than 200 for East Asian countries. German children spend 20 more days in school than American ones, and South Koreans over a month more. Over 12 years, a 15-day deficit means American children lose out on 180 days of school, equivalent to an entire year.

American children also have one of the shortest school days, six-and-a-half hours, adding up to 32 hours a week. By contrast, the school week is 37 hours in Luxembourg, 44 in Belgium, 53 in Denmark and 60 in Sweden. On top of that, American children do only about one hour’s-worth of homework a day, a figure that stuns the Japanese and Chinese.

Americans also divide up their school time oddly. They cram the school day into the morning and early afternoon, and close their schools for three months in the summer. The country that tut-tuts at Europe’s mega-holidays thinks nothing of giving its children such a lazy summer. But the long summer vacation acts like a mental eraser, with the average child reportedly forgetting about a month’s-worth of instruction in many subjects and almost three times that in mathematics.


The Economist

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Number Three

From Paul Kedrosky:

There is an important story in England’s Daily Telegraph about the increasing likelihood that some economically devastated U.S. cities may have to be partially bulldozed in order to survive. With cities like Flint, Michigan, having lost much of their rationale for existence, this should not come as a complete surprise. Nevertheless, this will be a difficult pill for "things will come back" America to swallow.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the "rust belt" of America's Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

"The real question is not whether these cities shrink – we're all shrinking – but whether we let it happen in a destructive or sustainable way," said Mr Kildee. "Decline is a fact of life in Flint. Resisting it is like resisting gravity."

Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was "both a cultural and political taboo" about admitting decline in America.

"Places like Flint have hit rock bottom. They're at the point where it's better to start knocking a lot of buildings down," she said.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000.

Posted by Paul Kaye at 7:26 PM
Keywords: Getting Ready, The Economy, The World
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Friday, June 12, 2009

Back from Europe

If ever an article represented the ethos of this blog and is reflective of my own personal values this piece in the New York Times by the superb writer Pico Iyer does it. Please read the whole article. Excerpt:

"I had been lucky enough at that point to stumble into the life I might have dreamed of as a boy: a great job writing on world affairs for Time magazine, an apartment (officially at least) on Park Avenue, enough time and money to take vacations in Burma, Morocco, El Salvador. But every time I went to one of those places, I noticed that the people I met there, mired in difficulty and often warfare, seemed to have more energy and even optimism than the friends I’d grown up with in privileged, peaceful Santa Barbara, Calif., many of whom were on their fourth marriages and seeing a therapist every day. Though I knew that poverty certainly didn’t buy happiness, I wasn’t convinced that money did either.

"So — as post-1960s cliché decreed — I left my comfortable job and life to live for a year in a temple on the backstreets of Kyoto. My high-minded year lasted all of a week, by which time I’d noticed that the depthless contemplation of the moon and composition of haiku I’d imagined from afar was really more a matter of cleaning, sweeping and then cleaning some more. But today, more than 21 years later, I still live in the vicinity of Kyoto, in a two-room apartment that makes my old monastic cell look almost luxurious by comparison. I have no bicycle, no car, no television I can understand, no media — and the days seem to stretch into eternities, and I can’t think of a single thing I lack."

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For Your Education Dept.

"Although we in the West tend to forget, 190 years ago one-third of the world's gross domestic product was in China. But then, rather suddenly, colonial exploitation and unfair trade agreements, combined with a technological revolution in Europe and America, left the developing countries far behind, to the point where, by 1950, China's economy constituted less than 5 percent of the world's G.D.P. In the mid-19th century the United Kingdom and France actually waged a war to open China to global trade. This was the Second Opium War, so named because the West had little of value to sell to China other than drugs, which it had been dumping into Chinese markets, with the collateral effect of causing widespread addiction. It was an early attempt by the West to correct a balance-of-payments problem."

--Joseph E Stiglitz writing in Vanity Fair

Posted by Paul Kaye at 4:01 PM
Keywords: Frugal Living, The World, Trust, Values
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