The Not So Predictable Future By Jack Carter, Principal, Wealth Generation nd Avenue North, Maple Grove, MN Phone: , fax: , website:

© 2007 Wealth Generation. All rights reserved. 2 Key Points This presentation is a counterpoint to most articles you read from state or federal economists. Freedom of Deception. The official view is always bright and predictable, but America’s future is anything but predictable. I’d believe experts who look at pros and cons before I’d believe politicians, advertisements, or hired guns such as state economists, consultants, and attorneys. Once past a tipping point where more people feel justified in exploiting others, employers need to cultivate morality to maintain growth and profit.

© 2007 Wealth Generation. All rights reserved. 3 Typical Points of Concern Housing Inflation Interest Rates Dollar Value

© 2007 Wealth Generation. All rights reserved. 4 Housing starts lowest in 10 yrs, but The official word is no big deal because housing is only a $750B industry in a $12.5 T economy (6%). How can this be true when housing & automobiles have always been our biggest economic drivers? –Construction labor and materials, real estate sales, banking, insurance, utilities, appliances, home and yard supplies, commuting expenses to and from work. –Home equity loans also drive consumer spending Housing is by far our biggest economic driver

© 2007 Wealth Generation. All rights reserved. 5 Stability? How stable are we? Inflation under control? Everything except the index is rising. Essentials like housing, healthcare, education, energy, insurance, property taxes… are all rising faster than the inflation index. America’s dependence on foreign investment from Japan, South Korea, and China ($5B of new debt every day), means that our interest rates and dollar value could dramatically change overnight.

© 2007 Wealth Generation. All rights reserved. 6 What about other factors? Our “jobless” economy could also become a crisis: –Automation: enterprise-wide software, embedded services running operations (McDonalds), supply-chain management, dotcoms transforming purchasing & distribution… –Outsourcing; off-shoring; mergers and buyouts; record high levels of immigration(legal and illegal); H-1B visas for better paying jobs… –Glutted domestic markets for automobiles, newspapers, magazines, 100s of TV stations, radio, CDs, and DVDs decrease opportunities and increase sales costs. –All reduce jobs, wages, benefits, and opportunities in type and variety of work, which in turn undermines consumption, ability to pay taxes, and quality of life. Growth markets: pornography, gambling, talk show demagoguery, lobbying, PR and dist. instead of mfg. Annual trade deficit approaching $1T means what?

© 2007 Wealth Generation. All rights reserved. 7 Let’s look at it another way We know that people, organizations, and nations create economies and lifestyles. So let’s look to what some of America’s brightest, most knowledgeable and experienced people have to say about what’s happening.

© 2007 Wealth Generation. All rights reserved. 8 America is in big trouble, according to… Paul O’Neill, The Price of Loyalty, 2004 Arthur Levitt, Take on the Street, 2003 Frontline “Bigger than Enron” Peter G. Peterson, Running on Empty, 2004 Henry Kissinger, Does America Need a foreign policy?, 2001 David Brock, The Republican Noise Machine, 2004 Tom Fenton, Bad News, 2005 Thomas Friedman, The World Is Flat, 2005

© 2007 Wealth Generation. All rights reserved. 9 Quiz Question #1 What President accomplished these objectives? Balanced the budget; steadily reduced the national debt; projected 10-year surplus of $5.6T Sent 60% of Welfare recipients (14M) back to work Reduced child poverty by 25% Doubled the prison population; Reduced violent crime by 50% Created more new jobs every year, setting new employment records year after year

© 2007 Wealth Generation. All rights reserved. 10 Paul O’Neill, Sec. of Treasury Ready to retire with $60M in the bank, when his old friend Dick Cheney called him Conservative Republican, born in a wooden shack, succeeded at everything he tried to do. O’Neill was deputy director of Nixon’s OBM. Allen Greenspan recruited O’Neill to Alcoa where, as CEO, O’Neill transformed the industrial company into a modern knowledge-based organization. After he turned the job down in 1987, O’Neill recommended Cheney for Bush 41’s Sec. of Defense.

© 2007 Wealth Generation. All rights reserved. 11 Arthur Levitt, Chairman of the S.E.C. from 1992 to 2001 Presided over a $7T loss in the stock market Says he left Wall Street a better place, but there’s much more to do See Frontline: “Bigger than Enron,” “Wall Street Fix,” “Tax me if you can.” Provides an inside story of markets, corruption, and rampant abuse of power along with other useful info. His philosophy: if there is such a thing as democracy, then let the truth do its work. He took lawmakers and his story to hundreds of investors in 43 meetings across the country. Then he wrote Take on the Street to spread the word far and wide. Who has read it?

© 2007 Wealth Generation. All rights reserved. 12 Pete Peterson, co-founder of the Blackstone Group, Chairman Fed. Reserve Bank NYC America is headed for a financial meltdown 2 choices: act now on our terms; or let it crash and let chance determine our future How Democrats got us into this mess; and how Republicans made it worse (over 30 yrs.) 5 myths about entitlements; 5 myths about tax cuts –Most entitlements go middleclass to middleclass –U.S. citizens pay less than any other country except Japan which …

© 2007 Wealth Generation. All rights reserved. 13 Henry Kissinger Washington gave up on foreign policy at the end of the Cold War and corporate America took over. 3 groups in Washington reveal deep dysfunction 1.Veterans who know foreign policy and why it’s needed 2.The Clinton generation who apologize for Cold Warriors 3.Our newest generation, our “best and brightest,” are without knowledge or interest in world history and culture Corporate diplomats in pursuit of profit don’t know who’s manipulating them or to what end. China, e.g., isn’t as reported in the news… Opposite of us: They focus on process; we focus on results.

© 2007 Wealth Generation. All rights reserved. 14 Quiz Question #2 Who is Larry King’s 1 st choice to succeed him when his contract runs out in mid- 2009? Source: NY Times, “Who’s Talking about Retirement,” April 5, 2007.Who’s Talking about Retirement

© 2007 Wealth Generation. All rights reserved. 15 David Brock, media expert and political author Brock’s expose of the neo-con movement starts with The News Twisters in 1971, a book that Nixon made a best seller using campaign funds. The neo-con “big idea” was to organize for power, rather than innovative policy or ideas. Organized think tanks, publishers, television and radio talk shows, and web sites, to advance their agendas and to ruthlessly attack any opposition. After 30 yrs and 10s of millions of dollars, the Big Lie took hold: our media was widely distrusted.

© 2007 Wealth Generation. All rights reserved. 16 Quiz Question #3 Who is the godfather of the neoconservatism? Source: The Republican Noise Machine, David Brock, page 19, 45-46

© 2007 Wealth Generation. All rights reserved. 17 Tom Fenton, CBS journalist and foreign correspondent for 40 yrs. What we don’t know can kill us! 4 months before 9-11, Mohammed Atta applied for a loan from the Dept. of Agriculture in Florida… Foreign correspondents know what’s going on. Fenton followed everything from the Shah of Iran to the movements of al Qaeda in Europe, but media bosses won’t print “depressing” or “obscure” stories anymore The less real news we have, the easier we’re controlled. E.g. without a big picture of what happened in Tora Bora, politicians can spin the story any way they want.

© 2007 Wealth Generation. All rights reserved. 18 Thomas Friedman’s flat world Walls coming down in Berlin and China, fiber optics and the Internet everywhere, workflow software, out sourcing, off-shoring, supply-chaining, in-sourcing (UPS), informing… everything on steroids. Conclusion: America is sailing into a “perfect storm.” Billions of new workers will devastate middle-classes Bill Gates gushes over the supply of high IQs in China China has 4x more grads in engineering than U.S. every year; Japan has 2x more. Recently, Citigroup and Circuit City moved 1000s of better paying jobs overseas Citi to Cut 17,000 Jobs in Broad OverhaulCircuit BreakerCiti to Cut 17,000 Jobs in Broad OverhaulCircuit Breaker

© 2007 Wealth Generation. All rights reserved. 19 Quiz Question #4 Craig Barrett, COB of Intel, says that Intel can be totally successful without ever hiring another _________. Source: New York Times, “Book Tour is an education and only some of it is funny,” Thomas Friedman, May 8, 2005

© 2007 Wealth Generation. All rights reserved. 20 What’s wrong? We have become an amoral money culture. Winning is everything, facts are unnecessary, everyone lies, or “puffs” on resumes. Ends justify means / any way to win. We have passed a tipping point where more people exploit than serve (media, insurance, credit card companies, lobbyists, corporate executives, leaders and managers, lenders, authors, talk show hosts, doctors, and lawyers). Many answers… but one is how we confuse culture with entertainment. Culture should mend human flaws. Starting with the sexual revolution, Rock & Roll, Playboy/Hustler, the Beats, the Hippies, and such. Hollywood has been cultivating our flaws since the 1960s with movies like “Easy Rider,” “Midnight Cowboy,” “Five Easy Pieces.” Now we have Howard Stern, MTV, and The Sopranos. Without moral messages, wrong is as good as right.

© 2007 Wealth Generation. All rights reserved. 21 Immoral in spite of all the fuss Credit card companies charging 30% interest… Tougher bankruptcy laws, even unforeseen medical All kinds of predatory lending from banks, retailers, credit card companies, sub-prime lenders; student loans, payday loans, tax-refund loans, direct marketing schemes, past-due agencies … Insurance rates based on credit history… and refusals to cover individuals who need the coverage the most. When ratings replace social responsibility, we are worshipping Mammon. That’s cultivating human flaws. Woody Allen both creates and exemplifies our lack of morality (“Hannah and Her Sisters” to “Match Point”).

© 2007 Wealth Generation. All rights reserved. 22 What Can We Do? What is the intended role of government? How do we eliminate corruption on Wall Street? How can we become a creditor nation again? How do we maintain our global dominance? How do we escape the media’s feel good fantasy? How do we restore trust in the media? How do we respond to billions of new knowledge workers entering the workforce?

© 2007 Wealth Generation. All rights reserved. 23 Culture is the glue that holds civilizations together Classical culture always has two dimensions: how to live better as individuals and as a society. Not just respect for others… but self-awareness and how to live with gusto. Moral cultures contain the secrets to performance and longevity like spiritual centering, trust, and honesty. Moral cultures in the workplace would regularly reinforce the differences between culture and entertainment while driving performance. Culture operates in the background of our thoughts and actions, as an operating system controls a computer. We need an update in the order of DOS to Windows XP.

© 2007 Wealth Generation. All rights reserved. 24 Key Takeaways America’s future is anything but predictable. I’d believe experts who look at pros and cons before I’d believe politicians, sales people, advertisements, or hired guns such as state economists, lawyers, and consultants. Once past a tipping point where more people are taking than giving, employers need to cultivate performance and morality to maintain growth and profit. Common themes from ancient wisdom can empower individuals with self-knowledge and compassion, inspire achievement, excellence, and teamwork, and discourage exploitation.

Thank you for your time and interest.