In Chicago, nearly every single tree on the street downtown has a price attached to it: The value it will return to the environment over the coming year.

Apparently for every $1.00 the City spends on tending the tree, it will return $2.70 in cleaner air, reduced need for air condition due to shade provided, and helping filter polluted water before it goes back into the City sewer system.

Makes you think! Should we be billing the equivalent for every tree that gets cut down?

When I worked for your subsidiary, there was much, and worthy, soul-searching going on:   Who were we and How would we show up in the marketplace?

If ever there was a time to stake your ground, surely it’s now!

It’s now, when a handful of your gutsy neighbours (who may even bank with you?) walked straight into the heart of your turf, the financial powerbrokers on Wall Street, and raised their 200 or so fists defying what financial institutions have become. And sparked a movement.

It’s now, when thousands  - millions?? – of Spaniards (oh!  those Spaniards!) spilled into the streets for 15O, indignant ones, speaking against the savage consequences of capitalist structures unchecked (uncheckable?) by political will (euphemistically speaking)

It’s now, when thousands of Oakland folks have tasted tear gas (including this woman in a wheelchair) for insisting that people come first:

It’s now, when this kid PWNS Fox News (for once, thank god, for once):

and when a Pulitzer Prize winner PWND Kevin O’Leary, Canada’s own lame-ass apologist for the worst of capitalism:

and when young mid-riff baring, cardboard placard bearing girls are corralled into red netting and then peppersprayed

So. In light of corralled girls and teargassed wheel-chair bound women and articulate youth and the hashtag #occupy showing up here, there, everywhere, does Vancity have something to offer? Yes, this vid gives a glimpse of a better way. It’s inspiring.

But it’s not a manifesto, and if ever a ballsy manifesto (nothing pretty, please! and no slick marketing!) was needed from a financial institution, one whose DNA is still gritty and radical even if tamed over the years, it’s needed now. Is a credit union something more than a kinder, gentler bank? I’m listening. And I hope about 99% of Canadian citizens are too.

Photo Credit: Net_efekt

Here’s the situation. Based on a true story.

You run a well established bank – let’s say, a Canadian bank called CanadaBank.

You borrow $Millions from Canadians by issuing Citizens Savings Bonds and offer them decent interest.

You take that money you’ve raised and lend it out at higher rate to another country, ’cause that’s what bankers do, and you’re a banker.  Let’s call it the country of Perezo.

Perezo.  Oh, Perezo.  Perezo is run by a Military General (MG) who keeps law and order, true, but at dear cost to the citizens.

Western Democracy it’s not.

You hear rumours that MG, who promised he’d use the money to build infrastructure for water and transportation, instead siphons off most of it to his relatives and friends and also uses a lot of it to bribe judges. But it’s not really any of your business and  you are getting the loan payments back on time, with interest, which you then give back to your Cdn. citizen Bond holders, keeping the profit.

But then the citizens of Perezo revolt successfully.

Overnight, MG is gone. In his place is a revolutionary, beloved by the people, named Juan. He pledges to end corruption, fire the bribed judges, and free the people MG had imprisoned. He is also contemplating kicking out all foreign businesses.

Your phone rings.  It’s Juan. He wants a meeting with you.  In Perezo. You fly down to meet him, keenly aware that Juan could give a rats ass about you or your bank.

The meeting goes worse than you anticipated. Juan notes how your bank’s money had enabled MG to purchase the guns that had mowed down citizens in the streets. How it paid off judges who imprisoned some of the country’s best thinkers who had dared speak out against MG and his henchmen. And he shrugs off your rebuttals that you had lent it to be used to build infrastructure, asking you, “where is it? Do you see water towers? Do you see good streets?”.

You develop a cold sweat because you realize you may well not see a penny of that money back. And your bank owes it to the people of Canada.

Readers – over to you. Dig deep into that inner armchair economist in you. What would you say to Juan to convince him to honour MG’s commitment to repay the loan?

ps – This is a real situation faced by a top banker. I have a book he recently wrote about his banking adventures, called “Banker to the World“. Chapter One describes how he handled it.  You get the book (maybe) if you take a shot at responding in the comments!  (one book to give away.  if more than one brave soul answers, it will be by random draw)

Photo Credit: UberZombie

A super important thing to understand: Bank Capitalization

When you give your $1 to the Bank, they then can invest that $1 to make profit (of which a teensy portion goes to you as interest).

Usually, banks invest that $1 by loaning to Joe the Pizza Man down the street so he can buy a second pizza stand, or to Cindy so she can buy a bungalow.

But here’s the super-important bit: The Gov’t allows the bank not to simply lend out that $1, but perhaps $8 or more. Why? Because of faith.

Faith that Joe probably will succeed in his biz and pay back not just that $1, but the full $8.

Faith that Cindy will pay her mortgage as agreed upon every month.

Faith that those effing bastards on Wall Street would similarly use the money with integrity as they select investments. They didn’t.

Bank Capitalization refers to how many $1s they in fact have. In short, how much that have that is real, not faith-based. That faith is well and truly shaken.
And all our intricate webs between banks and businesses and countries are seriously frayed.

Photo Credit: komodoro

Certainly I’ve been known, though, to publicly protest actions of Canada’s conservatives and my most popular blog post is one in which I went ape-shit about how we in Vancouver used to treat our homeless (arresting them for sleeping outside, for god’s sake). My point? I’m not typically an apologist for the Conservatives.

But.

After my month in England and concentrated doses of BBC reporting and the immediacy of what’s gong on in Greece, I have a deepened respect for policies which get and keep us out of national debt. National debt, just like personal debt, gets a stranglehold on a country, and then takes them down.

Consider this: Greece funded its many worthy social objectives with debt for years. Now, it has to pay nearly 20% (at time of this writing – July) on its bonds. Canada only has to pay 0.65% because of our relatively sane debt levels. Yes, I know much of that should be attributed to Paul Martin under the Liberals. But it also is attributable to Michael Wilson (Finance Min. under Mulroney) and also attributable to the perception that the Conservative Gov’t will keep the debt in check.

What does this mean? It means the same sort of thing that it means for individuals. Because we are (relatively) in good shape on our debt to earnings ratio, we are considered a good risk and just like individuals who have handled their debt well and can get the best interest rates on their credit cards and their mortgages, so Canada can borrow money from other countries and its own citizens at the best rates. This translates to more of our taxes going to programs and less of our money going to dealing with our debt.

I’m good with that. If I’m going to be taxed (and I don’t inherently object to being taxed at all; I want to live in a society that funds the arts and takes care of the vulnerable and funds higher education) I don’t want it to be paying off debt, or worse, simply paying the interest. And if the Conservative Gov’t helps us on that, measured props to them.

Photo credit: British PMO office (somewhat ironic, eh? no photos avail from the Cdn PMO)

I don’t know where that idea comes from: We history majors (and often the parents) or the business world. So a word to each.

But first – just to shake it up quickly –  Martha Stewart.  Lee Iacoca. Tamara Vrooman. Lord David Sainsbury.  Anita Roddick.  All history majors, and that’s just a cursory check.

History Majors: Do you want to be a barista? Then by all means go to Italy, learn all about coffee, and be the best barista you can be. But for god’s sakes don’t start out in life assuming your only option will be  serving coffee or something else equally low-paying. That’s simply not true unless you perpetuate the myth for yourself – and others – by spending your energies getting that kind of work.

Do you, O History Major, harbour suspicion towards the business world? You should – we all should – in that anything involving people is riddled with self-interest, corruption, and competing interests. That’s the way of All Of Life, not simply the business world. But surely as history majors you also know this by now: there are greater and lesser Goods. Some businesses operate more ethically than others. Some places that ostensibly are doing good are naively doing harm. Some places (I’m thinking of the mining industry) have a bad rap but are in fact sometimes surprising us by taking real leadership. All places are a mix, and you can be part of influencing that mix. Or you can serve coffee and bitch about it.

Will you need to make the case to prove your value, even when you shouldn’t have to? Perhaps. So did women. So do people of colour. So go out and do likewise.   Here is a starter list of why you should be running Starbucks, not serving it.

Decision makers and HR folks, a letter:

Dear Business,

Allow me to make the business case for hiring, promoting and prizing history majors.

1. History majors can scan vast amounts of information, find what is relevant to your business, and also discern which sources are credible, and which are not.
Need someone who can scan the business environment and reliably provide you critical information? Hire a history major.

2. History majors know that what is not said can be as important as what is said.
What’s your churn rate? Do you know why your customers are leaving? History majors can find out what your customers aren’t telling you, and recommend win-back strategies. Hire one.

3. History majors can identify themes and zeitgeists. What value do you place on picking up trends before your competition does? History majors can keep you ahead of the curve. Hire one.

4. History majors are usually fluent in more than one language. If you’re only doing business with English-speakers, skip to the next point and history majors, move to the next employer.

5. History majors connect the dots. They know that what happened in Country X affected Country Y. Need talent who knows the implications of seemingly disparate events? Hire a history major.

6. History majors construct well-thought-out arguments, after weighing one set of possibilities against another. Need someone to create smart, grounded strategies? Hire a history major.

7. History majors have a global mindset, having immersed themselves in learning about wildly different cultures and social systems. Need someone with humility towards other cultures and a flexible mindset? Hire a history major.

8. History majors know how to research and evaluate the findings. Need someone with the analytical skills to not only assess data, but who knows which questions to ask in the first place? Hire a history major.

9. History majors find out who the key influencers are. Need someone to lobby for you? Hire a history major.

10. History majors get the big picture. In fact, it usually spans millennia. Need someone not easily thrown by immediate events and can frame the micro events of your business into perspective? Hire a history major.

Photo credit:  nemzetikonyvtar

2. GM’s profits increased by – are you sitting down?? — a freakishly incredible 89% last quarter compared to the same time last year. Did I mention MY FUNDS ARE TIED UP RIGHT NOW?

3. The Japanese Yen, like our Cdn. Dollar, has been increasing in value compared to the US Dollar (as it weakens) so today they deliberately intervened to weaken it (basically by flooding the market with yen). They did this because they want other countries to keep buying Japanese goods, without it becoming cost prohibitive – the tsunami wasn’t that long ago (seems like it though, eh?) and they need to keep getting their economy back on track.

4. And -quick! - take a look at your diamond. Was it extracted fairly? Or, god forbid, a blood diamond? I just heard about this company which uses only fair trade gems. That’s of particular interest to me as a northerner. Diamonds are mined up here and if you can get one of ours, you can be assured of the conditions under which it was extracted from the earth. I hope the business owner sources from the NWT!

The bottom line is that if Canada’s GDP per capita (in plain English:  how much per person we produce – economically, I mean, not having progeny!) doesn’t grow each year (last year we produced 10 cars and 50 shipfulls of wheat and 10 truckloads of lumber;   this year we produced 11 cars and 52 shipfulls of wheat and 12 truckloads of lumber) then we suffer.  You and I suffer.

Bah.  Not suffer, not in relative-to-Guatemala terms.  But we have we don’t have as many cars to trade for bright shiny objects like iPads so we make do with fewer iPads.  Or fewer outfits.  Or fewer loaves of bread.

And how do we make sure we keep producing as much as or more than the prior year?   Making those cars and growing the wheat and cutting the lumber requires people.  In HR lingo, labour force.  Or for the high-falutin’ car-engineer types, talent pools.

If there’s one thing I picked up loud and clear in my 2 years of HR work, and attending a Cdn. Minister’s Conference (long story) on the topic, it’s that the issue is no longer theoretical.  It is upon us.  Our labour pool is just beginning to start its Big Shrink. It scared the crap outta me, truth be told.

**Let me guess.  At this point you are:  <  rolls eyes >    #I’vebeenhearingaboutthisforever. Right? **

Well so have I, and consider this.  The fact that you haven’t yet experienced it, haven’t felt it doesn’t mean it isn’t happening.  For one thing, it’s only just starting.  The first baby boomer cohort has just left the workforce.  No problem for year one.   But next year, it’s going to happen again.   And the next year, it’s going to happen again.   We’ll start to feel it then.   And in 2015 it will happen again.   My prediction is that 2015 is The Year when all doubt will be removed from our minds about the impact of the Boomer’s leaving.

And as there are fewer people making the cars, growing the grain and sawing the lumber, our GDP per capita shrinks.

And when we’re at that point, what’s the impact on your wallet?

1. If you are not a baby-boomer, you will not lack for jobs in Canada and you should be able to negotiate the best salaries of your life.   For the first time in living memory, job-seekers will hold the bargaining power, structurally.
2. You will pay the most taxes of your life to support the retired and the elderly who will continue to have high expectations, especially healthcare.  At the same time, services you use from the government will be reduced.  Put crassly:  it will pretty much suck.  The retirees will still hold the votes and have the time to be activists. Expect their wants to win, and yours to take a back seat.
3. It will cost an arm and a leg, even more than currently, for skilled labour.  My advice?  Learn to fix your own stuff!

Take a look at the graphs below.   See the big clump that starts red|yellow|green|blue ? Take a look at how it’s slowly been moving towards the older age and retirement.  Slowly, but surely.

I took the following graphics from NationMaster, which I gather is a sort of Wikipedia.

Canada Population Pyramid for 2000

Age and sex distribution for the year 2000:

Canada Population Pyramid for 2003

Age and sex distribution for the year 2003:

Canada Population Pyramid for 2005

Age and sex distribution for the year 2005:

Canada Population Pyramid for 2010

Age and sex distribution for the year 2010:

Canada Population Pyramid for 2020

Predicted age and sex distribution for the year 2020:

Photo Credit:  Trevor Blake 

I find that interesting in two ways:  Ford’s brand has been sooooo “Made in the USA”.  I wonder how this will affect that?   and secondly, the fact that India’s market for cars has grown by 30% is an on-the-street (ha ha) indictor of how quickly their economy is growing.

2. Music Industry game-changer (again?  yes, again) Spotify has come to the USA. One more example of the colossal paradigm shift of pretty much the entire world (ie. we’re moving to the cloud, folks).

3. Canada received a top, top credit rating partly attributable to the Conservative Gov’ts stimulus package.   What does that mean to you?   It means two important things based on this:   Canada can borrow money cheaply because it’s such a safe risk.

a. Less of our taxes go to paying interest on the debt and more of our taxes are thus left over to pay for programs such as health care

b. Banks can borrow money more cheaply which means they, in turn, lend it more cheaply to us (with the outrageous exception of credit cards).  Lines of Credit, Mortgage rates = less expensive.   Don’t own a home?  Well, as a landlord, since my mortgage payments stay low, I pass on those savings to my tenants (if I don’t, my neighbour would, so I do.)

4.  Even The Economist is sounding fed-up over the USA’s dilly-dallying about the debt-ceiling.

(short story – it’s like the USA is living off its Line of Credit, and has hit its limit.  The limit can only be raised if Congress gives the OK, which has been done in the past many, many times, albeit not when things were so dire.  If they don’t, then on Tuesday, the gov’t can’t pay its own bills – think, public service payroll?  old age security?  medicare?  paying back other countries who lent them the money?  Democrats want to cut programs and raise taxes.   Republicans say flat-out No, or are concocting last-minute schemes of all kinds)

What happened? Here’s a story which may help:

Max and Eve lived beyond their means for quite some time. Truth be told, they spent nearly 50% more each year than they earned! Their credit cards and lines of credit racked up.

The reasons they were in debt were ones with which anyone could sympathize, such as fighting off the neighbourhod mafia. By the time they got rid of the thugs they were so in-the-hole they had to go to a debt counsellor who helped them consolidate their loans. Things went well for several years then those mafia came back *again* and once again they had to borrow to get them off their back. They mortgaged their home to the hilt.

Max and Eve were living a typical middle-class lifestyle. Their (mortgaged-to-the-max) home was lovely and they welcomed many relatives and friends for weekends. They both worked hard at their jobs. They ensured their children were well dressed and got a good education.

Then Max and Eve discovered that all their aunts and uncles were forming their own investment firm, called All In This Together (AITT for short). Several of their cousins joined as well. Max and Eve wanted in. It was time for them to start getting seriously ahead, and besides, they were part of the family.

Max and Eve did have to convince AITT that they would deal with their debts, which was a bit embarrassing, but whatever. And there was lots they didn’t tell AITT. They didn’t tell AITT that they had borrowed from their neighbours in exchange for agreeing the neighbours could use their garage for the next 10 years. They didn’t tell AITT they had borrowed from their friends who owned a nursery and promised they could use the garden to grow flowers for 15 years, which meant Max and Eve could no longer grow their own vegetables. They also had something going on with PayDay loans which no one knew about. Although some of their cousins suspected Max and Eve weren’t being entirely honest, they were family after all (and besides, they had a few dirty little secrets of their own) and eventually AITT let them in.

At first things went well; they invested together, they covered each other’s backs, and for Max and Eve the best things was those mafia and their henchmen were gone for good; no one would mess with AITT. They family lent one another money, and Max and Eve got repeated loans when their roof needed replacing and their son got into a really good, but expensive, school.

But as things go in all relationships, some of the dirty little secrets began to emerge. Cousin Herschel got wind about the whole garden thing and challenged Max and Eve on it. Thankfully didn’t have to respond as Cousin Sven’s finances got shaky and all attention turned on him. Then Aunt Maureen disclosed she wasn’t as financially secure as she seemed. These were cause for concern but not insurmountable.

And then the unanticipated happened. Their distant cousin overseas, George, had been doing a number of investment deals with AITT and KABOOM, it was all over the news: George was pretty much going down. AITT held several emergency meetings. Things were getting tense. Above all, they needed to present a united front so they did their best to help out Cousin Sven and Aunt Maureen. Oh, and Uncle Steve and Cousin Susan. The firm’s resources, partially gutted by George, further gutted by Cousin Sven, were slimmer by the day. Then, at this worst possible time, it emerged that the PayDay loans people were about to come calling on Max and Eve with clubs. And the bank discovered the deal with the nursery which in fact was against the mortgage conditions and were about to repossess the home.

The family had a Very.Serious.Discussion with Max and Eve. With raised eyebrows and angry looks, they helped Max and Eve out (for the umpteenth time!) and gave them just enough to hold the PayDay loans people and the Bank at bay until Max and Eve could get their act together. There were very, very stern words spoken to Max and Eve and it was unequivocal – pull your kids out of private school, start renting out your garage (they didn’t know about the deal with the neighbour), and sell your house and move into a smaller place, because you’ve got one year and one year only to pay up.

Stressed out, Max tried to negotiate something more bearable, and asked for more money to actually pay off the PayDay loan and ideally get his garden back too, but all AITT felt they could afford was to make the interest payments for a year.

Max and Eve did what they could. It was hard. Harder than expected. The kids went ballistic about leaving their school. The housing market tumbled and they couldn’t get serious buyers interested. They were going without vegetables which would have long term effects on their health.

And when the year was up, Max lost it. Eve was willing to go hardcore and forgo everything that made life nice for them, but Max was seriously pissed. It wasn’t their fault that Sven and George and Maureen had screwed up. So why was AITT being so hardline with Max and Eve? And why had they had to bear all the brunt of paying off the mafia?

Max and Eve’s relationship started to fracture. Seriously fracture.

Eve was resolute that they had to honour their commitment to the family and AITT. She foresaw that if they failed AITT, then AITT would collapse and the whole family would be ruined.

Max thought the life they would be condemned to – cramped apartment dwelling, dashed hopes for their children, working long hours towards nothing but paying off AITT – was not a life worth living. He alternated between rage and utter despair. He couldn’t believe Eve was putting the welfare of AITT ahead of their own.

The kids were scared and confused, and cried every day and had nightmares.

It was awful.

Max told Eve that if she proceeded, he would divorce her.

Eve proceeded.

What happens next? Keep an eye on the news.

** If it’s not obvious: Max and Eve are Greece. AITT is the European Union. Other than that, the events are very loosely correlated.

** A few interesting facts:
Greece twice had to fight to leave the Ottoman Empire which is what put them in debt. They pledged their whole country as collateral on the debts. They didn’t pay off their debts, but they weren’t invaded by whoever lent them the money, either.

Recently, Greece borrowed money in exchange for all their Airport Fees for years to come.

Greece is currently having to offer 20% on its bonds to attract anyone. Contrast that to 0.65% for Canada Savings bonds.

Photo Credit (top image) The Justified Sinner