Trust Fund & Step-Father

These truly strange times motivate an allegory. The parties should be clear before the end.

Imagine a smart struggling kid coming of age, frustrated by years under the thumb. He has a trust fund, supplied regularly by a new caretaker. The kid is energetic, hustles small deals, works hard, makes friends effectively, is a fast learner, learns from history, employs stubbornness to his advantage, and exhibits more patience than seems humanly possible. He is rough with those who cross his path and interfere. He remembers all too well his forefathers being oppressed in centuries past. Some call him unscrupulous. He has a strong new sense of what capitalism is in raw form. He has noticed how to exploit situations and catch the lazy and corrupt at their own game. The kid at times is like an impudent young pickpocket, akin to the Artful Dodger in Oliver Twist, the classic by Charles Dickens. Months ago, he stole the last of Sam's heirlooms left carelessly on the mantle. The youngster has made a most unlikely friend in "Sam." His new step-father has fostered his growth, even as the more experienced elder has given too many long-held secrets away in return for his chores being done on the cheap by the young firebrand. The elder hears the name of the youngster, but being a man of little culture, mistakenly calls the kid "Joe" over time. Older Sam still reminisces about the old glory days, and believes in things which no longer apply in a day and age which no longer exists. The younger sees this misplaced nostalgia, but plays along like a shark does toward an aging, and once sleek bluefin tuna. All in time.

The step-father has permitted a substantial trust fund to be created, built from the younger's diligent planning, clever deals, and just a few years of doing the "scutt work" for the elder. Young Joe has grand plans which the crusty Sam misjudges and miscalculates. But Joe does not mind, since he knows time is on his side. Some of Sam's friends have lost their jobs to Joe and his young eager buddies, who work for peanuts. Those friends had become smug and cocky. The enterprising kid has cultivated a little clan of gypsies, so to speak. They work for him, give him his vig in a finder's fee for odd jobs like a subcontractor. Joe has no problem in treating his serfs poorly, since they wash up on shore like tidal clockwork. If one croaks mowing a lawn or painting a house or assembling hats, he tosses the serf aside and replaces with another eager able body. Rumor has it that Joe has even sold the livers of some serfs who crossed him in public. You see, Joe has few scruples in a blatant open manner, whereas Sam has no scruples protected by a false façade of respectability. Joe operates on this abandoned large field by ocean marshes where the police avoid, leaving Joe to run his own mini-empire. The jobs taken are those which Sam's friends demand too high a fee to complete. Joe is eating their lunch and they know it, but then again, this is capitalism. They like the lower costs, mindlessly.

Times are changing. The trust fund has grown for Joe, perhaps too much too fast. The clumsy Sam has long since squandered his savings. He talks tough, throws his considerable weight around. His back yard is filled with old creaky stuff covered with dust and networked by cob webs. He boasts of many powerful tools and equipment, many rusted out. Sam says he loves to go fishing, but uses hand grenades and dynamite, when he can buy it. He lives on a pension which seems safe, but is in danger of being whittled down if the old factory goes under, a highly probable event. Sam lives beyond his means, but still swaggers. He is basically a fat slob whose sweat gives off a ripe stench on a hot day. Whenever his ailments rise up, he takes a pill. In fact, he takes 18 pills on a daily basis for a cornucopia of afflictions. He drives a SUV out of Detroit and feels powerful as he rolls down the road. Its strong frame is a necessity to haul his supersized body. He talks of pulling his boat, as justification for the oversized combo sedan urban tank. If truth be known, his boat is not seaworthy anymore, and has not seen buoyant days since 20 years and 80 pounds ago.

Sam has tons of debts from his glory days, and refinances them every few years. The newly cut deals often fill his pockets with cash, borrowed against a house which no appraiser would risk deeming ship shape. But borrow he does with glee. He still feels the pain of those regular trips to the old Native American casino with the really cool statues of hunters and wild game. Sam gave up tending to his farm and ranch back when his wife Bessie passed on. On many occasions, like the crafty Artful Dodger, Joe lifted with five fingers some patents in old Sam's abandoned study. When Joe put up knockoffs for sale in his little makeshift store, Sam looked the other way. After all, the kid needed to build up his trust fund, hard to prove theft anyway, too much trouble. Someday he might begin to purchase stuff from Sam's more industrial friends. Well, that was the hope. Joe would eventually need a car, some appliances, even a computer. South of the farm by the marshes, Joe had been busy setting up shop, mixing concrete, forming a road. Rumor had it that little Joe had bought up all the cement at the store one month last summer.

Sam and Joe have worked out a system which had served them each well, filling a trust fund. At least Sam thought so. Being a second-class citizen, Joe has abided by rules set before him by the step-father. Joe is permitted to buy things at the many stores, no problem. The tricky part is the value of his trust fund. The avuncular Sam has set the fund's value in terms of the low pay scale that Joe has agreed in contract for work, in token credits. If Joe wants to redeem for a load of plywood or a cement bag or loaves of bread for his clan, it costs his a certain number of token credits, equivalent to hours worked. Joe has become increasingly uneasy about the arrangement with his crusty benefactor. The old codger is surly, in poor health, a bit over-extended, and might not be in full position to honor all earned credits accumulated by the dynamic Joe and his merry band of swamp rats.

Sam has begun to see the light. He views Joe as a threat, as he is growing up, has sights on the big easy chair that Sam slovenly sits in, with fast food and beer staples at the ready. Sam sees Joe and his growing band of serfs take too many jobs away from Sam's other friends. Their neighbors are talking about encroachment, lost jobs, lower income from crappy new jobs taken, poor worker benefits. Sam has a plan to give Joe a raise, but the kid and his clan relish to keep the severe undercut and competitive advantage. Joe figures he can corral as many swamp rats as needed, low pay notwithstanding. What does he care about low pay? Sam has grown angry at the arrangement, in the face of the resentment shown him by neighbors. They claim he has allowed the unwashed misfits to take over quietly, to take away jobs, to rob them of savings.

Joe is all too aware that a raise means his trust fund will buy him less, as he has overheard Sam on the telephone. The raise comes with a hitch. All past work would be paid in fewer token credits. The system seems unfair to Joe, who has worked hard and hustled for years. He figures his past work should not be downgraded to purchase less. He can understand the demand for a higher pay, but figures there too, he will continue to undercut the slower friends of Sam who always feel entitled to gobs of benefits. The clan of kids cannot demand such extras.

Joe is evolving as a little capitalist, having read widely and seen more of the world. He has until now been content selling housewares, odds & ends, that labor intensive stuff. His little stores need an upgrade. Joe has eyes on that gas station down the road. He has a boat load of token credits to use in purchase. They will soon lose value, so it seems. He also wants to buy a pond over the hill, the one which has been under-developed for years. Joe sees a way to use the water to feed his new idea for a ceramic shop. He has big plans. New kids come into his fold every week. As Sam and his friends are distracted by sports, movies, the latest crime drama on television, even casino extravaganzas, Joe is building store after store. Sam has been content to see Joe's clan peddle small-time wares. But Joe sees a grander enterprise on the horizon. He wants to move up the value chain. He wants a seat at the Rotary Club where Sam has attended since the glory days.

Joe sees the writing on the walls at the town square. "MISFITS ARE TAKING OUR JOBS !!!" The mayor has vowed to act, to quell the angst running thick among the townspeople. To Joe and his clan, this seems unfair. He has done what his Uncle Sam has asked, has worked for peanuts, has endured the hot sweaty shop conditions. Some misfits have fallen by the wayside, their dreams with them. Last spring Joe and his best friends among the clan decided to form new partnerships and use their token credits to buy companies, not stuff used to build things. They insist on buying higher on the value chain in order to build bigger and more sophisticated things, to compete more directly against Uncle Sam and all his friends. The race is on. This must unfold like a buying spree, before the angry townspeople block the sale of his trinkets, toys, gadgets, and housewares. They must act before the trust fund is ordered to be worth less!!!

Joe wants to buy that gas station, no, a chain of them. He wants to buy the lumber mill in order to learn. He would keep the oldtimers on the payroll until as much as possible can be learned. The wagons the clan have been building for their own usage would sell well in the town market, if only they were permitted to sell there. He has quietly bought a few rifles with his token credits, but that information has not been made known. Pressure is on by the authorities. Sam and his friends have convened meetings to discuss the "problem" but they don't invite Joe to attend, only to hear the results after decisions were made. The Rotary Club has strict rules on who can enter the front door. This really ticks off Joe, who has decided to be called by his real name, Zhou, not Joe. Zhou is ready to play hardball. He will spend his token credits as he sees fit. He has forged new agreements across the lake with Ivan and his southern trade partners.

BACK TO REALITY

The Hat Trick Letter details a vast new alliance was been in progress for two years among China, Russia, and Iran. The United States has been slowly isolated on the Asian frontier. The new triangular alliance includes Chinese oil purchases from Russia, Chinese gas purchases from Iran, and Chinese energy project investment in both Russia and Iran. Toss in an oil pipeline across Siberia to a Russian port on the Pacific Ocean, funded almost fully by Japan. The alliance also includes Russian nuclear weapon technology for Iran, Russian conventional armaments for China, Chinese missiles to Iran.

Iran lies at the focal point for Persian Gulf expansion of thinly disguised democratic reform which would provide cover for any attempt to tighten control of this critical energy producing region. Russia and China offer clear deep military support for Iran. THAT IN MY OPINION IS PRECISELY WHY THE USA HAS BACKED OFF IRAN. Last March, Iran was the new threat, suddenly dropped from the evening news. We live in dangerous times. The Unocal deal is on the table. The conflict is growing between the USA and China. Chevron and the Chinese National Offshore Oil Company (CNOOC) are in competition. Finally, national security concerns have been raised by the US Congress, to complement a threat of trade tariff against Chinese imports. A Chinese corporation, subsidized by a communist government, is competing to acquire a private sector oil company. Unocal is the ninth largest oil refiner belonging to the USA. It owns rights to several prime offshore oilfields in southeast Asia. Things are heating up. There is no going back. For five years, the United States has been fostering growth in our new global competitor. China is coming of age. The lower labor costs are something the USA cannot compete against, and never will be able to. Two hundred million Chinese will enter their manufacturing workforce in the next decade, something the USA cannot defend against.

China wants a seat at the geopolitical stage, where the USA has long dominated. China should be granted a seat at the G-10 Meetings of finance ministers. Anything less is an insult and injustice. Sooner or later, the colossal mountain of debt will be used as hostage against the USA. The current Bretton Woods II quasi-agreement is an utter farce, a disaster in the making. Market interference has been the order of the day for too long, which has invited political friction into the fray. Currency changes to the Chinese yuan will unleash disorder. The old world order is not going to cut it any longer. Asia is banding together, not without some friction and harsh old memories. That is their wall of worry to climb. My main objection is that the Chinese should not be permitted to own names with four letters or less. With 1.5 billion people, they should be granted much longer names, and more liberal use of hyphens. There are more Chinese with names as variants to Chen than there are US citizens. This cannot stand. Names like Wu, Li, Fu need at least eight more letters after them if confusion is to be averted. Let this be on the agenda for the next G-10 Meeting. Time is ticking until the Summer Olympics in 2008, to be held in Beijing. That event is their showcase, an event as important as "Y2K" was at the turn of the millennium for the Western world.

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 23 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com.