People Backed Securities

china debt

As so often happens when I read posts by smart and successful people, I am startled to realize I have an idea or an opinion I didn’t even realize I had.

My friend Hussain Abdullah Al-Dagher posted a graph with a comment about China’s private debt being leveraged. We explored the impact this has on China (and the global economy) through a series of responses to the original post.

Hussain’s comment: “Average Chinese is OK, their stock market is up 40% , hot money don’t know where to go.” led someone to respond:

“Hot money, don’t know where to go? How about saving people from famine and disease?”

After jokingly replying that China could send its hot money to me, I had one of those thoughts:

If there was an investment package (and there certainly ought to be) that allowed someone to invest in the well being of others, and profit from the success of their well being, I bet a lot of hot money would go there. If you figure the loss of value to the economy of sick and dying people, vs their value as alive and healthy and employable, there has to be a way to earn a profit on that increase in value, but I am not smart enough to design such a package. of course, if you are saving “marginal people” (economic wise, not humanity wise), people who do not produce any wealth by being alive, it is much harder to profit from the intrinsic value of them not being sick or dead.

But if one could figure out how, not only to “heal the sick and save the dying” in populations where productivity is historically almost too low to measure, or as I call them “Economically marginal people”, but how to use these low demand populations even in small ways to contribute to the overall economy, enriching themselves at least to a point of self sustaining security (of course, great success might lead to massive consumer demand and create a disastrously higher carbon foot print, though, if we do not create a more greenhouse friendly way of powering the “developed world” we are all doomed to extinction in our grand childrens’ lifetime.).

If this balance of investment, not only in healthcare and but also in opportunities for education and to create meaningful work, in some form, could be sorted out, the profit potential for the investor, for those invested in, and for the global economic stability are almost limitless!

Most forward thinking people recognize that in a given community, say, mine, in South Florida USA, if we, as taxpayers chose to pay as little taxes as possible, close the schools, prevent poor people from having access to decent health care, fail to invest in infrastructure, that in the end, we will pay more in policing, courts, jails, loss economic opportunities due to bad roads, and digital highways and lack of skilled workers. so as a society, we invest in public schools, we struggle to expand decent healthcare and higher education to as many people as we can, because investing a few extra tax dollars today, pays huge dividends in the future. Of course there are backwards populations in every society, people like the Tea Party and our current corrupt Governor, Rick Scott, who will take the short term savings in lieu of investing in our future. But this does not change the fact, that investing in “people backed securities” has, for as long as progressive societies have done it, has been a proven road to wealth, for the rich, the poor, and the middle class.

Is there not a way to monetize and expand these opportunities for wealth creation into private instruments? There are nearly 3 Billion people on this planet who live on less than $2.00 USD per day. Obviously, if a person is near starvation, and their babies are starving and sick, and there is little in the way of the first layer ofMaslow’s Pyramid, much less those things most of us consider a requirement for our lives. If there was a way to invest, not through charity, not an endless “giving away” but an honest investment?

I know there are very successful businesses in the micro loan business. most of them are Non Profits, but if one cared to, a for profit (with proper international guidelines and regulations) could do well and make a profit. What I propose is beyond micro loans for tiny entrepreneurial efforts. An investment in communities on the brink of collapse, food, clean water, basic healthcare, as well as the economic opportunities, micro loans, some education, some digital interconnectedness.I wonder what a million dollars, invested with a expectation of a 10 yr return could offer to not only the community invested in, but to the investor? How much money could today’s “hot money” make over ten years? and what is the risk of loss? Obviously the risk would be minimized by doing the research, of which plenty is certainly out there through the work of non profits, as to what is the best path to use in creating successful communities out of todays “societies on the brink.”

Linkedin Comments:

your point about hot money is well taken, these would have to be long term, fairly high risk (so would have to generate very nice returns), but a moderately well off person age 30-50 who has an interest in long term economic sustainability might want just such an investment as say 5-10% of their portfolio?

Anthony Watkins AUTHOR YOU

Thank you! Yes, it just seems like a win-win opportunity, a good investment can also be a good deed, if only I knew how to do it:)

Hussain Abdullah Al-Dagher 1st

Private Trader & Family Office Mandate

“Hot Money” sounds crazy ha! 🙂 Well basically it means fast speculative money looking for short term profit “quick and fast” , you can’t count on these type of funds they move fast not stable looking for quickie and fast return. What you are trying to say is actually in the make, there are people now working on such aka “Alternative finance”, more creative and direct to the economy and take the risk. The problem with banking these days they risk averse and want the “sure thing” .. Crowd Finance is on the rise, i.e they are creating mini shareholding companies, projects JV , even individual real estate, why not do the same to public schools instead of closing it ? and getting the community as shareholders ? instead of investing in 401K stock funds .. just a thought. All in all I agree, and I see what you see, a clear deficit in finance that need or actually in the process of restructuring. Good Post Anthony . Thanks!

Contract Software Developer at HGBS

“…though, if we do not create a more greenhouse friendly way of powering the “developed world” we are all doomed to extinction in our grand childrens’ lifetime” only if you’re taking big city newspapers and ‘mainstream media’ at face value. There are, of course, other things that could finish us off. Every few days I do a keyword search on ‘solar cell 1000 piece’, and browse the industrial goods websites that come up. It’s been interesting to watch the steady decline in prices – right now I’m seeing multiple vendors offering solar cells at 5 cents per watt. I’m seeing multiple vendors offering solar panels at 40 cents per watt. I’ve seen ‘laminates’, which are the next step from cells to panels, at less than a penny a watt, however I’m guessing there is either a quality issue or a limited supply. The average citizen knew about computers from the 1950s onwards, however it wasn’t until they 1980s that anyone could afford to buy one. Once it was economically viable, the transformation was rapid, and ultimately, close to total. From 1980 to 1995 computer penetration in households went from .1% to easily over 80%. Given the hypothetical 2030, one would expect most of the human population to be running off solar power, under the assumption that solar prices today remained relatively stable. Continued declines simply accelerates the process.

Anthony Watkins AUTHOR YOU

one can hope. and one can hope that the various alternatives to carbon based energy will be clean and safe and help reverse the tide. one can hope. but either way, it seems like the 22,000 children who die every year to starvation are worth saving.

Anthony Watkins AUTHOR YOU

It seems like an investment in a community that is almost surviving on $2.00 per day, or less, could offer a huge return. The human equivalent of “penny stocks” but like penny stocks, unless you really knew what you were doing, as both an investment, and as a social good, you could just be wasting your money. If we could tap into the for profit capital market, it is a much bigger market than philanthropy. Somebody, somewhere, smarter than me, and richer than me, could figure out a system that was pretty much a sure thing and make a fortune on the business of ending poverty!

  • CT Processing Technician | Customer Service Rep | University of Phoenix Alumni

Great insight. I agree if something like this were in place, the world economy would improve tremendously.

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