0409 state owned bank

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Leaving Comfortopia Project Innovations, Inc.

LeavingLeavingComfortopiaComfortopia

February 9, 2009February 9, 2009




Four Key PointsFour Key Points

1. We have to think for ourselves ±Leave Comfortopia!

2. We have to deal with the causes of things

rather than the effects of things.3. One big and overlooked cause - rivers of

Michigan dollars flowing to Wall Street.

4. A state bank could keep our tax dollars inMichigan.




³The computer models at Standard & Poor¶s indicate that the price of a barrel of oil should fall by about $20 to the neighborhood of $75,´says David Wyss, chief economist at S&P.

Christian Science Monitor

Dec. 28, 2007

And the national experts said . . .And the national experts said . . .

³Under the administration¶s new forecast, the gross domestic

product or GDP, will grow by 2.7% next year.´

Fox News.com

Nov. 29, 2007




What happened?What happened? -- Oil prices hit $147!Oil prices hit $147!




What happened? GDP took a nosedive!What happened? GDP took a nosedive!

-6.2% in4th Quarter




Guess who?Guess who?

Continuous moderately growing U.S. economy(GDP 2.7% annual real growth)

Employment in chemicals declines

Decline in domestic name-plate market share slows

Citizens ResearchCouncil of Michigan ±

Sept. 2007

Employment in office furniture stable

R&D employment expands

Overall a moderatelyimproving economy




What happened? Sales collapsed!What happened? Sales collapsed!

2007 Actual: 16.1 million sales

2008 Forecast: 15.7 million sales

2008 Actual: 13.2 million sales

18% Decline and

Billion Dollar Taxpayer Bailout!




Anyone need a ride to a bailout?Anyone need a ride to a bailout?

Alan Mulally, FordPresident and CEO

Rick Wagoner, GMChairman and CEO

Robert Nardelli,Chrysler CEO




Our Governor envisioned . . .Our Governor envisioned . . .

³H ere¶s the answer: Michigan has the most aggressive economic plan of any state in the country. It is a bold $6 billion plan to grow jobs today and jobs tomorrow.

And by this time next year, we¶ll see new businesses doing just that. In five years, you¶re going to be blown away by the strengthand diversity of Michigan¶s transformed economy.´

Governor Jennifer GranholmWorking Our Plan, Securing Our Future

State of the State SpeechJanuary 26, 2006

www.michigan.gov




And the MEDC created . . .And the MEDC created . . .A Strategic Plan for TransformationA Strategic Plan for Transformation

Pure Michigan ± travel and tourismcampaign

Emerging Sectors ± alternativeenergy, life sciences, advancedmanufacturing and home landsecurity

21st Century Jobs Fund ± ³the mostinnovative and comprehensiveeconomic development program inthe nation´




What happened? #1 in the nation!What happened? #1 in the nation!

10.6%As of Dec. 2008, Michigan has519,000 unemployed workers




What happened? No start up cash!What happened? No start up cash!

" Is there any funding in Michigan right now? I would say no," said Jake Sigal, who last year managed to findangel investors outside the state for his Ferndale start-up, Myine Electronics Inc.

By Katherine YungDetroit Free Press Business Writer

February 1, 2009




What happened? Population decline!What happened? Population decline!

Declinestarted in

2006

For the third year in a row, Michigan¶s population has fallen and it is one of only twostates ± tiny Rhode Island is the other ± to have a shrinking population, according toestimates released today by the U.S. Census Bureau. Michigan¶s loss rate increased,

with an estimated 46,368 fewer people in the state on July 1, 2008.Detroit News

Dec. 22, 2008




What happened? Construction halted!What happened? Construction halted!




These are effects, NOT causes!

Inefficient Labor vs. Management Culture

High Taxes

High Cost of Doing Business

Useless and Wasteful Government Programs

Automotive Centric Economy

Shortage of Creative/Educated Talent

Biggest City Impoverished and in Collapse

Deteriorating Infrastructure




The root causes are debt and interest!The root causes are debt and interest!




Interest Payments Skyrocket!Interest Payments Skyrocket!

Source: www.reformation.org

2008 Interest: $400 Billion




The Miracle of Compound InterestThe Miracle of Compound Interest

Imagine what happensif we borrowone billion dollars




A Root Cause: Our Huge Interest PaymentsA Root Cause: Our Huge Interest Payments

State of Michigan

$340M

City of Detroit

$120M

DetroitWater &

SewerageDept.

$124M

DetroitMetro.

WCAirport

$112M

DetroitPublic

Schools

$82M

University of Michigan

$35M

MichiganState

University

$20M

Over $833 millionof interest per year




SampleSample MichMich Interest PaymentsInterest Payments

City of Lansing $1.6M Birmingham Schools $11M

By the way: 2009 State Budget Deficit -$1 Billion

Bishop Intl. Airport $1.4M

Genesee County $1.8M




The Siren Call for MunicipalitiesThe Siren Call for Municipalities

$420 Billion invariable rate

municipal bonds

³N obody ever considered that a

AAA bond insurer would get

downgraded.´ Kathy Culpepper Bond Advisor




DWSD Forced into the RocksDWSD Forced into the Rocks

1. DWSD purchases$500M 4%

variable rate bonds

2. March 08 ±insurer downgraded

3. DWSD renegotiatesbonds ± cost torate payer - $148M




How Wall Street Uses Our InterestHow Wall Street Uses Our Interest

Merrill Lynch CEO Thain Spent $1.22 Million On OfficeMERRILL LYNCH, JOHN THAIN, BANK OF AMERICA, OFFICE SUITE, MICHAEL S. SMITH DESIGN,CNBC.com | 22 Jan 2009

When John Thain became Merrill Lynch¶s CEO in early 2008, he hired Michael S. Smith Design to revamp his office suite,spending approximately $1.22 million according to documents. Additionally, documents showed that Thain signed off onthe purchases personally, and that he used over $30,000 to pay the expenses Smith incurred in doing the work.

The following is a list of the items in his suite:

Area Rug $87,784 Mahogany Pedestal Table $25,713 19th Century Credenza $68,179 Pendant Light Furniture $19,751 4 Pairs of Curtains $28,091 Pair of Guest Chairs $87,784 George IV Chair $18,468 6 Wall Sconces $2,741 Parchment Waste Can $1,405

Roman Shade Fabric $10,967 Roman Shades $7,315 Coffee Table $5,852 Commode on Legs $35,115

© 2009 CNBC.comURL: http://www.cnbc.com/id/28793892/

Note: Merrill Lynch received $10 Billion in TARP fundsand then Bank of America received an additional $20Billion to complete its purchase of Merrill.




How Wall Street Uses Our InterestHow Wall Street Uses Our Interest

Total Wall StreetBonus Distribution for 2008:

$18 Billion




The Brutal Reality . . .The Brutal Reality . . .

Public debt is rolled over,not paid off.

Michigan based banks

don¶t buy our public debt. Banks create money

when making a loan.

Then they charge interest

for their magic!




Need to get out of this cycle!Need to get out of this cycle!

Easy Creditin the

Boom Times

Tough Creditat Trough

Now 18%Decline




What if we got the interest?What if we got the interest?

The Bank of North DakotaKeep North Dakota¶s money in N.D.

Nation¶s

ONLY stateowned bank.




The Bank of North DakotaThe Bank of North Dakota




Bank of North Dakota Project:Bank of North Dakota Project:

La Playa ± A Daily Fiesta!

In a truly western border town calledBeach exists a truly special Mexican

restaurant ± La Playa.

Natalie credits the Bank of North Dakota¶sBeginning Entrepreneur loan program,with being the magic touch needed to

convince the local banker to accept her business proposal.

Source:www.ndsbdc.org




Bank of North Dakota resultsBank of North Dakota results

2007 loan default rate ± less than 2%

2007 Loan Volume - $2 billion

Net Profit - $51 million

Each year, the state legislature decides what to do with the

profits.

In 1993, the legislature transferred $52 million to the GeneralFund, $28 million from bank capital and $24 million fromearnings.

184,000 Student Loans, with one of lowest default rates inthe nation




What¶s good for the bank is . . .What¶s good for the bank is . . .

2008 Budget Surplus $1.2 Billion

Good for the state!

All with a population less than 700,000, a cold andinhospitable climate.

Since 2000, GNP growth of 56%, Personal incomegrowth of 43%, Wage growth of 34%

November 2008

U

nemployment Rate = 2.8%

Tax Information: Ranks 42 out of 50 ± Michigan is18th (2005 Tax Foundation Report)




What if Michigan had a bank?What if Michigan had a bank?

Extrapolating the populationdifference of 16:

Bank Loans - $32 billion

Bank Profit - $800 million

Michigan taxpayer interest

staying in Michigan - $1 billionplus!




Four Key PointsFour Key Points

1. Leave Comfortopia ± we need to think for ourselves!

2. Quit fighting about the effects.

3. Focus on a root cause ± where do our interest payments go!

4. A state bank could keep our tax dollars inMichigan.




Time for a State Owned BankTime for a State Owned Bank

G reat source onour nation¶s

banking systemand how a statebank could re- energize our

economy.

0409 state owned bank

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