Chapter 25

After having studied the possible futures for three weeks, Lucy looked up at the display at the front of the room with a smile. She pressed a key on the keyboard and the tree illustrating the possible futures remained, but the colors of the lines, the style of the lines, and the legends changed. She pressed a different key with a similar result. She pointed to the one line and, while looking over at William, asked, "Is this the one?"

"I believe that is the one I'm pursuing. I see them differently in my mind than up there," William answered. His vision didn't show lines on a monitor, but sequences of images of stereotypical people and lifestyles. There was far more detail in what he could see.

Lucy used a pointer to select that particular line. A complete description of the line appeared on the display. The line was now captured as a set of graphs for each independent variable. She scanned the values of all of the variables for that particular line. A lot of the predictions weren't pretty. She sighed and said, "There will be a lot of unhappy people for a while if we pursue this future."

"Yes," William answered walking up to the display. It was now lit from the back so that they could approach it and discuss aspects of each line without blocking the projection. He walked along the line pointing to various features while he walked. He said, "The cost of living is increasing throughout this time period. The values put on real estate are going to inflate beyond their actual worth starting about this time. There will be a lot of speculation going on and the values will climb a lot higher.

"At this point, the trend is going to end when there is a normal market correction. Some of the more aggressive speculators will lose everything. Even though they will constitute less than half a percent of the people buying real estate, they will have driven the market prices to more than double their actual value."

"Wait," Lucy said with a frown. She double-checked the values on the screen and then said, "You're telling me that less than half a percent of the buyers can inflate property values that much?"

"Any time you have aggressive speculation in a single market the speculators exaggerate a trend. Buying and selling property becomes their livelihood. They are always on the lookout for deals. They kill the lower end of the market forcing others who are interested in buying property for use as a home to have to pay a higher price. They take a low end property and sell it as a higher value property. Everything gets inflated," William answered.

"I still don't see it," Lucy said with a frown. As far as she was concerned, there were always deals that could be found.

William said, "Let's say that the average home purchaser buys a house once every twenty years. When they are ready to buy a new house, they sell their old house. A speculator might buy and sell twenty houses a year. That makes them equivalent to four hundred regular buyers. Even though they may constitute a small percentage of the buyers, they are effectively as much as a quarter of the actual market. That has a big effect when the goal is making money rather than buying a nice home."

"I didn't think about it that way," Lucy said.

"They will also account for a major portion of the bad debt because it really isn't backed up by much beyond the properties they owe mortgages on," William said.

"Depending on the size of the debts, that could really put a squeeze on the banks," Lucy said.

Nodding his head in agreement, William said, "We are going to see a collapse of the credit companies when people can't pay their debts. Right about here, one of the major credit card companies is going to fold. Stocks will plummet, real estate prices will fall, and a lot of small businesses will fail. Medium sized companies will shrink. The very large companies will have to fracture into hundreds of smaller companies in order to survive.

"Several dozen rather well known billionaires will file bankruptcy when their total assets fall under a billion while their debts remain well over a billion. They will bring down a lot more billionaires and multimillionaires when they fail.

"The average person is going to suddenly realize that they have lost almost all of their investments. Nearly a quarter of them will become unemployed. That will further drag the economy down despite the actions of governments all around the world."

Lucy stared at William open mouthed. After a few seconds, she said, "That's horrible. What are people going to do?"

"There will be soup kitchens just like in the great depression. There will be more homeless than ever. The Fusion Foundation will step in and save millions of people from total economic destruction. This isn't going to be limited to the United States, but will have international impact. The Fusion Foundation will have to reach out worldwide in order to help," William said.

"You stepped down from the board of directors," Lucy said thinking that it was the worst time possible for the Fusion Foundation.

"That's right," William said.

Shaking her head, Lucy said, "I hope it steps up to the challenge."

He smiled and said, "One of the saving graces will be that a lot of people will own cars that can take them to where the work is. These are cheap cars that last forever."

"Your car company?" Lucy asked.

"Yes and no," William answered. He said, "My little car company won't survive as a major economic force, but it will force car companies around the world to adopt a longer term perspective on the automotive market. They'll come to understand that their corporate goal is not to grow but to maintain a basic healthy bottom line that comes from having a consistent market share and to maintain a good profit by maintaining a low operating cost."

"How?" Lucy asked.

"They'll stop coming out with a new model every year," William answered with a smile. Too much of the market was driven by fashion rather than function. A major economic crisis would put a lot of that market drive back on track.

"Ah," Lucy said. She wondered how much money was wasted every year doing nothing except changing the body style a little here and there.

He walked a little ways down the display to another point. He said, "Four years after the first major effects of the fall are felt, the economy will start to recover. Local small scale manufacturing will be the first economic sector to recover. They'll produce low cost high quality products that everyone needs. It will be a matter of making necessities rather than luxuries."

Lucy frowned and asked, "What kind of products?"

"Nuts, bolts, screws, nails, wire, replacement parts, fusion cells, light bulbs, and other standard household items," William answered.

Staring at the chart, Lucy asked, "Where is the capital for all of this going to come from?"

"I've been shifting my investments from stocks, bonds, certificates of deposits, and real estate into ownership of small companies across the country," William answered with a smile. It was going to take him over ten years to transition his investments so that his actions wouldn't trigger an early crisis. He added, "I've been spending the money on purchasing buildings, machines, and farms."

"Farms?" Lucy asked.

Nodding his head, William said, "No matter how bad the economy gets, people will need to eat. For a while, the biggest purchaser of agricultural products will be the Fusion Foundation. Of course, I'll sell it at cost."

"You've got it all planned out, don't you?" Lucy said staring at William.

"Yes, I do. This is the only future that I've found that changes the basic consumer driven economy in what I view as a good direction. The current economy is based on planned obsolescence. That doesn't really move the standard of living forward. In fact, it holds it back. Sure, some improvements are made here and there in products, but the economic cost on the average household is tremendous and the stress on resources is phenomenal."

"What do you mean?" Lucy asked. Like many people, she had assumed that the standard of living had improved tremendously over the past thirty years.

William answered, "Take a common household item, let's say an iron. There's not too much that can be done to an iron. It is used to press clothes. It is a utility item in just about every household. You buy one and use it for an hour or so a week. Most of the time, it is kept in a closet somewhere. Why should a household have to buy a new one every four years or so? There's no reason. The style of the iron isn't all that important."

"An iron costs thirty dollars or so," Lucy said not seeing what the big deal was about it.

"It is just one of many household items like that. There are mixers, vacuum cleaners, telephones, and other things. Sure it is just thirty dollars, but ten such items a year is three hundred dollars. Let's take a slightly more expensive item like a DVD player. They last about three years before the plastic gearing dies," William said.

"I see your point," Lucy said. Lots of money was getting spent just to maintain the status quo rather than improve the standard of living.

"The cost of these little items will increase, but you won't have to replace them every three or four years. Improving the quality of an item does cost a little money, but that money goes to people who do the work. It does require extra people, but they are consumers," William said.

"So the market for cheap poorly made items will disappear. Won't that mean that companies will experience slower growth?" Lucy said.

William smiled at that and said, "The only way for a company to grow will be to come up with new products. These will be products that represent a real improvement over the current generation of products. It won't just be a matter of changing the color of the buttons, but a real substantive improvement in functionality. It has been decades since there's been real substantive improvement in household products."