Monday, October 20, 2014

Tax Avoidence

As taxes get more onerous, people will do what they have to avoid them.  In Germany it looks like this.
VAT taxes are absurd and they add really more than 20% to the cost of everything between the tax and administration. A larger portion of the remaining disposable income is consumed by food, everything else many are starting to turn to used merchandise. Why? No more taxes than necessary. There is a rising trend in Germany to buy and sell used goods to avoid taxes. Since the goods are not “manufactured” there is no chain of production for the VAT system to oppress.
Powell's bookstore in Portland introduced used books alongside new books 40 years ago. I think we can see retailers begin to sell inexpensive used everything alongside the new.  The problem is the hegemon through its banks will see what is happening through the cash register and bank funds flow, and crush small business in favor of Ikea, WalMart, etc.

Then there will another innovation.  There never was a time in history, well, there are some rare exceptions,  in which people we not oppressed by a hegemon.  Today is usual, normal, typical.

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Ebola and the Social Contract

When no one is punished, in fact, the perpetrators are rewarded, you can expect this kind of thing to go on and on.
The US Department of Defense (DoD) is funding Ebola trials on humans, trials which started just weeks before the Ebola outbreak in Guinea and Sierra Leone. The reports continue and state that the DoD gave a contract worth $140 million dollars to Tekmira, a Canadian pharmaceutical company, to conduct Ebola research. This research work involved injecting and infusing healthy humans with the deadly Ebola virus. Hence, the DoD is listed as a collaborator in a “First in Human” Ebola clinical trial (NCT02041715, which started in January 2014 shortly before an Ebola epidemic was declared in West Africa in March.
Then there is this, as if someone designed this strain...
Dr. Osterholm just gave a talk shown on C-Span explaining that a top Ebola virologist – the Head of Special Pathogens at Canada’s health agency, Gary Kobinger – has found that the current strain of Ebola appears to be much worse than any strain seen before … and that the current virus may be more likely to spread through aerosols than strains which scientists have previously encountered.
There is no way, we have no effective means of law enforcement to address this, so the only means would be truth commissions.  Who, what, where, when and why.  Even capital crimes must be immune, pardon the pun, to get at the truth.  Maybe then, we might take steps to curb some of the terror.  Instead, we blame the black guy.




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End "Fair Trade" Now!

Here is a fellow who from the trenches discovers what specialty trade has meant from the beginning...
Above all we remain focused on quality and consistency
Exactly, or "pack consistently to grade" ...  "Quality" means nothing, since Walmart has a quality level and Saks has a quality level.  The trick is to establish what the level is, not "insert a buzz word."  And then make sure everytime the box is open that grade is in the box.
Mexican coffee growers are way too polite to use rude gestures, but what do you think they said when I suggested that they pay to become "Fair Trade" certified?
The same thing when a group of Ecuadorians were told they should introduce microloans to their villages.  "It is a trap."

The USA destabilizes vast swathes of the world, and communities that functioned for millenia are degraded and then the perps show up with a "plan."  How about a different foreign policy?

How about we disband our military and business people show up with a purchase order?  We pay trillions in taxes so Dick Cheney can show up overseas and tell people what to do.  How about we pay nothing in taxes and I show up with a sketchpad?

I have to disagree with this fellow on the point that Fair Trade efforts raises customer awareness, since he makes a point we in specialty small business have always known... there is a premium on quality.  I think he is being nice since his customers no doubt believe in "fair trade." Instead of creating a sinecure to be funded out of grower profits, the best way to "raise awareness" is to associate the grade with the cup of coffee a given person is drinking at a given money.  Logos, halos, whatever do not do the trick.

As I learned forty years ago from people who learned it where they first worked, compete on design at the specialty level.

I've complained about fair trade before...

There are two other points this fellow is rocking if you nose around his website:

1. Finance along trade lanes... credit along the trade lane is necessary to recovering small business international trade.  He is doing this.

2. Traceability...  he offers it as authenticity, but I see it as trumping the violent interference of the state in trade with the IPR of trademarks.  Strike one for freedom!

When Fair Trade showed up in the 1980s it was clear it was another progressive collectivization, sinecures with a halo, a program to pick winners and crush losers, that would get co-opted by the big boys putatively being fought.  Mission accomplished.

It warms my heart as people with no relation to me, never heard of me let alone took any of my classes, come to the exact same conclusions of what needs to be done concretely.  It means we are making progress.

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Sunday, October 19, 2014

LsC & BPO Trade Finance and Payments

For the life of me I cannot tell the difference between a Letter of Credit and a Bank Payment Obligation, The New Thing in trade finance.  Here JP Morgan explains...  The ICC, a private law entity which promulgates rules and regs for banking, has this to say...

The "mismatch acceptance" is noted, and therein is the nonsense of banks selling letters of credit as security in international trade.  Some 80% of letters of credit fail, and the buyer "accepts the exceptions."  Here the banks refer to the buyer "accepts the mismatch."  With an LC, we always did, since we knew our suppliers, so a difference in terminology fails to signify new.  Credit risk mitigation starts and ends with relationship between buyer and seller, there is nothing the bank can contribute to amelioration, since neither by policy or law will they take responsibility to payment or delivery failure.

The BPO does seem to be limited to what is known as a confirmed letter of credit, the highest grade of letter of credit.

I suspect the fact they are introducing defined electronic data sets to be matched by computers, rather than humans checking paperwork, will on the one hand reduce the errors of input, but on the other hand increase the accuracy of checking for document compliance.  I'd expect a net improvement in matching documents to terms.

I can see how switching from humans checking paperwork (I got to the point of being able to tell the native language of the clerk who did the checking by the check marks made) might increase efficiency and lower cost, but the requirement of underlying assets has not changed in the least.  And I wonder with the lower costs, if there will be a lowering of fees, I expect not, since we are talking banks.

Banks take an abundance of caution when extending lines of credit to customers, and there is I am sure nothing new with the BPO.  But who knows?  Credit is being created at a breathtaking pace, banks are not lending it very fast, and given that nothing regarding the BPO seems to be new, perhaps the "new" is just a lowering of credit standards, that is to say, the banks are no longer taking an abundance of caution, and this is all "standby LC" grade credit being lent.   A good masters thesis would be to study the BPO on this point.

The FEDS are jumping back in with both feet right now pushing subprime loans to the masses, again lowering standards, to bring back the good old days that resulted in the 2008 bust... and so we can expect that bad ideas are being pushed.

Right now the BPO is optional, I see a time coming when it is mandatory.

Another generation will no longer how to process a manual transaction Letter of Credit transactions.  What to do when a virus brings down the electronic clearance systems?

I recall in the 1980s when the power went out, stores continued to sell and ring up customers.  They did manually.  Imprinted credit card transactions.  Cash till transactions...  business went on.  Now they have to shooo customers out and lock the doors.

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Irish Agri-food at SIAL

I do so hope these companies have properly prepared for this trade show, with appointments with buyers set up BEFORE they contracted for a booth, and are prepared to write orders at the show.
Twenty-five Irish agri-food companies and organisations are travelling to France to take part in the largest food and beverage trade show in the world.
If they are going because the trip is subsidized and settling for "trade leads" then they will soon learn "free" is way too expensive.

My seminars are taken by people from all over the world.  Links in the upper right above.
On Oct 17, 2014, at 10:20 AM, riki.j.klein wrote:
Great thank you John! Loving your course, what's so interesting is as the learning happens my motivation and sheer excitement grows simultaneously! Thank you again!
Cheers!
Riki
Maceio, Brazil 
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Saturday, October 18, 2014

Negotiation to Limit Access to Medicine by the Poor

In a country transfixed by the death of one and infection of two to ebola, yet where some 30,000 a year die of flu, you have to wonder at secret negotiations regarding limiting access to medicine.
As the latest round of talks for the Trans-Pacific Partnership agreement begins in Australia next week, negotiators will be discussing revisions in a key document that consumer advocacy groups say would strengthen patent rights for drug makers at the expense of patients in poor countries.
The 77-page document, which was obtained by WikiLeaks and reviewed by The Wall Street Journal, contains proposals made at the last round of talks in May, according to people familiar with the document. The TPP is a trade agreement that is under negotiation to lower tariffs and open markets by 12 countries in the Asia and Pacific regions.
Why do we have to rely on Wikileaks to find out what trade negosiators are up to?  Why is Assamge fear for his well-being?

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Ex Im Bank Finances Terror

Terrified, villagers have backed off and accepted relocation after an activist disappeared pursuant to an Ex Im Bank financed overseas boondoggle.
Sudarshan Rajak disappeared under suspicious circumstances after protesting the relocation of families for Reliance Power's 4,000-megawatt Sasan coal project in Singrauli, India. Some of his neighbors believe he was in his house when it wasbulldozed by Reliance. Krishna Das Saha's home was destroyed in the middle of the night -- while his family was still living in it -- to make way for Sasan's coal ash pond. And when Sati Prasad challenged Reliance's refusal to hire local workers, he was dragged out of his home and beaten by the police.
These are just a few people who have met violence and intimidation at the hands of Reliance Power. This aggression is subsidized U.S. tax dollars in the form of over $900 million in financing from the U.S. Export-Import Bank (Ex-Im). Indian groups have documented these and other abuses in Sasan Ultra Mega Power Project, Singrauli, Madhya Pradesh: A Brief Report.
This is nothing new.  The ExIm Bank got its start financing the Soviet regime, and the deaths and disappearances pursuant to those loans are uncountable.

History: EIBW established under DC charter by EO 6581, February 2, 1934, to assist in financing U.S. trade with the Soviet Union.

Today the employees of the ExImbank try to hide their past and present activity, but hey, it's capitalism, so it is all good.  Republicans have come up with a plan to keep it going for another five years.

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Friday, October 17, 2014

Peace Prosperity and Property Rights

"We look to Scotland for all our ideas of civilization."  Voltaire

Hong Kong and the USA were started at the same time and the same people with the same weltanshauung, Scotsmen who were heir to laissez-faire French philosophes who took what the Spanish scholastics had picked up from Islam before they were tossed from Iberia.

Both HK & USA have dubious beginnings and whimsical borders with curious anomalies within any given borders at any time, but one difference is like Canada, Hong Kong remained loyal to the British Crown, an office occupied by whatever hapless German upon which the Anglos placed a funny hat.

Property rights are created when you mix your labor with either homesteaded real estate or property otherwise consensually acquired.  We think of land when we say property, but the land itself needs to be developed to bear any fruit.

Our history with the natives is spotty, but it became horrendous after the USA Civil War.  As Sheridan noted, the only good Indian was a dead Indian, given the challenges of property rights and development on land already occupied.

In spite of a Papal ban on disrespecting natives rights (which neither Catholic let alone protestant obeyed) owning the land was deemed existentially fundamental, so began the Indian long trail of sorrows which continues to this day.

In Hong Kong, the British Crown already owned all land (except for the Anglican Cathedral in time) and so at no time could anyone own any.  As Hong Kong territory expanded, it did so by taking leases form the Chinese, hence the 99 year lease time -up for most of Hong Kong in 1997.  Without most of Hong Kong, the UK arranged, for consideration, to give up Kowloon & Hong Kong Island as well, which had been deeded into perpetuity.  And now the ChiComs own the land, and the USA is funding destabilization of a comity in Chinese-owned territory against an agreement settled in law in which the ChiComs are in no way violating.  Why not?  All of our other efforts are working out so well around the world.  (I hope the Hong Kong students are making note of the fate of the Kurds, the beneficiaries du jour of USA assistance.)

But I vent, so to return - with no one allowed to own land as long as Hong Kong has been, and to this day, Hong Kong has managed to grow from a pirates' watering hole to a city-state superior in all categories to any capitalist regime.  And where the USA hides behind the "too many minorities" keep our averages down, Hong Kong is a polyglot of refugees and expats from the world over, and by all accounts overpopulated, but few want out and countless want in.

It is a model of anarchy, for free markets, and that is real estate may not be owned.  Why should it?  With 99 years leases (to whom?) we have a valid experiment in peace and prosperity, and that is Hong Kong, one even the ChiComs can appreciate (and communism by design expects its apotheosis in anarchy).

Sure, under such a regime cutting leases with a Nakota Chief to lay down tracks with the understanding the buffalo may roam might have taken time, but time is only more expensive, not too expensive.  In any case, one must not claim to have the best system or a just system when there is clearly something better and with patience more just.

It's one thing to lay tracks, it is another to frack.   I've conversed with a petroleum engineer of global reputation who told me "of course fracking can be done cleanly, but it is not....  of course you can burn coal cleanly, but we do not."  And why, because once you can "own land" then you can do what you will with it, because it is yours.  And in time, courts can be bought off to allow pollution on others property, a process explicit traced in USA jurispridence by Morton Horvitz, a fine Marxist historian laboring at Harvard, who book is necessary if you wish to ever be considered educated about the USA.

The Transformation of American Law, 1780-1860 (Studies in Legal History)



 States are cracking up, splitting up, and it is the 1750s all over again.  We are the "me" generation in the formula "apres moi, le deluge...".  I do so hope we see a few examples of the happy accident of Hong Kong, where people figure out you can have peace and prosperity without actual ownership of the dirt beneath the ground.  It may cost more, but not too much, it may take more time, but not too much time.

Strong men will emerge to lead us.  In anarchy, you are the strong man you've been waiting for.  Lead yourself.

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UK Advice Every Bit As Bad

We need a strict separation of business and state, especially in the USA where fascism, by definition, is rampant.  The UK has no such excuse for peddling bad advice to start-ups, but they do...
1. Exporting helps businesses grow
With speakers from UK Trade and Investment and UK Export Finance, there was a clear push to make exporting simpler for SMEs. They pointed out that exporting is beneficial to both individual businesses and the UK as a whole.
It's extremely simple now.  The most important thing is customers, and the hardest thing is getting the product right.  The MOQ is the right tactic and FOB is the right tool to prove both.  Once proven, logistics and payments can be turned over to clerks.  To hold a conference and then not talk about what matters, but an area in which there is no real problem, well...
2. Research the local culture
Throughout the event, speakers emphasised the importance of learning about the culture of the target country and the usefulness of knowing other languages as an exporting entrepreneur.
Wrong and wrong.  At the small business level the challenges of the target country are the problem of the buyer to whom you sell, not your problem. English is the language of trade, and while knowing foreign languages is a fundamental in being liberally educated, English is the default trade language.
6. Take care to protect your brand abroad
The steps you take to secure your company in the UK should be replicated in the country you export to.
If you are as a small business "protecting your brand" in the home country shame on you.  Traceability is necessary and sufficient to the task.

There is no reason for the UK to be giving bad advice to SMEs, unless it is simply more poodleism, like the following the USA into Iraq.  Does the UK government follow the USA's "get big or get out" imperative? The Scots should reconsider the No vote, but this time put freedom on the agenda.

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Pay With EBT, Ship the Food To Caribbean

This is old news, but with Costco studying the China market, there may be a twist.
“Everybody does it,” said a worker at an Associated Supermarket in Prospect Lefferts Gardens, Brooklyn. “They pay for it any way they can. A lot of people pay with EBT.”
Customers pay cash for the barrels, usually about $40, and typically ship them filled with $500 to $2,000 worth of rice, beans, pasta, canned milk and sausages.
Workers at the Pioneer Supermarket on Parkside Avenue and the Key Food on Flatbush Avenue confirmed the practice.
They said food-stamp recipients typically take home their barrels and fill them gradually over time with food bought with EBT cards.
When the tubs are full, the welfare users call a shipping company to pick them up and send them to the Caribbean for about $70. The shipments take about three weeks.
All immigrant groups rock the welfare payments (you think they come here because of our freedom?)  There may have been a time pre-1964 "Great Society" welfare regimes when people came here to work and look for freedom, but now we cannot know if it is 'freedom" or "Free $#)*."

Whatever, but USA sent $522 million last year to the Caribbean in Foreign aid.  This goes to the Harvard educated elites to keep these satellites in poverty and dependent on USA.  This EBT card scam also helps.  USA food processors, the biggies, get the profits, the taxpayers take the loss, and the Islands never develop a domestic retail trade, nor do they bother to grow a domestic retail trade commensurate with their potential when they can get food "free" from the USA.  The elites then compliment USA Imperialism by repeating the mantra "our people are culturally inferior."  Break his legs then criticize him for not walking.

Costco is getting a handle on sales of its Kirkland brand to China.  In doing so, Costco will figure out what percent is EBT-scam based (the amount of China sales that does not originate in China after it is easier to buy in China) and this will be private trade data, information no one in government policy making will have.  Not that it would matter, since get big or get out, the USA policy imperative, either way General Foods, General Mills, and other Big Food companies products are being moved and taxpayers are subsidizing their profits.

WE are not going to get rid of the EBT cards, or the welfare state, these things cannot be backed away from.  Empires just fall and become fond memories and whimsical lapdogs to the next empire, like the UK.  Not bad, but delusional.  Or they may become somewhat dignified like Italy.

It ain't the hand you are dealt, it's how you play the cards...  and there is no judging a man for how he plays his cards.  But we can say, "hmmm... instead of buying Fritos and Pepsi and Kentucky Fried Chicken (yes allowed) with your EBT, why not buy Foie de gras, raw milk sour cream, organic lemons, caviar, all products no Big Ag makes, only small AG products, and then improve your health as you starve the beast?"  This will divert money meant for big ag to the struggling small ag that is specifically targeted for avowed destruction by the USDA in particular and the federal government in general.

Smile at that single mom with the screaming kid checking out in your upscale grocery paying for excellent foods with an EBT, and offer to help her with her groceries.  Make them most welcome, they would be revolutionaries.

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