Tuesday, December 6, 2016

Case 297,773,028,471: Ex Nihilo Credit Damage

Ex Nihilo Credit again, tracking since "1982"...  I was finishing a long delayed BA then, and you could see the damage being done in education by the boom...  -
Recent evidence suggests that in the UK, for example, a record number of university graduates—one in four—face only a choice between unemployment and taking a job that does not require a degree. This shows that their degrees are not demanded on the market or, alternatively, that young people are malinvesting high student loans into degrees which, once obtained, will not offer them better employment alternatives than before—thus having a rate of return too low to justify the initial investment. Similarly, an investigation by The Economist has revealed that worldwide, BAs, BSCs, but also master programs such as MBAs are no longer considered to offer a candidate a competitive edge in the marketplace.
Another facet of the devaluation of higher education is the record high number of specialised degrees, a trend which began with masters and MBAs, but has now peaked into PhDs.The mismatch between supply and demand (academic positions) is even wider in this case. A 2013 paper published in Nature Biotechnology has found that “Each year, there are seven times more PhDs awarded in science and engineering than there are newly available faculty positions.” In fact, the authors show that
Since 1982, almost 800,000 PhDs were awarded in science and engineering (S&E) fields, whereas only about 100,000 academic faculty positions were created in those fields within the same time frame. The number of S&E PhDs awarded annually has also increased over this time frame, from ~19,000 in 1982 to ~36,000 in 2011. The number of faculty positions created each year, however, has not changed, with roughly 3,000 new positions created annually.
A part of these graduates, especially in economics, end up working for the government when they eventually fail the market test. But the trend is also extending further to postdoctoral fellowships, which are sought after by the 70% of PhDs unable to find alternative employment. 
Government jobs may well be drying up under the change of regime going on worldwide.  What's that leave?  Self-employment.  Do good while doing well, repair the world economy!

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Hanjin Hype Follow-up

We can assume since they are selling the ships the Hanjin cargo has been unloaded, hence fears of "crew in peril and cargo stranded for years" as hyped initially has proven, as I predicted, nonsense.
South Korea’s Hanjin Shipping Co. that is under court-led restructuring is expected to complete the disposal of all of its vessels this month at the earliest, a move that would practically lead once the world’s seventh largest shipper to liquidation. 
Yes, black swan events happen, and in small business international trade we work in multiple LCL shipments, never FCL shipments, which is cheap insurance against disaster.

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Monday, December 5, 2016

Gold And Money

These two articles are terribly useful if only to understand what one is up against.

First, this fellow is self-employed.  He was caused much pain given nonsensical gold trade statistics, so he found joy in just validating (or more often invalidating) gold trade data and its sources.  So now he makes money with his work, and is a big draw at conferences.
What came to light as on odd discrepancy between GFMS’ Chinese gold demand and “apparent supply” has proven to be a tenacious cover-up by the oldest consultancy firm in the gold market. And not only does GFMS publish incomplete and misleading data on Chinese gold demand, all its supply and demand data is incomplete and misleading. As a result, the vast majority of investors across the globe has been brainwashed to believe total gold supply and demand mainly consists of global mine output and jewelry demand. In reality, the supply and demand data GFMS publishes is just the tip of the iceberg. But the firm is reluctant to admit this publicly, lest their business model would be severely damaged.
Next, as I have said repeatedly here, it is definitions of money that are so misleading, as to malinform thought.  Frank Shostak is brilliant, and his essay good, but I disagree with him here as well.  This new definition surprises me, but it is in the context of his certain argument here, and he may merely be making a point.
No definition, however, can be established by means of a correlation. The purpose of a definition is to present the essence, the distinguishing characteristic of the subject we are trying to identify. A definition is to tell us what the fundamentals of a particular entity are.
In this sense money is that for which all other goods and services are traded. The distinguishing characteristic of money is that it is the general medium of exchange. It has evolved from the most marketable commodity. 
In any event, he debunks most other definitions of money in this post.

I've defined money here classically (search the blog for "money"), to have a solid basis for thinking and analyzing.  It is no guarantee that my thinking is sound, but to start with mal-definitions is to guarantee others is unsound. Take the trouble to define terms correctly, to have a better chance.

J. K. Galbraith: ‘The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.’ Money, p. 5

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Sunday, December 4, 2016

New Estimate: eCommerce Sales 8.4% in USA

US Census is estimating retail eCommerce sales, after some 20 years of trying, at about 8.4% of all sales. Here is their definition (opens as a .pdf):
E-commerce sales are sales of goods and services where the buyer
places an order, or the price and terms of the sale are negotiated over an Internet, mobile
device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic
mail, or other comparable online system. Payment may or may not bemade online.
With mail order catalogs having shifted their order processing from the backrroom to self-service by customers online, and calling that "eCommerce" 8.4% looks rather low.  Mail order catalogs hit that in their heyday back in the mid-1980s.

Amazon is giving away eCommerce services to people working on razor thin margins, and this is the best that can be done?

Anyone pursuing internet as a pure play is delusional.  Use it as self-service order processing, but otherwise make no effect to market online.

Even if 8.4% accurately reflects any new business channel, and I doubt it, it means 91.6% of the market is in brick and mortar.  To concentrate one's effort in the more difficult, expensive and unlikely 8.4% and ignore the easier, less costly to serve, and larger 91.6%, due to some delusion, is unfortunate.

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Saturday, December 3, 2016

28 Jan 17 San Francisco Start-Up Seminar on Sale

Image result for college of san mateo logo

If you have been meaning to commit to start-up small business international trade, College of San Mateo in the San Francisco area hosts my all day in-person seminar on small business international trade start-up.  We always have a good group there.  The next session is Jan 28, Saturday, from 9am to 5pm.  The school is a magical place on top of a hill, and there is a farmers market occurring on the same day, which makes for a delightful lunch hour.

The school has put all of their classes, including mine, on sale.  You get the orientation and action steps in the course, plus unlimited follow-up with me afterwards.  Sign up now here to save 10%.

Happy Holidays!
Announcing a 10% Discount onALL Live Courses!

Good 11/28 thru 12/31/16!
Use the Code- 
Holiday2016 -upon cart check out
to receive your discount!

(Cannot be combined with any other discount)

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India, Gold and a Monetary Event and Some Change

So India is working on what USA has not quite done yet,  but Europe did, and that is eliminate certain bills and when people tried to trade the old for the new, they were obliged to explain where they got all this cold hard cash.

In USA, cash is "probable cause" of a crime at any level any cop says so, and since they get to keep what they seize, "says so" getting less and less every day.  War on cash.

Here is a guy whose reasoning is sound, although I agree with Sennholz that the Hegemon has way too many options, plus the Hegemon does not lose if the system crashes.  When the Soviet system crashed, the same people ended up on top.  The Russians were just smart enough, this time, to let change happen without bloodshed.  With USA having shed so much blood worldwide in this last 40 years, what goes around comes around. (Name a time when the news covered Soviet soldiers in combat.  Just Afghanistan?  That was only ten years long, and the Communists had the decency to self-destruct peacefully after that.  We are at fifteen years now...)

This guy is pointing out that gold is up to $1700 in India, about 40% higher than spot.  A change of currency is a monetary event, and inflation what happens when you print too much currency.  India explicitly here is printing more currency, and inflation is showing up in terms of money (gold.)

It is fun to read a prediction that you'll be able to buy an average house for 2.6 ounces of gold soon, and let the mind work out how easy it would be to buy that much gold and hold it.  This guy sells gold.  If it gets to that, you'll have so many other options, no gold required, that as today a gold play is just one marginal opportunity among countless others.  At one point I had a couple of kilos of gold in my house, plus 1,000 ounces of silver, I accumulated over the 00's, with a view of the "main chance."  I repented of that, and sold it all (at the top it turns out; taxes on gains will impact much getting a house for 2.6 oz of gold, making the play probably risible at that point in the future.)

The stories are black market machinations are pushing the price of gold up in India.  Could be, but I'd stick with printing too much currency.

As to the price of gold in India, the solution to high prices is high prices.  The high prices themselves will widen the smuggling, from petty to grand, and that will solve the problem of state policy failure.

People are still panicking over Trump, and those panicking I still think are doing so becasue they know the ex nihilo credit regime si over.  As to that, Trump is merely the messenger, Hillary would have done what trump will do, just as Obama did What McCain would do.  Just as Obama was used to draw back the disaffected left, so Trump is drawing back the disaffected right.

What is true no president keeps promises, at all, and Trump will be no exception.  What is also true is the iron is hot, and everyone can pointlessly vote, but everyone can also effectively act.  The election is decided, buy how you contribute to forging the iron up to you.

As the ex nihilo credit regime declines inexorably, your action replacing it, at the small business level, is both doing good and doing well.  It is the only reasonable "prepping" that can occur, because entrepreneurship is about the unseen, as Drucker says, "creating customers and innovating."  If you create something, then necessarily it is unseen until you act. When you start up a business, your product is a solution to a problem (and there is no solution that can be improved upon) but you cannot know what that product (or service) will look like around the bend, because its development is by iteration and iteration, based on customer feedback preceding each iteration, something that cannot be plotted linearly.   Whole lotta zig zaggin' goin' on. You have the passion and joy, but you have no idea what your offering will look like in a year, let alone a decade.  Neither does the hegemon (or competitors for that matter) so as fruit to pick you are too high and too far apart to mulct.

(The point of Intellectual Property Rights, monopolies issued by the hegemon, are to set designs in stone, with a promise of riches, so that creativity and innovation is suppressed, especially by threat of litigation if anyone dare improve on a monopolized idea, so we have extremely limited options from which to choose in life.  Car companies could not start in USA after the Big Three pooled patents among themselves, and anyone who tried to start up was obliged to overpay the big three for each automobile function a car needed.  Windshield wipers? Pay us.  Radio?  Pay us.  ABS?  Pay us. )

Obama was elected to stop the wars, the bailouts, close gitmo and fix healthcare.  Of course all of those are far worse today.  In 2010 he announced he wanted to double exports in five years.  Whole lotta ex nihilo credit spent on that, never happened.  If McCain won, it'd be the same.  Obama was against the Standing Rock pipeline, but as you can see from the video, on his watch, whole lotta work got done.

Trump won, meaning the iron is hot.  What gets forged depends on how people act, what they do.

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Friday, December 2, 2016

LCL MOQ FOB Partial Colloquy

On Dec 2, 2016, at 1:03 AM, LL wrote:

Hi John,
Thanks for another fantastic session this Tuesday. I have mailed out the initial letter and wanted to be prepared just incase she calls me before our scheduled time this Tuesday. I have started a different email thread since we are on the next phase and also makes it easier.  

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming she's interested, she'll either start getting into specificity then and there

***Yes, and you're best answer is "I don't know... and it will be find to find out..."  (Will I have to change the packaging?Who in Mexico do you have in mond?)


No, I don't want or need and exclusive

Yes, you can say forget it... (except for the one, first LCL MOQ FOB)

Yes, you can fire me...  because I am not your employee and don't have anything but some time spent doing something interesting, trying out my learning, at risk...

OR will want to think about it and get back to me

***  All I need is weights and measures of say a pallet load, what price YOU want, where I can pick it up from you, and  what would be the lead time, a month?  Then you can think about my export offer, after you see it,  is it something you want out there?  Start your thinking then, when you have something solid to look at.  If you say no, I'll be trying Bison Jerky next, but I like your product more. "***

OR will ask me on how I want to proceed [ I'm assuming you'll say "Right Now over the phone" 🙂 ].  Was hoping me you can give me some guidelines on the following details which I think will be fundamental to our discussions and If there's something else you think might come up in the discussion and is important, please let me know

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

***Yes, must...  they have one already for domestic sales, but yours may be bigger, but usually no more than a pallet load.  You see on the template we need the weights and measures (H,L. W each and total) of the cartons, add the pallet height, and the price she wants to ear on the sale (ExW), and her delivery lead time, plus where she wants the goods picked up.  You might just have a rough draft template of the LCL MOQ FOB form with those blanks highlighted to email her, so if she asks how you want to proceed, you can just email her that .pdf.

Smallest rational really gets to logistics cost; if you get 100% more product for 5% more logistics cost (FF will point this out), then yes, jack up the qty to make the offer more attractive, but no, never a full container load...  two pallets is max for a test, and we are testing at this point in the export game.  There is back and forth on the LCL MOQ FOB development.  Measure twice, cut once....  remember it, you are stuck with it through 100 inquiries...***

More to follow...

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Thursday, December 1, 2016

Dow 10,000 or Gold $10,000?

This fellow is apparently famous, and I can see why, because he nails it... here are two snippets:
Stocks have been a massive beneficiary of the biggest monetary expansion that the world has ever experienced. If we look at the Dow since the last major economic cycle started in the early 1980s, we find the most remarkable rise. In early 1980, the Dow was at 850 and today we are 19,000. That is a rise of over 18,000 Dow points in 36 years. This means that the Dow has gone up by 9% per year on average since 1981. A 9% annual increase leads the index doubling every 8 years. What a great investment. You buy stocks in 1980 for $10,000 and today in 2016 you have $220,000 without having to lift a finger. On top of that there has been a dividend yield of around 2% on average. But this growth in the stock market has not just happened on its own accord. Stocks don’t grow at 9% annually for 36 years without some rocket fuel. And the explanation is very simple. Debt has provided the fuel. Because US debt has also grown by 9% annually since 1981. So the recipe for becoming a successful and loved president is just to print and borrow money. There is an absolute correlation between the increase in US debt and the growth in the stock market.
The Dow/Gold ratio peaked in 1999 and is now in a downtrend. Once the current correction is finished the ratio will continue down towards the 1:1 level like in 1980 when the Dow was 850 and Gold was $850. The only question is at what level the Dow and gold will be when they reach the 1:1 ratio. Will it be Dow 10,000 and Gold $10,000? Or will we see hyperinflationary levels of 100,000 Dow and $100,000 gold? The absolute level is really irrelevant. Because at whatever level they meet will involve a catastrophic loss of real capital for a stock market investor.
Just so...  when he says credit, he means "ex nihilo credit" and for that matter he means that when he says "printing money."

The article mentions real estate crashing, which is crucial to a boom in small business.

His summary is buy gold, and if buying gold, his advice is good.  But if gold becomes important, the Hegemon will just steal it.  The only real protection is self-employment, own the emans of production, in the form of fruit too high and dispersed for the Hegemon to get around to....

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Wednesday, November 30, 2016

China Gold

The Chinese know from money, and they are buying up gold in anticipation of a big crack-up.  China does not have to have a hard currency (back by gold) to win the coveted "reserve currency" title when THE crash comes.  It only has to be harder than the current leader, USA.  If Fort Knox is compromised, as suspected, then it won't take much for China to win.

Gold is tricky because it is both a commodity and a money at once.  Koos Jansen has been following the gold makets and writing illuminating articles on the topic.  Here is summary of one:
To understand the reasoning behind this calculation, please note that after withdrawing the metal, this standard gold leaves a VAT exempt environment (the SGE system), for an environment that is not exempt from VAT, and hence VAT is born into existence. When Laofengxiang doesn’t withdraw the gold, the SGE invoice is the only invoice it will receive for accounting purposes – Laofengxiang needs some evidence for accounting entries. If it withdraws the gold, then it will receive an SVI because the standard gold withdrawn can be manufactured into new gold products and sold off-SGE. Therefore Laofengxiang will need to claim input VAT. General VAT taxpayers that withdraw will get a SVI, individuals that withdraw form the SGE will not. The input VAT noted on Laofengxiang’s SVI from the SGE is not an amount Laofengxiang paid to ICBC as VAT, but Laofengxiang is allowed to deduct this amount from its output VAT.
That seems dense, but I think he does a good job of explaining, if you read the whole article, and his basic research is good.  That a trader will buy a commodity to turn into decoration and ultimately replace the commodity is unique.  The taxing authorities are perplexed.  Dealers thrive in this trade.

Who buys lead and then pays back the the seller with lead? Only gold.

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Tuesday, November 29, 2016

Trump Capitulates On Fraud Lawsuit

This has been kicking around my head, if "Trump University" can get sued for nonperformance, so can every other school in the country, and someone beat me to it:

Looking closer at the complaints against Trump University, the primary allegation is fraud.According to students and instructors, “Some of whom described the program as a scheme to cheat customers out of thousands of dollars.” Also high-pressure tactics, “Tapping into the roller coaster of emotions to get students to sign up.”
Let’s compare all of this to “real universities” and colleges and other institutions of higher learning across the US. Counting both two and four-year institutions, public and private, just over 4700 such institutions dot the US landscape.

We do not have free trade in education.  To fix education, we need deregulation, get the accreditation out and that will sink the odious textbook scam.  There is a model of education that worked for a thousand years, in which students pay the instructors directly, for what they thought the lecture was worth.  In such a system tenure is not necessary since quality results are all that matter.

As I teach at the college level, strictly noncredit extension seminars, for the last 35 years, far and wide, the colleges report back we extension, adjunct lecturers are rated as a group far higher than the tenured professoriat.

Now, that amounts to nothing for a simple reason:  we adjunct profs are expert in a narrow field, we are popularizers, not scholars; our student base is self-selecting - they want our content and pay their own cash for it.  So we have both apples and oranges on both content and audience.

What it does prove is the adjunct model, what the Germans call privatdozent, could be THE model leading to more, better, cheaper, faster educational opportunities.

Education is important, but the Hegemon has captured that too.

I have a delightful sideline lecturing where I want, when I want, what I want with fees set by me.  There is only so much time I can devote to it, but it pays off in expertise gained, since as everyone has said since Adam, it you want to learn, teach.

I even created a course "Go Back To School - As The Instructor" delivered online to help the countless unemployed, especially in my cohort, to keep working and build something while the economic ship righted back circa 2008. Better to have on a resume "teaching, writing, consulting" for however long the economy sucked, instead of "collected welfare."  "Teacher" is stronger than "student" when looking for work.

Sadly the Hegemon had other ideas.  Student loans had recently been made unbankruptable, so in an effort to enslave countless more, ex nihilo credit based student loans were extended with abandon.  Unemployed java coders could retrain to be roofers!  Unemployed roofers could retrain to be java coders!  Practically no takers for those who wanted to go back to school as a teacher, when you could get sure money going back to school as a student, and not really work too hard.  The promise of a "degree" promising employment was pure fantasy, like at Trump University.

Two to four years later, they came out, tens of thousands in debt, unbankruptable and unemployed, unemployable outside of the barista job they could have had before enslaving themselves.

Student loans on the books went from 500 bil to 1.5 tril.

Trumps first act should be to free the slaves, an emancipation proclamation, announcing henceforth student loan "debt" (scare quotes since the debt is denominated in ex nihilo credit tally, and has no value anyway) may be bankrupted by any interested party.

Also, deregulate education.  There is a model, the student pays the instructor directly, in place right now, that could be extended to the entire educational process.  A true revolution.

What was said about Trump U could be said about any U, just search and replace the complaint documents with the college from which you "graduated."  Indeed, a settlement compromise with the Universities may very well be the ability to bankrupt a student "loan."  The Universities won't care, they got theirs, jack.  It is the issuers of the ex nihilo credit that lose.

I like this idea.

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