Thursday, November 13, 2014

A Little Lesson/Assignment

This blog is going to go silent for about six weeks, until early January 2015.  I spend about two hours a day doing research and placing my outraged screeds and rough drafted content up and, happily somewhat organized, a happy thing for someone like me with the gift of ADD/ADHD.  These are my most creative and productive two hours, to which I will devote to the draft.

But I have enough rough content to produce my third book, how to grow once you've started up.  You have customers, and now you need more.

For years people have asked for an advanced class, and my response has been the advanced class is to actually execute the info in the intro class.  

The paradox was the improvements in communication and transportation after the "Fall of the Wall" in Berlin 25 years ago atomized businesses to where functions were farmed out (warehousing, accounting, sales) and the headquarters itself could be removed from the port city. Where once you could simply call another importer you knew from down the street about some problem, now you go to the web.  But that web information may rate high in a search, but not be reliable.  My courses have been unique in validity and reliability, according to the participants.

Now there is a new void.  We have lost at least one, probably two, generations to FIRE (Finance, Investment, Real Estate), people who would have once started small businesses have answered the siren call to trade the new false economy.

In my classes I can see patterns of what is missing, and in practice I shake my head at the waste of time and money in the areas of finding new customers, marketing, trade show work, finance, product development.

Another indicator the time is right is there are plenty of people who are writing on the same topic.  This is good, it means the need is being met.  But the fact of the matter is what I have is better content than what I am seeing, for whatever reason, so I am obliged to write mine too.  But I have the others at a disadvantage, I am actually doing what I describe, and have done so for forty years now.

And the next forty years promise to be even more exciting.  The pendulum is swinging back, small is beautiful again, "get big or get out" has failed, and people want new choices in goods and services.

Yes, if you are on any of my lists you'll hear about the book as it gets toward publication, or if not, email me at john at johnspiers dot com and I'll put you on a notification list.

And since you've read this far, here is a wee assignment if you like:

Listen to this lecture, part one and two...

(Incidently, At 2:45 seconds into part two, Simon Sinek asks ... “how do you find the ones who just ‘get it’ Before you are doing business with them, vs the ones who don’t get it”  (pointing to the 16% laggards.)  I've been teaching that for 30 years, I learned it from the people I worked for the first ten years.  The kind of info people used to pass on inside small businesses.)

and then reflect on what you heard as you study this promo piece.

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Wednesday, November 12, 2014

Duelling Free Trade Deals: China v USA

China will make a better offer to the world because their overhead is lower:
 In response, China has been pushing for the creation of its own rival pact, the Free Trade Area of the Asia-Pacific. Speaking at the APEC CEO Summit, China’s President Xi Jinping said his country will invest $1.25 trillion abroad over the next 10 years, and import more than $10 trillion in goods in the next five years. “As its overall national strength grows, China will be both capable and willing to provide more public goods for the Asia-Pacific and the world, especially new initiatives and visions for enhancing regional cooperation,” Xi said, according to a report byXinhua.
Nixon played China against Russia, and now Putin is playing China against the USA, and China says plainly they can win this game.

China once new a different USA, one that took the indemnities foisted on Imperial China by the European Imperialists, and invested those funds in Chinese Universities.  We were once respectable.  Now we are merely tradable.  No one likes what we do much, but there is money to be made off us.

We need to bring the troops home, and return to a market economy.

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This fellow gets it just right:
TPP and TTIP are everything that people hate about Washington. They are deals being crafted in secret by business interests for business interests. They are never going to be subject to any serious political debate involving the public at large. And the leaders of both political parties are in cahoots on the trade deals and the route for pushing them through Congress.
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Take ExImBank's Word For it

Taxpayers are obliged to fork over millions in public relations costs to keep being told the EXIMBank is good for us, but when congressional oversight attempts to verify anything, they get stonewalled.
Lawmakers tasked with overseeing the Export-Import Bank have issued a subpoena for records that detail the agency’s internal deliberations, saying they had endured months of “stonewalling” from Chairman Fred Hochberg and other bank officials.
Time to end it, but it won't happen.Feel free to forward this by email to three of your friends.

Tuesday, November 11, 2014

Net Neutrality

Here is the problem:

But the answer is not regulations imposing net neutrality. You can already smell the mandates and the loopholes once Congress gets involved. Think special, high-speed priority for campaign commercials or educational videos about global warming. Or roadblocks--like requiring emergency 911 service--to try to kill off free Internet telephone services such as Skype. And who knows what else? Network neutrality won't be the laissez-faire sandbox its supporters think, but more like used kitty litter. We all know that regulations beget more lobbyists. I'd rather let the market sort these things out.
But what market? Phone lines, cable, and cellular--i.e., the means of Internet access--are all regulated; their operators are quasi-monopolies. Even if you end the monopolies, the incumbents have the advantage of a huge head start. Broadcasters own valuable spectrum and feed us cretinous shows like Wife Swap and The Bachelor. Cable has a lock on our homes via local franchise bribes, er, fees, so we get Lifetime and Animal Planet that no one watches. Satellite TV is content to charge just a hair under cable's pricing umbrella. For phone companies, too much Internet bandwidth would threaten their bread and butter--overpriced $25 per month (it's worth no more than $1) phone service and hot innovations like call waiting.

All good and true, but then his solution is abrogating property rights, and then "somehow" introduce competition, a reliance on capitalism.

I don't like abrogating property rights, but the "mall owners" never invested a dime of their money in technology they got for free from the taxpayers.  They were merely selected as winners by the powers that be.  They are really appointed caretakers (and exploiters) of what society has so far wrought.

The author goes on to say:
We don't even know what new things are possible. Bandwidth is like putty in the hands of entrepreneurs--new regulations are cement. We don't want a town square or a dilapidated mall--we want a vibrant metropolis. Net neutrality is already the boring old status quo. But don't give in to the cable/telco status quo either. Far better to have competition, as long as it's real, than let Congress shape the coming communications chaos and creativity.
Yes, but we can guess if we employ free markets and not capitalism.  Taxpayers paid, good and hard and perniciously, for the infrastructure and its use and maintenance.  Its use is governed by inventions, some of it software protocols.

Right now people subscribe in advance, present a message to send or a request to fetch something to their ISP, and the bells and ISPs split up money based on payment plans.  All very complicated.  You get what they say is good, all very Soviet.  The hegemon is ultimately in control, all very imperial.

So how about this?  Arbitrage, a fine free market tradition. We tell the caretakers, the corporations who were appointed winners, that we have changed our mind.  Now those utilities will be wide open.  Anyone and everyone can originate any send or receive requests.  They may submit it to anyone they like.  And anyone may charge any price to facilitate the transaction.

So I and Verizon are one when it comes to exploiting the web.  Verizon has zero advantage.  If Comcast wants to charge $90 a month for "blast" internet, and it costs presently $3 a month to handle the traffic, I can come in and do the work for $60, saving money, denying Comcast unwarranted income, and turning a profit, then I do so.  

Of course, there is always someone who will do the same for a buck less, so we'll see the prices drift down, and in order to make money, we'll see people add on, as Joe Girard said, things that make our services worth more to people than their money.  Apps that track your car keys, wallet, iPhone and your four year old, things you are always leaving behind.

Yes, it will take some more inventions, and some new software, but we are not short of software engineers.  We do not have to add to the infrastructure, we just need a program that measures capacity at what speed and then opens it to the highest bidder, second by second, or minute by minute.  The telcos do this now with "nights and weekends free" and the stock market today is rigged with high-freak trading where billions are traded in front of need by microseconds.  Why not have these people write code from behind bars, where they belong, with clemency attendant on deployment of this new system.

Yes, it would be wild west up to the point where the bid for space and time is managed by the software that google-ad style would send the message.  Consumers could manage their use, providers could predict costs, and countless people would save money sending that email at midnight instead of instantly.  Spammers and pornographers would find themselves actually having to pay for their use.  (The degree to which we receive spam is the degree to which microsoft never addressed this problem in their software, and the problem is manifest in Bill Gates' personal wealth.)

Bring the free market solution of arbitrage to the problem.  All of the moving parts are in place now anyway, and as the writer noted, there is no one to root for.  Either side wants a deal that either way screws the consumer.  The only question in the debate is who gets to do the screwing?

How about neither.  How about peace, prosperity and justice?  But in capitalism, which is putatively morally neutral, this topics never come up.  They do recognize "moral hazard" but like rain on a picnic, nothing to be done about that.

The word the consumers need is "arbitrage."  Send the exploiters on both sides packing, and let people willing to compete on design have the field.  Software programming will come back in demand.

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Monday, November 10, 2014

Co-Branding Apple With Gay

Am I proud to be heterosexual?  Well, not really. It has never occurred to me one way or another.  It is who I am.  It does not define me, or my lifestyle.  I’ve worked in industries in which homosexuals rule, and I have noticed invariably “if people enjoy it, a homosexual was involved.”  Gays have an outsized impact on what is good, true and beautiful.  Good for them, good for us, what a struggle for them!

The media advances the image of a monolithic gay culture, the range of homosexual experience is no wider than allowed on “Modern Family.”  Very funny show. Problem is, the experience is rather wider than that.  I know as many homosexuals, happily married to women, and raising families, because they want to be happy, as I know the gay couple with kids.  They give up the gay thing to be happy, as they see it.

As to gay marriage, Gore Vidal and others have a better argument than the ones being advanced in courts, but then he was always smarter than any judge or lawyer.
“Trying to make categories is very American, very stupid, and very dangerous,” Vidal said. Categories ultimately led to the Nazi doctrine of “We don’t like your category.”
..Homosexuality was institutionalized, because it was useful for training soldiers .... You also got married to have children... It never occurred to people you would be one thing or the other.”
As far as I can tell, the gay marriage advances seem to be attendant to the growth in fascism in the USA. This is not unprecedented, in fact fascist movements have a history of a “gay vanguard.”  Fascists will use anything they can get. And that history invariably includes this gay vanguard destroyed as soon as they are no longer useful.  Tolerance of gay is no deeper than fashion demands, and its amen corner will as easily condemn homosexuals as they legalized it if it gets down to it.

(Again, never seek legalization, it only ends in tears.  Decriminalization, yes, legalization, never... always a bad policy.)

Allowing one segment of the gay panoply to destroy wedding-related business, cakes, photography, florists, and venues, (as if there are no gay providers who would take the work), battle lines are being drawn.  The definition of gay is being ever more closely associated with fascism. Picking on Christians is gratuitous since they have not stopped gays from advancing their agenda.  Indeed, when states included gay couple adoptions, the Christian charities simply withdrew from the work rather than violate their consciences.  Before there were agencies that would do gay adoptions and ones that would not.  Less choices now.

But gay fascism will not permit people to withdraw from the work rather than violate conscience.  When the florist, baker, venue provider, photographer elect to decline work, to withdraw and let others do the work, gay rights plus the state come down on the provider.  

Gore Vidal very much understood America, and he would have no part in all of this.  Reading the OUT article cited above, is a very edgy ad from Wells Fargo pitching financial services to a lesbian couple with child.  America was told in the 1930s that registering with the government by race was necessary for administering social security, the info would be secret, and never used by any other government department.  People actually believed that.  In less than a decade, the Army used the lists to round up all of the Japanese Americans on the West Coast.  Vidal knows what he is talking about when he says its very stupid and very dangerous to sign up by category.

  After fascism triumphs, they fascists will need their religious allies, but not the homosexual allies.  Christian counterattack will advance fascism.  But then the fascists know this.

Then comes this, from the CEO of Apple:
The world has changed so much since I was a kid. America is moving toward marriage equality, and the public figures who have bravely come out have helped change perceptions and made our culture more tolerant.
Net more tolerant?  Is Christian charities withdrawing from social services, florists, bakers, photographers and venue hosts having to find new work, for their beliefs, more tolerant?  
Being gay has given me a deeper understanding of what it means to be in the minority and provided a window into the challenges that people in other minority groups deal with every day. It’s made me more empathetic, which has led to a richer life.
And of course one need not be gay to achieve the same, but if he wants to credit his homosexuality with that result, good for him.  The rest of us get it through Christianity or some other means.
Part of social progress is understanding that a person is not defined only by one’s sexuality, race, or gender. 
This after defining himself as gay.  But then the whole pretense that it was not widely known that Tim Cook is gay is sheer nonsense, since it has never been a secret and nary an article discussing him has ever failed to mention he is gay, lo these many years.

If Jobs was careful of anything, co-branding never happened.  Yes, the logo was an apple, but once upon a time I was consulting on fruit exports with a major agri-firm, where a salesman took it upon himself to attempt to sell apples, the fruit, to Apple the computer company.  Get it?  Apples as gift from Apple.  I tried to explain to him the point of naming the company Apple was a tribute to the Beatles and was to eventually arrive at the point people thinking "computer" when they heard the word apple, not the fruit.  Giving apples the fruit as gifts would be the wrong direction.  His effort would get no where.  Nonetheless he pursued it.  His effort got nowhere.

An advocate of the PC platform used debate me often enough on mac v pc, and he only once had a cogent argument.  He said the mac platform was fascist.  It was the apple way or the highway.  PC allowed one to accomplish anything one likes any way one likes it on the PC platform.  No doubt that is true.  If one is a computer scientist.  I am not.  I want things to work one way, every time, with no options to slow me down.  Fascism, all integrated into one narrow system, is great in computers, in a private corporation, no doubt.  No objections there.  One can take it or leave it.  But fascism is a horrible polity, as a political system.

Who knows?  Perhaps much of Apple's success is Cook's contributions.  And maybe he is well within the gay fascist bandwidth, and hence Apple's success, along with Job’s.  I don't know, the world can be a mysterious place.  Maybe Bill Gates, always desperate to make Microsoft relevant, will appoint a homosexual as the next CEO. Copy Apple!

As I started out saying, if you like it, a homosexual was involved. And the impulse to reduce life to the confines of the dictates of a few is the heart of fascism, bundling all together in one controlled group, big government and big business. Those of us who can live with mysterious are at a disadvantage.

But Jobs was careful never to co-brand.  Co-branding Apple and gay may very well be a monumental mistake.

In any event, coordinating anything with government is a bad idea, and the history of fascism is of a gay vanguard that is eventually crushed.  To what degree is open tolerance being replaced by secret resentment as one small business after another, in a regime that already says "get big or get out" is crushed?

Gay may become synonymous with fascism. To the degree it does, we all lose.  If and when Apple begins to falter, and Cook begins to take the blame, some future Apple advertising campaign may be:

“Don’t be gay.”
Bundesarchiv Bild 102-15282A, Ernst Röhm.jpg
Ernst Röhm wearing Hugo Boss
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Sunday, November 9, 2014

Port Slow Downs, Management Responses

Jim has been watching the port situation:

Greetings John,

I see some of my emails to you were useful for you blog, glad to help.  As you know the west coast ports were shut down yesterday due to ongoing union demands and it brought me to thinking about the future and what part the new 900 million super port in Mexico that will open next year will bring in changes.

Here are some facts:

 A dispute between shipping lines and dock workers led to a shutdown of all major western U.S. ports in 2003,  "The world's biggest retailers want to have more options open,"  This started the Mexico super port ideas.  Kansas City Southern de Mexico, will intermodal containers from Mexico to Kansas City.  Kansas City is positioned to become one of the busiest (Inland) ports in the world. 

Kansas City smart Port has already invested millions.  They claim to have the largest underground warehouse space in the world.

The Port will handle 2.2 million TEU, becoming the third largest port in the world

Chinese billionaire Li Ka-Shing, whose company controls 35 major ports in the world is behind this as well as many major retailers in the USA.  This coalition has the experience and financial ability to pull this off.  The plan is to reduce transportation costs by as much as 50% by using Mexican ports over west coast ports.  By using the Mexican ports, the international corporations managing this global trade are able to avoid the U.S. labor union workers who otherwise would unload the ships in west coast ports

CARB (California Air Resources Board) has some of the highest truck regulations in the world.  I work with a company that dispatches over 25 trucks in and out of Oakland port daily and know first hand the cost of these regulations add to logistics.

These are some compelling facts that say change is on the horizon. If the big boys create a route that FCL or LCL WILL BEfaster and cheaper to Kansas City rather than to Los Angles or Oakland that will mean big changes.   We know that with change comes winners and losers and my questions is how do we positions ourselves to be in the winning column?  Your teaching which I whole hardly agree with is the let the big boy do what they do with the low margins but we look for opportunity to have higher margins on smaller volumes.

Questions I ask myself:

1.       How will these changes effect imports?  A pick and pack in Sparks NV might not make sense.

2.       How will these changes affect exports? Are there commodities in the mid-west that the rapidly expanding Chinese would want?

3.       What is the low hanging fruit during this transition?

4.       How to be one step ahead?

I look forward to your thoughts.


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Answers to Jim

My thoughts on Jim's questions:

Questions I ask myself:
1.       How will these changes effect imports?  A pick and pack in Sparks NV might not make sense.

***Right.  We moved to Sparks when that emerged as the standard.   Sparks is still growing, but a DC in KC would make a lot of sense.  I could see the Mexico super-port get some side business re-consolidating to run boxes up to LA, the largest market west of the Mississippi.***

2.       How will these changes affect exports? Are there commodities in the mid-west that the rapidly expanding Chinese would want?

***If there are, they are already moving, so geography is not destiny.  Ocean freight is dirt cheap, and will remain so.  The KC savings will be in management, not in oil.  Everyone blames labor, but such entities as the Port of Seattle are astonishingly wasteful and featherbedding operations.***

3.       What is the low hanging fruit during this transition?

***Change costs money, so not sure there will be initially...  I think they’ll accomodate autos and grain, rail-specific stuff, and then get around to monuments. This thing will lose money for 20 years before Li et al start to clean up.***

4.       How to be one step ahead?

***Product design.  It is a siren to study changes in law and logisitics and then contemplate how to game the system.  We follow the crowd on everything except design, and by design of product stay one step ahead.***

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Saturday, November 8, 2014

Greenspan On Gold

Much is being made of Alan Greenspan repudiating the dollar as king, calling gold real money.  Mish and as far as I can see are viewing this as a mea culpa and a typical post-damage admission.  Part of the excitement is the CFR minutes excised the comments:
Tett: Do you think that gold is currently a good investment?
Greenspan: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.
Well of course they would excise that criticism.  The FED is a the heart of the corporation we call the United States of America.

But this attitude of his is nothing new.  He was appointed as FED chief by Reagan because Greenspan was a gold bug.    Here is his 1966 work.

And his first act as FED Chairman was to crash the USA economy with his policies, and usher in the moral hazard that just made things worse later.
The 1987 crash was the debut of the “Greenspan Put,” and some critics argue that the complacency it fostered in market participants — economists call it moral hazard — helped foment the sort of risk taking that led to the 2008 crash.
Greenspan is a smart man.  He knows the truth, and he knows the score.  He gave the powers that be exactly what they wanted.  His alternatives would be to continue life as an unknown financial consultant, or he could manage the system for the hegemon, become immensely wealthy, bag Andrea Mitchell as his squeeze, and retire with fame and fortune.

The inevitable is the ideal.  Greenspan knew somebody was going to do it, so why not him?  It ain't the hand you are dealt, it is how you play the cards.  There is no judging a man for how he plays his cards.  Greenspan played them they way he played them.  What is tedious is the countless people who pretend that their work is somehow noble, the people who want it both ways, that is to scam the world and be thought of as heroes, the hypocrites.  That Greenspan was a gold bug, worked to advance all that is wrong with the world, and then retire to re-affirm himself as a gold bug is absolutely honorable.  Attaboy.

It reminds me how Jesus told stories of the wicked master who criticized his servant for not even trying usury to increase his wealth, and how he admired the scamp of a steward who upon being given dismissal notice ran around cooking the books to make friends, and also in the apocalypse cautioned "be ye hot or cold for if ye are lukewarm I'll vomit you out of my mouth."    Just don't be timid or a hypocrite...

But back to what Greenspan said.  "Gold is a currency."  Ungh.. those definitions again...  yes and no.  It is money, a medium of exchange, and can be used as currency, but almost never is.   Economies in history usually run on credit, asset based at zero interest.  Such a comity build community. If gold is backing a transaction, the gold is not exchanged, but warehouse receipts are traded.  It is only when the trading partner is of a doubtful future are debts settled in actual gold exchange.  It's a false dichotomy gold vs fiat currency.  There is a gold as money and credit, and then there is force and fraud of fiat currency.  Yes, gold is infinitely superior to fiat currency (the dollar), but the alternative to the corrupt dollar is credit, which the dollar is supposed to represent, and asset-less backed credit at that.  In a real economy, there is gold and silver as money, and there is non-interest (usury) credit.  Fiat currency has no place in an economy.

Greenspan knows this, but he could count on his truth-telling to be deleted by the CFR in any case, and what little that did get through, would fall on uninformed ears anyway.

Given all that, why wouldn't Alan Greenspan play his cards they way he has?  If I got half a chance, wouldn't I?

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Online Advertising

Received another Costco advertising booklet in the mail today.  Stuff for sale and on sale.  Costco is fairly internet savvy.  Funny they are sending out dead tree media to promote business.

In the 11/1/14 edition of Forbes, page 11, the Chief Product Officer (?!) of that august org give a rundown on online advertising... doesn't look good.  I ran the numbers on his percents:

Ad viewability - only 5 in 10, 000 readers click on a display ad, but only 70% of readers see the ad in the first place.  Hmm... 10,000 is 70% of 14,286...  and 5 into 14,286 is .00035.  So ad impressions online is about 35/100th of 1%.  Now mail order catalogs, dead tree media, gets sales of 1/10th or 1% of impressions.  Online advertising only gets about 1/3rd the views of catalog sales.

It is interesting no one can bring themselves to admit what the sales rate is with online advertising.

Fraudulent Traffic...  and even if someone did report a click, who knows if it is accurate?  The numbers above include fraudulent traffic meant to make online advertising look good one way or another, some 36% of internet traffic being fake.

This is a problem with building a system on something started by the Hegemon.  The internet was invented as a closed system with some rather brutal responses to people messing about.  In 1980 that system changed, telecom was deregulated and the first order of business as to create a system that relied on technology and property rights to control fraud and force.  Never happened.  AOL and Apple gave it a try, Apple largely succeeding, as far as they could influence.

But Microsoft got the government contracts and within the Hegemon productivity does not matter. Spam rules.  And with no rational limit on what can be financed by lending credit, we built out a system that is pretty bad as to security, and then charged it to the grandkids.  Capitalism is an awful system.

Since online advertising is ineffective and rife with fraud, Forbes Chief Product Officer D'Vorkin notes some online sites are promising 250 hours of in-view time for an ad.  Fine, but what about sales for that time at what cost?

I've been offering people who try to sell me on online advertising a bounty of $47.50 per sale, a 50% affiliate fee or anything you want to call it.  15 years in, no takers.  I am sure because they know it cannot be done economically.

Google Ads will allow you to track from click to sale so you can associate your ad costs to actual sales, but true to Google form, Google Ads cannot be used by anyone short of computer scientists.  I meet countless people who say "yes, tried Google Ads, could never figure it out."  That is either on purpose or they have so much false economy ad revenue that why bother with mere viable businesses?

Forbes notes that now more dollars are going into programmatic buying, where computers are matching ad opportunities with big data at lightening speed, no need to humans.  Would love to hear if that is effective.  Maybe so.

The Chief Product Officer says Forbes was on the cutting edge in 2010 with native advertising, in which "50 marketing partners publish content" on Forbes.  Is slapping a by-line on a advertiser's press release all that new?

There is massive malinvestment and misallocation in media.  When the bust comes, there will be a shake-out and the false economy rags will fail and an organic set of winners will emerge.  Unless president Hillary can get in there fast enough and post gatekeepers on a controlled-by-subsidy media.

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