Saturday, October 25, 2014

Something in the Air

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Friday, October 24, 2014

Berkeley Food Export Seminar in San Francisco

If you would like to find new business overseas either as a start-up or an established concern, whether as a producer or an agent, an all day intensive boot camp at UCBerkeley Extension will get you launched.

Before the seminar starts you select your product so that you hit the ground running when we meet.

During the all-day seminar we go through the process of doing the research on export trends and prices, create the tool to offer the buyers overseas what they need, and leverage this information into the sales approach.  Next we identify actual buyers and create the contact offers based on the earlier research.

Next we cover how to process objections into sales, and then how to participate in trade shows, leveraging existing exhibitors into promoting our products worldwide.  You will leave with the actions steps and necessary tools in hand, and you will have the resource of the instructor and past participants to help you along the way.

The course is affordable, grants Berkeley extension CEUs, and usually conforms to employer-education benefit coverage.  Hey, if you are outside of California, make the boss pay for travel too.  Fly in Friday night, play Sat and Sun, study Monday and fly out Tuesday morning!  Unforgettable.

Sign up now.

Mon 8:30AM - 5:00PM
17 Nov 2014
San Francisco Campus
Classroom 503
San Francisco

UC Berkeley Extension logo

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Alle Hagel Sauerkraut! - Small Food Business Export Start-up

A cousin in Portlandia hosts a annual Kraut Fest in which a dozen of so families come together and make sauerkraut from scratch.  Beer, brats, brots, kids working alongside adults, a beehive of German productivity with Irish hilarity.

I brought a crock to the sauerkraut fest and the krautmeister poo-pooh'ed it saying I'd break the crock mashing the Kraut...  little does he know the Irish only pretend to work (and we all know mashing the kraut only speeds up the fermenting, it is not really necessary.)  So there!

There were probably 30 containers, 5 crocks and the rest food-grade plastic buckets. None of the 5 crocks were broken....  Erin go braugh!

But as I was leaving there were extra buckets of Kraut, one I had done since there was an empty bucket and more cabbage...  my cousin told me to take it since he was kraut stupid.

Three weeks later the plastic bucket is a horror house of mold of several varieties, and no mold yet in the crock...  mold is inevitable, and you just scrape it off.. but interesting crock v plastic...

I have ten gallons of kraut coming up in 3 weeks.  Reubens are back on the menu.

But my reason for the post is this:  McDonald's experienced a 30% drop in its profits last quarter.  It serves food that can make you sick worldwide.   That is a lot of sales that did not take place.  That is a lot of highly subsidized food product backed up in the distribution channels.  And far more important, that is a lot of alternatives to junk food that got eaten, necessarily at a higher price.

As people get more money in emerging economies, their first purchase with newly discretionary income is better food.  Check it out (drill down, but it is there  Distribution of Additional $1 Income Across Food Subgroups, 144 Countries, 2005.)  That report is ten years old, but these trade reports, of new food trade lanes is current.
Between 2000 and 2011, developing countries also increased their share of world agricultural exports from 27 percent to 36 percent.
That is an awful lot of food that is being eaten.  See a pattern? McDonalds down, fresh/good up.

A cousin in law at this very kraut fest told he he had been diagnosed as pre-diabetic.  I said "it is all that junk food you eat."  He said "that is why my doctor said, but I can't give it up, I like it."  Indeed, the stuff is designed to get you hooked and to then make you dependent on Big Pharm forever.  I don't think it should be outlawed, ending big Ag subsidies would be enough to bring it all down.

And then there is also this: of the 60 people involved in making kraut, why does one not start a business making kraut, fresh raw kraut without the nasty chemicals, which are not needed anyway, and then pickles, etc.  And once there is USA market established, then start exporting to get in on this world trade that is asking for new and better?

I teach a class online regarding getting those export sales at the small business level.  You either have your own food production, or will find production that should be exported, and you'll get into the business with little or no resources.  Sign up here now, next session starts Tuesday November 11.

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Trade Flows

Note over a dozen ports on the East Coast, and essentially three on the West Coast.  When the USA was formed, each of the states were considered independent countries, with a federal government.  Each of these states had its own int'l port.

On the West Coast, we have essentially three, Seattle/Tacoma, Oakland and LA/Long Beach.  Of course, there are only three states on the West Coast, but the railroads determined winners for port sites, and railroads did not exist when East Coast ports were developed.

Note also the states before 1850s have borders of squiggly lines (usually following rivers) and to the West of the Mississippi have straight lines as Indian lands were quickly divided up for hegemony.

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Is China Leading the World in Economic Development?

China stats are doubtful, but the 3rd world trade is growing. How much of this is facilitated by China?
“Developing countries now account for half of the intermediate goods trade – which is a standard measure of global value chains. And south-south trade accounts for a quarter,” said WTO Director-General Roberto Azevedo in opening remarks at the presentation of the document in Geneva.
The report points out that since 2000, the GDP per capita in developing nations increased by 4.7 percent and only by 0.9 percent in developed countries.
Between 2000 and 2011, developing countries also increased their share of world agricultural exports from 27 percent to 36 percent.
We used to be leading trade development the world wide.  Food was once our #1 export.  These are fundamental shifts that are going unnoticed.  This makes for unforeseeable opportunities, discoverable only be "search and learn."

Use MOQ FOB to search and learn.

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Thursday, October 23, 2014

Money Community Economies and Credit

An acquaintance of mine, at 92, still lives a throwback lifestyle.  Sharp as a tack.  A recent visit to a doctor had her prescription sent to "the corner pharmacy" which delivered it early that evening.  They added the charge to her bill, which she settles up at the end of the month.

(She found surimi in and among her shrimp in a salad and her notice of it has led to this particular store banning all surimi in all instances.  "Surimi is not shrimp."  "Yes, ma'am." The last dozen visits has been the occasion of a dozen reminders.  Truth in advertising is maintained by a 92 year old.)

Now think about that, and compare it to your doctor visit.  Do you argue with the doctors, and make them back up their diagnosis with science?  If a prescription is needed, is that information communicated to your corner pharmacy which in turns delivers it to you home, and then bills you?  And you pay up at the end of the month?

No, if you are typical, someone you don't know says things about you quickly and leaves you not sure about your condition, or at best hopeful.  Then you have to make time to stand in line somewhere to get  your prescription filled, or try to save money by going to Walmart or Costco or some place.  And here again, someone who does not know you is filling that prescription.

Her pharmacist knows her personally, and will advise her even more fully than the doctor.  Her pharmacist exists still, one of those gift-shop in the front, pills in the back shops, that were in every neighborhood in my youth, largely because they are a "compounding pharmacy."  Pharmacists are free to make any drug they want, and compounding pharmacists do so from scratch when needed.

Most doctors are getting a cut of the prescription action, one way or another, from big pharm, and most pharmacists are simply filling that prescription.  Ka-ching!  But if pressed, doctors can change the formula, and compounding pharmacists can make that up.  And do.  And 50 years ago, this was true of almost all pharmacists.

What changed is banks learned they could lend asset-less backed credit to any and all. With this credit with no rational limits, they needed to find a market for it.  Consumers!

My twenties I regularly received credit cards, loaded with credit, ready to use, unsolicited in the mail.  I believe by 1980 I had some fifty credit cards of various styles.  At the time airlines had their own internal systems, but eventually they found they could switch to United Air Lines Visa, dump their operations, and make more money brokering visa than running their own.

All of this allowed concentration of credit-extension farther and farther away form the transaction, the community, with more and more centralization of transaction, and the ability of the hegemon to peek in on who was spending what with more and more specificity.  Taxing became easier.  Match this massive data flow with computers, and the Center could more and more spot trends and predict outcomes ever further from the transaction.  FICO thrived.  Get big or get out was actualized.  Safeway for food, Gap for clothes, Ikea for furniture, CVS/romneycare for medicine, NFL for entertainment, Fox for info, Ferguson for law enforcement, 9-11 for defense, Comcast for utilities, ad nauseum. The more the centralization the further from accountability to the customer.

Two generations believe their fundamental relationship in the economy is with a bank, instead of the stores one patronizes, and your status is determined by a credit score.  You pay interest depending on your credit score.

Dave Ramsey is anti-debt, and has become a multi-millionaire out of bankruptcy preaching anti-usury, yet he has to give into his audience wanting to buy a home on credit.  So if people take his advice on the one hand and get rid of credit card debt, then they run into a problem on the other, no credit score to get a loan.  Such are called the unscorable.
One of the side effects—or side benefits—of becoming and living debt free is that you eventually fall off the FICO radar. You become one of the 64 million “unscorable” consumers who haven’t had an active credit account for at least six months and therefore can’t qualify for a mortgage with many lenders.
Distraught at losing some potential usury slaves, the bankers come up with a solution.
The unscorable group has grown large enough that it’s getting attention with Experian, Equifax and TransUnion, the three credit bureaus FICO uses to determine its scores. They have developed the VantageScore model that looks at 24 months of credit history instead of six months. It also includes rent and utility payments—even public records when they’re available.
What is happening... they are going local for the credit info...  decentralized.

In another place Ramsey notes (and even big banks will do this) a practice called a manual mortgage, in which they study your circumstances based on local experience.  he may not know this, but in banks it is called a "portfolio loan."  That is to say, the bank is keeping the risk on the books, instead of acting as a broker and passing the loan risk off to taxpayers via Fannie and Freddie (which just last week again lowered their standards to restart the housing bubble - as I said, there is no rational limit to lending asset-less backed credit) and keeping the profits, the banks can do what all banks in all instances did 40 years ago, and ran the risk and kept the profits.  Mortgage bankers knew every customer personally.  Not any more.

But to capture the growing group of independent, the usury-free, the banks must return to old practices. But personalization costs more, so will their cheap credit still be so cheap?  Will the cost of duplicating what is already known locally about a customer overwhelm the advantage of EZ cheap credit centrally provisioned?

EZ credit at inexpensive interest allows more people to consume than no-interest credit allows.  The pharmacist is not going to extend credit to someone he knows cannot pay.  There is a pitch-perfect justice in someone who is profligate has that very profligacy checked by the community in which he lives.  The community is strengthened by curbing profligacy.  Interest free credit builds communities.

With EZ credit at low interest, people tend toward eternal debt.  But also deadbeats spend prodigious amounts before they are destitute and cut off.  Their selection of goods and services are items that please deadbeats, and this market is so large, whole factories and industries grow up to serve this mal-investment.  And once cut off, why, does EZ credit stop?  Not at all, they are issued an EBT card in which credit is extended to them with no requirements whatsoever.  By failing to meet commitments at usury, they are returned to no usury loans, but there is no community to curb their profligacy.

A downward spiral.  Cheap EZ credit destroys communities.

Kentucky Fried Chicken, drug dealers and McDonalds rejoice.  The pendulum may be swinging back, since Mickey D saw a 30% cut in profits last quarter since their highly subsidized food is so nasty.  McDonalds will try to turn things around by... wait for it... tailoring their menu to local tastes.  But if they do, how do they take advantage of the EZ credit subsidized ingredients that makes their model profitable?  If they need not buy a billion pounds of reprocessed potato starch to supply the exact same french fries to all locations, and buy a 50 pound sack here, and a 50 pound sack there, how will they compete with a local burger joint whose tiny market for fresh fries is ten times the volume of any one given Micky D unit?  Micky D can't have it both ways, mass volume purchase and localized product. If the EZ cheap credit is not advantageous for what one can do with it, for size no longer delivers what enough customers want, then there is for the corporate welfare queen a downward spiral.  Just like the EBT set.  Cheap EZ credit ruins economies.

One quarter a trend does not make, but it is worth watching.

But with all these movements toward local I think the pendulum is swinging back.  People are sick of getting sick from what they eat.

So as you start a business, recall what once was: extractors fronting processors at no-interest credit, processors fronting manufacturers at no interest credit, manufacturers fronting distributors and retailers at no interest, and retailers fronting Larry Lunchbucket at no interest until the end of the month, when the bills were settled up.  Larry's $100 got passed back from the retailer, 60 to the distributor, 40 to manufacturer, 10 to processor and 5 to extractor.  No banks involved, no interest involved.  Now every step is run through the banks because their credit is EZ and the cost seems ot be cheaper than maintaining your own credit monitoring in house.

And indeed, those small businesses could not compete against EZ credit at low cost to consumer vs credit monitoring of the market at no cost to the consumer.  But, in a mere forth years, the goods and services called forth by the putative winners of this regime, corporate and private welfare, no longer match the needs.  With no real feedback loop except "cheaper" what range of goods and services narrowed over time and through malinvestment and misallocation no longer meet consumer demand to the degree that the economy is stagnant, and six years in has shown no improvement.  This is scary to those picked as winner in this regime.

And those who realize what is up look to gold as a hedge.  Very good.  In times of economic distress, gold is king, it is money that will extinguish debts, and call forth goods and services when no one will extend credit (and no one will accept currency as money, since it clearly is not money.)

But, gold and silver, as money, is a medium of exchange.  Holding on to it to get to the point where the economy is healed and businesses are again extending credit within their communities is a rational plan. But if things get to that point, you'll have bigger problems than if gold will buy things.

Instead of hedging future fears by hoarding medium of exchange, why not invest that money is a business now, in which you extend credit to your customers, the worthy ones, like the pharmacy down the street, and maybe front-run the pendulum which very well may be swinging back, and find you are not a part of the problem, but part of the solution.

Dump the banks and the EZ cheap credit, and square and etc... build a solid customer-based business, not one based on EZ cheap credit.  Be a part of the real economy, not the false economy.

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Sport Obermeyer and Lead Times

Klaus Obermeyer is a veteran innovator who has seen seven decades of wholesale business:
Klaus Obermeyer, founder of the Aspen-based ski-wear company Sport Obermeyer, said the Snow Show remains important for his business, but changes in the manufacturing business have complicated his side of the industry. In the old days, the Snow Show was held in March. Retailers would place their orders, then Obermeyer would reach a deal with a factory.
Now, factories need more advance time, so Obermeyer must place its order before the Snow Show. “We have to order before we sell the stuff,” Obermeyer said. He and his staff make an educated guess on their order for numerous models of pants, jackets, parkas and vests based on how well sales have gone for the current season — which affects retailers’ inventories — and some previews with some of their best customers. Nevertheless, it’s still a guessing game.
“You go to church every day and pray to be right,” Obermeyer quipped.
Indeed, because his business is in the hundreds of millions, so lead times are scary for him.  For a small company, say $3 million in sales and $300,000 net for the owner, those lead times are not applicable.  We are still operating on the 1960s lead times, since we are not critical to anyone anywhere along the distribution channel.  In my book I call it the "value of our insignificance."  We must go to church every day and pray too, but we have enough orders to cover the suppliers minimum in a workable amoount of time, profitably.  Entrepreneurs don't take risks.

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Truth Commissions

When a mass grave was dug up to find a missing 43 students in Mexico, alas and alack, the dead were not the missing students.  This is a different fresh mass grave. Still looking for the missing students.

Mexico has arrested various and sundry, but criminals know how to keep their mouths shut, and to whack those who talk.  So the state monopoly on violence, aka the criminal justice system, simply is not up to the task.  (Not to mention they in fact have no monopoly on violence.) We are advised to accept a "strong man" to sort it all out.

We could instead decriminalize drugs (not legalize, decriminalize) to get rid of the underlying problem. And top subsidizing USA corn into Mexico so we end the degradation of the Mexican farm economy.

Then next, announce a truth commission, something now called for in Mexico (thanks to Jason for the link.)  Truth commissions grant you immunity for any crime, as long as you testify in your role.  You are only at risk if you keep your role secret.  This upsets the entire power structure of crime (and of course the state too) and gets to the facts.

Now those who whacked the dead are immune and free, but that can be a very dicey proposition given some ticked off relative.  C'est la vie.

In Hong Kong they have an Independent Commission Against Corruption ICAC that has been very effective in rooting out malfeasance and corruption.  In the USA all police departments are free of independent review, and so corruption is rampant.  The day an independent agency can prosecute and punish a cop is the day the tide turns.

Back to Hong Kong, the occupy "non-leaders" protestors are well documented as supported by USA agencies.  A truth commission outlining who got what help, when, might go along way in adding to the admirable reputation the ChiComs are building in response to unwarranted protests and extreme provocation in one of their cities.

Since the media no longer has credibility, we need new avenues of reporting to emerge.  Truth Commissions would be a new service to develop.

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Wednesday, October 22, 2014

Buchanan V Francis

Why would anyone care about some dispute inside the Catholic church on some doctrinal issue?  Because the Catholic Church is the largest and oldest voluntary association in existence, by far.  How it works is an ongoing lesson to those who value freedom.

Buchanan is worried about maintaining faith and morals, and notes:
Cardinal Burke called on the pope for a restatement of Catholic teaching on marriage and morality, saying, “It is long overdue.” The pope has relieved Cardinal Burke of his post.
This provides an excellent insight into this pope (if any of this is true).  St Francis the passive deals with someone who has the temerity to "call on" the pope to do something.  Very bad form.  "You're fired."  Such a call puts the Pope in a no-win situation, if he does not heed Burke's call, then Burke has some high moral ground.  If he does, Burke has some high moral ground.  This Pope for all his niceness, is one tough cookie.  He is not going to let some Cardinal named Ray box him in a corner or lead a faction.  This Pope who sleeps in a dorm room knows his place, and keeps his top dogs in theirs.

The source of the tizzy, in a preliminary report...
The report recognized the “positive aspects of civil unions and cohabitation” and said “homosexuals have gifts and qualities to offer to the Christian community.” As for Catholics who divorce and remarry without an annulment, we must avoid “any language or behavior that might make them feel discriminated against.”
So what?  First of, preliminary drafts are up for debate.  Wait until the final report.  Catholic teaching already recognizes the inherent effort to approximate what God ordained in the irregular forms of association.  This pope seems to want to say instead of "this is wrong", emphasize what part is right, and let the hearer draw his own conclusions.  Same with the remarried, divorce usually does end Church association for the whole family.  How come?  Time to look at that.

Cardinal Walter Kasper has been the prime mover of the liberalization of Catholic teaching on sexual morality. When an African bishop objected to the report, Kasper retorted, “You can’t speak about this with Africans. … It’s not possible. … It’s a taboo.”

Really?  A Cardinal named Kasper? Criticizing an African?  Guess who will never be pope.  
In his beatification of Paul VI on Sunday, Pope Francis celebrated change. “God is not afraid of new things,” he said, “we are making every effort to adapt ways and methods … to the changing conditions of society.”
When the church wants to make a point, they elevate someone to sainthood.  Paul VI was the no contraception Pope.  Point being, in this controversy too, church teaching will not change, just possibly some style of communication.

Extreme views get hashed out in a voluntary association.  No one needs to get whacked.

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Wexner and the Lessons of The Limited

Here is a critical bit of info from a titan who says he learned it as a kid.  Yes, that handing down of information has been broken by FIRE.  Here is Leslie Wexner:
“When I was a kid, before my first store, they talked about stores as theater and retail as theater. It still is,” says the 77-year-old, attired casually in gray slacks and a blue oxford. “Retailing is a free form of entertainment.”
FIRE is the massive, false economy which will continue to degrade, as our "enemies" improve, slowly surely. The guy not only received an education from an earlier generation, he never bought into the  madness. Here...
In defiance of e-commerce evangelists, he opened 50 new locations in the last year.
Yes, brick and mortar is where the customers are, plus good old fashioned mail order. Catalogs drive sales to internet where orders are placed...
His online business is not the focus, but it’s doing just fine, accounting for $1.5 billion of his annual sales.
The selling is out of the catalog, the transaction is on the web. And he hasn't started exporting yet...
And there are billions more waiting for Wexner outside of America’s borders. 
What he has done is franchised it out to other countries, that is having no presence of his own companies overseas, just let locals import and manage the brand in their respective countries.

Wexner found a problem and worked on a solution...
When his father left on vacation, Wexner tried to solve the riddle of why his dad had always worked so hard but never made any money. He found a stack of invoices, and on a piece of scrap paper began tallying the cost and profit from each item in the store.
The numbers added up to a counter-intuitive conclusion. Although big-ticket items like dresses and coats looked like they had huge margins, they actually made no money because they sat on racks forever. All of the store’s profit came from less glamorous items like shirts and pants. 
His dad fired him...
... founding a rival store to his father’s with a $5,000 loan from his aunt in 1963. He put a limited selection of clothing in the store–only the shirts and pants that flew off shelves–and named the place The Limited. ...He made $20,000 of profit in his first year, twice as much as his dad’s best. The secret was his focus on only a few products, a revolutionary idea at the time. 
Steve jobs studied him...
Wexner says that Steve Jobs (or presumably it was Jobs–”what’s-his-name from Apple,” Wexner says off-handedly) was one of many to credit The Limited boss with inventing specialty retail. “Probably did,” he shrugs.
I recall the era well.  There were countless people opening "boutiques."  Most of them were crammed with merchandise and went under.  Wexner did it right. He tried to figure out how Victoria's Secret worked when it was a one man operation in San Francisco. The founder sold out to Wexner,
His financial advisors had warned him that $1 million was too much for the business. Wexner let Raymond run it under The Limited’s umbrella for a while, and his deputies rolled their eyes as it bled millions more. When they examined the financials more closely, they realized the only way Raymond had been making any money before the acquisition was from a secondary business selling mail-order sex toys. Wexner fired Raymond and moved headquarters to Columbus. 
Wexner took the same idea and made it profitable.  Raymond could not, so he had ventured into something desperate and kept it secret.  Raymond failed at his next venture, and then killed himself.  Why do two people working on the same project diverge so terribly: billionaire v suicide.  Perhaps it gets to how they process suffering...

By the common definition of wealth, Wexner was unhappy...
“By the time I’m in my early 30s, I’m, by most measures, enormously successful. And the more successful I was in terms of business achievement and accumulation of income, the more ineffective, unhappy I was.”
Read the article for how Wexner dealt with it...  And comes the question...
After 51 years as CEO of his company, is Wexner thinking about retirement? He smiles, having known the question was coming. 
Of course not.

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