Saturday, October 2, 2010

I Won't Fly Virgin Now

In this ad Virgin Airlines makes light of the full body death-ray scans some airports are using, and the Italians have since banned.  The economic model of the airline industry is such that it has never turned a profit since it was initiated in the 1920s.  Massive subsidies and wealth transfers from the poor and middle class to the rich has made some particular airlines turn a profit, but not from raw business acumen or serving the customer.

What few people realize is the travel industry depends on government worker travel to sustain its size and profits.  Small businesspeople generally are too concerned with sustainability and customer service to bother with such ephemeral aspirations as sexuality connected to air travel.  This ad is clearly to attract the automatons who travel on govt and big business vouchers.  I cannot imagine anyone serious finding Virgin Airlines an attractive offer.


Braniff Airlines... We Move Our Tail For You!

I think it was in the 70's that Braniff was criticized for using double entendre in advertising airlines.    Here are four airlines today, advertising under the "sex sells" rubric.  According to David Ogilvy on Advertising, sex gets views, but not sales.  It is interesting that these competing ads come from four countries and seem to reflect, to my mind, the culture of each, or at least a typical component.  In order of sophistication, or ahem...:

Cebu Airlines

Air New Zealand

Virgin Airlines

AviaNova

For you weekend entertainment.  On a didactic note, never spend a penny on advertising until you have read Ogilvy.


Friday, October 1, 2010

Why We Are Hated Overseas

"It used to be that the idea of informed consent -- asking permission -- was unheard of," said Besser. "Sixty years ago, there weren't ethical boards, there weren't institutional review boards reviewing studies determining what you could and couldn't do. It's a different world today."


Blacks in USA are naturally leery of joining medical studies in USA, since they have been used in murderous studies by the govt agency that changed its name to the Center for Disease Control.  To many blacks , the Center for Disease Control controls disease to kill blacks.


The above quote comes from and article on USA running a mad scientist experiment to see if syphilis could be cured with medicine, the answer of course they already knew was "yes."  They tried it on blacks in USA too, just to be sure.


Today govt agencies are quick to say it is wicked, and say we now have safeguards in place.  Except today we do things every bit as wicked, but spread it around to NGOs and foundations, who do the dirty work, like Blackwater did the dirty military work in Iraq and Iran.


How USA Works

The government signed into law (whether dems or repubs in power, it does not matter)  a deal giving car dealers more credit.  For what, who knows, because it will not increase the sales of cars.  It just means that the big auto makers, now owned by the government, will make cars on credit to dealers, who eventually will go bankrupt, the cars sold at auction, and your auto will have a lower resale value.

If the government had let Chrysler fail in 1979, those 100,000 or so employees would have been out of work for a while... and GM and Ford. trembling in their boots, would have begun designing competitive cars.  Of the 100,000 unemployed, 100 would have started auto companies, or which maybe 5 would still be in business today, but one of them would be the best in the world.  Instead, all three USA auto makers are bankrupt, and on life support at taxpayers expense.

The auto industry is too big to fail because it is so tied up with special deals.  Think of the patents on auto parts awned in consortium by the big three.  Government safety regs require that these parts be in cars sold in USA...  so foreign companies must pay huge percentage of the price of a car to USA automakers to sell here.  And USA still cannot compete.

The proper thing to do is to let Ford, GM, Chryslers and everyone else go bankrupt.  Burn all stockholders and bondholders, and open source all of the patents. It would be only 3 to 4 years before USA was number one again.  But a prerequisite would be businessmen and politicians who love freedom, and we have too little of either in USA today.  We are dominated by big business, with Microsoft, Boeing, Archer Daniel Midlands, Buffett and Munger no more than welfare queens.

And because of this our education, ou medicine, our housing, our entertainment it is all going third world.  The Ford Transit is a huge success (made in Turkey with your bailout dollars); banking service is horrible since "we don't care, we don't have to...", ice cream is whipped to be lighter and put in smaller containers to give you less for same price... the degradation is endless.  But it is what you voted for, when you voted for McCain or OBama, both supporting war, bailouts, constraining freedom.  We'll continue to shrink.


Home: Fight or Flight

Back in the 1980's, during the last real estate bust, two things bugged the banks: 1. assumable loans.  2. mortgages.

With an assumable loan, you could sell you house with the loan attached, so someone could buy your equity and then continue to make the payments on your mortgage.  Well, hard to trap homeowners when there is an assumable loan, hard to make money if a loan is assumed and you cannot charge for a new loan.  Assumable loans disappeared.

It was almost impossible to get a mortgage in the last decade or so...  what you got was a deed of trust.  With a mortgage there is a pile of common law rules and regs, a judge has to review the case, you get a homestead allowance of prox $20K if you are foreclosed on, and the loss is limited to the house.  Can't trap people with that... so banks wrote deeds of trust, not mortgages.  So then, banks can fast track the sale of your home and you get nothing, but in most states you gt stuck with a "deficiency."

Well when things are so assymetrical, something will go wrong.  Since it was a "no lose" situation for the banks, they wrote endless junk paper, and split it up and sold it over and over.  Now people are finding out the foreclosures in many cases are not proper.  I heard about this three years ago.  Like paying taxes, losing your home to banks is probably voluntary.  This article isn't the hald of it...


Thursday, September 30, 2010

Part Two: Small Property Versus Big Government

I finished the book that I began reviewing here.  It is well worth finishing, for a few more points:

1.  If you lead a tax resistance movement, the minions in the cities will destroy your business.  In one poignant scene, the author is interviewing a tax resistor from way back, who was living in trailer park.  Once he resisted taxes, he could not longer get permits to build on the property he owned.  They broke him.  We've seen this more recently in Washington State with a fellow by the name of Tim Eyman, and of course anyone who tried to remodel in the last ten years experienced the crushing weight of government regulation and taxes.

2. Growth management acts were introduced as a way to destroy local ordinance power... if there was a state wide regulation, then there could be no victories in local elections.

3.  Small Businesses were the back bone of the anti-tax movement, that inadequate in themselves apartment owners and citizens could ally.  I have long wondered what was the salient reason for government to destroy small business in regulation and tax, and from this book it is clear.  We are the people who get things done in the community.  Government cannot have competition and alternative.  it is us or them, a fight to the death, from their point of view.

4. These tax protests started in the 1950's, and success came in 1980.  So it took 30 years.  Every single tactic we see government using today to frustrate citizens, this book demonstrates they used 50 years ago.  How come?  Because it works.  So 30 years after political "success" nothing has improved.  Prop 13 was supposed to be the end of abusive government (and the end of the world according to big government, big labor and big business, which dod not happen either.)  So the bad guys blew past this roadblock or prop 13, and proceeded to raise fees on everything and tax other things.  They did not miss a dime of government growth.  My favorite government stalling tactic is if they find a law requires a reduction, the government will reduce what critical function upon which they have a monopoly, say fire services, and keep paying from something not critical, like featherbedded staff, bogus travel, etc.

5. One city in California was particularly active in escaping rising taxes and then leading protests when they did rise.    They had good politicians.  That city was Bell, California.  Apparently, this is an example of where "good government" leads.  The author should do a follow up book.


Spooner On Coins

Lysander Spooner, the great jurist, was addressing the issue of a gold standard when he wrote this, and I think his premise question is off (gold is a basis for money, a standard for nothing I think..), but it was part of his argument that made me think... returning to gold and silver coinage as money, people say there would be an actual shortage of coins, making commerce impossible (thus we need a bank to make bank notes, and a central bank to back up the banks.)   But Spooner notes metals come out of the ground and are minted into coins, a people then recognize them, and then as needed, the coins come and go from coin to "plate, ornament and jewelry" as not needed....  to wit:


The first question, then, to be settled is this, - namely, what is that fixed or definite value (or something like a fixed or defi nite value) which gold and silver coins have, and which enables them to be used as standards for measuring the values of other things?
The answer is that the true and natural market value of gold and silver coins is that value, and only that value, which they have for use or consumption as metals, - that is, for plate, watches, jewelry, gilding, dentistry, and other ornamental and useful purposes. This is the value at which they now stand in the markets of the world, as is proved by the fact that doubtless not more than one-tenth, and very likely not more than one-twentieth, of all the gold and silver in the world (out of the mines) is in circulation as money. All the rest is in plate, watches, jewelry, and the like; except that in some parts of the world, where property in general is unsafe, large amounts of gold and silver are hoarded and concealed to prevent their being taken by rapacious governments, or public enemies, or private robbers. Leaving these hoards out of account, doubtless nine-tenths, and very likely nineteen-twentieths, of all the gold and silver of the world are in other forms than coin.
And as fast as new gold and silver are taken out of the mines, they are first carried to the mints, and made into coins; then they are carried all over the world by the operations of com merce, and given in exchange for other commodities. Then the goldsmiths and silversmiths, in every part of the world (unless among savages), are constantly taking these coins and convert ing them into such articles of plate, jewelry, and the like as they have call for. In this way the annual crops of gold and silver that are taken from the mines are worked up into articles for use as regularly as the annual crops of breadstuffs are consumed as food, or as the annual crops of iron, and cotton, and silk, and wool, and leather are worked up into articles for use.
And when the coins have thus been wrought into articles for use, they for ever remain so, unless these articles become unfash ionable, or for some other reason undesirable. In that case, they are sent again to the mint, and converted again into coin ; then put into circulation again as money; then taken out of circu lation again by the goldsmiths and silversmiths, and wrought [*5] again into plate, jewelry, and the like, for use. They remain in circulation as money only while they are going from the mint to the goldsmiths and silversmiths. And this route is a very short and quick one. An old coin is rarely seen, unless it has been hoarded.
Unless new gold and silver were being constantly taken from the mines, and old and unfashionable plate and jewelry were be ing constantly recoined, these metals would soon disappear alto gether as money.
All this proves that they have no true or natural value as money beyond their value for use or consumption as metals. If they were worth more as money than they are for use or consump tion as metals, they would, after being once coined, remain for ever in circulation as money, instead of being taken out of circu lation and appropriated to these other uses.


Nobody Needs to Get Hurt...

In an act of desperation, the US Govt is taking action against China, for selling us things we want, at a price we like.  We demand they ruin their economy, as we have ruined ours.  Only if they too ruin theirs, will ours not look so bad.



No manufacturer need be hurt by "cheap imports"...  If you make 10 penny nails in USA, and a cheaper 10 penny nail comes from China one day, then an importer is behind it.  Do you believe the importer of the 10 penny nail will steal your customers? To compete, become an importer too.  Import 10 penny nails from China, and offer them both to start, the home made and the imported ten penny, and let your customers decide.  Importing is not a business, selling things is business.  If you are a rice farmer in USA, and cheaper rice comes in from Indonesia, then let your farm rest while you import and sell Indonesian rice to your customers.  It's just business.

Most importers in USA are just companies who buy overseas what they once made here.  Like George Soros, we just exploit stupid government policy.


Wednesday, September 29, 2010

Just Bury It!

On Sep 28, 2010, at 5:22 PM, ww wrote:
I find some good patent in the web,do you think it is a good idea to directly contact the patent owner.and get his permission to procduce his patent,I think this is the fastest way to bring the idea to market,I have no idea about how to design a product now.the patent is a papper box used to clean dog shit.i think it is convenient.you can throw it away after using it.

 WW:

Thank you for your kind note.  I think you are getting ahead of yourself on this one.  First, find customers.  If you had the patent to whom would you sell it?  Approach those people and inquire: If I had a dog house for doggydoo would you buy it from me?  Listen to their answers.  if it sounds good, then you can proceed.  If not, then why not.  Maybe you come up with a better design.

For my part, I think this phenomenom of dogmasters' picking up and carrying off excrement is some sort of extravagant joke.  Why walk around with a bag of poop?  Why pick it up?  Why alarm your dog who knows better than to mess with it?  Gross!  Why not just carry a spade and bury it?  My opinion does not matter, but I would try a new product that buries poop.  For my part I just look through and walk past without acknowledging anyone I see carrying a turd.


A Nickel: The $1 Coin

jay Leno made a joke about the new $1 coin, saying the government already produced on, it is called the nickel.  Economists commonly state the dollar has lost 95% of its purchasing power since the institution of the Federal reserve system nearly 100 years ago.

Now this is not very compelling since few of us lived 100 years ago, and we think we are better off with cars and phones than with buggies and telegraphs.  We live a lot better, so who cares?

Also, at any given time, a man's good suit costs the same as the price of an ounce of gold.  80 years ago a suit and an ounce of gold were both $35.  Occasionally there is an exception to this rule, but pretty quickly the price swings back.  Sure today you can get a man's suit for $300, but it won't be very good. Right now $1300 is about right, and so is an ounce of gold.  Of course we are talking about a suit with excellent materials that will last 25 years or more.

But this is confusing... are we talking about gold which is relatively stable, or currency, which is not.  Gold certainly has not lost 95% of its value in the last century, it is still, well, good as gold.  The dollar has lost its value.

Here is what is supposed to happen in an economy: money is supposed to stay constant so the market can lower the cost and widen the access to material benefits and services, and innovators can introduce the new and better.  The poor gain access to what is good in a free market.

When the currency is manipulated, sure an ounce of gold will still buy a good suit, but far fewer people can get access to that level of goods and services.  Those who argue "we have it much better than 100 years ago" are ignoring the vast majority of those who in fact do NOT have it better than 100 years ago.

If the dollar had not lost 95% of its value, a suit would still be $35 and and ounce of gold would be so as well.  But everyone would be able to afford a good suit now and then, and a cure for cancer, which would be here by now, and countless other benefits and services.  Look at the relatively free market in cell phones and see what benefits come.

But once dollars are no longer a receipt representing gold in a vault, and coins are no longer silver and gold, then fiat "money" allows the powers that be to cause inflation by printing too much of the currency.  The result is most people lose out.  The genius of USA is to have enough safety valves so people like me do not complain about the system that robs everyone else of what is good and true and beautiful about life.  I got my suits, it's your choice to dress like a junkie.

This too is an example survivorship bias, since we do not have the witness of the people who were laid waste by war over declining yields and lack of innovation to alleviate shortages.  We do not have the witness of people who died from preventable disease, and so much else.

As purchasing power of a currency declines, we still have innovation, and some things do improve.  What is missed is what is not seen, what would would have had also.  We would have all of the goodies we yielded from innovation and efficiencies, but if the value had not declined we would have had capital for new investment.

Prices naturally drop, it takes government intervention to make prices rise.  It is no secret, in fact is is publicly stated, the job of the Fed is to introduce inflation.  Now they complicate matters by saying inflation brings stability, like war is peace and up is down, but let's not worry too much about internal contradictions when it is enough to say the Fed's job is to inflate.  Which they do.

If they did not, if the Fed did not exist, prices would naturally drop, in a free market.  A price of a suit would be the same as an ounce of gold, but instead of about a weeks wages, it would be an hours wage. With freedom, price dropping, division of labor, we would have so much more to choose from, and so much more access.

But in such a system the powers that be would have no power to maintain the status quo.  Love of money is the root of all evil.  Power comes from manipulating money, and that is the job of the Fed.


Design Fever

Costco sends out a magazine called Costco Connection, and my copy arrived today.  Costco is to be generally admired, and I am delighted they are going after the Washington State Stalin-era liquor control board.  It is safe to do so in these times.  It is tedious sometimes for me to get my booze in California, especially when it is no longer allowed to be carried on board an airplane, for no good reason whatsoever.

But on to design...  the Costco magazine letters to the editor has a note from a graphic artist, making the case contrary to an article in a previous edition.  The article in question apparently advocated crowdsourcing design requirements. (You can blow up the letter once you get to the page.)  The designer makes the case that working with one designer is better, as your desires are better executed. The point is fine, and I would agree.  But the writer, a graphic artist, makes a couple of common errors.

First she claims crowdsourcing is "one of the most hurtful practices to ever show up in the life of  designer."  The problem here is the ad hominem nature of the argument: She does not argue process and result, but feeling of a participant.  We who buy design capability are buying a result, not investing in the emotions of the players.

To claim something is hurtful implies one needs a remedy.  She does not warrant the claim:  how do I freely conversing with several hundred potential suppliers possible cause her harm?  I should be required to include her in people I desire might work with.  Since the designer feels hurt, I should somehow, by force a third party (paid for by a fourth party) be obliged to work with her, or her assigns?  Of course her impulse is precisely what is behind bar associations, medical accreditation, etc.  She even makes the ultimate claim: we can only be assured of quality, and not being ripped off, by working with people like her.

Second, the practice of a designer developing ideas on spec has been going on since time began.  Merely because more people are being reviewed in the crowdsource method makes it no worse, or better.  No doubt the writer "worked for free" while in school, and no doubt she has made up plenty of designs on spec.  We all do in all professions.

Instead of complaining about other people being free to do as they like, it is better to study the process yielding a result.  Figure out how one ought position oneself to yield a result.  In this case the designer might set up some computer program that sorts out inquiries so as to offer up the ones where upon a designer may put his best foot forward, or in this case her best foot.

Crowdsourcing is widening the access and lowering the cost of design, allowing a lot more people get into it it on both sides of the equation.  Instead of complaining about this, she could crowdsource herself, putting together a crew of excellent designers worldwide, and market them.  I'd love to see prequalified designers, I would resent being forced to work with only them.


Monday, September 27, 2010

On Sep 27, 2010, at 9:06 PM, Anthony wrote:

Mish is predicting a currency / trade war with China, but he seems short on details.   How will this unfold in your opinion?   I assume we will exchange tariffs ( I think China threw a tariff on Chicken),  but I'm not sure how the currencies will play out.  Will it be a race to devalue the currency?  How will this impact importers?   What happens if you submit your factory order before a tariff is applied?  or Order then the currency plunges?

Anthony
USA policy is to not let USA consumers enjoy lower prices from China.  USA policy is to demand China pay more for USA products.  The chicken tariffs should show the USA govt what happens when prices go up: buyers look for alternatives.   As the Chinese communist party banker says sensibly, USA needs to get its finances in order.  True true.  

I don't think much of anything will happen.  China will not comply, and USA can do nothing about it.  Elections are coming up, and politicians are posturing to look good to voters: blame some one else for our problems.  

Slowly but surely our standard of living will degrade.  The powers that be in USA prefer to rule over ruins than serve in paradise.  Pensions are toast.

John


Midnight At Walmart

A WalMart executive shared with the financial class about buying patterns at month's end at Walmart.  As the government loads up welfare payments on people debit cards, coountless shoppers have been loading up their carts waiting for 12:01 am so they can take their milk, eggs, etc to the checkout counter and pay.

This of course is known among drug dealers and narc countrywide, and has been known for 40 years:  welfare check day is a huge drug purchase day.  The government hauls in massive taxes, turns it over to countless crack heads, who buy crack, and the money is laundered back up the chain.

Welfare was a bad theory to begin with, and has proven a disaster in practice.  Of course people will say: John you are heartless, you want the poor to starve, as though the only way to help the poor is for the government to give a poor person a check.  No other possible option.

Of course this is nonsense, but the drug dealers, politicians, war profiteers and welfare hustlers, who control government, do not want to see the system change.  Religion has been bought off, so don't expect them to do their job in helping the poor, when they are too busy helping themselves to lucrative welfare programs.

We need alternatives to what we have.  There is business opportunity in it.