Saturday, November 6, 2010

Sweden, China, USA

A few months ago I heard the announcement that Obama proclaimed USA will double exports in five years.  My first thought was "how?" and second thought was, "when this fails, they'll have something else to blame Obama for..."

Obama does recognize that there are winners and losers to this policy, within the USA:

"I know the issue of exports and imports; the issue of trade and globalization; have long evoked the passions of a lot of people in this country," Mr. Obama said. "I know there are differences of opinion between Democrats and Republicans; business and labor; about the right approach. But I also know we're at a moment where necessity has tempered the old debates."

So, who cares, we have a crisis, and we'll have winners and losers, but politicians will not have to take the blame, because we are doing "something." But he leaves out what the rest of the world thinks, since the policy will create winners and losers overseas.

I waited for details on how we'd double the exports from USA in five years, since with the proclamation no details came forth.  What the above article says is government agencies will focus on helping exports. Oh. That's it?  That means government workers will travel overseas and attend trade shows, everyone will be offered forms to fill out to back an export business, and some well-connected campaign contributors will get taxpayer loans for exports, which will go bad, and leave the taxpayer on the hook.  We've seen this all before.  It doesn't work.

There is another part.  The USA is trying to export inflation to other countries, to make USA export goods cheaper, on the theory it will make USA goods more attractive and help our economy.  Here is a nice summary of how it works.  The bottom line is other countries' citizens are supposed to pay the price for our bad policies.

China will not stand for it, and Brazil will not stand for it, as well as Europe.  Recognizing just how odious the USA policy is to most other countries in the world, China feels confident it can for good measure threaten European leaders not to attend the Noble Peace Prize event for a Chinese dissident.


#1 rule in exporting: most of your business is domestic.  If you hang you hat on exporting, the volatility pretty much assure failure.  If you want to save the USA economy, you must focus on the USA economy, not export economies.  

What to do?  Cut the size of government, defined as cost and regulation,  back to the last year the economy was good:  2000? 1990? 1980?  1840?  And cut the tax base as well.  For example, if we cut the government back to 1990 levels, we would not need the federal income tax. There are enough other taxes to cover what would be "government." This would result in massive layoff, and a return of our troops from around the world. So what happens to all these now unemployed?  (Privately, as an importer, I'd like to see USA fed government be limited to import taxes for lifeblood.  US Customs again becomes the leading USA govt agency.)

The solution is small business renaissance. But we do not have the cultural capital, that is to say enough people who know how to run a business, to take up the slack necessary to provide for the division of labor to feed clothe house and otherwise provide for these fish out of water.  Two generations of mal-investment economy has wiped out the cultural capital it takes to farm, fish, manufacture, bank, build, design, transport etc.  at the small business level.   

What farmers and fishermen and small business people there are will do very well, since our relatively rare skills will be priced at ever increasing bids.  Most consumers will not be able to afford us.  But enough will for us to thrive.


Friday, November 5, 2010

Janelle Monae

Here is another huge talent, who seems to be very well managed, and using the net to promote.  Note how her songs are wrapped in ads, which of course drive her revenue everytime someone listens to her video...  I have some 70 youtube videos up, and could do the same (I don't know what they would earn) but I do know they drive class and book sales.)

She is a stunning beauty, obviously very smart, and as one commenter noted, this song sounds like a Bond film song.  Yes, artists will do that, try to create a song that will be bought by a franchise, like the Bond films.

Ever since Shirley Bassey belted out Goldfinger, every singer has wanted to do a Bond film.  paul McCartney, Sheena Easton, and so on.

I recall giving props to movie and tv shows so our products would show up nationwide... not that it did much good... now you have to pay the shows to get used.  The world keeps changing, more or less.


Kurt Gerron

Now there is a name you do not hear much about anymore, but before WWII he was a household name worldwide, a Berlin acting/singing/directing talent, (not to mention an MD)  with plenty of offers from Hollywood, although he did not speak English.  He was the first to make Mack the Knife a hit song, in the original German.  

In 1944, he made a film showing what a wonderful place nazi concentration camps were, and he considered it a flawless piece of work, except of course, it was a lie.  It is a remarkable story, for a Jew to still be living well enough under nazis in 1944, and making a movie on Hitler's request.  Gerron was in the nazi concentration camp Theresianstadt when he made the movie about that very camp.

It is a fascinating story you view when you have 90 minutes, here...


Theresianstadt was a place the nazis put Jews that the world would miss, and rich Jews could buy their way in, as well some could bribe their way out of Germany.

This little film is important, because it is by, about and interviews people who were there.  What we "know" about those times is largely wrong, and if we accept the sharp black and white images, we'll never be able to spot it happening again.

Distressing point:  the nazis left it up to the Jewish elders to decide which Jews were to be eliminated.  The elders obliged.

Interesting point:  Hitler cared about what the neutral countries (Sweden, Spain, Ireland, Switzerland) thought about Germany, and had the film made to persuade them all was well.  Hitler did not care what his enemies thought, only what the pro-peace people thought.



Government Art

So we learn by first hand account the major art movement of the 20th century was a CIA creation.  The art may have been original, but its popularity was a CIA gig.

Now in his eighties, Mr Braden lives in Woodbridge, Virginia, in a house packed with Abstract Expressionist works and guarded by enormous Alsatians. He explained the purpose of the IOD.
...
He confirmed that his division had acted secretly because of the public hostility to the avant-garde: "It was very difficult to get Congress to go along with some of the things we wanted to do - send art abroad, send symphonies abroad, publish magazines abroad. That's one of the reasons it had to be done covertly. It had to be a secret. In order to encourage openness we had to be secret."
If this meant playing pope to this century's Michelangelos, well, all the better: "It takes a pope or somebody with a lot of money to recognise art and to support it," Mr Braden said. "And after many centuries people say, 'Oh look! the Sistine Chapel, the most beautiful creation on Earth!' It's a problem that civilisation has faced ever since the first artist and the first millionaire or pope who supported him. And yet if it hadn't been for the multi-millionaires or the popes, we wouldn't have had the art."

The CIA also backed some 800 journals, and countless other "arts" in order that the USA could win the cold war.  Or not.  It could be that with so much money, it was fun to be a government worker and spend unlimited funds on whatever you like.  And the idea that art has to be backed by the wealthy is absurd.  There were plenty of people who could and did paint as well as Michaelangelo (who did not even consider himself a painter, he signed everything "sculptor"), it's just that with wars bringing up widespread disease and killing talent along with nontalent, and concentrated wealth allowing the few to pick winners and losers, Michaelangelo is not the best, he is all we got.  In free markets, there would be countless Sistene chapels.

Note also, the article points out the CIA had to work in secret, since the reps of the people, congress, would not approve.

Did you vote last Tuesday?  Why?

Braden says art takes money... nonsense, Michaelangelo complained constantly about how little he was paid...  concentrated power can capture artists, and the pope Michaelangelo worked for, knew from power, he, a pope, naming himself after Julius Caesar!  He made Michaelangelo an offer he could not refuse.

Go to Hong Kong and see stunning, world class art, unprotected, in shopping malls, for all to get close to.  Art is cheap and plentiful in a free market, and there is no restraint on expression.  Braden says his department, the government art project, was the most important part of the CIA.  No doubt Braden, with al his years in government could come up with juicy examples of govt waste fraud abuse in other parts of the CIA in particular, and the govt in general.  Of course.  I hear this repeatedly, "oh yes, there is much waste etc, I agree, except for what I am doing (or did.)"

Next, those right wingers swept into office last week, all complain about waste, fraud, abuse.  Every govt program has waste fraud abuse.  You cannot fund a few thousand people a few billion dollars without having plenty of waste fraud and abuse.  Govt programs have no way to know costs, have no market signals from prices, and are penalized if they do not blow out their budgets.  Putting phantoms on the payroll, taking a sexytary on a govt biz trip, and stacking in the basement 100 desks too many accidently ordered just comes with the territory.  The only way you can cut waste fraud and abuse is to eliminate the program itself.  But not a single right winger can name a single program that they would cut.

We need free trade in art.  We would get more, better, cheaper, faster.


Thursday, November 4, 2010

Capitalism vs. Free Markets

Here is a summary of a discussion in last nights class:

Capitalism admits government regulation and subsidy, that is, it sets policy.  All govt policies will have a winner and a loser, there are the two sides.  The policies are unnecessary, but they do make for winners, something those who paid to win esteem very much.  And then those, safely in their jobs, can dream of someday being a winner, like on TV.


When big corps get subsidies, pay no taxes, crush small farmers with regs only big biz can comply with, the problem isn't "small" the problem is "unfair."  But big corps need lots of workers, who vote, and vote  their pocketbook, that is to have big biz win. When big corps get subsidies, pay no taxes, crush small farmers with regs only big biz can comply with, the problem isn't "small" the problem is "unfair."

In capitalism you can get rich and afford whatever the world has to offer...  in free markets, the world has far more to offer (because of division of labor) and it is all affordable by most people... what cannot be afforded by someone in distress is easily provided by charities... No policies mean no losers and winners, just division of labor, where the real wealth is .... more options that more can afford is better than fewer options only a few can afford.

See Hong Kong, and what USA was about 120 years ago... Private companies put out money in Hong Kong, not the government... everything is cheap and plentiful... and far wider range of goods and services... Hong Kong is not a completely free market, but free enough to be an astonishing alternative to corporatism or capitalism, and communism...

People do not like free markets since you cannot get super rich, crush others, start wars, get bailouts in a free market... that is limited to -isms... gotta have an -ism to have a war, and war is where the real money is...  Free markets bring peace prosperity, and division of labor...  bigger pie at accessible costs for everyone...

 Panama is relatively free, as is Costa Rica... Aruba...  there are plenty of Hong Kongs around.. Monaco, Andorra, Singapore... I think Vietnam will trump them all within ten years...  So can we have free trade in the USA?  No, it won't happen as a country, we are too far gone.  We do have some possibilities, even liklihoods: either we make a free trade zone ala Hong Kong round say, Seattle, or we make any business in USA under $5 million a sort of free trade zone, with no regs, taxes, etc... it doesn't really matter, it does not have to be actual territory, it can be "in the rules."


Why Government Regulation is Unnecessary

Let's take an example which can serve as a template argument against any and every government regulatory agency, let's look at the Securities and Exchange Commission (SEC).

Like the Transportation Security Administration the SEC was formed after a government policy failure.  The government policy-enabled market crash of 1929, among some politicians, called for some government theatre to "restore confidence in the markets."  So in 1934 Roosevelt created the SEC, to mime market oversight.

From the SEC site:

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
and
  • Companies publicly offering securities for investment dollars must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing.
     
  • People who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly, putting investors' interests first.

Of course it does no such thing.  The mission is a synopsis of the government theatre performance, and it is absurd to expect truth from a company, even if they new it (who knows all risks?)  And the game is already rigged, like a casino, to assure brokers dealers and exchanges never lose, but clients generally do.

Of course, Madoff was identified as a criminal to the SEC 10 years before he outed himself, Enron went on without a regulatory problem in spite of widespread evidence of wrongdoing, and the FBI in 2004 testified to an open congressional hearing about widespread fraud in mortgages.  Nary a congressman or prosecutor or SEC inspector lifted a finger. If and when companies are in trouble, like banks, the SEC will step in to protect them, not investors.  SEC Chairman Christopher Cox outlawed shorting bank stocks (and eventually more) when the bankers were about to face the consequences of their criminal acts.  There is no correlation between SEC "enforcement" and investor protection by the SEC.

So what, do we just let bad guys run riot on Wall Street?  Well, that is what we do right now, and instead of punishing them, we bail them out.  Moral hazard.  Also, when government regulates, the regulators are captured by the regulated.  I do not recommend an absence of sanction, what we have now, but sanctions that work.  How so if not with regulators.

Every criminal named above was caught by shortsellers.  Their study companies to see which ones are lying or cheating, and since that inevitably leads to disaster, shortsellers bet on disaster.  They borrow the stock of a target company, sell it, keep the money until the stock goes down, and then buys the same amount of stock at a lower price, and then return the borrowed stock.  And keep the price difference between the old high price, and the new low price, for themselves.  There has never been a more effective policeman in the markets than the shortseller.   And here is the best part, if the shortseller is wrong, the shortseller pays dearly:


"He who sells what isn't his'n / Must buy it back or go to pris'n."

If a shortseller was wrong, it hurt.  Long before the SEC, indeed we had more years with no SEC in USA than with an SEC, before the SEC we had effective policing, by private means.  It was only the introduction of government regulation that concentrated power and enabled, through legislation, the leverages necessary to achieve the stock market crash.  At the same time people stopped looking to short sellers to police the markets.  Why pretend the SEC can police the markets, but shortsellers cannot?

And as a side, although we no longer rely on the shortsellers, they still do provide a value, and make money doing it.  Such is the free market.


你吃饭了吗 ?

Ni chi fan le ma?  Have you had your rice today?  This expression draws smiles today in China, since it is rather quaint, old fashioned.  When I first went to China, Ni Hao, or roughly "how are you?" was immediately followed with ni chi fan le ma?  "or have you eaten today" or have you had your rice today?  Such were the food shortages of the previous 40 years in China that in the 1970s this kind inquiry was still common.  Today I use reflexively that phrase, learned long ago, to the amusement of the young who have never experienced hunger.

Today China is following the path USA used to get rich, as USA follows the path old China used to get poor.  I hope I don't live long enough to hear "have you eaten today" commonly used in English.


Good Morning, Vietnam

Vietnamese retail is up up up, and an interesting tidbit, Vietnam is the worlds 13th largest in population... it is growing with mutual benefit to USA and Vietnam.  Much, much better than war.  Now, if we can just get chased out of the middle east, like Vietnam, we can all do business and promote peace and prosperity.


Wednesday, November 3, 2010

Election Results: Another Trillion Dollar Bailout

The Fed is going to buy 600 billion, plus more, probably a trillion, in bonds in a bailout of the banks.  At least last time people complained. A trillion in purchases means a whole lotta Wall Street activity.  I guess it is ok to bail out banks if the Republicans are in charge.

This is a back door bailout, since the banks borrow money for free, and then buy bonds that earn 3%, meaning by the magic of compounded interest, taxpayer losses are gains for the banks.  It's slow-cooking the frog.

Free markets do not need to be bailed out.


Post Election New Business Opportunity

This election was a disaster for USA: none one of the new people is anti-war, and not one would name one government cutback they would make.  That means they will get busy with more of the same, which is very bad.

Ambrose Pierce has a good article on the dollar, but I am finding the comments sections often better than the articles, at lest for humor.  His is one persons comment:


Ron Paul and other libertarian students of economics have long said that paper money is arbitrary and fundamentally worthless. Now you see that. Enjoy your pension. Maybe the Chinese will keep you as a pet.


Well, yes, that could be a business in the future: exporting Americans as pets for the Chinese.


Tuesday, November 2, 2010

Exporting Wine To China

Everyone wants to export wine to China, but sadly I don't see any small business with a plan that will work...


Since February 2009, the company has put 75 samples into the market, many through trade shows and similar events, and is beginning to reap the benefits. Top Cellars is now fielding requests from Shenzhen, as well as Beijing and Shanghai, though company CEO Robert Pong finds competition fierce. “Trying to stay competitive while maintaining a reasonable margin is always a challenge,” he says.       
David Harder at The Canada Emporium spent nine months and Rmb500,000 establishing an office in Beijing and obtaining an import license. He says employing people to work on the ground is vital for success. Those who don't invest in people, secure companies that do. Failure to put money into people, says Mr Harder, “is almost a definite recipe for failure.”   


I should have my video on the topic up at some point in the next few weeks...


Monday, November 1, 2010

Foreign Corrupt Practices Act (FCPA)

Funny what they call a law regarding how USA businesses may act.  The law itself, and it's implementation, brings chaos to international business, exactly the reverse of what law is supposed to do.

We have a regime of law in international trade, called Law Merchant, and has worked for millenia, but it works without government, therefore, government does not care for it.  The FCPA focusses on making sure no American (or corporation) makes a bribe or in any way seeks to makes things happen by bribery or some other means.  As I heard on panel discussion member say, you can do things to get moved up a list, but you cannot do anything to get ON the list (of people seeking a overseas contract, etc.)

This is of course about big business, and the fed prosecutions are selective following political lines.   I am not going to talk any more about this because it has nothing to do with we at the small business level.  We export for a price, and that is that.  We pay a supplier a price, and import, that is that.  It would be pretty strange to bribe a supplier to make something when importing or buy something when exporting, when in our case our items are unique.  Why would we need any incentive above price?

This is limited to big business.


Sunday, October 31, 2010

Yes!

To the question asked below about talent...


Sunday Entertainment More

Watch Ginger Baker at the 2 minute mark... wow!

See what happens when hats go out of fashion?  Quality goes down...

Do we have this innovation in music today?