Had a delightful discussion with a fellow yesterday whose 15-some-year successful business folded last Fall, and all of his assets with it. It failed the same way most people are failing: he borrowed to finance expansion, did well during the boom, but the bust cut income lower than what was needed to finance the debt.
This is precisely what "loose money" policies engender: malinvestment and overinvestment. By setting up a false economy, people invest based on the signals the contrived market sends out. The signals are false because the underlying productivity is not there. Such a false economy cannot go on forever, and at some point it stops, or gets too out of whack to continue. As he described the last few months, debt mounting, income decreasing, I said "that's no fun..." to which he readily agreed. Successful people do not start businesses for fun, it is for the joy of solving a problem. But when money is short, it's no fun. Time to quit, abandon the position, regroup, restart. His business solved a problem, but it was overwhelmed by debt in a busting economy.
So, he is restarting, working out of his apartment, with a kid to support. His kid will watch dad, and pick up cultural capital: never build a business on debt.
Of course, this seems silly since most of those who are super-wealthy did it with debt. But remember, in a free market it is impossible to get extraordinarily wealthy, in terms of money. In a free market, we all get wealthy, in terms of access to goods and services, in terms of opportunity.
Right now the USA government at all levels is destroying small business and opportunities in order to transfer wealth from the working to the wall street/banker cartel. There is nothing you can do about it, part of the reason the powers that be ran Obama was to show you that you have no hope, no change.
The most radical thing you can do to fight back, is in spite of it all, start a business. The powers that be fear nothing more. Check out what kids in an apartment are doing with used equipment to make hundreds of thousands of dollars... they do it because they love it. Watch till the end, when the song is done, and watch another business get launched, by accident. Love. That is where you start.
Friday, December 31, 2010
Busted and Coming Back
Thursday, December 30, 2010
Kevin Checks In
On Dec 30, 2010, at 8:52 AM, kevin wrote:
Hey kevin,
Love Your Union!
House unions are detested in the labor movement, and govt unions are house unions. But the worm is turning... now that they are no longer useful, or too expensive, or both, the means to promote the govt union workers is being used to demote them. After years of being told they are selfless public servants, the stories have not turned to how venal and undeserving they are. New York sanitation workers are the latest to get bad press. We see how the powers that be will handle the expense of public unions and pensions. First step, demonize them.
Wednesday, December 29, 2010
One Thing I've Never Heard Back...
I am happy to note no one has ever contacted me to say "I followed your advice and lost a lot of money..." In some 25 years of teaching as an adjunct, I've often been told horror stories... I received one today...
Dear Mr. John Spiers:Merry Christmas and Happy New Year.When will the next session start for importing and exporting?I went through the my uncles records and realized he just jumped into the exporting business in Africa. He had no knowledge of medical equipment and letters of credit. He lost about quarter of a million dollars. He forgot that traveling to Africa was not like going from New Jersey to New York.I decided to learn from his errors... and I want to give myself a JUMP START before the next session.Thank You AgainAG
AG,
Sixth Avenue El
Prior to WWII, USA supplied Japan with everything it needed to attack us, but denied Japan the oil and rubber from Malaysia to be a modern country, which assured Japan would attack us. War followed.
Today a bailed out GE has cut a deal to Joint -Venture USA avionics technology with China. Your tax dollars at work. Your government cannot care about you, because it is too big and too conflicted to care.
The only defense USA has is a free market. A free market in planes in USA would have brought the price down lower than with which China could compete. A free market would have most Americans travelling by mag lev, and we would be world leader in that.
ee cummings wrote a poem about war, in which he refers, as you'll observe, how USA sold scrap metal (the 6th ave el) to the Japanese which in turn they used to make bullets.
plato told him:he couldn't believe it(jesus told him;he wouldn't believe it)lao tsze certainly told him,and general (yes mam) sherman; and even (believe it or not)you told him:i told him;we told him (he didn't believe it,no sir)it took a nipponized bit of the old sixth avenue el;in the top of his head:to tell him
ee cummings
Tuesday, December 28, 2010
22nd day of Tevet, 5771
I quote from Rabbi Daniel Lapin's email:
That Hebrew word also has two other meanings; ‘repeat’ and ‘change.’
struck him with it into his fifth rib and he spilled his innards onto the ground; he did notrepeat (the blow) and he (Amasa) died.(II Samuel 20:10)
The potential trap for us is allowing each day or year to be nothing but a repetition of the one before. Animals hibernate to cope with the wintery problems of the present and in the spring they awake to continue exactly what they were doing in the fall. They endlessly repeat past years’ activities.
We have a choice. We can be animal-like and do the same. We can view sleep as nothing more than a human version of hibernation with the focus on the biological component. We can see a new year as simply a calendar fact. New Year’s Eve partying can serve as an attempt to camouflage the dreary passage of time and the gloomy likelihood that the coming year will repeat the mistakes of the one fading away.
Alternatively, we can see how different we are from animals and that every single day we are blessed with the ability to start anew and bring about refreshing changes that improve our lives. We can awake each morning with a smile on our faces, a prayer on our lips, and hope and happiness in our hearts as we embrace the day. Each sleep can herald new resolutions of change, growth, and improvement just as each new yearly cycle should so the same.
Each evening, we can set an agenda to make the next day somewhat better than the one before. Instead of treating the night of December 31st as another meaningless party, we can contemplate ways to change in the coming year. Quiet thought will quickly produce a list of important changes that will make our 2011 better than 2010
We can pick from two contrasting equations.
or Sleep = year = change.
You Do Not Need Financing
If you are contemplating getting a business started, you must get rid of one bad idea: financing. You do not need money to start a business, you need customers. Customers buy things, and give you money. There is all of the financing you need. But but but... I need money for... NO YOU DON"T. You can get along with out it... if you have some savings, and things might happen faster investing a wee bit of savings, then fine. Your own money, ok. But you need no financing.
Bu but but... my project is so big I need financing. NO YOU DON'T! Just make the project smaller. Cut out the part you can handle without financing, and do just that. Start from there. You do not need finance.
Why Price Gouging Is Critical In Emergencies
"We were thinking of the option of driving down, but the car rental company gave us a quote of $2,000," Hussain said, laughing. She said many rental car companies are out of vehicles.
One commenter was outraged. How come? These will all be one way rentals, meaning the car company will have to rotate them back to their locations as well. At $2000, the car companies will roust good drivers out of bed, have them drive cars a couple of hundred miles into the snowstorm areas, pay the drivers double time, and cars will be available for those who badly need it, and can pay.
Now "gouging" lasts at most a few hours, because at that price everyone gets the same idea, and car comes flowing in. As the cars show up, the rates drop. Someone with a $2000 car for sale may head out to the airport and unload it quick. Those "exploiting" are subject to regression to the mean, in other words they will overshoot demand and the rent-a-car companies will be offering cars at lower than normal rates, helping the poor and the less desperate.
