Dipping slightly....More data than you can stand is here at USCensus....
Saturday, December 10, 2011
Friday, December 9, 2011
Islamic Finance And Banking History
I came across a site with a course on Islamic Finance hosted by a fund manager, Tarek El Diwany, who advocates orthodox Shari'ah compliant finance. Here he notes a subtle point I had not considered:
But, if it were indeed the case that the banker had the power to manufacture money, why did he not simply print receipts and spend them on his own consumption? Simply because, in spending his receipts, the banker would no longer own them. It would then be certain that in due course all of the receipts would return to his institution for redemption in gold - gold which never existed in the first instance. By lending the receipts instead, the banker could charge interest on the amount lent. Upon repayment, the receipts could be destroyed as easily as they had been manufactured, but the interest charge would remain as revenue.
As I understand it this fellow laments that most Islam is making similar mistakes they most Christianity made 300 years ago when it considered the issue of "usury" as an absolute prohibition. For the record, the Catholic church still maintains and absolute prohibition on usury, what we might call interest, in any amount for any time period.
Thursday, December 8, 2011
Virginia Tech Gun Attack Again
People who randomly kill others are cowards. They pick places where they are not likely to meet resistance to do their killing. Virginia Tech has a gun ban on Campus. The College I went to in the 1970s has a rifle and pistol club. It was unremarkable to see a rifle case carried by a student on campus, any more than seeing someone with a tennis racket. It just means there is a meet today. Pistoleros had there guns in a bag.
The first such campus shoot-em up occurred at UT Texas, when an ex-marine began sniping and killing students from a Tower. People driving cars and gun clubbers returned fire, laying down suppression on the Marine sharpshooter.
When the first cop arrived at the scene he asked a man with a rifle who were all these people with guns firing back?
"Texans." Came the reply. Eventually a citizen and a officer worked their way up the tower and executed the Marine. No swat. No "perimeter." Just old fashioned "git 'er done..."
There has not been a repeat performance at UT Austin, possibly because UT Austin still has an active Rifle and Pistol Club. Fool around with a gun on UT Austin Campus, and Suzy Sophomore might surprise you by busting cap in your head. She's #2 in the state rankings.
Today two more were killed by a gunman on Virginia Tech campus. Firearms are forbidden on the Virginia Tech campus. One killed was a cop. Of course, kill the cop, and then for sure you are free to kill at leisure. Whose left to defend the students? When seconds count, the police are only minutes away.
If you believe in the right to self-defense, then it is hypocritical to leave it to others. One should be reasonably sure they can kill an attacker. Get the right equalizer, and make training part of your life. It would be a good business too. The state is burning the cops, like teachers. You'll surely need to defend yourself.
Interest and Usury
As I proceed through the book on Islamic financing, in which usury (commonly mistaken as interest) is forbidden, I wonder what a market in which no usury occurs would look like.
I wonder if it can be quantified? Can we quantify how much business is done under usury? And if so, can we figure out the success/failure rate of such deals? And then can we qualify what business activity is generally supported by usury? I suppose, and this would be a moral judgment, that if usury was used to keep orphanages well provided that is one thing, but if usury kept crack dealers well funded that would be another.
If we are careful to notice the market (trade in goods and services) is a subset of the economy (the sum total of all human action), we already know that relatively little of the economy is supported by interest bearing agreements. If you add up a ride to work, a neighbor giving you a pie, volunteer firemen and so on, surely the majority of the economy is not related to interest bearing agreements.
Next, the entire stock market, equities, has no interest aspect. It is shared risk. Bonds, that is debt, surely carry usury components, and in Islamic finance there are bonds, but they are not-interest bearing, the bondholder shares the profit and loss without taking equity or putting in money. (Say a company wants to buy a new machine, and the vendor will not sell on credit. A third party may guarantee the payment, with a view to enjoying some of the profit from the expanded business provided for by the new machine. In this way it is like a bond, but no interest and a different kind of risk.)
Then there is of course usury (interest) in banking on everything from credit cards to auto loans to home loans. Here is where the mischief lies. Mismatched maturities (borrow low usury rates short term and lend high usury rates long term) and fractional reserve (multiplier effect on loans made and deposits of proceeds booked). This is where both the magic of compound interest aggregates power in the hands of the few and in the same measure destroys the weal of the masses.
Even if usury is immoral, it is not illegal. Nonetheless, in spite of the fact that untold wealth can be amassed through usury, people still resort to simple theft.
MFGlobal had little to do with usury, its stock in trade was hedging risk of farmers and commodities. In this instance, the people running the company simply stole the investors money and directed it into their own accounts, for their own benefit.
Now listen to the former head of Goldman Sachs, former US senator, former New Jersey governor, the person head of MFGlobal and the next US Sec of Treasury, Jon Corzine had to say about himself and the stealing over a billion dollars:
“I sincerely apologize, both personally and on behalf of the company, to our customers, our employees and our investors, who are bearing the brunt of the impact of the firm’s bankruptcy,” Corzine says.
Bankruptcy is the problem? No, taking peoples' money and using it as your own is the problem. Bankruptcy is the result.
When people cannot see what they are doing is wrong even when it is clearly wrong, then how to expect them to perceive something more subtle, like usury, as wrong?
Wednesday, December 7, 2011
Field Trip: Occupy Seattle Teach-In
Last night I attended an Occupy Seattle Teach-In on the University Of Washington Campus, where the economic crisis and the dissolution of our Republic was addressed. Including me, there was never more than eight people in the room, including also the 2 teachers.
The Bolshevik Revolution started with a marginal and unlikely group, and was well financed by powerful interests as well.
The topic was essentially "how to use this moment to advance socialism" and the false dilemma of socialism vs capitalism was presented.
I inquired as to the internal contradiction of having the regulators, who are always captured by the regulated, curb the capitalists, when they have not done so before.
Well, we have to believe there is a structure, a polity in which people behave themselves, where the profit motive is not foremost.
Ah, you mean like Hong Kong. No, Hong Kong has a CEO in charge, it is totalitarian. Sigh.
The next step is to shut down the ports. http://westcoastportshutdown.org/ This will show the capitalists that their system can be shut down. Good luck.
It is clear capitalism is over, it was slightly better than communism, if you measure it by how long it lasted, but now USA political system is up for grabs. Those who failed are stealing whatever is not nailed down on their way out. The activists are working under a false dilemma: capitalism vs socialism.
The desire of activists is to be in charge. Free markets does not have anyone in charge (except, vaguely, the customer.). Free markets may solve the problems we face, but free markets do not have anyone in charge. The search is on for a new system that has people in charge, and the activists are hashing out what this might be, and how they might be in charge.
At best, nothing will change. At worst, it will get chaotic. Get ready to escape to anarchy. Get ready to live in a Free Market.
I was a Ron Paul delegat to the Washington State convention. It became real clear real fast that the Tea Party people (to Ron Pauls' credit he never embraced the Tea Party, and good thing he didn't.)
Tuesday, December 6, 2011
Social Media Thoughts
As google gets into the social media game with its service google+, I again review the possibilities. Might it serve one's business? Keep in mind I still do not believe in web-based marketing... it is great for retaining customers, but lousy for gaining customers...
What if one solicited customers to report their experiences with your product or service on your "facebook page." Public declarations tend to help people commit; public declarations drive competition, as people see others progressing they get encouraged (or envy?) spurs them to act; to some degree there is reality theatre in play as well. So my question is, would it result in more customers and better results? Who knows...
Now, how would this apply to you? let me take a field I have never worked in, as a thought experiment... and then you can think it through for your project...
Looking at indochino.com and http://www.blanklabel.com/ and others, they are missing the opportunity. Both are managing the tailors, which is unnecessary and terribly expensive.
Think of crowdsourcing http://99designs.com/ brought to tailoring...
A website that matches people needing clothes made and the tailors worldwide, taking payment in escrow, to assure customer satisfaction.
Retail is theatre, and this website is unique in that every customer's progress is social-media'ed, that is their selection of tailor, selection of garments, and then taking measurements, cutting, sewing, first fitting, and adjusting is all photo-journalized and blogged with the customers feedback as the final act. Reality TV, everyone is a star, commerce... so many threads...
Before Congress destroyed garment imports (recently restored) there was a tailor downtown who took measurements, telexed them to hong kong for the suit to be made, and then shipped it to usa, where the tailor would do final fitting. this fellow had a crew in chinatown that did the finish work.
Indochina offers up to $75 credit to get it right with a local tailor. I think make that mandatory, that is, a local tailors review of the work.
That is just a rough sketch, as an idea, that might help in relating to your own thing...
Monday, December 5, 2011
Retailers, Reps & Product Lines
CJ checks in on visiting retailers...
I visited my favorite store in DC to talk to two different toy inventors/company owners who came-in to the store to demo their products.
***Ack... since employers are finding it more difficult to have employees, they foist more of their work on their suppliers... alarming trend...***
Both inventors and the store owner said that the hardest part of the business is getting the sales reps to properly represent a small start-up or even an ongoing small toy company with a proven track record.
***Yes, 80/20 ... the stores need the new to interest customers (20) but the customers largely buy the standard (80).. But the first question the buyers ask of the sales reps is “what is new?” since that is what brings in the customers, even if the customers do not buy “what is new” at a very high rate.., importers are rarely pleased with the efforts of the reps, but rarely can out-do the reps...***
In fact, they said that by comparison getting a product to show was easy ("….anybody can go to China and have something made…")
***Very true, even if competing on design...but most people buy from china “off-the-shelf”... did they draw a distinction that design has advantage? Where the importers' items of their own design, or “off the shelf”? their comments are true either way, but the situation impossible if the importers are not competing on design.***
They argued that since the sales reps have limited time with the owners, they usually maximize their expected sales by showing the complete lines, including numerous new products, from large established companies (e.g. LEGO).
*** Again, very true... LEGO of which stores MUST buy, but the first question is “what is new?” ...so they MUST buy “new” too... just in no where near the qty of the LEGO basics...***
They also felt that the large companies have so many new toys coming out that there was little niche left for small businesses in the sales reps' priorities.
***This is nothing new either. When “lego” comes out with somethign new, it is actually somethign they “stole” from a small business... we see this more starkly in garment trade, but it happens there too... in every field... these complaints are not new, they’ve always been the “skin-of-the-teeth” nature of the business... (if insurmountable, how come they continue?)
Thats why we shop for our “ideas” as customers first, so we can see if retailers think it is a “good idea and does not exist”***
I asked if this was an artifact of the toy industry/toy stores and if I'd be better off marketing my products as gifts. They didn't think so.
***I agree...***
They pointed out the considerable overlap between the toy and gift industries. Evidently their sales reps show their products "everywhere from museum shops to gas stations" so they believe the same holds in the gift stores.
***I agree, but only to note that the reps sell everywhere where they do not cross the line in the law of diminishing returns.***
I'd like to get your reaction to their assertions that it's difficult to get sales reps to represent your products well. I can guess some things you might say but if you don't mind commenting, I'd like to hear what you think.
*** It is absolutely true, and I think (I hope) I say so in the book... on the one hand the store owner wants to see new, on the other, the store owner does not want much new, because it is untested... so that ends up being a small part of the rep’s overall sale, but a critical part...the reps motivation is not big, more strategic... the rep is going to outsell you in any case, but specifically you do not have time to sell, and markups reflect this with the room for a sales’ reps commission in the markups... Further, getting back to your conversants critique, not only is it hard to push new items as a small business, it is counterproductive for you to do so. Design is so critical that it is the only work for which the you actually gain compensation. Everything else can be farmed out. And even here the small biz importer owner is more of an impresario, since he brings people together, even designers to execute the solution. ***
...on a promising note, the store owner volunteered to e-mail her favorite sales rep to tell her I'd be getting in-touch with her.
***And that is exactly why we go to the retailers ourselves, is to get the references of the reps they like best. Expect to be discouraged, to have expectations talked down, it’s part of the reps services (almost all people think they will get rich with one item, not realizing the work is a lifelong integrated process)..
She said she's a "real New Yorker" and will tell me very clearly what she thinks. Since I'm from a long line of New Yorkers, she sounds like a perfect match.
***Indeed...I’ll get popcorn and watch the show!***
Sunday, December 4, 2011
History of Communism
Not unlike so many other -isms... think of the American Indians and USA capitalism as you watch this very disturbing series...
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