Obama Bailouts Continue Thru ExIM to NAV

Navistar is a ten billion dollar a year company in financial trouble, it's stock has dropped by half in the last year.  According to Fidelity Investments, Navistar rates a weighted average rating among analysts of 1.2, that is to say very bearish, as in sell the stock, get rid of it, run away from it as an investment.  This company is such a loser insiders have unloaded 16 million shares in the last six months.

Therefore, the Ex Im Bank is obliging taxpayers to go on the hook for $360 million to bail this company out.  A Canadian bank will make some serious no-risk fees on handling the $360 million dollars.

The stock price has been falling dramatically from $70 to $35 in the last year, so let's say the insiders have sold at an average of $50 (it does not much matter, when you see my point).  So, 16 million shares times $50 or so, is $800 million dollars.  So insiders have taken $800 million out of the company, and the EX IM Bank guarantees the taxpayers are on the hook for $360 million.  How come the insiders are not willing to put the same $800 million cash they just took out of the company into the company they run?  If the very people who run the company think the company is a dog, why does Ex Im Bank think it is ok to burden the taxpayer with it?

Ex Im Bank is claiming this is to help small businesses.  Yes, Boeing is made up of 3000 subcontractors, yes, Navistar depends on small businesses for many of its parts.  So this money, net of political contributions, is to pay off small businesses who see no chance of getting paid by Navistar.  Now, if the failed Navistar was to actually go out of business, many talented people would be released into the economy to be snapped up by companies that are actually well run.  With Navistar gone, an opportunity to open a well run new business to serve Navistar's 10 billion dollar customer base, and pick up those unemployed who would be freed up by Navistar going under.  As it is now, zombie Navistar will manage to keep prices higher because it is taxpayer subsidized.  When Navistar eventually dies, these subcontractors will suffer anyway.  The can is being kicked down the road. And Ex Im Bank is breaking records passing out money like this, trying to buy friends. This is why I predict we will see a wave of Ex Im Bank funded entities to go Solyndra after the elections.

And how does Ex Im Bank square bailing out a domestic truck maker and its domestic suppliers as backing international trade?  Well, see, these small businesses may not be involved in exporting, but they have "exportable" products.  So it is a version of pre-emptive strike, it is pre-emptive finance: you might be able to export, so we will react first.  It is astonishing to watch the Bush criminal ideal of pre-emptive strike, work its way through every thread of the state, under Obama.

This company has competitors in USA, for example Paccar.  Paccar is well run and does not need to be bailed out.  But see, when politicians come to Paccar and say "give us campaign contributions!" Paccar will say "How come?"  When politicians come to Navistar and say give us campaign contributions, Navistar will say "Yes, thank you."  Since politicians gave the insiders at Navistar $360 million to play with, the insiders bundle up payback for the politicians.  The Navistar, Inc Good Government Committee (I am not making that name up) political action committee gave $130,000 last election cycle, and is up to $100,000 so far this time around. So taxpayers are paying for Navistar to claim that good government is when taxpayers pay Navistar to claim that good government is when taxpayers pay Navistar.. o dear...is there ever an end to this?  This $360 million bailout comes just in time for this election cycle.

This is how come your gas and food is expensive and your home is under water.  Money is misallocated and malinvested, and we all have to pay for this from our pockets.  It is the capitalist system, and it is very harmful.  What we need instead is the free market.

If we cannot even get rid of the Ex Im Bank, then we cannot get rid of anything.

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Hong Kong To Cut Trade Taxes

Hong Kong was formed by the same people at the same time with the same philosophy as the United States.  Hong Kong remained true to those ideals, where as USA as degenerated into an empire.

Now, well less than half the people in Hong Kong are subject to any taxes of any sort, because although states need money, governments generally do not.  Of those who are obliged to pay, most pay trifling sums, with almost none obliged to pay the maximum 17% total.  Just as in USA we once had widespread self-government and little state, Hong Kong has little reason to tax.

Hong Kong has always been a destination for freedom loving people in the UK to flee.  Because exceptional people are drawn to freedom, Hong Kong has a higher standard of living and per capita income than its former colonial masters.  Below is a book, Golden Boy, by a UK lad who grew up in Hong Kong, and what it was like.  It was like very much as it is today.

Just as we once did in USA, today when Hong Kong experiences the economic downturn we are all experiencing, the Hong Kong first reaction is to cut taxes.  So comes now the news that Hong Kong is legislating a tax cut of 50% on the import export declarations.  This is the old stamp tax that USA went to war over the UK, I used to get documents from Hong Kong exporters with what looked like postage stamps of the Queen of England on them.

So this is the best part: this tax, left over from colonial times, is 6.5 cents.  So down to 3.25 cents with this tax!  Similar taxes are being cut in half.

The people of Hong Kong are brilliant.  In any community, there are people who suffer from libido dominandi (lust for power) who want to decide other people's lives.  They love to get together, take their money and direct their lives.  OK, so let people run for office, collect taxes and make rules. Without any money to do any real damage, these people are harmless.

So sure, export some goods, toss some money in the can for the "state" to play with, and if things get tough, cut their income in half.

There is a book that outlines how western civilization receded to the monasteries in Ireland during the dark ages before expanding back out over Europe. perhaps that is Hong Kong's role, to be the modern Ireland for free markets in these dark ages of capitalism. We American citizens could learn from Hong Kong.




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David Sorkin on Advertising

Biznik is a biz self-help online group which sends me articles from time to time.  One came in today that is an absolute smash!

Sorkin takes a TV ad anyone over 50 recalls and takes it apart with some fascinating aspects, and then argues how to apply it to your business today.  I am scratching my head right now trying to apply what he is teaching.

His insight, as to spotting the consumer insight, has me thinking about teaching business start up.  A couple a years ago I spent time surveying past students on how come they do NOT start up.  I shared the results with everyone.  In essence, no surprise, the reason is fear uncertainty and doubt.  Hucksters and late night TV people eliminate that, but also scam the vulnerable.  I don't want that business.

My insight is people instinctively know business start-up is about personal transformation, and they dread that.  So, I am not "selling" business start-up how-to, I am selling personal transformation.

Palmolive Dishwashing Soap never mentioned in their ads it cleaned dishes, just gentle on the hands.  Following what Sorkin is saying, I should should be saying "biz start-up; change your life."

O wow.  I gotta go....

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Louis Farrakhan And America

The United State of America is the only country in the world with a constitution that still explicitly provides for slavery, and not just any slavery, the slavery we all learned about in grade school.  This is the real America, the one we see around us, the one Louis Farrakhan understands when he warns blacks that when they sit down to negotiate with whites, they have no idea who they are up against.  Just so.



If you want to understand how the USA works, follow Farrakhan. I understand he is very much widely hated, but please name one thing he has said that can be refuted.


 And if you do not believe slavery is still alive and well in USA, read Oshinsky on worse than slavery.  Farrakhan says blacks do not understand who they are up against.  Do you know who the blacks are up against?



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Bet on Bo Xilai

There is an inscrutable power play going on in China, where an accomplished high official has apparently been relieved of duty and is under investigation for problems relating to charges that his high-profile wife may have murdered a British subject.  How Byzantine!

The fellow in questions is Bo Xilai, son of Bo Yibo.  Read their biographies and you'll see, like father like son.  Father was a hard-line communist, yet contributed to the modernization with Deng Xiaoping.  So it is with the son.

The Chinese leadership says it is not about a power struggle, as western press reports it, and it is likely not.  The Chinese leadership is not inclined to struggle with anyone at any time.  What is happening, no doubt, is the situation is being studied closely.  With Bo Xilai safely tucked away, the authorities can discern who has been up to what.

Apparently Bo Jr did not want the Chongqing posting, but Beijing wanted a clean politician to clean house in that district.   Expect local mafiosi and corrupt cops to try to button him, but also expect Beijing to not allow one of theirs to be overthrown by local thugs.

China is in a "clean campaign" right now, and they could care less what the outside world thinks.  It is all about results.  A fruit seller in Tunisia set himself on fire because he was not allowed to sell fruit by oppressive government.  Criminals in control of government make for oppressive government.  Beijing will not tolerate this.

Bo Xilai spent five years in solitary, as did his siblings, his mom died, and his dad tortured, all by had line communists, but they survived otherwise and came back out on top.  Bo Xilai can take a little time out.

After the hard guys from Beijing sort out Chongqing, expect Bo Xilai to return and resume his upward path.  Bet on Bo Xilai.

Update:  Purged?  Who said purged?  If you read what this person has to say, it is clear he is reading the story exactly backwards from the facts.

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Spending Safety Margin

Aside form being weird, like those leashes some parents use to tether their kids in public places, like dogs, now comes a helmet for toddlers.  Time will tell but I bet these helmets lead to more injuries as harried parents ignore their kids now that they have "safety" helmets.  I talk about spending safety margins here.

Kids are designed to take falls, and the bumps and bruises signal the body systems to to exercise repair functions.  To allow kids no bumps and bruises is to deny their ability to develop their body's automatic repair system.  Just as playing in the dirt helps kids develop immune systems.

The big money is when this company starts paying politicians to require these helmets, and clean up like the car seat industry,  where once people drove more cautiously with baby aboard, they no longer need to because the kid is strapped in for an Apollo 11 flight.

My nieces and nephews are warned to stay away from me at family reunions because they will just end up crying.  They flock to me because I represent adventure which usual means crying eventually, but hey, uncle John is the most fun.  My siblings just say to their kids "I told you...now walk it off!"

Kids need roughhousing, danger, and bumps and bruises.  But there is money and an exercise of power in denying others good things.

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Moral Hazard and Ex Im Bank

For all of the talk of economics as a science, with no moral dimension, there is a term used by all economists: moral hazard.  Moral hazard says if you arrange incentives in a way that is likely to cause people to do the wrong thing, they likely will do the wrong thing.

Here is an example, straight from the Ex Im Bank:

As a small exporter of floral greens in Puyallup, Janis van Well takes comfort knowing that she has insurance from the federal government: It will protect her company's losses for up to $1.6 million if any of her foreign customers won't pay their bills.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Why is she selling to people who cannot pay their bills?  Why should the taxpayers be on the hook for her companies bad credit decisions? Since she does not have to worry anymore about not getting paid, since the deal is the taxpayers are on the hook if her decisions go bad, then it is very likely that such bad decisions will be made.

In van Well's case, the bank provided "accounts receivable insurance," where the company pays a monthly fee to receive protection from bad debts. She said that last year marked the first time that her company, which has about 20 full-time employees, signed up for such an insurance plan.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Note also, as an example of the absolutely necessity for this program, the Ex Im Bank uses someone who has been in the program for one year.  What did they van Wells do the previous decades?  Exercise good judgment?

"Our business has always been done on a handshake," she said. But with the uncertainty in the economy, she said, she and her husband decided it was time to get insurance.

"There's a lot of different companies that do that, but we like this one because it was through the government," van Well said. "I would not like to see it disappear."

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Yes, there are plenty of people who provide trade insurance, but they have to compete with the Ex Im Bank.  Without the Ex Im Bank getting credit would be harder, but not too hard, and certainly not impossible.  The Ex Im Bank is another example of a government program solving a problem that does not exist.

There is a reason why Ex Im Bank had to use a recently recruited example: any other example is either Boeing, which the article admits, or long time political hacks who've been blessed with funding for "services rendered."  In any event, here is another airplane maker, who needs no welfare transfers.  With the government propping up Boeing, many workers are not available to move on to a profitable firm, and help grow our economy.

I'll make a prediction, with all of this new money being spread around, the Ex Im Bank will see a huge increase in failures and costs to taxpayers in the coming years.  It is just a subprime loan program to benefit billionaires.

The program was instrumental in helping out the Soviet Union, which was in the middle of murdering 5 million Ukrainians, by helping make up for the loss of production their deaths occasioned.  One active US Citizen in this was Armand Hammer, named by his communist father after the Arm and Hammer of the Socialist icon.  The Ex Im Bank was the finance arm that made Armand Hammer a billionaire, and the losses were legendary to the USA taxpayer.  The Ex Im Bank only talks about making money in the last year or so, they dare not reveal its entire history.  Hammer in turn backed Al Gore's father for Senate, and in turn Al Gore, the Vice President.  This is no secret, take a look at the Gore family estate in Tennessee. Talk about a government program that picks winners and losers!

Washington Senator Maria Cantwell, D- RealNetworks, claims one in three jobs in Washington depends on world trade, that is silly from several point of view.  Senator Patty Murray, D-Boeing, says 83,000 jobs will be lost.

1. The figure is arrived at by dividing exports leaving washington state by Washington State total economy.  Sigh.  Since we have ports, much from Michigan, Colorado, Idaho, etc, is loaded and shipped out of Washington.  That gets counted.  It was silly in the 70's when they claimed 1 in 4 Washington state jobs depended on exports, and it is sillier now.

2. Whatever the total is, not all of it is based on Ex Im Bank.  Some people actually run rational profitable export businesses.

3. Most of the money goes to Boeing, which would find alternative sources of finance if not taxpayer-backed finance.  Ex Im bank does not make plane sales possible, it makes it merely easier.

Cantwell said the bank has helped pay for the construction of one of every three Boeing planes built in the state in the last three years, or about 450 commercial aircraft in all.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Well, who is financing the other two of the three exported jets?  Private companies who make good money doing so.  Why are the taxpayers obligated to steal business from these private companies?

But let's look at an important point:

Eric Schinfeld, president of the Washington Council on International Trade, an affiliate of the Seattle Metropolitan Chamber of Commerce, said the bank does not aid Boeing directly because the money goes to its customers.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Yes, precisely.  As we destabilize countries around the world, our state department can promise the violent revolutionaries that if they overthrown their government, we can set them up with airlines, etc.  all taxpayer backed.  Ex Im bank is heavy in airplanes, oil, gold, agriculture and directly links the USA taxpayer with USA war crimes round the world.  You make it happen.

Of course there is little one can do about it.  The push to rid ourselves of this noxious weed is mere grandstanding.  Those congressfolk who are pushing to rid us of it are merely setting up a horse trading session:  we'll vote for your odious Ex Im bank if you vote for our odious program.  It's how things work:

As a presidential candidate four years ago, Obama dismissed the bank as "little more than a fund for corporate welfare." But as president he has been a reliable supporter and now says it has been a key player in helping promote U.S. exports. In 2010, Obama set a goal of doubling U.S. exports by 2015.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Naturally.  A deal will be cut, the program will live on forever, or until the USA crumbles and becomes like the middle east is today: a place that was once renown for peace and prosperity, but is now mired in poverty and violence.

But the article did reveal an opportunity for an enterprising young person.    Recall this?

"It gives us peace of mind," said van Well, 61, who owns Golden Eagle Evergreens with her 64-year-old husband. "We're getting a little older and, if we do suffer a loss, it hits a lot harder. If you're in your 30s or 40s, it's easier to recover."

The $4 million company, which sends its greens for bouquets to businesses in Germany, Japan, Canada, New Zealand and the Netherlands, is one of 74 companies in Washington state that found help in 2011 from the Export-Import Bank of the United States.

Read more here: http://www.bellinghamherald.com/2012/04/15/2480027/elimination-of-export-import-bank.html#storylink=cpy

Well, they have admitted they are not as competitive as they once were.  They say they are tiring.  In Washington, or in USA trying to pass on a business or sell it results in overwhelming taxes.  It is a safe bet this business will not survive, one way or another.  One could take the article and share it with buyers in the named countries as evidence their supply may falter, their supplier needs a government bailout, and the buyers overseas should recruit the younger more solvent newbie than the retiring people who claim to be too old to be competitive.  Now, it is unlikely that the buyers around the world would give the newbie all of the business, but they now doubt would give some.  Say it is 10%, then your first year would be $400,000 in sales.  Or if one of their 40 employees hopes to have long term employment, maybe the way is self-employment.

We likely cannot get rid of the Ex Im Bank, but we can take out those who fall into its trap, and thus keeping the markets in that measure more free.   There is a moral dimension in economics, and we cannot let the state interfere in the markets and pick winners and losers.

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Video Of North Korea Rocket Tensions

North Korea must always be viewed in relation to China as its puppetmaster.

Has it occurred to no one that with the North Korean rocket launch, which would be tracked closely by western intelligence, that the Chinese would be learning much watching the Americans watch the North Koreans?

In any event, I've been sent some super secret film of tensions on the DMZ:

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