Miraculous!
Feel free to forward this by email to three of your friends.
Saturday, July 6, 2013
Excess Capacity and International Trade
On Jul 2, 2013, at 11:25 AM, Sharon wrote:
On page 1 in your book, you refer to excess management capacity as
something importers rely upon to identify suppliers overseas. I'm
not understanding excess management capacity or excess credit
capacity. Is there another way to explain this?
Hey Sharon
Say you are an orange juice seller. And you buy oranges from a
grove. The grove has a bumper crop, and so they have an excess supply
of oranges. What happens? The price goes down so you get more
oranges at a lower price. Other people who were buying pineapples to
make fruit smoothies, start pushing orange smoothies, so more people
show up to buy at the lower price.
Instead of oranges, what about instead of ten people who can manage
footwear production, you have 100. What happens to the cost of hiring
managers?
What if banks had a million dollars to lend today, and then tomorrow a
billion. What would happen to the price of borrowing money?
When there is an excess of anything, the price drops...even management and credit. That is
what we exploit, management, not labor.
what we exploit, management, not labor.
Feel free to forward this by email to three of your friends.
Hong Kong Protests of Beijing
Anthony checks in with a story on Hong Kong protests...
The reason we know the above two were breaking the law, is because this fellow, Snowden, leaked the info. Now Snowden is running for his life. In USA tell lies, keep your job. Reveal truth, lose your life.
It gets worse. People who will cheat experience an atrophy of smarts. And they cannot see the obvious problems with their ideas. For example, people around the world believe they are immune from USA hegemony because their countries are independent. But by threatening countries around the world vis a vis Snowden, citizens see their politicians are just Obama lapdogs.
So the first article about Hong Kong is actually very encouraging... the people of Hong Kong take to the streets at the drop of a hat, and top officials get convicted. Democracy, universal suffrage may change in Hong Kong. Look at USA, democracy, universal suffrage, no protests, no convictions no safety from the government.
Maybe leave well enough alone in Hong Kong. And create our own Hong Kong in USA.
Feel free to forward this by email to three of your friends.
"The central government has to come up with a timetable and proposal to say how Hong Kong people can truly have one person, one vote instead of it being decided by 1,200 members of the ruling class," said Ed Chin, one of Occupy Central's organisers.Now, when does a top USA official ever get convicted of anything? This top spy continues to spy on Americans. He continues to spy on Americans in safety.
...
Leung has been hit by scandals since taking power a year ago, ranging from illegal building work at his mansion to last week's fraud conviction for his first development secretary, Mak Chai-kwong.
The reason we know the above two were breaking the law, is because this fellow, Snowden, leaked the info. Now Snowden is running for his life. In USA tell lies, keep your job. Reveal truth, lose your life.
It gets worse. People who will cheat experience an atrophy of smarts. And they cannot see the obvious problems with their ideas. For example, people around the world believe they are immune from USA hegemony because their countries are independent. But by threatening countries around the world vis a vis Snowden, citizens see their politicians are just Obama lapdogs.
The offers came one day after leftist South American leaders gathered to denounce the rerouting of Bolivian President Evo Morales' plane over Europe amid reports that the fugitive American was aboard.
Snowden, who is being sought by the United States, has asked for asylum in more than 20 countries, including Nicaragua and Venezuela. Many another nations have turned him down.
So the first article about Hong Kong is actually very encouraging... the people of Hong Kong take to the streets at the drop of a hat, and top officials get convicted. Democracy, universal suffrage may change in Hong Kong. Look at USA, democracy, universal suffrage, no protests, no convictions no safety from the government.
Maybe leave well enough alone in Hong Kong. And create our own Hong Kong in USA.
Feel free to forward this by email to three of your friends.
Friday, July 5, 2013
China Retaliation on French Wine - All Hail Chinese Dumping!
In one of those crazy things where bureaucrats ruin business, the welfare queens in Europe, as in USA, get heavy subsidies for solar panels. The subsidies are not enough to beat Chinese superiority, so the bureaucrats are making trouble for Chinese exports of solar panels to Europe.
Now, this is how the game is played: one one country begins to make noise about some complaint, then the other country looks at the value in question, and retaliates in kind. In this instance the French market for wine in China is the same size and the Chinese solar panel market in France. So, voila! the Chinese pick on French wines as France picks on Chinese solar panels.
Now, the hysteria in France over solar panels is because the people at the top get payoffs and sex and whatever else to prefer one business over another, to advocate for one system over another. In any event, the powers that be make bad decisions.
So what if China is dumping solar panel displays in Europe (or USA, for that is in debate too). If they want to make panels cheaper than we can, if they want to lose money on the things, then USA and French makers ought to cease production and become importers and make profits until the Chinese cannot stand the losses anymore. Does anyone think through these things? I guess not when you can always depend on a bail-out.
The real money in solar panels is the installation. And installation is local, tax-paying small business. And when installed, less paid for energy is money available to spend on other goods and services. Starting a trade war over solar panels is nuts, but the bureaucrats who start these suffer no consequences for their acts. We should all welcome countries "dumping" product in our country, like Christmas presents.
Feel free to forward this by email to three of your friends.
Now, this is how the game is played: one one country begins to make noise about some complaint, then the other country looks at the value in question, and retaliates in kind. In this instance the French market for wine in China is the same size and the Chinese solar panel market in France. So, voila! the Chinese pick on French wines as France picks on Chinese solar panels.
Now, the hysteria in France over solar panels is because the people at the top get payoffs and sex and whatever else to prefer one business over another, to advocate for one system over another. In any event, the powers that be make bad decisions.
So what if China is dumping solar panel displays in Europe (or USA, for that is in debate too). If they want to make panels cheaper than we can, if they want to lose money on the things, then USA and French makers ought to cease production and become importers and make profits until the Chinese cannot stand the losses anymore. Does anyone think through these things? I guess not when you can always depend on a bail-out.
The real money in solar panels is the installation. And installation is local, tax-paying small business. And when installed, less paid for energy is money available to spend on other goods and services. Starting a trade war over solar panels is nuts, but the bureaucrats who start these suffer no consequences for their acts. We should all welcome countries "dumping" product in our country, like Christmas presents.
Feel free to forward this by email to three of your friends.
Firefighting - Still One of the Safest Jobs
Tragedy invites reflection, and the death of 19 firefighters is an awful thing. Firefighting is still one of the safest professions one can pursue, unlike farming or fishing or construction, where people put their lives on the line so we can eat and live.
I've made several posts on this blog about volunteer firefighting, and I came across some statistics that show volunteers are safer at firefighting than paid firefighters. I can only offer anecdotal evidence, based on conversations with volunteer firefighters, but the facts are 70% of the firefighters in USA are volunteer, and they experience less than 50% of the deaths. Less than 30% of the firefighters are paid and they experience nearly 50% as well. People might argue that city firefighting in inherently more dangerous than country firefighting, but that ignores the fact there are city volunteer firefighting crews, and note that 19 who just died were fighting fires in the country. That argument won't wash.
People will say "if you disagree with paid municipal fire fighters, you want houses to burn down." Perhaps if we step back from social conditioning, and look at the facts, we can have safer communities, fewer fires and deaths, at a lower cost. That is what I would like to see. It appears that paid firefighting may not be a good idea (and it has been around only about 100 years, so time to review it.) Study how come volunteer firefighting is safer, just as effective if not more so, and at a lower cost. Then debate it. Let's just not accept the death of 19 firefighters and continue on as before.
Also, the largest forest fire in the history of the Colorado was started by a USForest Service Fire Fighter and the worst serial arsonist in the history of the USA was a city fire marshall. Insurance investigators were on to him almost instantly, but since we rely on the State to investigate its own, the arson and death went on a decade. Such should be added to the downside of paid firefighters accounts.
Feel free to forward this by email to three of your friends.
I've made several posts on this blog about volunteer firefighting, and I came across some statistics that show volunteers are safer at firefighting than paid firefighters. I can only offer anecdotal evidence, based on conversations with volunteer firefighters, but the facts are 70% of the firefighters in USA are volunteer, and they experience less than 50% of the deaths. Less than 30% of the firefighters are paid and they experience nearly 50% as well. People might argue that city firefighting in inherently more dangerous than country firefighting, but that ignores the fact there are city volunteer firefighting crews, and note that 19 who just died were fighting fires in the country. That argument won't wash.
People will say "if you disagree with paid municipal fire fighters, you want houses to burn down." Perhaps if we step back from social conditioning, and look at the facts, we can have safer communities, fewer fires and deaths, at a lower cost. That is what I would like to see. It appears that paid firefighting may not be a good idea (and it has been around only about 100 years, so time to review it.) Study how come volunteer firefighting is safer, just as effective if not more so, and at a lower cost. Then debate it. Let's just not accept the death of 19 firefighters and continue on as before.
Also, the largest forest fire in the history of the Colorado was started by a USForest Service Fire Fighter and the worst serial arsonist in the history of the USA was a city fire marshall. Insurance investigators were on to him almost instantly, but since we rely on the State to investigate its own, the arson and death went on a decade. Such should be added to the downside of paid firefighters accounts.
Feel free to forward this by email to three of your friends.
Thursday, July 4, 2013
Distressed Merchandise
A student writes to me regarding a company, we'll call Xcorp, that offers to find buyers for distressed merchandise you might find. It is a club. You pay to join. There is no selling on your part, you just call around, even from a list they give, and find distressed merchandise.
The person inquiring said she found some items, but the XCorp keeps telling her they have not found a buyer. Why would they? The game is the club fee, not the service. After they got your money, they can safely ignore you. It is a great scam.
First off, there is no such thing as distressed merchandise, only distressed importers. Second, there is already a very efficient system for getting distressed merchandise sold.
The person inquiring said she found some items, but the XCorp keeps telling her they have not found a buyer. Why would they? The game is the club fee, not the service. After they got your money, they can safely ignore you. It is a great scam.
First off, there is no such thing as distressed merchandise, only distressed importers. Second, there is already a very efficient system for getting distressed merchandise sold.
I have in the last 40 years had to liquidate mistakes from time to time. It happens. And I know what to do. I go straight to BigLots. (40 years ago it was AAA liquidating, then it was Macfrugals 20 years ago, now it is BigLots, bless their hearts.) They will buy every piece of my mistakes, whether I have 100 pieces or one million pieces. At what price? Well, say I paid $10 each for my item. And I have 5000 pieces. So they cost me $50,000.
BIgLots will look at those 5000 pieces and say at what price can we sell all of them in 30 days?
hmmmmm... say 50 cents each, the can move the 5000 pieces out their door in 30 days at a retail price of $2500 for all 5000 pieces. $2500 is what they will gross on selling my dead stuff.
Then BigLots will offer me 10 cents each for those, because they need to make 5 times on everything they buy in 30 days.
So they will pay me $500 for what I paid $50,000 for, and they will get $2500 for it. If BigLots could get more, you know they would, because they want as much as possible. This is one company I never hear anyone complain about. Straight as an arrow.
BigLots, as you might imagine, always pays their bills, first rate company to work with.
Can I get a better price elsewhere? Never.
You mean I am taking a $49,500 loss? Yes.
Is there an alternative? No.
Why don't I offer it on sale to my regular customers? I said 'No!" My customers want to buy new, not dead on sale.
Can't I sell these at flea markets or craigslist or ebay and get more? No. first you are not in that business of selling on eBay. Second the time and effort to sell the $50,000 will be more than the "more money" you might ever get. You job is to rip the band-aid off fast.
Can't I sell these at flea markets or craigslist or ebay and get more? No. first you are not in that business of selling on eBay. Second the time and effort to sell the $50,000 will be more than the "more money" you might ever get. You job is to rip the band-aid off fast.
I bless my lucky stars there is a BigLots to buy my mistakes. When I have a dead item, they move it at a very fair price. They take it all, I no longer pay rent and insurance on a dead merchandise. The $49,500 comes straight off the bottom line, so my taxes are lower, but I learn from my mistakes or fire who needs to be fired.
Feel free to forward this by email to three of your friends.
Join Amazon Prime
I constantly test new ideas and performance of marketing campaigns. Amazon.com says it is paying $2 to each blogger for each person who signs up for Amazon Prime. For $79 a year you'd get free 2 day shipping and access to 40,000 movies, and some other bennies, or whatever. I am not interested myself, but I am interested to track the reaction from what visitors this website has... I'll report the metrics of the response to this pitch, at my level anyway...
Join Amazon Prime - Watch Over 40,000 Movies
Feel free to forward this by email to three of your friends.
Join Amazon Prime - Watch Over 40,000 Movies
Feel free to forward this by email to three of your friends.
Morsi Is Under Arrest
Now this is interesting....
Who else are Obama's bitches...? Since Morsi was jilted by Obama shortly after this, his bitches around the world must now be shaking in their boots.
Definitely not this woman:
Notice how Edna, the current president of Ireland, never answers her questions, but does criticise her for what she has not said...
Feel free to forward this by email to three of your friends.
Who else are Obama's bitches...? Since Morsi was jilted by Obama shortly after this, his bitches around the world must now be shaking in their boots.
Definitely not this woman:
Notice how Edna, the current president of Ireland, never answers her questions, but does criticise her for what she has not said...
Feel free to forward this by email to three of your friends.
Wednesday, July 3, 2013
Bianco On Labor Unions In China
Yesterday I reviewed Bianco's book on the Chinese revolution, a "must read" and I wanted to point out another side issue in his book. Bianco's notes the standard marxist view of the dictatorship of the proletariat, that the city worker is the future. Bianco draws come comparisons and contrasts between Mao and Trotsky. Someday someone should write a comparison of Mao vs Trotsky. It would be a useful study of social status comparable but culturally diverse minds.
Since Mao was obliged to mime good communist ideology, Page 78 Mao was formulating policies for a proletariat that did not exist... like is USA where we write minimum age laws for people who will never work again. At the same time, Mao was quietly breaking the communist dogmatic rules by forming policies with the power that certainly did exist, the peasant (small farmers.) While Mao was working with the Chinese people, Chiang kai shek was working with the Americans.
Chiang was a fascist who pursued policies that were anti free-market, like minimum wage laws and unemployment insurance. The unions in China were sham unions, as they are now in USA today. So both sides were focused on labor, all outsiders considered labor the key, and only Mao (secretly) was working on what mattered. All the best minds and most powerful elements were barking up the wrong tree.
What drove the Chinese revolution was rage at foreign domination of China. This was not only bad for China, it was bad for mankind which was denied the good of Chinese creativity for the centuries of foreign hegemony. One China, strong enough to "stand up" was the goal of all parties. The (more or less) Communists won the right to dictate terms to the world and to the Chinese.
We might step back a second, now that the Chinese have found their independence, and look at "one China, two systems." Is that not a concept for foreign consumption? Does it not play on the racist idea that all Chinese are alike? What if I were to say Europe has a "one country, 27 systems" policy. Well, you might begin to say Europeans are too diverse to make that work, but then, is that not exactly what is being fomented with the Eurozone efforts (which just a decade old is falling apart?)
The strength of the Chinese Imperial system was its weakness. Foreign powers could take over the head and the country would follow. Switzerland remains free because it has no standing military and to take over the government would get you no control over the Swiss people.
USA was founded on a regime of "one country, 13 systems." It is now and empire, and failing. Perhaps the Chinese Communists, who call the shots in China, could now peacefully expand this "one country, two systems" to whatever number best frees up Chinese creativity to the betterment of mankind.
I'd like to encourage that.
Feel free to forward this by email to three of your friends.
Since Mao was obliged to mime good communist ideology, Page 78 Mao was formulating policies for a proletariat that did not exist... like is USA where we write minimum age laws for people who will never work again. At the same time, Mao was quietly breaking the communist dogmatic rules by forming policies with the power that certainly did exist, the peasant (small farmers.) While Mao was working with the Chinese people, Chiang kai shek was working with the Americans.
Chiang was a fascist who pursued policies that were anti free-market, like minimum wage laws and unemployment insurance. The unions in China were sham unions, as they are now in USA today. So both sides were focused on labor, all outsiders considered labor the key, and only Mao (secretly) was working on what mattered. All the best minds and most powerful elements were barking up the wrong tree.
On page 84 of his book Bianco notes that the nationalists, under Chiang Kai Shek, were allies of the USA and the USSR, which is no surprise since USA and USSR were allies during WWII. USA & USSR saw little hope for the Communists, but Chiang new better, and turned on the ChiComs. The story of how this betrayal in some ways precipitated the ChiCom victory is a fascinating study in how the unexpected plays out in big movements. And here again, as so often in all history, but in particular Chinese history, you have the Chinese people escaping to anarchy to escape the chaos of government.
The Communist government was thin on the ground and terribly inexperienced. This was highly preferable to the vast majority of the Chinese who found the nationalists modern efficiency too terrible to endure. Chiang kai Shek beat a retreat to Taiwan, where many natives soon came to regret the defeat of the Japanese.
As these things go, once violence is introduced as the change agent, the results are miserable all around. Scores get settled, good and final. Although China officially has a "one country, two systems policy" it really might be by now, "one country, three systems."
What drove the Chinese revolution was rage at foreign domination of China. This was not only bad for China, it was bad for mankind which was denied the good of Chinese creativity for the centuries of foreign hegemony. One China, strong enough to "stand up" was the goal of all parties. The (more or less) Communists won the right to dictate terms to the world and to the Chinese.
We might step back a second, now that the Chinese have found their independence, and look at "one China, two systems." Is that not a concept for foreign consumption? Does it not play on the racist idea that all Chinese are alike? What if I were to say Europe has a "one country, 27 systems" policy. Well, you might begin to say Europeans are too diverse to make that work, but then, is that not exactly what is being fomented with the Eurozone efforts (which just a decade old is falling apart?)
The strength of the Chinese Imperial system was its weakness. Foreign powers could take over the head and the country would follow. Switzerland remains free because it has no standing military and to take over the government would get you no control over the Swiss people.
USA was founded on a regime of "one country, 13 systems." It is now and empire, and failing. Perhaps the Chinese Communists, who call the shots in China, could now peacefully expand this "one country, two systems" to whatever number best frees up Chinese creativity to the betterment of mankind.
I'd like to encourage that.
Feel free to forward this by email to three of your friends.
Snowden Has No Where to Go
Now, the whole Snowden thing could be some sort of elaborate hoax, and in any event, such a unique circumstance is fraught with unexpected consequences.
Country after country is declining to help Snowden. This is curious. That initially country after country thumbed their noses at USA, but now take a more reserved approach means there was some intervention. We know Joe Biden was working the phones on this, after Sec State Kerry flubbed it up. Whatever happened, carrot or stick, things changed. What is likely not being considered is whatever treatment USA offered in desperation of worldwide disrespect for the USA, carrot or stick, China and Russia are making friends with those USA "treated." Whatever is going on, it is likely going to backfire for USA.
One thing we do see clearly is the people on top live in fear of mid-level operatives who have both information and the means to murder. Fast and Furious, the Boston bombings, the OKC murders, so many obvious rogue events in which adult supervision is lacking, but the supervisors are compromised.
This is nothing new, in Seattle in the 1970s the City Council outlawed the Police from keeping files on politicians. The police did it anyway. They also commonly broke federal laws on wiretapping. And how do they get away with it? They keep files on each other. If any one cop goes down, he'll take several others with him. So they were and are free to keep files in violation of the law. And illegal wiretapping is nothing new. Judges are not about to curb law enforcement crime when law enforcement has the goods on the judges.
There is no way out in our system, so we need a new one. Truth commissions will work. But also, Japan was oppressed by such mid-level rogues during the samurai shogunates. Then came the Meiji restoration. One day samurai had "cut and walk" rights, the next day samurai were harvesting rice in order to eat. USA could do the same. Restore order in USA, where we now have chaos at all levels.
Maybe in a hundred years some Bollywood movie would romanticize USA under the thugocracy with a movie called "The Last Motorcycle Cop" or the "Last DEA Agent."
Feel free to forward this by email to three of your friends.
Country after country is declining to help Snowden. This is curious. That initially country after country thumbed their noses at USA, but now take a more reserved approach means there was some intervention. We know Joe Biden was working the phones on this, after Sec State Kerry flubbed it up. Whatever happened, carrot or stick, things changed. What is likely not being considered is whatever treatment USA offered in desperation of worldwide disrespect for the USA, carrot or stick, China and Russia are making friends with those USA "treated." Whatever is going on, it is likely going to backfire for USA.
One thing we do see clearly is the people on top live in fear of mid-level operatives who have both information and the means to murder. Fast and Furious, the Boston bombings, the OKC murders, so many obvious rogue events in which adult supervision is lacking, but the supervisors are compromised.
This is nothing new, in Seattle in the 1970s the City Council outlawed the Police from keeping files on politicians. The police did it anyway. They also commonly broke federal laws on wiretapping. And how do they get away with it? They keep files on each other. If any one cop goes down, he'll take several others with him. So they were and are free to keep files in violation of the law. And illegal wiretapping is nothing new. Judges are not about to curb law enforcement crime when law enforcement has the goods on the judges.
There is no way out in our system, so we need a new one. Truth commissions will work. But also, Japan was oppressed by such mid-level rogues during the samurai shogunates. Then came the Meiji restoration. One day samurai had "cut and walk" rights, the next day samurai were harvesting rice in order to eat. USA could do the same. Restore order in USA, where we now have chaos at all levels.
Maybe in a hundred years some Bollywood movie would romanticize USA under the thugocracy with a movie called "The Last Motorcycle Cop" or the "Last DEA Agent."
Feel free to forward this by email to three of your friends.
Small Business Food & Beverage Export Start-up
Would you like to learn to export food & beverages as a small business? Monday, July 22, 6-9pm, at Seattle Central Community College I will be presenting a live in-person cutting edge strategy for small food and beverage producers to export around the world. Agricultural exports are the one booming area of USA trade. As overseas markets emerge, newfound disposal income is spent on better food, and more of it. USA food products have strong positive attraction in these emerging markets. By selling into new markets, your small company may expand production profitably.
Forget what you think your know about exporting. You will learn something new. The goal is to make an export sale as profitable and as easy as a domestic sale. The tactic is to present a buyer with what he needs to make a decision, but limit the contract choices to those standard practices where you take no risks and provide no extra services.
Forget what you think you know about marketing. This is selling from the buyers point of view. It is s systematic business development. You will learn to get in front of the decision maker and either get the order or the objection to be overcome. This seminar has been presented in several states to very high ratings.
Although this seminar is for people already in business, this seminar will provide a strategy for acting as an export agent for USA food products.
If you are in the Seattle area Monday, July 22, 6-9pm, sign up to join this seminar. If you cannot make it, let me know by email at john@johnspiers.com, I may have an alternative way for you to take the course, from anywhere in the world.
In any event, the course provides hands-on steps to be taken, with activity follow-up with the instructor, me. Sign up now.
Feel free to forward this by email to three of your friends.
Forget what you think your know about exporting. You will learn something new. The goal is to make an export sale as profitable and as easy as a domestic sale. The tactic is to present a buyer with what he needs to make a decision, but limit the contract choices to those standard practices where you take no risks and provide no extra services.
Forget what you think you know about marketing. This is selling from the buyers point of view. It is s systematic business development. You will learn to get in front of the decision maker and either get the order or the objection to be overcome. This seminar has been presented in several states to very high ratings.
Although this seminar is for people already in business, this seminar will provide a strategy for acting as an export agent for USA food products.
If you are in the Seattle area Monday, July 22, 6-9pm, sign up to join this seminar. If you cannot make it, let me know by email at john@johnspiers.com, I may have an alternative way for you to take the course, from anywhere in the world.
In any event, the course provides hands-on steps to be taken, with activity follow-up with the instructor, me. Sign up now.
Feel free to forward this by email to three of your friends.
Tuesday, July 2, 2013
Business Without Bank Credit
What I like about Mish is his calculation of bank credit in the world of economics. I think it is Mish's unique contribution to the Austrian School argument, if he is not original, he certainly is first to expound it well. Here is is following a very important story, bank credit contraction in Spain. What is happening is Spain will eventually happen here.
In analyzing any story, look to answer this question for yourself: are prices falling or rising? Prices rising, bad. Prices falling, good. So when the story says "contraction" is that a result of, or the cause of prices going up or down?
The story is in relation to bank credit, so it gets tricky. The less bank credit being used, the better, since bank credit is an accepted act of fraud on participants. In this case the people not engaging in loans are consumers and small businesses.
Is that because they are cutting back on debt, or is it because they want loans and cannot get them? Whatever the case, non-participation means less costs and less profits. Less demand means lower prices, so this sounds good.
Let's step back and review something... credit in history of commerce was one entity extending credit to another with four criteria:
1. Asset backed
2. Creditworthiness
3. Commerce related.
4. Short term or tenor (related to the flow of commerce).
For example, I give amazon.com time to pay me. I give schools for whom I teach time to pay me. I am extending credit to my customers. The credit is asset backed, as Amazon.com has my books or revenue from the sale thereof, and the schools have the asset of the revenue from the course fees charged. Whether goods or services, my extension of credit to customers is asset backed.
The creditworthiness of my customers is sterling, and I won't work with customers who cannot or will not pay, or whose own reputations are not first rate.
I only extend credit when it is overall commerce related, in the sense of "this side of the end user." When I retail books off say my website, I do not extend credit. End-users do not get credit because they consume the asset.
(Although it is true under the UCC that merchandise cannot be returned for credit unilaterally, the law actually converts assets shipped to cash due.)
How much time is relative short, and related directly to how much time it takes to ship and sell on goods. Each industry has terms, such as Net 30, 30 days to pay or so.
Please note here the difference between asset-backed extension of credit in commerce vs a loan. They are very different events. Credit extension is grounded in the assets being traded. A loan is in infusion of "capital (money, credit?)" into commerce.
And then we have the ethical proscriptions on loans at usury, held by all major religions. this proscription ought to cause us to pause and recall how those religions view a loan:
1. An act of charity.
2. Never at usury.
So what is being contracted in Spain is loans of fiat currency into
Now the sketch above represents about 99.8% of the economic history of mankind. Banks involved in lending credit is very recent and very narrow in scope. Review the differences I have bee elucidating:
1. Money is usually gold or silver or both.
2. Almost no one ever uses money in history to pay for things (except at end-of-the-line events such as when Judas sold Jesus for 30 pieces of silver or the fall of the Ptolemys).
3. What makes the world of commerce go around, in history is people extending credit, as I said above,
on the basis of
Interfering in commerce by abusing the charitable act of lending in an act of usury was forbidden in ethical climes, often a capital offense. But when the state emerged, religions receded and claimed ignorance of the damage done.
With usury not forbidden, bankers began to lend money at usury. Then they began lending currency (warehouse receipts for money) at usury. Then they began to lend bank credit at usury, and then fiat bank credit at usury. No matter what they were doing technically, to this day banks call it lending money, when it is no such thing.
This explosion of credit being lent caused a problem for the banks. How to find customers for the credit being lent at usury? The concept of risk as an element in business was introduced, so people began to borrow money in speculative ventures, in a distortion of the business process. Naturally people associated money with affirmation. If you please customers you get money. Pleasing customers is what got you the money to grow the business.
Think of what happened when banks began lending credit, and people with nothing could be instantly competing with people who had built a business over ten years. When the bank extends credit to a business, it appears to the borrower his success is assured, since the bank has predicted success concretely in the form of the loan of bank credit.
Now the borrower can only compete by lowering prices in this uncreative process, so to the delight of the powers that be, both the borrower and the standing business both suffer. The legitimate standing business now needs credit too to buy in larger quantities, and compete on price. As bankers say to each other, KaChing! Banks lending credit at usury inexorably harms the economy.
As legitimate business people found this credit so cheap they began to use it too, which allowed ever more risk plus it began to foment an unnatural degree of specialization among business people. Historically, a person might have 3 or 4 ventures in which they engaged, particularly adept people 7 or 8. then came cheap credit at usury. By supercharging a particular business with an infusion of "cheap credit" management attention need be focussed on this galloping bull.
It all looks somewhat similar to legitimate business, but it is as far from it as prostitution is to married love. Specialization is good for a given business, but not for a given businessperson. Commerce invites innovation, but usury allows for unwarranted access to markets.
Now we have come full circle. Either the banks cannot lend, or people do not want to borrow, and banks have this massive ponzi scheme set up that is now closing down. It will get very ugly for all concerned. Most of all, governments have been feeding off the taxes for which collection was made possible given bank record of credit deals made. But tax revenue is derived from ersatz revenues or values, for example when a city appraises a house at a million dollars after the state boomed the prices up. Good luck with that revenue stream.
So necessarily the solution to the problem for small businesses, return to what mankind did in 99.8% of history, will starve governments. That will make for massive interventions which will be painful. it will be hard on producers, but harder yet on non-producers. The safest place to be in the next 30 years is self-employed, but get your money from customers, not credit from banks.
Feel free to forward this by email to three of your friends.
In analyzing any story, look to answer this question for yourself: are prices falling or rising? Prices rising, bad. Prices falling, good. So when the story says "contraction" is that a result of, or the cause of prices going up or down?
The story is in relation to bank credit, so it gets tricky. The less bank credit being used, the better, since bank credit is an accepted act of fraud on participants. In this case the people not engaging in loans are consumers and small businesses.
Is that because they are cutting back on debt, or is it because they want loans and cannot get them? Whatever the case, non-participation means less costs and less profits. Less demand means lower prices, so this sounds good.
Let's step back and review something... credit in history of commerce was one entity extending credit to another with four criteria:
1. Asset backed
2. Creditworthiness
3. Commerce related.
4. Short term or tenor (related to the flow of commerce).
For example, I give amazon.com time to pay me. I give schools for whom I teach time to pay me. I am extending credit to my customers. The credit is asset backed, as Amazon.com has my books or revenue from the sale thereof, and the schools have the asset of the revenue from the course fees charged. Whether goods or services, my extension of credit to customers is asset backed.
The creditworthiness of my customers is sterling, and I won't work with customers who cannot or will not pay, or whose own reputations are not first rate.
I only extend credit when it is overall commerce related, in the sense of "this side of the end user." When I retail books off say my website, I do not extend credit. End-users do not get credit because they consume the asset.
(Although it is true under the UCC that merchandise cannot be returned for credit unilaterally, the law actually converts assets shipped to cash due.)
How much time is relative short, and related directly to how much time it takes to ship and sell on goods. Each industry has terms, such as Net 30, 30 days to pay or so.
Please note here the difference between asset-backed extension of credit in commerce vs a loan. They are very different events. Credit extension is grounded in the assets being traded. A loan is in infusion of "capital (money, credit?)" into commerce.
And then we have the ethical proscriptions on loans at usury, held by all major religions. this proscription ought to cause us to pause and recall how those religions view a loan:
1. An act of charity.
2. Never at usury.
So what is being contracted in Spain is loans of fiat currency into
Now the sketch above represents about 99.8% of the economic history of mankind. Banks involved in lending credit is very recent and very narrow in scope. Review the differences I have bee elucidating:
1. Money is usually gold or silver or both.
2. Almost no one ever uses money in history to pay for things (except at end-of-the-line events such as when Judas sold Jesus for 30 pieces of silver or the fall of the Ptolemys).
3. What makes the world of commerce go around, in history is people extending credit, as I said above,
on the basis of
1. Asset backed
2. Creditworthiness
3. Commerce related.
Interfering in commerce by abusing the charitable act of lending in an act of usury was forbidden in ethical climes, often a capital offense. But when the state emerged, religions receded and claimed ignorance of the damage done.
With usury not forbidden, bankers began to lend money at usury. Then they began lending currency (warehouse receipts for money) at usury. Then they began to lend bank credit at usury, and then fiat bank credit at usury. No matter what they were doing technically, to this day banks call it lending money, when it is no such thing.
This explosion of credit being lent caused a problem for the banks. How to find customers for the credit being lent at usury? The concept of risk as an element in business was introduced, so people began to borrow money in speculative ventures, in a distortion of the business process. Naturally people associated money with affirmation. If you please customers you get money. Pleasing customers is what got you the money to grow the business.
Think of what happened when banks began lending credit, and people with nothing could be instantly competing with people who had built a business over ten years. When the bank extends credit to a business, it appears to the borrower his success is assured, since the bank has predicted success concretely in the form of the loan of bank credit.
Now the borrower can only compete by lowering prices in this uncreative process, so to the delight of the powers that be, both the borrower and the standing business both suffer. The legitimate standing business now needs credit too to buy in larger quantities, and compete on price. As bankers say to each other, KaChing! Banks lending credit at usury inexorably harms the economy.
As legitimate business people found this credit so cheap they began to use it too, which allowed ever more risk plus it began to foment an unnatural degree of specialization among business people. Historically, a person might have 3 or 4 ventures in which they engaged, particularly adept people 7 or 8. then came cheap credit at usury. By supercharging a particular business with an infusion of "cheap credit" management attention need be focussed on this galloping bull.
It all looks somewhat similar to legitimate business, but it is as far from it as prostitution is to married love. Specialization is good for a given business, but not for a given businessperson. Commerce invites innovation, but usury allows for unwarranted access to markets.
Now we have come full circle. Either the banks cannot lend, or people do not want to borrow, and banks have this massive ponzi scheme set up that is now closing down. It will get very ugly for all concerned. Most of all, governments have been feeding off the taxes for which collection was made possible given bank record of credit deals made. But tax revenue is derived from ersatz revenues or values, for example when a city appraises a house at a million dollars after the state boomed the prices up. Good luck with that revenue stream.
So necessarily the solution to the problem for small businesses, return to what mankind did in 99.8% of history, will starve governments. That will make for massive interventions which will be painful. it will be hard on producers, but harder yet on non-producers. The safest place to be in the next 30 years is self-employed, but get your money from customers, not credit from banks.
Feel free to forward this by email to three of your friends.
You, The Berlin Wall & the Mexican Border
The headline that McCain said "we'll make the border with Mexico look like the Berlin Wall" is an outrageous lie. He said nothing of the sort, see for yourself.
What he did say was the immigration bill in debate would make the most secure border since the Berlin Wall. He stated that in the sense of it being a positive thing.
He did mention the Berlin Wall, as a positive thing, in a sense of the level of security. He was speaking quantitatively, not qualitatively. If you are going to have an opinion, you must listen to your opponents, and address what they are really saying.
I have argued this point below, pointing out what the Berlin Wall was qualitatively. Mustn't ascribe to McCain a qualitative allusion when he clearly means quantitative allusion.
But we really ought to discuss the qualitiative allusion of the Mexican Wall to teh Berlin Wall. As I lay out in the linked arguments above, the reasoning for a Mexican wall, are point for point, precisely the reasons the East Germans used for building the Berlin Wall.
Even John McCain should address the issue: Are we the new East Berlin?
Feel free to forward this by email to three of your friends.
What he did say was the immigration bill in debate would make the most secure border since the Berlin Wall. He stated that in the sense of it being a positive thing.
He did mention the Berlin Wall, as a positive thing, in a sense of the level of security. He was speaking quantitatively, not qualitatively. If you are going to have an opinion, you must listen to your opponents, and address what they are really saying.
I have argued this point below, pointing out what the Berlin Wall was qualitatively. Mustn't ascribe to McCain a qualitative allusion when he clearly means quantitative allusion.
But we really ought to discuss the qualitiative allusion of the Mexican Wall to teh Berlin Wall. As I lay out in the linked arguments above, the reasoning for a Mexican wall, are point for point, precisely the reasons the East Germans used for building the Berlin Wall.
Even John McCain should address the issue: Are we the new East Berlin?
Feel free to forward this by email to three of your friends.
Monday, July 1, 2013
Progressives and Small Farming Revolution
Lucien Bianco wrote an important book in 1967 on the Origins of the Chinese Revolution, a clear explication when people were generally writing nonsense extreme one way or another . He published the book first in French, and Origin of the Chinese Revolution was translated into English a few years later.
The book is well worth a read for anyone interested in contemporary China. The revolution to which Bianco refers of course is the Communist revolution, led by the communists who harnessed the power of the peasants (small farmers) This in it self was revolutionary, for the Marxists had a long tradition of denigration of the peasants.
On page 74 Bianco notes that while Mao was working out recruiting peasants Stalin was working on the “final solution of the Kulaks,” a group of which Marx called “the class that represents barbarism within civilization...” They were hated because the resisted the modern utopian ideas. Stalin speaks of “blood drinkers” who resisted forced collectivization.
Bianco tells us “Marxism was in theory as in practice the deadly antagonist of peasantry (small farmers).”
The book has many threads but for me one fascinating story of how Mao, who compared marxism to dog shit, (dog shit come out ahead) managed to violate all Marxist theory by leading a peasant revolution. Page 79
Now, eventually , few suffered in China less than the peasants, but marxist-led revolution they did have. Mao’s contribution was probably to put into effect Trotsky’s permanent revolution, and to exploit whatever contradictions were available on the ground. Never waste crisis.
Bianco quotes Mao at length on page 205 on the small farmer.... such disrespect for a group about whom they knew little, and it sure sounds like blaming the victim. That the people making policy had no concern for the victims of their policies sounds so familiar to me. That the people making policy were in no position to understand the effects of the policy sounds so familiar. IN any event, bad policy hurt the policy makers not at all.
So could we have a revolution by farmers in usa?
Peasant revolution cannot happen in usa because small farmers are not 92% of the population. And as China showed us, any violent revolution goes badly for the participant.
Feel free to forward this by email to three of your friends.
Sunday, June 30, 2013
China Banking Moves
Mish is on top of the financial beat, and has some interesting things to say today..
This is why I think we need to watch carefully what happens this week. It is not clear to me how widely Chinese depositors knew about or understood the events of last week. Although they were discussed in the specialized financial press, the accounts tended to be very “factual”.
More info here...
Feel free to forward this by email to three of your friends.
This is why I think we need to watch carefully what happens this week. It is not clear to me how widely Chinese depositors knew about or understood the events of last week. Although they were discussed in the specialized financial press, the accounts tended to be very “factual”.
More info here...
Feel free to forward this by email to three of your friends.
Subscribe to:
Posts (Atom)