Bo Xilai & Bo Yibo

The trial of Bo Xilai has already taken a wild course off the scripted path, taking longer than expected.  This kind of hard-core politics is nothing new to Bo, who has been persecuted by the communist party before.  His father, Bo Yibo, did several stretches in prison under several regimes, but came out on top.  Bo Xilai did not escape persecution either.

While imprisoned, Bo Yibo attempted to keep notes on the circumstances of his beatings by writing on scraps of newspaper, but his jailers confiscated these and used them as evidence of Bo's recalcitrance. Eventually, his hands trembled so much that he could not hold chopsticks, and he had to scrape his rice off the floor of his cell. When he complained to his jailers that this was "not the communist way", his jailers only beat him more severely.^[1] Bo's children were jailed or sent to the countryside, and his wife died in captivity (she was reportedly beaten to death by Red Guards,^[1][7] but they claimed that she committed suicide).^[11] Bo Xiyong, Bo Xilai, and Bo Xicheng were imprisoned at the ages of sixteen, seventeen and seventeen (respectively), and Bo Xining was sent to the countryside at the age of fourteen.^[12] Bo remained in prison for over a decade.

Clearly Bo has no use for the deranged leftism, the self-destructive policies of which we are only too aware of in USA politics.  On the other hand, he is an unlikely candidate for corruption, given what his family went through.  What is going with this trial is epic, and it is too bad we have no press up to the challenge of explicating the events.   The stakes in China are high indeed, for if the current leaders exonerate Bo, it will be a very clear signal to certain elements.  On the other hand, if Bo is convicted and sent away, that really is nothing final.  He may be back.

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Regulatory Life & Death In America

Says Niall Ferguson:

Unlike Frenchmen, he continued, who instinctively looked to the state to provide economic and social order, Americans relied on their own efforts. "In the United States, they associate for the goals of public security, of commerce and industry, of morality and religion. There is nothing the human will despairs of attaining by the free action of the collective power of individuals."

Compare this with Hong Kong, where everyone seems to belong to a dozen orgs, that is to say, exercises in self-government.

One of the weirdest developments is that wine in USA follows French (!?) regulation and we end up with French results...  To wit:

1. A winery in USA, for the most part, is a consumer item, not a business.  "I have a waterfront home, a Porsche, kid at Stanford, a winery, etc."

2. The wine business is about tax credits and subsidies.  Take those away and probably 90% of the  wineries in the USA disappear.

3. All advertising is about aspirations, and the winery itself is the experience to be advertised.  About the only advertising for most wineries that matters is "Tasting Room, Next Exit."

4. What ads get produced are valentines to the winery owners.  "Look at us.  Aren't we special?"  Google wine ads and google and any other industry.  Every other industry shows an identifiable target market enjoying the product.  Rarely a wine ad.

5. All advertising benefit inures to the leader. Royal Crown advertises cola, people buy Coke, so we have small wineries throwing money away to grow the big ones.  They already get import taxes on the wine they sell against you zeroed out, might as well finish yourself off.

6.  So no advertising?  Correct.  Wine is an add-on sale, so it needs to be cross sold: marketed not advertised.  Your brand is the retailer or restaurant who features you.  But since USA adopted the French wine trade laws, we are not able to compete effectively world wide, let alone domestically.

But here come Detroit, with freedom re-emerging.



Maybe they will become a regulation-free zone.  It is good to watch, because the future of USA is being played out in Detroit.

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Dex Yellowpages and the Internet

 Dex is a descendent of the old Yellow Pages company, and is apparently reinventing itself.  Apparently it is, or has been, doing a series of well-executed promotional events around the country.  I attended one a few weeks ago in Seattle.  I went uncertain just what Dex is about.

Now, I was vaguely aware that they are now internet based.  I went because the topic was SEO, SER, SEM etc, something I assiduously follow to test my position that website development is largely a scam, when calculating the money spent, the time cost, and return on the investment.

Nothing I learned at the conference told me any different.  Amazon agrees, they have done webinars on this problem, and offering advice on how to perhaps get ones money's worth.

I did learn some heartening facts, such as 67% of small businesses in USA have no web presence.  I am glad to hear of such widespread native intelligence among small business owners.

This year mobile searches will surpass desktop searches.

Google analyses search down to the relevancy of time...   a midnight search from a car for pizza needs to serve up the closest pizzeria, a six pm search from a home needs a delivery pizzeria.  Cool.

Dex has a panel discussion with a google top dog, a yahoo top dog, and some local luminaries.  Sitting on this all-star panel was one Dex salesperson.  The only person who had anything interesting to say was the Dex salesperson.  He knew what was what, and obviously had a handle on reality.  The google guy was content free, no surprise there, the yahoo lady mentioned that yahoo still gets 56 million ad clicks a day and the average price paid for things bought is something like 40% higher.  My guess is more money oldsters who never left yahoo are their base.  Who knows.

I presented myself to the Dex salesman, he was out of cards, I gave him mine, and said I wanted to talk.    I wanted to confirm what I could to that point only guess at, and that Dex must be a reseller of google and yahoo ads.  That is to say, Dex buys a billion in google ads each week from google at 50% off, $500 million say, and resells them to their clients for 750 million... and everyone cleans up.  Google movs ads, Dex makes a profits, Dex clients get a discount.

These promos must be doing well for Dex, for I have not heard back.  I did look at the Dex website, and it seems to be offering each element necessary for a state of the art website and online marketing.  You need youtubes, they sell a film crew to come out and make yours.  You need web design?  Done!  You want an ad program, let's do it.  I think I have that right, and if so, I wonder how that is working.

For my part, I watch closely for efficacy of online advertising.  My test is courses.  Schools gain an enrollment at $7 average cost when they promote through paper catalogs delivered to homes.  Schools gain an enrollment at $95 average cost when they promote through targeted ads over the internet.   That is the problem with internet advertising: it costs too much to get a customer.

Someday Dex may show me how to get an enrollment for $47.50.... if so, I will be their customer.

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Detroit and Food Stamps at Farmers Markets

I was reading a heart warming story on anarchy in the USA 

“For all intents and purposes, there is no government here,” said Willerer, 43, checking the greens and other crops he is growing on an acre off Rosa Parks Boulevard, across from an abandoned house with broken windows. “If something were to happen we have to handle that ourselves.”

when my heart stopped:

The U.S. Department of Agriculture, geared toward rural farms, is trying to figure out how to serve the sector, said Anne Alonzo, the administrator of its agricultural marketing service. It has underway pilot projects that encourage food-stamp recipients to buy fresh produce and programs to encourage “food hubs” that gather goods and create larger scale for purchasers, Alonzo said in an interview.

Wait...  no one wants food stamp recipients as customers.  The drug trade is financed by food stamp fraud.  To invite food stamp recipients is necessarily to require fraud related activities in these new markets, which is precisely why Detroit is in the mess it is in.  And look at the call to collectivization.

In freedom all people are free to work and thus all customers would be suing their own money.  In the system we have now, co-opted unions and minimum wage laws corner people into welfare and thus the downward spiral.

The people are creating order out of the chaos imposed upon Detroit by the Government, and the Government is there trying to restore chaos.  Detroit needs to be the next Hong Kong.

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An Unthinkable Opportunity

The internet as we have it today is a complete mess... most of the capacity is devoted to waste (spam) and websites no one will ever visit.  It is so leaky as to invite spying, not that it is necessary since everyone is happy to self-report.  The preacher man all complain that the #1 problem by far in the pews is porn addiction, due to the www.

Such freedom was unexpected, but there we have it.  It need not be so.  There can be alternative internets. http was one invention, there could be another.  The same pipes and wires could be used to handle a different programming language, on another "www."

This www could be open-sourced, and escape patents.  Yes.  The internet is an invention itself, and there is not solution that cannot be improved upon.  But USA controls what can be an internet, for security reasons, so a second not-www internat, in which inventions unimagined were brought forth,  will lead to violent intervention.  That is capitalism.  The few who are allowed to win tell those who are not allowd to win, there is somethign culturally wrong with them.

I recall back in the 1980s people did initiate competing internets, but they were quickly shut down, like counterfeiters.   So no go?  Well no.  There is a way to create an internet in which it is impossible to spy on users.

It has been around for a while, it is called MBC, meteor burst communication.  Here is a once secret technical report from the NSA (a good example of what is secret: a study of a technique used by Ham Radio Operators... wait, what?)  It is really cool science, using meteors hitting our atmosphere, an unlimited supply, as satellites.  And even cooler, it is not the meteor but the trail behind it that is used to bounce signals.  Cheaper than satellites, and more reliable than cell phones.

Since there are so many meteors, and their life so short, it takes some serious computer work (but not too much for your new iPhone) to predict, target and send a message that cannot be traced either inbound or outbound.  How come?  Because no need to register phones which are then triangulated by cell towers and billing records.  All communication is free of charge and utterly private.

It is functional, there is at least one company capitalizing on it.  But here is the problem: the relatively free internet, which costs us way more than we can afford in subsidies, crowds out the development and use of what would be truly no cost.

Visiting websites would be a technologically different activity in which a website would receive a request for information with an address to which to send the info...  o wait, that is what we have now.  Just with MBC no one could know who is asking and where it went.  Privacy, and no cost communication.  Such are free markets.

If there was no way to track users, there would be no use for the NSA and other spy agencies, and they exist for their own sake, and are irreplaceable jobs... or something like that.

Also, IPR allows layabouts to mulct funds from all of the patents on internet related activity.  IPR would be moot in such a regime.

But we are yoked with security theatre which perniciously burdens commerce.  We need a place that is free to develop such technologies, and not stop science.  A Free Detroit?  Aren't we halfway there anyway, with the name of the newspaper in that city the Detroit Free Press?  Let's go all the way...

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Communist Party Document Number 9

The NYTimes is covering an internal contradiction in China -

“Western anti-China forces led by the United States have joined in one after the other, and colluded with dissidents within the country to make slanderous attacks on us in the name of so-called press freedom and constitutional democracy,” said Zhang Guangdong, a propaganda official in Lianyungang, citing the conclusions from the meeting of central propaganda officials. “They are trying to break through our political system, and this was a classic example,” he said of the newspaper protest.

Whereas in the Western countries we sit idly by while mid-level rogues break our laws and subvert our system under the protection of high-level liars, neither the Chinese nor Russians are obliged to do so.

Prosperity, the root of the word is hope, spes, and these countries will suffer too in the coming bust, but they will bounce back first.  We have too many people messing around in too many countries.  We need more people trading for more peace and prosperity.

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Putin, Gays and Russia

RT is Russian Television in English with a decidedly Moscow tilt, a sort of Russian Fox News Service.  One reason Russian authorities give for suppressing gay Freedom of Speech is Russian contention that the "freedom" is funded by Western intelligence agencies.  That would not be surprising, but this very exchange, in which a fellow is allowed to crash one topic to trash RT and Russian politics, in which he insists he is not free to say what he just happens to be freely saying, is remarkable for the fellow's assertions.  If you listen closely, he sounds like he is reciting CIA agitprop.  Maybe just an unfortunate coincidence, but not a creditable performance.


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Hong Kong Monetary Authority

Hong Kong has maintained the relatively free market instance of having private companies issue the currency.  To this day in Hong Kong, in your wallet at any time there may be currencies from three to four competing firms.  Seem strange?  The legal fiction in the United States is you have nine competing currencies in your wallet.  Anyone in government knows, anyone in banking knows, you NEVER allow a government to get involved in banking.

The USA monetary system is a private affair, in which the monopoly on violence of the state is lent to the bankers.  Hence, when USA federal reserve notes say "This note is legal tender for all debts public and private" Americans are obliged to takes these in payments.  Other laws forbid competition with this currency, an idea once thought obtuse.  Nothing free market in this.

But Hong Kong can hardly be considered a model of free market banking.  It has a Monetary Authority, the HKMA, itself a government agency managing the currency.

The Exchange Fund's primary objective, as laid down in the Exchange Fund Ordinance, is to affect, either directly or indirectly, the exchange value of the currency of Hong Kong.  The Fund may also be used to maintain the stability and integrity of Hong Kong's monetary and financial systems to help maintain Hong Kong as an international financial centre.

So, how is that better than what we have in USA?  It is in the differences.  It ain't the hand you are dealt, it is how you play the cards.

First, the HKMA changes rules occasionally, but they are directed at the above.  In the USA, the job is to target an inflation rate that assures the rich get richer, and promote fullest employment, os the poor don't notice.  That may sound cynical, but it is not in the least.  This point is not disputed.

Hong Kong is after a simpler target, and that is stability.  Now, a free market has no business attempting even that, but again, it ain't the hand you are dealt...

Given that the USA is the world's reserve currency, and given that USA policies affect the rest of the world, how best does a tiny entrepot play that hand?  The HKMA is one answer, and all things considered, not a bad answer.  Hong Kong's per capita income matches USA's and surpasses the UK.  And the big test, when bad boy George Soros came a callin' in 1997 and sent Malaysia, Indonesia, Thailand and Korea to their knees, little Hong Kong could hold its own.  Now of course, Hong Kong had China to help out, but China itself was getting battered, and it may very well have been Hong Kong advising China on how to defend the renminbi that saved them both.

The people who make up the HKMA are also bankers, lawyers, academics, industrialists as in the USA, but Hong Kong is a village.  All of these people are accessible and in Hong Kong, that means answerable.

With so much free, prosperity, it would be a bit stupid to self-deal to the detriment of all other, because one one hand you have so many more options to doing well creatively, plus on the other hand, your victims are everywhere in Hong Kong.  A nice carrot and stick.

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Patent Free Zones

Here is a very encouraging image, that of what one enterprising young woman calls the "patent free zone."  In essence non-green means almost no patents.



She does make a useful point on her website:

You now have the right to stop other people from making, using, selling, offering for sale, or importing your invention in the US for 20 years. Only in the US — it's a US patent. You cannotstop anyone from using your patent outside of the US. To get that right in another country, you must apply for a patent in that country, usually within one year of receiving a US patent. 

What she does not point out is there is almost no market in those zones so pursuing a patent is desultory for the USA patentholder.  One can make patented items in those areas, and sell them unmolested by USA or other country patent holders, but then, to whom?  There is little if any market in those zones.  And if there is a USA patent on any such item, just because it was made in a patent free zone does not mean it can be sold into USA.

Where I was hoping to read of some initiative to expand freedom, and she hints at this...

Nothing is walled off, so there are paths everywhere, but few private spaces. Patent Free Zones are a little like that. There are no private, walled-off ideas: they're free for everyone to share and use. It's a place of great opportunity, need, and challenge. Welcome to a wide-open country.

But what exactly is the plan?  More of an argument... for what?

It sounds like stealing, doesn't it? You come up with a great idea, go to a lot of work and expense to patent it (in the US), and then I just take what you've done, without asking, and get rich off it. That sounds unfair. 

Not to me.  First of something is not wrong because someone with a gun says so.  It has to do harm to be wrong, and capitalizing on a good idea does no one else any harm.

It is a great observation, this patent-free zone.  For these areas to enjoy a renaissance, market development like the USA and China, they must eschew patents as USA and China have done during their rise to modernity.  Great observation, what is the plan?

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Does the Euro Mimic a Gold Standard?

A gold standard curbs State monetary abuse, and to that extent is to be esteemed, and comes now an Austrian economist who is arguing FOR the euro, in the measure it is presently mimicking a gold standard.


I am not sure I buy the argument, but the points made in this video around the argument are edifying, well worth the 30 minutes run time.

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Frito Lay Cheetos x Pepsi Shuwa Shuwa Cola Corn Snack

I generated a wee bit of controversy by suggesting exporting to develop products might be an interesting strategy.   Maybe someone at Frito Lay reads my blog...

The junk food mashup by Frito-Lay is the newest combo to hit shelves in Japan. Dubbed Frito Lay Cheetos x Pepsi Shuwa Shuwa Cola Corn Snack, the bright orange Cheetos have a sweet cola flavor that actually fizzes in your mouth according to the Impulsive Buy.

Fancy Roman homes included a room called the vomitorium.  Yes, you figured that out.  After stuffing themselves sick guests would go puke it out and get going again.    The good thing about these chips is when you are finished, you have the empty bag to puke in.

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Printing Human Body Parts

Mish again, this time a report on laser printing new human organs and parts.    Looks like a new Tang Dynasty in China, with all of the inventiveness.    Time for USA to vote itself some freedom so we can compete.

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India, Onions and Letters of Credit

India can buy all of the onions it wants, but the price has risen by 144% recently.  It is not a shortage of onions that is causing the price to rise, but bad government policy.  The economic crises worldwide, created by failed Government policies, promised to bust out in surprising places, and for India to be first to impose trade controls is indeed surprising.  India has curbed money going out and gold coins coming in.

Mish says India has a housing boom, but then again, who does not.  The damage in economics is done during the boom.  The bust is only where the powers that be decide who has to pay for bad policy.

When the market is free to operate, prices are constantly falling.  New products being introduced initially cost more, and then they too fall.  Wheat gets to a price where it is nearly free, and people have so much money relative to goods and services they are constantly trading up, and in so doing finance ever more better cheaper faster.

When countries begin to defend their bad policies with currency controls, back to Letters of Credit it will be.  I thought my skills had become defunct in this regard.

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Following Sean Corrigan

Mish has his complementary equal in the UK's Sean Corrigan, whose metier is to find the problems at the minute level..  To wit:

Then there was the pensions wheeze. Ironically being delivered in the week when S&P noted that the 500 index’s members posted record pension and post-retirement benefit deficits last year of no less than $687 billion, the BEA’s new methodology henceforth counts contribution shortfalls of this type as a notional loan by the firm on which it will pay virtual interest, thus adding a corresponding phantom amount to the totals for the personal income and personal saving of their employees! 

Now, those of you who expect a pension to feed you as an elder, think about that.  That you cannot, will not ever see such income is being treated today as the solution to the problem. The fact you cannot be paid proves you'll be paid.  And you are wittingly accepting this?  Companies utilizing such rationales are solid?

When your stocks go down, exponentially, to the mean, my inventory will go down as well, concomitantly, not exponentially, and not revert to a mean.  That is to say when a carpet I bought at $1000 begins to fetch only $500, well, housing and food fell in half too...  when the stock of the companies falls 90%, then it hurts, or worse, the stick is wiped out in business failure.

90% fall is not going to happen?  Starting a business is cheap insurance.  At least hedge your bets...

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A Black Eye For Trader Joe's

It appears an enterprising fellow is filling a need, and very much benefits Trader Joes, but Trader Joes is suing him,

Operating out of a store called Pirate Joe's, Hallatt resells Trader Joe's goods that he drives to Washington to acquire. Hallatt says he is breaking no American or Canadian laws in doing so, as he is allowed to purchase and resell trademarked products as long as they are sold without material change, according to ABC News.

Benefits to Trader Joes.

1. Sales otherwise not gained

2. Free test marketing in a new market.

Mimicry is the sincerest form of flattery   To let this go also allows Trader Joes to show a sense of humor.    There is no risk... no downside to Trader Joes.  The BigCorp that bought them is making a mistake.

Now the best part is the fellow would not lose a the lawsuit that Trader Joes is bringing, but of course the fellow could not fight trader Joes in court, who has that kind of money?  But wait, Hallatt's insurance company is stepping in.  Insurance people can smell a buck, so they are helping him mount a counter-suit, because they know they can win.  Yay!  This is how insurance companies are supposed to be, the only law-enforcement a free market needs.

Trader Joes should take a page from Costco.  Costco positively encourages the Hallatts of the world to do their thing.  Here is a page from Costco website:

They have a ten pallet minimum for their special pricing, of if you want less quantity, that is just shop their catalog to fill a 20', they up for that.  Either way, they'll stuff the container, prepare invoice and packing list, and coordinate with your freight forwarder.  Costco provides everything you need.

Perhaps Hallatt could buy container loads from Costco and sell them in a store in BC he calls Lostco...

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Early Warning On Retailers Failing

A major retailer dismissed its loss prevention team in at least one store, I hear from a salesperson there.  We can only surmise that no team equals probably a $250,000 "savings" that would go straight to the bottom line of the store.  Multiply that by 100 stores and you have a nice bump to the bottom line, which pretties the corporation up for a sale.

Circa 1980 a buyer for this same major retailer asked us to invoice their purchases at 10% higher than list. They would only pay list, but by having the inventory, which would be their asset, overvalued they could fool the bankers into lending 10% more against phantom inventory.  We said no.

When you get rid of loss prevention teams, you lose.

Brooklyn prosecutors showcased stacks of evidence Wednesday against a sticky-fingered assistant manager at a T.J. Maxx accused of selling high-end wares he stole from the outlet at rock-bottom prices.

TJMaxx is not the biz in question, but I'd ask how did this guy get so much inventory past Loss Prevention?

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