Saturday, May 3, 2014

Ascent of Money

I was reminded of this renown television series by Niall Ferguson, the Ascent of Money, while reading a Austrian Economist blog.  I've rarely had cable access (or a TV for that matter) so I never saw it.  Reminded, I looked it up on youtube.  It is from circa 1990, and this has over a million hits.  There are amazing errors and omissions in the first twelve minutes, and the interesting half of half-truths.  I'll be blogging this, so give it a watch and we'll discuss.



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When You Think of China...

You perhaps think of outsourcing and knock-offs.  The list of knock-offs has expanded.
Three people who founded their own city government are being prosecuted for forging official documents in the city of Dengzhou, Henan Province.
In college I tried to set up my own country in my apartment.  I called it the People's Republic of Morefreebeeria.

I issued my own currency, invited some friends over to celebrate our independence day.  We ordered pizza and tried to pay for it with our currency, but the pizza delivery guy insulted our country by refusing to accept our currency, although we voted it fully convertible.

He called the cops.

The cops came, slapped us around until we came up with the USA cash for the pizza.  And then they took one of the five boxes for "wasting their time."

We filed a formal diplomatic complaint with the state department but no one replied.  Then finals came up, and everyone lost interest.  But that Japanese kid went on to start bitcoin.

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Friday, May 2, 2014

Harry In Your Pocket

There are not enough people around who recall when everyone had a wad of cash on a money clip or ran a tab to be cleared off.  One of my first jobs was to collect slow pay (in a small company one did everything)

For that matter few people remember small company that hired 20 people and anyone who wanted a job could have a pretty cool one pretty quick.  This buddy worked at a small fish processor, another work at a small furniture company, another worked at a small clothing manufacturer, another worked at a small ski maker... so much small business.  And 22 year olds could buy a house in a nice neighborhood, working as a cook, in a small business.  A few friends did, but since anyone coould buy a house any time, why would you tie yourself down at 22?

After 2 years working my way up at a small business I was off to the newly opened China as a buyer.  As one with the gift of ADD I was not particularly good at anything except getting distracted, but back in those days ADD had not been invented and employers had to take what they could get.  Now we have drugs, except for those in pain.

To discourage slow pay small businesses had begun charging interest (usury) on "past due" accounts.  The funny thing is no one ever paid the interest. If someone owed $250 and 5 in interest, and we got a check for $250, we'd just "write off" the $5 interest owing.  Of course.

Interest (usury) in practice never worked until the state got involved.  The FED began creating funny money and cheap interest, so there was a shift from person to person and business to business to all transaction running through FED associated banks.  Two effects: since the state could see every transaction, it could begin to tax every transaction.  Since it was cheaper and easier to use funny money + cheap credit, everyone eventually did.  But the first time anyone used a credit card to pay a medical bill was probably sometime in the 1980s, and pay for food was in the 1990s.  This system has not been around long.

Companies like Department Stores put so much "on the account" of customers that a chargaplate system was adopted in which the bill of sale was impressed with a card number of the client, and billed at the end of the month (the stores kept these charge cards).  The whole thing speeded up the writing down of the account info.   You cleared your account at the end of the month.  Usury was a crime and it did not occur to businesses to charge usury on their customers.

Eventually businesses with clients (such as gas companies and airlines) who moved around began issuing the charge cards to the customers, so when some NY bog shot flew to LA he could buy his airline ticket in NY on a charge card, fly to LA, you his NY oil card to buy gas in his LA rent-a-car, all within different offices of the same company.  Accuracy and speed.

Eventually businesses started accepting each others' charge cards (you hear some older folks still referring to credit cards as charge cards).  If someone showed up at a Flying A gas station in LA with a NY Kendall charge card, Flying A knew the driver was good for it. Take the card, make the impression on the sales receipt, bill the customer.  If someone showed up ay a Western ticket counter in LA with a pan Am charge card, take it.

Eventually, circa 1960 bankers figured out that could let people slide on payment, charge usury and make money by shifting from charge cards to "credit cards."  When some third party (American Express) was charging you interest Macy's was not the usurer.

In 1971 Nixon took USA of the semi-gold standard and the shift was tectonic.  Around 1960 credit cards emerged, by 1975 I had a dozen of them.  In the mail the offers would come, preprinted off lists sold by credit card companies to each other.  In fact, the cards would show up in the mail with a credit limit noted in the introduction.  Imagine that.  No application, just use of the card constituted agreement to the terms and conditions.  I am not making any of this up.

I recall a discussion with my agent in Hong Kong circa 1980 in which he declared he no longer carried cash, just credit cards, so now he would never get robbed (He had never been robbed, another example of humans eternally rationalizing wrongdoing.) I will say the skill and profession of pickpocketing went away, jacking iPhones is now.

People who used Taxis a lot all had accounts, and rich kids could jump in cab and put the tab on the parents.  The world we have now is based on usury.

Our economic system has crashed and burned, and it is now on momentum, like how a space shuttle keeps flying after blowing up.  When it comes down, will people know it was never necessary anyway?  There is an alternative?

Dave Ramsey does not take credit cards and he has a huge online sales thing going.  When WalMart and Target and IKEA cannot take credit cards, will the small local business return where the owner knows the customer.  Will home loan officers know you again?

I hope so, so people can get good jobs again.  Maybe we need a "pickpocket index".  The more pickpocket arrests made, the better the economy.



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Thursday, May 1, 2014

Crumbling Infrasructure Nonsense

David Stockman knocks down the crumbling infrastructure nonsense with a fully informed article:
One thing is clear. The is no case for adding to our staggering $17 trillion national debt in order to replace the bridges of Madison county; or to fix state and local highways or build white elephant high speed rail systems; or to relieve air travelers of paying user fees to upgrade local airports or local taxpayers of their obligation to pay fees and taxes to maintain their water and sewer systems.
I listened to Diane Rehm and crew lamented a lack of pork imminent, so the idea of toll bridges came up.

Wait, what?  Toll bridges?  We had rhe state take over roads to get rid of toll bridges Here again, the state failed?  If it is time to do toll bridges again, then make them private concerns, to get rid of the waste fraud and abuse that comes with government participation.

I was on a bus recently and people were talking across the aisle regarding mass transit, and a young woman claimed that BART, the SF Bay area light rail, was privately owned, and that is why the service was bad and the fares very high.

She was challenged on the "privately owned" assertion, but she defended it.  I lived in the Bay Area, and I think I would have heard, but I checked.  Nope.  Just like any other mass transit in USA, government run, except the one in Disneyland, which is free.

And of course, the light rail mass transit in Hong Kong is privately owned and it is cheap and efficient.

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Wednesday, April 30, 2014

Africa Food Trade


This from a student with a particular project...  I've edited for confidentiality...

On Apr 30, 2014, at 10:31 AM, SA wrote:

Hi John,
This is my question you asked me to email you yesterday.
I am wondering how to find out the best competitive source between US and Asia to export (one), (two) and (three) to Africa. I'm actually in talks with potential importers about (one) in Chad and (two and three) in Benin. I want to be able to submit them a professional proposal. Would you help me?
SA

SA,

I am happy to help..

First you have to realize that those are commodities, and the best price is to be had from the biggest sources.    I am afraid you are either being used to do unpaid research or you are being set up for a scam.  If they are real buyers, why are they not going to the top sellers?  Do you have an answer to this question?

The next question is how will you finance this deal, which will necessarily be in the hundreds of thousands?

Further, if the best source does prove to be Asia, why will Africa buy from you here in USA?

With these questions in mind, we'll proceed to find you the best source in USA to start and create a professional proposal.  Then on to Asia.. You tell me, from the course assignments, what are the HTS codes for the items in question?  From there we will have price trends, and then we can look to suppliers, and then a proposal. So let's start there...

If this commodity does not work out, please consider this...

http://www.ers.usda.gov/data-products/international-food-consumption-patterns.aspx#26207

scroll down to ...


and then open and read what Benin and Chad are buying in food...  they want cereals most...  if they are getting USA grain, then they also need gluten Free...  less work for more money than commodity sales...

John

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Los Angeles International Trade Start-up Seminar

This Saturday, May 3, is the last chance in Los Angeles for several months to attend an all-day start-up intensive, focussing on getting the right product to the right customers now.

Check out the details and enroll here now...

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Start-up Weekend

Where is the customer?  And shouldn't they make clear this is limited to Cloud Computing?
All Startup Weekend events follow the same basic model: anyone is welcome to pitch their startup idea and receive feedback from their peers. Teams organically form around the top ideas (as determined by popular vote) and then it’s a 54 hour frenzy of business model creation, coding, designing, and market validation. The weekends culminate with presentations in front of local entrepreneurial leaders with another opportunity for critical feedback.
Market validation?  You mean the product or service is pitched to buyers?   You form a hypothesis and test it with your target customers during the 54 hours?  No?  Then why would anyone form a business model, code, design or anything else?
Startup Weekend is a global grassroots movement of active and empowered entrepreneurs who are learning the basics of founding startups and launching successful ventures. It is the largest community of passionate entrepreneurs with over a thousand past events in 110+ countries around the world.
If there has been thousands of these, why is there not a scorecard of how many of the "winners" went on to thrive in commerce?
Whether entrepreneurs found companies, find a co-founder, meet someone new, or learn a skill far outside their usual 9-to-5, everyone is guaranteed to leave the event better prepared to navigate the chaotic but fun world of startups. If you want to put yourself in the shoes of an entrepreneur, register now for the best weekend of your life!
Shark Tank and such events as Start-up weekend may be fun and entertaining, but none of the people involved are your customers.   And there is no way to access the customers in the time alloted.
Seattle will be hosting truly a unique event kicking off on May 16th. Startup Weekend and 9Mile Labs are coming together to host one of the world's first B2B Startup Weekend! B2B (business-to-business) implies that your primary customer and source of revenue is another business. The objective of this event is to encourage and empower entrepreneurs to build their B2B idea. To help the B2B entrepreneurs, 9Mile Labs and Startup Weekend will be bringing great people and resources to this event to educate and coach participants on the key considerations for building a viable B2B business.
Wait!  "primary customer... another business...   coach participants on key considerations..." there is only one consideration, and that is the customer.  No one will dispute the customer is the most important thing in business, but getting the product right is the hardest thing.  That takes interacting with the customer.  You must at some point speak to a customer, why not make that the first thing?  As I read through the brochures I see a sort of Disneyland of Rides as opposed to business start-up.  Again, for $99, probably fun, but where are the businesses that get started?

Also, apparently in Seattle there is only one business, and that is cloud computing.  No restaurants?  No  manufacturers?  No apparel companies?  No jewelry? This event is centered on something called 9Mile labs.
About 9Mile Labs9Mile Labs is a high-tech accelerator based in the Seattle metro area focused on B2B software and cloud technologies. 9Mile Labs runs two 3-month programs every year, each with a group of 9 startups. During these 3 months, startups receive funding, access to an impressive set of mentors, free workspace and the opportunity to present to investors at the end of the program in exchange for an equity stake in the startups.
Although success is doubtful in their approach, one thing is for sure...  what happens when you have all those resources directed to one tiny area, cloud computing?  The price comes down.  Very good. Further, the entire effort is dedicated to software and cloud computing.  Apparently there is no other business.

It seems to me this is selling fantasy to people who are hoping for the big score.  Good luck.  if you are not going after the customer first and building organically a company based on matching your natural talents and customer needs then I wonder how far one will get.

I should talk though, I've never kept track of how many people have taken my class and started up.  Plenty of positive feedback over the years, but no data.  But then I don't claim to be an incubator, merely a lecturer.  And then, people do save time and money and actually get businesses up and running based on directions form my seminars and follow-up assistance.  That's what me feedback says.

I am in discussions with a local school to form a business incubation program, and funny, I keep thinking "everything but tech" to specifically exclude tech from the program.

I think the tech business and funding model advances a false economy... indeed, if one contemplates the false economy, the thread that holds it together is tech.

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Tuesday, April 29, 2014

The Coming Economic Bust

Andy Xie has an excellent world economy summary over at Caixin:
Only changing the policymakers will change the global economy. While national leaders change, the bunch who manage major economies have remained in the same circle for the past two decades. People do not ask why, after causing so much damage, they are still around. The power of money from the speculative community is distorting the narrative in the media.
Yes, in the western capitalist countries, the powers that be are the capitalists, the permanent hierarchy. Elections change nothing.

Xie also says,
Gold is the safe asset in today's environment. As paper currencies lose credibility, the demand for gold will surge. The alternative digital currencies are fool's good, really scams to take advantage of people's fear over the potential collapse of paper currencies.
Good for  those holding gold.  That means almost no one.  Capitalism is ordered to aggregation from the many to the few, so it will have no answer to the collapse.

Only free markets can fix our economy. This means going back not to gold, but vendor financing, at no interest, and asset backed.  There are extremely few of us still around who remember that system.  Small business will be exponentially valuable.

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A Quick Tour of the USA Econo-Political Landscape

A doctor's lament:
We could change the paradigm. We could as a group elect not to take any insurance, not to accept Medicare—many doctors are already taking these steps—and not to roll over time and time again. We have let nearly everyone trespass on the practice of medicine. Are we better for it? Has it improved quality? Do we have more of a voice at the table or less? Are we as physicians happier or more disgruntled then two years ago? Five years ago? Ten years ago?
Well, the patterns and practices of capitalism include buying off people who are necessarily kept from being productive.  Now let's hear from those being bought off with EBT cards:
A group called The Counterforce, which has protested against tech companies in the past, spent Saturday evening “chasing down Uber cabs and detaining them amidst traffic.” That’s according to the inaugural post written by a Counterforce member on a new blog called “Destroy Uber: A clearing house for the destruction of Uber.”
Oh.  Kidnapping people.  That is a crime.  The police don't recall receiving any 911 calls.  Of course not!  Most Seattleites know it is a very big mistake to ever dial 911.   In Seattle the police will not interfere with kidnappers if kidnappers will not interfere with police.  Professional courtesy.  It's called the Starbuck's Rule.
“We are anarchists, not socialists,” Counterforce wrote. “We want the abolition of the economy, the destruction of capitalism, and the immediate communization of all shareable resources.”
They wish they were anarchists.  How do you abolish an economy? Sure, get rid of capitalism, sooner the better, but economics is how a household is run.  How do you get rid of how households are run? You can change that, but you'll still have households and they will still be run. Communization is socialism, so this group is internally contradictory.  The reason this group keeps their faces covered is they are police.    Anyone in any group who advocates violence is necessarily working for the police.  Every police department has people inside advocating violence.

Meanwhile, back at the FBI...
Information about the alleged plot first surfaced in FBI documents — released through a prior FOIA request by a civil-rights legal organization in Washington – that referenced a “plan to kill the leadership via suppressed sniper rifles,” according to court documents. It’s not known who was behind the alleged plot or whether the FBI investigated it.
Funny that.  Snipers in Syria, snipers in Iraq, snipers in the Ukraine... snipers snipers snipers.  Now in this particular instance a judge is trying to do the right thing, in getting the FBI to answer what they knew about snipers targeting the Occupy Activists and when they knew it.

But here is the real problem.  Then what?  Judges are just a venal as the rest of us, and are highly desiring of blowing with the wind, which every way it is blowing.  But our system has broken down, there is no reading a newspaper for accurate information, there is no congress that shall pass a coherent law, there is no executive branch subject to the law.  So how can a court gauge what their ruling is supposed to be in any given moment.

Right now, the courts are punting, buying time until something gives way.  Like when the Chief Justice of the Supreme Court called the Obamacare failure a tax not a fine.  Whimsical.

The USCongress has voted the Military can take over the government when it decides it "needs to."  Of course they can only "indefinitely detain" a US citizen secretly, but that is all it takes.

The people who are elected to office are done so by fraud.  I know, I watched close-up one year.  And anyone who is elected can be brought down, due to total world surveillance, so most are compliant.

Sometimes, one steps off the reservation, and gets hammered hard and quick as an example.  Here is a federal prosecutor statement on the arrest of a Congressman:
Grimm, as an accountant, attorney, former Marine and ex-FBI agent, "was poised for success as a small business owner," but "made the choice to go from upholding the law to breaking it," Lynch said in a written statement.
Wow...  how the mighty have fallen.  What was it?  Narco-trafficking?  Murder for hire?  White slavery?  No, "Healthalicious."
The restaurant also used cash to pay some workers -- some of whom didn't have legal status -- and then didn't report the payments to tax authorities, Lynch's office said.
Wait, what?  What restaurant in New York City is not using illegal aliens and paying them at least partially under the table?  Ever heard of staging? How do you think anyone can do business in USA without that?  If you do not cheat, you are bankrupt and can't pay your taxes.  This is what is called selective enforcement.

Well, how come target Grimm?  Hurricane Sandy.  Look at the aftermath of natural disasters in USA.  The Feds come in and arrange recovery.  The rich and powerful end up with the assets.  Mayor Nagin spotted this instantly in New Orleans after Katrina and made his famous "New Orleans will remain chocolate" statement.  Soon enough Nagin was in prison for what any mayor does.  And on 20 counts, just like Grimm.  Twenty sounds so, what, ... guilty.  Grimm is having none of the asset transfer post-disaster activity, so off to prison with him!

Our country is broken, our courts, bless their hearts, would love to help out but they have no idea which way to rule.  The legislators are all suffering from Stockholm Syndrome and have voted for a military dictatorship as the powers that be pull what strings are necessary to get America to hate the executive branch.  Military strongman ahead!

There is an alternative: truth commissions.  Short of that, we will remain ridiculous.

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Monday, April 28, 2014

Forbes Does It Again!

Yet another Forbes magazine cover uses the word billionaire, this time glorifying the fracking king. Sigh.

INC, Businessweek and Fortune and all other business magazines, especially the ones putatively devoted to small business, and proceed from the definition of wealth as how much a person can buy with what they can accumulate.

I suppose if the regime is capitalist, by definition then that would be pertinent.  The confusion sets in when people somehow conflate capitalism and free markets, which are mutually exclusive.

Fracking is being allowed on the premise we have an energy shortage.  There are never shortages of anything in a free market.   Capitalism aggregates power into the hands of a very few and the narrowed interests result in malinvestment and misallocation.  Crises follow.

When will there be a magazine devoted to the free market? With the definition of wealth the etymogically defensible one of the range of goods and services one can afford with one's own money?

I'd have something in the magazine called the toaster index.  I'd compare what it would cost to make a toaster (and run it) in USA vs other places on earth.  I'd plot the trend. Right now plenty of places beat USA.  When the toaster began to overtake other places, as costs fell, it would tell you USA was improving.

The business media in USA is devoted to capitalism and crowds out any news on free markets.

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Sunday, April 27, 2014

RN Numbers and Clothing Trade

Ever see those odd RN numbers on tags on clothes?  They can tell you who actually is behind the garment, as opposed to what a label might say.  Write down the number, then look it up here, see what you learn, if you are in the rag trade.

https://rn.ftc.gov/pls/textilern/wrnquery$.startup

Information in this RN data system is based on data submitted by private companies. The information is accurate and current only if it has been kept up-to-date by the registered company. We encourage businesses to review their records and update their information as necessary.

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