Usury, Debt Financing and Current Events

Now the powers-that-be banks are criticizing each other:

The question stems from lengthy (256 page PDF) from the BIS Annual Report (Bank for International Settlements) that stated among other things "The only source of lasting prosperity is a stronger supply side. It is essential to move away from debt as the main engine of growth."

Debt finance is making money on loans.  Supply side is demand based on customer preference.   The report leads like an autopsy, at the death of an economy and identifications in all the ways the body economic was perniciously ill and battered.

And this:

In particular, prolonged and aggressive easing reduces incentives to repair balance sheets and to implement necessary structural reforms, thereby hindering the needed reallocation of resources. It may also foster too much risk-taking in financial markets.

Ya think?

Reading the summary of the BIS reports, who can deny interest rates are at the heart of the financial milieu, and that this polity is currently regnant.  No one denies this, but 99.9999% or interested parties are only arguing as to how to manage it.  "Responsible parties" are are actually promoting a managed undoing of the damage, recognizing there is damage done by polices.

If, as I and the other .00001 percent argue, the problem is in the practice of interest, then no matter what prescription is brought to the malady, the failure rate will be 100%.  The winner of the policy course will be the loser in history for screwing up the economy.  Go get 'em!

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Good Sake

Last night I was treated to a sushi feast in which a fellow had brought back a bottle of sake from Japan and shared.  The sushi chef, Japan born and raised, pronounced it excellent and ended up drinking as much as the rest of us.   The comments from another patron and a fellow who swore off drink 20 years ago except for a taste of this was...  "smooth... smooth."

I've never had sake before that I liked.  In fact, I never tasted any that I did not think was nasty.  Well, this stuff is great.  And here again, top shelf.    I would drink this anytime.

So, how come not in USA yet, what with all of the sushi shops, etc.  Small makers all over the west of Japan, why bother exporting since they sell all they make, etc.

So, of course, the only way to get it is to pay a higher price.  Here is an opportunity for something new and good for the USA market.

What else good is not imported, and where?

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Stockman on ExIm Bank

As I have said before, the USA will have to end before the ExIm Bank ends.  And the USA will end because the ExIm Bank will not end.  That is not to say that the USA depends on the ExIm bank, only that the ExIm Bank is proof that the USA economy is in the hands of extremely few people, the powers that be.  Like the Soviet Union, too few people in control cannot recognize all of the price signals, like the Soviet Union, the powers that be could care less if USA ends, because whatever is next they will be in charge of that, too.  ExIm Bank is just another bauble on the body politic.

Now, if like the Moldavans, some parts are able to go Hong Kong autonomous, then that will be a good thing.  USA was designed to be independent countries, called states, with a weak federal government.  No standing army. We lost that.  Time to get it back.

Stockman does an excellent job again breaking things down, and here he goes after the ExImBank. tries to make a difference between crony capitalism and capitalism.  There is only capitalism and free markets.

Unfortunately, the script is already evident. When push-comes-to-shove during the run-up to the fall congressional elections, Speaker Boehner can be counted up to come to the rescue of GE in his home state, and sell-out the tea party insurgents yet again.
And this time it will be game over. After the Ex-Im is given a new lease on life there will be no place for free market conservatives in the Republican party at all. Going forward, crony capitalism will be readily managed by the statist politicians who dominate the beltway regardless of notional party affiliation and banquet speech ideologies.

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China's Credit Crunch

Mish has a trio of articles yesterday, all getting to credit and real estate, and he quotes another writer;

Credit guarantees played a role in fraudulent borrowing. These borrowers then open their own credit guarantee firms and either aid others in fraudulent borrowing, or use the credit guarantee firm as a way to earn a high rate of interest on their fraudulently obtained money. Much of this credit may be tied up in the real estate market. Low income borrowers can borrow their down payment from a credit guarantee firm. Real estate speculators can obtain capital through credit guarantee firms. 

These "credit guarantee" firms are the boogeyman in the story.  In essence, they are asset-less guarantees a loan will be paid back.  And if not, up goes the interest.  That China has whole empty cities based on this practice is a stark version of a "false economy."

But this lending credit, unbacked credit, is precisely what the USA taught the world when after 1971, slowly at first, and then with acceleration, banks began lending their credit after they lent out all of their money.

I've been blogging on this, but anyone who thinks the China situation is different, or worse, is missing the fact that the Chinese are not bailing out (much) this process.  In fact, as China arrests malefactors, that credit is flowing into USA making China the #1 foreign buyer of USA real estate.

Foreign purchases jumped to 35 percent last year, and Chinese customers led the way with $22 billion out of the $92.2 billion total spent by foreign buyers in the US real estate market, according to a report by the National Association of Realtors (NAR).

It ain't money, it is credit.  They own the house free and clear, paid for it by US Dollars... but those dollars do not represent money.  Full faith and credit....  hope and a prayer.

And Mish finishes up with a story about France taxing empty office spaces hoping to fore the owners to convert to housing...

China is tottering and will probably "crash" first, but not fall as far as USA.  But we all need a real estate bubble bust so small business can find cheap rent from which to grow.

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Free Trade Is Unilateral

The EU, of all things, has exercised unilateral free trade agreements with West Africa.

Certainly, 11 out of 15 ECOWAS countries, i.e. all its Least Developed Countries (LDCs),
enjoy already full market access to the EU under the Everything but Arms (EBA) initiative
since 2001
2
. The latter grants LDCs free access to European markets without being forced to
open their own markets to EU imports. Therefore, these LDCs might think that they have little
to lose if the EPAs would fail. The EU, however, made it clear that EBA is an unilateral
arrangement granted by the EU which may be opened to LDCs outside the ACP

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Online Export Food Seminar

If you need the shortest distance between where you are now and exporting food as a small business, sign up now for an online version of my start-up course.  I've added a section for late July to meet immediate demand.

Sign up here.... http://seattleteacherscollege.net/exfoassmbu.html

Full course info here: http://www.johnspiers.com/Export_Agriculture/Welcome.html

The dates for the course are:

Summer Session II 2014 

Monday 7/28- 8/18/2014   Four Sessions

Section One ~ 6 AM to 7 AM Pacific Time

(This would be 7 AM to 8 AM Mountain, 8 AM to 9 AM Central, 9 AM to 10 AM Eastern)

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Home Auto-Roti Maker

I've been saying we'll know the economy has turned around when toasters are being made in USA again.  Well, it's a breadmaker, and it is being designed here, so we have a ways to go...  Amy checks in with a Roti machine...

When Zimplistic first unveiled its YouTube product demo, the video went viral, and amassed 2.5 million views. That flood of interest converted into $4.5 million in pre-sales as soon as Rotimatic started collecting orders on its site. Now, the company is “sold out.” Even the initial run of Rotimatics won’t arrive in consumers’ hands until early 2015.

This is excellent, seeing a machine being designed

A product of Zimplistic, a Mountain View, California-based company of 20 people, Rotimatic was developed over six years by co-founders Pranoti Nagarkar and Rishi Israni. Nagarkar handled the engineering, and Israni was largely responsible for the software side (there’s no operating system; it runs “bare metal”).
Nagarkar said she was inspired to create Rotimatic after growing tired of trying to perfect her own roti-making skills. Depending on how good you are, a batch of five take 30 to 40 minutes. “I used to take probably longer and that’s when I got fed up," she told Mashable.

Response has been hot...  I love this crowd-sourcing market testing and finance.  banks and their usury destroy economies, and even if people do not understand the destruction from usury, as long as there is a process to get us away from it, good enough.

They should test the brand name Rotimatic against other names.  I'd call it Guru Roti. Roti Guru?  If I knew some Hindi I might come up with some fun puns.

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Crumbs Bites the Dust

The same day shut down of 70 specialty cupcake stores has analysts talking.  This fellow has a close reading of the story:

Mia and Jason Bauer founded the first Crumbs in New York in 2003, and did quite well. Crumbs thrived and grew organically—first in Manhattan, and then in well-off areas of the tri-state metropolitan area, as people who worked in the city took their newfound taste for cupcakes home with them. Crumbs avoided advertising and contracted production out, thus keeping a lid on costs. In post-bust New York, rents were comparatively low and so the model worked. By 2009, when I first warned of a cupcake bubble, Crumbs had expanded to about two dozen locations where the people are as rich as the cupcakes—wealthy areas of Los Angeles, the Hamptons, New Canaan, Ct. Sales boomed from $5.3 million in 2007 to about $23 million in 2009, and the company was profitable.

I would note that this "get big or get out" is a culprit, for many small chains thrive for decades if not centuries without big expansion.  But when credit is limitless and cheap, people "go for it."  But then comes this excellent note:

When the business model isn’t fundamentally sound and the zeitgeist goes against you, it can be tough going. Crumbs tried to adjust by closing stores, cutting costs, and seeking to license its name. But the costs were simply too high. In 2013, the company had $47 million in sales, up 10 percent from the year before. Fans were still willing to shell out for the product—the company reported a gross profit of $25.5 million. But rent ($12.7 million) and staffing ($16.4 million) more than ate up the operating profit. Crumbs couldn’t sell enough cupcakes to pay all its bills. In the end, its rent was too damn high.

Yes!  Lending credit is exactly the problem.  It was fine as a couple of cupcake stores, but then they went B I G ....  and with cheap credit we had asset inflation in real estate, and those inflated prices knocked out the small company.

This is textbook classic example.  The specific policies of get big or get out work well, they help the big get bigger and destroy the small.  When commercial real estate drops drastically, and rents follow, we may see some resurgence of small business.  We badly need a real estate bust in USA to help fight unemployment.

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Hit the Gas!

Video makes things seem farther apart than they are...  here a pilot changes his mind about landing...



The gasp from the videographer suggest how close they came...

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Exporting Good Food

For whatever reason, the word is getting out on back to good food.  Here Time magazine has a video on how we got to such huge increases in heart disease and diabetes, both diet related conditions.

I guess I was lucky that my godfather was an MD and back in the 1950s, 1960s he wasn't buying any of the government health advice.  He knew better, since doctors back then were scientists, not sociologists.  At the same time my mother was in fact a sociologist, and could see what was up when sociology was being abused.

This is an interesting piece of history, because we see it happening today with propositions every bit as nonsensical.  I think it was Thoreau who lamented it took so very few people in a democracy to get us into war.  Just so, and just as few to get us into unbelievably destructive social experiments. give this 2 minute vid a view:


(Again, from De Costner)  I missed being scammed by the fascist big govt/big ag combine.  Pushing 60, my health is good and all my life I ate what I want when I want.  I wanted good food.  Always have, always will.  The junk food stopped appealing when they started putting in the junk in the 1960 - 1970s, although to this day on a long road trip, I will buy a corn dog, for the psycho-psylibin reaction that is guaranteed with those.

Today I am writing so I am down to 2 meals a day, spartan, and no interest in snacks.  I drink beer and wine in what I call moderation.  I drink expensive beer and cheap wine.  But it is in glass: Carlo Rossi, the biggest gallon jug.  I've also fasted twice a year for a week for the last couple of decades and this turns out to be a reset button physiologically.  (At first I was sent to my godfather because family were alarmed at a week-long fast. My doctor was mystified that anyone would consider going a week without food being a problem.  We both shrugged our shoulders and that was the end of it.)  But then, it is a monastic saying that to fast well you must eat well.  Anyone who eats well (as in proper, not as in "much") can go a week without food to no ill effect.  In fact, as my doctor said, when the body starts consuming itself, it selects the diseased parts first.  Maybe that is the reset button they are finding.

Here Karen DeCoster recounts her escape from food disease, and she makes an offhand comment:

Even food giant Unilever is backpedaling on its anti-butter marketing and product placement while touting its “half butter” products.

Well, yes.  Those half-butter products.  You know, when USA outlawed selling cigarettes to kids (and now even dopers are alarmed that marijuana legalization is targeted at kids) we taxpayers began to fork over hundreds of millions so the tobacco companies could market cigarettes to kids overseas.

And click on this to see the exports in "half-butters" from USA the last five years.

Click to enlarge

Now this is a remarkable report...  half butter exports are not a big business, but clearly there is a concerted effort to market this USA butter spread product around the world.  Rarely does one encounter such spotty export patterns. A big first sale, and then dwindling...  Hong Kong and Singapore are in 1000% increases, but they have massive hotel operations which can use the stuff, plus much entrepot trade, so they are unique.  But South American countries that are coerced to buy from us are doing what they can, but countries like Israel and Malaysia get a load of this and quit quick.  No doubt at $2 a kilo we are not using our best butter in the butter half and who knows what is in the "surprise" half. (Feel free to email me for .pdfs on both the raw data and the spreadsheet.)

The world wants USA food, but our good food.  There is the business.

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Trade Data Revisions

Entering the world trade data website at usitc.gov I was offered this notice....

So I asked around inside and got this reply...

This is typical for any set of stats.  Revisions can come several years into the future as they clean the data and get more forms in.  The changes are normally  not very big (unless somebody screwed-up).  They'll get more forms into the system that maybe were filled-out on paper instead of electronically.  They'll also look for outlying/unlikely values and either drop them or adjust them.  They'll also impute data for cases where the form is only partially filled-out.  It's basically a bunch of detail work that takes 1/2 of the total collection time to get the stats as accurate as possible.

It would be interesting to go back and redo some reports to see any changes the updates effect.

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Jimmy Choo Shoes Logo

When I ask what drives the sales of $400 shoes at places likes Saks, participants in my seminars usually say "brand" or "logo."  At which point I go throough a Saks catalog and demonstrate many of the companies with shoes for sale at Saks no one has ever heard of.  These are new companies.  I ask if these people got into Saks unknown, how come you have not?  (And then I proceed to show them how.)

Comes China Daily with an article on Jimmy Choo.

In over 20 years of business, Jimmy Choo has gone through various ownerships and investors. Although still alive and working, its original eponymous designer is no longer connected to the company.
His niece, Sandra Choi, who has been with the company from the start, designs the current line. The brand is now owned by Labelux, a fashion holding company based in Switzerland, which also owns other luxury leather goods companies like Bally, Belstaff and Zagliani.
Aside from never having had an "it" bag or shoe, today's Jimmy Choo makes a fascinating story because it is one of the few brands who has never aggressively entered China although it has had a store in Beijing and Shanghai for the last 10 years.

Jimmy Choo has no logo or Brand identity, nor ever pushed in China.  China is yet to produce a respected worldwide brand, even though it is the worlds #1 exporter.  That will change.  For now, there is only this logo.



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Google Ads

Now don't get me wrong.  I love google.  The help me do research, and most important, they sell my books as long as I am willing to give my content away.  It is paradoxical, but there you have it.

And I do believe that google is conceived and executed as an intel arm of the USG, owned and operated by uncle sam but fronted by gee-whiz millenials in order to keep the center.  And I do understand also they punish people who say what I just said.

But so what.  This blog provided "free" by google (why do "free" things cost we taxpayers so much?) gives me about $20 a month in ad revenue, and I am told it earns about $.80 cents an ad.  Y'all are big spenders according to google.

I very badly wanted google ads to work.  I took their freebie offer and after spending about $500 of my own money running ads, I got to where countless schools arrived, and that is the cost of an enrollment for continuing education courses by advertising online is about $90.  Therefore, the method is pointless in this instance.

Ogilvy put the ratio at ten times.  If the ad does not bring in ten times the cost, then the method is pointless.  Ogilvy was particularly scornful of ads that won awards or had many viewers, but at the same time no generating ten times the cost in sales.  Minimum.  For my $500, I should have gotten $5 thousand in sales. Didn't happen.

I think online advertising is largely bogus, although it generates billion in revenue for google.  I know someone working for a prominent online media outlet who went unpaid for a long time since GM did not pay for their Camaro ads, awaiting bailout dollars, to do so, as related.  Got paid eventually.  But if that is typical, and look at online ads. then all of this is false economy.

Among small business people I speak with, universally they say google ads is inexplicably difficult, and it seems purposely so.  How come?   So agencies can step in and sell the unsellable, google ad efficacy.

Explain this....  the landing page for recruiting google ad users features a success story.

Ok... All is very high tech with a rollover that quotes a whopping doubling in clicks.  Well, clicks don't pay the rent, so who cares.  But wait!  A ten percent increase in sales!  Yay!

At what cost?

At what price did a 10% increase in sales come?  So let's go the Romis website and inquire directly about the no doubt paid endorsement.  Maybe we can find out.  Now to to that website, romiboutique.com and what do you get...

Update: twice last night I landed on a godaddy "no such webpage" placeholder.  A reader tells me it is now landing where it should:  http://www.romiboutique.com/  Confirmed!

Now I will ask at what cost came the 10% increase in sales.  I'll update with an answer if I get it.

Don't mix up google Adsense in which you are paid to let google place ads on your "property" with google ads in which you are placing ads.  Those are two different things.    For whatever reason, according to my experience and those of other small businesses who have tried it, it is impossible to manage.  Hence the ad agencies that will manage it for you.

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Do Good While Doing Well Right Now

If you ever want to visit a ranch run right, that produces good food well, and even teaches others, the Devil's Gulch Ranch is the place to go and better yet send your kids to a summer camp.  I know, because I spent a day there.

But doing all that is as Wellington said a "damn close run thing."  Farming is money up and money down, and we can keep the wicked big banks away from farmland by promoting these kinds of loans. Keep these ranchers free to make good food!

So in steps Kiva with zero interest loans.  That's right, I can also recommend this because Kiva will facilitate a loan that will be repaid,  only no interest.  I am so delighted to see these expanding, a usury-free market.  Crush the big nasty banks with people power!  Defend the small farmers!

Now here is the deal...  Kiva will kick in an extra $500 depending on how many people subscribe.  The amount does not matter, it starts at a mere $5!  Or you can put an end to their immediate struggle and kick in $6930.00.  If you got it, do it.  You'll get it back. Either way, anything from $5 to $6930.00. You do it today, and spread this around so others do it by July 8.

Get your debit card right now, and become part of the solution, making an interest free loan of a small amount to people who are making the kind of food we should be eating.  The more people like this grow, the lower the price to the rest of us for tasty, nutritious food.  Pledge right here, right now.

Did you do it?  Good, you just made the world a better place.  Now tell everyone else....

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We Buy El Salvador's Lunch

Comes the news on USA foreign aid:

El Salvador is a recent example of corporate domination in U.S. foreign aid. The United States will withhold the Millennium Challenge Compact aid deal, approximately $277 million in aid, unless El Salvador purchases genetically-modified seeds from biotech giant, Monsanto.

Where do we get $277 million dollars to "aid" El Salvador?  Well, as long as we can lend credit, for which there is no rational limit, credit-backed dollars are unlimited.  $277 million might seem like a lot to you or me, and even El Salvador, and certainly some El Salvadorans who were educated in USA, but to Uncle Sam who admits to 16 Trillion in debt, it is peanuts.

El Salvador is a small country, but as more and more small countries are paid by USA taxpayers to buy Monsanto products, it starts to add up for Monsanto.  Please note that without USA taxpayers buying the Monsanto products for El Salvador, El Salvadorans would not buy Monsanto products.  In big biz/big govt USA, this means taxpayers must pay El Salvadorans to buy Monsanto products.  Well, not pay for, but add it to our tab, since we are putting all this on credit.

As small countries take the money and then buy Monsanto, the food control shifts from the growers to the Harvard educated city bureaucracy, and the result is the chaos of such countries as Somalia.  We have destabilized many a South American and African country with this "aid."  We did so to the USA inner cities.

How did we get here?

The watershed event was the USA leaving the the last vestiges of the gold standard in 1971, and with that broke free of any rational limit to borrowing.  With limitless borrowing, comes limitless credit, in turn which can be lent.  What is outlawed in the three great monotheistic religions, is now calculated in the trillions.

But to what end?  It is always the same thing: libido dominandi.   Lust for power drives all sorts of people and Rome was not the first to conquer territories for food, and then use food for control.  It was ever thus.

USA was supposed to be exceptional in this regard, but we have proven to be unexceptional.  With the limits off, USA got busy using, as Earl Butz noted, food as a weapon.

Time magazine (November 11, 1974), concluding its special report on the world food crisis, explains its support of triage:
In the West, there is increasing talk of triage. . . .If the U.S. decides that the grant would simply go down the drain as a mere palliative because the recipient country was doing little to improve its food distribution or start a population control program, no help would be sent. This may be a brutal policy, but it is perhaps the only kind that can have any long-range impact. A triage approach could also demand political concessions. . . . Washington may feel no obligation to help countries that consistently and strongly oppose it. As Earl Butz told TIME: "Food is a weapon. It is now one of the principal tools in our negotiating kit."

The press was no less government-controlled back in the 1970s than it is now.  Continuing the blend of theories of Malthus and Darwin, leading magazines proclaimed there are too many people and someone had to go.

Only surplus food will find its way to those nations unable to compete in the market. But not even this paltry sum has been directed to the areas most in need. The Sahelian countries of Africa, where 100,000 persons were felled by famine last year, received relatively little of this surplus food. The decision as to where the food is shipped is based on cold war politics. Last year nearly half of our food aid went to South Vietnam and Cambodia. Our "defense perimeter" certainly did not include Chile under Salvador Allende. Three days before the military coup d’état, the U.S. turned down a request to sell wheat to Chile for cash. Yet one month after the junta’s putsch, with Allende dead, the U.S. granted the new regime eight times the total credit ever offered to Allende to purchase wheat. Food for Peace has been handled as an adjunct of our military assistance programs.

The system now depends on a regime in which there is no rational limit to what can be "borrowed" against "ourselves" (meaning our kids) with the only caution beyond forbidding usury is the vague "unto the third and fourth generation."  Bill to the USA taxpayers El Salvador purchase of GMO grain?  Why not? There is no rational limit, until something goes wrong and it comes a crashing down.

What are the chances the people of El Salvador escape this deal?  What are the chances we escape this deal?   Near zero?  That is capitalism, that is democracy.

On the one hand, there is absolutely no need for these programs.  Yes, people are starving in some places, but not for a shortage of food.  People starve pursuant to political decisions.

The small business of food trade worldwide is necessary and sufficient to literally deliver the goods.  If capitalism and democracy could have delivered by now, it would have.  What proper nutrition people in fact get is the result of free markets.  Like the socialists and communists, capitalists are free riders on the success of free markets.

The most revolutionary act you can perform is to start a business.

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