Saturday, September 27, 2014

Spooner on Banking

Lysander Spooner is probably one of the greatest Americans you never heard of.  He was what we today would call and anarcho-capitalist, and I've been reading him in relation to banking.  He was very well known in his time.

All of his works are amazing to read, if for nothing else to see what people argued over 150 years ago.  Today we cannot imagine there was ever a time or place when people discussed right and wrong, or the role of government.

As an anarchist Spooner simply did his own thing, becoming a lawyer without going to school (still allowed in Washington State)  but skipping the 5 year apprenticeship required by law.  His arguments were so effective the State of Massachusetts had to rewrite the rules to accommodate him.  Can you imagine today a state ever changing rules to meet logic and right?  He lays waste the arguments for state licensing.

He saw no reason for the monopoly on mail, so he set up as a competitor to the US Post Office.  He was quite successful, but of course as is to this day, the Feds were too big to fight.  The Feds of course adopted all of his popular ideas, and then ruined them.  Today we have people who tried to set up alternatives to the internet who have met more harsh treatment.  Whereas government once would at least argue, now it is "off to prison" with you.

His particular book I am reading now on banking was written in 1873, and his advice was eventually embraced, extended, distorted into what we have today.  He would be appalled at what happened to his ideas.  The book was in response to the scorched earth policies of the republicans (today embraced by democrats too) on the South, and how to introduce capital and competition.

Think if you owned a $250,000 home free and clear.  The you might create a title to monetize your house at say $200,000.  Warranted by this title, you would issue $200,000 worth of currency, in 1, 5, 10, 20 and 100 notes.  Then you could spend it, how?

Say farmers are started to grow wheat down the road.  There is no mill close by.  Locally y'all will do well if there is a mill close by.  So you spend the $200,000 buying land, hiring builders, hauling in a millstone, hiring architects, and get the mill built.  Now in essence, where there was just once a house, now there is a house and a mill.  Where you once owned a house, now you own a mill, and all of the people who took your currency now have claim on your house, so you live in the house, but do not own it free and clear any more.  It has more moving parts, but over time the mill generates profits which you use to extinguish your debts, that is the currency you lent out against the value of your house.

He notes the obvious, that in an economy gold and silver as money is very little used.  It is credit that builds communities, and lack thereof that stifles them.  Access to credit is how the bankers control who wins and who loses in USA.  Who can issue currency is strictly controlled, and the same elite force (Secret Service) that protects the currency "protects" the president (although they tend to be notorious whoremongers, substance abusers and keep the president in line for the bankers by allowing scary people to get near the president.)  Spooner asks the obvious question "Why do we allow the government to control banking?"  In fact the legal fiction is we do not, that the Federal Reserve System is a private corporation, owned by its members.    It is a monopoly, and its owners do not allow it to be audited.  It's credibility is backed by American threat of force worldwide.

There is nothing new in his ideas, except to say it was not allowed.  It is now allowed, indeed, maxxed out, embraced and extended into lending mostly against no assets whatsoever.  By giving government backing, that is violence, to support lending against no assets, there has been no logical limit to what we can do.  And we have decided to make wars, debilitate segments of society, pollute, ad nauseum.  Spooner knew you could not trust government to get anything right.

Banking has a fascinating history in USA, and Spooner does a great job of breaking down the raison d'etre of the USA to banking and bankers' central role in control and exploitation.

Spooners arguments were consistently admired by his opponents. He got as far as he could, and it is an eye opener to read the quality of the arguments back then.  Wish we had more people who could argue and think today.  Wish that people gave anarchy serious consideration.

I part ways with Spooner as he makes usury central to this system, when it is simply not necessary.  He does not make it mandatory, and maybe he was being polemical by including it.  But if he supports it, then that makes him an anarcho-capitalist, not a straight anarchist.

This edition is a reprint, and not stellar, but readable, and valuable for a experience of time and place, back when USA and Hong Kong seemed so much more alike, closer to the roots of both.
A New Banking System The Needful Capital for Rebuilding the Burnt District



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Ex Im Bank Funds Andalou Naturals

This is fair warning to investors and customers, that according to the ExIm Bank, this company relies upon  corporate welfare:
Founded by Stacey Egide in 2010, Andalou Naturals, a small business-exporter based in Novato, Calif., relies upon Ex-Im Bank to sell natural and organic products for skin, hair, and body care abroad. The company currently employs 21 employees in CaliforniaOhioNew York, TexasIllinois, and Colorado.
 (Emphasis added) I wonder if Andalou notes its reliance upon the ExIm Bank in its financial statements.
"Ex-Im's export credit insurance is designed to support small businesses like Andalou Natural expand their exporting portfolio by neutralizing the risk of nonpayment," said Ex-Im Bank Chairman and President Fred P. Hochberg. "In California alone, Ex-Im Bank has authorized $11 billion to support $23 billion inCalifornia small business exports since fiscal year 2007."
Even if any of that is true, how come the majority of exporters need no such help?  If it is designed to help small business, why does almost all of it go to large businesses?
Andalou Natural has become a repeat policyholder of Ex-Im Bank's export credit insurance and expanded their export reach to TaiwanMalaysiaSouth Korea,SingaporeJapanThailandIndonesiaVietnam, and the U.A.E. Total company revenue currently amounts to $18 million, approximately 15 percent of which is export-related. "By providing affordable accounts receivable export insurance, Ex-Im Bank has given us the opportunity to expand at a much faster rate and has broadened our pool of possible importers," said Mark Egide, President of Andalou Naturals.
OK, so about $2.5 million is at taxpayers risk.  But how come other exporters need no such help?   Sure, there are all sorts of things that can be done to speed up processes if you privatize the profits and socialize the losses.  How is this any different than Bank of America?
"Ex-Im Bank support has allowed us to hire an export manager and a sales-support assistant as we have expanded. Without this insurance coverage, we would require prospective importers to pre-pay for their orders, and this typically limits the number of companies who show interest."
I thought you said the money was for export insurance, not hiring staff.  No objection to hiring staff, but much objection to expanding the false economy, and misallocating resources and malinvestment at taxpayers risk.   Yes, EZ Cheap credit does expand the customer pool to include people who otherwise would not make it overseas.  It does not mean you would have NO business, it only means your competitors in USA find their customers overseas losing out to sketchy buyers competing overseas.  In this way, among many others, ExIm Bank harms USA exporters.
Export credit insurance enables companies to increase export sales by limiting their risk of non-payment by purchasing an insurance policy, just as someone limits their risk of fire by purchasing homeowners insurance. 
Well, not "just as" in any way. Most exporters limit their risk by being prepaid, a rather fool proof method.  Companies do not "purchase" insurance, and we end up with the bad debt on taxpayers books, while ExIM Bank books bad debt as "assets."  One limits the risk of fire by safety measures and being careful.  ExIM Bank loans foster carelessness.  If your house does burn down, you've paid a full premium amortized for risk.  ExIM Bank loans are so heavily subsidized and cheap that losses are immaterial to the company.  Compare getting your money from another source to having to deal with your house burnt down.  The Ex Im people are dishonest in their PR.

There are perfectly viable ways of organically growing export business with any ExIm Bank interference.  Almost all exporters do it.  But ExIM Bank does give you and edge by privatizing profits and socializing losses, misallocating resources to picked winners while harming the ones who do not take welfare.

The ExIM bank, along with its recent push for reauthorization, now hides who gets loans and the losses incurred, so, as with most government programs, there is no possible oversight, like the IRS (tea party scandals) or the DEA (fast and furious).

An interesting study would be to learn who got loans, the effect on their competitors, and the loss rate, plus any correlation between loans granted and political contributions.  If we have to pay for the success of these companies who report they rely upon the ExIM bank, then we really should know what we are getting.

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Cotton: Get Paid To Create Glut

The USA has a program where farmers get paid to create a glut.
Lower demand from top-importer China and bigger production in the U.S., the No. 1 exporter, are expected to lead to the largest global glut of the fiber in history...
To help farmers with operating expenses, the federal government offers cotton growers nine-month loans at a rate of 52 cents a pound, which are secured with the fiber. Late Thursday, the U.S. Department of Agriculture calculated its adjusted world-price-a proxy for the physical price of the fiber-for the week beginning Friday at 52.61 cents a pound.
When the USDA's world price falls below the loan rate, the government allows cotton farmers to pay back their loans at the world price rather than the higher price at which they took the loans. Farmers also have the option to forgo a loan and simply receive a payment that equals the amount by which the loan rate exceeds the USDA's world price when they sell their cotton.
The last time the government made a payment under its cotton loan program was in 2009, according to the USDA. That year's total was $5.5 million. Between 1999 and 2009, the average annual cost of the loan program was $332 million.
1. Every dealer on planet earth saw the lower demand from China coming, how come we did not plant less.  Because you make money either way.

2.  How come cotton growers are guaranteed a price, and not coffee shops, or copy shops, or shoe shine parlors, or appliance repair shops?  Or your business?

3. The average $300 million is money taken from USA taxpayers, and leads to the ruin of overseas producer who cannot compete with USA dumping of cotton.  This is another reason why so many people around the world want to kill USA citizens.

We really ought to "have a conversation" about why people want to kill us.   I know it is easier to say "because they are Muslims" but it just might be another reason.

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Friday, September 26, 2014

Russia Goes Up Market

In response to the idiotic sanctions on Russia for USA destabilizing the Ukraine, the Russians seem to be going for an "import substitution" program.  If the import supply is going to be iffy anyway, just curtail it overall and watch domestic provisions grow.
Reports all showed a sharp decrease in farm and seafood produce to Russia in recent years. Prior to 2009, the products accounted for 50-60 percent of Vietnam’s exports to Russia but the proportion has dropped to 10 percent.
Nguyen Binh Giang, a senior official of the Import & Export Department of the Ministry of Industry and Trade (MOIT), noted that in many cases, Russia’s standards were even higher than that of European countries.
“The requirements on food hygiene and product quarantine set by Russia on Vietnamese farm produce are very strict,” Giang said.
Vietnam has no beef with Russia, but Russia is being tight with Vietnam.  Is Russia allowing prices ot rise inside Russia in order to see domestic production called forth by the price signal?  Will BigFarm find that its heavily subsidized exports to Russia never returns, when Russians find domestic is superior?  Expect in a decade to see Russia's domestic production start to become exported as the domestic production improves.

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Line 'Em Up!

Severe punishment for a mere ten billion in phony deals?  Ten billion is nothing in USA.
China uncovered almost $10 billion in fraudulent trade nationwide as part of an investigation begun in April last year, including many irregularities in the port of Qingdao, the country’s currency regulator said today.
We need to outsource regulation to China.

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I Don't Believe a Word of It

The FBI and CIA claim google and apple have encrypted their software on new models so the Feds can no longer eavesdrop.  I don't believe a word of it.
The FBI has warned that decisions by Apple and Google to encrypt their smartphones will make it more difficult to rescue kidnapping victims and foil terror plots.
The two Silicon Valley giants have both decided to add new encryption systems in the face of privacy concerns sparked by Edward Snowden's disclosure of mass government surveillance.
Both Apple and Google were criticised for allegedly handing over reams of customer data over to the National Security Agency (NSA).
Options:

1.  The companies tried and believe they succeeded.

2. The companies and the cops/intel are running a scam hoping people believe this to help their sales overseas.

Either way, there is nothing created for which the cops do not already have a key.  there are countless people inside who are selling info out the back door to law enforcement, and plenty of law enforcement plants inside these companies.

In time we'll hear this is nonsense.

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Thursday, September 25, 2014

Yikes! 43% Interest With Kabbage

John sends along a link to kabbage.com, that makes loans based on your online sales experience, tapping into your ebay, yahoo, square or amazon account to see what you can carry.  Pretty slick, but yikes...  their suggested loan example shows 24% interest pa, and if you dial back to one month loan it is 43%!!!

Check it out:  https://www.kabbage.com/how-it-works

In time we'll get back to no interest loans among businesses.  Like https://www.communitysourcedcapital.com/

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Poverty Draft & Veterans Benefits

One benefit of being a veteran is the leadership experience as an attractive resume point, nationwide jobs preference programs, massive training programs, all leading to better jobs prospects after time in the service.  Or not:
As of September 2012, 736,000 veterans were unemployed and the jobless rate for post-9/11 veterans was 9.9 percent, with young male veterans (ages 18 to 24) experiencing an unemployment rate of 18.1 percent.
The unemployment rate in USA is reported as around 5.5%, so veterans are running about double, and young veterans nearly four times.

How come?  Is the fact of the matter military experience makes people undesirable as employees?  Or is it just officers get the experience benefit and the grunts, no?

Since we now have a poverty draft, the young should know these figures, if any think they will escape poverty by joining the military.  They might, but the odds are they won't.

If you really want to be all you can all be, start a business, the most revolutionary act an American can perform.

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Alibaba Serves Up Another 48 Million Shares to Insiders

After your pension paid $90 a share of alibaba, alibaba issued another 48 million shares the following Monday, at $68 each.
In particular, it was reported by CNBC that numerous hedge funds were allocated miniscule amounts of Alibaba Group Holding Ltd (NYSE:BABA) stock in comparison to the amount requested. Instead, preferential treatment seems to have been given to investors that had longer ties with the company, including early backers, who were given larger dollops of shares as a reward.
So now those insiders will sell out and pocket the difference between their $68 price and whatever your stock falls to before the insiders can unload and book profits.  The Chicom press gives a more fair view:
"As the irrational passion for short-term trading gains dies down, Alibaba's share price will adjust and recede to around $80," said Hong Hao, the chief strategist at Bocom International Holdings, to China Daily online, adding that a new round of investors will digest the stock and seek buying opportunities in the secondary market.
The USA stock exchange is supposed to be about wealth creation, but clearly it is about wealth-transfer.  These guys came to USA because we allow front-running and regulators captured by the regulated.  It astonishes me to hear people say "we need more regulation!"  There is no field more regulated.  The trick is to get rid of the regulators, then the regulated have no one to pretend to be in charge.  That's right, then you'd have to develop your ability to judge.

Check your pension statements to see how much BABA they bought at what price.

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Wednesday, September 24, 2014

Welfare Queen Gets Tired

Here is a fair criticism of an ExIM bank critic... by an ExIm Bank client:
She and others like her pontificate from behind a desk, using theory and political rhetoric rather than considering how their words can impact American jobs. By contrast, employees with our U.S.-based company happen to work face-to-face with product distributors and with farmers in fields all around the world.  Our company is based in Gilbert and we began using the Ex-Im Bank nine years ago. Alan J. Merrill is executive vice president of Bio Huma Netics, a Gilbert-based company that manufactures fertilizer and wastewater solutions.
Yes, theory against experience pales.  So let me reply to Merrill who claims to have been on EXIM Bank life-support for nine years in business, from someone who already had ten years experience of dealing with buyers and sellers face-to-face around the world, before being self-employed for thirty years.  Ready?
Our competition includes some of the largest agriculture companies in the world. Many of them receive support from their home governments. The Ex-Im Bank helps level the playing field so that we, as a small business, can get our product overseas and compete on quality, not financing.
Well, which is it?  There is an internal contradiction to say you need financing, so you don't need financing.  How can you possibly control for the variable of EZ cheap credit when trying to assess whether quality is a factor in a sale?  You can't.  So here is what you have missed by being a welfare queen, instead of a entrepreneur:

One cannot compete on quality.  You would have learned this had you actually gone out and tried to build business without the ExIm boondoggle.   Quality and service are standard offer items.  The quality of your fertilizers are set to what the market wants, no more no less (as is service).  Within an extremely narrow band, all players offer the same quality and service.

What builds markets for small business is design, the only place where small business can and need to compete.  A fertilizer designed to produce a specific effect, solve a specific problem, as opposed to the standard fertilizer.  Now for a uniquely beneficial fertilizer one may charge a premium price and have no problem finding customers who are ready willing and able to pay.

Indeed, the fact you admit the people with whom you deal are not able to pay means legally they cannot be designated customers.  The legal definition of buyer is ready, willing and able to buy. You don't have a business, you are really a sort of government-funded NGO.

Why are your customers so weak that they need USA taxpayer loan guarantees before they can buy (or more to the point, before you will sell?)  Why are taxpayers running the risk of default, and not your company?  You say "look at the jobs" when we should look at your company.  (The ExIm Bank now forbids this, hiding the list of names they finance, in this way we can no longer know when ExIM Bank deals go bad.)

Google reports variously 700 fertilizer exporters in USA... why is Merrill's the only one that needs taxpayer bailouts to continue (aside from the Koch brothers of course, welfare queens extraordinaire)?  Why should you have an advantage over the some 658 others who sell and get prepaid for export sales, not USA taxpayer guaranteed funding?  What about the employees of well-run companies who lose their jobs because overseas buyers who are perfectly capable of paying the other company agree to save money by buying from a USA taxpayer wealth transfer scam that your company mediates?

And what of the domestic producers in your target market?  How are they to compete when you offer USA taxpayer subsidized product against the domestic product?  EXIM Bank support has ruined many an overseas producer, adding to the hatred of USA.

Businesses on running-bailout need not concerns themselves with competing in markets.  For all that ExIm bank is used by almost no one in business of international trade.

If a country is effectively subsidizing its exports, then trade in that country's subsidized product until that bad policy breaks them.  Get rich off their folly.  It is how Dow Chemical got started.
Without the bank, we would not have access to financing alternatives, and as a result, would not be able to export to many of our current customers. But opponents of the bank suggest that the private sector will step up to meet the needs of small businesses like ours should the bank's charter expire.
No, opponents say if your parroting of false EXIM claims of profitablity were true, then a bank would do the business.  But you can only get financed when a bank says you'll fail otherwise.  What does that say to the rest of the taxpayers funding you?
Small businesses here in Arizona and across the country can tell you that without Ex-Im there is no other option. The private sector can't step up to meet our needs because commercial banks are most often unable or unwilling to finance or insure the international deals we conduct. Without financing or insurance, these American businesses and jobs will be put at risk.
Well, yes.  The jobs at risk are all false economy jobs. Merrill parrots EXIm's well documented lies about turning a profit, a point that is prima facie nonsense because if so banks would do the loans.  Yes, these jobs exist because of misallocation and malinvestment, provided by ExIm Bank.  And the same  misallocation and malinvestment is crowding out real economy jobs.

It's not the cards you are dealt, it is how you play the hand.  There is no judging a man as to how he plays his hand, if he wants to pursue being on the dole, that is his choice.  Indeed, when I lecture I advise on a strategy of raiding the dole meant only for big business judiciously to advance a small business advantage. But when he wants me to believe his choices are a good thing for everyone, then that is insulting and abusive, expecting me to go along with his pretense.  In life, NEVER believe your own PR.


Merrill actually starts out with the best quote:
Be it President Barack Obama, lawmakers or D.C.-based think tanks, we tire of being told how to run our business.
Hilarious.  Typical republican. Barack Obama has put the ExIm bank on steroids, making your gig possible.  Like most welfare queens, he wants his EBT card but bristles when people suggest he get a job.  It is HARD being a welfare queen!  People want accountability for what you do with their money!  Soooo tiring!

I never get tired of criticism.  It is either not true, or where true, I readily admit it.    I get media rate, a huge subsidy, on the books I sell.  Why should taxpayers subsidize delivery to my customers?  Why, indeed?  I don't advocate it continue, I say get rid of the USPS.  Let private companies run it.  Until then, I rock the subsidy.  But if they get rid of the subsidy, I won't go away, because the subsidy is not critical to my success.  By defending ExIm bank, you are expressly stating you cannot survive without it.

Don't worry, the ExIM bank will not end until the USA ends (and the USA will end because such as  the ExIM bank cannot be ended).  But you can join the other 659 or so USA fertilizer exporters and offer a product people actually want to pay for.  But you have to compete on design, not taxpayer guaranteed low price.

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You Cannot Tax a Corporation

The talk of Buffett-financed Burger King tax evasion is desultory.  It is not possible to tax a corporation or business.

If a business is profitable, it has passed all paid taxes onto its customers.  If you buy a hershey bar, you have paid all of Herhsey's taxes.  The end-user refunds or prepays all taxes ever paid.  Nothing else is possible.

So why tax corporations at all?

1. Hide the tax from the ultimate payee.  Corporate taxes are stealth taxes that keep you from knowing you pay about 70% of what you earn in taxes.  (How do you think we "pay" for all these wars?)

2.  To disadvantage one business in favor of another, by hiding the fact you are harming one businesses customers.  Capitalism needs governments to pick winners and losers.  Tax codes reflect the decision of who proceeds and who is destroyed.  (The power to tax is the power to destroy - Chief Justice John Marshall, 1819)

For Obama to say
“I don’t care if it’s legal, it’s wrong.”
is ever so delusional, astonishing ignorance.  If it is wrong, why is it legal? (and this from the man who orders criminal invasions of other countries, and meets Tuesdays to pick who dies from a deck of cards.)   It's legal because it does not matter, but in any event, it is there on purpose.  Don't like it, change it.  That is what congress is for (although this "constitutional lawyer" seems ignorant.)

Pat Buchanan advises we lower the corporate taxes to be competitive.  Why not just eliminate the desultory taxes and show people what they really pay in taxes, since they are the ones who really pay the taxes?

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Tuesday, September 23, 2014

Portland Oregon Import Export Start Up Seminar

If you live in the Portland, Oregon area, on October 25 I will offer and all-day intensive international trade start-up seminar at Portland Community College.
45743Sylvania Campus / SCB / 20309:00 AM-04:50 PMSa25-Oct-2014 thru 25-Oct-2014
Instructor: John W Spiers 
Notes: One hour lunch break. 
Tuition: $79.00 Fees: $0.00 


Please bring recorders or anything you like, I provide handouts and after-class follow-up by email.  I look forward to meeting with you personally!

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Ham Radio Renaissance

A week ago on a street corner in Seattle a man walked up to me and asked if I knew what a ham radio was.  I said sure, and we talked about the pros and cons, and he recommended I visit arrl.org.

My father was a radio man in the WWII Navy, so over the years I heard some things about radio, and then I read this today:
There are many, many, many ways to make a radio out of household items. Way too many to list them here. Suffice it to say that with all the wires and old electronics laying around, making a simple radio receiver is pretty simple. Just like the foxhole radio, these pretty much only receive. They can also be made to use power from the signal itself so they don’t all need anything else to power them.
Power from the signal?  Shades of Tesla!  I recall in my youth being able to alligator clip a set of army surplus headphones to the metal springs of my (army surplus) bed and listen to the radio, something my father had set up, but I had no idea how it worked.  I think he said "crystal set" but who knows.  I just assumed beds played music.

A few days later a car stopped at an intersection with all passengers face-in-screens.  The back window was rolled down where a devotee of McDonalds had a face lit-up for zombie effect.  I said "put that away" and he gave me the most venomous look, like a crackhead who had his smack snatched.

Instead of entertainment being shovelled in, like fast food, there is entertainment in being apart of the process of creation of content.  Ham radio.  Sing alongs.  Pot lucks.

Just sayin.

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USA Attacks Syria

It is a war crime to attack a nation which is no threat to you.  It is lunacy to do so to help terrorists.  So I guess that makes our military leaders criminally insane.  At least the ones who do not resign.

Part of the lunacy is we are backing Kurdish rebels, who are fighting USA trained and funded ISIS, which means we will necessarily need to go to war next with either the newly reconstituting Kurdistan or Turkey.  Which ally will we betray next?

Kurdistan has better basis and feels more strongly about independence than Ireland ever did.  And now comes their chance.    Their country consists of about 1/3rd of present day Turkey, and parts of Syria, Iraq and Iran.  Clearly their tactics are to arm and train, compliments of the USA, and fight strategically and defensively until such time as they can strike and make solid gains on the field.  There is not longer any country called Iraq, USA created a failed state there, os the Kurds have a solid base.   They may get some Syria out of this fight.  There are unlikely to fight Iran, but in any event, with those Kurds it is always pleasure before business, so expect them to fight Turkey first.  When that war starts, which ally will we betray then?

This may be sooner than we think, for here Turkish security forces are rebuffing Kurds retreating into Kurdistan homelands from USA funded and trained ISIS attacking Kurds.

When you can lend credit there is no rational limit to what craziness you can get up to, and it seems this opportunity attracts crazies.

Our generals are notorious liars, (see Colin Powell re: My Lai, soldiers left behind, Iraq) and certainly mere politicians (flag officers are nominated by the president and voted on by the senate.)  War makes their post-military careers unbelievable lucrative.  This was never meant to be in USA, indeed, we were once structurally unable to have a standing army, the bane of civilians.

If we get into WWIII, the history books will show USA started it.  We all want to know who is the next Hitler?  Obama?  Bush?  Clinton?  (Our next two options for president.)

It's not a question of who is the next Hitler.  The question is are the American people any different than the German people?  Clearly not.

Shouldn't we just bring our troops home and buy what we want from these countries, and sell them what they want?

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You Extending Credit

Stockman has also panned Alibaba IPO.  He is far more qualified to critique it than I.  Check your pension statements and see how much you got.

When the crash comes, people will need things.  The banks will not be lending credit, because they won't have it either.  This will be good, because it will take usury out of the equation, to some degree.  But you'll need to extend credit to customers who can pay you back, just as others will to you because you are producing.  No one will charge the other interest, the way it was just 50 years ago in business.

Produce something people need (that advice is no help, I know) and you'll be in business.  These will be good times, as small businesses will be in a bull market.

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Monday, September 22, 2014

Trade Shows and Branding

You'll hear every trade show tip include "branding" as critical.  But as a start-up, no one has heard of you.  Money spent on promotion of brand is wasted.  Don't even bother with a logo.

Brand is built organically, one sale at a time.  To have first rate customers buying from you is to advance the brand in the most leveraged way.  To offer ad allowances is to leverage the customers' brand with your own.

All thought of trade shows should focus on orders, the only activity that advances the goals of the business, and necessarily, enhancing the image, or brand.  Money elsewhere spent is wasted.

Here are some tips with which I will argue...  here dealing with non-customers:
Siskind offers up two strategies in his report: “presumptive disengagement” and “conciliatory disengagement.” Here’s a closer look at both.
I say the booth itself constitutes "the approach.." so the next step is "qualification".  Is the person with whom you are speaking a buyer, as defined as ready, willing and able to place an order?  With this in mind, let's look at the next point...
The first part is to refocus the prospect’s attention from business to a graceful conclusion. Siskind suggests saying something along the lines of, “I am glad we had the opportunity to talk today” or, “I am looking forward to getting your feedback once you have received the initial order.”
Well, how about "I came here to sell, why are you here?"  That is what should be in your mind as you speak with people. Assuming you have a qualified buyer in front of you, and if your original focus "Here is our MOQ FOB which will meet all of your needs, don't you agree?" does not lead to an order, then you solicit feedback.  From solid feedback you advise the buyer you will look into making the changes recommended and get back to the buyer.  Next.
The next step is to take full ownership for the disengagement. You could say something like, “I know you are anxious to see the rest of the exhibition.”
No.  Why be manipulative?  We are all busy, and all these things assume wimpy buyers.  Real buyers are tough, and want to be matched in toughness.  Your success depends on going toe to toe with tough buyers.  How about, "I'll call you at four o'clock on Friday your time in two weeks to report what I have found."  Shake hands and turn around and walk away.  Next.
The final step—the proposition—could involve giving the visitor a promotional gift, which allows you to thank him or her for stopping by and gives the offering real value and is a tangible symbol that the conversation is complete.
Real buyers see that crap and wince. They know if they place an order with you they have to pay for the ten thousand geegaws you gave away.  That is false economy waste.  Crap is real value?  The tangible symbol the conversation is complete is the back of my suit.  Which a real buyer will not notice because he has turned and left as well.  How did we get to this place that people hand out crap ti simulate something important happened?  How about, instead, make something important happen?
Conciliatory disengagement. This approach should be used by exhibitors when they are stuck in a conversation that won’t produce a viable sales lead.

No. Your attitude is "I came here to sell, why are you here?" If you discover the party is not a qualified buyer, then you hand that person copy of your MOQ FOB and desire he study it and come back when ready to place an order.   Next.  The only alternative is when you discover the person is press, at which point you snatch one of the half dozen articles you've prewritten, each with a different slant, and a money quote, and say "I am busy right now, but feel free to use this, and email me any quesitons, this press release is unique.  (Meaning the writer can slap a by-line on it and be assured won't get embarrassed when another writer puts up the same content.)  An enhancement is to have  $50 bill in the envelope with the article and a note saying there is another one of these if the article gets published, and you get a copy.
The first step is acknowledgment.  For an established customer, it may be along the lines of, “Thanks for dropping by this afternoon. I am really pleased to know that we can count on your ongoing business.” While to those your product can’t help, you may say something such as, “It doesn’t look like we have a solution that will address your concerns.”
Hang on, to old customers you show new products, and new customers old products. You either get an order, or if not, why not? You end the conversation with "I'll study your objections and get back to you with what we find." Next.
The next step is the invitation. Exhibitors want to be polite and leave themselves and their products open for opportunities in the future. So, for the visitor the product currently can’t help, exhibitors may want to suggest they stop by the website from time to time to see if things have changed and if new products and services are being offered.

I cannot think of anything more insulting to a real buyer.  Visit our website?  How about "I'll work on your objection and report back what we find."  Next.
The third piece is the reality check, where exhibitors explain to the visitor why continuing the conversation won’t help either party. This all wraps up with a call for action where the exhibitors sets up a plan for the future, such as suggesting meeting for coffee after the meeting or providing contact information so the visitor can reach out if wanted.
Wow.  Again, why did the conversation not end in an order, or solid feedback?  If you realize continuing the conversation will not help either side, then the conversation is over.  The plan for the future is either changes which will elicit an order, or nothing else.  They buyer came to buy, the seller to sell.  If that does not occur, then the meet was wasted, or raison d'etre delayed.  For both the buyer and the seller the order is the thing.  Nothing else.

And within this focus, do as much on the floor as you can.  Don't put off anything for later that can be done now.  If the buyer has merely a logistics question, that can be answered by phone within a few minutes, jump on the phone with him there and get the answer.  Be as productive as you can while you are there.  What can be done later that cannot be done in booth, on the spot?

No cards. The orders should have all of the contact info, and if no order, no need to exchange cards.  Unless someone will be doing business with you, do not give out your business card.

No chairs.  No trade show booth should have chairs, either for you or your customers.  If people need to sit, let them sit in a coffee shop.  Shows are too expensive and too short to provide for rest and relaxation.

Next.

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Get The Hegemon Out of Fire Fighting

Over 70% of the firefighters in USA are volunteer.  They are every bit as well trained as the paid city millionaires, they just don't demand payment for doing the right thing.

A house burning down is not a market event, so it has no market response.  It is a disaster, so it needs a charitable response  Obviously, there is more than enough charity out there to meet the need, but in most cities the hegemon has suppressed people's charitable impulses, and made fire fighting a venal, money grubbing activity.

Meanwhile, back at the ranch, there was no problem with ranchers fighting their own fires until the Bureau of Land Management showed up.
Lyons looks out over a plot of BLM land--studded with sage brush. Ranchers have been grazing here for decades, and they say they've been fighting fire just as long.
The story goes on to a happy ending, and that is the Hegemon backing off.  Any time you can get the Hegemon out of any activity, all improves.

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Wealthy Chinese Want To Flee

The algae is always greener on the other side of the canal.

People make much of how some many rich Chinese want to get out of China, and go elsewhere, say Singapore.  At the same time rich Chinese want to get out of Singapore, and escape to China.
Singaporeans were the second-most eager to flee home, with 23% planning to relocate in five years, followed by 20% for the U.K. and 16% for Hong Kong. Indian and American rich are the least likely to move, with only 5% and 6% of respondents saying they would relocate.
The top reasons Chinese cite for moving abroad are better educational and employment opportunities for children (78%), economic security and desirable climate (73%), and better health care and social services (18%). Hong Kong is their top destination (30%), followed by Canada (23%).
But for all those money drain, China is also on the receiving end: It’s a top destination for Singapore’s high net-worth individuals, with 30% saying they want to move to the Middle Kingdom.
People always think a new place would be better.  But your job is to grow where you were planted, not take the money and run.

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Sunday, September 21, 2014

Pricing Strategies In Product Design

So you have experienced what makes you suffer, acknowledged it, found joy on working on the solution, you have taken your solution and tried to buy it (yes, of course, BUY) from those you'd expect to be your customers for your idea.  Those target customers told you it is a good idea, but does not exist.

So now you have to make a sample of your idea, to discover the costs and make a sample to test the idea and price.

Price is never the issue at the specialty level.  The new iPhone 6 averages say $400.  They'd sell more at $10, and less at $10,000.  But $400 is the optimum price point.  You are only designing enough into your product to get enough orders to cover the supplier's minimum order requirement,  profitably, in a workable amount of time.  Say something like this.

http://en.wikipedia.org/wiki/Apple_I
Add a monitor later.  Stick with a computer.  See from customer feedback what they think of the computer, and find out what people hook up as a monitor.  That will tell you much about what to do next.

A fundamental is to design what you are designing, a test of your hypothesis.  Age quod agis. Organic, gluten free bread mix is a test of organic gluten free bread mix.  You'll get reaction to the product based on what you are testing.  If you also make it "kosher" you've lost control of the variables, and no longer (in the measure you added "kosher") are testing the market for organic, gluten free bread mix.  Your results don't tell you much, one way or another.  Of course, if it is your intention to test orgainic, gluten free and kosher, then very good.  But people often add on goodies hoping for new market and in the process ruin their test.

Each iteration makes money or gives clear information of how to do better next time.  The result is a upward spiral, excelsior.  When you add on too much to test, too many variables, you've left money on the table, the version that would have sold.  You dissuade customers who may have bought more simple, and thus added to your knowledge base by their feedback, not to mention added to your customer base.

You foreclose too much customer feedback by overdesigning. Don't overdo the design and leave money on the table and miss out on feedback.  Just enough design to create a product that will generate enough orders to cover the suppliers minimum in a workable amount of time, profitably.  Along these lines, the one constant in criticism of me by people who have gone on and started businesses is that I should emphasize how little it actually takes to compete on design.

Sigh... I say this in my book, I say it in my classes, I don't know how much more I can emphasize it.  I think the problem is our books are full of stories of HUGE SUCCESSES so people are conditioned to believe their product must be huge design effort to be a huge success.  Nope.  Boeing started tiny.  Apple started tiny.  Most happy people got to a place and stayed where they want to be in business.  No one writes about happy people.

Having said that about design strategy, we get to a tactic - design to price points.

Part A ...

Your specialty product is more roundabout in production and distribution than a commodity item, therefore it costs more to produce.  Keep this in mind as we consider the fact that every industry has price points, collective wisdom as to what people are willing to fork over for what.

Say gift and housewares...

4.95  9.95  19.95   24.95  29.95  49.95  295.00  595.00, etc...

Clothes  20 50 100 250 500 1000

Beef Chow Yuk  2.95   4.95  7.95   12.95   29.95

These are simply price points people find acceptable, and thus do not slow down the thinking process about price.  A gift item at $17.50, people have to think about that.  Better $19.95.

Clothes are much more emotional, so rounder numbers can work, but the point it the price point.

Food can be the wildest.  Sure you've ordered that $2.95 beef chow yuk, and spent a week regretting it.  The $4.95 is not much better, but if it's take out window, you know where they are saving the money. You'll find it on a good restaurant at $7.95.  And at a fashionable restaurant at $29.95, all free range grass fed beef, house-made noodles, duck fat for cooking, and so on.

That $12.95 price point is the pop-up restaurant, the kids who are trying a new recipe, working out of a hole in the wall like the $2.95, card tables and folding chairs, but using the same ingredients as the $29.95.  And cleaning up.  I hope this makes sense..

So you build your item to price out at a standard price point...  Your item may normally be a $7.95, but your mess of beef chow yuk has free range beef, grass fed, hand foraged chanterelles, in-house made noodles, so it is price blind.  No one knows what the price should be.  But it meets the criteria: testing what you are testing, not leaving money or design on the table, designing to price points.

(As a side note, one reason the restaurant business is so alive and creative is there are no intellectual property rights in that field.  Monsanto is trying to sneak in with patents on ingredients, and being strictly NonGMO is a way to fight back.)

You are not gouging the customers, the price is fair.  The customers are getting a very good deal, for they get excellent food and are not paying for ambience (and you are not risking the cost on ambience to sell with your unproven dishes.)  Don't end up with expensive ambience and no customers to pay for it.

Part B ...

What is the mark-up in your industry, cost to wholesale?  What is it wholesale to retail?

Say cost to wholesale is keystone (roughly, depending on the definition, doubling.)  and say wholesale to retail is the same..

So if the price point at retail is $100, then your wholesale price is $50, and your costs are $25 landed.  Depending on freight duty, etc, you probably have abut $22 to play with in the cost of the item.

So them within the contraints of

1. testing what you are testing

2. not leaving money or design on the table

3. designing to price points

You decide what you can put into the product.

Now, that mess of beef chow yuk may be normally $8 a plate, but since you are using free range, hand foraged chanterelles, in-house made noodles, yours may be at the $24 price point.  But it meets the criteria: testing what you are teesting, not leaving money or design on the table, dsigning to price points.

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First MH -17 Studies In - Putin Did Not Shoot Down Malaysia Air

I've always admired marxist writers for getting their facts straight, if not their recommendations.  Here is a straightforward analysis of the facts in relation to the downing of the Malaysia Air flight over the Ukraine, perfor,ed by marxist trained engineers.    Admirable work. The evidence demonstrates the Ukraine air force shot down Malaysia Air. Qui bono?

The USA is strangely silent about what USA satellites saw, the Brits unforthcoming with what the black boxes say, and what evidence the Ukraine had has been destroyed.  The big unknown is what the Russians know, and no doubt they are waiting for the West to present some nonsense story, and then have to back track based on Russian counter proof.

The people on the left who believed "if we just had the right person as president" are matched by the people on the right who say if we can just get rid of this president" and both are delusional.  This madness is top to bottom, left to right.  Changing the dear leader is not going to help.

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