Saturday, March 21, 2015

Six Bizarre Things: Credit Deflation

A columnist for Investors Business Daily notes tweets by a chief banker, commenting on six bizarre things, inscrutable among keynesians, but perfectly understood by Austrian economists.
"The first oddity is a loss of control over prices. The best central bankers can do is export deflation elsewhere, triggering currency wars.
That's right.  Inflation was fun, wasn't, you could screw the little guy with complete control over the last forty plus years.  Up up up, but now it is falling, and there is no control, and it benefits the little guy.
"The second oddity is negative nominal interest rates, a desperate attempt to prevent fx appreciation but in time a threat to credit growth."
I suppose you could say an inability to sell nothing, asset-less backed credit, due to oversaturation, except at a loss, is odd, for there is no rational limit, but you have reached an irrational limit to a criminal enterprise.
"The third oddity is the weakness of world trade growth, which may reflect more than a whiff of post-crisis protectionism."
Well, the price-competition juggernaut that wiped out small productive businesses competing against huge "below-cost due to massive EZ credit" is drying up.  It is the biggest portion of international trade, so yes, it will show alarmingly and first.  Yippee...  here is the Hegemon's report:

Goods and Services Deficit Increases in December 2014


















Some serious dipping going on... this is exciting...  this means massive cut backs on consumeristic stuff, junk people toss and kill themselves over on black Friday, and a vacuum into which materialistic stuff, the nicer stuff people keep, specialty goods, goes up.  The more that green line goes down, the better for the little guy.

Next...
"The fourth oddity, now recognised by Fed, is the ropey nature of the US recovery, reflecting weak wage growth and energy production cuts."
Shipping used to be cheap, and now it is getting cheap again.  The oil wars, in which we have been defeated, were very good for the big guys.    Cheap transportation is wonderful to see.  Also, wages will fall.  The man can congratulate himself on the tax revenue increase from the poor on $15 an hour, but one way or another wages will fall.  This is good, because costs will fall faster, meaning the little guy is getting an ever better deal.
"The fifth oddity is believing what central banks say they're going to do. Given BoE, SNB and now the Fed, markets need more scepticism"
When were they ever understandable, let alone credible?  Their definitions of the terms they use are ludicrous.  Scepticism was necessary 40 years ago.  Now that the game is over, you begin to question?
"The sixth oddity is forecaster bias. Initial consensus forecasts for US growth since 2000 have been too high in 12 out of 15 occasions"
Well, of course.  This is the choir who will be on hand to tell the masses when their pensions are gone, and they have to sweep streets to eat like their Soviet pensioner counterparts, "no one saw this coming." their job is to manufacture the contradiction so the dialectical materialists can exploit the cognitive dissonance.  Or in other words, never waste a good crisis.

You cannot complain about what is coming when it gets here.  You knew.

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Targeting Buyers Overseas

On Mar 20, 2015, at 6:51 AM, M wrote:
John,

I sent out my MOQ FOB letter to this supplier and got a canned email response back with a "New Supplier Letter".  It seems like they are asking for a lot of information. Is it worth the hassle or time? It seems like most large corp entities will have some kind of procedure in place, so what do we do only target smaller organizations?

Thank you

Hey M,

O yes, big biz is not for us... and note they want promo dollars, to build their name, not yours.  I am assuming Australia is your target market, and as such, you need to create a file on each of these players.  Study this company's for their tactics and terms and conditions, and bear it in mind when approaching the right customers...

I think you are looking for an importer, not a huge retailer who imports.  An importer who has 500 small business customers, not a retailer with 500 stores.  

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Friday, March 20, 2015

Traceability Vs Clean Label

We must never let a government make definitions, for they render them incomprehensible.
Market researchers tell us that consumers are seeking ‘natural’ products more than ever – and ingredient suppliers have responded by providing ways to ‘clean up’ product labels – but what do these terms really mean?
Since the word organic has become meaningless, and people care, now the idea is "clean labels" which work to be specifics to what the given food has gone through.  Well, take that desire to its apotheosis, traceabilty.  The QR code what takes the consumers smart phone to a page that not only has a quick video on the entire process of the food in question, but further affirms that particular unit that the customer scanned is legitimately from the source.

In all specialty products "provenance" is key.  With traceability you can build loyalty with provenance. Right now companies offering traceability systems are charging too much to do too much.  When someone comes up with the right offer, I will highlight them here.

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Lending False Credit

Frank Shostak defines True and False Credit:
There are two kinds of credit: that which would be offered in a market economy with sound money and banking (true credit), and that which is made possible only through a system of central banking, artificially low interest rates, and fractional reserves (false credit).
Banks cannot expand true credit as such. All that they can do in reality is to facilitate the transfer of a given pool of savings from savers (i.e., those lending to the bank) to borrowers.
Nor has there ever been a need for banks to expand credit, let alone offer it.  Banks don't have money, it belongs to their depositors, in a free market.  In capitalism, your deposits are owned by the bank.  (You did not know that?)
For example, a depositor opening a checking account at a bank in the United States with $100 in cash surrenders legal title to the $100 in cash, which becomes an asset of the bank.
Money is strictly medium of exchange.  It is used to extinguish debt.  Credit is an agreement to pay later, not the same thing.  Currency can be either a warehouse receipt for gold (medium of exchange) or credit (fiat currency).  Gets confusing fast, doesn't it?  That is on purpose.

When I was a kid, the grocer and pharmacist gave my parents till the end of the month to pay.  The wholesalers gave the retailers thirty days to pay. Manufacturers gave wholesalers 30 days, materials suppliers gave the mfgr 30 days, extraction gave material makers 30 days...  most of the economy was on credit, all asset backed (Shostak's true credit) and none of it at interest.

Then came 1971, Nixon went off the gold standard lite, and banks experimented with lending the bad credit Shostak mentions: asset less backed credit.

Notice what a Moslem correspondent pointed out: in the massive private credit outlined above,  nonpayment meant the lender took a loss, and the borrower lost nor gained nothing. Lenders were careful, they had skin in the game. When credit is loaned with no asset behind it, and the borrower fails to pay back, the bank loses nothing (for it lent nothing) but the borrower loses some other secured asset (home?). This new thing is profound, the more nothing the banks lend, the more assets they can vacuum up upon failure, at no risk to themselves.

True credit is managed at a human scale by 350 million (in the usa) people, the false credit is managed by six banks.  In the former credit expands with population as human interaction recommends its asset-backed introduction.  With the latter six banks are agents of social engineering on an industrial scale.

To the extent we have false credit (92%?) minus what false credit accidently is invested in true economy pursuits, is the degree to which this economy will fail, plus, what with regression to the mean.  Imponderable.  But will there be enough people who recall that pitch perfect, human scale, unitive and creative credit system to revive it after the crack-up bust?

Better get a business going in the true credit economy.  The false credit economy is in for a rough ride.

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When Patents Expire, 3D Printing Explodes

Here is a Shelby Cobra, printed 3D.

sciencedaily.com
You could not have a better example of how patents suppress innovation.

Quote from the interview:
It's the one where the key patents covering this ...  expired in 2011, so there has been an absolute explosion in innovation in these machines.
Right.  With patents, all is suppressed, no one makes any money.  Patents off, and there is an explosion in innovation.    But wait wait...  no patents, no innovation!  It cannot be true there are countless people willing to innovate and create without patents, for that is the only possibility.  This is what we were taught in school, and we have the unbankruptable student loans while working at Starbucks to prove it.

In fact, we see that where there are patents, extremely little goes on.  When there are no patents, people compete to provide ever better.   There is nothing to support that idea that..
The Congress shall have power ... To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;
Example 8,925,112 of how our patent regime premise is bogus.

Ask any patent attorney:  How many patents issued since 1789?  About 8 million.  How many of those patented ideas ever turned into a product?  Very close to zero.  Of those extremely few ever to turn into a product, how many were profitable? Again, almost none.  All of this is true.  Is it important?  Sure, if you are a patent attorney with two kids in college, it is important you don't know this.

There is nothing in the law that provides that anyone gets rich because of patents.  The law provides only that the "intellectual" "property" "rights" (statutory monopoly powers) contribute to the commonweal.  Even if the means to accomplish this goal was patents, one penny more than that is too much, under the law.

The idea patents are warranted to allow people who would otherwise decline to innovate if not for a mechanism to recover their costs is pure fiction, something made up outside of the law.  Getting rich off patents is obviously contrary to the intent of the law.

People come up with the screwiest and desperate defenses of their sinecure:
Patents have helped 3D-printing technology advance, but not by giving a patent holder temporary control over a particular printing technology. Patents, particularly key patents on critical platform technologies, have pushed 3D-printing technology forward by introducing constraints. Patent-induced constraints force technological ingenuity — which, in turn, drives innovation. The reason several different 3D-printing techniques exist today is, in part, the constraints imposed by patents that blocked key technologies and hence required the creation of workarounds.
Get it?  Because patents block people on one path, they are forced to innovate, otherwise there would not be as much innovation.

And these college professors know this how?  Or is this just another wild stab in the dark trying to defend the indefensible?

The funny thing about this argument is he uses 3D printers as his example, where we see, now that the patents are not possible, and explosion of innovation.  Amazing myopia.

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Thursday, March 19, 2015

Amazon is What Percent of USA Retail?

Amazon is huge.  It is a growth machine with massive infrastructure, but it consistently makes no money and pays negligible taxes.  How does it do it?  Benedict Evans explains:
So, we have dozens of separate businesses within Amazon, and over two million third party seller accounts, all sitting on top of the Amazon fulfillment and commerce platform. Some of them are mature and profitable, and some are not. And someone at Amazon has the job of making sure that each quarter, this nets out to as close to zero as possible, at least as far as net income goes. That is, the problem with net income is that all it tells us is that every quarter, Amazon spends whatever’s left over to get the number to zero or thereabouts. There’s really no other way to achieve that sort of consistency.
This all started with access to massive asset-less credit, sure jump-started by venture capitalists, who were paid off after the IPO when taxpayer risk was laden on in the form of debt.
Amazon has perhaps 1% of the US retail market by value. Should it stop entering new categories and markets and instead take profit, and by extension leave those segments and markets for other companies? Or should it keep investing to sweep them into the platform? Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity. He seems very happy to keep seizing new opportunities, creating new businesses, and using every last penny to do it.
Yes, it is 1% of the retail USA market.  All avenues.  Actually that is huge, but what it represents is a sweeping up of transactions and the wiping out of marginal businesses.  As one commenter noted: "so the response is retail that is carefully curated."  Just so, compete on design.

And one commenter had this to say:
Walmart has gotten serious about online and outgrew Amazon last quarter, 24% to 23%. And Walmart made more online in that Q than Amazon has ever made. Walmart has the cost edge on products it carries in their stores since they buy millions of them while Amazon only buys thousands. Walmart pays it suppliers on average in 35 days v Amazon 75 days. Moody's sees this and rates Amazon debt just a couple notches above junk. Walmart is in alignment with suppliers (IBD articles routinely list Walmart as companies' favorite customer); Amazon has had recent fights with 2 of Walmart's suppliers, Disney and Hachette. Then there is Staples that is making huge online strides, considered troubled though also making more online in a Q than Amazon has ever made. Amazon is investing in the declining warehouse market and hiring lots of near minimum wage people, many of whom publicly state they are unhappy.
Yes, but Amazon is in flux, Walmart is settled.  Actually, the Walmart ecommerce site (really online self service) is an Amazon gig, if I recall.   But what is clear is all of this is borne of financial gaming, Bezo's previous career.

What happens when the fuel for that engine, asset-less credit, not only dries up, but begins to disappear from within the balance sheet (deflation?)

What goes up...

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Negative Interest Rates

Inflation is a pernicious tax that robs the poor and gives to the rich.  It is why the powers that be employ it.

In Sweden, the powers that be ae getting desperate, trying to kick start inflation again:
"These measures and the readiness to do more at short notice underline that the Riksbank is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation," the bank said, adding that the rate would "remain at −0.25 per cent at least until the second half of 2016."
By charging people to make deposits, that is, in an effort to get people to lend, you get fined for savings, now at a quarter point.  Even though they call it money, it is not, it is credit, but the fact is no one wants it.  This is credit destruction, and deflation.

It is a whole new world now.

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Wednesday, March 18, 2015

You Need Export Customers for Food?

You will learn how to find customers for any food or beverage anywhere in the world in this live one day intensive seminar held April 27 at UCBerkeley Extension in San Francisco.  Whether you are working as a food producer, or as an agent representative, find out how to make an export sale no more difficult and just as profitable as a domestic sale.

Food is USA’s #1 export growth market, and the studies show start-ups gain the lion’s share, if they follow rules we lay out in this class.

In this class you’ll learn the tool, tactics and attitude to immediately get orders, and if not, get information you can act on so you do.  You develop trade data intelligence which only you will have. We go straight at the customer. 

You learn to become expert in the international trade of your product, without having to become expert in international trade.  Product selection, compliance, logistics, finance, and even web presence is covered in this one day seminar highly rated for content, pace and humor.    You will build this at your own pace, to whatever level you want, and certainly working out of your home to start.


Sign up now!


NB:

This course carries CEUs and is eligible as an elective in the UCBerkeley Extension Entrepreneurship certificate. Contact the program office at 510-642-4231 or extension-business@berkeley.edu for more information.

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The Access to Credit Fallacy

Access to credit is a term that is popping up more and more according to google.  NGOs and religious leaders widely decry the lack of access to credit for the poor.  The problem is, they mean access to bank credit, at usury.  Their work to "help out" actually destroys.  And they think their grants from Bank of America and the Agency for International Development are proof of the essential goodness of both.

Access to credit is important, but what are you calling credit?

If credit is based on money, that is someone with assets backing currency (extremely rare these days) then they lend you money, and it is noted on your tally.  The money is yours, you must pay it back.  There is enough of this out there to support any business at any level, as long as it is not interest-bearing.

Now another source is when someone has assets and acts as surety for the small business.  They promise to pay if the person to whom they are extending credit fails to pay.   Again, enough people in this work to meet the needs of business.

But the vast majority of borrowers and lenders are working in a false economy: banks lending credit when they have no assets to back the loan.  And then they charge interest on nothing.  And if the borrower fails to repay, the lender takes real assets away from the borrower.

Note that: in the first two the lender is at risk.  The lender actually loses something if the borrower cannot repay.

In the third one, the vast majority of "credit" which the do-gooders lament is not available sufficiently, if the borrower cannot pay, the borrower loses something else the borrower owns, therefore the borrower is worse off than before!  The bank never loses for it never put anything up. Their offer is heads we win, tails you lose. This is what the religious and NGO groups urge on their victims?

There is no shortage of credit.  If someone claims they need access to credit, the problem is a lack of customers.  If you have customers, the credit is there, necessary and sufficient. EZ Credit at a high price and long terms can provide a hit, like a hit of crack, but it is not a good idea.

The religious groups and NGOs need to review their call to the provision of despoilment to small businesses and the poor.

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End of Capitalism, Return of Free Markets

I have no idea where this Koos Jansen came from. But he has it spot on:
If sustainable monetary solutions can be implemented at all from the top of governing bodies within a society waiving the flag of capitalism remains to be seen. In my opinion our system, which is still presented as capitalism, can only survive from the essential input of the economic agents operating at the bottom of the market, producing goods with labor, setting prices, taking risk and creating real wealth. Denying these fundamentals is what brought us into this crisis.
No kidding.  The people who have no clue and zero sympathy for the people who matter, are in charge of correcting the error.  I am glad I am a free-marketer and not a capitalist.  Read on in the article.  Up to about 2013, the USA could destroy anyone who displeased it, but then we backed down on Syria.  Now people can, and do, turn to China and Russia for protection.  The USA is going to have to learn to get along without violence.

Jansen has an interesting overarching hypothesis he is testing... outside the USA, all of the other powers that be are working out a distribution of gold among themselves to have relative concomitant strength, a truly new economic order, with power in a new world order.

The big concern is the worldwide debt.  I listened to Alan Blinder on the radio last night talk about the three trillion in credit created for QE I - VI?, the American portion of what is concerning the UN.  Blinder was describing how, inexplicable to him, the credit was created but not lent out.  Apparently he cannot see it was used to leverage another housing boom and a stock market boom, while starving pensioners, without lending it out.  At any rate, Blinder did note that by ending the QE process, and the unwinding thereof, the world heads into completely uncharted territory, and no one has any idea what will happen.  (I searched but could not find the program upon which he was being interviewed.)

Well, Austrian economists understand it perfectly well.  The credit deflation is a new wrinkle, but since credit mimics money, and unwinding three trillion in debt is analogous to destroying three trillion in currency, prices denominated in credit are going to fall, and probably regress to the mean.

So the trick is to spot which assets are in the false economy, which assets are asset-less credit backed, and which assets are real economy.  Not real hard...  grossly speaking...

1. Did it boom in the last 40 years?  it is going down...

2. Has it been boring or languishing the last 40 years, but survived?

I went into a used household parts store last week, and noted all of this salvaged items constituted a wider selection than Home Depot.  Sure Home Depot has deeper stock, but no Home Depot has a floor model of a bidet, nor circa 1900 door latches.

I asked the owner what is his #1 problem in his business....  he immediately said "space...  I am turning so much great stuff away...  and what I have is selling great...  I just need more space."

I can see big box retailers spreading carrels wider and spreading stock to cover empty shelves...  they don't have the customers with credit cards loading up on crap they do not need.  I think the salvage house will find plenty of room coming up as places like Home Depot start a new round of closings.  Check out the 2014 store closing list, and 2015 appears to be accelerating.  There is nothing to move in and take its place.

The next forty years will be a renaissance for small business.

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Tuesday, March 17, 2015

Capitalism's Berlin Wall Moment

Kevin has twice sent me links to this story, and it has been coming in on my google feed, but it is moving so fast that I was awaiting some pause to comment.  I guess the story is "it is moving so fast" and showing no signs of slowing down.

Back in the day, some East German apparatchik spoke an unscripted answer and a rush to get out of the socialist countries turned into an implosion of the Easter Bloc.  We are there.

China has set up an alternative to the World Bank and the IMF.  The Hegemon told everyone to stay away from it...  by badmouthing it:
"Our messaging to the Chinese consistently has been to welcome investment in infrastructure but to seek unmistakable evidence that this bank...takes as its starting point the high watermark of what other multilateral development banks have done in terms of governance," U.S. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel said in Seoul.
Is that what we do, we "messaging" China?  Our foreign relations is programmatic?  Note the backhanded "fear uncertainty doubt" implication: watch out for those inscrutable Chinese, and their questionable governance.  This, coming from USA.  Ferguson much?  Iraq much?

Although the IMF is supposed to help out in a crisis, Jude Wanniski, John Perkins and Naomi Klein have all documented the fact the the IMF foments crises wherever it lands.  Controlled absolutely by the USA, it puts foreign faces on USA credit and spreads destabilization in the name of development.

The world well knows the true nature of USA financial shenanigans and W A R W A R W A R and China is offering a way out.  So far here is a graph of our ungrateful vassals:

http://www.businessinsider.com/americas-biggest-european-allies-just-dealt-a-blow-to-us-foreign-policy-2015-3
Saudi Arabia? Have we not kept your regime in power?  Kuwait!  Did we not save your bacon?  The Philippines?  You don't love us anymore?  India?!  We thought we were friends!  Uzbekistan!  Did we not pay you enough?  The news we cannot keep up with is the torrent of European allies that are bailing out of the USA-dominated system, and transferring their allegiance to Chinese leadership.  It gets down to this: the Chinese will manage better at a lower cost.

You can read here how long other countries of the world wanted to escape the USA hegemon... let's look back to 1974:
VOLUME XXXI, FOREIGN ECONOMIC POLICY, DOCUMENT 63
63. Minutes of Secretary of State Kissinger’s Principals and Regionals Staff Meeting 1Washington, April 25, 1974, 3:13–4:16 p.m.
....
Secretary Kissinger: Then what’s our policy?Mr. Enders: The policy we would suggest to you is that, (1), we refuse to go along with this—Secretary Kissinger: I am just totally allergic to unilateral European decisions that fundamentally affect American interests—taken without consultation of the United States. And my tendency is to smash any attempt in which they do it until they learn that they can’t do it without talking to us.
It goes back farther than that, but our policy is to smash any act of independence by any ally.  Since one ally defied the Hegemon, the others have rushed through the gate.  So what is USA to do?  Punish them all?  Punishment will be welcome for a price paid to join the Chinese will be convertible into rank in the new pecking order.

While USA has answered every question with war for the last 25 years, the Chinese have been building roads, airports, universities worldwide.  China has simply been playing out of our playbook, and we scream "cheating!"  The Chinese call it "winning."  Silk road and gold-backed currency.  Shipping overland costs 14 times over water, but who knows?  With maglev the costs drop?  (In USA we are still spending $30 million a mile for 1880s trolleys, the real point being the bond sales, not transportation.)

Our grand "pivot to Asia" is called TPP, which does not include China.



As usual, this politician says "free markets" but means no such thing.  Lawyer speak with forked tongue.

Only we free traders are anti-isolation.  And free trade is always unilateral.

What this means is massive credit deflation.  USA has astronomical amounts of credit on offer, but with too much uncertainty as opposed to the Chinese offer.  Sure, when there are no assets behind the credit, one can afford to borrow at negative interest rates, but not if there is nothing to invest in that will not end up in the red at even those rates.

The Communist Bloc fell with little bloodshed, and hopefully the Capitalist Bloc will do so as well.  unlikely.  In the Eastern Bloc they went from poor to better off, whereas we will need to make a transition from "entitled" to rational.  Whew.  I get dizzy.

Your best bet is to start a business.  There is necessarily personal transformation in self-employment. There will be a renaissance of small business in USA.  Lend credit at no interest against assets to your customers, that is the smart game in credit deflation.  If there is war etc, and if you survive, then for your kids etc things will be very good after that.  You can't complain, what goes around comes around, and you never complained about the wars for the last 25 years.  Take your medicine like the rest of us.

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Rules Change?

While we confidently maintain gold does not matter, China may be laying in a big surprise by demonstrating the RMB is harder than the dollar...
One of the members of the Chatham House global Taskforce was … Meghnad Desai, who is also Chairman for OMFIF. Small world. In its research the taskforce was greatly helped by the “Chinese Academy of Social Sciences (CASS), and Professor Yu Yongding and Mr Zhang Yuyan.” Could it be there is a team of academics and policy makers around the world working behind the scenes to reform the international monetary system by adding, among other currencies, the renminbi and gold to the SDR?
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Monday, March 16, 2015

MOQ FOB: Take it or Leave it

On Mar 16, 2015, at 1:48 PM, B wrote:
Your approach of "take or leave it" really makes sense when approaching buyers.  I keep getting stuck in my head when I imagine the shipment getting stopped by customs on the buyer's side.  Yes, it is the buyers problem, but isn't a customer's problem really mine as well?

An annoying hold up at their border or return to sender seems like it will leave a sour taste in the buyers mouth making it unlikely they will want to buy anything from me again.  When there are only a certain number of (deleted) buyers in Japan, creating smooth transactions seems key.
Why is Japanese customs holding up a Japanese buyer's product in Japanese buyer's country your problem?  How could you have any control over that?  Why would you promise something (smooth transaction) you cannot possibly deliver?  When they pre-paid the shipment, they tacitly agree all problems are theirs.

As an importer, I have run into just about every problem you can with USA customs.  My supplier had nothing to do with it, but in the occasions they did (failure to mark the goods with C/O tags) I just dealt with it.

Reason #48,274 you are offering the smallest order rational is because there are problems with every shipment, especially new connections, there will be problems, and small quantities are easier to deal with, or lose, than large shipments.

Finally, the second you do a favor (Sure!  We'll put your ingredients label on) then when their country's customs objects, it is now your problem to solve for the goods sitting on the docks in that foreign country.  No good deed goes unpunished. No thanks, take it or leave it.  Real importers will take it.

John


On Mar 16, 2015, at 3:50 PM, B wrote:
After kinks are worked out THEN start doing favors....is that what you mean 
On Mon, Mar 16, 2015 at 4:00 PM, John Spiers <john@johnspiers.com> wrote:
No, no good deed ever goes unpunished.  After they prove they make money, then they get charged a super premium for every request.  they will want you to put on a label that costs you fifty cents and them five cents on for free.  You offer to do it for $2.50 a label, take it or leave it.  They pass, and do it for five cents each themselves.

And they still prepay, with a view to if there are any problems, it does them no good to appeal to you.

Just the way it is in int'l trade.

Your job is consistent pack to grade, reasonably on agreed time.

John



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No, eBay, We Need No New Rules, Just No Hegemon

Forbes Magazine, that stenographer to billionaire welfare queens, offer this:
...  6.5 million companies fall into the “very small business” category, earning under $10 million a year in revenue. According to stats released last month by the Kauffman Foundation, the pace of new business creation in the U.S. has been increasing steadily since the depths of the recession, with just over 400,000 new start-ups launched in 2012.
That does not mean that Main Street USA will suddenly be revitalized with local retailers. Instead, a new generation of small business entrepreneurs, empowered by technology, have taken Main Street digital. This phenomenon is epitomized by an advocacy group created by eBayin 2008 called eBay Main Street. Developed by eBay’s government relations team to help lobby policymakers on behalf of the hundreds of thousands of small businesses who sell through the online auction giant, the Main Street initiative has exposed some really interesting facts about the changing face of small business in the U.S. and some of the challenges they must confront.
Stop right there.  So, billionaires create an advocacy group and front run witless microbusinesses?  In what way are the interests of 400,000 small businesses who happen to trade on eBay match the interests of the billionaires who own eBay? 
Consider this statistic, released in a letter from eBay to Main Street members this past February:
“According to eBay Inc. data, over 90 percent of U.S. businesses using ebay.com are trading across borders. On average these businesses sell to 30 different countries. Comparatively, less than five percent of businesses using more traditional models trade with customers outside the U.S. On average they sell to fewer than five countries.”
So what? Explicate qualitatively those 90% of eBay businesses, their ROI and size.  It will be risible.  Look at those people who make a solid living trading at the microbiz level, with a mere five customers overseas, and you'll find a respectable ROI and lifestyle realization.

eBay wants to graft itself onto USA hegemony for reasons that have nothing to do with its economically doubtful "auction" business... 


This reminds me of the refrain "for the children..."


Whatever eBay claims it wants for "small business" one can assume the opposite is a good idea.  At the same time, Forbes is oblivious to the renaissance coming with the end of lending credit, and the era of credit deflation, what?


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Hillary's Servers

You'll only hear it here, although it is extremely simple.

Hillary held a press conference on the question of her servers at the United nations, where almost no USA reporters can get in to attend.  Softball questions from reporters who could.

What do we know?

1. Hillary had her own servers set up in her "home."

2. Hillary had several emails at least.

3. She claims to have used these for only personal business.

4. She is lying.

5. The NSA spies on all communication, at all times, and having your own server at home changes nothing.

(As all things Clinton, there is 100 layers of lie on top of the story, such as "servers at home" a point that is irrelevant but will serve a couple of days of media coverage when the "investigations" proceed.)

So having said that, start with this:

A. The Clintons outed their own servers.

B. Now they are officially on record as possessing all of those "back channel" emails with movers and shakers world wide on their servers, under their control.

C. The fact that some officials are calling for their disclosure is golden: it makes it seem the Clintons have what the NSA does not already have.

D. The NSA has it too, which deflates the NSAs power since the threat of something is always far more powerful than the actual.  The NSA cannot threaten the Clintons, since the Clintons already have what the NSA might use as a threat.  We all know that all politicians and judges and priests etc are all terrified of what the NSA can produce about them.  The Clintons are saying "We are not afraid of you, i it matters, we got it too."  In a "leak war" the Clintons can martial far better forces at narrative (Hollywood) and selective leaks than the NSA (Provo, UT.)

E.  All world leaders who can recall what they said in emails to Clintons are now on notice Clintons still have records.  All world leaders have rivals.  Rivals would love to get ahold of what their rival said to the Clintons.  More power to the Clintons, and they manage internal disputes.  Expect a parallel intelligence agency, which freezes out the renegade CIA/FBI/NSA/ETC.

F. There is not enough time between now and Hillary's election for this to be any problem for Hillary.  No one knows from election cycles better than the Clinton machine.

That vast left-wing conspiracy, the USA government, will breathe a sigh of relief when the spooks are taken down a notch.  The legislative and the judiciary will cling to the Clintons for their control of the renegade spooks.

Hillary has two ways to become "great"  One is economic, and her husband knows that game. The second, the one stated regret of Bill, was 9-11 happened not on his watch.  Neither he nor hillary will allow such a regret.  To be a great president, you'll have to be a war president.

Sack cloth and ashes.

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Sunday, March 15, 2015

Richard Miles on Carthage (Tunisia)

One reason schooling in USA is devoid of the classics is "we've seen this all before...." and the powers that be do not want anyone outside the circle to understand what is going on.  Even Prof. Richard Miles has to lay it between the lines...  but it is there. A very good 90 minute lesson.




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Behalf Payment Systems

Well, this is easy... front run accounts receivable and make it up on collections...  and charge a pretty penny for the "competitive advantage" of pre-approved B2B credit approval. Something tells me the principals have never worked a trade show nor been in wholesale business to business.    All concept, no reality.

Here is the offer:
Behalf pays vendors upfront so that their small business customers can buy more and pay back on more flexible terms. 
But on credit deflation the longer before you are paid the harder the dollars. Buy more what?  Why do we ever need to buy more than is necessary?  The buying plan is designed to buy just the right amount.  And when you buy right, you can meet vendor terms standard in the industry.  Once you decide to farm out mission critical skillset, you are asking to fail.

The offer is to solve a problem that does not exist.
From a cash flow perspective, this phenomenon is mind-boggling – you are literally trying to plan and source your big season or entire years inventory in a matter of days. Even if you can afford it, what will that mean for your balance sheet? By spreading out your payments over time, you can both increase how much you buy, and better plan how you pay back.
Any buyer at a trade show without a buying plan is an idiot, and perhaps that is their intended market, idiots they can shake down coming and going.  All of the problems mentioned in the article are management problems, not finance problems.  You cannot pound a nail with a screwdriver.

I can't see where this gig will replace vendor financing or factors, the only two eternal offers.  And both management issues, not finance issues. The idea that the internet changed anything much is a delusion that just keeps precipitating the malinvestment and misallocation of resources.

Second, the website offers this:
This approach enables us to approve 30-40% of the small business market. That’s over 4x the approval rate of the credit card industry.
That is a false parity - why compare credit card risk approval at any rate, since taking credit cards as payment is to give up too many points in the transaction. And anyway, which credit card risk group is Behalf 4x the approval rate? Standard practice of checking B2B credit is about 80% approval rate, so what is attractive about Behalf's 1/2  as good performance? And
Suppliers across the U.S. use Behalf to transform purchase financing into a competitive weapon in their industry. On average, suppliers that use Behalf see a 20% increase in sales. 
Yes, increase sales and go out of business.  Suppliers building infrastructure to serve people soon to fail for outsourcing mission critical work leaves them malinvested and resources misallocated. Third:
Let us pay your customers’ invoices and reduce your accounts receivables. If your customer misses a payment to us, there is never any penalty to you.
I know I would set the algorithms to: pick sitting ducks we can skin.  Let sloppy people overbuy, and then nail them and be the first to shake them down.  They are going out of business at some point anyway, might as well the ones to clean them out.

Make it on fees on the front end, and then squeezing the late payers on the back end...  but it is too easy, the more creative work of business is more interesting than any of that.

Then this:
Behalf (beta.behalf.com), a small business financing company, backed by Sequoia and Spark Capital.
Good to know these VC funders, in essence elaborate pump and dump operations, have not become aware of the changes with credit deflation.  That they are backing a credit facility designed for an inflationary world when credit is in secular deflation means they are clueless.  Good to know.

I bet this venture fails to gain traction.  I'll be wrong when it gets acquired by google or amazon or some such (and right if it gets acquired by alibaba or microsoft).

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Apple iWatch Knocked Off Already

There is a $50 knock-off version of the $350 Apple iWatch available in Shenzhen, but necessarily it has android OS cuz to knock off the Apple OS will get the thing rendered inoperable when it tries to talk to Apple.  This operability issue is an unseen version of traceability.

Since no one buying a fake iWatch will be fooled as to its provenance, Apple ought to view this as free advertising as Lagerfeld views knock-offs sold in alleys in NYC of his Chanel designs.  Even if knock-offs become a billion dollar business, not one dime is Apple out.  So not one dime ought to be spent preventing it, especially on the taxpayers tab.

The iWatch strikes me as a turning point in Apple, when it becomes clear if not technologically, but leadership-wise, the change from Jobs to Cook begins to matter.  In announcing final details on the watch, cook in a demonstration used it to make a phone call in front of the crowd.  After the connection made, he enthused:
"I've been wanting to do this since I was 5 years old, the day is finally here," Cook said about the watch's ability to make and receive phone calls.
To tepid response from the audience, to a man with something far better in their hands at that moment, the smart phone.

When Steve Jobs called something "insanely great" it was.

There is another Apple offer, Apple Pay.  For the first tie in its history, Apple is going where the market is not going, Apple Pay.  Jobs would have known this.  all of the early adopters of Apple pay (check the website) are all credit queens (of course) and in credit deflation, instant pay is a bad idea for the customer, whose cash will be king.  Who is going to pay a premium to be abused.

And if hackers can mechanically insert a reader into gas pump card readers to hijack credit card details, then sticking a tiny radio station to a Apple Pay reader is going to be easier.

Of course I have been wrong before, but I am testing a hypothesis.

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