The Iran Nuke Deal and Trade

The delusional among us are railing that the Rogue Obama has directed the useful idiot John Kerry to sell-out USA to Iran.  As if.  There was never any nuke threat anyway, it was all about the sanctions.  The sanctions are coming down.

John Kerry is Skull and Bones, in fact one of the powers that be.  We need some extrication from the mess and cost of our middle east disaster, so the Saudi's are saddling up and USA needs Iran's adult supervision over our out-of-hand terrorist orgs we foment (if not create, arm and finance).  If the Saudis prove inexpert at fighting the rag-tag Houthis, watch out below.

The deal with Iran is what we want, and "blame Obama" is the right narrative for the delusional in USA to cover the powers that be politically.  Foment divisions, blame the black guy.  USA! USA! USA!
Google Search Blame Obama  About 95,100,000 results Blame Bush About 4,720,000 results
Kevin sends in this article on the hopes arising among Iranians...  Tehran Hotels are full of westerners getting ins early while the getting is good.  I doubt there will be much in the way of oil and energy coming to USA from this detente, but I expect the Iranians to load up on USA goods and services, more as their economy begins to recover.

Iran is a rather orthodox Islamic Republic, and the USA is now offering good prices, and vendor financing on no-usury terms (zero interest rate.)  Expect Iran's products to start out inexpensive, but that will change.  USA has quite the pistachio crop, but you cannot beat Iran's quality and flavor.

LCL MOQ FOB is the right tactic to test out if there is market for your product in Iran.  With no track record to look at, it gets down to LCL MOQ FOB to search and learn what business is to be had there.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Trade Deficits

On my post below regarding...

Anonymous has left a new comment on your post "Trade Deficit Decrease and You": 
John, Don't wars get started over trade deficits, ever read about what happened to China when the British started liking Tea and the Chinese Emperor decided that they were only interested in Gold and Silver in payment ? 

There are a few elements missing in your question - waterborne opium inbound traffic and the same volume of tea export does indeed leave a tremendous deficit, a deficit usually financed in credit for which more goods and services were called forth.  But the British demanded the deficit be settled in gold and silver for the simple reason the trade was criminal, and criminals want to settle up each deal.  How often do drug dealers extend credit?

You've left out the time element too... in the 1790s Macartney tried to open more trade with China which the Emperor rejected.  So any question of "demanding payment in silver" is fiction.  By the 1840s the British demand for silver cited above was hurting China economically, and in part a reason for the crack down on the illegal opium trade.  So I was a bit surprised to see that you learned the Emperor gets blamed for British perfidy.

When the Emperor tried to shut down the criminal drug trade, the UK attacked, the first of the Opium Wars.

Here is a very nice video on Hong Kong, but it starts a bit late, in the 1840s, when foreigners first began setting up shop in Hong Kong 100 years earlier, with envy for the Portuguese who had the China tried sewn up in Macau.  Hong Kong's genesis is in Scottish traders before the Opium Wars.



Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

If Gold is Not Money...

Then how come every currency system is grounded in the value of gold?

Once established as the global reserve asset, the SDR will be freely converted into whatever currency a borrower member requires, at exchange rates which are based on the weighted composition of the reserve currencies which make up the basket.

And

Initially the SDR valuation was equivalent to 0.888671 grams of fine gold, which was also the equivalent of $1.00USD. After the collapse of Bretton Woods between the years 1971 and 1973 the SDR valuation was changed to the basket of currencies structure.

Note the powers that be have it exactly backwards....  individual economies ought to have the community SDRs, and the central banks ought not exist.

This blogger says:

As mentioned, in the coming weeks there will be some exciting announcements on PoM in regards to the new SDR and what the average person can do to capitalize on the multilateral transition, as well as protect themselves from any volatility that may take place.

Well, how about just start a business?

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

All Hail the Economic Recovery!

Or not.  Those who are waiting for the government to fix things will rot waiting.

You can take things into your own hands if you like.  Plenty are...

Start a business...

Drudge headlines:

RECORD 93,175,000 AMERICANS NOT WORKING...
Record 12,202,000 Blacks Not In Labor Force...
Record 56,131,000 Women...
January, February jobs numbers revised down dramatically...
Fed Cuts Growth Forecast to ZERO...

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Trade Deficit Decrease and You

Trade deficits do not matter, for example, I have a trade deficit with Trader Joes.  I buy from them, they buy nothing from me.  Amazon.com has a trade deficit with me, they buy far more from me than I buy from them.  What matters, as I heard Paul Volcker once say, it is the health of your trading partner that matters, not the deficit.  I'd be in trouble to the degree that Trader Joes or Amazon.com were economically unhealthy, for my range of goods and services traded would be in that measure in doubt.

No come the February import export report from USCensus.

The Nation’s international trade deficit in goods and services decreased to $35.4 billion in February from $42.7 billion in January (revised), as imports decreased more than exports. (April 2, 2015)

So we are seeing here too changes that may take some time to play out.

http://www.census.gov/foreign-trade/data/index.html

As you read trade data, recall that big business makes up probably 60% of the trade, that is about 1000 companies, while the rest is handled by while small business.  Although those drops are graphically alarming, not to me, for it takes big business to make changes that big that fast.  it is big business being hurt, not small business.  In fact, what big business is no longer buying and selling, some is because their customers are not buying, but some is for their customers' preferences have changed.  Any chenge at the big business level is exponential at the small business level, bad of big is exponentially god for small.

(This is not necessarily so, for there is a natural symbiotic relationship in free markets between small and large business, but in capitalism it is a zero sum game in which one loses and one wins, and class contradictions are fomented, as the Marxists accurately critique capitalism.  A pox on both their houses, gimme free markets.)

This graph shows it is getting better to get into small business international trade, competing on design.  We can adapt any of the widening excess production capacity to more closely match emerging consumer demand.  McD cannot do it.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Funky Town in Cantonese

Peace, prosperity and stability, that is Hong Kong.  The first half of this video is Queens Road Central, that after 35 years looks exactly the same, down to the rolling stock.  Toward the middle the scenes of the housing behind the high rises shows run-down buildings... they've all be refurbished.  All set to Funky Town, in Cntonese.

About halfway the view is of Wanchai, which they renovated and built out with the new exhibition center.

The Pen and the YMCA are still there... just like Hong Kong, the finest hotel in Asia and the YMCA Hotel are side by side.

The narrator seems to be comparing Hong Kong 1978 with perhaps 35 years before that.  Again not much change.  The boats are still there...

Hong Kong has five times the billionaires per capita as USA, and anyone who wants to work can work.  The government is extremely weak, therefore personal responsibility is strong.  Taxes are extremely low, indeed most people never pay any taxes, since they never meet the threshold.  It is amazingly safe place to be.  the government is not trusted with the currency, private companies issue the currency, and no one owns any land, not permitted.  Hong Kong and USA were started at the same time with the same philosophy and system.  Hong Kong pretty much stayed true to its roots (radical)...  USA has altered so much, too much.



Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Iceland To Reform Banking

The powers that be could care less about any given system, they are pragmatic, and want whatever keeps them in power.  Capitalism is over, and now they are looking for alternatives:

“Of all the many ways of organising banking, the worst is the one we have today. ... Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis. This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too.” – Lord Mervyn King, Governor of the Bank of England 2003-2013 1 

When Euro-trash banks demanded Iceland enslave itself to pay back bad loans from bondholders, Iceland said "no" and their economy has quickly recovered.  Ireland said yes, and it limps along.

Now Iceland is going further, and redesigning its banking system. Although it has one crucial point correct, the rest of this plan is a hash (it opens as a .pdf.)  The good part is no more fractional reserve,  the bad part is the government is to run the new system.  Here in the abstract:

There is also indication that the fractional reserve system may have been a long term contributing factor to various monetary problems in Iceland, including: hyperinflation in the 1980s, chronic inflation, devaluations of the Icelandic Krona (ISK), high interest rates, the government foregoes income from money creation, and growing debt of private and public sectors. 

Ya think?  This must be there to guide along the economic illiterates, who have no idea.  But then to the solution:

Economists have long been aware of the problematic nature of the fractional reserve system and proposed various reforms. A program for monetary reform by Fisher et al in 1939 received the support of 235 economists from 157 universities and colleges but was not imple-mented. This report reviews some of the more frequently mentioned proposals for monetary reform: 100% Reserves, Narrow Banking, Limited Purpose Banking and describes in detail the Sovereign Money proposal. 

Ungh!  Well, no fractional reserve is an improvement, but the rest of all that is still disaster, just not as bad.  The problem starts with, as usual, wrong definitions:

Commercial banks create money when they make loans and delete money when loans are repaid. The Central Bank of Iceland must provide banks with reserves (money in accounts at the CBI) as needed, in order not to lose control of interest rates or even trigger a liquidity crisis between banks. The Central Bank of Iceland therefore had to create and provide new central bank reserves to accommodate banks as they expanded the money supply nineteen fold between 1994 and 2008. 

No, that process does not create money.  It is extending credit out of thin air.  And when that credit is extinguished, banks end up with assets on the books, interest streams, out of thin air, money for nothing.  they charge humans rent for being alive.

You can read the 110 page whole thing, but the argument is (and this is correct) the state can make that money. And since only angelic beings get elected or appointed in government, bliss will follow this new system.  Well, not so.  The system is inherently destructive, no matter who runs it.

One large concern is "enough money" (credit) for industry.  Well, no industry needs state credit, or asset-less backed credit.  As long as it is asset-backed, there is no need for state provision.  Unless it is asset backed, there will be disaster.  So for the State to involve itself, necessarily leads to disaster.

The disastrous credit in capitalism originates in the patterns and practice of law in capitalist regimes.   IN the USA, the legal fiction is private companies issue the currency, and the mint issues money (gold and silver coins.)  The USTreasury also once issued currency, and that is warehouse receipts for gold and silver in storage.  Private banks could do this too, for the gold and silver they had in storage.  This was banking long ago.  Fraud is possible here, as some bank might issue more receipts (currency) than their warehoused stocks of gold and silver warranted.  We had bank runs when banks got caught, and the owners were wiped out.  This is like what happens when a restaurant is caught making veal piccata with rat meat.  It is run out of business.  Customers shut it down.

Whereas we all want bad restaurants shut down by customer demand, capitalists never want banks shut down.  so they formed a cartel to watch each other, and gave the central umpire role to uncle Sam, our Fed Reserve system.    So now that could get away with fractional reserve on their gold holdings.  But by the 1970s, they figured out they could get away with fractional reserve on nothing.  Ka-ching!  And when the system faled, Uncle Sam would oblige the taxpayers to bail them out.

This is the Zombie system we are no in.  And people are trying to figure out how to kill.  Icelands plan will not work.

Instead they should look to Hong Kong.  Where only private companies, competing with each other, issue currency.  Now this system is not perfect, it is currently trimmed to take advantage of the bad economic policies of the USA.  As they say, the conditions are "tradeable."  The whole thing is deleterious, but that does not mean you cannot make money off it.

If Iceland's government were to extract itself from banking and money, and allow the free market to emerge, then they would truly reform their monetary system, and be able to ride out any economic storm.  iceland has about 200 years of anarchy, peace and prosperity, long ago... they ought to rediscover anarchy.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Chicago Home Values and Taxes

With capitalism, cities in USA work like this:  The Mayor and City council front the money men who write up bonds for projects (tunnels, bridges, light rail) that are way overcosted, and then experience cost overruns.  The bonds allow the lawyers, bankers, construction companies etc to bank their profits up front, immediately, while the taxpayers fork over money to pay for these overpriced boondoggls, and for the vast infrastructure of city government to manage all of the bizzy-ness.  Nothing good comes form it, it is almost all malinvestmnet and misallocation.

Take a look at this bridge being built across Lake Washington in Seattle.  Way over priced to begin with, engineering screw ups have added massive costs (more bonds to write... ka-ching!) and guess where it is going?  Yes, toward Seattle, and they tore down a museum for a place for the bridge to land...  but no one knows where the ten lanes will go next.  Not the legislature, not the engineers, not the taxpayers, nobody.  And if you look at some places, there really is not place for it to go.  It gets better!  There is no money to have it go anywhere.  We also have a multibillion dollar tunnel stuck in the mud.

http://www.wsdot.wa.gov/Projects/SR520Bridge/financing.htm



Now Mish comes with an article on Chicago financing, and let me trim one sail:

The payments would compete with $28.3 billion of city and overlapping debt and billions of dollars of escalating pension contributions for funding. Basically, if you are in Chicago, your property is about to become more expensive.

...

"It is not a balance sheet test, but a cash flow test. Municipality has to be in a position where it cannot make near-term payments on obligations as they come due (like within six months). This is one of several eligibility criteria. So Chicago is not bankrupt by definition (yet) and has a huge tax base. The biggest risk to residents (now) is that they are in for an absolutely massive property tax hike to pay for debt and pensions," says Culpepper. 

Tax hikes will not make property more expensive, quite the opposite, it will lower property values since bidders will take into account the total cost of ownership, including taxes, when offering to buy a house.  Chicago taxes will not be secret, and home buyers, and indeed their bankers, will not allow themselves to pay more than they can afford overall, especially when credit continues to dry up.

Tax increases, when passed to save a bad budget, always backfire.    House prices in Chicago will fall, valuations will fall, tax revenue as a percent will drop, and it will be a downward spiral.  Lower property values, lower tax take, unfunded pension liabilities greater, situation worsens.

If you own a house in Chicago (or Seattle soon enough) you'll owe higher taxes on a house worth less, and soon underwater mortgage wise.  2008 was just a warm-up for what is next.

There is a huge, untapped free market, and so relax and get used to losing "everything you worked for" over the last whatever years.  If you indeed lose it in capitalism, you'll be happier resuming your work in the free market.

Capitalism is based on the usury bond, it is inherently destructive, and is now in its death throes.  It has a long ways to go, but never too soon to move over to what is more natural.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

LCL MOQ FOB Food Exports Start-up

You must compete on design at the small business level, yet it may seem in my lectures on small business food exports I am advising people who act as agents to sell as if Plan B, selling off the shelf items.

It would seem so, but what we are selling is not kombucha or energy bars, but a test.  the buyer overseas needs to test new products in his market, and we design a product that he can test, the LCL MOQ FOB. So in food export start-up, our initial product is the test we design, a test of the product in new markets.

On the one hand the buyer overseas is using our LCL MOQ FOB to test the product in his market.  At the same time we, by the test search and learn, discover new business that has not shown up on anyone else's radar. And then based on a critical mass of info no one else has, we proceed into building the business of selling the product and move out of the search and learn phase.  Yet here again you begin to redesign your product, based on the feedback of the proven customer.  For the first time you begin to localize the label, make changes in packaging or portion, add the traceability function, and the words "Export Quality.".  Your investment is not money, but time, discipline and patience.  You don't look for finance, but customers; not business loans, but sales.

We introduce old product (necessarily a product must be selling in USA before nit can be exported effectively) to new markets, and then as the markets are proven (and in effect become old) we redesign the product based on valid and reliable feedback.

The next session of the online exporting food course is here....

http://seattleteacherscollege.net/exfoassmbu.html

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Debt Deflation V Credit Deflation

The Bank of International Settlements (BIS) is the hub of all the central banks, the holy of holies among the powers that be.  The FED may be the chief priest, but the BIS is the Sanhedrin.

When their policy wonks put out a study, it does well to read it to see what they know and think.  They can only work within their own narrative.

Well, it turns out there are quite well apprised of what is going on....  and what they have to say is -

1. Credit deflation is happening, and there is a flip side, a good side, for small business etc.

2. If you depend on paycheck, property or pension, you are toast.  For the next 25-40 years at least.

What have I been saying?

You can read it here, it opens as a .pdf.

Some excerpts:

 And even if deflation is seen as a cause, rather than a symptom, of economic
conditions, its effects are not obvious. On the one hand, deflation can indeed
reduce output. Rigid nominal wages may aggravate unemployment. Falling prices
raise the real value of debt, undermining borrowers’ balance sheets, both public and
private – a prominent concern at present given historically high debt levels.
Consumers might delay spending, in anticipation of lower prices. And if interest
rates hit the zero lower bound, monetary policy will struggle to encourage
spending. On the other hand, deflation may actually boost output. Lower prices
 increase real incomes and wealth. And they may also make export goods more
competitive.2

Rigid nominal wages?  Start-ups paying less when less buys more will crush standing businesses paying more.  The $1 an hour more at WalMart and McD was exactly the wrong move, for them.

And then your mortgage becomes sisyphean, you can't afford the mortgage as time goes on...   the asset value regresses to the mean, ouch.    Most will simply jingle-mail, walk away.  And smart people will rent for 20 years and lower the rent on the landlord every year.  Right of first refusal will become popular in rental contracts.

There are two sides to every policy, a winner and a loser.    What Mish and I call credit deflation, the BIS lads are calling from their perspective, the other side, debt deflation. Two sides of the same coin.  Now these lads get it, but note the see the top policy folks still do not get it.   This is important, and good, meaning they will screw it up even more to small business advantage.

His envisaged mechanism, however, operates fundamentally through the impact of the liquidation
and repayment of debt on the money supply (deposit money) and, from there, on prices. Empirical
evidence for the relevance of debt deflation more generally is scant and anecdotal. In their
econometric analysis of the Great Depression, Bernanke and James (1991) do not include debt
deflation explicitly; they simply suggest that the (large) unexplained component in the output
contraction in a sample of countries may reflect its operation. Fackler and Parker (2005) infer the
relevance of debt deflation in the United States from the observation that debt grew rapidly in the
1920s against the backdrop of largely stable prices. That same observation, alongside the strong
increase in asset prices, led Eichengreen and Mitchener (2003), drawing on Borio and Lowe (2002),
to argue that the Great Depression was a credit boom gone wrong – a point subsequently
confirmed by Schularick and Taylor (2012). Meltzer (2003), in turn, argues against the debt deflation
view on the grounds that the fall in goods and services prices should have boosted real balances
and stimulated spending. He sees tight monetary policy as the main cause, as had already been
highlighted by Friedman and Schwartz (1963).

And Friedman and Schwartz were wrong, and Friedman said so before he died.  Unh!  Where are my notes on that!

 Against the background of record high levels of both public and private
debt (Graph 7), a key concern about the output costs of goods and services price
deflation in the current debate is “debt deflation”, ie the interaction of deflation with
debt. The idea is that, as prices fall, the real debt burden of borrowers increases,
inducing spending cutbacks and possibly defaults. This harks back to Fisher (1933),
who coined the term.16  Fisher’s concern was with businesses; today the focus is as
strong, if not stronger, on households and the public sector. This type of debt
deflation should be distinguished from the strains on balance sheets induced by
asset price  deflations.

Yes, distinguish between business debt and household debt.  but business debt problem is your pension assets, including social security hopes, since that is a ponzi scheme depending on the greater fool presently paying in from industry jobs.

So they know, at least at the wonk level, credit deflation, or form the hegemon's perspective, debt deflation, hammers the assets of the powers that be and their selected winners.  It open up opportunity for the small business, by lowering costs of labor and inputs and real estate, while the prices of all things is going down.

If you have your $15 an hour job (or more), in a prime real estate office space, with a wonderful 401K, and a mortgage on a nice house, you are toast because competitors can provide jobs to people who can gain more with less money, whereas you need to maintain status quo on all fronts to maintain your debt based economic status. Your law firm goes down.  Your biotech goes down.  Your real estate office goes down.  Your bank goes down.

Be agile, nimble.  Get a business going, so you can abandon the sinking ship and rebuild after the Spanish Armada like disaster we are sailing into...

And money does not matter, nor gold, credit is the thing.  Extend usury-free asset-backed credit to your customers.  The longer they take to pay, the richer you get.  The game has reversed, and the powers that be, at least their wonks, know it.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

FESCO Moving on Up

These are big increases for the Russian Far East Trade...

In 2014, export-import sea container transportation of FESCO Transportation Group climbed by 16.6% YoY to 428,137 TEU due to growing trade flows between Russia and Asian countries, the Group says in its press release.

So much for our embargoes on Russia for our destabilization of the Ukraine.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Man the Lifeboats!

You are right to fear deflation, for it will cause you grief commensurate to the degree you are tied into the false economy.  Have property, paycheck or pension?  Ouch!

On the other hand, if you are willing to maintain a sense of humor about kissing it all goodbye, there is an alternative awaiting, and that is self-employment.

A massive crash is coming, the world will seem to be coming apart at the seams, your savings and pensions will be gone, there will seem to be no where to put them, and it will seem that whatever you try to have will be stolen, so it will look bleak indeed.  Those who rediscover extending asset-backed usury-free credit to customers will recover first, and anonymously.  there will be no way for the powers that be to "see" your savings, because it will be diffusely spread in many small amounts among customers, and as it comes in it will be reinvested in growing the business.

To wit, massive central bank financial repression is the actual cause of deflation. In the boom phase of the expansion it leads to unsustainable public and private borrowing which finances artificial spending by households and governments and excess investment in private mining, processing, manufacturing, transportation and distribution capacity as well as public infrastructure. Then eventually comes the crack-up phase when the borrowing ends or diminishes, causing reductions in output, prices, profits and incomes throughout the economic chain.
Thus, Governor Zhou Xiaochuan’s threat to unleash more stimulus owing to the specter of “deflation” in China borders on the comical. The very deflation about which he frets was caused by the runaway money printing campaigns of the PBOC over the last several decades—-campaigns which produced monumental price and credit inflation in China, and which were then transmitted and amplified throughout the world economy, and especially China’s supply base in the EM

 Your business is your lifestyle, your income and your savings plan and your lifeboat.  As the powers that be find they can no longer manage the massive false economy they degenerated, they will find themselves beset as was the Soviet Union in 1990.  The worse it is for them, the better for small business renaissance, as part of the rebalancing.

Get your lifeboat built now.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Trade Show Exhibition Decision Tree

Trade show participation is crtitical to the growth of your company, but it can be expensive, or not.  Expensive:

Yes, exhibiting at trade shows can be costly: Troy Trice says a traditional 10-by 20-foot booth will run $15,000 to $20,000 -- and that booth expense typically is about one-third of an exhibitor's overall show outlay.Trice is a trade show guy, president of TradeTec Skyline, a Lombard exhibitor company. Travel and the exhibit floor space you rent are additional. Show marketing before, during and after the event -- including swag -- adds to the cost, too. 

Not expensive decision tree:

www.johnspiers.com

You see there are many options for getting exposure at a trade show before you ever have to fork over the big bucks.  It all depends on getting customers first.  Feel free to email me for a .pdf copy of this...

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Frankenfoods Reversal

Whether or not Frankenfoods are safe, the clear and present danger of GMO foods is the madness of having about 90% of the USA corn crop "owned" by a half dozen people.  That is too much leverage in economics and in safety.  The world is turning on GMO which is to be welcomed, and so to apparently the previously bought-and-paid for media.

Some time later, the Seralini study was removed from the Journal of Food and Chemical Toxicology, and this fact has been used in a foolhardy way by biotech shills to promote the ‘fallacy’ of biotech dangers on more blogs and Facebook postings than I’d like to count. It looks like the journal is doing some house cleaning; however, because two Monsanto-supporting, biased editors have been removed from their positions.

Perhaps the powers that be desire to begin to correct some of their excesses.  Who knows?

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Stop the TPP

As far as labor is anti-fascist, they are most reliable, as in this effort to derail Sen. Wyden's bid to further sink USA into fascism.

While this was occurring Wikileaks published the text of the Investment Chapter of the Trans-Pacific Partnership. This chapter allows corporations to sue governments in a tribunal that supersedes the  US judicial system when a law passed in the public interest would undermine their profits. Corporations can sue for the profits they were expecting to make in rigged trade tribunals where corporate lawyers play the role of judges and there is no right to appeal or take the case to another court for review. Even the US Supreme Court cannot overrule the corporate judges.

The problem is the commanding heights of labor and other nominally anti-fascist entities will sell out at the drop of a hat.  They are not against any of these plans, they are only against no rent stream for them from the game, no seat at the table.

Get rid of usury as a government backed practice in USA, and end this fascism.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

The Wind At the Back of Small Business Start-Up

Mish cites an article on the role of gold in the deflation of USA currency and credit....  for the last 40 years, USA has been exporting inflation around the world.  Note the reverse (obverse?) is now happening... (below I will outline the situation on the ground in the next 25-40 years):

Right now, excess returns are under pressure from four main areas; The rest of the world is exporting deflation to the US.
 ...

The second key threat to US returns comes from low productivity & the dearth of investment, itself induced by the high level of debt and the subsequent low rate of growth (See Buttiglioni – Deleveraging, What deleveraging? 2014).
 ...

Of course, conditions are very different today. In ‘Disinflation or deflation?’ January 2015, we argued that deteriorating government productivity, something not measured in the GDP stats, was bringing down productivity for the economy as a whole. The combination of negative net investment and weaker productivity from tech applications means that corporates will struggle to offset rising wages.
 ...
So, in contrast to the extended 90s boom, weak productivity means that, as labour costs rise, cashflow gets squeezed, and credit fundamentals deteriorate further.
 ...
The most important support for US liquidity is corporate debt issuance for buybacks & M&A. So corporate debt issuance is also a key driver of EPS momentum. From 2010-14, corporates were able to issue large quantities of low quality debt.
 ...
In part, this was because there was a huge bid from mutual funds. Persistent Fed, foreign central bank and Investment bank treasury buying over the past five years induced mutual funds to reach for yield. But now that those sources of treasury buying have evaporated, mutual funds have much less incentive to reach for yield – so high yield appetite has deteriorated. Just as the fundamentals of debt, cashflows, are under pressure from the deflationary forces highlighted above.
 ... 

By lending asset-less backed credit we were able to generate massive false economy in the last 40 years.  We grew war and prisons and regulations other government-related non-productive projects, we funded massive unwelcome intrusion and interference worldwide, and wrote rules that made manufacturing overseas preferable (with an explicit intent to harm foreign workers while aggrandizing a USA elite, a project that has backfired), while at the same time making producing here difficult, and lost two generations of entrepreneurs to FIRE: Finance, Investment and Real Estate.

We have a overwhelming majority of people who believe they are entitled, the poor and their EBT payments, and the rich and their pensions and investment portfolios.  Both are soon to learn either are NSF.

The feds are studying what government services USA can do without, "saving" investments by seizing them is a done deal, "prison sentencing reform" will empty out prison-nation and troops are in our cities training to fill them back up with malcontents.    The sturm und drang over Obama and the Iran deal, as if Obama can exhale without the permission of the powers that be, is USA disengaging in its disastrous neo-and-theocon anti-Islam oil grab.

Productivity is down not for lack of investments, but for frustration of enterprise.  We micromanage to the degree that a shop-owner may be fined for not attending to a gay wedding.  We are not free to contract, you must pay a minimum wage that only engorges the state.  If it moves tax it, if it keeps moving regulate it, if it stops moving subsidize it.  We need separation of business and state.  Will with the coming cutbacks in government work, will there also be a cutback in regs?

But even with freedom, entrepreneurship is apprenticed, with among the several children and employees of a small firm, someone either inherits or leaves and forms a new company based on lessons learned.  Gone outside of tech.  And now we have inheritance taxes that kill off any successful business before it can pass to a second generation.

But as tech gravitates toward true economy (now that false economy credit is drying up) and the control of world finance leaves USA for China, so will importing what we need.  We will see a demand for in effect import-substitution, that is for making much of what we now import.

On the other hand, we'll be able to get more for USA products overseas than in USA, cuz we will not be able to bid up prices here.  Ironically, we'll finally get strong export sales, but not in the categories the powers that be had hoped (food, yes, but not food as a weapon.)

The question of finding credit for small business is deeply offensive.  What they mean by credit is rent-seeking on the productive segments.  The capital necessary to start up is available in the profits of the start up.  People need customers, not credit, and if they have customers, they have capital in the form of retained earnings.    And don't worry, commercial real estate, inputs, fuel are all going to get dirt cheap, and if wages are allowed to be freed, then labor as well.  Full employment opportunity, if yu want it.

But cities such as Detroit, Chicago, etc have such unfunded liabilities they need to rent-seek upon entrepreneurs.  If and when these cities bankrupt and default on their "obligations" they may have a chance of recovery if they also repeal all of the whimsical regulations the now-beneficiaries of pensions wrote while they rested on the public payroll.

Credit deflation is the wind at our back, rules and regs and taxes are the cross winds.  Cities might compete for entrepreneurs, but more likely small towns without pension obligations will be taken over by free marketers and allow small business to flourish.

This could be a golden era for the USA, when we end our isolationist policies of alienating all on earth with our interventions, and become a country willing and able to freely trade world wide, get back to the roots we know works given the example of Hong Kong, birthed at the same time under the same philosophy as USA.

Our problem is only us.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Isolating USA

The powers that be know they have gone way too far, and the Iran deal is meant to show we can back off from our monstrous foreign policy.  Finally, Arab armies are afoot doing their own fighting.  But it is probably too little too late, for the rest of the world was obliged to avoid USA's warmongering and destabilization, and the momentum is away from us.

In May 2014 Chinese Premier Li Keqiang visited four African nations; Ethiopia, Nigeria, Angola and Kenya to boost ties. Chinese vice-minister for foreign affairs told reporters that about 60 agreements have been signed during Li’s trip, which”highlights the great importance we attach to China-Africa relations”. Kenyan President Uhuru Kenyatta has said Li’s visit would be a “game changer” and the region requires “a strong partner who will not only support it in economic ventures but also in peace settlement”. It’s estimated 85 % of Africa’s export to China are raw materials, such as oil and minerals.

But hey, we can spy on everyone on the planet.  We can do that.  All if this comes from lending asset-less backed credit. We were able to build a false economy, which is now coming down.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Canada Hearts USA Food

And so do their pets...

With a 25.6 percent market share in 2014, and a value of $17.2 billion, Canada remains by far the top destination for U.S. exports of high-value agricultural products.  These consumer-oriented agricultural products are foods typically sold directly in supermarkets or used in restaurants.  These high value exports support tens of thousands of jobs in the United States, and many of the suppliers are small and medium sized businesses.•  Wine and beer:  $644 million
•  Pet food:  $630 million

Check out the whole list in the report.  Pretty interesting.  There is a paragraph that describes beneficial changes due to NAFTA, with which I disagree, but otherwise this supports the trend toward food export.

Canada remains USA's #1 trading partner.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Capitalists Hate Free Markets

The Capitalists wiped out free markets, and the chaos that followed ushered in the communists, leaving knowledge of the free market far behind.   So we get this plan from Vietnam:

Representatives from the two sides discussed the development of the capital market in Vietnam and solutions to help small- and medium-sized enterprises gain access to capital. They also considered the best ways in which to promote the application of modern technologies in the international payment process.

We don't need capital at the small and medium sized business level.  We need customers.  We do not need capital, we need voluntary, usury-free, asset backed credit facilities, something largely illegal now.

Places that do not make it illegal thrive.  Those that do, suffer.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post