Saturday, July 4, 2015

Seaweed Micro-industry and Anarchy

An obscure magazine called Lucky Peach did a long article on the seaweed harvesting industry in Norther California.  They don't put their articles online, but you can buy back copies.

The article is very instructive, and highlights how microbusiness is and can be.  My observations while I was reading the article.


1. Given the nutritional benefits of seaweed, including seaweed in a diet means you need ot eat less of other things, like fish, to get a well balanced diet.  Less fisheries needed, the less harvested.  The less we actually eat to sustain ourselves, the more efficiently our body performs.  I've been down to two meals a day for about a decade, no snacks, for the simple reason that is all I need given what I eat.  If you are american you are probably eating way too much of the wrong things, and it is slowing you down.  Sure good food is more expensive, but less needed, so it is a net savings.

2. The fact people have started gathering seaweed for commercial purposes means people are regularly present where once was no one.  They watch our coastlines and give us early warning of threats like pollution, or whatever.  They are advocates for off the radar parts of the ecology.  The more we eat of seaweed, the more it is harvested, the better our coastlines are protected.

3. The people who harvest the seaweed are not capitalists, they are not about accumulation, but commonwealth.  As free marketers, they mix their labor with natural resources to create a product to sell.  Private property occurs when you mix your labor with natural resources, or otherwise trade your own services with those who do. No one owns the coastlines, and the state does not enforce real estate property rights (another example of why we do not need to have real estate property rights.)  If conflicts were to occur, they could be solved by recognizing the treaties giving Indians ownership, and then let the Indians lease out shore use. 

4.  As you read about the people actually involved, they are old enough to be aware of the pre-1970 economy, in which comity, not polity was supreme.  So sad to see people under 55 without a clue as to what could be.  Business is about lifestyle, not accumulation.

5. We see in free markets no one need own land.  Capitalism depends on a real estate regime, communism does not. Now the communists are a direct lot, they just executed the unneeded landlords.  In capitalism the Supreme Court simply makes laws allowing for big business to take private lands for themselves.  If you resist, then the capitalists will just kill you too.  All -isms are grounded in violence, one way or another.  Owning real estate is not necessary nor sufficient for a free market, indeed it seems to inhibit it.  The Indians and the communists got this right for different reasons, but in any case, leases are not necessary but sufficient for free markets.

6. We see the seaweed harvesters come up with best practices, which are adopted among competitors. Practice creates rules and regs, and the lease enshrines the rules and regs to maintain sustainabillity.  For example, the hegemon has made a hash of regulating seawed on the Northern Caifornia coast, and the only reason it has not killed off the micro-industry is the local regulators do not enforece the stupid tules.  (What hegemon rules are not stupid?)  Anarchists love government, but not the hegemonic state. Anarchists live by rules, rules necesarily not violence-backed.

7. With leases, the lease sustains the environment and those who own the lease mix their labor with natural resources, and the work is handed down to the next generations, who either renew the lease or let it go to the next highest bidder for a new lease.  Capitalism demands real estate ownership so lists may be known of whom to tax, and real estate is a handy choke point.

The article illuminates yet another example of working anarchy, and the chaos the state introduces where freedom naturally yields prosperity.  We have peaceful means to govern this limited resource we call land (or ther seas, which ought also be leased, but capitalism is about accumulation into ever fewer hands by the means of usury.  So for capitalism to obtain its raison d’etre, capitalism must have a provision for personal ownership of real estate.  From this flows all of the horrors of capitalism that has plagued the world for the last two centuries: war, poverty, starvation, refugees, lack of proper food, clothing, medicine, education, etc.

I understand how this may fill you with rage at capitlaism and capitalists, but we must remain meek, never resort to violence like the communists, and simply withdraw our consent to be governed by the hegemon so we can move forward, broken people that we all are, to the more just comity of no one owning the lands, or more specificaly, giving it back to the Indians, who can then lease it out to the highest bidder, subject to terms of sustainable best use.


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Mal-credit

The culprit in the next market crash will again be mal-credit:

And the cost of money is so low it’s almost irrelevant. Thomson Reuters in a white paper on M&A pointed out that these deals are nurtured by the cost of funds in the bond markets and by rising share prices in the equity markets. Currently, bond markets “are following the path of quantitative easing,” the authors said. While the Fed has ended QE, the ECB, the Bank of Japan, and others are still pursuing it with a passion. And stocks have soared. That’s feeding the M&A boom with its crazy valuations.
But this time, it’s different. The white paper explained that during the last M&A boom just before the Financial Crisis, private equity firms were the deal drivers, with LBOs accounting for 25% of the activity. Now the boom is driven by corporate buyers. With access to cheap debt and armed with their own overpriced shares, they’re “out-bidding” private equity. And private equity, considered the ultimate smart money, sees these irrational prices, shudders, averts its eyes, and steps back from the melee.

If you want to prosper, avoid mal-credit at all costs...

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Friday, July 3, 2015

Puerto Rico to Become the New Haiti?

Capitalism created Haiti, and now capitalism threatens to turn Puerto Rico into a new Haiti.  To capitalists, the solution for borrowing too much money is to borrow more money:
Hedge funds holding billions of dollars of the island’s bonds at steep discounts are frustrated that the government has not seemed willing to reach a deal to borrow more money from them.
“We want to be a part of the solution to the commonwealth’s fiscal challenges,” a group of investment firms, including Centerbridge Partners and Monarch Alternative Capital, wrote in a letter last week.
An aide to the governor said the hedge funds’ debt proposal was too onerous. And the deal would only postpone Puerto Rico’s inevitable reckoning.
Haiti was poor because of the indemnities it agreed to pay to France after the slave revolt.  In essence, Haiti's new leaders a few hundred years ago agreed to impoverish Haiti into perpetuity in exchange for France recognizing the Haitian leadership.  Poverty forever for Haiti.  Only recently, after earthquakes and other natural disasters, did France forgive the debt.

Puerto Rico is advised to become the new Haiti.

How about Puerto Rico be give the freedom to become prosperous?  3.6 million people is just about right for a sustainable nation.  Try the Hong Kong model, not the Haiti model.  Free markets, not capitalism.

An absolute key is nonviolence.  Haiti's slave revolt was violent, and any time violence is used to make change things get far worse.  Look to Gandhi, not Toussaint Louverture (although Louverture had the capacity to be a Gandhi).

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93 Million Unemployed?

If so, that is over 25% unemployment rate.
The 157,037,000 who participated in the labor force equaled only 62.6 percent of the 250,663,000 civilian noninstitutional population, the lowest labor force participation rate seen in 38 years. It hasn’t been this low since October 1977 when the participation rate was 62.4 percent. 
I recall 1977.  It was the first year I went to China as a buyer for a small import company.  Plenty of economic problems, but plenty of small businesses exploiting new opportunities, like China opening up after Mao, and hiring people.  not any more...  The last 40 years have been harsh on small business with the hegemon mantra of "get big or get out" and the specific means to that end of mal-credit lending, wiping out the comity upon which a beneficial market was based.

WE have X GDP right now, and it must support those 93 million and answer for all of the claims on it...  that is going to be an ugly fight.  Don't join that fight.... start your own business.

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Thursday, July 2, 2015

Your FTZ (Foreign Trade Zone)

On Jul 1, 2015, at 8:03 PM, TS wrote:

I do have a question that you might help me understand, there is something about my city and special import/export stuff.
 
 
Will this impact me and if so, how?

Hey TS,

FTZ's have been around a long time, they were designed to help big business avoid tariffs and regulations.   I've never seen an instance where an FTZ benefitted a small business.  The one to which you refer is #176, meaning there are 175 others, and my home town, Seattle has a couple, one being the Boeing plant.  I suspect outside of industrial big business applications, they are otherwise decorations and make-work for econ-dev cheerleaders.  As you go through the list of benefits, one thinks "so what?"  For example:
Exports: Foreign merchandise in the zone may be re-exported free of duty and federal excise tax.
Well, I can import anything I want, pay duty, and re-export and recover 99% of the duty with duty-drawback and none of the cost and paperwork of doing it through a FTZ, which will be far more onerous than 1% of anything.

They sound exciting, but they really have no useful application.  Now, if instead of Foreign Trade Zones USA allowed Free Trade Zones, like the communists allow in Hong Kong, then we'd be talking about something beneficial.

John


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Wednesday, July 1, 2015

ExImBank Shutdown?!

It ain't gonna happen.  Even though the reason for the ExImBank is over (to prop us the Soviet Union) there is no chance the welfare rationale is over.
The Export-Import Bank dies tonight when its charter expires. After 81 years, what is commonly known as Boeing’s Bank is headed toward Washington’s trash bin.
Boeing, GE, and other existential-grade welfare queens cannot be denied their life-support AND have USA continue. This is pure political theatre, wherein the wascally wepublicans are just holding out for more kickbacks.  Did the US govt shut down in govt shutdowns?  Of course not.

Expect a anew and approved ExImBank (more money, more secrecy) to be announced as the Republicans fund it and call it a victory.

The ExImBank will not end until USA ends.  Because the ExImBank will not end, USA will end.

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Hedge Your Bets?

If nothing else, one ought to hedge one's 401K by shorting whatever you are holding.  Say you have 100 shares of apple, the short 100 shares of Apple.  The net effect is you neither win nor lose.  But trouble ahead...


So let the price discovery begin. In the days ahead, we will catalogue the desperate efforts of the regime to reassert its authority and control and to stabilize the suddenly turbulent casino.
In riding the central bank bubbles to unconscionable riches the big axes in the casino have falsely claimed to be doing “gods work”.
As they are now being forced to liquidate these inflated assets, they actually are.
Last fall one of the most detestable members of the regime, Jean-Claude Juncker, arrogantly issued the following boast.
I say to all those who bet against Greece and against Europe: You lost and Greece won. You lost and Europe won.”This morning that smug proclamation is in complete tatters. Good on you, Alexis Tsipras.

Also, all that talk of market interest rate, well, zero is the right interest rate, the rate at which businesses lend.

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Tuesday, June 30, 2015

Kiss Your IRA & 401K Goodbye

A friend of mine drew a sixteen year sentence in a federal pen for allegedly moving investment funds from a less risky to a more risky asset category.  He is appealing, from prison, his conviction.

Now comes Wall Street:

Anyone who invested in less-risky funds did so with an understanding of the definition and risk parameters of the funds at the time of investment.  But now BlackRock is changing the rules and risk parameters of those funds by exposing them to the counterparty risk of the riskier funds in the BlackRock fund complex which will be able to borrow money from the less risky funds.
This means that the Treasury fund in which your IRA or 401k is invested will now be “invested” in any fund that borrows money from the fund with your money.  The risk profile of your “conservative” fund assumes the risk profile of the riskier fund. Because of this, there is absolutely no reason for anyone to leave any of their money in any of BlackRock’s funds.

Easy come, easy go.  If you lose money in the next crash, it is because you did not care.  But even then, just as they are as this story outlines, the rules get changed in the middle of the game, as when Chris Cox at the SEC outlawed shorting financials just before and short-sellers could realize a gain.  The heart of the USA economy is profoundly corrupt.  When you lose, do not join the masses trying to recover equity.  You should be busy with your own business.
To me, this is the signal that everyone should call up their mutual fund company, financial adviser or 401k administrator and get all of their the money out of any mutual fund.  Larry Fink has done everyone invested in any mutual fund a favor:  he’s unwittingly signaled that it’s time to get out – now.   Anyone who is aware of this and does not take action immediately is either a complete idiot or simply does not care about having their money taken from them by the criminal elite.
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Rice and Comparative Advantage

Any time you hear the words "comparative advantage" without scorn being heaped on the idea, realize you are in the presence of a nincompoop.  (Nincompoop = non compos mentis eg, a poorly composed mind).  There is nothing in the field of economics more risible than the idea of comparative advantage.

A prime example is the USA growing rice.  In Texas and California, we grow massive amounts of rice for export, precipitated by the USA wiping out the Vietnamese ability to produce any crops, let alone two crops a season possible in that land blessed, if sans invaders (and every invader since Genghis Khan has been defeated, most recently the mighty PLA in May of 1980.)

Without denying Mexico the good of the Colorado River, and other massive water diversions, and massive GMO and financial subsidies there would be zero rice grown in USA (except for wild rice, actually a grass).  Further, we poison our ecosystem, not only our economy, so the extremely few can take the profits while the rest of us pay the costs.
In March 2014, the European Food Safety Authority published a separate study finding that “the highest dietary exposure to inorganic arsenic was estimated in the younger population,” and pointing to non-rice based grain processed products, rice, milk and dairy products and drinking water. That November, Consumer Reports followed up withanother report, which included a focus on levels in food for children, who have much lower recommended maximum intakes. The EPA has also concluded separately in 2012 that “rice consumption may expose children to arsenic.”
Without these subsidies written into the law, we would simply buy what rice we needed, as would be the case of comparative advantage if we had free markets.  We do not have free markets.  We have capitalism which necessarily means chaos and poverty and war.

You get more of what you subsidize.  If we end subsidies for bad food, we'll end the disease, pollution and malinvestment we get from the bad food driving out the good.  We need a separation of agriculture and state.

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Monday, June 29, 2015

Banks and Armies

From Thos. Jefferson:
... “I believe that banking institutions are more dangerous to our liberties than standing armies.” He also wrote, “The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals.” You’ll notice that Jefferson identified “the precious metals” (plural) – meaning gold and silver – as being superior to paper currencies.
Two abominations we now have, standing armies and paper currency, have very much harmed the republic.  The armies are extensions of the banks, and the banks need to armies to protect their mischief worldwide.

Yes, we need gold and silver as money, but we do not need much money to make an economy prosper.  We need a separation of business and state, the state having no role in the economy, so natural banks can evolve and the necessary element of private credit might thrive.

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Sunday, June 28, 2015

China's Entrepreneurial Advantage

An advantage Chinese entrepreneurs have over USA entrepreneurs is China does not have the policy of "get big or get out" that is mandatory at all levels of government in USA towards business.  So creative types can thrive there.
While she refuses to call her clothes business a commercial or fashion venture, the acclaimed designer who set up the highly popular local brand Exception, does like to experiment with her products.
"Our clothes are hand-woven, made from natural materials such as cotton and linen. And we only do plant dyes," says Su.
A Wu Yong workshop in Zhuhai city in South China's Guangdong province, where Ma's company is based, has some 40 workers, with the majority being weavers. For the designer, the concept of sewing by hand and weaving are essential to what she describes as "emotive dressing".
We can redefine unions as marriage in USA, put a man on the moon, but we cannot change the "get big or get out" mandate in USA government policy?

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So Many Suppliers Available for Export As a Small Business

On Jun 26, 2015, at 9:12 AM, LA wrote:

Hi John,

Here is yet another Export question:

My response from the (product) suppliers was strong.  I am having difficulty figuring out which supplier would be the best.   I have 5 now who all seem great and refuse to export (ed.note: meaning buyers overseas will not be able to go around LA acting as an agent).

Do I only want to make a MOQ FOB for only one (product) supplier to start with?  I assume unless there is a clear difference having more than one (product) offer would confuse buyers?

I have also started mailing to importers in Japan.

Thanks for all your continued help -- I greatly appreciate it.

--Luke

Hey LA,

As part of your LCL MOQ FOB, you will need links to references, people with whom buyers can check that say you are AOK.  You have no such references starting out.  So the next best thing is links to references to the producer that is your source (one that refuses to export).  This is another reason your humility pays off, you are not doing this business saying "look at me!" You are developing export markets for (the product).  You are almost invisible in the process, except for communicating between principals.

So pick one of the suppliers, the one most loved in USA that also already has references, the one easiest to also cite examples of USA retail prices, and push that one supplier.  Now as soon as you need more (product), you know where to get it, the other four.

Does this make sense?

John


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