Reality Happened to Amazon and Groupon

Groupon has gone in its short history from about $25 down to under $4...

Shares of consumer deals company Groupon (GRPN - Get Report) have plummeted some 55% in 2015, including a 48% plunge in the past six months. And Groupon stock has been under pressure for quite some time. Investors who have held Groupon in the past one-year or three-year periods have seen, respectively, 36% and 21% of their investment disappear.

Today I see a notice from Amazon's version of Groupon, the daily coupon deal:

On December 18, 2015, Amazon Local will stop selling daily deals at local.amazon.com and on the Amazon Local app.
All purchased vouchers will not be affected by this change and remain valid according to their terms. Learn more.
From October 30, 2015 until December 18, 2015 you can continue to purchase deals at Amazon Local as usual.

So they are admitting online marketing is not a viable way of promoting coupon deals.  How long will it take the hundreds of millions who believe online marketing is a viable means of business promotion to learn it is not true?  Since they all point to Amazon as the big success story in the field, when will Amazon's consistent contradiction convince them?  Malcredit creates such malinvestment and misallocation.

Now I should say I have two books that earn me a tidy sum each month, which are largely marketed online.  But only because I refuse to waste a dime on online marketing am I able to make money due to online marketing.  This is not a contradiction.

Because I know intellectual property rights is a moral evil, I can allow my book to be available at googlebooks 100% free of charge.  Since it is there free of charge to readers, it ends up the destination of many a google search into "small business international trade."  Since the entire books is opena nd free, people tend to land on precisely the part of the book that answers their interest.  And after a few pages of reading online, and seeing it pitched on the same page by Amazon in hardback and kindle version, people often click through and buy on Amazon.com.  Since I am the publisher, and I sell to amazon, I get teh wholesale markup and profit, and amazon earns a retail profit, and google gets a referral fee.  We all make money.  But I do not put a dime into this, your pension plan is losing value to keep this malinvestment operating as I make money from the very system.

Is it wrong for me to do so if I understand how it all works?  Your pension plan financed the destruction of the small retailers who would have sold my book.  Your pension plan is now defunct for those investments.  I am riding down what your money has wrought.

Yes, the world can be a wicked place, and that is good o know.  Just unload the delusions, look at the facts, admit it is awful, then see how you can make enough to live whatever your lifestyle.

If you have a $30,000 student loan for a "website development" degree, yikes!  If you are contemplating one, better you dig ditches now than go get such a degree.  You'll have better prospects.

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Again USA Fomenting War Over Spratlys

USA once had a anti-war (pro-peace) movement, and it was predominately Marxists, so it had its facts straight.  I was astonished to learn the Vietnam war was over supposed oil reserves in the Spratly and Paracels.  And here we are again, making war over those rocks:

Chinese warships followed the USS Lassen, a guided-missile destroyer, as it moved through the Spratlys on Tuesday. The U.S. Navy is operating in a maritime domain bristling with Chinese ships.

Chin will not back down.  If a war starts, it is because our leadership wanted one.

There is of course an alternative, peace rocks.

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Mish Gets Bitcoin Wrong

No one has the whole picture, and one reason economics is so mystifying is definitions are erroneous often.  People have been trying to define Bitcoin, and the article is interesting for its report on whimsy, but here he goes off the rails:

The key point is number two: "Money is a commodity. It differs from other commodities in being demanded mainly as a medium of exchange." 

Bitcoin is clearly a commodity whose primary purpose is a medium of exchange.

Not at all.  Bitcoin is simply a tally.  Anyone who is promoting action based on any other definition is a scam artist.

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Paper "Money," Mal-credit and the Plague

When googling money, google offered the HistoryWorld first, put up by very smart people, which had this to say:

Money, one of the earliest and most significant inventions of civilization, is essential to the development of trade. Without it there is only barter, a relationship between two people each of whom has something which the other wants.

What about credit?  Did that no precede both barter and money?  Perennially man returns to credit when money (properly defined) fails to meet demand:

During the Song Dynasty (960-1276) booming business in the region of Tchetchuan (Sichuan) likewise resulted in a shortage of copper money. Some merchants issued private drafts covered by a monetary reserve which initially consisted of coins and salt, later of gold and silver. Those notes are considered to be the first to circulate as legal tender. In 1024 the Authorities confer themselves the issuing monopoly and under Mongol governement, during the Yuan Dynasty (1279-1367), paper money becomes the only legal tender. During the Ming Dynasty (1368-1644) the issuing of notes is conferred to the Ministry of Finance.

So hegemon issued coins fail, merchants simply go back to benecredit, usury-free asset-backed credit.  That works,  So the hegemon steps in and makes it worse.  The hegemon issues monopoly paper money.

Now one overlooked aspect of silver and gold as money is it is anti-biotic.  Silver and gold both kill germs.  Since credit works locally, silver and gold money is not necessary there.  but in world trasde, where traders may never see each other again, the anti-biotic nature of the only thing that actually physically trades hands in int'l trade is the antibiotic money.  Bear that in mind.

Note that date above, Yuan dynasty, 1279-1367.  World trade was burgeoning, somewhat driven by Marco Polos accounts, being publicized about 1300.  Note this:

Marco Polo describes the way in which bank notes are produced in the 13th century for the Chinese emperor in what is now Beijing:
'They are made with as much authority and formality as if they were of pure gold or silver, for many officials who are deputed for this write their names on every note, placing there each one his mark, and and when it is all done as it ought to be, the head of them deputed by the lord stains the seal entrusted to him with cinnabar and impresses it upon the note so that the pattern of the seal dipped in the cinnabar remains printed there, and then that money is authorized. And if anyone were to counterfeit it he would be punished with the last penalty to the third generation. And different marks are printed on them according to their future value. And this money is made in the city of Beijing by those who are deputed for this by the king, and not by others. And each year he has so great quantity and supply of them made in the city of Beijing that he would pay with it for all the treasure of the world, though it costs him nothing.'

Quoted Bamber GascoigneThe Treasures and Dynasties of China, Cape 1973, page 162

Next... after Marco Polo, smack dab in the middle of the great world trade expansion facilitated by monopoly money malcredit, when paper replaces gold and silver, watch what also happens.

The Black Death erupted in the Gobi Desert in the late 1320s. No one really knows why. The plague bacillus was alive and active long before that; indeed Europe itself had suffered an epidemic in the 6th century. But the disease had lain relatively dormant in the succeeding centuries. We know that the climate of Earth began to cool in the 14th century, and perhaps this so-called little Ice Age had something to do with it.Whatever the reason, we know that the outbreak began there and spread outward. While it did go west, it spread in every direction, and the Asian nations suffered as cruelly as anywhere. In China, for example, the population dropped from around 125 million to 90 million over the course of the 14thc. [ http://history.boisestate.edu/westciv/plague/02.shtml]
[http://www.eyewitnesstohistory.com/plague.htm]
The plague moved along the caravan routes toward the West. By 1345 the plague was on the lower Volga River. By 1346 it was in the Caucasus and the Crimea. By 1347 it was in Constantinople.It hit Alexandria in the autumn of that year, and by spring 1348, a thousand people a day were dying there. In Cairo the count was seven times that.The disease travelled by ship as readily as by land—more readily—and it was no sooner in the eastern Mediterranean than it was in the western end as well. Already in 1347, the plague had hit Sicily. [http://history.boisestate.edu/westciv/plague/03.shtml][http://www.eyewitnesstohistory.com/plague.htm]
It reached Cyprus late in summer 1347. In Oct. 1347, a Genoese fleet landed at Messina, Sicily. By winter it was in Italy.
[http://www.eyewitnesstohistory.com/plague.htm]
January 1348, the plague was in Marseilles. It reached Paris in the spring 1348 and England in September 1348.Moving along the Rhine trade routes, the plague reached Germany in 1348, and the Low Countries the same year. 1348 was the worst of the plague years.It took longer to reach the periphery of Europe. Norway was hit in May 1349. The eastern European countries were not reached until 1350, and Russia not until 1351.Because the disease tended to follow trade routes, and to concentrate in cities, it followed a circuitous route: the Near East, the western Mediterranean, then into northern Europe and finally back into Russia. The progress of the plague very neatly describes the geography of medieval trade. [http://history.boisestate.edu/westciv/plague/04.shtml]

The spread of paper monetary instruments replacing silver and gold correlates with the spread of the bubonic plague.  So what?  The plague is spread by fleas, and as relatively coarse as paper may have been back then, it did not conceal fleas.

Yes, but the massive expansion of unnecessary trade occasioned by issuing malcredit instruments brought delights all along the trade routes, physically packed with voracious fleas as hosts for the virulent plague.  It is the scale of trade, in all of its misallocation and malinvestment, that offered the rapid expansion of opportunity for both the hegemon and the plague.

The argument of benecredit and 100% reserve is it checks boom and bust economy.  Perhaps it also checks plagues.

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Adam Smith On Corporations

Moseley comments on Smith's view of modern corporations:

He has similar objections to joint-stock companies. The fact that ownership is remote, and always changing as the shares change hands, means that owners of companies are not directly involved in running them, and they are less carefully managed as a result. ‘Negligence and profusion, then, must always prevail, more or less, in the management of the affairs of such a company.’[xi] -

Just so...  readers of this blog know I have nothing in particular against the corporation, even though it is the vessel of capitalism sailing in a sea of rules and regulations to maintain it, only that anything good from capitalism's corporations may be had in the customer-owned coop.  Coops have shares that rarely change hands, and the management is immediate in every sales transaction.  Not noted, but upon reflection it is there, the only other thing a corporation offers is speculators.  How is that a benefit?

Update:  One of the customer-owned co-ops of which I am a member, sent all 12 million of us this notice today:

This Black Friday the co-op is doing something different. We’re closing all 143 of our stores. Instead of reporting to work, we’re paying our employees to do what we love most—be outside.
We want you, our members, to be the first to hear—not just what we’re doing, but why.
We’re passionate about bringing you great gear, but we’re even more passionate about the experiences it unlocks for all of us. Perhaps John Muir said it best back in 1901: “thousands of tired, nerve-shaken, over-civilized people are beginning to find out that going to the mountains is going home.”
We think Black Friday is the perfect day to remind people of this essential truth.

As an owner (there are about 11 million of us total, 5 million active, and my membership serial number is well below 100,000), I am happy to see the management I elected make this decision.  That is 11,000  employees get a paid day off.  Good day to make a statement.  It will hit my dividend check, but customer-owned is not about accumulation.

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Los Angeles Import Export Start Up Seminar

Your last chance in 2015 to take my live all day start-up import seminar is in the Los Angeles area,  Saturday, Nov 7, at Orange Coast College, from 9am to 5pm.  It's right off the 405 in convenient Costa Mesa, plenty of free parking. You'll get clear instructions on how to go straight to the customer with the best product for you to trade.  Follow up info by email is included.  Get your business jump-started now.

Sign up here now....




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Lending Credit Instead of Money

Ivo Mosely is prereading his upcoming book on the genesis of asset-free usury over at the Cobden Center.  He is out with the 5th chapter, and it is fascinating to see the long slow process that has led to the worst iteration of this crime, manifest in our economy today.

Economists before Adam Smith noticed that huge quantities of credit, based on very few assets, were passing as money, enabling real property to be purchased by people who had done nothing to gain it besides speculate or fund the speculations of others.[i] The ‘financial revolution’ was inevitably accompanied by a social revolution: the old landed gentry were being bought out and displaced by speculators in finance.[ii] Some economists were concerned about the effects on society generally, of such people gaining political and financial power.[iii] ‘Every little scoundrel gets a new estate’ commented Charles Davenant in 1701.

In 1707, there occurred one of those momentous turning-points in history which no one much remarks on. The nature of the event probably explains why it is so obscure: debt became a legally-recognised commodity. Not exactly a bit of history to thrill the imagination, and yet it changed the world, transforming how money could be made and leading by slow process to the situation today, when financial operators own most of the world’s wealth.

 Fascinating reading, start with this chapter, and read the previous four at your leisure.



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China Retailers' Woes

Ungh..... Reuters gets it glaringly wrong:

Rising vacancy rates and plummeting rents are increasingly common in Chinese malls and department stores, despite official data showing a sharp rebound in retail sales that helped the world's second-largest economy beat expectations in the third quarter.
The answer to that apparent contradiction lies in the rising competition from online shopping and government purchases possibly boosting retail statistics. Add poorly managed properties into the equation and the empty malls aren't much of a surprise.

Why don't they fact check? Online shopping impacting brick and mortar?  Guess what percent of retail sales in China is brick and mortar?  50%?  25%?  How about 6%.

The fact that China used funny money, malcredit to overbuild malls tell us only they overbuilt malls.  Where retail should be can only be known at the microlevel, where I imagine the match is quite good.

Do the big boys worry about the returns on their malinvestments?  Probably, but it's no concern to us what happens to them.

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Valid and Reliable Business Start-up Process

In a seminar Saturday a fellow who was inspired to attend based on the wealth of a neighbor who imported latex gloves, expressed perplexion over my orientation toward start-up beginning in passion and joy and creating something needed, vs simply trading in a commodity, as his neighbor does.  Why not just pick something off the shelf?

I've heard this often over the decades. The problem is the example of the latex gloves may be valid, but it is not reliable.  Ask the latex glove importer and his journey is so convoluted that there is no way you might reliably follow him to similar success.  Valid, but not reliable.

(Not to mention in some instances of apparent wealth, the true source is occult.  Given off the books profit opportunities, tax laws that make pretending at business quite advantage as well as earnestly working, there is no single example one might look at as a template for success, however you might define it.)

A process in which one became successful in latex gloves applies to that person and that product.  here is no sorting out what steps mattered, and which did not, nor discerning which variables might have had  some bearing on results.  Any given example may be mere survivorship bias.

Now as we know from Science 101 class, you'll recognize that establishing valid AND reliable is necessary to achieve scientific fact.  So any given example may be valid, but fails on reliability.

On the other hand, there is a process that is valid and reliable. The process does originate in something quite personal and subjective, what causes you to suffer, and then what solution gives you joy, but for the necessary shift to a thriving business you must embrace the science of marketing, and a scientifically valid and reliable process of getting there.  That is what I teach.  The objective steps, stripped of any bias, allows for a scientific approach, so you can use absolutely any product, service, agricultural item, or idea whatsoever and a the same time control for variables and thus save time and money getting to your goal.

In two weeks, November 3, I have a live online one-hour-a-week for 4 weeks seminar on export food start-up.  It is hard-core, run you through the steps, highly rated by past participants.  Sign up here and pay nothing now, you pay at your leisure.  Space it limited since the class is live.

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Finance, Regulation and Regulatory Capture

Shorting stocks is investing backwards, betting a stock will go down, rather than up.  To effect this you borrow stock, not buy it, you sell immediately in order to gain, not hold it.  All very contrary.

But this "opposite side of the trade" performs one minor and another major benefit: the minor is it adds liquidity to a market, that is more shares are available to players, and the major benefit is shorting is all that is necessary and sufficient to regulate markets.  Short sellers only risk their money when they smell a rat.  Taxpayers do not have to fork over the money to regulate (and all regulators are captured by the regulated anyway, see Bernie Madoff, see every stock market debacle).  Short sellers have excellent noses for sniffing out rats.

To short a stock is to borrow the shares, say 200 each priced at $50 and then immediately sell them for their $10,000 value.  The bet is that rat scent has a source, and when revealed, the stock will drop in value, say from $50 to $22.  At that point, since stocks are fungible, the short seller simply buys 200 shares at todays (say a month later) $22 price ($4400) and returns the 200 shares received in todays purchase from where he borrowed them.  The short seller gained $10,000 selling the stock, paid $4400 recovering the borrowed shares, and earned the $5600 difference between the two prices over the given time period.   (There are some slight financial considerations involved too, but leave that aside for clarity's sake).  As I said, this function is all that is necessary and sufficient to effectively regulate the stock market.  Rats are fined exactly the yield of their fraud.

Now, there is also so-called "naked short selling"' wherein the stocks are never borrowed to begin with, only market makers claim to have had done so at an earlier point, and then buy shares at $22 and demand their $5600 profit.  Why such a simple fraud is in any way described "short selling" is inscrutable, like when two men committing to each other is somehow deemed marriage.  Definitions are so lax nowadays.

Now although this is clearly fraud, the SEC, in its role as captured regulator, naturally has nothing expressly to say about it, only to make clear it is aware of the practice.  Rumor has it deep in its pointless rule books there may be some disapproval of it on principle, but not as though any criminal might lose sleep over enforcement.

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