The Nature of the Asset Base Upon Which America's Credit Depends

To review, USA's productive asset base is in essence how we pay for everything, and when we "put it on the tab" that is plan to pay Tuesday for a hamburger, or a war, today, that trio is based on our productive capacity,

That productive capacity is owned by the shareholders, and any bondholders are in front of shareholders as to payout in case of liquidation.  Pensioners are last in line.

On top of all these people with claims on the productive capacity of the USA, are all those with entitlements, the unemployed, the disabled, the military, the government workers.  Puerto Rico just defaulted on its bonds so it could pay government workers.

"This administration continues to take historic steps to ensure the residents of Puerto Rico continue to receive essential services while the commonwealth continues to face a delicate financial situation," a spokesman said Thursday.
The island isn't planning to make any of the $800 million payment to its bondholders due on July 1. Puerto Rico's government says it is in a "dire" financial position with only about $350 million in cash on hand right now.

Gee.  Wonder how they got in dire circumstances?  At any rate, screw the retired teachers cops government workers and anyone else on a pension whose "assets" are in those bonds, pay the people who show up today.

But back to that asset base.  A big part of USA production powerhouse is the auto industry.  For the last eight years sales have been driven by the fog-a-mirror credit plan, with people driving news cars off the lot they cannot afford to maintain let alone make payments.  It seems that has peaked.

Next we have our computer industry, which produces nothing but life-drain, but wait, never mind, that is all made overseas.

Let's move on to our jewel in the crown, Boeing.  USA Taxpayers must lend the credit to Boeing customers.  As Boeing itself said, no ExImBank, no Boeing.  Promise?

Hmmm… USA agriculture is a powerhouse.  But the vast majority is GMO, of controversial nutritional questions.

The installed base of infrastructure, real estate, plants and equipment, is rarely marked to market, that is on the books for what it is really worth.

Our asset base is the trough from which the vast majority do root.  Dare you even think about getting near it?

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Customers Are the Most Important, Getting the Product Right the Most Difficult

In the 30 plus years of teaching writing and consulting on small business international trade, there emerges one clear indicator of failure: the person who tells me he has customers, which is always my first question:  'Do you have customers?"

I know they have no customers by the questions they ask:  How do I find a good supplier, how do I get financing, how can I get in front of buyers (yes! "I have customers, how do I find customers?"), what kind of licensing do I need?  And so on.

Customers Are the Most Important in Business, Getting the product Right is the Most Difficult.

You must at some point get in front of a customer, right?  Since the customer is the most important thing, why not do that first?  But this begs the question, what to offer?

So then we get to the hardest thing in business, getting the offer (the goods or services) right.

This is the real work in all business, and international trade as well.

The genesis of the problem is the all-too-human inclination to try to skip the steps that matter.  "I read a study that there is a need for…" (So, yes, there are customers…) And based on this delusional syllogism, the presumption there are customers and they are yours, the self-deluded gets busy worrying about nothing that matters yet: finance, licensing, supplier, etc.

The genesis of a thriving, authentic business is yourself, creating a solution, and presenting it to customers first.  I quickly deconstruct the delusional, and get people on the right path.

Creating your own assets is the only smart investment left.

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Merkel Says Credit, Listen

The Banco di Monte was started 550 years ago to keep farmers from getting caught up in usury, largely a charitable organization.  It took less than 17 years of "lending credit" to destroy this institution.  And note the Teuton Angela Merkel says it precisely:

An attempt by Matteo Renzi to use Brexit-driven market turmoil to secure EU approval for Italy’s plans to recapitalise its banks without triggering bail-in rules has been rebuffed by Germany and the European Central Bank.
“We wrote the rules for the credit system, we cannot change them every two years,” Angela Merkel, Germany’s chancellor, said on Wednesday in her first public comments since the Italian prime minister floated his idea on Monday.

Well, yes, none of this is about money.  It is about credit.  The reason the masses stand back completely confused is because people normally say "money" when they mean credit, so there is no possibility of  people intervening in their own fate, since they have no idea what is going on.

To simply learn the difference between money (and currency) and credit, and then mal-credit and bene-credit, then every step is crystal clear.  But the terms were slowly changed over the last 40 years, and people do not want to stray any further than what a smart phone allows.

You have no money.  You have credit, which is a claim on assets.  The assets are profoundly overvalued, meaning there is practically nothing in the way of assets to match your claim.

Your only hope is to start over now and begin creating your own assets, assets not on anyone's list.  Self-employment.

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Russia: Progress with Sanctions and Import Substitution

"We pretend to work, they pretend to pay us."  Soviet era joke.

The EU placed sanctions against Russia for Russia's failure to surrender when undermined by the USA and the EU. As the only adult in the room, Putin is playing the situation well, and looking to "import substitution", that is having Russia make what was once imported.

The witless EU merchants will find the Russian market never to return, forcing prices down due to newly excess capacity, plus they can look forward to Russian competition in their foreign markets, as Russia re-learns to produce for real pay.

But here is a Russian bank official with sadly dead-wrong capitalist visions:

Will the reduction of the key rate of Central Bank influence the lending of enterprises?Loan rates have got rid of the key rate to a great extent. But its current level remains quite high and continues to control lending. But we go on reducing the key rates regardless of the actions of Central Bank.

Source :http://realnoevremya.com/articles/5

No one needs finance, they need customers.  Once there are customers, there is vendor financing.  Anyone who needs a bank loan for business is simply engaging in another form of Wimpyism, that is to say, hoping to Tuesday for a hamburger today.  These loans are unnecessary.  And organic, asset based, interest free vendor finance system may be lost to Russia, and need be rediscovered.

What is interesting is in his interview, talking about all the business help available, is his anecdotes of how many companies with no help have done so well.  Indeed, check your stats: how many with help have failed?

The best thing Russia could for recovery is to maintain strict separation of business and state.  The state has no say so in commerce and industry, and on the other hand, commerce and industry can expect no assistance from the state.

Russia is already unbeatable, but then it could be wealthy and unbeatable.  Protect the borders against the USA, and let the Russians prosper.

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Venezuela - China Protects Investments

Earlier I showed a picture showed of a soldier guarding a near-empty grocery store, and I noted how that store was inorganic to Venezuela… the Washington Post adds detail I only guessed at:

Sira has long been a proud “Chavista,” convinced that government spending could create a more equal society. Chavez’s government, flush with oil money and billions of dollars in foreign loans, gave her theMadre de Barrio subsidy for mothers in extreme poverty. Another program helped residents to finish houses under construction. Youths from her community received scholarships.
“I always lived for the revolution,” she said.
But many of the welfare programs started by Chavez have dried up, and the nearest store has little more than two-liter bottles of Pepsi and packs of Pall Mall cigarettes. Under Chavez, the government established anetwork of government-run supermarkets that sold basic foods at subsidized prices. But inflation has put even these bargains out of reach for many people. A single kilogram of yucca — about two pounds — now costs about one-third of the weekly minimum wage.

So the article goes on to describe the riots at the trough, the rising crime, and the political backlash. Low oil prices are blamed, but this is absurd.  How do low oil prices cause the failure of toothpaste to appear on the shelves?  Only if oil paid for everything, and there was no organic economy, and in fact, that is what occurred. The number of people in Venezuela who accept the free ride is far more than lower oil prices can support. Ever widening claims on an ever narrowing productive base.  
Exactly what we have in USA.

Lower prices of any commodity normally means little to an overall economy, unless the entire economy is based, foolishly, on the commodity.  The small business productive, organic economy was wiped out when the Hegemon buried the economy in below-cost subsidized everything.  The organic economy died out.  Now people, according to the article, travel a half-day to grab rice from the road, upon a rumor that turns out to be untrue.  If you feel you have claim on assets, and entitlement due you, this is your future.

Venezuela cannot recover because those who would lead the recovery, the small business person is wiped out.  Those who suffer most are the ones who expect the small business person to lose money for the privilege of serving the customers.  It is difficult to reason with the entitled.

Now comes China, accused of holding talks with Venezuela's opposition party, to explain their actions:

With Venezuela facing a deep economic crisis and political stalemate, Beijing's loans to Caracas have become a heated topic of discussion at home and abroad, especially after the Western media reported that China recently sent an "unofficial envoy" to meet with Venezuela's opposition party. Such reports are not confirmed by Chinese Foreign Ministry.

As to China loans to Venezuela, well, Venezuela is "good for it."

The debt problem Venezuela faces is a result of its liquidity crisis, not solvency crisis. This means the huge loans China has given to Venezuela, contrary to what some claim, are retrievable. Besides, Venezuela's abundant resources and China's comprehensive national strength are enough to ensure the long-term safety of these loans.
Indeed, Venezuela now lacks the capability to repay foreign loans. By the end of September 2015, its foreign debt had reached $148.83 billion, of which $65 billion were loans it had taken from China since 2005. Compounding the problem is the fact that Venezuela has only $15.6 billion in foreign exchange reserves.

Well, yes, to get repaid, Venezuela needs to sell oil, and that requires infrastructure.

But China has to specify that some of its loans to Venezuela are meant for the latter to maintain oil and gas production and exports, and promote the formulation of some corresponding management methods. Under pressure to repay the principal and interest amounts for its imports and matured debts, Venezuela has used a very small part of its oil export revenue to maintain oil production and transport facilities. So, to ensure Venezuela's largest source of fiscal revenue is not interrupted and prevent a lose-lose scenario for both creditor and debtor, it is necessary for China to specify that some of its loans are meant for Venezuela's oil production and export.

O dear, the government took the loans meant to maintain oil export infrastructure and spent it on keeping the false economy alive a bit longer.  Fiesta!  So China is finding socialists yet again unreliable, and is working with the opposition party with a view to protecting Chinese accounts receivable.

So it is in USA, we have wiped out our organic market, and let rot our infrastructure to produce.  From Boeing to the military Google to the welfare mom and the disability scammer, the claim on the asset base far exceeds the capacity of the asset base to satisfy those claims.

Steer clear of the entitled poor and suffering, their lot is self-inflicted.  Don't work for Boeing or Google or take money from the Hegemon, start up your own business and work with the others who will organically sell toothpaste when there is none to be found at Safeway or other Hegemon run entities.

With the deepening of its economic and social crisis, Venezuela is likely to grant foreign capital, including Chinese capital, access its oil and gas production and transport to help create favorable conditions for possible debt-to-equity deals with China, its largest creditor.

Yes, China needs oil. Venezuela owes on loans it never needed to take.  But there you have it.  Asset prices fall, the loan principals and interest stay fixed.  Precisely the fix into which most Americans have put themselves.  Get your debt to zero.  WE are in deflationary times.

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1% Down $2 Trillion and Counting, Good News on the BPound

Yay! In THEIR economy, the "assets" just dropped by $2 Trillion from which to pay on obligations, which only continue to increase in THEIR economy.

NEW YORK (Reuters) - The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor's Dow Jones Indices.

Next the pound has been hammered:

As the chart shows, today’s massive drop sent the Pound to its lowest level – around 1.36 to the Dollar – in 31 years. ... During those 30 years, the level (Bottom $1.40) never faltered. That changed today.

But for whom is this move a pounding?  Say an American is planning to buy a Morris Mini for $14,000, well, the price just dropped to $13,600.  Say a Brit wants to buy an American tractor for $13,600, well the price just went up to $14,000, so a domestic UK tractor starts looking better price wise.

When their banks stocks crash, this is good news to us.

Those with trillions in derivatives care much about these changes, but anyone in an organic economy could care less.  Therefore, the 1% billionaires want a reset.

(Reuters) - Billionaire investor George Soros on Saturday called for thorough reconstruction of the European Union in order to save it, even though he warned that Britain's vote to leave the bloc makes "disintegration of the EU practically irreversible."
Soros, who warned of financial meltdown if Britain voted to leave the EU before Thursday's referendum, also said the effects of the decision will likely damage Britain.
"Britain eventually may or may not be relatively better off than other countries by leaving the EU, but its economy and people stand to suffer significantly in the short to medium term," he wrote in a commentary on the website Project Syndicate.

If you are at the trough, there will be short and medium term pain.  If you are not, then it is all lifestyle.  Are there enough people who know who to do business to revive the UK tractor industry?

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Battle Lines Bein' Drawn

It seems the politics worldwide is now an awareness that the hegemony has been up to no good the last 40 plus years at least, at least its most virulent form.  What is ending it?  Since lending credit is the heart of the damage done, there was never any rational limit to what damage could be done.  So only an irrational limit would put an end to it, perhaps something like "sins are unto the fourth generation."  Since the debts we have racked up cannot be paid until the 4th generation, perhaps all this is just the irrational limit.

My favorite Old Testament passage is probably the Hegemon's as well, 1Samuel 8

6 But when they said, “Give us a king to lead us,” this displeased Samuel; so he prayed to the Lord. 7 And the Lord told him: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. 8 As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. 9 Now listen to them; but warn them solemnly and let them know what the king who will reign over them will claim as his rights.”10 Samuel told all the words of the Lord to the people who were asking him for a king. 11 He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12 Some he will assign to be commandersof thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers and cooks and bakers.14 He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16 Your male and female servants and the best of your cattle[c] and donkeys he will take for his own use. 17 He will take a tenth of your flocks, and you yourselves will become his slaves. 18 When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”19 But the people refused to listen to Samuel. “No!” they said. “We want a kingover us. 20 Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles.”21 When Samuel heard all that the people said, he repeated it before the Lord.22 The Lord answered, “Listen to them and give them a king.”

Knowing that people will give up almost everything to have someone else "fight our battles" the Hegemon offers to do so and then takes their sons to fight the battles anyway.  This event took place about 400 years after Moses, and Israel went downhill thereafter, including civil wars and captivities, never to quite recover, to this day.  But then that was part of the deal.  And not the line above:

18 When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”

So after 40 years of enjoying false economy detritus on credit, baneful food, empty education, whimsical medicine, cracker box housing, fun-time voluntary terror wars everywhere, and aspirations constrained to pixillations, charged off to the next generations, anyone actually think voting Brexit will change much?  Think the Hegemon will just go away?  Still thinking "If we can just get the right people in office?"  God Himself anointed Israel's kings, and everyone of them would disgrace a trailer park, because they were human.

On the one hand is the Hegemon who controls the levers of AN economy (never say THE economy) and can place what pixels it so chooses on smartphones, etc.

On the other hand there is the vast swarms of people who feel entitled, from those who works for 40 years and expect the credit tallied in their pension to be money, to those who are scamming the disability system for a free ride and believe their own lies.

Well, that is just about everyone isn't it?

The working poor know they are being abused, and they say so, on their smart phones.  They will tip the scales in votes, since the Hegemon cheats enough only to win elections, never pays for a landslide.  But votes do not matter, it is just a question of allocating diminishing returns among the growing claims.

Cell phones contain rare earth materials extracted from the Congo in fun-time terror regimes when we simply could have traded for them.  No, we need an "Africa Command."  So for anyone to be carrying a smartphone and claiming to be a victim of injustice is a dolt.

This most virulent strain of capitalism has had a 40 year run.  The damage has been done, and now it is a question "who pays?"   The Hegemon still controls the conversation. On one hand he has a flashy economy, on the other he directs the thoughts of the incensed masses.

Step aside, do not get in that fight.  If you think you are entitled to anything, let it go, give it up.  Of course building an organic business will be tough, but not as bad as fighting at the empty trough.

Self-employment is about personal transformation. Anarchy means no + king. Time to escape the chaos to anarchy.  Get started now.

Michael Jackson tried to talk about this 20 years ago, but the video he made in Brazil was banned from USA airplay.



So Jackson made another with Spike Lee in USA… it was banned too.

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