How Apple Gets a Subsidy Avoiding Taxes

Stumbled across this:

Report: Government Paying Apple Millions to Shelter Overseas Profits  
Bloomberg:

Many of the biggest U.S. multinationals have seized on the same exemption, which lets them avoid or delay repatriation taxes by buying Treasuries with their overseas cash. (The top 10 alone hold over $100 billion of the bonds.) That, in effect, enables the companies to turn billions of dollars in potential tax liabilities into millions of dollars in taxpayer subsidies--all while they publicly bemoan the sky-high taxes that make it impossible for them to bring the money home. 

  Yes.  That is not an accident.  It may costs $100,000 a year in lawyer/accountant fees, but it is what you get when you borrow enough ex nihilo credit to get huge, and then have lobbyists write legislation to benefit you.  I can do this thing as well, but it costs $100,000 a year in lawyer/accountant fees.  Not worth it unless I am huge.

Since 1962, the U.S. tax code requires overseas profits to be taxed at the corporate tax rates. So, companies can either keep the profits over seas, pay the tax on the already taxed profits, or, as this article details, invest in government securities. Proceeds from such investments are subject to the same tax rules as the overseas profits.
It interesting outlining how Apple's tax scheme works, including its own in-house investment firm to manage its cash investments. Where things go weird on me though is suggesting Apple is getting a tax subsidy buying government debt. The article goes so far to claim Apple has been paid $6 per tax payer over the past 5 years. The fact though is the government sells debt and anyone who buys those securities receives interest on their investments. If Apple, and other companies weren't purchasing the government securities, someone else would.

Not true.  If Apple and other companies were not purchasing them, the interest would be higher, for the demand would be lawyer.  G'ma on fixed income would be doing better.  At higher rates, Uncle Sam could not finance as much whimsy as he can now.

At the same time Uncle Sam taxing those profits in real time would not do anyone any good, for when Uncle Sam has more money, he just starts another war.

This is simply another example of the misallocation and malinvestment that comes with an ex nihilo credit regime.

The solution is to go back to import duties being the sole revenue source for the general (federal) government.  All else is free trade, and all product liability is on the importer.

It was the original design of the USA, a free market, until the bankers, led by Hamilton, overthrew the revolution.

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Meat Trade

You probably eat a lot of meat, like I do, and I am keen on good meat.  Here is an edifying article on the int'l trade in meat: 

"This week, there will be many remembrances of what we've accomplished in this organization over the past 40 years, and everyone here should take great pride in that, but for most of you, it's not the past that drove you to attend this meeting. It's about what we're going to do today, tomorrow and into the future," Philip Seng, USMEF president and chief executive officer, told attendees.

There is that forty year perspective again, what happened after Nixon took us off the gold standard (lite).  So this article is about "It's not the hand you are dealt, it's how you play the cards."  This is how the meat industry played the ex nihilo credit card, if you'll pardon the double entendre.

According to Seng, the U.S. eclipsed $13 billion in meat exports. “That’s quite an accomplishment when you consider some of the challenges we’ve had over all these years,” he said, adding that the goal is for $20 billion in meat exports in the near future.

Here again, in an ex nihilo credit regime, he who borrows the most wins.

Some recent highlights for U.S. trade include that the U.S. beef industry just surpassed Australia as the number-one supplier in the South Korean market. The U.S. also recently passed Australia in chilled beef exports to Japan, which Seng called a milestone.If there was any doubt that trade is important, Seng pointed out that 80% of the world’s buying power lies outside of the U.S., so “the more we can have this export mentality, (and) the more we can challenge ourselves to do better, the better it is going to be for all of us.”

This is Big Meat talking, the same people who make it criminal to test USA beef for mad cow disease in order to promote exports.  (It's a criminal offense to even own a test kit without a license.) Mad Cow takes anywhere from 2.5 to 5 years to incubate, so USA got rules pushed through for countries to accept USA beef under three years old.  lemme see...  2.5 years to incubate, sell three year old beef....  hmmm... did anyone do the math?

1. They are not sure what it is.

2.  It is hard to spot, making it hard to control.

3. It is hard to kill, and the killing process relieves the meat of most nutritional value.

4. It is 100% the result of cruel and stupid animal farming.

But it makes cheap bovine meat at the cash register, but Big Meat gets so much in up-front subsidies and preferences, plus the cost of the damage done is after the fact, so here again we have the fascist Big Government and Big Industry acting as one, to privatize profits and socialize losses.

(Grass fed beef is natural and popular, and on unused "government land" it can be produced inexpensively.  This is why the FEDS kill ranchers who won't back off from grazing rights, as in Oregon.  This terrorism is employed to smash any competition for Big Meat.)

The Chinese market has provided some success stories for the U.S. Seng noted that there are now nine pork plants in the world’s fastest-growing market for pork. However, challenges remain, as it’s still not easy selling in China, he said, adding, “It’s not the most transparent place, and it’s very hard to follow product in that market.”

Unh... mendacious!  USA pork is fatted up with ractomine, an additive with criminal consequences in every country in the world except the Nafta three.  Since USA Government cannot be trusted with inspections, the Chinese have bought their own pork processing plant in the USA to serve China.  Only Big Meat Americans cannot figure out how to sell to China.  Their only tactic is get subsidies, compete on price.  Also, tracking every pound of pork exported to china is cheap and easy.  Use QR codes.  And QR codes are the small business, specialty meat secret weapon to marketing to China.

"Trade is no longer rising around the world," Seng explained. "Actually, this is the first time since World War II that trade has declined during a period of economic growth. That's why what we are doing in the meat industry — whether it's the beef complex, the pork complex, the lamb complex — the fact that we are increasing our exports (means) we're really going against the grain right now, because most industries are not enjoying robust export sales."

If trade is not rising, this is very good news.  It means that the ex nihilo credit regime is over.  Russia has surpassed USA in wheat exports, when they used to be a importer.  The abominable USA ex nihilo credit regime is dying.  All markets for meat are growing, because people spend their first experience of new disposable income on food.   USA Big Meat product is cheapest at the cash register in China as well as USA.  What with export subsidies, tax advantages and financial engineering, exports give Big Meat Industrial Complex an ability to privatize profits and socializes losses, on steroids (pardon the mixed, but apt, metaphor).

Seng referenced World Trade Organization data showing that 2,100 new trade restrictions were imposed from 2008 to 2016. Sometimes, it may seem like there are fewer trade restrictions and more free trade agreements, but he said, “frankly, we are still in a very protectionist world.”

USA has never signed a free trade agreement, because there is no such thing as a free trade agreement.  If it is an agreement, then it is managed trade, not free trade. And for Mexican Harvard MBAs to write 14,000 pages of "agreement" with Canadian and USA Harvard MBAs, that protect crybaby billionaires from free markets, then you better call it free trade agreements, in case someone notices.

Fifteen countries account for 63% of world trade. “What that means is there are certain countries that are franchised in, and there are certain countries that are franchised out,” Seng said.
"This is one of the challenges we have with the WTO," he said. “There are more losers than actual winners when it comes to trade, just given those 15 countries. Usually, it’s those 15 countries that write the rules, so it’s become quite complicated when we take a look at international trade.”

Oooooh...  I like this guy... he slipped it in.  It's a racket.  He has to be careful not to lead with that point, but he knows well what is going on.

The challenges ahead, according to Seng, include the state of the Korean economy, the impact of Britain's vote to leave the European Union and whether societal norms will begin to affect trade deals.
The paramount question on everyone’s mind, however, is how to deal with the “tsunami of meat” heading toward us, Seng said. It will be key, he said, to focus on what can be done over the next couple years to move more meat, as well as what can be done for demand enhancement in this industry.

As he must well know, it is over for Big Meat.  To have used ex nihilo credit to wipe out the markets for countries that traditional supplied the world such as Vietnam was once king in rice, Argentina in beef, and Russian in wheat (see the Hanseatic league), and so on, USA was able with ex nihilo credit and guns to knock all of those "comparative advantage" countries out of the game.  Winning a this is a Charlie Sheen kind of winning, where you wipe yourself out in the process.  In the USA the runoff from Big Meat is horrifying and invisible, plus expressly not tested for by the EPA.  Massive water is diverted to grow GMO crops such as rice and cotton, distorting the natural economy massively.  Food that is poison, small business wiped out by ex nihilo credit-based costing, malinvestment and misallocation of resources, especially land, and the pollution, have taken a horrifying toll on the USA economy.  The damage is done during the ex nihilo credit boom.  When the bust comes, the only question is "who pays."  Never the people who gained from the damage done.

The solution is simply end the subsidies to Big Meat, and deregulate Mad Cow testing. At the same time, people need to work hard developing markets for USA produced good food, so the good food producers (necessarily specialty) can grow their operations.

One reality is wherever the USA has introduced a market for Meat Industrial Complex compromised products, there is always as specialty market growing alongside.  So where USA exports the most, there is the most likely specialty market.

It cannot be foreseen, it must be searched and learned.  How to is no secret, I learned it from people in the business, and he meta studies confirm how to, it is just apparently i am the only person who teaches it.

If you have a passion for food, and want to start a business doing the urgent work of restoring balance in world trade and protecting specialty food in USA, then I have a hard core online course open to anyone in the world.  The next session is coming up in January.  If you wish to enroll, you may do so here.  If you do not see your local school, you can scroll down to the bottom of the page and enroll directly with me.  I'll bill you the course fee after the course.  Don't worry if you are overseas, the tools, tactics and attitude apply in all countries.  I am happy to have you enroll too.

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Was The Oakland Warehouse Anarchy?

No, it was government provisioned chaos, another government policy failure.

The warehouse was the site of an artists' collective known as The Ghost Ship, and many of the victims were either associated with the group or with the local creative community; musicians, tech professionals, students and free spirits.

In a free market, all associations would be voluntary, such as the Catholic Church.  No one has to join, anyone can leave.

In a managed market, and especially capitalism, everything is "mother-may-I?" because your actions must be constrained to not interfere with the sinecures of those who hold the commanding heights of capitalism.

All Hegemons offer the central demand of people: fight our battles for us.

¹⁷ Your flocks also he will tithe, and you shall be his servants.¹⁸ And you shall cry out in that day from the face of the king, whom you have chosen to yourselves. and the Lord will not hear you in that day, because you desired unto yourselves a king.¹⁹ But the people would not hear the voice of Samuel, and they said: Nay: but there shall be a king over us.²⁰ And we also will be like all nations: and our king shall judge us, and go out before us, and fight our battles for us.

Of course that means literally, the king leads the forces onto the field for battle  (guess where he gets his soldiers!?) but it also means he sets rules for warehouse occupancy so neighbors do not have to work out among themselves how to behave.

In anarchy, as in the 400 years of anarchy Israel enjoyed before they began the horrifying descent recorded in the Bible once kings were installed, there was largely peace and prosperity and people were responsible for working out among themselves relationships.

Today we have rules, but they are not enforced, giving us chaos.  The "Ghost Ship" (prophetic, that) was famous and notorious and only "on the list" to be inspected.  The fact is government inspection is risible, there is simply not enough money to do proper inspections in any category.

In the wake of disasters, the inspectors announce rules were broken, tsk tsk, mistakes were made, time to move forward.  Inspectors rewarded with a bigger budget next term.

I see this in importing, whereas we have a massive inspection bureaucracy, there simply is not enough inspectors to be effective.  To be effective, the Federal government would near have to direct every single federal worker to the task of inspecting food imports, meaning Donald Trump himself would have to be on the docks opening boxes, and nothing else.  (Actually, not a bad idea.)

Having Hegemon's inspections fool people into a false sense of security.  Disaster follows.  Free markets punish people doing wrong in a perfectly condign manner.  In a free market there would be competing artis cooperatives, not just illegal ones mulcting the free spirits whose confidence in the Hegemon is unshakeable.

Get rid of inspections, and ell people the truth.  You have to fight your own battles.

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Dow 10,000 or Gold $10,000?

This fellow is apparently famous, and I can see why, because he nails it... here are two snippets:

Stocks have been a massive beneficiary of the biggest monetary expansion that the world has ever experienced. If we look at the Dow since the last major economic cycle started in the early 1980s, we find the most remarkable rise. In early 1980, the Dow was at 850 and today we are 19,000. That is a rise of over 18,000 Dow points in 36 years. This means that the Dow has gone up by 9% per year on average since 1981. A 9% annual increase leads the index doubling every 8 years. What a great investment. You buy stocks in 1980 for $10,000 and today in 2016 you have $220,000 without having to lift a finger. On top of that there has been a dividend yield of around 2% on average. But this growth in the stock market has not just happened on its own accord. Stocks don’t grow at 9% annually for 36 years without some rocket fuel. And the explanation is very simple. Debt has provided the fuel. Because US debt has also grown by 9% annually since 1981. So the recipe for becoming a successful and loved president is just to print and borrow money. There is an absolute correlation between the increase in US debt and the growth in the stock market.

and

The Dow/Gold ratio peaked in 1999 and is now in a downtrend. Once the current correction is finished the ratio will continue down towards the 1:1 level like in 1980 when the Dow was 850 and Gold was $850. The only question is at what level the Dow and gold will be when they reach the 1:1 ratio. Will it be Dow 10,000 and Gold $10,000? Or will we see hyperinflationary levels of 100,000 Dow and $100,000 gold? The absolute level is really irrelevant. Because at whatever level they meet will involve a catastrophic loss of real capital for a stock market investor.

Just so...  when he says credit, he means "ex nihilo credit" and for that matter he means that when he says "printing money."

The article mentions real estate crashing, which is crucial to a boom in small business.

His summary is buy gold, and if buying gold, his advice is good.  But if gold becomes important, the Hegemon will just steal it.  The only real protection is self-employment, own the emans of production, in the form of fruit too high and dispersed for the Hegemon to get around to....

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Correcting Mish Again, This Time On India

Mish has a post on the problems caused by annihilating some ex nihilo credit currency in India.  Some point he does not make, that he should.

First, if the currency were mere notes representing gold, as currency ethically ought to, and once did, then there would never be a "liquidity crisis."  Of course I am talking free markets here, and these problems come from managed economies.

Second, as spooner pointed out, the amount of gold and silver as money is always pitch perfect.  What gold that is dug up enters the market as bullion, and the market is constantly converting bullion into jewelry, plate and decoration as the price drops, and converting jewelry, plate and decoration into bullion as the price rises.  The newly dug-up bullion joins in on one trend or the other, but normally at lower prices the gold stays in the ground.

Third, it is credit, not currency, that matters.  Rich men use gold to settle debts and liquidate relationships, poor men use silver. Currency representing gold and silver is ethical. Ex nihilo credit based currency is evil and has the problems India is experiencing, but the traders with relationships and authentic credit will see this problem through.

I don't know about India, but I hear people say "I can buy things with dollars that I cannot with gold.  Gold is useless."  Well.

1. Why are Indians trying to exchange those doomed rupee notes for gold?

2. You certainly can, for now, take gold anything into a dealer and get USA Fed Res Notes (ex nihilo credit items.)

3. Fed Res ex nihilo credit notes are legal tender, meaning they must be accepted for "all debts, public and private" says so one each bill.  Further, there is a monopoly issued to private banks by the government on these notes. The Secret Service protects the notes.  Talk about privatizing profits, socializing losses!

4. If you had gold, and a store of ex nihilo credit notes from commerce, which would you use to buy a house?  Or anything for that matter...  you'd obviously get rid off the ex nihilo credit notes, the Fed Res Notes.  As Gresham repeated Copernicus's observation, "bad money drives out the good."  Certainly in India it is clear people are using notes to buy property, not their gold.  You'd use up fed res notes to buy a coffee before you'd use a silver dime.

Credit is unitive and creative.  People cooperate, trust, support and introduce solutions in a credit economy.  The barter economy upon which economics insist gave rise to money is an unlikely step in history.  Credit solved the problem of needful double coincidence.  Money (gold and silver) has existed to use when relationships will be extinguished, when you trade, but may never see each other again, as at at an Oasis on the Silk Road,

Ex nihilo credit destroys a credit economy sowing un-cooperation and distrust, calling forth goods and services no authentic economy would support.  It looks like credit, acts like credit, but it is demonic, a lie.  There is nothing behind it.

There is never a "liquidity crisis" with credit, since it originates between two market actors who trust each other to see a project through, from paying for a hamburger today by Tuesday, or building a smartphone factory.  They create credit based on assets and extinguish credit on an as agreed basis.  no need for regulation.

Ex nihilo credit distorts the entire economy by allowing people who have produced nothing to call forth goods and services attractive to people who produce nothing.  Where do they get the means to "pay" for it?  Tallies of ex nihilo credit issued.  There is still an authentic market too, but is wanes as the ex nihilo credit part of the economy waxes, the boom.  The damage is done during the boom generated by the issuance of ex nihilo credit.  The bust is where the losses are assigned to those participating.

What is new in USA is the combination of the size of the issuance, the universality (both Boeing and the fellow buying a corndog at a gas station with his EBT card depend on it), and that it bears usury.  Fantastic!

Next, here Mish goes again, with the internal contradiction.

Negative Interest Rates Logically ImpossibleNegative interest rates and currency bans are nothing more than government sponsored financial repression.

Logically impossible, but exist?  Twelve trilliion in Euros at this point?  That is an internal contradiction

Negative interest rates imply logical absurdities such as one would rather have $90 in ten years than $100 today.

Obviously people do in reality, to the tune of $12 trill.  When you know the stock market is going down 50-90% within those ten years, and will say down for at least 25, then the hit is preferable. 

Negative interest rates do not occur naturally. Rather, the must be imposed on savers by repressive forces.

Correct.  The Hegemon can and does, as we see in reality.

There can never be negative time preference.

Maybe this is where Mish goes off...  negative interest rates do not establish negative time preferences but a bet that this investment is the least risky.  (But many a fortune was made or lost when bonds drop to pennies on the dollar.)

Note that I am talking about interest rates, not storage fees, a completely different thing.

The Church allowed a storage fee, under the term was interesse, denoting a loss, from which we get the word "interest."  The word has been twisted from meaning an unavoidable loss to meaning a necessary gain on a loan.  A Savings and Loan was once an example of charging only the processing costs of loans, etc, as a mutual aid society, in the sense of loans as charity work.

(There is another aspect to loans as charity forming in my mind, and that has to do with loans as strictly charitable events being among peers only.  To lend to an inferior status individual implies the inferior status individual "owes" more than the loan to his benefactor.  Whatever the "owes" constitutes is in effect usury.   Something there, have to develop this. Islam is good on this, so I must, as much of Western Civ has done before me, depend on Islamic sources for elucidation.)

Free Market in CurrencyI am in favor of a free market in currency. Whatever consumers decided would be fine by me. Gold and silver would be the logical choices, as they have been for thousands of years.

Ungh...  gold and silver were never currency, currency is a note backed by gold or silver or both.  What he means is he'd like to see a free market in currency, as we have in Hong Kong today, with various private companies issuing their own currency, on agreed denomination notes (to remain within the confines of cash register design.)  USA had this until 1913.  No more.

To have a free market in currency, with which I agree wholeheartedly, we need to deregulate banking, get rid of their monopolies and regulations (the result of regulatory capture), watch ex nihilo credit and its currency die,  and then have a renaissance in the unitive and creative aspects of a credit based economy.

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More Black Friday Hype

In self-delusion, it is called bias-confirmation.  You read something and you make it fit what you want it to say.  Here is a article linked from a breathless headline on Drudge:

We have said earlier this week Thanksgiving can beat Black Friday or even Cyber Monday in terms of online consumer spending. Amazon just announced that Thanksgiving is quickly becoming one of the busiest mobile shopping days on Amazon in the US. In fact, mobile orders from Amazon customers on Thanksgiving Day exceeded both Thanksgiving and Cyber Monday 2015.

If he could say Thanksgiving beat Black Friday in terms of online consumer spending as he predicted, then he would have.  So his prediction is not borne out.  Never mind, he twists an unremarkable point to serve the self-delusional: orders on mobile devices, that is smart phone shopping, is up.

Well, with a year's worth of new smartphones in the hands of shoppers, and a year's worth of technology improvements, and a year's worth of new vendors optimizing smart phone ads, one would expect this result, right?

When O when will they report sales net of returns?  And net profits on loss leaders as the product mix?

Never.  Gotta keep those boys in mom's basement, thinking all experience is pixel-mediated, the future is on the web.  That will never happen.  VR will go the way of the movie industry, it is content, not medium that matters.

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Chinese Banks Prepare For the Scheduled World Economic Crash

China-haters salivate at the prospect of The Chinese Communist Party coming apart when the banking system, modeled on the USA system, fails.  Never mind the obvious implication; if the Chinese banking system modeled on the USA fails, well, then...

It ain't gonna fail.  The Chinese want to replace the USA, become #1, exactly the same way USA became #1.  And what I love about Marxists is they get their facts straight and proceed in a straightforward manner.  No hype, no halo on exploitation, no "it's for the children" cant, just "get 'er done."

This reporter hilariously wonders if the efforts of the five Chinese state-owned banks is coordinated: all five have proposed subsidiaries to offload bad debt and funded with ten billion yuan-

ABC Asset will specialize in the debt-to-equity swap business, including acquisition of debt assets, converting debt into equity, holding, managing and disposing of equity in debt-to-equity swap enterprises and other financial business, according to the announcement.

The investment, which will be funded by ABC's own capital, "meets the bank's needs to adapt to changes in the internal and external economic and financial environment".

"It will enable the bank to enhance its competitiveness and gradually transform its business model from over-reliance on the deposit and loan business and to carry out integrated operations," the bank said.

...

"We commercial banks regard this as an opportunity to transform our business," he added.

After the subsidiaries are established, they will raise funds for debt-to-equity swaps from qualified institutional and individual investors.

The sources of money will include insurance funds, pension funds and industrial investment funds that can make long-term investments.

"By setting up a subsidiary, we'll have a professional team specializing in debt-to-equity swaps. Moreover, it will be easier for the subsidiary, as a legal entity, to isolate risks from the bank," Zhang said.

Just like GoldmanSachs and Lehman Bros did (does?) secretly, China will be forthright about it.  The ten billion yuan is a ludicrous amount to deal with China's credit problem, it is probably just the start-up costs of the office building necessary to conduct the wealth transfers.

So there it is.  The crash is coming, the Chinese will simply raid "insurance funds, pension funds and industrial investment funds" and oblige them to "make long-term investments."

That is exactly what the USofA plans, it is called "opt-in" where they seize your "assets" (ex nihilo credit is nothing but tally of nothing) and turn it into a long term investment, "for the children."

Now you know.  Forget about guns and ammo, stocked prepper foods, and gold coins.  Start an authentic business, that does not require ex nihilo credit.

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Black Friday

In business, black means good, as in black ink, positive balance, as opposed to red ink, negative balance.  The day after Thanksgiving in USA is called Black Friday because for many retailers it was the day they turned from a negative balance to a positive balance. the cash registers running red hot.

Mish has a post on how all this is changing, with the obligatory hype regarding internet "sales."

I call it hype, since predictions, that never quite pan out in the future, are presented as earth shattering, and never do the analysts report the two salient factors:

1. What is the net profit of the Black Friday sales? If the draw is loss-leaders, then what is the net?  For all of the extra overhead, what money do you get that you would have not gotten otherwise?

2. When will they report internet sales net of returns?  Never.

How important is Black Friday?  Let's look at an authentic larger retailer, whose model has thrived for over 80 years, through thick and thin.  It is a sporting goods store, thriving while the likes of dinosaur Sports Authority has come and gone in a fraction of that time frame.

Such is the effect of ex nihilo credit.  Nothing from nothing is nothing.

Like last Black Friday,  this Black Friday REI will be closed.

For authentic retailers, Black Friday does not matter.

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The Ex Nihilo Credit Theme Song

Billy Preston is the only artist to ever share credit on a Beatle's song. Note in his pre-performance interview he says "It's an old saying and it's true..."



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Advice on Surviving Ex Nihilo Credit Regime

What needs to be written down and passed from generation to generation, is when a Hegemoon introduces ex nihilo credit, join the exodus to importing, but stay in the upscale market.  Slowly mothball your own factory, and then keep your customers by selling them well made imported goods of your design in an overseas factory where you have set the standards and the foreigner's manage.

When ex-nihilo credit regime crashes as it is now, re-open your own factory just as gradually as you closed it.

When Nike was tiny, it was up against Jack Purcell, Wilson, Converse in sport shoes, all made in USA.  Ex Nihilo credit made Nike, and Nike used ex nihilo credit to buy all those brands (well, Russell Wilson), and yhey sell them as retro on their site.

But the feedback say the retro are junk.  Too bad.  On the other hand, great opportunity to fill the void left by the destruction of the boom years.

I haven't come across any advice anywhere on how to work in ex nihilo credit regime destruction.  Masybe this is a kernal that can snowball.




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Now May We Have That Economic System Crash, Please!

Authentic businesses do not crash in a bust.  Only the false economy businesses.

Office Depot and Office Max were once the last two giants of the ex nihilo credit based roll-up of the neighborhood stationary store.  Now they are one.

Drove past a downtown Seattle special Office Depot/Office Max installed a few years ago to try to improve sales by mimicking the old neighborhood stationary store.  It has failed.  A sign invites all to visit their inconvenient location in the industrial district next to the welfare office.

Target tried the same thing, will no doubt yield the same results, if it hasn't already.  The dinosaurs can try all sorts of wacky things,  because the fraudulent stock market works on the "buy on the rumor, sell on the news."

Target has also tried to be an upscale fashion store, competing on price.  Again, a contradiction in terms.

“The Shops at Target is an example of how Target continues to explore new programs,” Boylan said. “We’re always putting a unique and fresh spin on the concept of design collaborations with the goal of bringing our guests compelling assortments at great prices.”

It's oer already. To open up "boutiques" in Targets is to create a rumor:  "Target has found a new market."  When they shut it down, then that is news.  Too late, the manager who opened the boutiques has retired with his bonus.  Taken from your pension.

Not to feel bad, your pension is tallied in ex nihilo credit, there is nothing there anyway.  Nothing from nothing is nothing.

Not an hour after driving past the closed Max/Office Depot in the mail came a flier from Office Depot/Max advertising amazing 20% - 50% off sale!  Wow!  But wait, it does not mention the prices upon which the %s affix.  No doubt because one can quickly find Costco prices are cheaper anyway. Costco is closer to a co-op, where the customers are members.

Back in the day the big daddy of the Seattle neighborhood stationery stores was JK Gill.  I think they had three stores. They were rich from a family owned stationary stores, and all the other local lesser stores supported families.

Under ex nihilo credit all those families went out of business and one family took massive profits while employing people who could not earn a living wage.  Multiply this times countless pet stores, corner grocery stores, hardware stores, tire stores, gas stations, clothing stores, on and on.  All wiped out by ex nihilo credit, at interest.  There is a reason all major religions condemn usury, let alone ex nihilo credit at usury.

Now the dinosaurs, like Sport Authoritys, are dropping dead.  It is easy to see Office Depot/Max is on its last legs.  Petco, Lowes, Best Buy, all looking shaky.

My guess is the hegemon will let Trump get settled in, and then let the big crash come Oct 2017.  Who knows, that is my guess.

In any event, their demise is great news.  We can see a renaissance of the family business in the wake of their destruction.

Update:

Commercial Real Estate goes up farther are crashes lower than residential... is it coming in 2017?

 "The key default threshold in "junk" bonds is 5%. Once defaults reach that level, the losses associated with the bad loans cause lenders to draw in their credit. They get more conservative and demand higher interest rates and other safeguards that significantly restrict access to more credit. Well, the same thing happens in virtually every other segment of the credit market, including commercial real estate. 
A recent Wall Street Journal article warned about the big problems developing in commercial real estate, especially for shopping centers. Overall, the default rate on commercial real estate loans that have been packaged into securities (about $400 billion of debt) has now breached the critical 5% threshold. The default rate on these securities is 5.6%. That means, going forward, it's going to be a lot harder for commercial real estate firms to move risky mortgages off their books. 
Research firm Morningstar now predicts that 40% of commercial-mortgage-backed securities loans maturing next year won't be paid off. 
If that's anywhere close to accurate, the entire market for commercial real estate lending will be virtually shut down, making it almost impossible to "roll" even relatively safe mortgages forward. This is a huge risk to real estate companies."

The Growth Stock Wire

November 26, 2016

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Now That The Election Nonsense is Over, We Can Get Back To Work

Martin Checks in from Chile:

On Nov 7, 2016, at 2:46 PM, Martín wrote:

Dear John

I discoverde that amazon has a new system called FBA "Fulfillment by Amazon". Basically you send them your products and the storage and send them to the amazon customers. What do you thank about that system?

***Very expensive, so I don't do it...    Amazon does not help you sell, so you may just be paying expensive storage ...  there are better/cheaper ways than amazon right now....****

I read about some guy who was about to being replazed by amazon. As amazon contacted the producers so the producers would ship directly to amazon bypassing the middleman.

***Many people going out of business blame amazon....  I haven't seen a single credible case yet...  Amazon is part of the CIA/NSA, but I love what they do and I work with them ... amazon buys from me, they are a customer of mine...  I sell "ON" amazon, and I sell "TO" amazon...****

In that scenario: Is a good idea to take a product, create my own logo, label, brand etc (with my contact info) then send it to amazon as a way to protect my products?

***Well, you should always trade under your own name....  the only reason to involve amazon is if your customers demand it...  either explicitly or implicityl.***

Thanks for your time

Martin

P.S. I finally found  a potential product in my country that could be exported. Though I will have package and label it myself, for me is no problem as I wanna make a diminute shipment....

***Let's get going... what is the HTS number?***

John Spiers

(If like Martin, you want to get to work, I have a special session of my online course coming up next week... enroll now, pay later...  Fall Special Session  2016 
11/15- 12/6/2016   Four Sessions

Section One ~ 6 PM to 7 PM Pacific Time

(This would be 7 PM to 8 PM Mountain, 8 PM to 9 PM Central, 9 PM to 10 PM Eastern)

The tactics taught here relating to food can be used for any product, but the specificity fits with the brevity.  Here is more info on the course, and you may enroll here.... (scroll down to the bottom of the page and use the form at the bottom of the page for this special session.

eMail me if you have any questions. (Ask John in upper right)

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Self-Employment Wisdom Affirmation

An SME is a small or medium sized enterprise, to be distinguished from large business, aka, dinosaurs. I, along with about six million other people, own a Seattle-based co-op called REI.  It is a medium sized business by all definitions, started by sport mountain climbers just before WWII.  So far it has been largely West Coast, but comes a story now they are moving onto the East Coast, filling in the real estate where dinosaurs have died.

The Sears store and Auto Center was recently sold to Seritage Growth Properties as part of the agreement in which Sears Holdings leases the store from Seritage, Reifs said. Under the agreement, Seritage has the right to recapture the space occupied by the store, he said.
After Sears' departure, the space will be developed for REI, along with additional junior box and small shop retailers, including restaurants, according to the Seritage third quarter operating results.
Saks Off 5th, the outlet version of the luxury department store, has signed a lease and will also occupy some of the space, West Hartford Community Services Director Mark McGovern said in an email Thursday.

Saks 5th Avenue is also by all definitions a medium-sized enterprise as well.  Both REI and Sak's compete on design, not price.  (And competing on design, not price, you'll have about 80% of your customers the one-off upscale stores and about 20% those well-known medium sized enterprises.  And of course you want exactly zero of the dinosaurs, the large businesses, as customers.)

Naturally, well-run companies that survived the bust will be the first to take advantage of the dying dinosaurs' demise.  Note what the real estate developer is doing: repurposing from dinosaur to delightful.

As an aside, while stores like Sports Authority drop dead from ex nihilo credit heart attack, a coop like REI thrives like crazy.

Your savings and pension and even social security depends on the dinosaurs thriving.  They will not, they cannot.  To keep from being taxed to death, you were persuaded to invest all in the limited range of securities allowed by law.  The law of course was designed by those who benefit from money pouring in every month to that limited range of securities.  Either way, the thieves end up with your surplus.  That is your future, because it the reality right now.

What is the best investment hedge given the reality?  Self employment, which is a misnoner. The real term would be customer employment.  We are all customer-employed, the hedge is to cut out the middle-man and be customer employed directly.

See yesterday's post for some options.

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Andrew Young on Bretton Woods

Andrew Young was interviewed By Tavis Smiley on his show Sunday, and finished with Andrew Young.  It is a remarkable interview.   I've said if something is not true in all places at all times, then it is not true.  What I teach, what I learned, what I have found reliable in just about every field, Andrew Young finds true in freedom movements.

When you have 30 minutes, give a listen here...

At 31:12 on the timer into the show,  Cornell West asks Andrew Young about MLK’s critique of capitalism and imperialism.  Young said he never heard King talk in those terms of the problems they faced.  Young said King's analysis was Biblical, not economic.  Young quotes King as saying communism needed more freedom, capitalism needed more responsibility, or words to that effect.

To my mind problems are solved on levels other than they are experienced.  Economic (physical) problems are addressed on a religious level, mental problems addressed physically, etc.

I've argued you decide the field you want to enter, the customers decide what you will sell.  as to the freedom movement:  Young wanted jobs movement, the people wanted back of the bus to the front of the bus movement.  So that was the program they had to offer.

Appealing to government never got them anywhere.  It is when the civil rights leaders met personally with business leaders and business defied the (Jim Crow) law, that the South finally integrated.  Here again, government is never the solution, business always is.  In his book, The Walls Came Tumbling Down, Dr. Abernathy chronicles the same point.  I'll say it again, if you want to be a revolutionary, start a business.

Amb. Young also talked about political power, and the disappointments regarding movement politicians of African heritage who were either co-opted or sold out.  Two points: the progressives targeted preachers of African heritage to advance their causes contrary to the flocks interests, and to some extent successfully, and who does not sell out of those who go into politics?  Does anyone expect  people of African heritage to be less corrupt than anyone else.  It's why they call it politics, because it is corrupt.

At 33: 08, Young talks about one of his first votes as a new congressman.  The 1971 vote was on ending the Bretton Woods compact in which the dollar was tied to gold.      Young admitted his ignorance of economics as a new congressman, but had the wit to ask the salient question, if "the dollar is not tied to gold, won’t people play politics with money?"

The panel testifying as to the wisdom of ending Bretton Woods consisted of Paul Volcker, Arthur Burns and George Schultz.   Arthur Burns replied “young man you’ll soon learn the dollar doesn’t need you to protect it.”

Young experienced the rebuke as  “shut up colored boy.”

The committee voted to end Bretton Woods on a voice vote.  Andrew Young was right, they were wrong.

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Rules Reveal Weaknesses

Prof. Joseph Salerno is an Austrian scholar who made a donation to his school's athletic program and received a brochure on what he could not longer do, according to the NCAA.  His point is o lay out how the NCAA is quite marxist in structure, which is entertaining, to see communism actually working.

But I was struck about the rules that now apply to him.  They say our rules reveal our weakness.  And what is forbidden below is precisely what happens in such fields a big Pharm when they want to influence say doctors:

To my surprise, the brochure informed me that I am a “representative of athletics interest” for the university. One comes by such a clumsy designation by making a donation to any of BC’s athletic programs, holding membership in any donor, booster, or alumni group, employing or helping to arrange employment of student-athletes, being either the parent of an enrolled student-athlete or a former varsity athlete, or helping to promote BC athletics in any way. As a “representative,” I am “prohibited” from providing “extra benefits” to any “enrolled student-athlete.” These benefits include cash, loans, and co-signing for loans in any amount. Also prohibited are gifts of any kind to student-athletes or their families including holiday gifts, clothing, and even birthday cards. I am also barred from providing special discounts for goods and services or rent-reduced or free housing to student-athletes or their relatives; nor am I permitted to pay a student-athlete an honorarium for a speaking engagement or allow him or her to use my cell phone to make a call without charging a fee.

Big Pharm does all these things with doctors.  It's how they bribe doctors without getting caught.  it's expensive, and so medicine has to carry all these costs to create a market that would otherwise not exist, that is to say, we'd have a different array of medicines if we did not have this corruption.

And that last one, i's illegal to let a kid use a cell phone without charging him...  In Islam, it is forbidden to stand in shade of a wall of someone to whom you lent money, for it might be taken as interest on a loan.

Our rules reveal our weaknesses.

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All Hail China Wheat Dumping to USA!

All USA policies have a winner and a loser, and the USA anti-dumping policies harm working families and smart business people and make rich 1%'rs welfare empresses like Cargill and Archer Daniels Midlands.  Here is example 319,392,085,003,914:

US President Barack Obama said that Washington is filing a complaint against China before the WTO due to China’s government setting prices for wheat, corn and rice well above market levels, which has led to unfair government subsidies in violation of WTO rules.

So the Chinese government sets a higher fake price for these commodities than the US Government does.  Both do it.  Setting higher prices calls forth more of these commodities, which in turn are then dumped at lower prices than what it cost to bring them forth.  You can focus on that if you like, but please do note the explicit fact that ex nihilo credit, that facilitates all this, calls forth goods and services that no free market would call forth.  Again and again we see how this happens, but at no point does anyone (except me apparently) question the ex nihilo credit regime that facilitates this malinvestment and misallocation.  Everyone loves a system that might work for them. No matter how much it harms them.

What the Chinese are doing is taking precisely the same steps USA took to become the Hegemon.  USA as a Hegemon is failing for it has run some course which is ending.  It shows up in our military failures worldwide, our odious leaders, and the biggest beneficiaries of the ex nihilo credit regime, the dinosaur corporations.  But that does not stop the 1%'rs from doubling down:

The US president added that if the United States signed on to the Trans-Pacific Partnership (TPP) free trade agreement, it would expand export opportunity for farmers and businesses and set rules for holding our trading partners accountable.

To hold our trading partners accountable? Before China joined the WTO, it was rules everyone haad to follow except the USA.  Now that China is trading as much as USA, the WTO is useless to USA (so Trump can announce he'll leave it), and USA wants to peel off smaller victims in a new org, the TPP.  it ain't selling.

This is all great news, for once the ex nihilo credit regime dies, or implodes, we can get back to real business, true economy stuff.    And non-issues like "dumping?"  Well, anyone with a wheat market in USA can simply reduce USA supply and by the subsidized China wheat to sell in USA until China goes broke.  Let our fields lie fallow and rest while China slowly dies (assuming dumping is actually happening.

All this is great news for small business.  That which distresses USA big business is advantageous for small business.  The pendulum is swinging back.

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Did The FED Just Signal Wage and Price Controls?

A FED governor gave a speech which is as appalling as anything Caligula ever said, but the difference is today few people would object.   Does this paragraph in a FED speech represent the way back to full circle, where this false economy started?  Nixon going off he gold standard (lite) and wage and price controls?  Are we back to the future, wage and price controls?

Mish of course covers the speech well, but he missed something I spotted.

A second alternative would be to replace the inflation target with a flexible price-level or nominal GDP target, where the central bank targets a steadily growing level of prices or nominal GDP, rather than the rate of inflation.

How?  It is a horrible idea at any rate, but how would they target steadily growing prices?  Pause for a moment and let the wave of nausea pass, as yet another blithe insult to you, where the hegemon's minion can openly ponder how to harm you and your family, with impunity, on behalf of the 1%. Recovered a bit?  OK.  Now, specifically how would they cause you this harm?

Would they order retailers to raise prices 4%, and then wholesalers, manufacturers, etc?  Nixon ordered business NOT to raise prices back in 1971 in a positive interest rate, inflation regime, so is the reverse to order business to raise prices the corollary in a negative interest rate, deflation regime?  (And raising prices does not make inflation).

Wait, there are mark-ups and margins to maintain in relation to each stage of production.  So say in housewares the margin is 50%, and the retailer reprices a $1.00 item to $1.04, does the wholesaler raise his price from 50 cents to 52 cents (4%)?    I'd love to hear what the plan is, and then consider it.

Mish does say this, with which I part company:

It’s asset deflation not CPI deflation that central banks ought to fear. Even the BIS agrees with that statement.

There will be no economic recovery without asset deflation commensurate with bubble inflation, with a regression to the mean for full effect.  If the BIS agrees, then Mish ought to disagree. The real estate boom, that asset class, must go bust.  Million dollar houses need to return to their 1998 $200,000 price for there to be an economic recovery.  And then lower to draw in buyers, for the tax man will leave the properties on the books at a million, and collect taxes as 6% as though nothing changed.  The home will have $60,000 tax bill, when $12,000 would be correct at the marked-to-market valuation.  The house thus must drop in price to amortize the unchanging "6%" tax rate, or the buyer won't pick it up.

But but but....  that would wipe out countless Americans.  Well, it would restore the economy to an organically sound foundation.  Those who assess theor accumulations in ex-nihilo credit tallies would certainly find their pensions, paycheck, properties, marked-to-market, are not worth much.  but that would just reveal how much they depended on a warfare/welfare chimerical economy.

And then stocks need to get marked to market.  And pensions.  And medicine, and every other inflated class.

We all love a system that works for us. All policies harm one side and reward another.  The hegemon thrives on the class warfare, could care less about which policy is regnant.  Even if either is being wiped out at any given time, all love a system at which they can win (but a Charlie Sheen kind of "winning".)

Anyone with a  pizza oven will do well, in spite of the fact that pizza prices would be dropping too.  but the difference is the tomatoes, flour, cheese prices would be dropping as well, and the pizza parlor would be dropping prices slower than his costs were dropping.  So he'd be getting wealthier as his prices were dropping.  This is how a free market works anyway.  Wealth is redistributed widely, those who work serving others earn best, and communities become more creative as the pizza man invests in other small businesses and  united as the pizza man extends credit to people in a jam.  It was only 40 years ago that the USA was this way.  Problem is most of productive USA has no idea there is an alternative and the way to it is through massive deflation.

Start your own business, fire up a pizza oven, if that is your thing.  Make sure it is on wheels, not bolted down, so it is your property, not a fixture that becomes legally the landlords.

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Next New Concept Testing V Food Export Seminar

New Hope has trademarked (ungh!) the tern "Next" (really?!) They offer a "Concept Test" to tell you if your B2B initiative will be successful "before you invest."  This is not possible I think, but they are giving 20% off through October.  Maybe because it is not possible.

It's not possible for three reasons: 

A. A study can never predict the future.  Coca Cola spent one billion dollars circa 1985 introducing new Coke, only to have the most famous fail in marketing history.  Show me statistically significant proof of the "Concept Test" and "Success."  I say it cannot be there.

B. The study is invalid to begin with, since the population surveyed is consumers, and the customers for B2B are businesses.  What consumers say, and what they will do with their money, are two different things.  The businesses to whom they should address their surveys will say "Who knows? Gotta test it."  I am sure the reason they do not survey B2B customers is any such survey would be impertinent to the sales process.

C. To be successful, you must do the work.  This is so self-evident, in the thirty plus years I have been lecturing on the side I have never said "I will make you successful."  I say only, "here is what I learned, here are the steps."  The steps are valid and reliable. Whether or not someone takes the steps is not up to me. I can only offer email support to those who are taking the steps and may have questions or need more coaching.   

I have never made anyone successful, at best I can save entrepreneurs time and money getting to their goals.  Indeed, you can get to your goals with virtually no money and little time, if the steps are followed.   If anyone says they can do more, I'd like to see how.  (And if their claim is false, I can quickly see how too!)

I guess I have two advantages:  I don't teach for a living, so I don't need to oversell this; and my entire career is trade for a living, so I know what you actually have to do to get customers.

The only way to know what a market thinks is go to your customers, B2B, and ask for an order.  If no order, then you have practical feedback upon which you can act.  You spend your time and money on adjusting based on what professional buyers say, not consumer surveys.

At some point in the game you must face a customer, even if you have paid your Next Concept Test fees.  There is no reason why the first thing you do cannot be face a customer.  Indeed, there are easy tactics to get in front of buyers before you put a dime into your idea.

You have to turn over a lot of information before you find out what they charge for the New Hope Next Concept Test, so I have no idea.  I bet is more than the $89 I charge for a seminar to find customers, that goes to customers first.  And I just need an email and a billing address, email for the course, billing address to bill you after the course.

Yes, my seminar is about exporting food and beverage, either as a principal or an agent, but the tools tactics and attitudes work anywhere, anytime.  Even domestically.  Indeed, in one part of the seminar you will compare domestic to overseas potential.  Check out assessing domestic potential based on current sales.

My seminar is online and open to anyone on planet earth, and indeed, I get people from all over.  I lead the live, online seminar. Your next opportunity to attend is:

Tuesdays, 6-7pm Pacific Time, Oct 11-Nov 1, 2016.

And you can register now and I'll bill you later, after the course begins.

http://www.johnspiers.com/Export_Agriculture/Register%21.html

Get in front of customers first.  Then adjust as necessary.

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A New Tang?

The Golden Age of all Chinese eras was the Tang Dynasty, flowering about the time Rome had descended into the Dark Ages and Islam was flowering.  What the T'ang did that so enriched China was a opening of trade with the West (to them) and liberality within.

While USA is voting between trade wars and nuclear wars, China is opening trade, with their West.

The first Central Asia cargo train departs from Nantong, East China's Jiangsu province, August 25, 2016. The cargo train left Nantong on August 26 for Afghanistan's Hairatan, marking the start of Central Asia freight train service.

http://usa.chinadaily.com.cn/

Now land transport is 14 times more expensive than sea transport, overall.  I wonder what rates the Chinese can move cargo overland.  And overland this is!  Essentially Shanghai to Afghanistan.

Google maps

The routing is probably quite different than the red line I inserted, but notice it ends in Afghanistan, where the USA military has been defeated for the last 14 years, as the Soviet Union was before.  For China to launch this rail line means the only people who do not know the Americans are leaving soon are, well, the Americans.  I wonder if we will leave captives behind like we did in Vietnam?  I hope we do not do that again, but since no one was prosecuted for that crime before, it will happen again no doubt.

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Marc Faber on Stock 50% Drop and SEA SHA $500 RT

It's happening...  air travel dropping again...  Seattle to Shanghai, Round Trip, Delta, $500! Round Trip! Overcapacity...  dropping prices can be deflation.  Scary changes for some...

Delta Web Site, 26 Aug 16

They are giving away ocean freight too. Both ways!  LCL MOQ FOB tactic for startup and expansion just got easier because it is getting cheaper, both ways.

When matched with Marc Faber's prediction, a rather safe one, of a 50% drop in stock prices,  this is a great time to start up a business.

"The fact is, the market hasn't really been driven by genuine buying, but by stock buybacks, takeovers and acquisitions, and market leadership has been narrowing. It's not that many stocks that have been making new highs. It's quite a narrow growth of stocks that have been very strong," he said.
In fact, market breadth has broadened substantially, and as of Monday's close, 48 percent of the stocks within the S&P 500 have made 52-week highs within the past three months; 6 percent made 1-year highs on Monday alone.

But it's so scary out there! Perhaps, but here is an odd fact: the more the general population fears initiative, specifically business start up, the more people start up.  That is to say, there is a subset of people who see opportunity in change.  They may too fear it, but they get going.

The lower line is the start up nation, no more than 10% of the population at any given time, and no less than 5%, representing the act of starting up businesses.  To move from 5% to 10% is a 100% increase in start up activity. The upper line is the attitude of the general population toward starting up a business.

(<http://www.gemconsortium.org/data/key-indicators ...you may  create this and many other graphs, update them for the day you read this,  for any country you like) >)

If and when you want an organized approach to start up in small biz int'l trade, on the upper right there are links to courses I offer.

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