Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts

Thursday, February 12, 2015

Malinvestment and Misallocation

One of the themes of the new agenda on this blog is misallocation and malinvestment, as to how live with both.

One way housing developers socialize costs while keeping the profits is the Feds require people buy flood insurance.  Well, once we have flood insurance, then developers can build on flood plains at prices below market costs, and when the plains flood, a disaster is declared, and the taxpayers have to pick up the tab.  Same with building in fire zones, etc.

How about we stop doing that?  How about if someone wants to build on a flood plain, they get real insurance from a real provider, who will in turn require the house withstand a flood before they will insure.  For example, here is one such house... designed for the reality of the place, the floods.

floodplain-home-unique-functional-pilings-1-exterior.jpg

Go ahead, let the waters get six feet high every 100 years...  this house could take 100 years of six feet of water under it.  It does not cost too much to design houses right, it only costs more.  If developers can build for less, and keep the profits and socialize the losses, then this they will do. Why the rest of us agree to it is beyond me.  Let markets work, and they will.

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Wednesday, September 24, 2014

Welfare Queen Gets Tired

Here is a fair criticism of an ExIM bank critic... by an ExIm Bank client:
She and others like her pontificate from behind a desk, using theory and political rhetoric rather than considering how their words can impact American jobs. By contrast, employees with our U.S.-based company happen to work face-to-face with product distributors and with farmers in fields all around the world.  Our company is based in Gilbert and we began using the Ex-Im Bank nine years ago. Alan J. Merrill is executive vice president of Bio Huma Netics, a Gilbert-based company that manufactures fertilizer and wastewater solutions.
Yes, theory against experience pales.  So let me reply to Merrill who claims to have been on EXIM Bank life-support for nine years in business, from someone who already had ten years experience of dealing with buyers and sellers face-to-face around the world, before being self-employed for thirty years.  Ready?
Our competition includes some of the largest agriculture companies in the world. Many of them receive support from their home governments. The Ex-Im Bank helps level the playing field so that we, as a small business, can get our product overseas and compete on quality, not financing.
Well, which is it?  There is an internal contradiction to say you need financing, so you don't need financing.  How can you possibly control for the variable of EZ cheap credit when trying to assess whether quality is a factor in a sale?  You can't.  So here is what you have missed by being a welfare queen, instead of a entrepreneur:

One cannot compete on quality.  You would have learned this had you actually gone out and tried to build business without the ExIm boondoggle.   Quality and service are standard offer items.  The quality of your fertilizers are set to what the market wants, no more no less (as is service).  Within an extremely narrow band, all players offer the same quality and service.

What builds markets for small business is design, the only place where small business can and need to compete.  A fertilizer designed to produce a specific effect, solve a specific problem, as opposed to the standard fertilizer.  Now for a uniquely beneficial fertilizer one may charge a premium price and have no problem finding customers who are ready willing and able to pay.

Indeed, the fact you admit the people with whom you deal are not able to pay means legally they cannot be designated customers.  The legal definition of buyer is ready, willing and able to buy. You don't have a business, you are really a sort of government-funded NGO.

Why are your customers so weak that they need USA taxpayer loan guarantees before they can buy (or more to the point, before you will sell?)  Why are taxpayers running the risk of default, and not your company?  You say "look at the jobs" when we should look at your company.  (The ExIm Bank now forbids this, hiding the list of names they finance, in this way we can no longer know when ExIM Bank deals go bad.)

Google reports variously 700 fertilizer exporters in USA... why is Merrill's the only one that needs taxpayer bailouts to continue (aside from the Koch brothers of course, welfare queens extraordinaire)?  Why should you have an advantage over the some 658 others who sell and get prepaid for export sales, not USA taxpayer guaranteed funding?  What about the employees of well-run companies who lose their jobs because overseas buyers who are perfectly capable of paying the other company agree to save money by buying from a USA taxpayer wealth transfer scam that your company mediates?

And what of the domestic producers in your target market?  How are they to compete when you offer USA taxpayer subsidized product against the domestic product?  EXIM Bank support has ruined many an overseas producer, adding to the hatred of USA.

Businesses on running-bailout need not concerns themselves with competing in markets.  For all that ExIm bank is used by almost no one in business of international trade.

If a country is effectively subsidizing its exports, then trade in that country's subsidized product until that bad policy breaks them.  Get rich off their folly.  It is how Dow Chemical got started.
Without the bank, we would not have access to financing alternatives, and as a result, would not be able to export to many of our current customers. But opponents of the bank suggest that the private sector will step up to meet the needs of small businesses like ours should the bank's charter expire.
No, opponents say if your parroting of false EXIM claims of profitablity were true, then a bank would do the business.  But you can only get financed when a bank says you'll fail otherwise.  What does that say to the rest of the taxpayers funding you?
Small businesses here in Arizona and across the country can tell you that without Ex-Im there is no other option. The private sector can't step up to meet our needs because commercial banks are most often unable or unwilling to finance or insure the international deals we conduct. Without financing or insurance, these American businesses and jobs will be put at risk.
Well, yes.  The jobs at risk are all false economy jobs. Merrill parrots EXIm's well documented lies about turning a profit, a point that is prima facie nonsense because if so banks would do the loans.  Yes, these jobs exist because of misallocation and malinvestment, provided by ExIm Bank.  And the same  misallocation and malinvestment is crowding out real economy jobs.

It's not the cards you are dealt, it is how you play the hand.  There is no judging a man as to how he plays his hand, if he wants to pursue being on the dole, that is his choice.  Indeed, when I lecture I advise on a strategy of raiding the dole meant only for big business judiciously to advance a small business advantage. But when he wants me to believe his choices are a good thing for everyone, then that is insulting and abusive, expecting me to go along with his pretense.  In life, NEVER believe your own PR.


Merrill actually starts out with the best quote:
Be it President Barack Obama, lawmakers or D.C.-based think tanks, we tire of being told how to run our business.
Hilarious.  Typical republican. Barack Obama has put the ExIm bank on steroids, making your gig possible.  Like most welfare queens, he wants his EBT card but bristles when people suggest he get a job.  It is HARD being a welfare queen!  People want accountability for what you do with their money!  Soooo tiring!

I never get tired of criticism.  It is either not true, or where true, I readily admit it.    I get media rate, a huge subsidy, on the books I sell.  Why should taxpayers subsidize delivery to my customers?  Why, indeed?  I don't advocate it continue, I say get rid of the USPS.  Let private companies run it.  Until then, I rock the subsidy.  But if they get rid of the subsidy, I won't go away, because the subsidy is not critical to my success.  By defending ExIm bank, you are expressly stating you cannot survive without it.

Don't worry, the ExIM bank will not end until the USA ends (and the USA will end because such as  the ExIM bank cannot be ended).  But you can join the other 659 or so USA fertilizer exporters and offer a product people actually want to pay for.  But you have to compete on design, not taxpayer guaranteed low price.

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Wednesday, September 3, 2014

Answering the Two Hesitations to Business Start-up

Probably a decade ago I surveyed my 1000 or so listserv members on how come people do not start up businesses, given the know-how to do so.

Now, a good portion of my seminar participants have always been the already employed, looking for an alternative.  Early on I realized, and even mention it in my book, the flight attendant with all of the advantages in the world someone does not launch a business.  How come?  Busy working!  Dentists, truck drivers, bank tellers, you name it, the employed have security and routine, and routine is important.  For this reason I'd advised kill your TV, take the 24 hours per week devoted to TV (remember those?) and work on your biz in the same time slot.  But even then, the underlying fears emerged. The answer as to "how come no go" got down to two parts in essence: funding and health insurance.

I suppose I can argue all I want that no one needs funds to start-up, only customers, but the fact is people see funding as extremely unlikely, and if their mind runs to contemporary banking, they are probably right.  No bank is going to fund anything that is not necessarily predatory.  The bank wants you to bring them an edge.

As to the health care thing, the mind boggles at the effectiveness of social conditioning.  Without health care insurance, all is lost.  Why would anyone think that?  But almost everyone does.  I recall when almost no one had health insurance, but of course the care was better and you could afford it with your own money.  But attitudes have changed, and prices have gone up, at least because of "insurance."

But now an effective response to each problem has emerged, thus wiping away major reasons for hesitation in starting up a business.

1. Health care.  A couple of evangelical groups have revived an ancient health care support scheme that is Romney/Obamacare exempt.  http://samaritanministries.org/  and http://mychristiancare.org/Medi-Share/  .  For each of these you have to affirm a faith statement and a lifestyle affirmation.  In essence both of these are narrowing the risk pool to clean living protestants and passing the savings on to the members.  And it is not insurance, it is co-op in which you commit to send in money each month and it is directed to the co-op members who have medical bills.  Expect monthly costs of $300 vs $1700. Now I found and could not affirm their faith statement, and junkies and homosexuals need not apply, but that is not the point (live with freedom of association).  Study the structure and form one for your community, and escape the horrors of Romney/Obamacare.  (I have a .pdf on tontines, and ancient insurance practice, that may be instructive as well, email me for a copy.)

2. Funding.  What if your business never had to get a loan approval from a banker? What if, as all major religions ethical systems teach, a loan is always a charitable event, and never a business event? That is to say, money is loaned at no interest to a member of the community who will endeavor to pay it back over time.  Never happen?  In a case of Deus ex machina https://www.communitysourcedcapital.com/  offers exactly that.  You still need customers first, but you'll never hope for loan approval from a banker, you loan gets funded by interested parties.  Now I know I just mentioned https://www.communitysourcedcapital.com/ yesterday, but in another context, and I want to add this - since the corporation is not an ethical business structure, the co-op, which is, is uniquely structured to accept the loans from its customers which are its owners.  The mind boggles!

You need to shift your definition of wealth from how much you can personally accumulate to the range of products and services the widest range of people can afford with their own money (which of course includes you.)  Comity vs polity, access vs credit score, prosperity vs aggression.

You cannot spot these emerging good things unless your weltanshauung might include them.  think differently.

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Sunday, August 31, 2014

The CDC, Autism and Whistleblowing

Now here is a troubling bit of theatre, an anti-autism group has reported on CDC mischief, and has rather credible evidence, naming names.  Nothing special there, although human drug trials can be criminal, all drug trials done without consent are criminal in USA.  Except by executive order, when the president can legalize a company running trials on people without their permission.  All human safety laws in USA are trumped by an exception by executive order.

Time magazine and others are reporting on this controversy, and here is the controversial video.


I have a bit of a problem with the mention of whistleblower.  The video starts out making a false claim, "CDC Whistleblower revealed."  Well, in fact, the "whistleblower" is not named.  It is like all of these people who come out 25 years later after some official crime, and when safely in retirement tell us that some crime was committed. McNamara is the poster boy of this ethic.  Unless someone is willing to stand-and-deliver, then shut up about it.  If this is true, whoever is "so sorry..." is not sorry enough to stand up like a man and say what he did when he did it.  No one goes to jail for these crimes, so he is not at risk of that, what is left at risk is retaliation in which he would lose he pension.  And there is exactly why criminality can flourish, because the people with some conscious get conscious trumped by the god ka-ching. Also, this half-way expose leaves controversy which ultimately serves the bad guys.

The video opens with the CDC run Tuskegee Experiments, and has the surprising data showing the autism rates impact people of African ancestry disproportionately.  Well, that is USA.  People of African ancestry are the despised class (every country has at least one, because like a national airline, you are not really a country without one).  Abortion rates among people of African heritage run about 30% on average, 60% in some places.  A disease uniquely African-american is sickle cell anemia, which rather goes begging for research dollars.  I see nothing good in patents, and I smell a rat when we Americans take out a patent on ebola, and the ebola breaks out in Africa, where we can save the day.

Just as it was in 1974 that at the same time USA declared "food as a weapon" there were policy guidelines issued and kept secret until 1992, in which our Sec State outlined that controlling food would control the world, so we may find in 20 years a similar directive in which we control the world by controlling medicine.  Sine the GMO thing is on the ropes, time for Monsanto to get into ebola drugs? Time to move to more subtle means?

But back to the CDC targeting people of African ancestry.  The fact that no one will step forward and say "I did this, I have first hand knowledge of that" means no one will take responsibility.  C'est la vie. My main objection is I am denied the good of the competition of people of African ancestry in the measure they are the playthings of the oppressors, and thus denied the opportunity of participation under the progressives.  Our economy needs as much competition as it can get.

The tool around which all of this mischief is organized and supported, the command and control, is the usury regime.  Get rid of this, and no one can concentrate the power to advance their pusillanimous evil ends.

Here is a billion dollar business.  Set up an office in Hong Kong in which US Citizens can upload their medical histories.  In USA medical history revelation will get you jailed, it is super secret, not for confidentiality, but because results sometimes reveal intentions.  All of these scandals could be easily spotted early on with pure science.  As the Hong Kong company received more and more medical histories, the data would highlight mischief afoot.  Other scientists around the world could come up with alternative therapies and counteract, in any event the data itself would be golden. Gather the numbers for free, crunch the data, and sell the reports.  Billions there, but illegal here.

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Thursday, May 8, 2014

Regulating Food Carts

It can get tedious to constantly correct bad ideas...  and so I held my tongue as a friend surmised it was lack of regulation that caused the plethora of food trucks in Portland, Oregon.  The ubiquity is causing prices to fall, which is usually a bad thing, but not after expenses incurred are high.

The fact is Portland heavily regulates food trucks, unnecessarily.  Between customers and insurance companies (free market versions) necessary and sufficient regulation obtains.

Because of the regulations, the process between decision and sale is very long indeed. Someone may get the notion of providing food by a truck and then engage in the process of actualizing that dream.

Permits proving compliance take time, and it is that time line of uncertainty in who people invest much before they are out of the regulation-compliance pipeline and out on to the street.  The pipeline has trucks that have emerged and are making money.  The pipeline is full of people inspired by the success of the early trucks to emerge.  New applications are entering the pipeline constantly based on the success of the early trucks that emerged.  So we have a few trucks sending signals there is money to be made.  Those signals will change as people currently in the pipeline emerge.   And people entering and in the pipeline will not know their decisions were made on price signals distorted for lack of information.

A list of how many people are in the pipeline cannot substitute for the price signals of the actual market.
The problem of regulations unnecessarily distorting markets cannot be fixed, yet the benefits of third party QC can be provided nonetheless by free market insurance and customer feedback.

I have no doubt the point of these unecessary regulations is to destroy the small businesses.  Portland has many small restaurants and such in place so long the owner owns the land.  Cities want big biz and big dev so they can have big tax income.  By stuffing the streets with food trucks, and monkeying around with parking meter times, costs and violation fines, the cities destroy the small business trade.

The in come the developers to sweep up the property and build massive high-rises to house big business. The problem is these are false economy, welfare/warfare driven big businesses.

Who knows how this will turn out.

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Tuesday, March 18, 2014

Insuring Food Exports

My research tells me Freight Forwarders who handle fresh food (perishable) exports will insure it at approximately .70 per hundred value with the claims ratio on full containers is about 1 in 400 or .25%.  this sounds about right since insurance companies take in 3 and pay out one.  Now, since we work MOQ FOB, we are not figuring this into our prices we are charging, but it is good to know the buyers will be offered insurance for loss on fresh food exports.

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Sunday, November 24, 2013

Bible Quote of the Day

Ecclesiastes 5:3 KJV

For a dream cometh through a multitude of business,

Once upon a time, people had several revenue generating activities, all rather pitch perfect match between an individual's own capabilities and the desire of customers.

This was social security, plus membership in some lodge, where collective contributions took care of the medical emergencies of all.  The Knights of Columbus is something of that, with life insurance, but no health insurance any more.

But with state intervention, we got routinization, not diversification.  Rules and regs take the joy of of work, and people tend to go after one thing "to make a living" instead of living.  Indeed, anyone with several lines of business is viewed skeptically.

Strange that.

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Wednesday, October 30, 2013

Why We Need Free Trade in Medicine

We are told we have the best health care in the world.  And too few can access it.  So we need to make access more better cheaper faster.  Chairman Mao orders China to produce more better cheaper faster.  He could not get it to happen.  Deng Xiaoping ordered more freedom, China got more better cheaper faster.

Do we have the best?  You think a patient gone missing for 17 days found dead in a stairwell will no longer happen?  Been to a hospital lately?  See what collectivization does?  You get more of what you subsidize.

If doctors cannot practice medicine for the rules and regs that destroyed the business, they lose hope and at the same time scamsters enter the field:
A study published in the New England Journal of Medicine suggests that profits urologists make from referring patients to their own radiation facilities play an outsized role in the treatment decisions. One third of men whose doctors own radiation equipment get the therapy at a cost of about $35,000 per treatment course. The same doctors prescribed the therapy for just 13 percent of their patients before they had their own equipment and could profit directly. Read more at http://globaleconomicanalysis.blogspot.com/#FB7aVFU4j3el4Zq4.99
At the same time, it's all your fault!
However, the CDC director explained that people have fueled the fire of bacterial resistance through rampant overuse and misuse of antibiotics....Srinivasan added that pharmaceutical companies are at least partially to blame for this problem, saying that they have neglected the development of new and more sophisticated antibiotics that could keep up with bacterial resistance because ‘there’s not much money to be made’ in this field.

Read more: http://www.dailymail.co.uk/news/article-2477273/Weve-reached-end-antibiotics-Top-CDC-expert-declares-miracle-drugs-saved-millions-match-superbugs-people-overmedicated-themselves.html#ixzz2jA5kQei5 
Do you recall ever asking to be overprescribed for antibiotics?  Now, also note, "there's not much money to be made" by welfare queen billionaires, but plenty of money to be made by you and me selling the immediate solution in bacteriophages, if we had freedom in USA.  You and I do not require 50 million cash a year to show up for our jobs.

Also note the Surgeon General of the United States does not mention this option.

All those hoping for single payer health care can look forward to UK style medicine, where the doctors a paid a bounty to give mom a nudge into "no care."

And this from Syria:

Ten cases of polio have been confirmed among children in the war-torn Syria, the first ever reported in the Middle East country since 1999 and making it an urgent task to vaccinate Syrian children against the epidemic, the United Nations said Tuesday. 

What we need is no war, not vaccinations.  The UN must condemn USA meddling in that country, with USA supporting Al Qaeda with weapons and intelligence, the side that will not destroy the chemical weapons.  This is exhibit A why the vaccination initiatives must be resisted: there is no upside, and if there are wars, vaccination does no good anyway.

After WWII, the damage done when on for decades, with polio as one example.  But but but what would happen if we did not have the government to make all decision for us?

No idea... thing like this:
The carpenter lost two fingers and mangled two more on his right hand. While still in the hospital, he was determined to find a way to get back to work. Eventually, solving his own problem led him to work with a stranger on the other side of the world to create a mechanical hand using a 3-D printer. Other prosthetics, including a lower jaw, have been made with the technology before, but making a hand is particularly tricky.Read more at http://globaleconomicanalysis.blogspot.com/#pLif74UyCe2Y3EFJ.99

With Romney/Obamacare, or single payer which is next after we get done blaming the black guy, expect far more of the bogus treatments as above and outlawing $5 prostethic hands.  And NO bacteriophages.  You'll need to be in int'l trade to get competent healthcare, so you can travel to where there is freer trade in medicine.

We could turn our economy around if we deregulated health care.

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Tuesday, June 18, 2013

Private Firefighters

70% of the firefighters in USA are volunteers.  Every bit as talented and trained as the paid version, but they just volunteer their fire suppression and rescue services.  And there is another category of firefighter, the insurance firefighter.
Morris is among a group of private firefighters hired in recent years to protect homes with high-end insurance policies. In a wildfire season that is one of the busiest and most destructive ever to hit the region, authorities and residents say their help is welcome.
The story is we needed paid firefighters because unpaid firefighters fought over the right to get paid fighting fires for insurance companies, and alternatively, if you could not afford insurance, you house would be allowed to burn down.

That kind of thing, letting a house burn down for unpaid insurance, only happens when you have paid firefighters. Repeatedly these days.

Well, insurance companies hire who they want, and certainly don't hire people who brawl while buildings burn.  For those without insurance, volunteer firefighters, then and now, did the trick.

Here is a great place to cut city expenses and taxes: convert to all volunteer firefighters, go from 70% to 100%

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Monday, July 2, 2012

First Eliminate the Paid Fire Fighters

The "blame the black guy" health care bill has created a precedent wherein congress has passed a law that can tax you to pay for a private company's services.  That is now the law.  White folk countrywide who otherwise do not know how to serve customers will now flock to congress to get congress to make customers for them too.  There is no rational limit to this premise.  After the election, the law will not be overturned, no matter who wins.  People will blame Obama.

But the economic destruction of USA will speed up, because there is no way this can be affordable, and it also forbids innovation and price reduction.  So the time to look at rebuilding society from the ashes is now, and a good learning experience would be for cities to eliminate all paid firefighters.

There is probably no group of city workers more loved than firefighters, which is a tribute to social conditioning.  So if we can prove we do not need paid fire fighters, then what city services do we need?  Of course, none, and people will know we can do quite well without city governments when we have no city governments.

Someone joked the USA is the only place in the world where if your house is on fire a truckload of millionaires will show up and put it out.  Witty.  But that is city firefighters, they who retire with pensions and bennies which constitute millionaire-grade personal wealth.  It is the city firefighters who are paid.  70% of the firefighters in USA are volunteer, which means they are not paid.  They are every bit as well trained and equipped as any paid fire-fighter, they just volunteer to help their neighbors.  Glad to do it without pay.

Last Saturday night I had a conversation with a volunteer firefighter from connecticut, a strapping young man with shoulder length hair.  He added a few points I had not considered.  First he brought me up short on the question of why firefighters are paid.  I was wandering in the labor theory argument when he cut me off with "cities pay firefighters because they have money."
Max Whittaker for The New York Times
Now, for me, this economic reality I always such a challenge.  I know it is true, I know it is almost always a factor in economic calculation, but it is so hard for me to grasp and hold it.  First off, it is a repugnant concept, spending for the sake of spending, and second off,  I am from a field were to survive you must cut costs.

But the fact is the volunteer fire fighter is right.  Cities have a captive audience, which they tax.  Now they have money.  What to spend it on?  How about art, playgrounds, firefighters, whatever.  Nothing necessary. It does not matter what they spend it on, it just matters that they collect and spend it, and keep some for themselves.  Since cities have money, they spend it. The money comes from force and fraud, you will be crushed if you do not pay the taxes, the money is not spent as you think it is.  It does not cost that much to suppress fires in a city, we just spend that much.

It does not cost that much to produce new drugs, we just spend that much.

It does not cost that much to defend America, we just spend that much.

See how it goes?

Then there was another interesting observation.  In his small town when the alarm goes out thirty guys with axes and gear show up.  Fires are put out quickly. Then it is Miller time.  In cities Firefighters are paid.  Maybe twelve people show up, no more.  How come? Because lavishing so much money on so few, and having a public union to keep people from fighting fires, the result is city fires have less crews fighting them than town fires.  Since cities pay firefighters, they cannot afford better coverage. This would make an interesting study.  Come up with a gauge that reads how many BTUs a fire is giving off when the first firefighters arrive, and how long it ties to end the fire.  Then compare paid firefighters to volunteer firefighters.  I bet we'd find that volunteer fire fighters put out fires faster than the paid fire fighters.  But "unfair!" you say, there are more volunteer fire fighters attacking a fire.  Exactly!

He had another sidelight.  In his town they got rid of the police department.  Now no town in USA is allowed to have no cops, so towns must contract with county or state police to be the state presence of the monopoly on violence which defines the state, if they do not have their own cops.

Although he has met the cops, he could could not recall if they were state or county since he saw them so rarely, but he told a story.  The outside cop working evenings made his first task to meet the volunteer firefighters.  How come?  In case of trouble, the cop needed back-up.  The volunteer fire fighters being local, most likely knew everyone.  he recalled how once an outraged dad was threatening a cop for hauling his drunk-driver son away.  Police back-up was scarce, so the deputy called the volunteer firefighters.  Within minutes a dozen men with axes were on the scene, who in turned calmed down the outraged father.  No swat teams, no killings.  Only a drunk driver went to jail.

None of these make for ideal circumstances, but they are better ways.  People should not see the end of this country as we experience it and have fear.  What we are losing we don't need anyway.  We can test out living in freedom by eliminating paid city firefighters.  Then we will all see that one of our cherished conceits was all a sham anyway.

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Wednesday, June 6, 2012

The Tactic Of Paying In RenMinBi Yuan

A Chinese website with a business dimension is noting the rise of Chinese exporters requesting payment in Yuan (most deals with China worldwide are denominated in dollars.)

"We believe that some deals were settled in yuan, which is good for Chinese exporters to avoid exchange-rate risk," Liu said. 

In my book I explain that the importer runs the risk of currency fluctuation, so we make the payment in whatever currency the seller (exporter) names.  Then we manage the risk no with forex contracts, but with the double tactic of frequent minimum order and competing on design, not price.  With this we may find we lose money on one deal in a year due to currency fluctuation, but there are so many transactions in a year that we are safe.  The last time I lost money on one transaction in a year was 1985 when the Yen went squirrely in April and I took a 10% loss on a deal.

The article mentions most trade show deals are denominated in dollars.  With China growing in the last 30 years, a yuan peg to the dollar served China as a constant which assisted in planning.  Here again China used our foolish policies, in this case in the form of having a central bank, against us in a slick jiujitsu move.

This article signals the Chinese are reconsidering the peg, which means exporters will be asking for deals denominated in Yuan.  Back in the 1970s all trade show deals were in yuan (indeed my book shows some such contracts from then) with Hong Kong transhipping and re-invoicing in another currency.

What this means is back to the future, and you already know what to do.  It also means you have an advantage in China, because you will readily say "yes" when the Chinese propose you pay in RMBY.

The article notes the request to be paid in yuan is not well received worldwide.  It is an uphill battle for Chinese exporters.  Your willingness will put you ahead.

You can go further and explain how you manage it.  What you explain will be carried up the food chain, with you cited, which is good for your reputation in China where you are trading.

But there is one more aspect.  This may occasion the return of the letter of credit in payment.  Understand something:  If denominated in Yuan, the Chinese company will get full profits, with no hit from exchange rates. The factory has other orders too, in dollars.  If the orders denominated in dollars, over time, due to currency fluctuations, are decreasing in profitability, then the Chinese will be eager to fulfill those orders first to book the dollars and convert to yuan.  Since they will make full mark on the yuan order, it is better to delay that one, that is to say, your order.

Paying with credit cards, more and more common over the last decade, has no provision to enforcing a shipping deadline.  Letters of credit most certainly do.  So your side tactic is to effect payment by letter of credit, which has harsh shipping deadline requirements.  You are safe from delay.

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


Saturday, May 26, 2012

A Doctor On Insurance

Here is a doctor who shares his view from the trenches on insurance.  Now keep in mind that the word insurance means one thing in a free market and another in capitalism.

In a free market, the insurers arbitrage the savings from ever reducing risk through education against ever lowering insurance premiums, that is to say the cost of payouts fall faster then the premiums.  Your insurance premiums drop as you experience less loss, but your insurance company is rewarded with more profit, which they plow into new research in safety.  Yay!  Everyone does better.

In capitalism, insurance is about the actuarial tables and simply charging for what static loss is expected, 3 dollars in, one out in loss coverage, one profit, one to overhead.  Cover voodoo in health insurance?  No problem, we'll just adjust the actuarial table.

Make houses our of every more dangerous materials?  No problem, we'll just adjust the actuarial tables.

The good doctor points out insurance companies can also find profits in gaming the capitalist system by goosing the actuarial tables.  People "hate" insurance companies, when they really despise capitalism.  A free market in insurance is not permitted by the state.  As long as we have a state, we cannot have a free market.

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


Wednesday, November 23, 2011

Insurance and Freedom

People once had a feeling of participation and respect for government.  Sadly with democracy, there is no break on selfishness and greed.  Only a free market can offer enough good to keep a check on the progress of evil. 

Today unregulated street vendors have respect and patronage, in violation of the law.  At the same time, restaurants in fixed locations may bribe an inspector to look the other way, and do.

In any event, there is no way inspectors can meaningfully monitor health safety in all restaurants.  They come in after the disaster.

Insurance companies can and would protect us if allowed to, if we had a free market in insurance.

If there was a free market in insurance, it would look as radically different as telecommunications looks today from pre-deregulation telecommunications in 1980.

Street vendors would buy a badge from insurance companies who covered their risk to the street vendors customers.  You’d prefer to buy from Jose, and pay 2 cents more per tamale, because he is insured by State Farm.  State Farm sets standards as condition of insurance for Jose to follow. The standards State Farm develps lowers risk faster than premiums go down, thus State Farm makes money by making the world ever safer. You eat assured your food is healthy or State Farm pays.  We need no government inspectors, Jose can self-police knowing his good work will gain him reputation and longevity.

It is good government is accelerating in its self-destruction, what with wars, covering Wall Street lawlessness, TSA and EBT cards.  We need not resist government, it is bringing itself down.

We just need to make sure that we are prepared for the United States government to fall, and the state and local governemnts as well, so we can pick up and bring spontaneous order of anarchy out of the chaos.  I hope we can have a bloodless revolution, like they do in comminist countries, such a China and Russia.  We’ll see.


Saturday, January 8, 2011

More On Free Market Insurance

We have such a hole in our understanding of how insurance once worked, and would work, in an economy, if it were allowed to do so.


First off, insurance has to be voluntary, this is absolutely key.  No one must ever be required to buy insurance by any government.  Now, someone financing the construction of a building may require insurance as a condition of financing, but that is different, merely conditions of a contract which one may freely enter or reject.  Not only is it a bad idea, mandatory insurance violates our constitutional freedom of association and freedom to assemble.


Now let's look at insurance as it once was: arbitraging present cost of risk against future cost of risk in a dynamic milieu in which innovation constantly lowers the cost of risk.  In so doing, the cost of innovation drops.  As cost of innovation drops, the expansion of goods and services, by division of labor widens, ever expanding true wealth.

Let me unpack that:  in say 1720 two of ten ships that left Plymouth for the Orient never returned, so there was a 20% loss to insure against.  So a premium of 25% would be profitable (a loss of 20% with a profit of 5% means the insurers made 25% on their money).  Insurance companies then began offering better rates of say 22% if the sailing ships employed better design, scientific navigation practices, plus new weather and route knowledge, and finally better results through humane crew management.  by 1750, one in ten ships were being lost, the improvement due to he insurance company demanded changes.  So a 22% premium was cheaper for the owners of the ships, yet the insurance compaines made even more on their money! (10 point loss left 12 point profit, now making 120%, not 25%)  Of course competition forced insurance rates down,  costs dropped faster than premiums.

As cost of risks dropped, more people went into trade, we began seeing more and better products at cheaper prices, so more could have access to material goods.  Insurance is critical to this process, at least free market insurance.  Now apply that to every industry, not just shipping.

Today insurance is about pricing static amortization rates.  Instead of tracing AIDS back to its source, insurance today merely resists covering gays until government relents and allows added cost of risky behaviour to insurance premiums.  In a free market, insurance would have traced the cause of AIDS to its source, and then competed to get cures and malaise management costs as low as possible....

Bring back free market insurance.



Tuesday, January 4, 2011

Set The Insurance People Free!

A wonderful development in the history of free markets is insurance.  By pooling risks, we can advance division of labor because loss is lessened individually when loss is shared communitarily.  When insurance was voluntary we had tremendous innovation and wealth expansion.

There is nothing in the left liberal progressive agenda, or in the right wing conservative agenda, in which government is the answer, that is not better handled at a lower price than by insurance.  Food safety is a matter of  standards set by insurance companies that have to pay out if someone dies.  Construction integrity, safety and efficiency is a matter of insurance companies deciding what they will or will not cover. Police and fire protection is better and cheaper when insurance companies provide it to arbitrage risk and make money on loss dropping faster than premiums.

The welfare and war-mongers work from the premise that being a government worker metamorphizes a person into a saint, and well worth the money.  Sadly this is not true.

Let's get back to housing for a second.  When my house was worth 1.7 million, the insurance company would only insure it for $850,000.  How come?  Because that is all it was worth.    The insurance companies, with their massive financial resources, are well aware of boom and bust cycles.  And being born in international trade, ocean shipping, the insurance industry has always refused to insurance anything more that it is worth, for the simple reason, over-insured property (or over-valued) is a moral hazard, begging for fraud.

Now, to advance the war-and-welfare mongers progressive agenda, insurance had to be hamstrung to be an ineffective provider, the government had to take a monopoly on insurance.  So far they have monopolized flood insurance, workmans' comp, social security and countless other plans.  Anything else in insurance is so highly regulated as to be ineffective, and a cause of antipathy misdirected from the insured to the captive insurers.

Now the evil money lenders have a problem.  Yes they bought and paid for the USA government, but the insurance companies, expert at statistics, have proved they were burned by the banks.  You and I have neither the skill nor money to establish this.  The insurance industry does.  The insurance industry also has massive amounts of money it invests in many industries, where the money is parked in case of disasters they need to cover with insurance.  They too can buy congressmen and presidents.

The banking industry, the insurance industry has proven,  burned the insurance industry (as well as everyone else, but we cannot prove it.)  The losses are big, and the insurance industry is big enough to fight back.    This federal fight will get interesting.  If the insurance industry allies with Ron Paul to bring the banks to justice, then insurers will be America's saviours.

A reward for taking on big banks, and defeating the evil cartels, might be to re-establish a free market in insurance, a big step in re-establishing freedom in USA.