GAO Suggests Limiting Internet Access (for Market's sake) During Pandemic Crisis.

GAO Report in PDF format

If they shut down the tubes, wing-nuts will scream that the New World Order is about to be imposed.

Or if you are on the Naomi Wolf side of “Shock and Awe”, then they are protecting the market (connected, rich, powerful) from close scrutiny in order to finish the pillaging.

Or if you are on what ever side is suggesting that it’s all to the benefit of the rich and to the detriment of the poor, I’d have to say that’s probably closest to what I think, whether there is malign intention or not.

How incentives affect sick days

Casey B. Mulligan writes:

A study by the International Monetary Fund showed that American workers were less frequently absent from work for sickness than was the average European (during the years studied, 1995-2003). As shown in the chart below, workers in the Netherlands, Sweden and Norway stayed home sick about twice as much as American workers did.

Economists have been aware of these differences for a while now, and have understood them to be the result of incentives. Quite simply, the financial penalty for work absence in the Netherlands, Sweden and Norway was quite small (as compared with other European countries and the United States), and the labor market responded by keeping workers home “sick” more often.

In Norway, for example, the social insurance system may have to pay a sick worker’s entire salary for the duration of a worker’s sickness, and require the employer to provide still further benefits. Under such a system, sick people are less likely to go to work when sick — but healthy people are also more likely to stay home claiming they are sick.

Indeed, a 2004 paper by the Stockholm School of Economics professor Skogman Thoursie found that the Swedish incentives were so strong that a large number of Swedish men reported sick merely to watch sporting events on television.

Thus, none of the studies have concluded that the Dutch, Swedes or Norwegians are sicker than we are. Regardless of whether you think these countries’ sick leave systems are on balance desirable because they allow sick workers to stay home, or counterproductive because they induce healthy workers to feign sickness, the literature concludes that financial incentives are affecting the size of the work force.

GDP Growing Again: Are We Finally Okay? Don't Bet on it.

29 Oct 2009 03:44 pm Megan McArdle

So GDP grew at 3.5% in the third quarter?  Are we out of the woods yet?

Maybe.  But I wouldn’t bet on it.

I think we have bottomed out; I don’t foresee the economy starting to contract sharply again.  But I’m not overimpressed by the growth figures, for a couple of reasons.  First, we had a very sharp contraction, and as the traders like to say, even a dead cat will bounce if you drop it from a sufficiently large height.  Second, there’s the stimulus.

When we were considering the stimulus, I got asked frequently whether it would work.  That very much depends on what you mean by “work”.  If the question is:  “can I increase the size of a measured variable by boosting one of the components of that variable,” then the answer is undoubtedly “yes”–but this is trivial.  We borrowed a bunch of money from abroad, and that was going to show up as an increase in GDP.  But as I wrote in our November issue, GDP is at best a proxy for our well-being, not a direct measure of it.  It’s often a good proxy.  But it’s never perfect, and it’s very easy to manipulate with certain sorts of government actions, most notably borrowing a ton of money from the global capital markets.

The things I think we really want to know about the economy are:

1)  Is it robust enough to withstand the large sectoral shifts away from housing and related goods?

2)  Are employment and compensation growing?

3)  Is productive capacity improving?

4)  Are people willing to invest in the future?

The answers to those questions range from “no” to a wan “I sure hope so”.  So the third quarter growth numbers bring me only middling cheer.

'The whole economy is a pyramid scheme'

That was a quote I picked up from the recently-posted trailer for a documentary called Collapse, which features the ideas of Michael Ruppert, an independent journalist who predicted the current financial crisis in his newsletter From the Wilderness. The movie opens in theaters Nov. 6, 2009.

From the trailer I picked up an interesting quote from Ruppert in the movie:

It’s not that Bernie Maddof was a pyramid scheme. The whole economy is a pyramid scheme.

The mortal blow to human industrialized civilization will happen when oil prices spike and nobody can afford to buy that oil, and everything will just shut down.

Watch the trailer here:

AB — 28 Oct. 2009

Ford Says Geely of China Is Preferred Bidder for Volvo

The Ford Motor Company said Wednesday that it had chosen a consortium led by the Chinese automaker, the Zhejiang Geely Group Holding, as its preferred bidder for Volvo.

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Although no final decisions had been made, Ford said that it would concentrate on Geely in its negotiations. Ford acquired Volvo for $6.45 billion in 1999.

“Ford’s objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties,” Ford’s chief financial officer, Lewis W.K. Booth, said in a statement.

“But there is much work that needs to be completed in the more substantive discussions that are agreed to take place,” Mr. Booth said. “We have no specific timeline to conclude the discussions.”

Ford said a year ago that it would sell Volvo so that it could focus on three main brands: Ford, Lincoln and Mercury.

Ford Says Geely of China Is Preferred Bidder for Volvo

On the Margin

Here’s an excellent podcast from Russ Roberts of EconTalk:  Munger on Shortages, Prices and Competition.

Listen to it.   This covers a gamut of topics:   Vaccines, minimum wage, organ donation, airline deregulation.  Roberts and Munger do a great job of explaining factors other than price that we use to allocate our resources on the margin everyday and don’t realize it.

For example:  FREE VACCINE!!! Great. We’ll all get it.  Right?  Nope.  Why not?  It’s still not worth it to many because there are “costs” involved.  Time waiting in line, getting there, having a chance to catch the illness while waiting in line to name a few.

I’m listening to the podcast for the second time as I write this.

10/24: New at the library this week

Movies:

Babylon A.D.

(all movies are on dvd unless otherwise noted)

Books:

The lost symbol / Dan Brown
As the story opens, Harvard symbologist Robert Langdon is summoned unexpectedly to deliver an evening lecture in the U.S. Capitol Building. Within minutes of his arrival, however, the night takes a bizarre turn. A disturbing object — artfully encoded with five symbols — is discovered in the Capitol Building. Langdon recognizes the object as an ancient invitation… one meant to usher its recipient into a long-lost world of esoteric wisdom.

When Langdon’s beloved mentor, Peter Solomon — a prominent Mason and philanthropist — is brutally kidnapped, Langdon realizes his only hope of saving Peter is to accept this mystical invitation and follow wherever it leads him. Langdon is instantly plunged into a clandestine world of Masonic secrets, hidden history, and never-before-seen locations — all of which seem to be dragging him toward a single, inconceivable truth. (read an exerpt)

The good soldiers / David Finkel
It was the last-chance moment of the war. In January 2007, President George W. Bush announced a new strategy for Iraq. He called it the surge. “Many listening tonight will ask why this effort will succeed when previous operations to secure Baghdad did not. Well, here are the differences,” he told a skeptical nation. Among those listening were the young, optimistic army infantry soldiers of the 2-16, the battalion nicknamed the Rangers. About to head to a vicious area of Baghdad, they decided the difference would be them.

Fifteen months later, the soldiers returned home forever changed. Pulitzer Prize-winning Washington Post reporter David Finkel was with them in Bagdad, and almost every grueling step of the way.

What was the true story of the surge? And was it really a success? Those are the questions he grapples with in his remarkable report from the front lines.

Highest duty : my search for what really matters / Chesley Sullenberger
Capt. Chesley “Sully” Sullenberger became one of the most recognized men in America when he landed US Airways Flight 1549 on the Hudson River in January of 2009, narrowing averting disaster. Now, in this gripping memoir, the pilot New York City Mayor Michael Bloomberg dubbed “Captain Cool” recounts not just the details of that harrowing five minute and eight second flight, but also the lifetime of flight training leading up to it, and the intriguing aftermath of the incident. (read an exerpt)

Masterpiece / Elise Broach
Can a young boy and a beetle pull off a staged art heist at the Metropolitan Museum of Art? (Age Range: 8 to 12; read an exerpt)

Morningside Heights / Cheryl Mendelson
Anne and Charles Braithwaite have spent their entire married life in a sedate old apartment building in Morningside Heights, a northern Manhattan neighborhood filled with intellectual, artistic souls like themselves, who thrive on the area’s abundant parks, cultural offferings, and reasonably priced real estate. The Braithwaites, musicians with several young children, are at the core of a circle of friends who make their living as writers, psychiatrists, and professors. But as the novel opens, their comfortable life is being threatened as a buoyant economy sends newly rich Wall Street types scurrying northward in search of good investments and more space. At the same time, the Braithwaites weather the difficult love lives of their friends, and all of the characters confront their fears that the institutions and social values that have until now provided them with meaning and stability—science, religion, the arts—are in increasing decline. Though the group clings to the rituals and promises of such institutions, the Braithwaites’ imminent departure sends shock waves through their community. As the family contemplates the impossible—a move to the suburbs—their predicament represents the end of a cultured kind of city life that middle-class families can no longer afford. (read a sample chapter)

Born on a blue day : inside the extraordinary mind of an autistic savant : a memoir / Daniel Tammet
Born on a Blue Day is a triumphant and uplifting story, starting from early childhood, when Daniel was incapable of making friends and prone to tantrums, to young adulthood, when he learned how to control himself and to live independently, fell in love, experienced a religious conversion to Christianity, and most recently, emerged as a celebrity. The world’s leading neuroscientists have been studying Daniel’s ability to solve complicated math problems in one fell swoop by seeing shapes rather than making step-by-step calculations. Here he explains how he does it, and how he is able to learn new languages so quickly, simply by absorbing their patterns. Fascinating and inspiring, Born on a Blue Day explores what it’s like to be special and gives us an insight into what makes us all human — our minds. (read an exerpt)

The murder of Lehman Brothers : an insider’s look at the global meltdown / Joseph Tibman
The Murder of Lehman Brothers sheds light on the perfect, complex storm that led to Lehman’s collapse and the ensuing global consequences. It includes a brief history of Lehman, highlighting certain notable events, including a previous near collapse, the rise of Richard Fuld and the one-firm culture, the repeated mistakes made by providers of credit, inventing new financings—rationalizing that while profitable, these risky endeavors are actually not risky, more specifically subprime mortgages and Lehman’s role, as well as an internal battle over Lehman’s embrace of a massive real estate book, the emergence of Lehman as a top tier firm, the unraveling that began with the subprime meltdown, and gained vigor with the fall of Bear, and the consequences of Lehman’s fall.

Strega Nona’s harvest / Tomie dePaola
In this humorous tale, Strega Nona attempts to teach Big Anthony about gardening and the importance of order. But when Big Anthony does not follow her directions and tries to use her growing spell, his small vegetable patch turns into an unruly jungle! What will they do with all the extra vegetables? (Age Range: For infants or children in preschool)

Skippyjon Jones : Lost in spice / Judy Schachner
Buckle up, amigos— everyone’s favorite kitty boy is about to lift off. You’ll want to be there when the brave Skippito gets lost in spice!

That’s right, spice. Skippy knows— from his big ears to his toes—that the planet Mars is red because it’s covered in spicy red pepper. To prove it, he’s off on a space jaunt replete with craters, crazies, and creatures from Mars. His new adventure is packed with witty wordplay, Spanish phrases, and Judy Schachner’s trademark hilarity. This rollicking romp is simply out of this world. (Age Range: For infants or children in preschool)

Listen to the wind : The story of Dr. Greg & “Three cups of tea” / Greg Mortenson
Greg Mortenson stumbled, lost and delirious, into a remote Himalayan village after a failed climb up K2. The villagers saved his life, and he vowed to return and build them a school. The remarkable story of his promise kept is now perfect for reading aloud. Told in the voice of Korphe’s children, this story illuminates the humanity and culture of a relevant and distant part of the world in gorgeous collage, while sharing a riveting example of how one person can change thousands of lives. (Age Range: For infants or children in preschool)

Miss Smith and the haunted library / Michael Garland
When Miss Smith reads from her magical book, the worlds she describes come alive—literally! Today Miss Smith is taking her class on a field trip to a deliciously spooky library. There the class meets librarian Virginia Creeper and settles down to listen to a few scary tales. Before long everyone’s favorite creepy characters are stalking the library and a haunted party is in full swing. So . . . who’s for taking a ride with the Headless Horseman? (Age Range: 4 to

Me with you / Kristy Dempsey
From tea time to game time, singing or swinging, in the good times and even the grumpy ones, a granddaughter knows her grandpa is always wonderfully himself, and she is wonderfully herself, and together they are unbeatable! A pair beyond compare, a rare and special two! (Age Range: For infants or children in preschool)

All of baby : Nose to toes / Victoria Adler
From eyes to ears, tummy to nose, legs to toes, there’s a lot for baby to discover—and even more for a family to love. Bright, buoyant art and a roly-poly little baby are sure to inspire plenty of giggling and grabbing and feet-in-the-air-ing. For every baby—and every parent who loves that baby to bits—here’s the perfect first book. (Age Range: For infants or children in preschool)

The runaway pumpkin / Kevin Lewis
When Buck, Billy, and their little sister Lil spy the biggest pumpkin they’ve ever seen, they can’t resist. Buck and Billy try to roll the pumpkin down the hill to show everyone, but it’s too big! Before they know it, it’s bumping and thumping and rolling out of control down the hillside. It busts through Momma Baxter’s sty and makes her think of pumpkin pie. It knocks over Grandpa Baxter and makes him think of pumpkin soup. And when Poppa Baxter finally stops it in a pumpkin bed, all he can think of is pumpkin bread. (Age Range: 5 to 7)

[Note: All synopses are provided by the publisher unless otherwise stated and do not constitute reviews by the Seldovia Public Library.]

Khazanah : Menengok Revolusi Pertanian

REPUBLIKA, Jumat, 23 Oktober 2009 pukul 01:49:00 Revolusi Pertanian

Negeri-negeri Islam berkembang pesat dan memiliki masyarakat makmur dari hasil pertanian.

Lahan pertanian telah lama menjadi karib umat Islam. Dalam konteks ini, umat Islam tak sekadar mengolah lahan. Namun, mereka juga mengenalkan sistem dan cara pengolahan lahan pertanian secara lebih modern. Termasuk, cara tanam dan penggunaan irigasi.

Bahkan, pada awal abad ke-9, sistem pertanian modern menjadi pusat kehidupan ekonomi dan organisasi di negeri-negeri Muslim. Pertanian di Timur Dekat, Afrika Utara, dan Spanyol, didukung sistem pertanian yang maju.

Sebab, praktik pertanian di sana telah menggunakan irigasi yang baik dan pengetahuan yang sangat memadai. Fakta ini menunjukkan bahwa metode pertanian yang dipraktikkan merupakan metode paling maju di dunia.

Umat Islam memiliki kuda-kuda terbaik, ternak domba, dan kemampuan membudidayakan kebun buah-buahan dan sayuran. Mereka tahu bagaimana cara membasmi serangga dan menggunakan pupuk dengan dosis yang tepat.

Selain itu, mereka juga telah memiliki kecakapan dalam mencangkok pohon dan tanaman untuk menghasilkan varietas baru. Tak heran jika kemudian lahir varietas tanaman yang unggul dan menambahkan keragaman tanaman yang ada.

Sejumlah jenis tanaman yang sebelumnya tak dikenal, juga diperkenalkan oleh umat Islam. Pohon jeruk, misalnya, dibawa umat Islam dari India ke Arab sebelum abad ke-10. Pohon ini kemudian diperkenalkan ke wilayah lainnya.

Pada akhirnya, pohon jeruk ini juga dikenal di Suriah, Asia Kecil, Palestina, Mesir, dan Spanyol. Berawal dari Spanyol, lalu pohon jeruk tersebut menyebar ke seluruh wilayah yang ada di Eropa Selatan.

Budidaya tebu dan pemurnian gula juga disebarkan oleh orang-orang Arab Muslim dari India melalui Timur Dekat, kemudian dibawa tentara Salib ke negara-negara Eropa. Kapas pertama kali dibudidayakan di Eropa oleh bangsa Arab.

Pencapaian umat Muslim dalam bidang pertanian mampu pula diwujudkan di tanah Arab, yang sebagian besar merupakan lahan kering. Ini terwujud dengan menggunakan sistem irigasi yang terorganisasi dengan baik.

Khalifah sebagai pemimpin pemerintahan, membiayai pemeliharaan kanal-kanal besar demi kepentingan pertanian. Sungai Efrat dialirkan ke Mesopotamia, sedangkan air dari Tigris dialirkan ke Persia.

Tak hanya itu, pemerintahan Islam juga membangun sebuah kanal besar yang menghubungkan dua sungai di Baghdad. Kekhalifahan Abbasiyah merupakan dinasti yang memelopori pengeringan rawa-rawa agar digunakan untuk pertanian.

Saat memerintah, mereka pun merehabilitasi desa-desa yang hancur dan memperbaiki ladang yang mengering. Pada abad ke-10, di bawah kepemimpinan pangeran-pangeran Samanid, daerah antara Bukhara dan Samarkand, Uzbekistan berkembang pesat.

Tak heran jika kemudian, daerah tersebut ditetapkan sebagai salah satu dari empat surga dunia. Tiga wilayah lainnya adalah Persia Selatan, Irak Selatan, dan kawasan yang ada di sekitar Damaskus, Suriah.

Berdasarkan catatan sejarah dan komentar para ilmuwan termasuk dari Barat, sistem pertanian pada era Spanyol Muslim merupakan sistem pertanian yang paling kompleks dan paling ilmiah, yang pernah disusun oleh kecerdikan manusia.

Hal ini terjadi karena kaum Muslim memperkenalkan banyak perubahan. Salah satu bukti, pada masa itu seluruh Eropa hancur di bawah perbudakan, namun tanah di bawah kekuasaan Islam mengalami kemajuan pesat di bidang pertanian.

Salah seorang cendekiawan berkebangsaan Inggris, Joseph McCabe, mengungkapkan, di bawah kendali Muslim Arab, perkebunan di Andalusia jarang dikerjakan oleh budak. Tapi, perkebunan dikerjakan oleh para petani sendiri.

Di sepanjang Sungai Guadalquivir, juga terdapat 12 ribu desa yang berkecukupan, bahkan makmur. Revolusi pertanian Islam telah diawali pada abad ke-7. Negeri-negeri Islam berkembang pesat dan memiliki masyarakat makmur dari hasil pertanian.

Para ahli geografi awal mengungkapkan, terdapat 360 desa di Fayyum, sebuah provinsi di selatan Kairo, Mesir, yang masing-masing dapat menyediakan kebutuhan makanan bagi penduduk seluruh Mesir setiap hari.

Di sisi lain, terdapat 12 ribu desa di sepanjang Guadalquivir, Spanyol, yang memiliki lahan pertanian subur. Ada pula 200 desa di sepanjang Sungai Tigris, Irak, yang pertaniannya juga maju.

Bukti lain, yang menunjukkan kemajuan umat Islam di bidang pertanian, yakni adanya sebuah sensus yang dilakukan pada abad ke-8 di Mesir. Dalam sensus itu, dari 10 ribu desa di Mesir, tak ada desa yang memiliki bajak kurang dari 500 unit.

Wilayah-wilayah yang kemudian berada di bawah kekuasaan pemerintah Islam, juga mengalami perubahan ke arah kemajuan yang drastis. Banyak wilayah yang sebelumnya tak maju, namun di bawah pemerintah Islam, kemajuan kemudian terwujud.

Pada masa pra-Islam, Mediteranian kuno pada umumnya hanya bisa memanen tanaman saat musim dingin. Itu pun, satu bidang lahan hanya mampu menghasilkan satu jenis tanaman setiap tahunnya.

Namun, datangnya Islam ke sana membuat segalanya berubah. Sebab, Muslim yang datang ke wilayah itu memperkenalkan berbagai macam tanaman baru. Dengan demikian, garapan pertanian pun kian beragam.

Seorang ahli agronomi Andalusia, seperti Al-Tignarî yang berasal dari Granada, membuat referensi tentang tanaman-tanaman yang memberikan kontribusi besar bagi peningkatan pertanian yang cukup signifikan.

Salah seorang orientalis dari Prancis, Baron Carra de Vaux, bahkan menyebutkan, sejumlah tumbuhan dan hewan yang berasal dari Timur dibawa ke Spanyol oleh umat Islam. Tumbuhan dan hewan itu, kata dia, digunakan untuk beragam kebutuhan.

Jadi, tak hanya untuk keperluan pertanian maupun peternakan, tapi tumbuhan dan hewan itu digunakan juga untuk keperluan pengembangan perkebunan, status kemewahan, perdagangan, dan seni.

De Vaux membuat sebuah daftar. Tumbuhan dan hewan itu adalah tulip, bakung, narcissi, lili, melati, mawar, persik, plum, domba, kambing, kucing Anggora, ayam Persia, sutra, dan katun.
Salah satu tanaman penting yang diperkenalkan oleh umat Islam di Spanyol adalah tebu. Sedangkan kapas, mulai dibudidayakan di Andalusia pada akhir abad ke-11. Andalusia kemudian mampu berswasembada kapas.

Bahkan kemudian, para petani di Andalusia mampu mengekspor kapas hingga ke luar negeri. Di sisi lain, pengenalan tanaman baru kelak melahirkan sistem pertanian yang kompleks. Termasuk, pembangunan irigasi. Semula sebidang lahan hanya menghasilkan sekali panen satu macam tanaman per tahun. Namun, dengan makin beragamnya tanaman dan adanya irigasi, petani mampu panen tiga atau lebih tanaman per tahun.

Dengan produksi pertanian yang semacam ini, penduduk kosmopolitan di kota-kota Islam, termasuk yang ada di Spanyol, mampu memenuhi kotanya dengan beragam produk buah dan sayuran yang sebelumnya tak dikenal di Eropa.

Paling tidak, ada beberapa faktor penyebab revolusi pertanian Islam yang akhirnya sampai ke Spanyol. Yaitu, pengenalan tanaman baru oleh umat Islam, penggunaan irigasi yang intensif, dan penggunaan serta pengolahan tanah yang lebih baik.

Selain itu, faktor lain yang juga sangat menentukan adalah banyaknya karya ilmiah, yang memperkenalkan inovasi pertanian dan ilmu pengetahuan tentang pertanian. n dyah ratna meta novia

Mereka yang Berjasa

Kemajuan pertanian di wilayah Islam, termasuk di Spanyol, tentu tak lepas dari kontribusi ahli pertanian Muslim. Mereka menyumbangkan pemikiran-pemikirannya dalam buku-buku tentang pertanian. Karya mereka menjadi panduan dalam pengembangan pertanian kala itu.

Abu’l Khair, seorang ahli pertanian di Spanyol pada abad ke-12, misalnya, menulis Kitab Al-Filaha yang berisi tentang hal ihwal pertanian. Dalam kitabnya itu, ia menuliskan empat cara untuk menampung air hujan dan membuat perairan buatan.

Khair menegaskan perlunya penggunaan air hujan untuk membantu proses reproduksi pohon zaitun dengan cara stek. Ia juga menguraikan tentang proses pembuatan gula yang sebelumnya telah diungkapkan ilmuwan lainnya, Ibn Al-Awwam.

Proses pembuatan gula diawali dengan memanen tanaman tebu yang telah dewasa. Lalu, tebu-tebu tersebut dipotong menjadi potongan-potongan kecil yang kemudian dihancurkan dengan cara dimasukkan ke dalam alat penekan.

Setelah itu, ekstrak tebu direbus dalam jangka waktu tertentu lalu hasilnya disaring. Hasil saringan ekstrak tebu itu dimasak lagi sampai tinggal seperempat bagian dari jumlah semula. Kemudian, ekstrak tebu yang terakhir ini dituangkan ke dalam cetakan tanah liat.

Ekstrak tebu yang dimasukkan ke dalam cetakan-cetakan berbentuk khusus itu, disimpan di tempat teduh hingga mengeras atau mengkristal. Langkah selanjutnya, gula dikeluarkan dari cetakan dan dikeringkan di tempat yang teduh.

Gula tersebut digunakan untuk pemanis minuman maupun sebagai bahan campuran membuat makanan atau kue-kue yang sangat lezat. Di sisi lain, sisi tanaman tebu tak dibuang sia-sia. Namun, dijadikan makanan kuda, sebagai sumber kekuatan dan energi.

Ada pula ahli pertanian dari Damaskus Suriah, Riyad al-Din al-Ghazzi al-Amiri (935/1529). Dia menulis sebuah buku tentang pertanian yang perinci. Secara umum, para penulis Arab kuno menuliskan tentang pertanian dalam berbagai subjek.

Di antaranya, soal jenis lahan pertanian dan pilihan tanah, pupuk kandang dan pupuk lain, alat pertanian dan karya budidaya, sumur, mata air, saluran irigasi, tanaman, pembibitan, penanaman, pemangkasan, dan pencangkokan buah.

Mereka juga membahas soal budidaya serealia, kacang-kacangan, sayuran, bunga, umbi-umbian, dan tanaman untuk parfum. Pun, tentang tumbuhan dan hewan beracun serta pengawetan buah.  dya

Treat Microsoft Different

I was reading The Register as I do from time to time and was struck by the nature of comments concerning the European commissions battle to redress some balance to Microsoft’s illegal monopoly abuse with regards to internet browsers.

to give you some background: The EU convicted Microsoft of abusing it’s Operating Systems monopoly in order to gain a web browser monopoly.

The proposed solution from Microsoft was originally to not include any browser at all, effectively hobble the operating system in the EU in order to blackmail the EUC into a simple fine. It’s called playing hard ball. Unfortunately for Microsoft the EUC have decided to play hard ball back to them, deciding that that option wasn’t good enough.

Enter idea number two. To present all users of windows (XP, Vista and 7) who have Internet Explorer as their default browser, with a ballot screen. Effectively asking every user what internet browser they would like. The EUC are considering this idea, although Opera objects on grounds of I can’t quite tell.

OK back to the comments from the article above. There are a number of commentators who are of the opinion that it’s Microsoft’s business as to what to include and what not to include in their operating system, and that if we do not apply the same restrictions to the FreeDesktops like Ubuntu and Apple’s Mac OSX then it wouldn’t be fair.

Since the EU isn’t calling for a ballot screen in Ubuntu, the EUC must be trying to do something improper. Since it’s obviously not very good for a Free Market to have a commission simply making stuff up as it goes along in order to disadvantage one competitor in a market place.

This is a quote from the noted Economist Adam Smith:

The price of monopoly is upon every occasion the highest which can be got. – The Wealth of Nations, Book I, Chapter VII

The problem with Microsoft is that they are a monopoly. This is an economic term for a business who controls the market through being it’s only supplier. This means that the invisible hand of the free market is in chains, so long as there is only one to which all the control is focused.

What regulators attempt to do is redress some of the balances by supporting the competition (financial or regulatory) and/or creating anti competition laws which restrict some of the actions that a company can take in order to use their existing monopoly in order to gain a new one.

For instance, say there was only a single petrol/gas company who sold fuel. Now lets say that the company decided to get into the Hackney Carriage business (taxies). because of their monopoly status, regulators would be (or should be) keeping a keen eye on what they do in order to break into this market and what they do in order to restrict competition. If it’s seen that this petrol company is using it’s unfair advantage as a monopoly, the regulator has the power to step in and split the monopoly up into a taxi business and fuel business and making sure they stay separated in operation.

Let’s say a single company (Microsoft) manages to get a monopoly of the computer operating systems on desktop computers, through the bad handling of another monopoly owned by a different company (IBM). At first everything is going fantastic, but then they miss the boat on a new technology and a new industry called “The Internet” and they’re finding that lots of people are using web browsers such as Mosaic/Netscape to get content via the internet.

Now suppose this company invents it’s own browser, they bundle this browser into their operating system for which they have a monopoly and they do not charge for it. Suddenly all the browser software makers have to compete with a product which is not only free (undercutting their business economics) but is also delivered to every single desktop users who is forced to buy the one single operating system that is only allowed to be made available on desktop computers.

Using their economic strength and their distribution monopoly Microsoft have killed off effective competition on a number of desktop computer fields: Web Browsers, Media Players, Word Processors, Networking Services and even Spreadsheets have all fallen to Microsoft and the companies that developed those ideas and software industries have been swept into the dusts of time.

Web Browsers was a particular worry, since as soon as Internet Explorer had destroyed the market for Netscape. The very standards of the World Wide Web as set up by the W3C began to erode. Everyone doing web development felt it, you developed for IE because it was what everyone had, no one cared that it didn’t follow the standards and it didn’t take long for a great number of websites to be completely incompatible with any other web browser.

So, what have I learned about monopolies? Well firstly they are economically damaging, they serve only to remove fair prices from the market and to stagnate the development of ideas. They are the very opposite of a free market economy and should not be allowed to occur, either through regulation or support for competition.

But what about now? Apple and Free Software is giving Microsoft a run for it’s money isn’t it? Well lets see, Apple is a hardware company not a software company. They produce hardware with it’s own software, so are not really in the same market as Microsoft. In the enterprise there are some competitors, and the server market was never Microsoft’s completely. As for Free Software on the desktop computer, it’s not a business, it’s a commons system. It’s not a competitor because it would be like Goliath vs the moon, it doesn’t even make sense. One is a force of economic and collaborative community licensing and the other is an business (even if it is an economic monster), Microsoft’s failed attempts to battle Free Software development actually look very similar to that image of a giant trying to battle the moon in my mind.

I believe that the EUCs goal of regulating Microsoft is right and proper and that the commentators on those articles are simply misinformed about the nature of the beast. Economic freedom and fairness are all well and good so long as everyone is on an even playing field, but good government comes from knowing how to achieve that balance and not loose it to unfortunate history.

As a side note, I would love for the competition commission to award a great deal of money to Free Software development as a way of spuring on competition.

Virgin on the Ridiculous - and All Tied Up

Richard Branson had an entertaining comment piece in the FT today. He was complaining about Sky’s dominance of the premium pay TV channels – predominantly sports and movies. Quite right too, the UK TV market is a big mess. Both the BBC and Sky stifle competition.

One point Branson made tickled me. If the market were functioning better, he claimed:

“Those who do not wish to commit to a 12-month subscription but are willing to pay for some TV channels will be more readily able to do so.”

Readers will remember that one of my whinges about Virgin Media was that they locked me into a 12-month contract. I presume Branson won’t mind if Virgin Media as well as Sky have their wings clipped in this regard.

But what really had me rolling around on the floor was the Bearded One’s description of Ofcom’s proposal, which, naturally, he wholeheartedly supports:

“Ofcom has proposed … making Sky sell its premium channels to other operators at a fair, wholesale price. This would be an excellent result for consumers because it will enable each pay-TV operator to com­pete based on its different strengths. Services will be developed that appeal more closely to the preferences of different customers. For instance, those who do not want, or cannot have, a satellite dish will not need one. … New market segments and more innovative and compelling consumer offers will appear. And they will cost less. Under Ofcom’s proposals, some operators could plan to retail Sky Sports 1 at a price more than 20 per cent below the lowest price that channel can currently be bought from Sky.” [my emphasis]

Absolutely hilarious.

Basically I support this vision – but this isn’t the way to go about changing the industry.

The point is that if Ofcom do this (and how they dream up the wholesale price is beyond me), then it makes no sense whatsoever for Sky to remain as both a service-provider and a channel-provider.

Separating these functions (for all broadcasters, BBC take note) – i.e. splitting Sky up into a service-provider and a separate channel/content-provider – should be the starting point of regulation, not a consequence of it. Breaking down vertical integration in this way is a central pillar of “managed markets”, part of my new political-economic philosophy of “constrained capitalism”.

The central argument is that if I can choose the technology that delivers my TV service and the channels I purchase as entirely separate steps, as Branson describes, then I have 2 dimensions of choice, not one.

There are numerous markets where our dimensions of choice are limited by dominant suppliers. Supermarkets is one. I gather from the hits on my rant complaining about the Cambridge Sainsbury’s misguided promotions and on my wide-ranging discussion of attempts to reduce competition by blocking Tesco in Mill Road and of self-checkout tills in supermarkets, that supermarkets are what the world wants to read about. Back in March when I wrote those pieces I meant to add some further comments complaining about how the Cambridge Sainsbury’s in particular has been gradually replacing branded products with subtly inferior own-brand goods. In my opinion, the texture of Kelloggs’ Sultana Bran is somewhat more dissimilar to that of cardboard than is Sainsbury’s equivalent product. If Kelloggs’ product is good enough for Chris Hoy, then it’s good enough for me. Besides, the Kelloggs box fit in the space in my cupboard in Cambridge and the Sainsbury’s one did not. It was very inconvenient to have to make periodic trips to Asda to stock up on Kelloggs’ Sultana Bran when Cambridge Sainsbury’s decided to just stock their own brand.

The point is that when supermarkets used to stock only branded goods, you had two dimensions of choice: where to shop and what to buy when you got there. The supermarkets specialised in the business of retailing and their suppliers in making the best products.

But what the supermarkets have done over the years is reduce the choice to one: where to shop. Larger stores, the institution of the weekly shop by car and a battle to monopolise the best locations have made it very difficult for shoppers to choose different products at different stores.

Own-brand products are a way of capitalising on “owning” the customer. Why let suppliers have some of the profits? Even if an own-brand alternative is slightly inferior shoppers are unlikely to go to a rival just for one or two items. And after a while they may forget they preferred the brand. Of course, it may not be necessary for the supermarket to ditch the branded product anyway. The threat of introducing a generic alternative may be enough. It must, surely, allow the supermarket to improve the terms of supply and increase their profits.

In the news this week, though is the OFT’s ruling in favour of the status quo on tied pubs. Clearly the practice must increase the landlords’ profits, since, as the FT reports:

“The OFT ruling on beer ties, which obliges pub tenants to buy their beer supplies from their pub landlords at often above-market prices, boosted shares in Punch Taverns and Enterprise Inns by 14 and 23 per cent respectively.”

I doubt the stockmarket is mistaken: if the practice is good for the landlords it must be bad either for the tenant (i.e. the pub manager, referred to in common parlance as the “landlord” – don’t get confused) or the customer. Probably both.

It seems to me fairly obvious that restricting the degrees of choice by the customer must allow the landlord to improve profits. Not all customers are going to go elsewhere for a different pint of beer, though they may well buy something different if it were on offer in their local.

Different industries may have the same feature – an anti-competitive form of vertical integration – but there are peculiarities to each. In the pub business, the landlord is a monopoly supplier to the tenant. It is therefore beyond me how we can find a Simon Williams, “senior director of the OFT” saying, according to the FT, that:

“… it [is] not in the pub owners’ interests to overcharge landlords for their beer. ‘Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales. Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees.’ ”

No, no, no! This is mindblowingly dumb. 101 economics (again): a monopolist does not maximise profits by fully satisfying “demand”. A few seconds thought verifies the sheer mindblowing dumbness of the OFT’s assertion: by their logic the pub owners would reduce beer to a fraction above cost to sell as much as possible. No. The pub owner has an incentive to increase the price of beer until the additional profit is outweighed by the sales that are lost. As I said, many people choose their pub on criteria other than the beer stocked and its price, so the tied pub owner has much more scope to increase prices than an independent beer producer. If customers don’t like it they have to go out in the rain: they can’t simply choose a beer from a different pump.

The Guardian, I now see, also reports the OFT’s decision. As well as the quote above they report some more absurd statements from Simon Williams:

” ‘The interests of the pubco and lessee are aligned.’

This is a bizarre thing to say. In any supply-chain there is competition to capture the available profits. The interests of the pubco and the lessee cannot possibly “be aligned”.

Anyway, let’s go on:

“[Williams] pointed to pub industry closure statistics, suggesting they showed the greatest number of boarded-up sites across Britain’s ailing pub industry were free houses, not ‘tied’ premises.”

Ah, but there’s an explanation for this (well, several actually – the article notes that it is easier to replace a tenant landlord of a tied pub than a free-house landlord). My different point, though, is that, because the pubcos buy in bulk from a small number of brewers you’d expect them to be able to undercut free houses, except the big chains like Wetherspoons.* Damningly, though, Williams notes that:

“…the difference in bar prices between tied and non-tied pubs was very small — lager being about 8p, or 4%, dearer per pint in a tied house — suggesting competition was working well.

Astonishing.

And finally:

” ‘The market can deliver better than any state intervention,’ he said.”

My philosophy is that the state needs to intervene to manage markets. No-one’s talking about setting prices or anything. Yet another ridiculous statement from Simon Williams.

Until recently the state of British pubs was a long way from the top of my list of the world’s wrongs to be righted. But no sooner had I noticed that the legendary Tumbledown Dick is boarded up than I saw the Paper Moon in the same sad state.

We’re losing our history.

And a large part of the reason is because we apparently don’t properly understand competition.

—-
* Note: The buyer power of large organisations is a separate problem in the pub as well as supermarket and many other industries. I’ll discuss this another time.

A Christian Economic Worldview - Debt

No, it’s not Caleb, this is Landon Vick.  I’ve been teaching a class on Biblical Economics with Brad Bleasdale at Grace Pres in Cookeville, TN.  Here’s a summary of our most recent class.   

Debt is pervasive in our society.  Our Federal Government has a current debt in the neighborhood of 12,800,000,000,000 dollars, that’s trillions if you aren’t used to seeing it, I’m not.  This year our budget deficit is adding around 1,500,000,000,000 to that federal debt.  Not to be out done, household debt in the United States is approximately 13,800,000,000,000 (which included mortgages and consumer debt like credit cards), and the average family has a credit card balance of 8,000.  This isn’t necessarily new.  In his book Financing the American Dream: A Cultural History of Consumer Credit, Dr. Lendol Calder says, “There’s “a river of red ink” that runs throughout American history. In the 1880s, a middle-class family would owe money to the doctor, the banker, the butcher, the hardware store, several friends, family members, and that looks pretty much like today, the only difference being the way they get credit. But the sheer fact of debt and credit is the same.”  Indeed in the Scriptures we are warned of the dangers of debt, it’s not new.

So what exactly is debt.  Simply put, Debt is the result of consuming today the fruit of tomorrow’s labor.  Debt is living on borrowed time, money, and energy.  Debt is TV’s, cars, houses, furniture, vacations, college and in extreme cases debt is groceries, clothes, bills, insurance, and taxes.

Why is it so attractive and tempting?

We are impatient – Who likes to wait?  We like to think that we are an immediate gratification society, which we are, but I suspect that this need for quick gratification or food or clothing is not just a recent phenomenon.  When Paul encourages the church in Galatia to walk in the Spirit he says in chapter 5, “But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control; against such things there is no law.  And those who belong to Christ Jesus have crucified the flesh with its passions and desires.”  Debt is the answer to our impatience as opposed to discipline and self-control in the fulfillment of our passions and desires.

Debt is convenient – There is no shortage of ways to access credit.  Where convenience is often a blessing here it is much more so a curse.  The easy access to credit enables us to enter into all sorts of transactions with the hope of paying  for them tomorrow.  I always think of James in the chapter 4 when he writes, “Come now, you who say, “Today or tomorrow we will go into such and such a town and spend a year there and trade and make a profit” – yet you do not know what tomorrow will bring.  What is your life?  For you are a mist that appears for a little time and then vanishes.  Instead you out to say, “If the Lord will, we will live and do this or that.”  As it is, you boast in your arrogance.  All such boasting is evil.  So whoever knows the right thing to do and fails to do it, for him it is sin.”  We are like grass and we don’t know what tomorrow holds, debt is convenient, but it binds us and we may not be here to repay it.

Debt makes the impossible, possible, it masks reality – The idea of leverage is such that why put a particular amount of money at risk when I could borrow someone elses money and have a much smaller payment but secure the same asset.

Example – buy a $100,000 house with a $35,000 income or pay $7,500/year, most folks would take the $7,500/year, that’s leverage.

Most of the folks that find themselves in debt do it unknowingly in a sense.  What they see is a monthly payment.  When you seek financing at a car dealership you don’t talk rate and terms, you talk payment, this is dangerous.  The minimum credit card payment is nice but it only masks the true liability that a person possesses.  Debt masks reality.

We covet – We have discussed the consequences of the 10th commandment often in this study.   Coveting is so dangerous, and such a silent evil that we often justify with cute comment like, “oh you deserve this” or “oh treat yourself to this” or “oh just do it, you only live once.”  Debt is ammunition for a coveting heart, and when wrongly applied it only feeds our materialism.

What do the Scriptures say?

Over the years I’ve struggled personally, with the appropriateness of debt at different levels or debt at all.  If you search for a Christian perspective on debt you’ll get a wide spectrum of views.  Think about these passages. 

Exodus 22:25-27 If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.  If ever you take your neighbor’s cloak in pledge, you shall return it to him before the sun goes down, for that is his only covering, and it is his cloak for his body; in what else shall he sleep? And if he cries to me, I will hear, for I am compassionate.

Leviticus 25:35-38 If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you.  Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit. I am the LORD your God, who brought you out of the land of Egypt to give you the land of Canaan, and to be your God.

Ezekiel 22:12 In you they take bribes to shed blood;you take interest and profit and make gain of your neighbors by extortion; but me you have forgotten, declares the Lord GOD.

The thrust of these passages is not to universally forbid the charging of interest but to forbid the exploitation of someone in need, particularly a brother.  You can imagine in a largely agrarian and tribal culture that once money was borrowed, paying it back had to be very difficult since there was such a lack of surplus wealth or opportunity to generate income.  Additionally, the lending was done by a select few rich to the many poor.  You can imagine that fair dealling was likely hard to come by since there weren’t any Fair Credit reporting laws or Community Reinvestment Acts.  Taking advantage of folks had to be easy.  These commands are encouraging love and compassion more then they are forbidding the charge of interest. Rather than taking verses and trying to expand them into something they aren’t, theses verses should convict our hearts in how we help the poor, protect them, and deal with them in times of need. 

As we discussed in our class on money, mediums of exchange evolved over time into the common currencies we have today.  Somewhere along the way, money changed from something sterile to something fertile that had value.  Somone borrowing money is “renting,” so to speak, that money’s value.  This would be similar to the way that folks rent houses, condos, or tuxedos.  The charging of interest, also evolved into a transaction in risk and investment as opposed to only an exploitation of need.

The title for this class is Debt: The Good, The Bad, and the Ugly.  That is how I’ll wrap this up.

The Good –You might smirk at the idea of something good about debt.  But here it is.  When debt is used properly; and by that I mean with wisdom and prudence in investment, it can yield fruit, profit, and wealth.  For much of the history of the world money was in a sense sterile.  If it was lent or hoarded there wasn’t much that could be done with it.  But as division of labor expanded and trade grew and cultures began to transact with each other outside of the historical familial or village setting, opportunities to invest sprouted and soon abounded.  The result is what we know as the time value of money.  There a clear distinction to be drawn between debt as it relates to capital investment and debt as it relates to everyday consumption.  Debt serves a purpose in the economy when it is used: prudently, with understanding, in moderation, and in light of our calling in this world.

The Bad – Proverbs 22:7“The rich rules over the poor, and the borrower is the slave of the lender.”Each time I see a credit card commercial I laugh and cringe.  Easy credit is sold as freedom, freedom to transact as you like, when you like, wherever you like to purchase whatever your heart desires.  It’s anything but that.  Debt is a burden.  God’s prohibition against charging interest in some situations showed is care for his people because debt is a burden.  If debt was not a burden Dave Ramsey would not be Dave Ramsey.  People call in to his show to yell freedom because they have actually been freed when they com out from under debt. Debt is a borrowing of the future and a weight on our minds.  I believe that when we play with debt and get comfortable with it, we aren’t only mortgaging our earnings, but we are mortgaging our lives.  We were bought with a price so let’s not become slaves of men.

The Ugly – Debt is the primary component to a financial perfect storm.  We’ve heard the statistics of how frequently money was a factor in divorce, and by money I mean money owed.  Or how often have we heard of suicide connected to money problems, and by that I mean debt.  Debt is a mortgage on our life and it robs us, spiritiually, in our relationships with God and others. We should endeavor to apply these truths like all other truths to the whole of our lives.  If we can’t afford someting today and our lives or the lives of our family are not at stake then we just don’t buy it.  While I don’t think we can definitively deny debt in any form scripturally, the Bible’s position on debt as it impacts the debtor is clear.  It is a burden.  If we find ourselves in debt, or coveting, like any other sin, let us repent, take steps to remove that sin or payoff that debt, seek counsel, and trust in the Lord.  If you are not in debt, then praise God that he has blessed you and your family, and seek to help those that find themselves struggling.

SDG,

Landon

Daily Comment - 23rd October 2009: Micro-Regulation of the banks may aid Andrew Xie's Mild Stagflation (let us hope)

Macro

Micro-Regulation of the banks may aid Andrew Xie’s Mild Stagflation (let us hope)

Apologies for the late arrival of this comment – I attended the AsiaHedge Hedge Fund Awards last night. Consequently, I have a bit of a champagne-induced headache today. Great to see my friends at Evenstar ( http://www.evenstarcapital.com/ ) winning The Best Event-Driven Fund of the Year, congratulations!

Right, back to business: you may recall yesterday I laid into the Chinese real estate market. But no argument on this would be complete without bringing the infamous Andy Xie into the fold. At times I think he’s courageous and quite brilliant, other times listening to him is as painful as scraping my fingernails down a blackboard – for this reason alone, he is irresistible. His comments on the Chinese economy and asset bubbles: on Bloomberg TV: Andy Xie. Notice how insistent he is on communicating just how important property is to the Chinese economy.

Continuing my Andy Xie theme, I’d just like to highlight an article from him which I read recently. He rambles a bit at the end, but this is Xie at his antagonistic best – I found it quite a captivating read. But some of his points are well founded: his reference to “mild stagflation” of low growth and inflation around 4% to 5% is pretty much in line with what I suggested in response to Mauldin’s piece on the 20th October – here is an excerpt.

In Mauldin’s latest piece he (shockingly) parts from the “Muddle Through” theory that he has held for many years on the grounds that the deficits are basically too big to ignore. I think this may be premature, there is a way out for the US economy: to stoke a fairly high rate of inflation and keep it consistently high for a number of years (without off-shooting into hyperinflation). No, this will not be pretty, and may be the backdrop for multiple recessions over the next decade, but it’s still within the bounds of “Muddle Through”, with real GDP growth averaging 1-2% over the long term.

Now, don’t misunderstand me, the Mild Stagflation theory is an optimistic forecast – it’s just about the best we could hope for, given the deficits and tax-burden Mauldin continuously alludes to, for example here. The caveat is that, in order for inflation to do the dirty work of what is effectively a soft default on Dollar-denominated assets (yes, that includes US government bonds), inflation will have to persist. As Xie eloquently points out, “the pain lingers”.

But his central point, I think, is that inflation is what the Central Banks are striving for. Not the benign, warm and fluffy inflation we’ve been accustomed to, but a higher, more abrasive, more painful level is required. Its tough medicine to swallow, but we’d better hope we get it. I hope Xie’s point, that: “the dirty little secret is that it [monetary policy] works by inflating asset prices” is not lost on readers by his abrasive style of writing. I would have perhaps phrased this differently so let me try to give my interpretation of what Xie meant:

Under the circumstances, inflated asset prices are an inevitable consequence of monetary policy as it stands, given the blatant inefficiencies of what I have called the “transition mechanism” for monetary policy (i.e. the banking sector – specifically the regulation thereof.

This is a point I’ve been repeating, just yesterday, referring to Mervin King’s eye-catching comments, I commented on the new-found ability of banks to regain their profitability and said “something will happen regarding regulation of the banks: watch this space”. On that note, I’d like to link-in today’s piece from one of the most respected economic minds in the World: Mohammed El-Erian. See the most important point he makes in this comment? Let me enlighten you with some selected excerpts, for effect:

There is another stage of de-risking in banks’ future. This second stage will be driven by the regulatory authorities, rather than the markets. Ironically, the success of some banks in restoring huge profitability will make this phase come earlier and be more consequential for banks.

There is a sixth issue, which is much more controversial. Should regulatory authorities reverse the multi-year trend toward combining commercial and investment banking activities in single institutions? At the heart of this issue is whether to restrict the ability of banks to use government-guaranteed deposits to fund investment banking activities.

Mervyn King, the governor of the Bank of England, is pushing for such a reversal. In doing so, he is reacting to the view that, to use his colorful language adapted from Churchill, “Never in the field of financial endeavor has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

Regardless of what happens on this sixth issue, it is clear that the banking system will soon be taking an important step towards the “utility” end of the institutional spectrum – a likelihood that is yet to be internalized, both in market valuations and in consensus expectations regarding the medium-term prospects for growth in the U.S. and U.K., in particular.

Need I say more?

Macro Data to Watch:

• Bank Holiday in Hong Kong on Monday – don’t expect a comment!
• Taiwanese Industrial Production
• Taiwanese Export Orders
• Singapore CPI
• UK GDP out today – I reckon anything positive is good news here.
• Spanish jobs numbers out today – can unemployment get any higher for the poor Spanish!?
• South Korean GDP comes out on Monday remember.

 

 Markets

I can’t keep bullying the Dollar indefinitely – I almost feel sorry for it. I know I’ve been a Dollar bear for the best part of a year now but we are oversold by almost every technical, at some point we must get a Dollar rally. I get scared when I get things right – it’s just not supposed to happen that way!

Global Stocks to Watch:

• Earnings:
  • China Construction Bank
  • Hynix
  • KDDI
  • Honeywell
  • Schlumberger
  • Microsoft
  • B Sky B
• On a broad note, keep an eye on the bank stocks as earnings continue to spill out and the rhetoric on banking pay and regulation continues from all quarters.

Music, farming, economic planning

I was at the Ciaramella concert Sat. night, had my loud band withdrawal exacerbated and am inspired to play more, And I’ve been thinking about this piee of Beck’s.

There’s a problem in that, even within my discipline, I spread myself way too thin. I’m a composer, I play half a dozen early winds, I have a church singing job, I occasionally get inspired to work on fiddle tunes on my mandolin. I can’t prioritize, even though I “should”, because it’s all way too cool.

But what’s killing me is the farm…the 2  1/2 hr per day commute, and all the time planting and harvesting. It’s not that I don’t enjoy it, because I do. But in terms of income, it makes no sense. Even the crappy pay of music returns more.  Why am I out here, doing what I do, if it’s not the highest use for my time?

If this were the 1950s or earlier, when we had the blessings of at least less screwed government, the answer would be simple: I’m nuts. It’s a little more complex now. I’m out here as part of a rational plan. At some point Real Soon Now, the cities will become uninhabitable, and the economy unsustainable.  When that happens, I’ll be prepared…I’ll be out of the city, have land, and know a little what to do with it. I will be “less than I could have been”, perhaps; maybe Western Civilization will deprived of x number of masterpieces (or messterpieces). But I and my loved ones will exist.

That’s what “rational economic planning” looks like, in the absence of a rational economy.  And It’s not like I’m the first to experience it. Think of any number of German musicians during the 30 Years War (Schütz did better than most.). Or the guys in Europe 70 years ago who had to choose between America and the concentration camp. Nothing to be done but suck it up and get busy. And get the product out there…there won’t be a midnight knock, because no-knock raids are all the rage.

Fiat Reports Third Straight Quarterly Loss

Filed at 6:19 a.m. ET

MILAN (AP) — The Italian automaker Fiat Group SpA has posted its third straight quarterly loss due largely to falling sales of trucks and construction and farm equipment.

Wednesday’s earnings release says Fiat lost euro168 million ($251.5 million) in the third quarter despite a 4 percent increase in auto sales due largly to cash-for-clunkers schemes that rewarded its small cars and fuel-efficient engines.

That compares with a revised quarterly profit in 2008 of euro604 million.

Revenues were down 15 percent at euro12 billion compared with euro14.3 billion last year.

Fiat took over a controlling share of Chrysler LLC in June, and CEO Sergio Marchionne is set to announce Chrysler’s five-year business plan on Nov. 4.

Fiat Reports Third Straight Quarterly Loss

The Politicians and Bureaucrats Are Lying about the Cost of Government-Run Healthcare

The Politicians and Bureaucrats Are Lying about the Cost of Government-Run Healthcare. The Wall Street Journal issues a devastating indictment against the absurd claim that the Senate plan for socialized health care will reduce the deficit:

Washington has just run a $1.4 trillion budget deficit for fiscal 2009, even as we are told a new health-care entitlement will reduce red ink by $81 billion over 10 years. To believe that fantastic claim, you have to ignore everything we know about Washington and the history of government health-care programs. …Let’s start with the claim that a more pervasive federal role will restrain costs and thus make health care more affordable. We know that over the past four decades precisely the opposite has occurred. Prior to the creation of Medicare and Medicaid in 1965, health-care inflation ran slightly faster than overall inflation. In the years since, medical inflation has climbed 2.3 times faster than cost increases elsewhere in the economy. …Next let’s examine the record of Congressional forecasters in predicting costs. Start with Medicaid, the joint state-federal program for the poor. The House Ways and Means Committee estimated that its first-year costs would be $238 million. Instead it hit more than $1 billion, and costs have kept climbing. Thanks in part to expansions promoted by California’s Henry Waxman, a principal author of the current House bill, Medicaid now costs 37 times more than it did when it was launched—after adjusting for inflation. Its current cost is $251 billion, up 24.7% or $50 billion in fiscal 2009 alone, and that’s before the health-care bill covers millions of new beneficiaries. Medicare has a similar record. In 1965, Congressional budgeters said that it would cost $12 billion in 1990. Its actual cost that year was $90 billion. Whoops. The hospitalization program alone was supposed to cost $9 billion but wound up costing $67 billion. These aren’t small forecasting errors. The rate of increase in Medicare spending has outpaced overall inflation in nearly every year (up 9.8% in 2009), so a program that began at $4 billion now costs $428 billion. The Medicare program for renal disease was originally estimated in 1973 to cover 11,000 participants. Today it covers 395,000, at a cost of $22 billion. The 1988 Medicare home-care benefit was supposed to cost $4 billion by 1993, but the actual cost was $10 billion, because many more people participated than expected.

On geoengineering as an alternative to curbing carbon emissions

The reason we are faced with climate change in the first place is that particular human beings and corporations, in their pursuit of profit, were allowed to intervene into the complex system that is our planet’s climate in unprecedented ways (i.e., by expelling mass quantities of various gases into the atmosphere). Now, we are being told in some quarters that, because the damage to the profit-margins of particular human beings and corporations would be unacceptable if we limited or stopped the interventions that got us into our present situation, we should intervene into the complex weather system in an even more radical and unprecedented way.

The Sweet Science

Boxing. The so-called “sweet science”. Two opponents in a ring that pound on each other until one wins. By strength or technique or both.

You thought fighting Congress on Health Care was a boxing match. You jab. You give them a knockdown in August but they get up and they fight on.

Then Reps. Henry Waxman and Barbara Boxer (oh the irony) come up behind you with a metal chair and clonk you with it.

Suddenly, your boxing match turns into THE WWF (E, whatever!).

It’s not the gentlemanly sport of boxing you’ve been in, it was the Entertainment-driven, fake, pre-planned world of Professional Wrestling.

The con is complete.

Hope and Change!

And your the sap who brought a boxing  glove to a machine gun fight.

Then you see what was written on the back of the chairs you just got clobbered with:

“CAP” and “TRADE”

And suddenly you understand FOR WHOM THE BELL TOLLS.

It tolls for thee.

“If you want a vision of the future, imagine a boot stamping on a human face – forever.” (Orwell)

In June, the House of Representatives narrowly passed the Waxman-Markey energy bill, which aims to increase investment in renewable energy and slash carbon emissions by 17 percent by 2020 and 83 percent by 2050.  In early October Senators John Kerry and Barbara Boxer unveiled the Senate’s version of the bill.  It is even more ambitious, with a goal of cutting emissions by 20 percent by 2020.

So while we were punching and counter punching on Health Care these 4 were coming out of the audience with a chair each.

The sponsors also drop the politically loaded term “cap and trade,” calling it “pollution reduction and investment” instead. (NYT)

How Orwellian of them.

There are ominous signs that the Earth’s weather patterns have begun to change dramatically and that these changes may portend a drastic decline in food production – with serious political implications for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now. The regions destined to feel its impact are the great wheat-producing lands of Canada and the U.S.S.R. in the North, along with a number of marginally self-sufficient tropical areas – parts of India, Pakistan, Bangladesh, Indochina and Indonesia – where the growing season is dependent upon the rains brought by the monsoon.

The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it. In England, farmers have seen their growing season decline by about two weeks since 1950, with a resultant overall loss in grain production estimated at up to 100,000 tons annually. During the same time, the average temperature around the equator has risen by a fraction of a degree – a fraction that in some areas can mean drought and desolation. Last April, in the most devastating outbreak of tornadoes ever recorded, 148 twisters killed more than 300 people and caused half a billion dollars’ worth of damage in 13 U.S. states.

To scientists, these seemingly disparate incidents represent the advance signs of fundamental changes in the world’s weather…

…To the layman, the relatively small changes in temperature and sunshine can be highly misleading.

GLOBAL WARMING!

That darling of leftists everywhere.

Problem is, the above unedited text is the opening from a 1975 Newsweek article on GLOBAL COOLING. And how if we didn’t do something right bloody now and do it fast we were all going to freeze and starve to death.

Bet you couldn’t tell the difference.

The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality.

Then just decades later along came GLOBAL WARMING. And the same dire predictions.  The very same predictions, only now we are going to fry not freeze in the span of 30 years.

Amazing.

And scientifically, crap.

But Politically, it’s gold for control-freak leftists who are way smarter than the average bear (in their minds)…

IT’S NOT GETTING HOTTER: Five major international climate centers recently reported that average global temperatures have not risen over the past 11 years.  In fact, experts say, temperatures actually dipped
in eight of the last 11 years.  Some scientists now predict that global cooling could continue for another 10 to 20 years.

And there’s the pause:  Where global warming stopped for 11 years and it will now resume by 2020.

So we gotta do it NOW!

Brought to you by the people who just got some the earliest snow in Midwest in decades.

An autumn storm brought snow to parts of Pennsylvania, New York and New Jersey, the earliest snow on record in some towns used to harsh winters.(Newsday)

And everytime the alarmists have  a big conference it snows on them.

Oh ‘but the icecaps are melting!’.

Yeah, and there is an ice field in Argentina that is growing!

In Argentina, the Perito Moreno glacier expands every day, even as Global Warming “threatens” the planet.

http://www.iceagenow.com/Growing_Glaciers.htm

Whoops!

Could it be that Global Warming is just…natural? That the planet’s temperature simply rises and falls?

Global Climate Changes

Naw, must be the evil humans.

And the those evil polluting capitalists of industry.

So let’s control them instead!!

Those evil polluting greedy scum bags!

That’s you!

Kerry and Boxer deserve credit for their work so far, and encouragement in fending off the inevitable calls for compromises by industries that fear the cost of change. The cost of inaction – or inadequate action – would be far greater.(boston.com)

Rep. Henry Waxman (D) – The harsh reality is that America’s global warming and energy challenges are just too important for us to keep mailing it in by not enacting a comprehensive energy and global warming bill.”

“The bill does not add one penny to the deficit,” Boxer said. “We’re very excited about that.”

The House passed its version of the bill, which is almost 1,500 pages long, at a cost of about $900 billion.  Members had less than 16 hours to read the final bill before it was voted on.  Legislators are seizing power and adding unprecedented tax burdens to Americans without even reading the legislation.

Poor households will receive additional payments to compensate for purchasing power they will lose due to cap-and-trade, another indication that the administration sees the law’s effects on prices.

Oh, like the subsidies to pay for the mandatory health insurance…

President Obama and congressional Democratic leaders, who have suggested that a cap on carbon emissions would help revive the U.S. economy. (NYT)

Sound eerily familiar??

Feel that chair yet?

Well, their always the TAX table, or  Professor Obama in the White House with the lead pipe!

To be continued…

The implication of world financial crisis on the retirement plans of the individuals and the possible avenues to prevent the deterioration of the retirement income

The implication of world financial crisis on the retirement plans of the individuals

and the possible avenues to prevent the deterioration of the retirement income

By: Rhesa Yogaswara, S.Si

(rhesayogaswara@yahoo.com)

Abstract

World financial crisis that happened many times, have been affected to the world. The recession was happening in many countries. The impact was not only to the country level, but also indidual level.

Therefore, with the purpose of financial stability in retirement, retirement planning, as part of wealth planning management is one of the best methods that individual can do to minimize risk from financial crises impact. Therefore, risk in individual level could be decreased.

One of the good impacts is the changes of purchasing power, which will be decreased. It means that the individual’s lifestyle is almost unchanged. For example eating frequently and nutrient-rich foods can be fulfilled.

At the end, the economic condition globally can avoid the recession. It is because of the stability in the macro and micro economic aspects.

1.0 Introduction

World financial crisis were associated with banking panics or recession that happened in many countries in the 19th and early 20th centuries.[1] Other situations in more specific conditions of financial crisis are stock market crashes, the bursting of financial bubbles, currency crisis, and sovereign defaults.

Banking panic is called systemic banking crisis. That situation was happened while bank were reluctant to lend because they worry that they have insufficient funds available, and it was widespread.

The bursting of financial bubbles is a crisis that happened while financial asset’s price exceeds the present value of future income. If there is a bubble, there is also a risk of a crash in asset prices. It happened while the market participants will go on buying only as long as they expect others to buy, and when many decide to sell the price will fall.

Currency crisis is a balance of payments crisis, which happened because of a speculative attack that forced the country to maintain a fixed exchange rate by devaluating its currency.

The last is recession, it is a negative GDP growth in the last two or more quarters. Sometimes, it is called economic stagnation, or depression, while happened in a long period of slow growth.

Many recessions have been caused by financial crisis. For example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The sub prime mortgage crisis and the bursting of other real estate bubbles around the world were widely expected to lead to recession in the U.S. and a number of other countries in 2008.

2.0 Causes of financial crisis

In financial market, there is a strategic complementarily condition which affected to the financial crisis. In many cases, investors have incentives to coordinate their choices. For example, someone who thinks other investors want to buy many Japanese yen may expect the yen to rise in value, and therefore has an incentive to buy yen too.

If the investors who think like that much bigger, then there are less yen that had been bought, until there is no value for yen. Therefore, financial crises are sometimes viewed as a vicious circle in which investors avoid some institution or asset because they expect others to do so.

Another cause of financial crisis is leverage, which means borrowing to finance investments. It borrows in order to invest more, it can potentially earn more from its investment, but it can also lose more than all it has. Therefore, leverage magnifies the potential returns from investment, but also creates a risk of bankruptcy. Bankruptcy means that a firm fails to honor all its promised payments to other firms.

Another factor that believed to contribute in financial crises is asset-liability mismatch. That condition is a situation in which the risks associated with an institution’s debts and assets, which are not aligned appropriate.

The mismatch between the banks’ short-term liabilities (its deposits) and its long-term assets (its loans) is seen as one of the reasons bank runs occur (when depositors panic and decide to withdraw their funds quickly than the bank can get back the proceeds of its loans. The sample case is financing long-term investments in mortgage securities.

Many analyses of financial crises emphasize the role of investment mistakes caused by lack of knowledge or the imperfections of human reasoning. It has ever been happened in dot com crisis.

Governments have attempted to eliminate or mitigate financial crises by regulating the financial sector. Goal of regulation is transparency: making institutions’ financial situations publicly known, and to make sure that institutions have sufficient assets to meet their contractual obligations, through reserve requirements, capital requirements, and other limits on leverage. Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in order to avoid a repeat.

Fraud has played a role in the collapse of some financial institutions, when companies have attracted depositors with misleading claims about their investment strategies, or have embezzled the resulting income.

Many rogue traders that have caused large losses at financial institutions have been accused of acting fraudulently in order to hide their trades. Fraud in mortgage financing has also been cited as one possible cause of the 2008 sub prime mortgage crisis.

Contagion refers to the idea that financial crises may spread from one institution to another, as when a bank run spreads from a few banks to many others, or from one country to another, as when currency crises, sovereign defaults, or stock market crashes spread across countries. When the failure of one particular financial institution threatens the stability of many other institutions, this is called systemic risk.

Economists often debate whether observing crises in many countries around the same time is truly caused by contagion from one market to another, or whether it is instead caused by similar underlying problems that would have affected each country individually even in the absence of international linkages.

Some financial crises are believed to have played a role in decreasing growth that could have a recessionary effect on the rest of the economy. Those crises could be caused by currency crises and banking crises together, which can cause recessions.

In Islamic perspective, financial crises are caused by basic concept of conventional financial system, which is in the single transaction of conventional transaction. There are four factors that made transaction prohibited. The first is a prohibition in the substance (zat), such as khamr, alcohol, pork, carcass, and blood. Second is prohibition of riba, which appear if uncertain contracts converted to be certain contracts. Third is avoidance of gharar, which appear if certain contracts converted to be uncertain contracts. Usually it happens in exchange transaction. And the last is prohibition of gambling (maisir), usually it happens in zero sum game.[2]

3.0 Effect of financial crisis

3.1 Effect to the world

All type of crises mainly affected to the economic recessions. Especially for the respective countries who are experiencing the recession. The impact is different for each country. It is depend on the country’s economic condition, which impacted not only to the poor countries, but also to the developing countries, and the developed countries.

Example case of global crisis in the last 2008, could impacted more than 90 million people could be living in poverty by 2010. The impacted to the developing countries are:[3]

• People are adapting livelihoods in order to cope but often into illegal or dangerous activities.
• People are eating less frequently, less diverse and less nutrient-rich foods.
• There are signs of rising domestic violence, tensions between groups, crime and drug and alcohol abuse.
• Different countries are putting the blame for the crisis in very different places.
• Recession in rich countries will hurt developing countries’ exports but it is also lowering the price of oil, reducing the severity of the impact on oil importing nations.
• Access to trade credit is not a major problem for established garment and horticultural firms in Africa. It is however a serious problem for some Latin American firms.
• Major global buyers are forcing developing country suppliers to absorb the bulk of the risks associated with the crisis.
• China’s state enterprises are using the crisis as an opportunity to consolidate investments in Africa, particularly in the energy sector.

After ripple effects of a sub prime mortgage lending crisis in the U.S. began to be felt across the globe, housing values deflated, banks failed, credit froze, and layoffs spurred unemployment levels not seen in decades. While all of the accumulated evidence points to a deep global recession now, the recent downturn unfortunately has had a disproportionate impact on people aged 50+.[4]

3.2 Effect to individual

The above explanations are focusing in macroeconomic aspects, which is specific on the country level. We can consider that individual level is the last level who feels the financial crises effect. However, individual has the important decision in facing the financial crises and recession.

For the individual, the main problem is the changes of the purchasing power, which reflect to the changes of the lifestyle. In some countries, some people are eating less frequently, less diverse and less nutrient-rich foods.

Purchasing power could be caused not only by the rise of the daily need’s price, but also the decrement of the individual source of funds. Both are affected by financial crises, which make individual’s lifestyle changed to the unexpected condition.

In US, over the last 12 months, retirement accounts have lost $2 to $3 trillion in value. Between the 2nd quarters of 2007 and 2008, private pension fund assets declined by over half a billion dollars while state and local pension funds declined at rate of nearly $350 billion. In the current labor market, those aged 55 and over are losing their jobs at a higher rate than the young are.

Policymakers must determine whether the right vehicles for retirement savings are in place, what is required to rebuild consumer confidence to begin reinvesting in the market and our own futures, and how to encourage older people to stay in the workforce longer in an environment of high unemployment.

4.0 How to Protect Income

Financial crises is the worst caused for individual’s lifestyle. So that we as an individual, need to protect our income in order to stabilize our financial condition. Especially how to protect our income for retirement plan in global crises, is another thing that need to be discussed.

There are many approach methods in investment plan as a solution to protect our income. Which investment is one of the solutions that would be highlighted in this discussion? There are three types of period terms in investment plan. There are short terms, medium terms, and long terms.

4.1 Short Terms Investment

Short-term investments can be considered, if you need to make money quickly. Short-term investments allow you to invest an amount of money at a high yield rate of return, and gain access to the return sooner rather than later.

You might need short-term investments if you have a pressing need coming up in the near future. For example, if you might need a down payment for a house or car in a year or two, you could use short-term investment options. The period is usually between one up to ten years. This is most likely different with retirement investing. Some even choose to use short-term investment funds to supplement their retirement income.

Most people are comfortable with investing around ten percent of their total income. Then, choose the investment to use. It is best to take the amount and invest it into one particular investment. There are several short-term investment options out there, and the key to making money successfully is finding the best short-term investments.

The sample investments for short-term periods are stocks, securities, savings, deposits, and bonds. All of them have same characteristics. There are liquid in short time. Stock is the investment in stock exchange, which investors can buy and sell stock of any company. The characteristics are liquid, high risk, but it is high return. However, the investor must have knowledge of the market trends, company portfolio, and needs a lot of time to monitor any information that could be the key driver of the stock price’s movement.

Securities are similar with stock investment. The differences are in the process and the institution involved which affected to the investor. Securities consist of several stocks, which are combined in a portfolio. The portfolio is managed, monitored, and analyzed by fund manager. The benefits for investors are simple investment, low risk, does not need to have a complex knowledge, and it savings much time in monitoring activities. However, the return is not as high as stock investment.

In addition, the other samples are savings, deposits, and bonds. Where all of them are more liquid than the first two samples. These investments are the least risk and the least return. These are simple investments for anyone, who has money.

4.2 Long term Investment

The long-term investments account differs largely from the short-term investments account in that the short-term investments most likely will be sold, whereas the long-term investments may never be sold, which long-term investments are where diversification is helpful.

The sample investments for long-term periods are insurance, real estate, and equity. Insurance simply means joint guarantee. It is not a contract but an agreement for mutual help among the group, and can be visualized as a pact among clients who agree to jointly guarantee among themselves against loss or damage that may befall any of them. The basic objective is to pay for defined loss from a defined fund.[5]

The objective of the insurance is to protect the loss. In addition, for the modern insurance nowadays, the objective of the insurance is not only for protection, but also for investment. Insurance is combined with portfolio investment, which managed by fund manager. So insurance is categorized as low risk with low return investment. However, the return could be received in a long time. The benefits are less effort to have knowledge and savings time for monitoring.

Next investment is equity. Equity in this discussion means investment in direct investment in real business. Investors, who have money, give the money to the party who will run the business. Investment in equity is categorized as high risk and high return. Investor must have much knowledge about the business industry’s characteristics.

Most of investment in equity, investor will have a return in long period since in the early, management must build and setting the business up. This process needs much effort from investor to have a good analysis and invest more time.

The last is the investment in real estate. Real estate consists of three types. There are personal residence, income property, and speculative property. In the individual level, investment in real estate will make income for investors who have the property from the rental fee.

This investment is categorized as the long-term period investment, which potentially high return and potentially high risk if it were wrong managed. The operational cost in real estate is relatively higher than another investment and the operational process is wasting much time. In this traditional real estate, investor must have much money in the early to buy the property and operational cost.

Same with several stocks that combined in securities, real estate also could be managed by real estate investment trust to be sold to investor. This investment is simpler than traditional real estate. Investor does not need to invest time to maintain the property, and it is relatively liquid. The benefit for investor is less money to invest in the early, less of operational cost, and savings time.

The choice of investment has been determined in the above sections, both for short-term and long-term period. Moreover, how do we combine those investments as the optimum income, both for short term and long term as our retirement plan?

There are some combinations which could be combined depends on the investor’s preferences in facing the retirement. Retirement planning is a comprehensive analysis of the tax-effective strategies, which are available to assist you in achieving your goals for retirement; which the process includes a comprehensive review and analysis of your assets, liabilities, saving patterns and investment strategy in the context of your timing of your retirement, retirement income and your tolerance for investment risk.[6]

It means that retirement planning is a plan to ensure that we have enough money to spend when we will retire. It includes the amount to save and to invest in the diversified portfolio. It should also consider the future inflation rate, the life style expected etc. Retirement planning is one of the financial planning which focusing on wealth protection.

We must plan our retirement through several processes. First is setting of Retirement Plan Goals. The Second is analyzing information and calculating savings needed to meet the Objectives. Next is planning the distribution, ascertaining the best method to distribute that is best. Then, it is implementing the plan. The last is review the plan.[7]

However, the investment structure for the retirement plan must be considered for investor. In Islamic perspective, all each transaction must bee free from riba. Risk in retirement plan must be managed properly as mentioned in Surah Yusuf (12:67) and Surah Yusuf (12:47); (7 yrs good harvest,7 yrs for bad harvest).

Those risk factors that must be managed consist of four types. There are personal risks, property risks, liability risks, and investment risks. In order to keep economic stability in retirement, we could apply the portfolio theory. Diversification and tax management are the main point in managing portfolio investment, which mentioned in the section 4.1 and 4.2.

The portfolio preferences could be created by considering the types of returns (capital appreciation/long term/rental income), level of returns, and leveraging tool for using borrowed funds. However, there are several portfolio investments that must be managed properly, such as market risk (macro economic issues), specific risk (related with industry), and financing risk (cash flow). All of the retirement plan methods can contribute to minimize risk of the wealth planning management.

5.0 Conclusion

Therefore, with the purpose of financial stability in retirement, retirement planning, as part of wealth planning management is one of the best methods that individual can do to minimize risk from financial crises impact. Therefore, risk in individual level could be decreased.

One of the good impacts is the changes of purchasing power, which will be decreased. It means that the individual’s lifestyle is almost unchanged. For example eating frequently and nutrient-rich foods can be fulfilled.

At the end, the economic condition globally can avoid the recession. It is because of the stability in the macro and micro economic aspects.

6.0 Reference

Alhabshi, Syed Othman. 2009. Retirement Planning. Presentation Slide. INCEIF. Kuala Lumpur

http://en.wikipedia.org/wiki/Financial_crisis (accessed 3 June 2009)

http://www.aarpinternational.org/resourcelibrary/resourcelibrary_show.htm?doc_id=860569 (accessed 3 June 2009)

http://www.research4development.info/news.asp?ArticleID=50393 (accessed 3 June 2009)

Karim, Adiwarman. 2004. Bank Islam Analisis dan Keuangan, RajaGrafindo Persada, Jakarta.

Razak, Shaikh Hamzah Abdul. 2009. Wealth Planning and Management. INCEIF. Kuala Lumpur.

Rosly, Saiful Azhar. 2005. Critical Issues on Islamic Banking and Financial Market. Dinamas. Kuala Lumpur..

[1] http://en.wikipedia.org/wiki/Financial_crisis (accessed 3 June 2009)

[2] Karim, Adiwarman. Bank Islam Analisis dan Keuangan, RajaGrafindo Persada, Jakarta, 2004.

[3] http://www.research4development.info/news.asp?ArticleID=50393 (accessed 3 June 2009)

[4] http://www.aarpinternational.org/resourcelibrary/resourcelibrary_show.htm?doc_id=860569 (accessed 3 June 2009)

[5] Rosly, Saiful Azhar. 2005. Critical Issues on Islamic Banking and Financial Market. Dinamas. Kuala Lumpur.

[6] Alhabshi, Syed Othman. 2009. Retirement Planning. Presentation Slide. INCEIF. Kuala Lumpur

[7] Razak, Shaikh Hamzah Abdul. 2009. Wealth Planning and Management. INCEIF. pg 270

Former friends claim balloon boy's father, Richard Heene, will do anything for fame

More and more details are emerging about balloon boy’s father, Richard Heene.

By now you’ve probably heard about the little Colorado boy, Falcon Heene who garnered worldwide attention because he was thought to be soaring above the earth in a homemade helium balloon for hours but was actually hiding in his parents’ garage.

Well, anyway according to one of  Richard Heene’s past employees, Perry Caravello, Richard Heene will do anything to become famous and this balloon saga was just his latest attempt at grabbing his 15 minutes of fame.

Now, I don’t know if Caravello statements are credible since Heene, according to him, owes him money and we all know how money can cloud events and darken the debtor’s personal character. But as this story develops I’m becoming convinced that this may have been one of the biggest hoaxes in recent history and unfortunately the little boy’s nervous reaction (he’s vomited on camera twice) and statement ‘we did this for the show‘  have only heightened speculation that this was just one big put on by the Heene family.

So far officials have stated it wasn’t hoax but if it is determined that the Heene’s hustled us I hope they are fined and ordered to reimburse all the costs of the rescue operation.

The "Death Bond", Wall Street's new investment scam.

Years ago, a person or company purchased shares in a corporation as an investment.

The corporation had a track record, when times were good, paid dividends, and the investor felt a tiny sense of security that the corporation will be well managed by people who cared about the corporation’s and subsequently the shareholders’ viability.

No more.

Wall Street is packaging anything it can and marketing it to investors, selling an upside that often doesn’t exist and a downside that has proved to be catastrophic and they continue the flim flam game.

I learned about “Death Bonds” today in theglobandmail.com.

They’re called “death bonds” – or, more formally, life settlement securitizations – a burgeoning class of financial products that have caught the eye of financial innovators at some of Wall Street’s biggest banks, which are eager to find new ways to make money after the popping of the mortgage bubble. The bonds are created by intermediaries that buy up life-insurance policies from policy holders – typically seniors looking to cash out their policies – bundling them together, and selling off small slices to investors. The profit comes when the policy holders die and the investment funds, as the designated beneficiaries, collect the payouts.

A Gem of a Post

Every now and again I run across a gem on a Blog I read daily – so I thought I might bring it to you:

Let me get this straight.
We’re going to pass a health care plan written by a committee whose head says he doesn’t understand it,

passed by a Congress that hasn’t read it but exempts themselves from it,

signed by a president that also hasn’t read it, and who smokes,

with funding administered by a treasury chief who didn’t pay his taxes,

overseen by a surgeon general who is obese, and financed by a country that’s nearly broke.

What possibly could go wrong?

Blindfolded.

The AP is reporting that President Obama is “looking at any way to create jobs”. That’s interesting. He must not be looking very hard. Or maybe he really is looking, but managed to get something in his eye. Or maybe he’s faking it. Never waste a crisis, you know. It’d be hard to imagine that Americans would be too eager to shift complete control of their lives to the federal government if unemployment was not at 10% and the housing market hadn’t collapsed. That’s got to be it, then. He’s not really interested in finding any way to create jobs because as long as we’re all unemployed, we’ll continue to be led around like sheep. That’s why all of Obama’s “fixes” all smell funny. His fingers are too deep in all of them.

Here’s more from the AP:

SPRINGFIELD, Va. (AP) – Standing at the site of a highway project funded by his massive economic stimulus plan, President Barack Obama said Wednesday he is committed to exploring all avenues to create jobs.

“Middle-class Americans are the ones who built this country,” Obama said. “They deserve leaders in Washington who are willing to work as hard as they work.”

[ . . . ]

Despite the stimulus, the national unemployment rate stands at 9.8 percent. Economists have said unemployment could continue to rise.

First—Obama is certainly not committed to “exploring all avenues to create jobs”. That’s just a lie. Note that the AP isn’t quoting Obama directly for that little nugget. If Obama were willing to explore “all” avenues, he’d think about tax cuts for small businesses. Tax cuts, after all, will permit these businesses to keep more of the money they earn…which they would of course use to…hire people. With less money left after taxes, businesses are not too motivated to employ more people.

Second—However nice it sounds to your populist disciples, America wasn’t built by Middle Class people. Not if the word “built” means anything, that is. Sure, they’re the ones that may have wielded the hammers and populated the plants, but these people were uniformly employees—hired by rich people with ideas to move technology forward. The Rockefellers, Carnegies, Vanderbilts and Fords which dot our history are the ones that “built” America. Not by themselves, of course, but without their entrepreneurial spirit and capital, America doesn’t become industrialized and that’s just a fact. It’s a hard fact for the left to acknowledge, however, and it’s the reason why they see “tax cuts for the rich” as “unfairly” lining the pockets of those in least need of the extra money. The fact is that one of the primary functions in our society of rich corporations is that they hire the rest of us. They enable us all to have health insurance. To save for our retirements and the education of our children. Without rich people who make things and hire people, we’d all be poor. So unless Mr. Obama is exploring ways to incentivize rich people to hire more of us so we can make more stuff, he’s spinning his wheels. Every second he talks about taxing corporations to death, he’s making it more and more likely that unemployment will continue to rise and the recession will continue to grow. Spending billions of TAXPAYER dollars to hire people doesn’t do the trick, either. Tax dollars must first come from someone who earned that money. It is not in itself the product of any growth. That’s why this Stimulus is just a gigantic shell game. Borrowing from Peter to pay Paul, if you will. Eventually the bills become due. Eventually, we’ll understand that shifting money around like this without creating any new growth is a dead end.

Which brings us to that last bit of the article. Incredulously, the AP admits that “despite the stimulus” unemployment is at 9.8%! As if the stimulus would lead to any other result except higher unemployment. This is shocking? When you take money away from rich people, they have nothing left to hire new people and make new things. They contract. It’s no surprise (to anyone except the AP, that is) that economists are saying that unemployment “could” continue to rise. High taxes work as disincentives for corporations and big business to hire people and make things. THe higher taxes go, the less things are made. The less people are hired. The longer unemployment lasts.