Archive | December, 2011

When fear blinds

31 Dec

Here is an interesting passage from a Bloomberg Businessweek story about Hollywood’s battle with online piracy. It’s the kind of thing we’re used to reading. If only we could apply the lessons learned to the present.

The magazine said:

The late Jack Valenti, president of the Motion Picture Association of America, warned the [congressional] committee, “The VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.”

Home video is now Hollywood’s most profitable business.”

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A scheme for making politics civil

26 Dec

I consider my local congressman a friend, even if I don’t agree with all his party’s policies. I’m especially opposed to its extreme wing, which at present seems to dominate. Its traditional philosophy is sound and sensible but was retired sometime ago.

When I saw my local congressman at a Christmas party, we both bemoaned the state of the nation, the ineffectiveness of Congress and the horrid, incivility of politics. In a fit of frivolity, my friend the congressman suggested I run against him. He said we could both vow to wage a polite, positive campaign.

On the hustings, in full public view, we could hug and ask about each other’s families.

Such a campaign would surely get us viral national press coverage and perhaps start a moment that would alter, if ever so slightly, the face of politics.

I, of course, wouldn’t have a chance of winning.

He, with his organization, experience and a redistricting that went squarely in his favor, would kill. No bother. My goal, and part of his, would be to establish a template for a rational, thoughtful campaign that would seriously address the issues. There would be no pandering, and no ripping the other person or distorting his views.

We wouldn’t go big with discovered evidence that one of us may have, at one point in our lives, been mean to a dog.

We issue complements and acknowledge each other’s intelligence, competence, moral character and desire to help the nation.

If publicity came, it could rally people around us and have other candidates make the same pledge.

It is a very tempting idea. If I were a self-sufficient man, and I am not, I would quit my job and surely do it. It would bring inner satisfaction and an authentic sense of purpose.

I worry about our nation, our people, our economy, our will, our unity and our place in the world. This plan, hatched with laughs at a party, would take me off the sidelines and allow me to at least do something about all that.

A nice dream.

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Thoughts on a Christmas morning.

25 Dec

What would our country be like today if the teachings of Jesus were truly part of our cultural life? For a moment, let’s not complicate things with religion and divinity. Just think of the teachings. Would we allow high unemployment and poverty? Would our economy flourish or sink? Would Christian equality fetter the ambitious? Would a refusal to make war result in a stronger nation or a vulnerable, perhaps occupied nation? Would we all be happier and at peace with ourselves, even if we had to live with less? Maybe living with less is the secret to happiness.

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A Worrisome Economic Indicator

23 Dec

My local Home Depot and Lowes are sold out of green and red outdoor spotlights. As an economic indicator, what does this mean?

  1. Times are getting better and people are buying more green and red spotlights than last year at Christmas.
  2. There are supply chain problems abroad with green and red spotlights.
  3. Home Depot and Lowes, as large as they are, are not sophisticated enough to properly stock a seasonal product in high demand.

I sense the answer is “c,” a small yet worrisome indication that in the larger picture we are doing poorly at trying to extract ourselves from the current financial doldrums.

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Scribble

20 Dec

A piece of found scribble on my desk:

Thousands are recognized as descendants of the prophet Mohammed. Why no descendants of Jesus? Yes, he was not married, but you’d think there’d  at least be a distant cousin somewhere.

 

Immigrant Workers: Masters of Arbitrage

18 Dec

Americans don’t fully understand the Immigrant Worker. They don’t have the full picture on why he does what he does for what he earns. Rather than being  masters of the hard, dirty work no one wants, they are instead the Masters of Arbitrage.

I’m not sure how economists define arbitrage, but to me it is a method for taking advantage of differing prices in different markets. If gold, for example, is selling at $900 an ounce in Botswana and $1,500 in New York, the smart American investor runs off to Botswana, buys as much gold as he can, then rushes home to sell it for a high profit.

For the arbitrage of the Immigrant Worker, home is the key.

Americans can’t pick tomatoes all day then go “home” to turn their pay into profit. Immigrant Workers can. From their perspective, this is what makes the situation tolerable. If Immigrant Workers are in a position to return home or to support a family there, our minimum wage is like buying $900 gold and selling it in a $1,500 market.

If they were paid the equivalent of what they would earn in their home country, chances are they would not be here.

I’ve heard stories of Immigrant Workers spending six months on jobs in the states and then returning home for six months to live a comfortable life, sometime not even working while there.

None of this justifies the poor treatment or exploitation of Immigrant Workers. It just helps to understand why they put up with what they do.

Things begin to change, however, when the workers truly begin a life here and want to stay. From a market perspective, arbitrage opportunities diminish and they are forced to find better jobs or perhaps become entrepreneurs.

When a guy mows lawns all day for minimum wage, it doesn’t take him long to figure out he can make much more once he saves enough to buy a mower and truck.

If I speak the truth, then a whole new class of small businesses is set to emerge.

These new entrepreneurs will buy houses and furniture and take vacations and send their kids to college, moving things up another rung.

I’m sure many will disagree, but if there is to be economic growth anytime soon in this country, it is likely to come from the people we once classified as Immigrant Workers … the one-time Masters of Arbitrage transformed into an economic engine.

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Tragedy in State College

18 Dec

I’m a fan of the classic tales of morality, irony, wit, wisdom and philosophy that come to us from ancient Greece and Rome. One sadly reminds me of Coach Joe Paterno’s present predicament.

This story concerns Solon, the wise Grecian lawgiver, Croesus, the rich and powerful king of Lydia, and Cyrus, ruler of the Persian Empire. It goes this way:

Croesus heard of Solon’s wisdom and invited him to court. He asked the Greek if he had ever known a happier man than he. Solon told the king a living person cannot judge his own happiness until his life is over, just as one doesn’t crown a wrestler while he is still in the ring.

Fate, he advised, is an ever-present hazard.

This greatly offended Croesus. Later, when he was defeated by

the Persians and put upon a pyre for burning in front of Cyrus, Croesus remembered the advice of the sage and cried out, “O Solon!”

In an extremely fortunate twist, Cyrus stopped the execution to find out what god or man was this Solon. Croesus explained, was spared and became an advisor to Cyrus.

There is no twist yet with JoePa, but the parallels are clear. Joe could easily have been judged one of the happiest men on Earth. He spent his life working a dream job; earned a generous salary greatly enhanced by endorsements; was a near god in State College; was respected by all and honored everywhere. He wore a perpetual cloak of dignity.

Paterno had reached a pinnacle of accomplishment few ever reach. But he had not left the ring.

Like Croesus, he has lost everything. The un-removable title of “coach” has been removed; respect has evaporated; dignity is gone; he has fallen off the cloud and must walk naked.

With twinges of the Biblical Job, he nurses a fractured hip and is being treated for cancer. He must be haunted by the coming infamy he will face in court.

It takes a strong person to remain whole after such a fall.

Some hide from greatness to ensure that greatness gained will not be greatness lost. Those wily, irony-loving Greeks were aware that happiness never remains long in the same place. Like Croesus, former Penn State Coach Joe Paterno now knows this.

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A Workers State No More

18 Dec

China once prided itself on being a Workers State. Now, according to Bloomberg Businessweek, extreme worker dissatisfaction is widespread. A professor at Tsinghau University in Beijing said in 2010 there were 180,000 riots, strikes and protests.

I worked in China back in 1985, for the New China News Agency. The first day I walked into my dusty, dingy office I was handed a month’s pay – in cash. “I haven’t done anything yet,” I told my supervisor. She answered, “In China we pay you for work you will do; not for work that you have done.”

That suited me fine.

At the time there was a great surplus of labor so we didn’t work very hard. It was a six-day work week but we could have done it all in four. You were allowed time off if a relative died and women could stay home during their periods. As an expected result, fathers sometimes had multiple deaths and females on occasion menstruated twice a month.

No one cared.

When there were beer shortages in the summer, the Agency got us beer. For those who didn’t have showers or bathtubs at home (there were many) you could take a shower in the company washroom while on the clock. (I once naively asked a co-worker: Why is your hair all wet?)

Food in the dinning hall was heavily subsidized. If you donated blood you got three days off to rest and coupons for free milk and meat. If you were sick, you went down stairs to the company clinic to be treated, for free, of course.

In the heat of summer you ate a quick lunch and slept for two hours. (In winter it was only an hour.)

Pay was low, but people paid minuscule rent, if any. There were few regular expenses and from what I saw, it was clear the disposable income of Chinese workers was actually higher than that of some Americans.

I think most of this has changed.

Today, companies in China try to take land from people and towns, causing protests. They will try to relocate factories to areas where labor is cheaper, causing riots.

Someone at a demonstration ought to stand up with one of those old books of propaganda about the supremacy of the worker and ask, “Hey, aren’t we a Communist country?” and see what happens.

Jail, probably.

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Close your eyes and invest

10 Dec

A complex and confusing financial document appeared in my mail recently. It is an offer, via Fidelity Investments, from an entity named Eksportfinans.

The people who watch MSNBC may be familiar with it but I am not. I’ve been investing, poorly, since my early 20s but cannot figure out what is being offered. The document begins with a mention of securities linked to common stock, with Apple among them. In these mentions are interest rates of 13 percent and maturity dates of 2008 and 2009.

Both the interest and the maturity dates seem out of date. I must somehow be missing the obvious.

Inside the quarter-inch thick booklet it says, “The yield that you will receive on your securities, which could be negative, may be less than the return you could earn on other investments.”

Now that sounds right, as does this:

“ … you bear the risk of losing some or all of the value of your principal if a knock-in event occurs during the term of the securities and the final stock price is less than the initial stock price.”

The term “exotic financial instruments” has been used a great deal in the past few years, generally to describe investments that are expected to make lots of money but impossible to understand. It is beyond me how anyone thought they could collect from a security based on sub-prime mortgages. (More confounding is that mortgage brokers received higher commissions for sub-prime mortgages than for less-risky ones.)

Just for the fun of it, I intend to look into Eksportfinans. But clearly, something perverse is going on  and it apparently has been for sometime. I don’t think any lessons have been learned from the great stumble and fall of 2008.

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About the Title

10 Dec

Mr. NotebookM

There was a 19th-century scientist of some renown who wrote his ideas down in a series of notebooks. He labeled the first “Notebook A” and when he filled it he moved on to “Notebook B” … and so on. When he reached Notebook M, he jotted down the basic theory for a major work he would later call “On The Origins of Species.” This made Notebook M one of the most distinguished in history. I thought I would borrow the title mainly because of this interesting story and because my last name begins with “M.” There also is hope that perhaps a small idea hatched here may one day develop.

Mr. NotebookM

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