Wednesday, July 9, 2014


Some Thoughts on Prices, Competitive Economies,Social Values, Markets, Free Trade and Free Choice What is Worth More to You? Buying Expensive Possessions or Extending Your Life Span by 20 Years or More? Why is a High Dollar Better for the Economy of the USA Than a Devalued Dollar? and Other Questions Considered Lex Loeb Contributor Network . Here are some thoughts about subjects including markets, the economy, free choice, lottery tickets , Pascal and his formula to calculate the value of making a wager and paying for it, Why an economy based on competition to provide inexpensive reliable health care services is as beneficial to society as an industrial economy and perhaps more valuable than a dying industrial economy like the major US auto manufacturing industry. Too many people are convinced they have all the right answers that might include having a trade war with china, forcing china to revalue its currency to somehow believe we can ever compete with them on slave wage labor rates, Or that we should be closing off the borders to prevent immigration of any kind as another form of protection for labor. An understanding that energy supplies do work in our industrial economy and give us advanced levels of productivity. Understanding that servicing leisure time is also an economic modality that affords an economy with growth potential. People want to believe that work should be done even if it is non competitive with foreign competition that provides better value and cost which makes one wonder if we should be slaves to a machine society or masters of what we can more cheaply import? A friend emailed me to ask if the Dow was up over 11,000 because of larger corporations having big stock buy backs. I answer that and more questions in my own way trying to give some of my insights which are a little more libertarian than you might find without answering the same questions. Here are my insights. They may not all be perfectly correct and some of my terminology is off and less than scholarly. Listen to my perceptions and see if what I say may make more sense than what a lot of top political commentators and politicians themselves tend to say about the subjects.... "The reason the Dow is up up up is because all the trillions of dollars in safe no interest bonds and treasuries wants to find a yield sooner or later. Also the dollar is moving down ...which means $5 gasoline is possible. that hurts us but because gasoline is priced in us dollars world wide it kills the Chinese economy. you can buy Chinese slave labor for less than $5 a day . those people working for wages like that can then just buy one gallon of gasoline. the Chinese economy is more vulnerable than our. They will then go speculate on $8 dollar a gallon gasoline creating another bubble that will eventually pop. These are weird economic times. The present administration is acting stupid telling the Chinese to readjust the yuan to a higher level than the dollar. that means i guess printing less of them but the US believes they can just set the price where ever they want to. It is hard to believe the Chinese really have that much power over their currency just with a peg because it does not work here or in Latin Marcia / Europe when its tried. I suspect the yuan is properly priced lower than higher and that the Chinese at worst are giving away their slave labor to us as a sort of economic gift. The reality is if the Chinese economy collapses and deflates things only become cheaper from china not more expensive. It is better to brain drain them letting them set up companies in silicon valley than to fight the low labor rates we can never compete with. both liberals and conservatives get it wrong thinking of tariffs or preventive measures....the fact is the us manufactures more than any other country on earth still and Chinese only have certain competitive advantages. with a stronger dollar we have gasoline that works to our advantage as the same thing as a slave wage laborer there, US productivity is higher than chinas too because we work smarter and have vastly more computer power amok other things. when people started converting automotive power into "horse Power" they were simply also converting automotive energy into labor equivalents because people used to have to do the same work horses did before machines. so our productivity is instantly higher with gasoline and other forms of energy cheaper here by virtue of what ever makes prices cheaper including the higher dollar, freer markets, more access to supplies, smarter use of energy, more computer thinking and more machine manufacturing with less employees actually having to do manual labor. No one ever tells you that about us competitive advantage. In Europe where gasoline is $8 plus a gallon they put themselves at a much lower competitive advantage in general but not in everything. The Germans are massive exporters but the us gets the benefits of labor form Germany, japan and china etc more than any other country does, so don't wish for the dollar to crash because, well that means other currencies eventually will crash too the way we last saw the euro go went down too much and came back , the Germans are incredibly frugal like the Japanese are and they don't buy excess cute stuff the way Americans do which means they over stock stuff for exports and can't consume it so prices are in effect subsidized for export. It means they work harder than necessary which might be the reason Europeans get three month's leisure time vacation. All of that says stay betting on the USA. don't worry that we import too much energy because when we do it is often cheaper than getting it here and that makes more sense. what then to do with all of our people who don't have jobs? The funny thing is that health care is still the big growth industry . you know ohsu is like the biggest employer in the city of Portland. it is the same from city to city in the us. hospitals are big business. there are plenty of job in service industries like that. when you extend the lives of people 20 and 30 years or more that would seem to be something that people should be willing to invest good money in as opposed to industrial goods like cars or cameras , building materials, clothing from china, etc. my fathers pace maker has obviously extended his life span so when i hear about obama care rationing or putting a tax on medical devices like pace makers it makes me furious. we want more competition in that field not less and we don't want to keep GM alive if it can't compete with Honda or Toyota because cars are cheap and life extension is costly but probably worth more/. The markets for health care tell us that. Thats is why your portfolio should have stocks like JNJ in it or Abbott etc. BDX, Syn etc. buying at the right price. after obama care you can still go into a car dealer show room and buy a $500,000 Lamborghini or Ferrari but you might not be able to go into a hospital and buy the same amount of heath care adjusted to suit your body as you want to. In Canada you need to have Money to escape to the south to get elective medical care , The US should me making health care virtually tax free to generate more competition and create a boom in the field where we most want and need it. they say you can take it with you--your possessions but you can keep it longer with better health care. the price you put on that should necessarily be higher than the other possessions? A lot of people in places like Washington DC believe they should have more say over your life choices. Maybe because they believe you make bad decisions or are somehow wasting money that belongs to society making your own choices? No where else on earth do so many ordinary common citizens have as much choice over their own lives as in the United States of America. Interesting how a self described progressive and liberal political party has a sort of angry attitude about free choice of free people in all aspects of their lives. People they say have too much free choice and too much freedom. We need to be controlled by bigger and bigger regulatory government. It is so strange that more than half the populating sometimes seems to support controls on their own free choice. Part of the reason is a constant barrage of propaganda. The progressives are always looking for something like land fill waste to extrapolate into a grave social ill. The reality for those of us who know nature better than others do because we are farmers and tree growers. Ronald Reagan said that trees polluted the atmosphere and he turned out to be right about that to the chagrin of the environmental fundamentalists. It also turns out that trees produce more land fill waste equivalent than humans do. The environmentalists dance and sing that this waste that trees produce is ecological biomass and then they ignore the nature of peat bogs that don't quickly decay into a wholesome ecosystem bio mass. The qualification of humans as wasteful and polluters and opportunists that harm the ecosystem misses the point at how natural most animals and plants are as polluters and opportunists themselves. There is real competition in the world of living organisms and relative scarcity of resources just as there is for humans. Just because humans can make wild choices in their lives does not mean it is somehow an un-natural process. Nature had to intend for humans to make choice as opposed to having overlords make all their choices for them. At some point when overlords make all your choices for you --you might as well just be sold into slavery. It is amazing that people with full rights of citizenship will vote for slave masters. It has happened before in history under many dynasties in different cultures. serfs must have voted for serfdom because it lasted thousands of years and rarely was there any rebellion. Revolution was so rare that a real revolution against not just tyranny but against serfdom and nobility did not occur until the American Revolution. It was the first such revolution but not the last. Or maybe it was just the first successful revolution while it continues to last because a lot of people can't seem to be without a king or an emperor and an imperial class of nobles as we see their never ending quest to vote that sort of thing into higher offices...." In an earlier email i talked about the subject of how to calculate the value of a wager in a public lottery such that the cost of the wager reflects the actual potential to win a set amount of money. Lotteries are considered by a lot of people to be a free sort of choice and voluntary taxation. The question might be what makes government so greedy when it runs a lottery that it should over charge participants with high fees instead of low fees that reflect zero sum game nature /structure of lotteries. The more interesting thing about the pascal calculation is that it effectively can tell you what the cost of a sure thing in something less risky like the stock market should be. Benjamin Graham clearly understood the principle with his value based approach to investing. Although stocks are not like lottery tickets you can take the number of ticket combinations for lotteries and make a comparison between those and the number of outstanding shares of ownership parceled out in a corporation as stock market shares to figure out the value of each share on an objective basis of value.... "...the thing about pascals law is that it tells you how much you should pay for all the ticket combination of numbers in a drawing so you would definitely come out ahead if you did it as an investment. in other words if you pay $3 million dollars for all the tickets and are sure to win $4 million its a bargain but if you have to pay ten million to get 5 million (buying all the ticket combination of numbers) then its not a good deal. The same logic works well on wall street and is actually a basic principle of warren buffet's value investing success. in the lottery you cannot usually get bargains on tickets but in the stock market at times like the market crash everything can become an instant give away. when people give away is when you put up your money to take away as much as you can. buffet really loved the crash more than most people because he possibly doubled his wealth. it is a double edge sword ...for me the damage came from having to sell shares for the stupid gov minimum required distributions i have to pay out by law. the stupid bush admin gave us no break until the next year which is why I can tell you for certain that there was financial sabotage going on leading up to and during the financial crash. sure thing. the Goldman Sachs guy in the treasury was orchestrating a raid and took advantage of us for the benefit of their favored firms. I think bush was too stupid to figure out what he was letting them do. They want to put way more excess liquidity into the economy and transfer ownership of a vast base of shares to inside hedge funds. by the way the hedge funds are often complete rip offs because they take 1 to 2 percent of assets to run the plans per year and then they take 20% or more over the first 10% they earn for their holders . It is a heads they win tails they win game...warren buffet actually invented this deal they are all following but he eventually made his shareholders equal partners instead of keeping that deal going. Hedge funds should have been the ones that went bankrupt before the crash but instead they screwed the market up to transfer trillions of assets to themselves giving them more time before their coming crash someday in the future. parceling out the risks and the rewards by pascals law and putting them in balance says that you only get half the value of the lottery where you "invest" ten bucks to win a mere 1 million dollars but you could conceivably buy two separate tickets and win two separate million dollar prizes in this lottery. The olds of winning the power ball lottery for the grand prize only is something like one in 1 in 150 million . if the value of the prize after taxes and since you only get half of the listed prize to begin with before taxes is variable since the prize pot is variable if you were to net 100 million dollars after taxes (a 300 something million dollar prize required before taxes and the split that happens) then the pascal number is 67 cents approximately. If you can find a company on the stock exchange selling at less than book value with net revenues and positive income that is increasing it can be like paying 2 cents to get $1 in the best possible case. it takes time to correct the market to recognize the values that are hidden under layers of sentiments. the time difference i guess is the difference between the lottery and the markets...." In the world of politics and political salesmanship we are all faced with people telling us what better ways there are for them to spend our money than for us to spend it ourselves. It is pretty amazing all the excuses for wants and needs that come up in every election cycle. Everyone in the field of political salesmanship wants a handle on an issue that people find important to think about. What better way to get the publics attention than to convince them that there is something that they all most contribute to which will mean that problems will be solved that would not other wise be solved. What problems do we have? In elections? Only the ones that have expensive solutions or then we have people like the Tea Party candidates who seem to agree with me that the problems are just usually non existent contrivances designed to maximize the publics gullibility. Almost every tea party candidate can see objectively that the whole global warming charade is about taking control and power out of the hands of individuals and having a centralized government , over paid and bloated in size never to shrink in size but only to grow and grow, micromanaging every single detail of every day life for every individual they can call one of the people they are offering this to as a mandatory service. Oh for love of government services! The nations biggest billionaires seem to think micromanagement of all aspects of everything by a central government makes perfect sense only of course if it helps shield their monopolies from the same form of micromanagement. People have to realize they are the problem and not the solution. The only thinking about putting things in order should come from a centralized authority - one that is elected or that lies to stay in power in every election. The tea party fear the realization of the world of George Orwell's 1984 but their big government detractors think that that will solve all the worlds problems especially the ones they create that never before existed like Islamophobia and global warming and health care which actually does not mean the same thing as what going to a doctor used to mean since you now will have to go to an IRS agent before you ever see a doctor. It does not have to make any sense so long as enough people get fooled into believing that this type of nonsense is helping to take care of them. It does not mater if it is a complete utter waste of money it still may be worth doing because it is in fashion. It has been said that great products never need to be advertised which brings to mind the GEICO adverting budget that seems to be one of the deepest ever. Doesn't all that repetitive non stop advertising cause the product to cost more? That is part of the theory of advertising that it has a cost. Propaganda in advertising is indistinguishable from propaganda in Politics. Even there it has a significant cost. Evey election that comes around costs the voters huge sums of time and money which are interchangeable. The value of government is so low that its advertising budget often can be so enormous that we can't afford any government at all because at some point all we get is feel good propaganda messages at very significant high cost of taxes and absolutely no other service. Every election and before and after one political party more than the other feels it needs to always keep a propaganda program going as an industry and they all that the news media. . Close

No comments:

Post a Comment