Saturday, September 17, 2016

Trump Rally Miami: 16 September 2016

The Donald was in town last night for his rally.  Before that he had even had a big day "rick-rolling" the media re the Birthers, ha ha.  I took my lovely wife and a friend of hers (who came to the US from Cuba at age 20).

Trump entered after Giuliani's rousing speech.  Rudy played attack dog, and went after Hillary re Benghazi, etc.  There are lots of ex-NYC-ers in Miami, so Giuliani is without question an asset in winning Florida's electoral votes for Trump.

Trump had his new "Les Deplorables" up on his giant LED screen behind him (link below image in case it does not show up here):

Bastille Day? Donald Trump entered his Miami rally on Friday as the theme song from 'Les Miserables' played and the video wall behind the podium flashed to tribute artwork including an insult aired by Hillary Clinton a week ago

Link to image:

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The place was packed (2500 or so), and very high energy.  Trump was also coming off a big day having pwned the media ("rick-rolled") the MSM, much to the consternation of CNN and MSNBC.

Before the rally he visited the "Little Haiti" area of Miami, where he was apparently very well received.  Trump is now gathering supporters in the African-American community (at the rally) as well as the LGBTQ community (also there).

There were no George Soros operatives there causing trouble.  They would probably have been thrashed had they come...

Among the highlights:

-- his excellent comments on us, "The Deplorables" (that is backfiring on Hillary now)
-- his obvious high energy (contrast that with, oh, well you know who)
-- his comments on the plight of African-Americans, having had no favors done for them by Obama...
-- his staunch defense of the Second Amendment (asking why Hillary needs so many guns around her)
-- similarly, mentioning the 3000 people shot in Chicago this year alone despite strict gun laws...
-- his rousing remarks on Cuba and Venezuela (plays very well in Miami, immigrants)
-- comments on coal and jobs lost in mid-America

Perhaps the high point:

Trump (asking the crowd re The Wall): "And who will pay for it?"

Miami: MEXICO !!

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The crowd was spontaneous in its cheers...  No need for cheerleaders or "Applause Now" on the screen.  Favorite chant:

"Lock her up!"

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High energy.  Enthusiastic.  Even the music (Lee Greenwood's "God Bless the USA"):

(Compare this music to what you hear at the Clinton rallies...)

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Pictures, although they do not turn out well as the LED screen was so bright, and I am a strictly amateur photographer...

Before the speakers (Florida state flag at upper right):

Rudy Giuliani:

Trump enters with his new "Les Deplorables" motif, the screen was too bright for my iPhone):

Trump will be very strong in Florida.

Sunday, May 29, 2016

The Unicorn

“A man’s problems arise because of some lack within him—and how can the same self that produced the problem overcome them?  The ox, the mule, or even the donkey will obediently pull your plow and your cart and take them exactly where you want them to go; but you have to have a destination and know how to get there.  The unicorn, on the other hand, will not do chores or follow a prescribed route.  He knows where he is going, and you couldn’t direct him because with your present consciousness you have never dreamed of such a place.  But someday the unicorn will suddenly appear at your side, eyes flashing, nostrils quivering, pawing the ground with impatience.  When that happens, do not try to put a bridle on him, or to look for some task for him to do.  He will not do it, and there will be no time.  No sooner does he appear than off he will go again.  So do not pause to think twice, do not turn to look behind you.  Leap upon his back, for he is a flying steed, and he will wing his way to the gates of the morning.  On that ride problems are not solved—they are dissolved.”

-Emmet Fox

Last night the unicorn appeared by my side.  I was not sure, how can one be?  This time I did not hesitate, I jumped on.  I almost did not, but I did.  I had my demonstration, and it made all the difference.

Monday, April 25, 2016

ZIRP And NIRP Pervert The Financial System

We are seeing an unusual phenomenon (very low interest rates) nowadays that is only partly being discussed in the press.  Many savers, however, are very aware of low interest rates as they receive next to nothing (or worse) for their money in the bank.  The general reason given for low interest rates is that they encourage economic growth (in that people would borrow more to invest).  Indeed, our own Federal Reserve (America’s central bank, the “Fed”) has lowered and kept rates low since the Great Financial Crisis of 2008/2009. 

Recently (December 2015) the Fed raised their overnight rate some 0.25% (a small amount), but since 2008 the trend has been to lower rates.  Until very recently most observers expected the Fed to RAISE rates perhaps four times in 2016 because of an improving economy and somewhat higher inflation.  The Fed’s latest opportunity (March 16) was to NOT raise rates, and most observers (including members of the Federal Reserve itself) believe that the Fed will not aggressively raise rates.

In fact, we are nearly at “ZIRP” (Zero Interest Rate Policy) here in the United States.  This has numerous effects (discussed below), most of them actually negative.  There is even talk here of instituting “NIRP” (Negative Interest Rate Policy”), following the lead of central banks in Europe and Japan.

Perverse Effects of ZIRP

In financial history, ZIRP is rarely seen.  In fact, this acronym only became well known in just the past year or two.  ZIRP has now been tried in all of the Western industrial countries with the idea of “stimulating” borrowing and investment to “get the economy moving” (the economy has grown very slowly since 2009).

Easily seen is one big effect: very low rates paid to savers in bank savings accounts and for CDs.  The rates that we receive hover around 0.1% (one tenth of one percent).  Yet there is inflation, the figures are disputed (and vary considerably), but price inflation is probably in the range of 2% - 4%.  This means that savers are LOSING money (in real terms taking into account inflation), and those losses are perhaps about 3% per year!  It is now very hard to get any real income, the 10-Year Treasury Bond currently yields under 2%.  And tying up money for 10 years seems risky for that 2% which at best matches inflation…

In fact, the picture is even worse for savers.  Pension funds, insurance companies and even Social Security are affected by low rates.  There are no good ways for the insurance companies, pension funds and even the “Social Security Trust Fund” to make any returns that they need to receive to be able to complete their financial commitments.  Social Security (already with separate financial problems) invests in Treasury Bonds, which do not make nearly enough interest income to be able to pay out to people in their coming retirements…

There is another effect that is rarely discussed but is important t understand.  In a financial environment that has interest rates going down, capital is actually destroyed rather than being created!  This can be explained as follows:

n  As money is borrowed in a declining interest rate environment, the “new borrower” gets a financial advantage versus his competitors: his borrowing costs are lower than his competitors who borrowed earlier (at higher rates, and so has to pay more than the new borrower).
n  As rates keep going lower, this effect magnifies, the “old borrowers” are at an even worse disadvantage.
n  There are ALWAYS more “old borrowers” than “new borrowers”.

Thus, the capital of “old borrowers” is destroyed at a faster rate than capital being created by “new borrowers”. 

The respected financial authority Dr. Antal Fekete has discussed this at length, many of his theories are easily available on the Internet.

If ZIRP is Bad, Then NIRP is Even Worse!

Again, NIRP (for regular people) means that you must PAY the bank to deposit (hold) you money.  You do not get paid interest, you pay.  This has not yet happened in the US (with a few quiet exceptions).  Negative interest rates are now seen in Europe and Japan.  Europe has been experimenting with NIRP since 2014, Japan has followed a roughly similar path.

Think about this for a moment: if you save money, you will LOSE some of it paying the banks!  Yet the economists say that what the USA (and Europe & Japan) need is more savings (and so investment, to invest there must be savings to put to work).  NIRP introduces a perversion to the financial system not yet seen in history.

The pension funds, insurance companies and Social Security all need to make money to pay their future obligations.  This becomes even harder under NIRP than with ZIRP.  Many pension funds and government obligations are already under-funded, NIRP makes it harder for them to come up with the money to pay.  Savers take note!  Do note, however, that BORROWERS like us would NOT get any “negative rate”, there is no way the banks would pay us to borrow from them!

Another perverse effect of NIRP would be that the lower rates going even lower means that even more capital gets destroyed.  Edward Chancellor recently wrote (in February:, that companies would likely NOT invest money in a NIRP, in that their expected profits of making products in the future would be less.

An even more interesting effect of NIRP would be the unusual one of saving cash, as in CASH money.  Holding cash itself means that that cash would not be losing money in a bank account (or CD).  Holding cash yourself means one would “earn more” than paying the bank for the privilege.  Similarly, having cash in the bank (that costs you money) means that there is an incentive to pay bills immediately rather than waiting (the opposite effect that is more familiar in inflationary times when it is better to WAIT on paying bills because inflation causes future dollars to be worth less after inflation’s effects).  An over-simplified example:

n  Let us assume a “Negative Interest Rate” of 2% (the approximate rate in Switzerland).
n  Let’s say you just bought a car for $20,000 and you have the cash to pay now.  You are given the choice to pay now or pay later (paying the $20,000 in one year let’s say).
n  If you pay now, you pay $20,000.
n  If you decide to put the money in the bank, and have to pay 2% for the “privilege”, than in one year you have only $19,600.  You would then have to pay that AND come up with $400 more to complete your obligation to pay $20,000.
n  You will likely pay the $20,000 right away, or hold the cash at home and then pay the $20,000 after that year.

Think that’s perverse?  It gets worse.  As implied in the above example, one way to avoid paying the bank under NIRP is to NOT deposit your money into the bank, and just to hold on to it.  If you would only have $19,600 after one year (in the above example) in the bank, while you would keep your $20,000 by holding the cash itself, many people will just hold onto the cash and be $400 “ahead”.

This effect of people holding cash has been discussed by the central banks (and even the Bank for International Settlements (the little known but very powerful institution in Switzerland that is considered “the central bank’s central bank”).  The talk among central bankers and other financial pundits (ex-Treasury Secretary Larry Summers and Harvard professor (and author) Ken Rogoff have discussed banning $100 bills, and even banning cash itself!  Sweden has a proposal to ban cash in five years, but in mid-March 2016 they are walking that back, as the elderly and the disabled would have problems not having the option of using cash.

Banning cash itself?  That idea is worth exploring:

n  Almost all payments would have to be by credit cards or debit cards.  Note that most retail sales involving credit cards incur a cost of about 3% (less for debit cards).  This 3% is now just “eaten” by the merchant.  This means, in essence, that prices would be up to 3% higher than now.
n  If all transactions had to be done by credit card (or debit card) that would make it very easy for the government (and the banks and card companies) to monitor your purchases!  Would you like that loss of privacy?  And, yes, the banks and credit card companies would be an even further juicy target by malicious computer hackers looking for big money.
n  There have been some examples of what happens when the power goes out, and gas stations (etc.) cannot take credit card payments because the machines don’t work due to storms, etc.  If there were a hurricane that came roaring through a city knocking out power in an environment where cash was banned, then you would not be able to pay!  No electricity, no credit cards would work.  And with a ban on cash, how would you buy food or groceries?

It gets even more perverse.  If the governments of the world decided to ban cash, then all money (not counting gold) would be in banks.  That introduces two other problems: the risk of money in the banks being frozen (as in Greece in 2015) or even seized (the “bail-in” that happened in Cyprus in 2013, the bail-in was a partial seizure of depositors’ money).  ALL money would be at risk of being frozen or “bailed-in”.  And bank account holders could do nothing about it.

Finally, scary as ZIRP and NIRP could wind up being, it is not clear that those policies would even work!  Japan and much of Europe have not gotten any better in the past year or two despite ZIRP and NIRP.  They have lowered rates to below zero in several cases, with apparently no good results!

In sum, the current policies of the major central banks to lower interest rates to zero (already here in the USA) and even to NEGATIVE interest rates (seen in Europe and Japan) create perverse incentives, incentives to NOT invest money (which the Western economies need), incentives to hold cash to protect savings, and incentives to pay bills more quickly with “hot potato” money in the banks are all unprecedented and perverse effects.  Yet, the central banks are reluctant to RAISE rates (which they probably should have done a few years ago) because of fears that the financial markets and the economies themselves would be wrecked.  The central banks are in a tough spot…


I asked to interview an officer of one of the local banks on this topic so I would have his views.  He told me that he would not talk, that to talk with “the press” would have to go through their corporate offices.

Saturday, January 16, 2016

Photos for Testing HTML re

Today's post has several images that will eventually go to my new (inactive now!) website.

Bearings & Hub Assemblies for Hyundai Accent & Sonata:

Two Pallets of Hub Assemblies for Hyundai (Ameru Trading del Peru S.A.):

Afternoon Snack in Lima, Peru (at "Chantilly" in Surco):

Mt. Everest (Nepal):