The Haiku of Finance for 08/06/15

Ask some candidate
How they will solve deficit
Markets want answer

Cancel Most US Federal Holidays To Save Money

I mentioned in one of my recent Financial Sarcasm Roundups that canceling Presidents' Day would be great.  I totally need to take this concept all the way.  The US federal government can save a ton of money and get more work done by canceling several official holidays.

Uncle Sam is nice enough to list the official holiday lineup.  The government also lists a bunch of stupid days like Groundhog Day, Valentine's Day, and Halloween, but those don't grant days off.  My focus is on some other stupid days that do cause people to skip work for no good reason.  The US Senate published an official Congressional Research Service paper from 1999 describing the origin of the eleven official holidays.  Note one very important point from the paper's abstract:  The holidays only legally apply to federal employees and the District of Columbia.  Your local laundromat or shoe repair shop that claims one of these holidays as an excuse to close is therefore just being lazy.

The eleven holidays in Uncle Sam's list are free days off for government workers, but alas nothing in this world is free.  The taxpayer pays through the nose for all of those cubicle dwellers to do nothing for almost one "working" day each month.  The Washington Times noted that one paid holiday in 2008 cost an estimated $450M.  Paying this out ten times a year, plus part of it once every fourth year for Inauguration Day, adds up to some serious cheddar cheese.  The opportunity cost of lost economic activity spills over into the private sector when service-oriented businesses decide they need to voluntarily shut down for a federal holiday.

Here's my modest proposal to restore sanity to America's out-of-control holiday calendar.  Let's eliminate every holiday that does not specifically relate to the nation's founding or its defense.  Conflict shapes our national character more than any other phenomenon.  Reducing the holiday count to this bare minimum leaves us with Memorial Day, Veterans Day, and Independence Day.  That should be enough for federal workers who also get accrued vacation days.  I question the rationale for giving federal workers Inauguration Day off because common sense should require the federal government be somewhat fully staffed while its head of state changes heads.  The other holidays are totally superfluous.

New Year's Day and Christmas Day are private functions for most people.  How we celebrate them should not be the government's concern.  The secularization of America is progress.  Elevating one religious holiday to a federal day off means granting other religions' special days the same status.  We either celebrate them all out of fairness, or celebrate none of them officially.  Take an accrued vacation day off if you must go visit your grandparents.

Thanksgiving Day can remain a semi-official holiday with no paid leave for federal employees.  Every civilization has some kind of harvest celebration and Thanksgiving fits the bill for America.  It also maintains the spirit of unity and magnanimity Abraham Lincoln had in mind when he first proclaimed it during the Civil War.  It therefore has something to do with building the nation's character and reminds us of our agrarian roots.

Labor Day makes no sense.  It is a vestigial reminder that the capitalist class once feared socialism enough to throw a bone to working stiffs with a special day.  We can declare victory in the class war by getting rid of Labor Day.

Celebrating Dr. King, our late but great Presidents, and Christopher Columbus likewise makes little sense.  Most Americans only paid minimal attention in school during history lessons.  Your average Joe or Jane Six-Pack probably wouldn't be able to pick those figures out of a lineup of cartoon characters or breakfast cereal mascots.  When those days occur, hardly any Americans stop and reflect on those holidays' notable namesakes.  Instead they go bowling or skiing, or whatever.

Federal holidays should serve a unifying purpose and remind us that we have a nation worth defending.  They should also take cost effectiveness into account.  Our modern federal holidays are too numerous and cost too much.  The private sector's imitation of government holidays costs the nation in lost productivity.  The nation got along just fine through the 1880s with barely half a dozen federal holidays.  Returning to the Republic's hard-working, thrifty roots is an excellent example for the government to set.

Nota bene:  Alfidi Capital is open 24 hours a day, seven days a week.  I have published blog articles during all major holidays.  This firm never takes a break, unlike the rest of this lazy, shiftless, good-for-nothing planet.  

Getting Straight Data on Trade and FDI for Revealed Comparative Advantage

I recently read the Asia Society's report on Chinese Direct Investment in California and perused the Rhodium Group's China Investment Monitor.  Both products are excellent rundowns of where Chinese investors find the US economy to be most attractive.  Both of these sources got me thinking about the relationship between trade data and FDI in the US.  

Trade data should be easy to compile if sources agree on computation methodologies.  I'll forgo the US Census Bureau's USA Trade because it charges a subscription fee.  The stats at USITA's TradeStats Express are free and meet my needs.  The UN Comtrade Database purports to be a comprehensive source of worldwide merchant trade data but I don't know how reliable it is for developing countries.  

Figuring FDI for any country ought to be straightforward.  After all, you'd expect a single country to report the same data sets to every international organization in which it holds membership.  The difficulty comes when those international organizations change their definitions of FDI and end up with different methods of collection and assessment.  The OECD has good stats on FDI and the IMF has a complex methodology for defining FDI.  The UN Conference on Trade and Development harmonizes the IMF and OECD approaches to measuring FDI.  I looked at the BIS stats page but found nothing obvious for FDI.  

I mention these sources because I want to discover whether trade data determines a revealed comparative advantage (RCA) that will attract more FDI.  The World Bank has a handy-dandy RCA calculator called WITS and UNESCAP has a good RCA definition.  I suspect there is a relationship between a country or region with a high RCA and a high inflow of FDI, presumably because sophisticated multinational investors want to invest in a region that has a disproportionately high share of the world market for a given set of goods.  I can't prove this yet with data, so I'm thinking out loud to signal the start of my research effort.  I plan to use the US as my test case and start with an analysis of my favorite sectors - defense/aerospace, logistics, renewable energy, and natural resources - to see if this relationship holds in my home country.  

Foreign ownership of US Treasury securities has long been a vote of confidence in the US economy.  I want to discover whether the FDI demand for the US's trade RCA justifies this confidence.  Watch this space for the official Alfidi Capital special report, coming whenever I get through the rest of the stuff I have to write about.

Financial Sarcasm Roundup for 01/28/13

It's time for another roundup of typically human tricks in finance.  BTW, if you're expecting a diatribe on Stolen Valor veterans, that's for another time and place.  Fighting fraud in the veterans' community isn't my only priority.  There's also plenty of fraud and stupidity in the finance community to keep me entertained.

The U.S. is angling for a big trade deal with the E.U.  Could this be the "grand bargain" we all heard so much about during tense moments in Washington?  Nah, this one's even grander.  It pits Europe's (read Germany's) desperation for revived exports against American farmers' hunger (pun intended) for continued protection.  I'd be very surprised to see a deal get done at Davos because most big shots are there to party, but if this is the U.S. negotiators' idea of a main effort then they probably aren't taking it seriously.  The farm lobby is more important to much of Washington than Europe's trade problems.

If Europe can't get a trade deal with the U.S., then by golly they can try for Latin America.  Chile is playing host to hopeful Euro-dealmakers and keeping its underclass out of sight.  The socioeconomic inequality might actually be a good thing for European leaders to see.  They'll be seeing more of it on their side of the Atlantic as their welfare state crumbles so it would be instructive to see what it takes to maintain stability in a plutocracy.

I'm disappointed that there may not be a U.S. government shutdown in March after all.  I was kind of hoping that the shock therapy of big spending cuts and worker furloughs would send the stock market tumbling, thus allowing me to buy in.  *Sigh.*  A sequester without a shutdown won't mean much because Congress will just postpone it again in another cosmetic deal.  Shutting things down for a couple of days would send a more serious message to the markets.

Investors who are drunk on the supposed housing recovery need to snap out of their daydreams. New home sales are down sharply, and the only people surprised were those who don't pay attention.  They'll keep dropping as long as banks are unwinding the foreclosure inventories they keep under wraps, lest regulators figure out they're insolvent.  These games of fake economic recoveries and phony sector growth get boring sometimes, so I'm glad I'm not playing.

I'll close today's sarcasm blast by welcoming the new readers I'll get who follow a certain Stolen Valor case. Hi folks!

The Limerick of Finance for 12/02/12

Fiscal cliff talks have hit a stalemate
Pundits worry and claim it's too late
But the real deal is done
No concessions were won
Kicking can until some future date

Greece And U.S. Don't Really Have Two Years

Here's today's "whoa Nellie" moment.  There will be more in years to come.  Europe is willing to give Greece two more years to meet its fiscal adjustment targets.  That's pretty silly considering Greeks are rioting right now over cuts to government spending.  They'll really light things up the longer that two-year reprieve window drags out their pain.  Leaving the euro for a hyperinflating neo-drachma will be just as painful but will probably end sooner.

The U.S. probably doesn't have two years either to solve its fiscal shortfalls but we don't know it yet thanks to the dollar's ever-more precarious status as the world's reserve currency.  Lining up business leaders to provide cover for tax increases will probably help but there shouldn't be any promises of business tax breaks in return for support.  Wealthy investors selling assets now are getting ahead of the game, so let's not count on any giant revenue boosts next year from higher capital gains taxes.  The Laffer Curve's implication that higher tax rates don't necessarily raise gross collections is becoming a self-fulfilling prophecy.

Jobless benefits are a potential casualty of the fiscal cliff but IMHO the federal government is not likely to slaughter this sacred cow.  The lesson of last week's election is that working-age Americans like their free handouts and will punish politicians who talk about taking them away.  Americans have become more like Greeks than they know.  Whatever compromise comes out of Washington will probably impact the rich first and the poor last, until hyperinflation makes everyone poor.

I have no idea whether Americans deprived of government benefits will be up in arms like Greeks.  America got its history of social unrest and agitation out of its system by the late 1960s thanks to an elite consensus in favor of a welfare state.  The end of the welfare state's income-support programs and lifestyle entitlements (SocSec, Medicare) will test our social fabric, and our elites are willing to postpone that day of reckoning even if it means they continue to bear a proportionately large share of the nation's income tax burden.

The Haiku of Finance for 11/12/12

Pump domestic oil
Shale not same as light sweet crude
We are not Saudi

European Turmoil Gets Entertaining

I can find amusement in just about anything, especially financial follies.  Europe's move to curb high-speed trading comes after years of allowing a few dozen hedge funds to magnify market volatility.  I'm glad I won't be anywhere near European stocks when that music stops.  

Spain is about to go all-in on austerity on direct orders from Angela Merkel, probably risking civil disorder on a scale that will tempt Catalans to secede and right-wingers to call for a counter-revolution in the name of forced national unity.  I'm glad I won't be traveling to Spain in 2012 or 2013, no matter how many euros my dollar will buy.  

Europe's creditor nations threw the proposed bank bailout agreement into a tailspin again, proving that the ministers who actually have to fund the bailout are far more reticent than the national politicians who endorse bailouts for the purposes of pumping markets.  I'm glad I don't have money deposited in European banks.  

S&P is gently reminding us that European corporate defaults on debt payments just might possibly be higher because of all the problems people are having paying their bills and getting along with each other over there.  I'm glad I don't own any European corporate bonds.  

One amusing thing in all of this bad news is that the U.S. isn't doing any better.  Our GDP in Q2 was much lower than what we were told at the time.  That's not enough to keep pace with population growth so of course median income will keep declining; watch for the fake numbers on that score which will be revised downward themselves when you're not looking.  

This is only news to people who think we live in a magical candy-land where life gets better just because we elect leaders who say it will.  People fall for that every time.  That's what's really so amusing here.  

John T. Reed's Super-Awesome Seminar At The Money Show SF

Okay readers, prepare yourselves for the first of several Money Show seminar reports I've been promising you.  This one's about my idol, John T. Reed, and his seminar on what he's learned after several decades of investing in real estate.  I like this guy because his writing is clear, honest, and extremely well-researched.  That is a rare set of qualities in the broad world of financial commentary.

John briefly recapped his career as a property manager, broker, and author.  Much of his introductory views of real estate are a reflection of what he's written in his free articles online and in his book How to Get Started in Real Estate Investment.  One of his best insights is that real estate investors should follow a strategy comparable to private equity investors by purchasing homes to which they can add value for resale (i.e., turning "disasters into fixers").  Leverage is okay if you can get it on your own terms, with no balloon payments, restrictive terms, or unethical options.

I'm a close reader of John's current articles on the financial crisis and other headline events.  I couldn't pass up the chance to ask him about his endorsement of foreign currency holdings.  He has described in detail his efforts to open accounts in banks domiciled outside the United States, so I asked him what he thought about owning foreign currency ETFs in a U.S. brokerage account.  John was skeptical of the concept on the grounds that even if the ETFs in question (the Guggenheim CurrencyShares ETFs) are held in a custodial account in the UK, that country isn't on his preferred list of safe havens.  John has thought through the legal implications of non-U.S. accounts.  If I were to add one more hedge to my own U.S. dollar exposure, I would hold New Zealand dollars in a bank account domiciled in that country.  John courteously provides his readers with the contact info for a New Zealand banker who is willing to work with us oddball Americans.  I will need a foreign bank account or two if those ETFs don't work as advertised.  Guggenheim has announced the closure of two of its currency ETFs, which means their assets can be forcibly distributed to investors.  That doesn't happen when you hold cash in a foreign bank account.

Aspiring real estate investors will benefit from John's checklist-driven approach to managing risk and hedging against adverse actions.  I suspect his methodology is derived at least in part from the checklists he had to navigate as a West Point cadet and U.S. Army officer.  BTW, John, thank you for your military service, from one who currently serves.  You may not need to hear that, but I needed to say it.  I am very interested in pursuing the investment strategies John identified that fall short of outright ownership of managed property, like liens and easements.

I can't do justice to the enormous wealth of knowledge that awaits real estate investors in John's material.  You folks will just have to buy his books and follow his articles.  I have purchased several of John's books myself:
- How to Get Started in Real Estate Investment
- Succeeding
- How to Protect Your Life Savings From Hyperinflation and Depression
- How to Write, Publish, and Sell Your Own How-To Book

I consider those books to be among the most important I have ever read in my life.  I have read them cover to cover several times and highlighted the passages that I use as active references in my financial decisions.  The starter book on real estate gave me some strategies that I'm actively pursuing.  Succeeding is something I wish I had read as a teenager because its points on matching your career to your natural strengths would have saved me a lot of grief many years ago.  The Hyperinflation book is the kind of tome that comes along once in a lifetime and is worth reading if you intend to survive the years of turmoil that have just begun to afflict the U.S. economy.  I have been following John's admonition to "buy everything you need for the rest of your life, right now" since the summer of 2011.  Check out his description of liquid hard assets if you need to start making a shopping list.  I can now ride out several years of product shortages, logistics bottlenecks, and wage-price spirals in the U.S. thanks to John's suggestions.  I still need to find some "junk silver" for my hard asset portfolio.  I really like the self-publishing book but I plan to use it in a different way than what John intended.  You see, the e-publishing revolution means people can buy e-books on impulse for their Kindles and other electronic book readers.  Having an e-book publishing presence IMHO leaves a much lighter burden for the self-publisher by eliminating physical inventory and other headaches.  Hey John, consider writing an updated version of HTWP for the e-book era.

I will disagree with one of John's chapters in Succeeding.  John is a big advocate of marriage and argues that there's someone for everyone.  I simply do not trust anyone enough to want to share my life with another human being.  I cannot afford to waste one more minute of my life with people who treat me poorly or do not want me around.  Some of us were meant to be alone.

I was absolutely thrilled to hear John T. Reed in person and I even praised him to the Money Show lady who was prepping him for a video interview the next day.  I respect this man's diligence and integrity, and that is why I take his writing very seriously.  Please note that he hasn't paid me anything at all to say this, even though his wisdom is priceless.

Full disclosure:  Long positions in FXA and FXC with covered calls; short position in cash-covered puts under FXF.

The Haiku of Finance for 08/01/12

Fed has swaps ready
Float euro past election
Stave off market crash

Alpha-D Currency Diversification for June 2012

I did it.  I contemplated this move for many months and finally executed last Friday during market hours.  I added foreign currency diversification to my Alpha-D portfolio with long positions in CurrencyShares Australian Dollar Trust (FXA) and CurrencyShares Canadian Dollar Trust (FXC).  I can explain this fairly radical departure.

I like what John T. Reed has published on the desirability of holding currencies other than the U.S. dollar as hedges against hyperinflation.  He correctly identifies several countries that rank high on Transparency International's list and low in relative debt-to-GDP ratios.  My tactical approach to holding the currencies differs from Mr. Reed's.  He advocates opening cash accounts with banks in each of his chosen countries.  I chose instead to hold ETF securities that represent cash holdings of currencies held in trust outside the U.S.

I reserve the right to add CurrencyShares Swiss Franc Trust (FXF) to my holdings but I suspect the Swiss central bank will continue its efforts to hold down that currency's value relative to the euro.  That's why I sold puts underneath FXF, as I suspect central bank action may drive its value lower relative to the dollar (as well as the euro).  I read the prospectuses on the CurrencyShares website before I made these choices.  The good news about these ETFs is that they are physically held outside the U.S., beyond the reach of confiscation and capital controls should the U.S. government enact those policies.  The potentially bad news is that JPMorgan is the depository for the currency.  In the event of JPM's bankruptcy, holders of the ETFs would be considered unsecured creditors of JPM and could suffer partial or total losses (hmm, shades of MF Global).

There is no way to mitigate the risk of JPM going bust.  The only consolation available to me is the possibility that the U.S. government will selectively backstop the balance sheets of systemically important institutions, and JPM appears to be one of the favored few.

I would like to take a position in New Zealand's currency but I can't find an ETF that represents holdings there.  I am not about to book a flight there just to open a savings account.  I may add more cash to my long positions in FXA and FXC in the near future.  Alternatively, I may not do so if I find some good hard asset stocks.  It's my money and I'll protect its value any way I like.

Full disclosure:  Long FXA and FXC with covered calls; short cash-covered puts under FXF.  No other non-U.S. currency holdings at this time.  

Hot Summer 2012 Looks Like Economic Annihilation

Holy canole, things are starting to slide.  Spain gave the world a gentle hint today that it can no longer borrow in world bond markets and would pretty please like Germany to put its good credit behind eurobonds. You'll have to speak up, Spain, because Germany is still pretending not to hear you give notice of default.  They get that way sometimes.

Germany is also going to get an earful from Greece, again.  The Greeks are one month away from going broke, again.  The death spiral of austerity has a firm grip on Greece and cuts in government spending are generating positive feedback loops that are sinking the economy and tax revenue.  I've had personal experience drinking German beer and Greek ouzo and can attest that both are sufficiently strong for the leaders of those respective countries to self-medicate their way through tough times.

Germany should stop listening to these deadbeats anyway.  Its economy is really hurting now that its client states can't afford to buy German-made stuff after implementing their austerity measures.  Oh well, less German beer exported means more German beer available at home for volks to self-medicate.

The G-7 pledged to do something.  Their finance ministers have burned up lots of frequent flier miles and free long distance minutes this year with no progress toward getting Europe off the floor.  I'll hazard a guess that they agreed to let the Fed do the heavy lifting since Europe can't get its act together.  The only things I need to know are the size of the Fed's dollar swaps with leading European banks and whether the U.S. will push some inflationary transmission mechanism onto the U.S.'s systemically risky banks.

Speaking of systemically risky U.S. banks (and you know that turn of phrase is one of my favorite segues), the TBTF banks still don't take risk seriously.  The OCC can't figure out whether JPMorgan's risk management controls are real or imaginary.  The controls are probably as real as you can get when writing them with a stick on a wet clay tablet.  TBTFs won't have much time for controls anyway if they get busy pushing hyperinflated dollars into weird new loan programs for Americans.  All the Fed needs to do is give the banks the "go" codes.  The Fed is already thinking about whether things are bad enough to require QE3, Operation Twist, or whatever.  Helicopter Ben can't wait.  The Fed's June meeting can't come soon enough for him.  Hyperinflation is the most likely policy option with Washington too paralyzed to enact the requisite tax and spending fixes.

I really have to hand it to those hedge fund managers who were stupid enough to go long the euro, European sovereign debt, European bank shares, U.S. sovereign debt, and U.S. bank shares in 2012.  These preppies take stupidity to a whole new level.  

Free Trade For Cuba

The US economic embargo against Cuba is half a century old.  It has utterly failed to accomplish its stated purpose of regime change in Cuba.  It is prone to leakage because the US does not enforce it with a naval task force that can interdict seaborne commerce.  The pain it inflicts on ordinary Cubans has spurred some to seek refuge in the United States, adding to our country's immigration burden.  This embargo is even outside the norms of the trade relations the US had with other Communist bloc countries during the Cold War.  The US allowed American companies to buy Soviet oil and sell the Russkies some Midwestern wheat.  Trade relations gave the US an additional lever it could pull to influence the Soviet Union's internal human rights policies.

Let's try a radical, outside-the-box solution to our Cuba problem.  The US should lift the embargo and negotiate a free trade agreement with Cuba.  The immediate effect of such a deal would be a rush of American companies looking to offshore low-wage production to Cuba.  The follow-on effect would be newly prosperous Cuban workers looking to spend money on material goodies.  Access to modern goods helped ordinary Soviet citizens see what they were missing in a system of central planning.  A little middle class spending in Cuba would go a long way toward breaking Communism's psychological grip on the island.

The US can declare victory in the last Cold War front in the Western Hemisphere.  The Castro boys have one foot in the grave anyway.  Opening up trade relations now would undermine any plans they may have for a familial transfer of power in the style of North Korea's Kim dynasty.  The Cuban-American lobby may not like this approach but they are much less influential now than in the 1960s.  If Richard Nixon could go to China, then modern American leaders can go to Cuba.  Economic influence is an element of national power.  We should use it to invite Cuba into the capitalist world.

Nota bene:  I have never smoked a Havana cigar.

Smart Reorganization Coming To Federal Business Regulation

Sometimes Uncle Sam gets it right.  The White House has proposed a consolidation of several major business-oriented agencies into one federal department.  These agencies all grew out of multiple efforts over decades to make American businesses more competitive in the world marketplace.  Getting serious about promoting exports means getting regulatory messes out of exporters' paths.

Concerns that this reorganization will curtail federal contracts available to small businesses are legitimate but can be addressed.  Requirements for prime contractors to award portions of their contracts to small businesses will very likely always remain in federal law.  Big contractors have plenty of experience certifying small businesses as partners to fulfill this mandate and know the value of businesses owned by women, ethnic minorities, and veterans.

There is some bad news that reform-minded observers may not be willing to notice.  The inability of the U.S. government to balance its budget will eventually exhaust the bond market's patience, and either an austere balanced budget or a hyperinflationary economy will result.  There will then be less federal spending available for all businesses, large and small.  Agency consolidation won't prevent that outcome but it will make a bitter pill easier for all to swallow once the business community sees the federal government get ahead of the downsizing curve.

One odd thing about the effort is the elevation of the SBA to a Cabinet-level agency.  That cannot outlast the reform if the SBA is to be eventually folded into the Department of Commerce.  It's a no-cost political move in an election year, the equivalent of a shout-out to entrepreneurs.

Reformers have finally found a voice in Washington D.C.  They're from the government and they're here to help.  

US Demands Europe Unification Bailout

The U.S. has cast its lot with European federalization, solidifying the Atlanticist elite consensus that only true continental supranationalization can prevent a European (and soon thereafter American) economic collapse.  Or so it seems.  The U.S. Treasury's Secretary's shuttle diplomacy is having the intended effect of shoring up elite European opinion in favor of U.S.-style bailouts and quantitative easing.  The only problem is that constitutional change is hard to come by when little countries in southeastern Europe can object.

I've said it before, and I'll say it again.  I'm agnostic on the question of whether the EU stays together or devolves into something smaller.  Staying together will now require rapid and massive legal changes that would empower the EU to make taxation and debt policies that supersede national sovereignty, and would give the ECB the power to print money like the Fed.  That outcome is much less probable than the uncontrolled dissolution of much of the eurozone. 

The U.S. knows what's at stake.  The Treasury is very cognizant of those American money center banks that will be exposed to European sovereign bankruptcies.  The Fed is very aware of the damage that the dollar can suffer if it must activate swaps with European banks that stand little chance of being repaid.  I do believe a contraction in the eurozone to a core of "Holy Roman Euro" countries would create a defensible economic perimeter.  I do not believe Europe's political leadership has the skill to execute this devolution.  They have instead gone for the all-or-nothing Hail Mary solution of continental unification.  This is going to be a photo finish, as they say at the horse races. 

Alfidi Capital Gives Thanks On Thanksgiving Day 2011

Publicly giving thanks on Thanksgiving Day is a tradition in the United States.  Many Americans give thanks to their parents, a supreme being, their alma mater, and whatever other forces and entities they feel have helped them become prosperous and happy.  I see no reason not to join in the holiday fun here at Alfidi Capital.

I am thankful to live in a country governed by the rule of law and not a monarch's whim or a mob's passion.  The rule of law is sometimes called into question when crony capitalists play questionable games with their clients' money, but I still believe justice prevails in even the most privileged cases.  America is still a country that convicts billionaires for insider trading.  No one is above the law.  The wheels of justice may turn slowly sometimes but they turn nonetheless.

I am thankful to live in a country that allows me to start and run my very own business without having to pay a bribe to a corrupt government official.  I pay my taxes on whatever revenue I earn without fear that some bureaucrat will surprise me with hidden fees out of spite.  This would be impossible in a socialist or Communist country where there is no such thing as private property. 

I am thankful for intelligent, thoughtful followers on the web who link to my site, read my blog, and follow my social media feeds.  Many people want financial analysis that is honest, independent, transparent, and entertaining.  My website management tools and traffic counters tell me that people from all around the world can't get enough of what they find here. 

I am thankful to be financially independent.  I have enough money to pay my expenses and live in comfort without fear of bankruptcy or a decline in my standard of living.  Being frugal and debt-free helps, but I could not have achieved this status without years of living well below my means. 

I am thankful to live in San Francisco, California, the greatest city in human history.  I have lived in Europe, Asia, the Middle East, and the South and Midwest of the United States.  Nothing compares to The City's quality of life.  The physical beauty, economic prosperity, and cultural treats here are unmatched.  There's no place like home. 

I am even thankful for the existence of stupid people who don't like me personally.  They're not intelligent enough to understand anything I have to say.  They make me look good by comparison.  I enjoy their hatred and relish every chance I have to defeat them. 

Finally, I am thankful to be extraordinarily handsome, supremely intelligent, and undeniably witty.  Those qualities set me apart from the stupid people referenced above.  I'd rather live this way than be sentenced to a miserable life of ignorance. 

Thanksgiving is a pretty cool holiday.  It's the perfect excuse to overindulge an appetite for the agricultural abundance of America, the most productive economy in history.  I enjoyed a buffet meal at The Cliff House, one of The City's oldest and best restaurants.  It was a great time to sample plenty of dishes and watch the world's commerce sail through the Golden Gate.  America is awesome. 

Reshoring Jobs Can Be Fun And Funny

BCG has turned bullish on America.  Their study of manufacturing costs in China drives them to conclude that 3mm jobs can be "reshored" to the U.S.  There are some problems with that conclusion.  The manufacturing infrastructure that used to enable those jobs was also shipped overseas, and it won't come back without major investment.  U.S. workers also lack the skills to do many of the hi-tech they could do before offshoring.  Plenty of other emerging economies have lower production costs than China, so global wage arbitrage can still keep manufacturing jobs from coming back here. 

If jobs are to return to the U.S., they will have to fit the changed skill sets and personal characteristics of most Americans.  Let's get creative, America!  Lots of grown adults in this country like to play video games, so perhaps they could get jobs as "gold farmers" who earn online credits for game-playing masters.  Asians have a lock on that job sector for now, so we'll have to give them a run for their money. 

Americans can also get jobs clearing out the vacated branch offices of banks that are bound to collapse all over again.  Fitch has put a bunch of U.S. banks on negative credit watch, so waiting for them to fail can become a fun game.  Fired bankers will only have a few minutes to clear out personal belongings from their cubicles, so plenty of temp jobs will be available for Americans who can spend a few weeks moving very attractive furniture to auction houses. 

Another great source of future employment will be the cleanup effort needed in the aftermath of the Occupy Wall Street movement.  New York City will soon require the Occupiers to leave Zuccotti Park so city streets can be restored to a semblance of civilization.  This is a full employment program for janitors and garbage truck drivers all around the nation.  Will the otherwise unemployed Occupiers want to take jobs cleaning up the messes they made?  I doubt it.  Today I walked past the OccupySF gathering in front of the Federal Reserve Bank of San Francisco on Market Street.  The sad losers squatting there wouldn't recognize productive work if it hit them on the head.  It's only a matter of time before they get hit on the head anyway. 

In case you haven't figured it out by now, I'm being really facetious with these suggestions.  Avoiding the poor career choices I've mentioned here will require the kind of hard work to which many Americans have grown unaccustomed.  Roll up your sleeves, people.  It gets worse before it gets better. 

The Haiku of Finance for 09/14/11

Geithner in Europe
In light of China's limits
U.S. may bail out

Possible Greek Default And Probable U.S. Regulatory Outsourcing

The more a Greek default looks likely, the further into denial some in the financial establishment will go.  International Financing Review posits that a Greek default will not destroy the euro.  Perhaps a Greek default by itself will not be a sufficiently strong straw to break the camel's back.  There's always Italy and Spain, two much more substantial bundles of hay ready to drop.  The plunging share prices of European banks tell us plenty about just how much debt is bearing down on valuations.

I love riffing at random on such a fun topic.  We'll have even more fun on this side of the Atlantic if a proposal to surrender some SEC regulatory power to FINRA actually goes through.  The financial sector's capture of government, coupled with the crushing debt burden that will consume revenue meant for law enforcement, is outsourcing the rule of law.  It will pay very well to have friends in high and low places in neofeudal America.

Europe and America need banking but don't necessarily need certain banks.  Both regions need strong regulation of banking.  That observation escapes notice in the midst of efforts to preserve bankers' equity-linked deferred compensation packages. 

The Haiku of Finance for 09/06/11

Europe debt effects
U.S. stocks get more nervous
Oil price falling too