Book 15: The economy

The economy usually follows the market in six months except the current market due to the excessive printing of money. I am political neutral as most investors should be. I criticize more on the current government disregarding which political party is in charge.

I The economy

1 My Coconut Theory

Coconut Theory

In a tropical island, every one sleeps under a coconut tree assigned to him. He wakes up only when a coconut falls on his head once in a while. He eats the coconut and goes back to sleep. He is lazy due to the nice weather (no need to find shelter) and the nice resource (the coconut tree). He is happy and rich by his own standard. However, he is lazy, fat, and stupid due to the lack of any need to work, exercise, and think out of his ‘perfect’ environment.

The worst that happens to the natives is borrowing coconuts from other natives with the coconut tree as collateral or cut down the coconut tree to make a canoe without plans to replenish coconuts in the future.

This is a simple theory. It can be used to explain how and why many countries are rich, poor, and continue to be so. Let’s check how this theory stacks up with countries.

U.S.A.

The U.S. is one of the richest countries due to its development, highly educated citizens, hard-working immigrants and the huge natural resources per capita (i.e. having a lot of coconuts in my theory). The U.S. is declining as we spend more time enjoying our wealth (borrowing coconuts so he can eat more) rather than creating more wealth (i.e. not planting new coconut trees in my theory).

The wealth is equivalent to the bountiful of coconut trees that were available originally and the many that were planted by our ancestors. There were fewer natives to consume the total number of coconuts, so there was a surplus of coconuts grown, eventually to be given away (as welfare and entitlements). Many of our citizens have no incentive to plant more coconut trees (work) when they have unlimited coconuts to them (generous welfare).

Because of WW2, most coconut trees in the world were destroyed while ours were isolated from the war. We were rich to ship our better coconuts to the rest of the world.

God gave us plenty of natural resources, good soil and climatic wealth (coconuts hidden under the land) and hopefully we continue to be wealthy. Unfortunately, we’re now consumers (of coconuts) instead of producers (planting new coconut trees).

Norway

Norway is the richest to its population group (3 millions) while Brunei is richest in its own population group. Norway is rich due to its rich resources and its intelligently governed wealth. I hate to compare any country to Norway as most likely we are comparing Apples to Melons.

From its long coast line Norway has rich off-shore oil fields and abundant fish exports which is second in the world-- only 6% of its export, after China but far, far #1 per capita wise. Because of the world's oil addiction and food dependence secures its income flow.

Peru has a long coast line, but it is not wealthy. My theory does not apply fully here, as there are always exceptions. It could be Norway’s educated citizens, close location to its trade partners and buying assets around the world (planting more coconut trees). The dividend payments allow Norway to prosper for decades. They have about 600 billion sovereign fund to be shared by 3 million citizens. Simple math!

Iceland

Some smart guys suggested cutting down all the coconut trees to make canoes so they can earn a rich life by fishing. The world blindly loans them with coconuts. When the fishing fails, their land is lost with no coconuts and no coconut trees left. Do not bet all the coconuts in one venture and always have an exit strategy.

Singapore and SE Asia

Singapore is rich due to its important location for the sea route for trade and commerce, as well as being the cultural intersection between the east and the west and its industrious citizens (most are Chinese). When the hard-working folks land on a land of coconuts (i.e. resources), they naturally become rich.

Mekong River is a good resource providing fishing, irrigation, transportation, and fertile land in the delta for SE Asia. Hence, SE Asia should be rich, and at the same time attracts hard-working immigrants from India and China to enhance their wealth. However, the river is being polluted by industries and the future is cloudy.

Japan

Japan has few natural resources. Its only resource is the educated and hard-working citizens. With a decreasing population and the policy not welcoming immigrants, Japan will face problems.

Haiti

Haiti used to have enough coconuts for its small population. French imported African slaves to the sugar cane plantation and changed the allocation of natural resources per capita. Coupled with frequent natural disasters and bad governance, Haiti becomes the poorest country in the world.

UAE

When the west helped UAE to explore its oil resources (the hidden coconuts under the sand) about 50 years ago, UAE becomes one of the richest countries. She expands in different areas and it could be over-expanded. When the oil dries up in 100 or so years and/or the shale energy competes better, they could be in big trouble. [Update: the problem appears as of 1/2015.]

Russia

Russia is a country full of resources (coconuts). Its citizens become lazy having a good time under the ‘coconut’ tree. Chinese are just the opposite. That’s why the Russians hire the hard-working Chinese to tender farm in the border while they enjoy life with plenty of Vodka J.

The primary reason why USSR fell was the temporary low prices of their resources oil and timber (coconuts). Trying to be #1 was another reason.

China

China has roughly 20% of the world population, but it has far less than 20% of the world resources (coconuts). For example, it has only 6% of the world land area. The situation was worsened in the last 300 years during the Opium Wars, and then semi colonization by the eight countries (led by Brits, the opium pushers). It bankrupted China by their colonial masters. It caused massive migration to escape from the land without coconuts. It was followed by WW2, war lord era and then the bad governance. Their bitter lessons ensure this generation and the next generation to work hard and be smart. When they do not have ‘coconut trees’ (the colonial masters cut most of them down), you have to work hard or die.

China ranks #2 in the economy. It is only important to its trading partners. Its own citizens care about their living standard which is about the middle in the rank of all countries.

Greece

Greece has its natural resources: tourism (coconut). Euro gives them unlimited borrowing. Olympics boosted their dumb ego. The result is bankruptcy.

Ancient civilizations too

Greece, Iran, India, China and Italy are among the oldest civilizations. Most do not do well in today’s economy and many of their citizens have immigrated to other countries. My theory suggests that they have exhausted their coconuts (farm land and metals) throughout the long history. Hence, they have to migrate to lands with more coconuts. To illustrate, there is a huge discrepancy in natural resources (oil, metal and farm land) between China and the U.S., which has a relatively short history.

Corporations too

Microsoft was a tougher company with more innovations fifteen years ago than today. However, they are enjoying easy profitability of upgrades of Windows and Office (coconuts planted by their ancestors). For a long time, she only has one successful new product, the Xbox. Her managers are counting their bonuses instead of taking risk. The Coconut Theory works again.

Rich families too

It is very rare to have rich families that last over three generations. The first generation grows the wealth (planting coconuts), the second generation enjoys the wealth, and the third or fourth generation usually becomes poor due to the easy life.

Conclusion

So far, no one tells me that this theory has been ‘discovered’ by others. Shamelessly I claim it is mine. To me, it is just common sense.

Afterthoughts

· I did not have a coconut tree (i.e. financial aid or money from my dad), and that is why I worked two jobs in my first summer while attending college here. The first one was a bus boy job from 5 pm to 10 pm. The other one was cleaning slot machines from 4 am to noon for 5 and usually 7 days a week. Lack of coconut makes you desire to work hard or you vanish. With an average IQ, I can make it by working hard in a land of coconuts.

My children have too many coconuts and they live in a more lavish life style than the old man. They ask me why I work that hard during my retirement or why I still go to Burger King with a coupon even they do not treat me like a king.

· According to my friend Norman, the problem with a small place filled with coconuts is someone would likely to colonize you and steal your coconuts as happened to Norway during WWII. Similar to China about 250 years ago. Once a while, need to cut down one among many coconut trees to make spears to protect the rest of the coconuts.

2 Our major problems

As of 2015, we’re running out of tools to stimulate the market. The zero interest rate has lost its effectiveness especially when most countries are using the same tool. We cannot pass our debts to the next generations forever.

We need to cut down expenses by:

· Ending our participation in the wars in Middle East.

· Not turning the illegals into legal.

· Reducing our generous welfare.

· Encouraging able folks to work.

· Encouraging constructions over consumptions.

Filler:

$80 sneakers

Amazingly, some kids from welfare families show off their $80 sneakers that I cannot afford (or not too stupid) to buy. It is same as going to see a doctor for a minor cold.

Tufts is giving scholarships to children of illegals. How many want to disguise as illegals (no proofs are needed to be illegal)?

No one saves. When you save too much (like myself), you lose all the goodies from the government such as free health care. With more than 40% not working, we're a nation of free loaders.

Actually the rich can afford to buy good stuffs more as the stock market is great. It widens the wealth gap and causes disputes. The problem is 1% cannot support the rest even if they spend like no tomorrow as the rest of our citizens are doing.

What's wrong with this country (compared to 50s and 60s)?

3 The evils of printing money

I just explained to my grandchild that money does not fall from the sky or grow on trees. Every time we print money, it does the following:

1. An invisible tax is added to the rich as their purchasing power will be decreased via inflation.

2. Your children and grandchildren will pay for the loans.

3. Selling a piece of our asset to foreigners.

4. Our products are less globally competitive as we have to add more taxes to pay for the loans. It is more competitive initially as our currency has been depreciated, but this will not last long.

5. Give more reasons for the rich to give up citizenship and move to another country. Most become rich for being smart and opportunistic.

6. The USD being a reserve currency is closer to end.

The only winners are the lobbyists and politicians, who bought votes with the money from your pocket.

It will help the stock market in the short-term, but it is very damaging for the long-term economy. That's also the primary reason why the recovery of our economy is taking forever. Printing money to the maximum is not a solution but a problem. Today most countries are printing money excessively.

Afterthoughts

· We have inflation (such as most products in the super market) and deflation (such as housing expenses) since 2008.

· As of 6/2012, we have 16 trillions of debt and it is substantially less depending on whether you include the entitlements. Besides the poor environment, unpromising economy, our children and grandchildren inherit our huge debts. So far, it is about $55,000 debt for each baby born today. However, many foreigners want their babies born here, so everything is relative.

4 Low interest rate

As of 2013, we have the lowest interest rates for a long while, which is normal in a recession. It is a great time to buy a house (especially with the depressed house prices) and / or borrow money. [Update 2016: The above has been correctly predicted.]

Low interest rates have many impacts on our investment:

· Usually they're better for the stock market as corporations can borrow at cheaper rates and hence improve the bottom line. In theory but not today, it should be great for the housing market and retailers.

· Corporations can borrow money at favorable rates to buy back their own stocks or acquire other companies to boost their own stock prices.

However, prolonged period of low interest rate will damage the economy. Japan is one example.

· Folks including retirees, who depend on fix incomes, will suffer.

· Dividend stocks will prosper from investment on moving bonds to stocks until interest rate starts moving up.

· Eventually the current long-term bonds will suffer big time when interest rate moves up as the higher-interest bonds are more valuable.

The government has to lower the rate to stimulate business, but at the same time it cannot prolong the low rate too long.

Afterthoughts

· As of 8/2012, the yield of 10-year Treasury Bill is about 1.75%, the lowest in my recent memory. It is better to keep cash now than CDs, so we do not miss any opportunity to move back to equity.

· Today, we’ve the lowest interest rate in memory but we’re still in a recession; the Fed is running out of tools to improve the economy.

5 Inflation and deflation

The historical annual average is about 3% inflation. CPI is not a good gauge any more after energy and food have been excluded.

Inflation is:

· An invisible tax to the rich.

· A strategy to lessen the loan burden. To illustrate, your loan of $1 can buy a loaf of bread now, and you will pay back the $1 plus negligible interest that can buy only half a loaf of bread due to inflation.

· An invisible salary cut.

· An invisible cut to your entitlements/welfare. Social security is supposed to be adjusted to CPI, which can be manipulated by the government by not using food and energy to reduce social security payment increases.

· An invisible cut to your investment incomes (dividends and appreciation).

Deflation is no angel:

Deflation is far worse than inflation to the economy. When the company produces a product and finds out they have to sell it for less due to deflation, then their profit would be cut and they might need to lay off employees.

Deflation would destroy all financial institutions. It makes all their collaterals on all loans less valuable and the borrowers may give up their collaterals as they’re worth less.

Inflation and deflation at the same time

As of 2014, we have both inflation and deflation at the same time for several years now.

We have inflation in most of our basic necessities: food, gasoline and heat (especially important for the NE) with the exception of rent due to the depressed house prices. Electronic stuffs and PCs are deflated considering how much we can buy today vs. last year. Cars have been slightly deflated when figuring in the extra features.

Outlook

The government should ensure inflation and deflation are within an acceptable range (3% to me). It has printed a lot of money and lower interest rate to stimulate the economy. At the same time inflation has been accelerated in many sectors. When the economy does not improve, the government has run out of tools to improve our depressed economy.

However, beside time the shale energy may cure all problems. When the economy improves, the inflation and the interest rate would most likely increase. Oil price depends on supply and demand. The poor economy will decrease the supply and hence the oil price would be depressed.

Afterthoughts

· The dollar has lost more than 90% of its value since the FED was created due to inflation. However, it only affects you if you save your cash under the pillow. Our capitalism system punishes those who do not invest and take risk. If you invest in long-term CDs, you’re doing barely OK. If you buy any stock such as Edison’s new venture or a piece of real estate in your town in 1913, most likely it beats inflation by a good margin and Uncle Sam would be glad to share your fortune via capital gain taxes.

· From my personal experiences.

The Big Mac Value Meal cost about $1 in 1970 and now it costs $7, 7 times in 45 years.

An average house in my hometown in 1980 cost $45,000, and now it costs $450,000, 10 times in about 30 years.

Houses in most cases are better deals. Besides paying the tax-deductible property tax and interest, we can live in them.

The $10,000 under my pillow in 1980 has no gain today, but it gives me a headache every time I sleep on it. J

· Today a bag of 10.5 ounce Lays potato ships is $4.29, and the next day it was downsized it to 9.5 ounces. All items in the grocery store are just like that. The millionaires have no complaint as their stocks (as of 6/2013) have been up since 2008.

· For those who have jobs, you have a deflation when your same income can buy you more of your basic supplies / services than last year with the exception of food and gasoline as in 2013.

Most investments are beating the inflation from last several years. The wealth gap has been widened between the middle class and the rich. Five years ago, the gas price is less than $2 and now it is over $3 [Update: $2 as of 1/2015]. We still have high unemployment and high under-employment. Most recent college graduates cannot find jobs or jobs in their choice. It happens all over the world.

· Inflation is controlled by the government via the rate of money being printed and / or easing credit. When we have more money chasing the same quantity of products / services, we have to pay more for them or we call it inflation. In shorter term, it may be distorted by other events such as the deteriorating housing prices. With excessive printing, I see hyperinflation in the coming years.

· Inflation is rising.

Labor

We have to divide it into two categories: labor that can't be outsourced and labor that can be.

Labor outsourced to China (your iPhone for example) and India is still relatively cheap.

Labor in the US like flipping burgers, fixing your plumbing problems, or your telephone services will be increased in cost. If they are not, they will be manipulated by the government via welfare (we pay for them via our taxes) or the unions. A worker at Burger King cannot survive without government subsidy or family largesse.

Commodities

All commodities including farm land will increase in value due to:

a. Supply and demand - the net growth of population is rising but it is offset by the poor economy.

b. Excessive printing of money. You will be able to buy half a loaf of bread with the dollar that used to buy you the full loaf.

· My official definition of Fed in my joke book.

The Fed acts more like a mistress to the president than an agency. The two are not officially related. But, they're on the same bed most of the day.

I worked there. Unfortunately I did not climb the corporate ladder all the way otherwise we do not have this economic mess. Same reason why the Celtics lose as they did not recruit me J

Filler:

### Inflation meter

When the beggar asked me for a spare dollar, I felt the inflation pinch. That's the real inflation meter. Forget what the government tells you.

6 Education by example

A good economy has to be supported by an educated workforce. We still have the best higher education system in both quantity and quality. Our pre-college education is failing with a high percent of dropouts.

When you find out your store under charged you by $1, do you go back to pay them back?

I do not for two reasons:

1. The store has cheated me before intentionally or unintentionally, so it breaks even.

2. We also need to teach our children to conserve energy. J

Despite the above reasons, I’ll go back to set up an example for my children. The primary problem with our education system is education should start at home. No matter how much money you throw into the system, it will not work if the students do not want to learn. With so many single-parent and teenage-mother families, I do not see a bright future.

It happens all the time that you have a convict and a doctor in the same class as indicated by this video. It proves my point again that education should start at home.

(http://www.youtube.com/watch?v=Xu1Q0E7oGQU)

Some of our discrimination and biases are passed to our children unknowingly. That will hurt them eventually. Be careful what we talk / act in front of our children.

Education by example is the most powerful and most effective, but unfortunately it is the most neglected. It is about time for the politicians resolve our root problems NOT by throwing our money (not their money) recklessly at the problem. Everyone with a first grade education can write a check and we do not pay our leaders to write checks.

We need to limit the generous welfare for teenage mothers and preach family value to stop the vicious cycle.

Afterthoughts

This short article attracted a lot of feedbacks.

· My elementary class in Hong Kong of 45 students produced one world-known chef, one movie director, one MIT Ph.D., one pharmacist, one doctor… I am the under achiever or the black sheep of my class. Our teachers were not from Hong Kong University (the best there). The incentive to learn is simple: If you do not study hard, you will be a nobody. No one will bail you out. Our average class size is 45, so do not use class size as another excuse.

· We need to select college trainings in the fields that the society or the corporations need. It is a luxury to take a major you’re interested in but is not demanded by the society. I did not have that luxury. However, even though I could not speak English well, I managed to start a professional job as a programmer while some college graduates with perfect English Xeroxed manuals for me.

· The problem of many high school students is the loss of respect to their teachers. You cannot learn from someone you do not respect. I feel bad for the teachers in many urban cities as your lives could be at risk every day and many lose their initial enthusiasm to teach after they face their cruel reality.

My friend Norman added and it never happens in the city I grew up:

My wife taught reform school in Richmond and was threatened several times. Once the girls in her food service class grabbed her and held a pair of scissors to her throat.

· The U.S. college education is a big export. It does not seem to be counted in our GDP and it should be. In addition to the highly–qualified professors, we have the best research (both on equipment, procedures and systems).

The landscape has been changed. Though most professors are still born here for more than one generation, a lot of students are foreigners and the children of the first generation of immigrants. Our high school systems are not graduating qualified students in the same scale as the last generation and foreign countries especially Asians are catching up and some are even passing us.

· Some Chinese students here are tutored by their parents on science and mathematics every night and a lot of students in China go to tutor schools after regular school. If we do not have the dedication and support to our children, we cannot catch up with them.

· 'Leave no one behind', 'Race to the top', 'No homework '... are just ideals and bear no fruits in the real world except for the big-mouth politicians.

After our best effort to educate the problem kids, should we still leave them to disturb the rest of the class?

China’s one-child policy gives rise to better education of the next generation. The child is raised by two parents and four grandparents. It is all good as long the child is not spoiled.

· One guy who was among the top in the unified examination for high schools in Hong Kong drove a bus to make a statement. We need these geniuses to create more jobs such as discovering a new drug to save many lives, not driving a bus.

· One child plays video game for two hours extra and one studies two hours extra every day. Do you believe they will achieve the same in life provided the last names of them are not Kennedy?

One Chinese high school has an average class size of 70 and has equipment below our standard. The difference is the students study at least three hours after dinner. It is in Tier III city and it is just a typical school.

· Why Mass. is rich? It is due to the large number of high tech companies including those involved in bio tech formed by former researchers of higher-learning institutions such as MIT and Harvard. It proves my point that we need about .5% of geniuses to provide jobs for the mass.

· Robots will be harmful to the employment of the unskilled workers. In next five years after 2015, we can see the more replacement by the robots.

Five years ago, robots could not do much. Now, they can do something useful from vacuum cleaners to bionic limbs. In ten years, they can do almost everything like a human being except one task (i.e. reproduce but they can assemble robots).

Robots are still expensive for many jobs today. To illustrate, Apple can assemble thousands of workers to manufacture a new product in China. They cannot have that large number of robots and program them in a short time.

· Non-correlation of education and the economy.

Brazil’s booming economy (due to high natural resources including oil) can benefit more with better education and harder working citizens. The education is lacking in Brazil. It gives rise to corruption and widens the wealth gap.

Brazil is one of the major countries participating in today’s globalization. When China slows down, Brazil will feel the pain too.

Philippines has the opposite problem. It has a lot of college graduates working at factories. The economy does not support enough professionals. The poor economy is due to lack of natural resources, long-term corruption, poor governance, etc.

Hong Kongers hire nurses and teachers from Philippines to be their household servants. It appears to be inequality, but actually it reduces inequality by providing them the best jobs they can find.

· More.

http://ebmyth.blogspot.com/2013/11/more-on-education.html

Links

· Click here for Asian education model.

http://tonyp4idea.blogspot.com/2012/10/asian-model-for-education.html

· Stuffs that college do not teach.

http://tonyp4idea.blogspot.com/2012/11/stuffs-school-does-not-teach.html

Another example.

http://www.huffingtonpost.com/2015/01/30/rescue-leftover-cuisine_n_6563516.html

· Click here for more Afterthoughts.

http://ebnation.blogspot.com/2012/11/afterthoughts-education-by-example.html

# Filler:

### Tips ###

· You need to know both value investing and the basic technical analysis to be successful in today’s market.

· Buy in fears and sell in greed instead of the other way round.

· An inflated sector will return to the average value.

· Be conservative and diversified. The turtles are always the winners in the long run.

7 A prolonged recession

As of 2014, we're in the 6th year of this recession even the market recovers fully. It is the longest from my memory. We tried too many short-term solutions such as massively printing money and rescuing big companies that should have failed. They work for the short term especially for the stock market, but it does not work in the long term. The temporary fixes are definitely not beneficial for the economy and its capitalist system. Politicians want to buy votes and voters do not want to bite the bullet. In addition, our economy is globally connected. What happens in foreign countries including EU and China will affects us.

Sometimes no solution is the best solution and let nature take care of itself. No companies are too big to fall. We cannot spend recklessly to solve our problems and that is the main reason to get us into this recession on the first place.

When we let big banks or corporations fail, the job unemployment would rise and their buildings will be empty. It is a temporary problem. Companies with better management will take over, start hiring and fill the buildings. It is called capitalism and it lets the fittest to survive. The lessons will be learned.

Our money has been used unproductively on unemployment and welfare. I’m glad we did not bail out Lehman Brothers as their former clients all over the world would ask them to pay back for misinterpreting the safety of their derivatives with some of them bundled as ‘mini bonds’. Many of the banks selling these derivatives are liable since Lehman Brothers is gone.

The investors are doing fine in the market as it is close to the 2007 level today. It is still a depression when you lose your job and/or your house.

I'm looking and longing for a prolonged bull market when the two wars will finally and completely end. The U.S. is still full of natural resources especially per capita wise. Everyone who wants to work should have a job. The environmentalists should allow the oil companies to drill unless the concerns are real. The politicians should have a longer vision beyond four years and we cannot pass our debts to the next generations forever.

Afterthoughts

· From Eric: I think you are completely on the spot on with this point. The system needs to cleanse itself once and for all, and current policies are only prolonging the agony at this point. I was OK with QE1, as a chaotic unraveling could not have been allowed, but I still wonder if we wouldn't be much further along in putting the crisis behind us if QE2 was left on the shelf back in 2010. Sure the adjustment process is painful, but so are many things in life that must inevitably be endured before things can get better.

· From Wheels: Recession for 4 years...hmmm...sounds like a depression to me...And we all know the reason why nature will never be allowed to take care of itself: because it's not politically tenable. No politician can stand up and speak to the dumb masses that we’re in trouble.

On the investing front, can someone please tell me how it is possible to get real valuations for the market with all the juice that global central banks have put in? Trying to invest with "fundamentals" in mind is making my brain hurt, because there is no such thing as fundamentals with all this intervention. And, 2008 is still staring us in the face, and scares me. And I think I'm a pretty average Joe investor out there.

# Filler:

### Politics. It is very seldom we have the third term won by the same political party; based on this I predict Republican will win. Republican is pro-business but statistically the market does not fare well under the Republican leadership. Will it be true this time? Only time can tell. ###

8 W-shaped recession?

As of 2013, this recovery is different from the previous ones:

1. For most job seekers, it is still a recession. If you lose a job, it is a depression. No matter how the government dresses up the employment picture for election, employment is still not promising.

As of 2014, we have improving employment. However, the median wage is still lacking. If you get a job that pays half your previous job, you will not spend recklessly like our government.

Many quit looking for jobs. The sign-up bonus for recent graduates is replaced by years of under-employment in jobs that they do not have to go to college for.

Globalization changes the entire picture from your daddy’s days. Corporations can hire the best candidate (slave wages and good education with the right skills) any place in the world.

2. Corporate profits are good after the bare bone cuts. They need to spend more and hire more to ensure future earnings. Employment is still low today.

They can move their ‘headquarters’ to any place in the world to seek the best tax benefits. We’re forcing the golden geese to fly away. It is similar to taxing the rich excessively.

3. Large money supply drives down the interest rate. It should be good for business for several years to come. However, the money supply does not stimulate business investment and hiring as it is supposed to. The government is running out of tools to stimulate the economy.

4. We've inflation for most commodities and food but deflation for housing.

I do not want to ignore the slim chance of a W-shaped recession even the market is doing great lately. A W-shaped recession means two recessions one after the other without recovery in a short time. It is very rare but we have the perfect storm coming our way with the EU crisis and China’s slow down.

Very often time cures all our problems including the EU crisis, our reckless spending… This time it just takes longer than usual.

As of 1/2013, the chance of a W-shaped recession is very slim, but the economy is recovering very slowly. We have a non-correlation between the stock market and the economy. However, it will return to the normal correlation.

II The stock market

9 When will DOW double?

Dow will double (to 25,000) before the end of this decade (2020) if most of the following materialize. My prediction is more realistic than the book Dow 40,000.

· The two wars will finally end by then and the U.S. will not start another one. We cannot afford to be the world’s policeman fighting for our idealism. Let others fight for their own freedom, their own humanity and their own ideology. Being a big brother means nothing when we have 15% unemployment / under employment. Does Vietnam today threaten the world?

· Again avoid any physical war at all cost.

Japan and several Asian countries are dragging us to a war with China on the disputes of oil resources in some islets in China Sea. Throughout history, Japan has been a fierce aggressor to its neighbors and its navy is growing fast. Why should we protect Japan militarily with our money while Japan passes us in living standard? When Japan and S. Korea fight, which should we side? Learn from our lessons from Middle East wars.

· Be friendly with China.

Avoid any trade war which has the risk of them pulling out their debts of over a trillion dollar. If it happens, it would damage our economy.

· Buy more printers to print money.

It would lead to super high inflation (so $20,000 today could only buy $10,000 goods in 2020). In this case, Dow doubles but not in real purchasing power except for the tax collectors. It will harm the economy long term. It would damage the banks that lend with today’s money and will get back the money with less purchasing power.

· Cut down entitlements.

In addition, force those able, long-term welfare recipients to work on jobs taken by illegal aliens now. Clinton’s work bill does not work in many states with too many misinterpretations.

· No more bailout.
No one including the state government is too big to fail. Cut the government size to half. It will not be degrade the service as most government workers have tiny workloads. I hope we’ll not bail out Detroit. If we do, we will have to bail out other cities such as Chicago and many cities in California. It is easy to ask for money than to work for money. Laziness is a human nature.

· Help small businesses.

Give incentives to businesses to invest here such as low tax rates, less complicated regulations / laws, low legal claims, etc. We cannot compete if our wages, taxes and regulations to do business here are too high or too restrictive. We need to bring our living standard to how much we earn, and not to how much we can borrow.

· Incentives to big corporations.

No more corporate welfare. At least tax the profits made in the U.S. Give them incentives to hire here.

· Reward folks taking risk by lowering taxes on investment incomes. Taxing the rich excessively will drive them to leave the U.S. We seldom have high taxes and business growth at the same time.

· With the shale oil and gas, the U.S. could be energy independent if there is minimal damage to our environment.

· Reform our election system. The primary objective of a president should not be reelection but serving us.

· Emphasize on the economy.

Is being #1 more than employment? Is consumption (via borrowing) more important than production (improving our deteriorating infrastructure)?

We need a law to balance the budget to be implemented after this recession. Most of the above will not materialize as the politicians cannot buy votes with many measures and no voter wants to bite the bullet. It seems we’re heading to more government spending and loans. Dow will double only due to higher inflation.

History or not yet?

10 Politics and the stock market

Republicans are usually pro-business, but the democratic presidency has better track record for better market performance.

The Dow index was up 56% (from 7,949 to 12,418) in the less than 3 years since the day when Obama took office. As of 8/2012, it is 13,100, so the market has been fully recovered from 2007-2008, but not the economy. If you still collect unemployment or your house has been foreclosed, you're still in deep trouble.

The S&P500 performance under Republicans vs. Democrats since 1926:

Annualized return under Democratic presidencies: 13.74%
Annualized return under Republican presidencies: 6.25%

The President's appointees for the economy are the ones to watch as they set up the policies. As of 2012, the interest rate is not a factor as it cannot go much lower. The cut in military expenses and the ending of the two wars will be good for the economy.

The problem of the two major political parties is that they do not agree with each other, so they have to make too many compromises and waste a lot of time and effort.

Afterthoughts

· Since we have more people depend on the welfare / entitlements and the government jobs, they will vote accordingly and that will not cut down deficits in the foreseeable future especially the baby boomers are starting to collect the entitlements.

· Do not blame the news media. They broadcast what you want to hear.
Do not blame the politicians. They do what you want them to do.

Do not blame me. I deliver what you want to get.

So blame you yourself.

· However, 40% (45% soon in our deteriorating economy) do not pay Federal income taxes and they take back more via welfare benefits and entitlements from the society.

The rich (1%) can blame the poor (40%), and the poor can blame the rich for the ‘welfare’ for the rich. They are both right and both wrong.
If we divide the society into 3 groups: the rich, the middle class and the poor, the middle class (I and most of you belong to this 59%) is really squeezed by both sides

· Capitalism encourages folks to work hard, communism encourages folks to be lazy, and socialism encourages folks to steal.

· It is obvious that the 2012 was partly won by the Hispanic votes with the promise of legalizing the illegal aliens. We’re the only country on earth that welcomes illegals. Have our politicians calculated the costs for welfare benefits and the impact on jobs if we legalize the illegals?

· A good president does not have to be an expert in every field except being a good communicator. He should delegate his power and know whom he hires for a specific job. Unfortunately his personal objective is to get re-elected during his first term. In the second term if reelected, build his legacy to sell his books/speeches and reserve a space in history. Actually he has about 18 months to do so in the second term.

From my definition, Obama is not a great president. Reagan had good acting skills. Bush was not. Carter was too gentlemanly and not firm. Nixon was tougher but his hand was caught in the cookie jar. Clinton invented or gave new meanings to some terms in our dictionary (such as interns, inhale, sex…) and got away. Basically I cannot find too many great presidents in recent history. We may have to blame our election system. If I want to be one of them, I would choose Clinton for all the funs he is having. J

· Whenever I make any political remark or any remark against the government, I have a chance of offending half of the population if we are evenly distributed into the two political parties. A good discussion even against any politician is better than no discussion. We are not a member in Bush’s cabinet who has to agree everything with the chief in order to survive.

11 Distorting indexes

The S&P 500 and Dow may not be a good benchmark especially for long term (say 15 years) for the following reasons. It would give you distorted results if it is not used correctly. The better ones are the equivalent ETFs like SPY, but they have a shorter history. Wilshire 5000 is less popular but it represents the market better.

1 Survivorship bias.

To illustrate, excluding Lehman Brothers, AIG… the indexes would have better return than they actually are, especially for dividend stock performance in 2008. How many dividends you have to gain when you lose the entire investment on these stocks? If you do not include the many failed small companies, your portfolio on this group should be fantastic.

2 Most companies in the 1920s have not survived. They may be spun off, being acquired, or the name being changed. Examples abound. Comparing the index of a specific year is fine but not from 1920 to today.

One testing technique is having a test window for a shorter time frame; for example, start on the first of the year and end at the end of the same year. Repeat the test every year for the test period and average the results.

To illustrate, a company originally worth $2M spins off a subsidy and each new company now values at $1M. It does not mean the original company loses half of the value and the data base should adjust the price accordingly. Usually spun-off companies appreciate more than the market, but there are many exceptions such as Palm.

3 When I use a database with no survivorship adjustments, I usually have strategies making incredible returns especially those strategies including penny stocks.

To illustrate, I have two stocks costing one cent each in the same portfolio. One goes to 2 cents and hence makes 100% return and the other one goes to 0. In reality, my return for this portfolio is 0. However, the database does not include the bankrupted stock and hence it shows me I have a 100% gain in this portfolio.

When you see the ads claiming unbelievable returns, it could be the survival bias or they use the best price of the day to their advantages.

4 Stocks are added and removed from the indexes every year. The ones that are removed could be bankrupted or doing badly like Kodak, Polaroid, AIG, Bear Stern, etc. It would make the indexes look better than they really are as they are replaced by better companies.

5 Inflation. When I was in college, I paid $1 for a Value Meal and now I need to pay $7 for the same meal. My stock has to appreciate six times to break even, not to mention the taxes for the Federal government and the state.

6 Dividends are not added to the index.

When your investment says they have 10% return and compare it to the index with 8% without dividends, the comparison is wrong. The investment is even with the index if the dividend is 2%. By law, the investment subscriptions / services can take advantage of this. Check the current rule.

7 Both indexes are not ideal and both do not represent the complete market. S&P500 with capital-weighted construction is better than Dow with price-weighted construction.

Usually Dow and S&P500 follow each other, but not in 2012. In 2012, the largest ten contributors in S&P rise but not in Dow.

I prefer to use S&P 500 (^SP500 in Yahoo!Finance or ^SP 500TR including dividends) which has a decent historical data and it has better diversity than the Dow:

Annual Total Return as of 2016

	2015	2014	2013	2012	2011
S&P 500	1.4%	13.7%	32.4%	16.0%	2.1%
S&P 400	2.2%	9.8%	33.5%	17.9%	-1.7%
S&P 600	2.0%	5.8%	41.3%	16.3%	1.0%

Explanation

· They are total returns (= appreciation + dividends).

· S&P 500 represents large stocks, 400 represents mid-cap stocks and 600 small stocks according to S&P’s definitions.

· The following illustrates how to estimate S&P 500 index by using SPY and prices from Yahoo!Finance.

Return= -.76% appreciation + 1.78% dividend + .1% for expenses for the ETF = 1.12%.

Dividend yield changes during the year, so it is just an educated estimate. The result is a little difference from the one published but it is acceptable.

· 2013 is a great year for all caps especially small cap while 2014 is for large cap.

Links

S&P 500:

http://en.wikipedia.org/wiki/S%26P_500

Dow:

http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

12 Momentum and volatility

Take advantage of the fluctuations and the short-term trends of the market. Volatility and Momentum work opposite to each other. Select the fluctuation (volatility) or short-term trend (momentum) according to the current market conditions.

When we've so many 3% fluctuations and the S&P stays flat, you can take advantage of fluctuations by buying a market ETF at the dips (3% down in this example) and selling at the temporary surges (3% up in this example). 2015 is a market good for this side market.

Bollinger Bands supposedly indicates stocks normally trading within the bands (upper and lower). This technical indicator is available in most charts such as Yahoo!Finance. For example, enter SPY for the stock and select the Bollinger Bands. You should see the two bands and the stock price in between. Buy when its price is closer to the lower band and sell when it is closer to the higher band.

Momentum is profitable by buying when the last n days is up by x% (you define your n and x and adjust it according to the past data for the stock). You need to protect your portfolio with stops as momentum can reverse. Do the opposite (via a contra ETF) when momentum goes in the opposite direction.

Design tests using historical data from Yahoo!Finance and implement your strategy accordingly. It can also be used to test the direction of the current market. A lot of time volatility happens for a very long period before the market changes direction.

Momentum works better in a rising market especially not using contra ETFs. Monitor whether the market peak is close, as it could plunge very fast and very steep. In this case use stop orders to limit big losses due to market plunge.

Links

Volatility:

http://en.wikipedia.org/wiki/Volatility_%28finance%29

Momentum:

http://en.wikipedia.org/wiki/Momentum_%28finance%29

13 Investors’ psychology 101

Emotions control our investment decisions. We buy in greed and / or excessive optimism and sell in fears and / or excessive pessimism. They are just human natures that we have to avoid. Here are some pointers.

· Emotionally detached.
Investing is about making money at the least risk with emotions detached. Never fall in love in a stock or a group of stocks. Never be bothered by failed stocks and do not be too excited with successful trades.

· Every asset/class will return to the average value with one or two minor exceptions (gold is one but most likely it is due to the depreciation of USD). As previously stated, when a strategy is used by everyone, it will lose its performance.

· Do not risk the money you cannot afford to lose.
One recent retiree lost most of his money in a market downturn and he died due to too much worry. After a year, the market recovered and he should have recovered all his losses except his life.

Older investors should have a rainy day fund in cash. This could be 10-30% of your total portfolio depending on its size. Younger families should have enough emergency income for at least 6 months.

· Buy when the market is bleeding and sell when everyone is buying. Buy low and sell high is the best strategy but it is hard to do so as our emotions do not allow us to do so.

· Diversifying your portfolio will improve your mental health besides your investment performance. Stocks could plunge with unexpected events and / or being manipulated. Diamond and Carnival were examples in 2012. I can sleep better with one bad loss among 20, but not one among 2.

· Do not buy sin stocks like tobacco companies unless the potential profit is more important than your moral can allow. One option is to donate the ‘loot’ to the cause such as Lung Cancer for this example.

· Do not follow the herd without an exit strategy. If you are against the herd (contrarian), make sure you have good reasons to do so.

The flow to money fund proves that the average retail investor is usually wrong in market timing.

### Tips from my book Best Stocks 2014 ###

From 12/16/13 (publish date) to 3/29/14 (today), the performances of the entire list of 9 small micro-cap stocks (RAS is not a micro-cap by my definition) are:

Stock	Market Cap (M)¹	Annualized Return
ARTX	52	234%
CPSS	176	6%
RAS	602	-19%
GST	329	83%
EVC	515	65%
LEE	171	293%
SGU	313	16%
HILL	166	491%
MNTG	147	12%

Average		131%
SPY		22%
Beat SPY by		496%

¹As of 12/16/13

14 Herd theory

When the herd makes money, they think they're genius. The last one to leave the herd will be the fool of all fools such as the last holders of Lehman Brothers, AIG, Bear Sterns, etc. The biggest fools are the ‘value’ buyers when these companies were plunging fast. When a specific stock looked great yesterday and it lost 50% today, it must be super good. Wrong! Check why it plunges. It could be missing some important metric or something is really wrong with the company that did not show up in the research.

The real genius is the one who makes money on the way up but leaves before the bubble bursts. Even a genius cannot predict the peak and the bottom but I'll call him/her a genius if s/he is right better than 60% of the time.

Now dividend growth stocks have the highest premium in the last 30 years. It is a mild bubble when we've many retired or retiring folks seeking for income. However, the bubble will burst when the interest rate rises. At that time, the long-term bonds with low yields will lose.

Dividend stocks will benefit when the interest rate is low. Bond holders move to dividend stocks from their low-yield bonds. Long-term bonds lose their values when the interest rate rises, and vice versa.

Same for the internet bubble in 2000. I did unload most of my tech funds on early April, 2000. The more I read that time, the more I got scared. It was partly luck and partly ‘genius’ to move all these sector funds to traditional industries. At that time, they did not have contra ETFs, so cash, money market fund and bonds could be the best choices.

15 Why market rises or falls

It is a billion dollar question. The institution investors drive the market. Their trades are more than 70% of the total trades. They switch to bond /cash when the market is risky, switch to rising sectors and stocks with more profit potential.

Market direction

There are two cycles: the longer secular cycle and the shorter market cycle (do not confuse with business cycle a.k.a. the economic cycle). The shorter market cycle exists within the secular cycle.

For simplicity and illustration, the duration of a secular cycle is 20 years and the 4 years for market cycle.

Some may argue we’re in the 9^th year of the secular bull market cycle as of 2016. However, the economy is still down. It is partly due to the major wars that are draining our resources that should be devoted to the economy.

I define the market cycle into the following phases: Peak, Bottom, Early Recovery and Up. I recommend buying selected sectors in each phase.

Sectors and countries

Very seldom sectors and countries continue its upward swing for years. They follow their own sectors with the above phases too. With the growing and aging population, some sectors such as health care should be in the secular bull market.

Today’s market

As of 2014, there are many positive signs and negative signs. I would predict we will have a fierce correction for the market to take a breather. We cannot print money (affecting interest rate, inflation, credit, margin accounts) at the current pace. We should not pass our liabilities to the next generation forever. When the printing is eased, we will have a correction. Hopefully the economy will be strong enough to prevent a market plunge.

16 Earnings nightmare

A bad earning would cause a stock to nose dive. As of 9/26/2014, FINL is such an example. It lost 14% in one day to $25.11. I looked at all the fundamentals, ratings from many sources and analyst recommendation before today. They are really great. It is not a small company that would swing widely.

Here are some of the metrics on the day. It belongs to the Specialty Retail sector which is not great during a recession.

Metric	Value
Forward P/E	12
Debt /Equity	0
ROE	16%
Market Cap	1.2 B
Insider Trans	-16%
Short float	6%
EV/EBIT	8
Shiller P/E	21
Analyst Rating	9/10
F-Score	8
Revenue Growth	15
EBITA Growth	8
Zacks	Hold
PEY	6%
PScore	4
Score – ST	6
Score – LT	21

Explanation:

· PEY – Pow’s Earning Yield considering cash and debt. The passing grade is 4%.

· PScore – My scoring system and 2 is the passing grade. The higher, the better.

· Score – Short Term. Based on PScore plus metrics from my subscriptions. LT for long term. Passing grade is 15 for both.

The only metric that shows problem is Insider Trans. Next time, before we buy a stock, take a look at this ratio. If it is negative and more than 10%, watch out. Insiders know the earnings before the announcement. As long as they follow the rules, it is legal. The other warning is the institution ownership changing from 100% to 6% in 3/31/14.

The above figures are from Finviz.com, Fidelity (customer required) GuruFocus.com and Zacks (subscription required for both). Usually Zacks is quite good for predicting stocks before their earnings.

I may consider buying it after this plunge. It could be a trap or an opportunity to make good money.

It went further down to almost $24 and as of 11/20/2014, it is back up to $27.74 shortly.

Missing or exceeding earnings estimate would cause the stock to swing 10% either way.

For long-term investments (over a year), ignore the announcement as long as the fundamentals have not changed. The price swing is usually short term. Missing or exceeding the consensus by one penny has no meaning to me. However, calculate the fundamentals based on the new information such as the earnings.

III The USA

A Nation of No Losers

We do not let you be a loser!
Your mistakes will be rewarded handsomely.

*
When you bought a mansion that you cannot afford, we bail you out.

When your beach-front house was destroyed by hurricane, we give you money to build one (and the next one too).
When you bought a clunker that you should not have, we give you $4,500.
When you bought any inefficient appliance, we pay you no matter how old they are.
When you returned an old gun, we give you money for a better, updated gun so you can kill more.
When you lost your job, we extended your benefits.
When you cannot pay your college loan, we will give you amnesty.
When you ran out of money for Christmas gifts, we gave you 2% payroll tax reduction.

When you do not have saving or a real job, we give you free health care.
When you have saving or a real job (or becoming a winner), we take your free health care away.
When you die penniless, we help you out.
When you die with millions, we share your wealth.

*

Drunk drivers, no one will prosecute you as the entire jury and even the judge are drunk.

Druggies, as long as you do not inhale, you’re still a no-loser – we even elect you for our top job.

We also make some drugs legal to avoid your prosecution and also boost our tax incomes without checking how many more deformed babies.

Murderers, as long as you are rich, you will be free.

Baby killers, we give you a movie / book deal to give you incentive to kill your next baby.

Prisoners, we will set you free so we can fix our budget problem.

Rapists, you’re in good company of our politicians, coaches and clergymen who rape and cheat as a glorious sport.

Altar boys, you could be the top 1%. Some want to know which churches you went to, so they will be in the top 1%.

Minority kids, we give you special pass to go to college and jobs.

Teenagers, the more babies you have, the more benefits you have. Keep them coming.

Grade F students, it is your teachers’ fault to give you too much homework. No one should be left out except the smart ones.

We can demolish the grade system, so we have no more F students. Simple fix!

Old folks, your driver license is also a license to kill.

Fatsos do not worry. Our up-coming drugs will melt all your fat while you eat.
At the meantime, we double all seat sizes in buses, airplanes..., triple the size of the value meals and replace the slim actors with fatsos to make you look like a no-loser.

*
Congressmen, insider trading was legal to your privileged club. Sorry to close this loophole but you can keep the loots publicly.
Lobbyists, help us to put tariffs on Chinese products that we cannot compete with.

Prisoners, you will get the flu shots first and free dental care. If your local jails are full, we beg you to leave with free transportation and goodies.

Gun control, what’s that? Just do not go to school or see a movie.

When you cheated billion, you can retire in a resort-like 'prison'.
Also, the billions your wife hid are hers - no questions asked.

When your company fails, we bail it out.
The executives are rewarded with bailout money for bringing down a company.
When your company is failing, we give you half a billion instantly without checking – what a country!!!

*
All athletes are rewarded with millions for taking drugs.
We’re outrageous on foreign athletes doing the same.
It is an American invention and how dare the foreigners copy it without paying us royalty!

We have to lay off our scientists due to lack of funds.

But we have funds to bomb Syria.

Borrow money from China to contain China. Smart idea!

We sell jets to both Korea and Japan.

A friend of a no loser is a no loser.

An enemy of a no loser is a no loser too.

*
The small catch.
We need your vote to re-elect us every four years.

We win the election by letting illegals (future voters) in to share our great welfare so they do not have to work any more.

We give generous welfare to the poor, the elderly losers, the mismanaged companies… in order to buy votes.

The children cannot vote today, so let's pass our debts to them.
China does not have a voice here, so let's pass all the blame to them.

Even the entire world agrees with us.
Our President was awarded the Nobel Prize for doing nothing but reckless spending, so why do you work hard and save?

The above serves as a wakeup call / satire / joke and nothing more. It is written by a 'winner' who actually is a ‘loser’.

Afterthoughts

· This blog receives a lot of good responses but a few personal attacks like ‘why don’t you go back to China’. If we do not know our problems, we cannot fix them. Again, all the problems are minor and can be easily fixed. I hope I’ll re-write the above and this time in past tense.

· I have enough material to write a similar article on China. However, Chinese government is less open than the U.S.

· Trump must have read this article: Tell the truth and be honest. He will be our next president if he is less Trump and the other politicians can beat him if they behave less like a politician. We must be tired of the lies from the politicians. Should we have a law to ensure the elected keep most of their promises? If of 2016, the Middle East wars have not been ended as promised.

· Martin whom I do not know said: Thanks for this one! I had fun reading this. I would be glad to share this to others!! This is a blog that should be read over and over again!!

· From Hzzz: it is impressive to summarize all our ills. Now I know how screwed up we’re.

Picture Filler: Hope tomorrow is brighter

17 The worthless job plan

Most government’s job plans have the basic problem: Spend, spend and spend without worrying about where the money comes from. It does create some jobs but at a huge expense. The problems are:

· Pass our loan burden to our children and grandchildren.

· Will have high inflation (not now due to the deflated prices of houses). However, judging from the price of gold and most items in the super market in 2015, we already have inflation. Inflation is an invisible tax to the rich.

· Will raise our debt ceiling and hence it will harm the economy in the long run.

· Do not spend wisely.
To illustrate, education starts at home, not at school. With high drop out of poor students (unfortunately more from minorities today) who will be the majority, we do not have a future. Instead, we should limit the number of single parent families. This is one example among many.

(http://nces.ed.gov/fastfacts/display.asp?id=16)

· Creating more government jobs is not a good way to boost employment. We should calculate the actual cost of each job created. We can learn from Greece before it is too late. Now Greece has to cut half of the government employees and half of their salaries when the country is heading to bankruptcy.

· The most you can save is ending the current two wars.

Check out how many billions of dollars we can save a month without the two wars. We really need to fix our economy and unemployment first. We cannot afford the two wars and any future war. Even with the mightiest army on earth, we're really a paper tiger if we cannot fix our internal problems such as employment. It is similar when Mao told his starving citizens that they're #1 on earth; they could cover the eyes and minds with dumb nationalism but not the growling stomach.

We have given too much to foreign countries. Helping the desperate poor is fine, but not buying influence in foreign lands to corrupt officials.

· All of us ought to bite the bullet by increasing taxes across the board and decreasing welfare / entitlements. They are not popular to voters, but they will be the most simple and effective solution to a complicated problem. However, we need to implement them gradually so it will not prolong the recession.

Obama is a good communicator but he should have acted far earlier to solve our economy problem that was created by the previous president. It is obvious that Obama is buying votes for the 2012 election to satisfy everyone. It could be the same for any president. They all play with the rules of the game. We need to change the rules and make their objectives for longer term.

We elect our leaders, so we have to be blamed too. The major flaw in our political system is the election every four years. Our leaders plan for four years and not for the longer term. We've more poor citizens than the rich citizens, but each has one vote. After they've been elected, they have to pay back to the special interest groups who have funded their campaigns. That's why our democratic system could lead to corruption, American style.

Politicians have to watch out for the benefits / welfare of the poor in order to buy votes. The rich will migrate to other countries with fewer taxes. So are the corporations moving jobs, investments and the headquarters to foreign countries where business environments are more favorable with less taxes.

Afterthoughts

· Unemployment should be a temporary safety net. When the unemployment benefits are extended, the incentive to look for jobs is also decreased. Many have given up looking for jobs after trying their best. The better yardsticks are comparing the following two with values of previous month: 1. Participation rate and 2. Median salary. 3. The changes of the above two.

· Why should you work if it means you would lose all the generous benefits such as the free health care, food stamps, housing subsidies…?

· We really have more than the official 8% unemployment if we count how many of our own friends/relatives are still employed or under employed. 5% is the employment rate for the U.S. for ‘full employment’.

· Many are under-employed and they’re not counted as unemployed; as of 3/2015 we have the lowest participation rate. To illustrate, an ex-manager flips hamburgers at McDonald’s making a fraction of his previous salary. The yardstick now is the improvement of median income.

· As of 5/2013, ObamaCare will decrease jobs in small businesses. The owners do not want to hire full-time employees as they do not know how ObamaCare will impact their businesses. Most likely it will require them to conform to the new laws that require businesses that hire over a specified number (say 50) of employees to pay a good portion of the health insurance premium for full-time employees (could be defined as working more than 30 hours per week). The solution is not to punish the employer and reduce the cost of health care delivery.

· IPOs for local companies usually mean more jobs. When we see a lot of IPOs in the U.S., we can predict the employment is recovering.

· Globalization changes all the traditional, conventional wisdom.
Most large companies are global companies. Corporations find the best workers anywhere in the world at the least cost. Typically the US, EU and Japan design the high-valued products and their products are assembled in foreign lands where they can find cheaper, better and more flexible labor.

Filler:

### Unemployment Report ###

Unemployment rate has its faults. Many giving up seeking for jobs are not counted (i.e. the participation rate). The new yardstick t is the improvement of median income that has not been recovered from 2007. Many recent college graduates are not working on the jobs of their choices and their college loans will not be paid back soon. Globalization throws oil to the fire as corporations can hire the best employees at the least costs anywhere in this planet.

18 H-1B visa

On my bus commute to downtown, I noticed a lot of Indians and some Chinese besides myself. Many of them are on H-1B visas and work in banks, insurance companies and brokerage firms downtown. Some have applied or will apply for the green cards. Their living standards have been improved greatly here and no one is naive enough to wait for India to fix their infrastructure and offer similar job opportunities for the equivalent salaries.

If you're a technical manager, which one would you want to hire:

1. An H-1B visa worker who will work hard for peanuts but gold to them when comparing to their native country,

or

2. One who has no incentive to work hard except trying to get your job eventually.

We should encourage our children to get into science and math. Our system is great for creative folks like Steve Jobs, Gates, etc. However, the society does not need that many geniuses but folks with the right training. To illustrate, most well-paid, high-tech jobs are held by foreigners and children of foreigners who study in programming, engineering, science and math. These professionals are not geniuses, but they have the right training to enhance and / or market the products / services from the visions of the geniuses. From my rough estimate, we probably need one genius for every ten thousands of professionals such as engineers / programmers.

If we have enough qualified professionals, we can cut down H-1B visas; however the government has to give incentives to hire local professionals to offset the lower wages from most potential H-1B holders. Today and in the near future, we can't cut down these visas otherwise our high-tech industry will not be competitive. Most H-1B recipients eventually get their green cards, and move their parents to the U.S. burdening our welfare and entitlement systems. The employers do not care as this is not their problem. The alternative is setting up research / development centers in foreign countries such as India and China at the risk of proprietary secrets being stolen.

Afterthoughts

· In 2014, there are 3 million (4 million for some reports) jobs last year in the US are unfilled due to lack of skills while we have many college graduates who cannot find a job. We have a serious problem of skill gaps.

There are about 2 million unfilled positions desperately needed by programming including the cloud computing. Our high tech industry is expanding their training programs in order to fill these 'skills gap' positions.

There is why the Congress is slapping permanent visas to those foreign students who graduated in the US universities with the right training in science and computer science and advocate larger number of H-1B visas.

Vocational colleges and apprenticeship should be encouraged. The high school graduates should match their careers to jobs that are plentiful. A college degree without a job potential is a waste of money and time, not to mention the heavy loan that will take years to repay. My plumber makes very good money with less than a year of training.

# Filler

When we legalize the illegals, do you think they are stupid enough to work instead of collecting welfare legally? Who is doing to do the jobs that no welfare recipients want?

19 Too delicious to fall

Unions are supposed to protect the working class from being exploited. Today unions reduce our competitive edge by setting up higher compensation. Globalization weakens the power of the union by moving some of our jobs to other countries such as China and Mexico. We have to define two classes of jobs: jobs that can be outsourced and jobs that cannot be. Some unions are more effective in the latter category such as riding up telephone poles. Few mayors in big cities are elected without the approval of the local police union, and hence some are politically powerful.

Hostess's fall is a bad day for capitalism, at least our style of capitalism. There is too much blame to go around:

· First, the management (and the hedge fund managers) did not update their products to meet the trend of the market.

· Unions are out-of-touch. If your patient is dying, you do not want to shake him hard. You need to have plan B when you're bluffing. All in with bad cards is just dumb.

They're the parasites and they will die too when their host (hostess in our case) is dead. The dream of owning the company will remain to be a dream that they never want to wake up from. They tried to violate the basic business rule of supply and demand but failed miserably.

· The workers are really dumb to let their master manipulate them until they lose out big time. Do you think you can protest and win in this kind of economy and the shaky state of the company? Another common sense.

· The politicians will not bail them out especially it is long past the election. This time they cannot buy votes by blaming China, as these jobs can't be outsourced (unless you want to buy your Wonder bread shipped from China). Hence, even if it were before the election, the government will not bail you out on the ground of ‘too delicious to fall’.

It is a lose-lose-lose (management-unions-workers) situation and only stupid folks will get into this situation.

20 Generous welfare

Last Saturday, a television commenter suggested legalizing illegal aliens and moving them to Detroit as that has worked well before in several other American cities.

I totally disagree with that notion. Instead we should ask the able poor to work and take less welfare benefits to encourage businesses to move in and provide jobs.

In addition, the city has to concentrate on education to provide an educated work force. It does not take a genius on how to lure back businesses by protecting the businesses first. If I open a business at the constant threat of being burned down or being robbed, I do not open a business there.

We also have to train the unemployed for jobs that are needed by the society. Investing in education is productive, while giving out welfare is not. It is a balancing act by the city administrators.

Unions and generous welfare will work in the short-term for a specific group of the society. In the long run, they will have opposite effects as demonstrated in Detroit and many EU countries.

One cannot survive by making the minimum wage in the USA. They will be subsidized with welfare and you know we all have to pay for these benefits eventually. We need to encourage folks to work by reducing the generous social welfare that should go to the real needy and/or serve as a temporary safety net.

In Mass., the system takes away free health care when the income is above a specific level. It does not encourage the poor to work.

There are too many frauds in our welfare system. We should take care of our citizens first before we take in more immigrants who compete for the limited jobs available.

In addition, when they are legalized, do you think they are stupid enough to work where receiving welfare is a better deal? The newly legalized will help their immediate families to immigrate and further burden our welfare system. At one time folks came in to work for jobs that we do not want or we do not have the skills.

Today, some new immigrants ask for the closest welfare office on the first day they arrive, or where is the closest hospital to give birth to a USA citizen baby free of charge. Taiwan has a book titled “How to Retire Rich in the USA with No Money and No Effort” from my memory. The objective is seeking an easy life without work in the land of generous welfare; the rest of the world calls us suckers!

Many Vietnamese refugees cheat on welfare. I do not blame them considering the miseries they went thru. Most of them were government employees (servants and soldiers) and Chinese merchants. Most are educated, hard-working folks with tough experiences. In just one short generation, you do not find too many of them collecting welfare and most become respectable and productive citizens.

Afterthoughts

· The welfare department and the immigration department do not share information. I wonder why the welfare officer does not check whether the applicant is legal or not. We have an illegal alien in Boston who sued the employer successfully for not paying minimum wages.

· A 25 year old with 9 children received more than 100,000 per year without working. It is the best get-rich scheme and a best-kept secret. Social security contributes about $8,850 per month for each recipient in the family.

http://tonyp4idea.blogspot.com/2012/11/making-over-100000-without-working.html

I did not write this article. It was distributed to me. I hope it is an exception.

· I debated whether this article should be included in a book on investing. Generous welfare benefits dampen our capitalist economy which eventually weighs down the economy and the stock market.

· Another subject of debate is whether education improves employment as many college graduates have been unemployed or under-employed for years. A city with well-educated citizens usually has lower crime rates, which is a prime consideration for businesses.

Judging from bailing out big businesses that are too big to fall, the government seems to be pro-business. It is good for political campaigns to lay off fewer employees, but it is not good for the economy in the long run.

· Some suggest to raising the minimum wage higher and even to the maximum wage. Sounds like communism to me.

· Sam sent me this article comparing work and welfare.

http://blogs.wsj.com/economics/2013/08/19/work-or-welfare-what-pays-more/?mod=trending_now_3

The authors found that in 11 states, “welfare pays more than the average pretax first-year wage for a teacher. In 39 states, it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer.”

· The USA citizens can be divided into 3 groups according to taxes they’re paying:

1. About 40% not paying Federal tax. When this group grows, we will bankrupt. Representation without taxation is worse than taxation without representation.

2. Middle class. We're being squeezed by the other two groups.

3. The rich 5%. They pay most of the taxes. However, in the last two years, they're fleeing to other places that have low tax treatments. The geese that lay the golden eggs are flying away. Without them, we're squeezed even harder until we’re forced to move to the first group and bankrupt the country.

21 Effective health care delivery

ObamaCare will have an impact on businesses. Large businesses will gain an edge over small businesses unless there will be subsidy and that will add to our deficit. Small businesses will suffer with several side effects:

· They will work around from the requirements of forced health care insurance by limiting the number of hours of an employee and the number of employees.

· Most of the new ventures are seeded from money from their home equity loans. With falling home prices, they will have less new businesses. The banks already have more restrictions in loaning money since 2007.

Most proposals on health care delivery do not care about how to cut down costs, and how to make it fair and practical. We need to know how to pay for it first, how much, and the consequences to businesses and employment. My proposal and comments:

1. Basic treatments for all.

Better coverage is paid by an individual. We should encourage folks to work hard and there is no more free lunch. It is abnormal for the poor to have free health care while the middle class do not enjoy the same. The poor in Mass. receive free health care. I hesitate to visit a doctor as I have to pay even after the insurance.

2. Fair regulation for nursing home.

Those with low incomes and/or those without a house most likely can receive free nursing home care, free drugs and free doctor visits in most states such as Mass. Those in borderline qualify for the free nursing home care by giving their houses to their children, hiding their incomes and/or just quit working. They are lazy but not stupid.

The government should spend an agreed percentage of the GDP on public health care. We can use the average percent from developed countries or let the voters decide. We cannot ignore other spending such as education or let the budget unbalanced irresponsibly.

When we over spend on any entitlement, there needs to be a corresponding hike in taxes. High taxes reduce the United States’ global competitiveness and lead to more unemployment.

3. Prevention: Voluntary and non-voluntary (via taxes) on smoking, fast food, soda, etc. It is fair for the citizens to take care of their own health. You can select to live recklessly in unhealthy life style, but the rest of us should not be burdened with your bad habit. In his book The China Study, Dr. Campbell recommends a whole food, plant-based diet that would reduce a lot of diseases.

When we ban smoking totally, many hospitals ought to free up many resources. In addition, the second-hand smoke kills too. Why should we die for your bad behavior? The children of parents with drug problems have higher chance of birth defeat and problems than the average.

4. Limit lawsuit award on malpractice.

Our health care cost is being jacked up partly due to the legal expenses.

Most do not realize these lawsuit awards will pass back to us. It is also the reason why the doctor would hesitate to care for us when we fall and lie in the street or why our clinical charges are so high. Lawyers and insurers get their share.

5. State-of-the-art treatments are less effective than prevention such as a low-dosage aspirin for all over 50 years of age and the routine shots for babies / children. Aspirin is the miracle drug that is hated by all drug companies due to the low profit margin.

6. Outsourcing the expensive treatments to foreign countries and drug development / clinical tests.

Our costs are outrageously high. Try some Caribbean countries, Thailand or Shanghai for example. The money we save pays for a free vacation, not mentioning the free massage every day for the entire trip in Thailand. Many Caribbean countries offer same dentistry services at half the cost.

This is a temporary solution until we solve our high cost problem.

7. Cut down the expensive drug marketing (such as giving money / goodies to doctors).

Personally I know doctors receiving free golf trips to the most expensive golf courses for the entire family. They also got unlimited lobsters in medical conventions in Boston. Should doctors receive the 'lecture fees' giving phony lectures or sales pitches in return of recommending the drugs or prescribing them to their patients?

Guess who end up paying for all these goodies eventually?

8. Stop the illegal aliens and foreigners from using our medical systems free.

Their employers or the patients should pay for their expenses. It is nice to help the rest of the world, but we do not have money to do so now.

Emergency room is the most expensive delivery method and its usage has been abused.

9. Before we send soldiers abroad or explore space (both have some merits but the average citizen does not benefit from these ventures), should we solve our home problems such as health care first? Get our priority straight.

10. The average last two years of one's life would be the most expensive health care cost. Many do not want to live through pains and sufferings. Should we let them pass away in peace if they want to?

11. Stem cell research has proven to be promising.

We should not let our politicians dictate the policy for religious reasons. The desperate will go to foreign countries to receive the riskiest treatments anyway. Why let them know their risk and do the treatments here in a better environment?

12. Stop all the insurance and Medicare frauds. If you spend $10,000 on inspectors and get back $1 million, it is a great investment. Whistle blowing is the most efficient way to prosecute violators. Each successful, publicized prosecution warns thousands of potential violators.

13. Importing foreign doctors and nurses is the worst we can do to a poor country.

These foreigners are seeking a better economic life for themselves, but forget their original purpose of seeking these noble professions. Why we send aids to these poor countries and steal their medical resources?

Afterthoughts

Finally we have a national health care system. Give it a chance to succeed. Have to give credit to Obama to start ObamaCare in a recession.

Roughly we spend double the average developed country on health care per capita but our health care system is rated as average.

A joke on outsourcing our medical delivery to China:

The hurting patient pleaded painfully to the outsourced doctor to get him someone who could speak English. The doctor said, “If I not English, what language I talking?

http://ebmyth.blogspot.com/2013/11/more-on-health-care-delivery.html

Filler:

### Need a high speed rail?

"Medium speed" is available now by just taking away the cell phone from the train engineer

22 How to solve trade imbalance

The U.S.'s wage of $20 per hour cannot compete with the $2 per hour (no matter it is from China, India or Vietnam).

You cannot live with the $2 per hour wage in the U.S. It is easier and better to live on welfare with food stamp, housing subsidies, free health care (in some states) and many other freebies, when your income is low or $0. Our generous welfare encourages our citizens to be lazy and some cheat on the declaration of their incomes. The disability claims excluding veterans from the wars increase substantially in the last decade even our work environment is far safer. It also encourages our citizens not to save.

The solutions are (some are satires with a J):

· Abandon industries that use low-wage labor and / or outsource manufacturing jobs like what Apple is doing.

There is no quality problem with Apple’s products that are outsourced to China, so it really depends on the company who outsources and how the product quality checks are conducted. Apple is making good money, paying taxes, hiring top earners and at the same time providing great and affordable products to the world. As of 2012, Apple is the most valuable company in the U.S at least for a brief period.

· Take out the embargo of military products to China at least on the products that China can obtain from other sources such as Russia and some European countries. Currently, it does not serve the purpose of preventing China from becoming a military power and we’re losing the sales.

Why should we be afraid of China when our military might is far, far away from any country on earth? We can sell China missiles with no fear. Just program the missiles to return to the sender when the GPS detects it is heading to our direction. My genius idea just saves us billions of dollarsJ.

· Beg China and other countries to loan us more money with states as collateral (by now no one is stupid enough to use the USD and loan us without collaterals) starting with all non-Democratic states first (according to Obama) and Washington, D.C. will be the last to sell. Just a jokeJ. As in a capitalist system, if you cannot service you loans, you have to give up your collaterals.

· Selling Alaska back to Russia (with SarahJ) for oil is a no brainer. It is just like killing two birds with one stone.

Selling Hawaii is just genius like selling something we do not own. Most properties in Hawaii are owned by Japanese already.

If we sold NYC to China, we would make a huge, huge capital gain. It is even more sweet if you recall we bought (cheated is a better word) a good piece of NYC from some native Indians for trinkets. The Indians / Eskimos were Chinese crossing the frozen strait due to losing their direction after too many hot drinks. I have my genes to prove my theory. So, it is the same as selling to the original owner for a huge gain without paying any taxes.

In reality, we sold Manhattan to a casino operator. Wall Street is the biggest legal casino. The only difference is all the hotels are outside the casino. Sell Silicon Valley to China and the rest of California to Mexico (similar to selling Florida to Cuba if they can pay for it).

The only place you cannot get rid of is Washington D.C. No buyer can live with the lazy government servants and politicians fighting each other every day to see who is on top.

It is the similar to the bankers foreclosing your house when you cannot service your mortgage. I hope it will remain as a joke forever.

· Close all trades with all foreign countries but we have to enjoy the $50 toaster that is produced by the U.S. workers! The U.S. is one of the few nations that can close out all foreign trades and survive. However, the movie and music industries will suffer and decline. Boeing will have to park their shiny planes in the desert to collect sand. We will have so much grain in storage that eventually we will have more rats than people.

· Without the rare earths from China, our Apple products will cost double and our missiles will cost us far more. However, it would be good for the world as folks will use their Apple products longer and fewer missiles will be produced.

The chicken feet would be better thrown into ocean instead of shipping them to China for cash.

## Technical metrics in market peak, bottom & correction

	SMA-50	SMA-200	SMA- 350	SMA50/ SMA200	RSI (14)
Market
Peak		5%	9%	101%	65%
Bottom		-32%	-31%	78%	25%
Correction
Peak	4%	6%	11%	102%	65%
Bottom	-5%	-6%	-7%	97%	26%
Stock
Peak					70%
Bottom					30%

### Joke ###

Measure the success in one's life

Contrary to popular belief, your success in life is not measured by how many friends or how many stocks you have. It is measured by:

When we die, we're

smart with all toys;

dumb with all toys not upgraded (Disclosure: I've stocks on Apple);

stupid with all money not converted to toys;

genius with all toys being shared with the poor (Gates and Buffett).

23 Modify our election system

Our voting system works but it has problems that need to be addressed as follows:

1. Reduce campaign money.

When politicians spend a substantial amount of time in fundraising, they have not concentrated their efforts on the important issues such as the economy. Gun control was not even mentioned in the last election despite we have constant shootouts. We need to set a limit in the amount of the campaign money they can raise and they can spend. Hence, the presidency is not won by how rich you are and / or your party is, but how you can resolve our problems.

2. Over-promising for votes.

The last election was so close and the outcome could have been altered by the inclusion of Hispanic votes. The changing of the legal residency status could create many legal welfare recipients to further burden our bankrupting country. If the welfare is so generous, why should they work when they are legalized?

3. Special interest groups.

The politicians optimize their policy to favor the special interest groups who finance the campaigns. Entitlement recipients belong to another group. They ought to be paid according to how much they have contributed. The social security system was designed for life expectancy less than 70.

I would include the big businesses in the special interest groups. Via their connections, they had been bailed out many times. In short, it is a conflict of interest.

4. We need to set up a ballot to indicate what percentage of our tax money will go to a specific budget, such as offense, education, etc. Spending too much on one budget would hurt other budgets. I would like to spend less than 2% on offense. Why we need a carrier driven by dual nuclear reactors and still ask for more defense expenditures?

5. Representation without taxation is worse than taxation without representation.

The votes of those who do not pay any Federal taxes, the mentally challenged or those with low IQs, the uneducated, and the criminals should be counted as at most half votes. The votes of all veterans should be counted at least one and a half as they sacrifice their lives for the country. A kind of controversial at first glance!

We have about 50% illiterates in Detroit. The politicians have to satisfy these voters in order to get their votes. It is not hard to predict the collapse of the city. Taxing the rich and giving more to the poor seems to be good deeds similar to Robin Hood. However, businesses cannot function over there and they have options to leave. It is another example that uncontrolled socialism could lead to self-destruction.

6. I suggest the second term of the presidency should be 6 years instead of 4. This is the term that the presidents usually do well for the country to build up his or her legacy without caring about votes for him or her. Today, most second-term presidents have only 1 ½ years to do so.

The following are related to governance but should be discussed during the election.

7. Need to balance the budget. It should be a constitutional law. We cannot pass our debts to the next generation forever. Most states require balancing their budget, why not the Federal government?

8. Need a long debate in the Congress before we can start another war. Most major wars from Vietnam War to the current two Middle East wars cause most of our financial problems. We are not wealthy enough to be the world’s policeman, and fighting for ideology and freedom for other countries. Being #1 or a big brother is not important when our economy is bankrupting and most our graduates cannot find jobs.

9. Need to encourage the able poor to work and be educated to break the cycle of poverty. There are too many holes and misinterpretations in Clinton’s law to force welfare recipients to work.

(http://en.wikipedia.org/wiki/Personal_Responsibility_and_Work_Opportunity_Act)

10. Need to control government expenses by a smaller and more efficient government and cut frauds such as Medicaid and disability entitlements SSDL. Increasing government employees and assigning them small workloads is reckless consumption.

To illustrate, building a road to improve transportation is productive, but defending other countries is consumption (unless the benefits justify).

Afterthoughts

· Why we shut down the government due to the debt ceiling? Run the government like what businesses do. Calculate the rate of return in the following two options.

1. Benefit in shutting down the government.

or
2. Benefit in not shutting down the government.

Select the option that gives us better benefit.

The majority of government employees have tiny workloads (most got their jobs in DC due to what party they belong to). Furlough (layoff could be better just like most businesses do) half of them and it would maintain the same service if they work in the private sector. A win-win decision.

Closing all the free museums (say in DC) will cost a lot of pains to tourists and future tourism. Actually it costs more than 10 times of the saved wages in shutting down. Only the stupidest managers make this kind of easy decision.

However, our government makes decisions based on politics: Want to show who is the boss and put the blame on the other party. They are all wasting our time, money and energy. We need to have smaller and efficient government.

When the problem is resolved (by approving funding or moving the debt ceiling even higher), both sides will declare victory shamelessly on how smart they ‘fixed’ the problem to insult your intelligence.

· Usually we vote for the candidates we associate with without considering the ideas and the qualifications of the candidates. That is evidenced from the reactions of the O.J. Simpson’s verdict from the students of a black college and the students of a white college. This is bad for the country.

Filler:

###

I was deeply moved by the family members of the church victims forgiving the shooter. At SeekingAlpha, I wrote a brief post: "Forgive" is the most powerful word in every language and in every culture. I forgot it until I received a response today from Jim.

"Tony,
Without even knowing it, you made the greatest comment I have seen on Seeking Alpha--and it had nothing to do with investing. You mentioned somewhere that "Forgive" is the most powerful word in every language. Wow.

I shared that with my children. Financial commentary is easily forgotten, but that will stay with me forever. Thank you for that.
Jim"

Jim, forgive me to publicize your email as I hope to spread the word to others. I cannot take any credit as it is just common sense except for those who do not go to church. The credit should be given to the forgiving family members and to the preaching of the church. With the power of forgiveness, we should not have the wars in the Middle East, past, present and future.

24 The Republican Convention

Why do we need to know Mitt (or any candidate from any political party) is officially nominated or he will accept the nomination? Who has turned it down in our history? If this is the main purpose of the convention, it is a TOTAL waste of money and time that can be used to deal with our real problems such as how to cut down spending. Isn’t it ironic or demonstrating how the big government wastes our money or how big business buys influence?

If you really do not know whom will be nominated (I'm shamelessly insulting your intelligence and assuming you have been living in a cave for the last year), just watch the news on TV and save millions.

The convention must be sponsored by airlines, hotels, restaurants and Florida or big businesses / special groups wanting influences. The hidden sponsors are the prostitutes and the drug companies who provide Viagra and condones. They are the winners of this convention, not the handsome Mitt and his lovely wife. All the conventioneers using other folks’ money to wine and dine are the free loaders and parasites. Sorry to offend all the politicians and their running dogs.

I like to attend any convention if someone is stupid or rich enough to pay for this unearned but lavish vacation – I’ll vote whatever you want me to. Sign me up for any convention, Republican or Democratic, now or future. I hope it will be in Hawaii or somewhere without any hurricane and with great and expensive food. You will pay for it eventually one way or another.

I must have some mental problems if I talk to an empty chair with a ghost rocking on it. When you guys laugh at the chair, you might have a more serious mental problem than I. Even with no one sitting on it, the chair still rocks. It symbolizes the do-nothing government could be the best government as it rocks! My point is we need a small, frugal and effective government. The best government is invisible but it provides all the basic services at the least cost!

Afterthoughts: More

http://ebmyth.blogspot.com/2013/11/more-on-republican-convention.html

25 How to solve our economic problems

The United States is still rich and powerful, so the economy should be easier to fix. However, we all have to bite the bullet. Bailing out everyone only buys votes for the politicians and will not help the economy in the longer term. The economy affects everyone and it should not be a political game. Here are some of my thoughts.

· When GE does not pay any tax to the U.S. but to some foreign countries, we've a problem. So are many U.S. companies which should be headquartered in the U.S. instead of in some foreign countries. We've not done enough to lure them back and give them incentive to stay. At least we need to force them to pay taxes on the profits they made in the U.S.

It is similar to the cruise ship companies. They pay minimal taxes even most are the ‘real’ headquartered in the USA and most of their customers are USA citizens.

· The rich should pay their fair share of taxes. If we force them to pay more than their share, they will move elsewhere. This is the straw that breaks the camel's back or killing the goose that lays the golden eggs. The top 10% rich folks paid 70% of all Federal tax collected in 2010, up from 55% in 1986.

More than 40% of the total population did not pay Federal income tax and they received most welfare benefits and entitlements. Our socialist system would bankrupt when it does not have any to give.

· Relax the environmental enforcement on drilling and start the construction of the pipe lines such as the one from Canada. We may have more than enough trapped natural gas for the next 50 years. Now, oil countries are dumping oil to fight off our shale energy. Should we have a new tariff to protect our industry?

· The complicated regulations, religious concerns and the high legal expenses force some drug companies move the research elsewhere. If nothing is being done, I predict Asia will be the center to produce more new drugs in the next decade and we will lose the competitive edge.

· We need to limit the unemployment obligations and the burden of ObamaCare to small businesses.

· We should give companies the rich incentives to take risk to start business and new ventures here, or they will invest elsewhere. Investment creates jobs.

· There are many ways to balance the budget.

We need to cut the entitlements. We need to encourage the able poor to work instead of receiving welfare. Why should they work if work means cutting the housing subsidies, food stamp and free health care (in many states including Mass.)?

We cannot tax the rich to the max. I belong to the middle class and I cannot give up my citizenship, my social security and Medicare that I contributed during my work life. However, the rich can and they even come back to live here as a foreign citizen. It has happened to many high-tax countries and we never learn.

There are many U.S. jobs that are being done by illegal aliens. Check out who pick your lettuce, or empties your waste basket in your office. The poor should take up these jobs instead of fixing up their motor bikes, or watching TV all day long. When we legalize the illegals, will these new residents collect welfare instead of working?

Hiring more employees for government jobs is the most inefficient way to boost employment, as our government is too big already. We can cut down half of them without degrading the services as most are working half of the time already.

We cannot afford the two wars; one war costs us $2 billion a week. Many well-known projects overseas cost about $2 billion each. Why we need a carrier powered by two nuclear generators is beyond my comprehension when we have more weapons to destroy the entire world by pressing a button. Should we solve our problems first such as Detroit before we send soldiers abroad and/or help foreign countries?

All the measures should be executed gradually to avoid the so-called fiscal cliff and related problems in different terms. I'm in IT and now in investing. I do not know much about social science and economy, but they're just common sense.

Afterthoughts

http://ebmyth.blogspot.com/2013/11/more-on-how-to-solve-our-econonmic.html

Filler:

12 noon is not 12 pm

The Chinese restaurant I went to says they open at 12 am. Are they wrong or the world is wrong?

The next hour from 11 am is 12 am, NOT 12 pm. The one who set it up did it totally wrong and no one complains until now. If I were born earlier, I would have corrected it. If I were born here, I would be the president and every one would have a job by now.

The same if I stayed with the Fed (I actually worked for them briefly and I still had the key to the executive rest room to prove it), we would not have this financial mess today.

Or, if I played for the Celtics (I need two more feet), they would not have a losing season.

Or, if I were the couch (I need to have a brain first), the Patriots should've selected to receive on OT this afternoon. I would cover my error by saying we would not give the Jets a better draft pick, so we let them win intentionally.

If I were more humble, I would not have written this stupid post but I see the ‘stupid’ smile on your face.

26 Implementation

As of 2015, this recession is the longest in my memory. Usually we have recessions that last for two to four years and then we recover. Some recent college graduates have been out-of-work for over four years and many work on jobs that they do not have to go to college for.

It could be due to the failed stimulations, printing too much money and the bailouts that did not fix the root problem. If we did not do the above, there is a better chance for a faster recovery than a deeper recession. Hopefully 2016 will be the year we finally recover, but only time can tell.

We need to let big businesses fall. No one is too big to fall. Let nature take care of itself. If you cheat and / or do not perform, you need to be out of business. It is Business 101 and the fundamental of our capitalist system. Why it is so hard to understand? Why do we need to bail out companies that should fail? Why the greedy CEOs have not gone to jail? Why they were rewarded with bonuses from our bailout money to bring down the companies?

Our problems are easier to fix than they appear to be. I can think of many easy solutions, so the politicians who are hundreds of times smarter than I (or at least make hundreds of times my salary) must have many solutions already.

Identifying the problems and finding solutions are the easy part. However, the implementation is hard, as the agenda of all politicians is simple: Get reelected. They have to satisfy the special interest groups who finance their campaigns and the voters who do not want to bite the bullet. When we have more voters benefitting from welfare and entitlements than the tax payers, we’re going to be a welfare state. In addition, big businesses control our government via special interest groups; I call it corruption, American style. When one party takes over the other party after the election, most politicians and their helpers get jobs from the companies that they gave favors to.

27 Solve our deficit problem

We should have a 10% corporate tax, a 3% VAT and extra 2% for luxury goods.

Advantages:

· All the corporate golden geese will not flock back.

· Our dividends will not be taxed twice.

· Corporations will plow back the money for investment and hence ignite employment.

· VAT discourages unnecessary consumption and spending. The 2% surcharge for the rich is fair and simple. The above numbers are arbitrary. We need to set up a budget and require the government to enforce it. If we have excess, we can cut down the income tax that would encourage working.

You may say we do not have money to run the government. It is simpler than expected.

· A small and efficient government.
If you're one of the lazy government employees surfing the net and waiting for the 4 pm stampede (after the two-hour lunch followed by your nice afternoon lap), you know exactly what I'm talking.

· Why the government employees can retire at almost full pension at the early age (comparing to corporate employees) is just beyond my comprehension.

· Stop being the world police. We've more problems to solve at home.

· Cut down the generous welfare and ask the able to get off the couch. Watching TV all day long for the rest of your life is boring and not good for your health. Remember when we run out of money to give you, the host and the parasite will die together

· Prosecute the welfare and disability cheaters.

· Prevent illegals to come in by prosecuting employers. If there are no jobs, they will not come. We do not need all those fences and patrols.

28 The first sip of coffee

Our politicians are 100 times smarter than I, 100,000 times richer than I, handsomer than I (debatable for most esp. Trump)..., why they always made the wrong decisions? Simple answer. Their agenda is buying votes and mine is for the good of our country. Here are the easy fixes.

* Corporate headquarter exodus. Lower their taxes first.

* Health care problem. Lower the medical expenses first.

* Building border walls like the Great Wall of China. Punish the employers who hire the illegals first.

* Social welfare. Do not punish folks for working and give more welfare to workers than those able welfare recipients. It is similar on how to dissolve multi generation of teen-age mothers.

* Fight terrorism. Understand why they want to be one (patriot for them). Think like one on how to give us maximum pain with the least resources.

* Improve the economy so everyone has a job. Our 'offense' budget is more than the next four countries combined. Unless for our own benefits, do not send soldiers overseas. Today's weapons are missiles and cyber security, so how many soldiers we need?

* If we learn the prediction from the Bible or the endless religious wars, we would not be involved in the Middle East conflict.

* Learn from history. Are we threatened by the communist Vietnam today? We should have learned it from the French.
Just write down this list at the first sip of coffee. It could be an endless list.

Filler:

Why I do not run for the presidency you may ask? Nobody would understand my English (not my native language). However, it could be strongest point as I dislike most politicians after I find out their real motives.

IV China & miscellaneous

29 Free trade with China

Free trade has its benefits (especially for consumers) and some minor disadvantages (fewer jobs to our workers for example). You do not want to grow sugar cane in Alaska. Chicken feet are delicacy in China, but they are not fit here to eat even for our cattle.

With free trade, we trade our excess products and products we have knowledge to produce (such as our high-tech products and movies) for products we do not or cannot produce here economically.

When one country produces the best product at the least price, she is a winner and so are the consumers of all the countries who import this product.

Apple’s products are good examples of the free trade in taking advantage of the best contributions from many countries. Apple’s products are global products: U.S.A. designs and markets, China assembles them and provides rare earth elements, Taiwan invests and manages manufacturing, and many countries provide specialized components. The results are excellent products that consumers all over the world enjoy at reasonable prices.

However, we have to ensure all partners play fairly. If China dumps products to force our shops to close and then raise prices later, then we have to step in. However, so far it does not happen often. They do dump some products to secure jobs. It has been a trade practice that Microsoft had done before with its Office software when it came late to the market.

Dumping rare earth elements actually benefits the rest of the world. It does not benefit China as the environmental damages are far worse than the benefits. All developed countries ask China to continue dumping their rare earth elements, which actually are ready to mine in many parts of the world. Why some products dumped by China are OK and most are not?

As the USA subsidizes our industries with free research grants and farm loans, it is quite hard to accuse China for doing the same. All countries subsidize industries in one way or another. What excuses are we looking for when we cannot compete some products with China?

When China or any country offers the cheapest and the best product to us, our consumers win. In addition, when China makes money on the low-end products, they will have money to buy our more expensive high-tech products, jets, movies and farm products to name a few.

China loans us money to buy her products and hence keep her workers working. The debt obligation is less when we devalue our own currency; we pay back our loan with depreciated dollars. By doing this the USA is actually the currency manipulator! Will China continue to loan us money at this rate? I do not think so at least not to be paid back in depreciating USD.

We need to limit our spending - wars by our government and big houses by our consumers. We cannot borrow forever. China and the oil-rich countries loan us money with their hidden agenda. The logic is so simple that even I, who has never taken any economic class, can understand.

As of 2016, China is no longer a low-wage country; that goes to Vietnam. However, low wage is only one factor and the others are political stability, infrastructure, educated work force and large internal market with fewer tariffs. This article is from the Chinese perspective.

# Filler:

# If Jack can succeed, everyone can #

Jack Ma of Alibaba is a smart man who can control and change his destiny despite all the setbacks and how little he inherited (I'm not talking about his look). The richest man in China cannot improve his look and health. In addition, money cannot buy everything including job satisfaction, respect, happiness, freedom, and clean air to name a few.

A good piece on him was seen on 60 Minutes. The following is a follow-up http://cbsn.ws/YBjL4h.

30 The stormy China Sea

If there were a war between China and Japan (the #2 and #3 economy), the US (#1 economy) will most likely support Japan and all the forecasts in this book will be off and we will return to a global recession.

There have been disputes on the ownership of some islets between China, Taiwan, Japan, Korea, Indonesia, Philippines and Vietnam for the presumed oil or gas in the near-by seas. The disputes have been mild for over 40 years (I remember the protest when I was a college student) and no side wants to do anything until recently. All these countries would not want to agitate China and China would not want to harm the trading relationships. Now, the U.S. wants to side with countries against China. With the backing of the U.S.'s Seventh Fleet and the U.S.'s promises, all these countries suddenly cry out loudly for the last few years.

If China starts the dispute initially, China grossly miscalculates and grossly underestimates the military might of the U.S. navy. If Japan resumes the dispute, they are risking losing trade (#1 export to China) and the tourists from China.

It is the U.S.'s intention to remain as #1 and the big brother in this part of the globe. It is not a wise decision unless we still live in the past glory when you're either my puppet or my enemy. Most likely, it is decided by the politicians who want to divert our attentions as they cannot resolve our problems such as employment. The government still wants to be the global leader (to another recession?) by giving and spending billions here and there.

If the U.S. wants to promote selling weapons to Asian countries (the U.S. is #1 in exporting weapons), we are playing a risky game and the potential profit most likely will not justify the consequences.

China might withdraw the loans and we would be back to the worst depression in our history. It is quite dumb for China to loan us money to build the Asian missile wall against N. Korea and most probably against China. When Japan and Korea fight against each other over the disputed islet, which position would we want to side with? If your answer is both, should we send missiles from one of our battleships to another one of our own?

We cannot afford another war. We've spent more than $1.4 trillion in the two current wars so far and it is still counting. We cannot visualize how much is one billion, not to mention one trillion. The current tallest building in the world (in Dubai) costs about $1.5 billion. We can build about nine hundred (900, not a typo) tallest buildings in the world and not even fathom of how many jobs would be created.

Wars cause human suffering. China is not a tiger now, but it is far from a paper tiger. Japan's navy is stronger than most folks in the U.S. can ever imagine. Japan has been the aggressor to China for centuries and she has been war criminals against Korea, China and most other Asian countries in WW2. They have not compensated all the damages to Asian countries that they destroyed during WW2. Their leaders still pay respect to the war criminals in their ‘shrines’ and rewrite history books not admitting Nanjing Massacre had happened.

As usual, we always pick up the brick, aim and hit our own big toe. It was Vietnam, then the two wars in Middle East and now potential wars in China Sea. We have not yet learned lessons from the French, the Brits and the Russians who had been to Vietnam, Afghan and they all lost big.

No politicians would tell us that all our troubles are due to the high expense of the wars we participated in. We have had about 20 years of secular bear market due to the Vietnam War, followed by about 20 years of secular bull market due to the lack of war. Our stock market has been rescued by excessive money printing but not the economy. At the meantime, many of us do not have jobs or are under employed.

The disputes will not be good for all countries involved. The U.S. does not have sufficient resources to start another war. Hope it will not happen. Let the sleeping dogs lie and silence is golden. Hope the disputed countries will share the resources instead of fighting for it. China has been bullied for 300 years since the Opium Wars. I sincerely hope they will not bully other countries when they’re stronger.

31 Japan 2014

Japan is not the Japan 25 years ago. As of 2016, I do not want to invest in Japan.

The policy has failed and the new policy is basically the same as the old one. Their problems are:

1. Agitate their major partner China on the disputed islets, which should belong to Taiwan by proximity. They're losing trade from China while China can buy the equipment and technology from many other sources.

2. The virtually zero interest rate (now negative rate) does not work before and it will not work in the future.

3. The higher tax and higher inflation in Japan will lower the living standard in Japan.

4. Any surge in export is just a mirage and cannot be sustained in the long run.

5. The recent Tsunami and earthquake will hurt Japan for another decade. I do not want to visit the affected area or eat any food products produced from the Tsunami area.

6. The impact of Japan's aging population is the worst among nations and is worsened by not welcoming immigrants. The smart and hard-working citizens are their major resource.

7. The baggage from the war crimes in WW2 to its Asian neighbors is still a burden. Japanese never compensate the comfort women who are disappearing fast due to aging. Japanese leaders pay respect to the war criminals in the ‘shrines’ every year, similar to paying homage to Hitler. I have moved on as the current generation are educated and will not commit the same war crimes.

Afterthoughts

· The point of this blog is not on the dispute itself but on: Why does the dispute re-surfaces after 50 or so years? I suspect it is the U.S.'s hidden agenda. My guesses are: Helped Obama reelected, the U.S. returning to S.E. Asia, selling weapons in the region (the U.S. is already #1 in weapon export), containing China...

· In Asia, Japan, India and China are all building carriers. It is not a good hint for peace.

· My Sentimental Journey: Nanjing Massacre.

http://ebmyth.blogspot.com/2014/01/nanjing-massacre.html

· Does war benefit the economy? Yes, to some extent. No, for the long term to me.

Norman: War got us out of the Great Depression in 1941. The inflation is a future problem, ducking the missiles is the current concern. War is a powerful business model and the countries over produce.

· China and Japan (a country with very few natural resources) will fight for natural resources. Most resources are stable but the global population is increasing. The rule of Supply and Demand will push the prices of most commodities (including farm products and water) higher.

· As of 5/2014, Vietnam riots destroyed several Chinese corporations over the disputed islets. Investing in S.E. Asia is risky now. Vietnam will suffer from foreign investment and tourism for 3 or more years.

http://en.wikipedia.org/wiki/Senkaku_Islands

32 China by 2020

By the time 2020, China will catch up with the USA in GDP. China has about 4 times the population of the USA, so the average income is 4 times less than ours. Hopefully the following will tell the China story better.

1. China's product quality is improving as it is moving up the value chain (that has been gone thru by Japan, Korea and briefly the US in the colonial period). Today a lot of goods that requires cheap labor are assembled (via China's outsource) in other countries such as Vietnam and Lao.

2. The quality of these should be responsible by the outsourcers. Does Apple have quality problems from China?

3. As long as the US corporations want higher profits and do not spare the time in checking quality, product problems will be here no matter they are from China or any foreign country.

4. China had saved GM from bankruptcy and also the tourist industry (ask any retailer who sells luxury goods in NYC).

5. I wish China will fix the basics first. They are air quality, water quality, food quality and basic necessities for all such as health care delivery.

6. China has been dominating for the last 20 centuries except the last three. They learned and suffered from foreign invasions. I hope they will not bully others as they were bullied.

7. If you believe kids will achieve the same in life by spending three extra hours in playing video games and watching TV more than Chinese or Indian counter parts, you believe in fairy tales or there is no God. We spend far more money to educate our students than our counter parts in most Asian countries.

33 The myths of ‘Made in USA’

A TV network advocates products made in the USA.

Are we cheating ourselves or redefining "Made In America" when we find out the assembled car here has more foreign parts than made here for example?

More than 30 years ago, the entire shirt was made in China except the two buttons and the label of "Made in Hong Kong" to get away from American embargo on China. The world has to play according to the US rule but the days are numbered.

Fillers:

### Joke ###

In my first job just after the Vietnam War, every one tried to date my beautiful office mate Mia except me. If we married, then her name would be Mia Pow. She would be very popular or very unpopular without showing her beautiful face. In any case, when she becomes a mother, she will be Mamma Mia.

### An offensive joke ###

There is a big sign offering escort service after dark in a Catholic college. My friend called and was furious on deceptive advertising as he expected the same service offered in Yellow Pages.

### Chinese music on Youtube

http://tonyp4idea.blogspot.com/2015_05_01_archive.html

### On Travel

http://tonyp4idea.blogspot.com/2016/04/on-travel.html

34 Capitalism & democracy

When we use communism to describe China’s political system, it is not 100% correct. It started communism about 60 years ago, but Deng modified it to be socialism with Chinese characteristics. Now, it is highly capitalistic.

Capitalist-Socialist is a better term to describe China's political system. However, China is also ruled by a single party with about a handful of rulers who determine the next leader every decade. It is consensus rule by a few within the context of party authoritarianism.

Communism shares food and other stuffs evenly. So, communism encourages laziness and China today is capitalist where its citizens starve if they do not work.

Socialism is in between capitalism and communism. Democracy could lead to socialism, which in turn could lead to self-destruction as demonstrated by Greece today.

What do we call the U.S.? Socialist-Democracy? We have generous welfare and free speech. Some may call it a welfare state.

Western Democracy may not work for countries with low education. It could and have led to corruption as indicated in many Asian countries, past and present.

To use health care as a yardstick, China practices capitalism. If you do not pay, you die literally in the lobby of a hospital. Canada is socialist. Everyone has some basic form of health care. Many of U.S. states offer free medical care to the poor and even the illegals, so the U.S. is communist or a welfare state.

Afterthoughts

· We cannot weigh the same vote for an educated citizen and a bum. We should have an IQ meter in the voting booth. Your vote is multiplied with your IQ. In the U.S., your tax return from last year will be handy too as we should not allow representation without taxation. Quite extreme even for me but just a thought. J

· As Uncle Deng said, “If the cat catches the mouse, I do not care it is black or white”. I see a lot of holes in the current Chinese system. However, China has lifted millions from poverty (i.e. starving to death) and just for that it is a good system in my book.

Deng should get a Nobel Prize for that. It is better than Obama’s for doing nothing and even before spending recklessly. Well, the current Nobel Prize committee has become a political clown who only gives prizes to folks against China. Hope Mr. Nobel would rise up and give them a hard spank on their stupid heads.

· The authoritarian system has some advantages like bulldozing all the houses to give rise to a highway or a high speed train rail. As long as it is not my house, it is OK. J

· The problem of the current system in China.

The central government sets up good policies. However, the local governments’ top priority is how to sip money for themselves. The central government should take action on corruption by the local government and ensure they follow the rules and policies.

· We spend too much time in planning, arguing (especially the silly objections between two opposite parties), lawsuits, financing in a large public project such as the High Speed Rail (HSR). By the time we start the actual work, the project plan is obsolete and the landscape has been changed.

BTW, High Speed Rail (HSR) is not cost effective for the U.S. even though it works in China. As in Business 101, you need to calculate benefit over cost (i.e. rate of return of the project). You should select the most cost effect projects first and HSR is not one of them except for political reasons. We’re not as densely populated as China. Airlines will compete better than HSR when the driving distance is more than four hours. In addition, how many workers want to work in that kind of conditions in laying rails instead of collecting welfare?

As most if not all big projects in the U.S. (actually same in most countries) are painted in a very rosy picture initially and then end up in cost overrun and diminished returns. The Big Dig project in Boston is one of them and it was full of holes before it was started. We did not have so many problems on similar projects decades ago even we have updated technologies and know-hows today. This project has been late, cost-overrun and unsafe. It is easy to give all concessions and expensive dinners to everyone as the money is not his. Ronnie did not get the presidency because of this project even he did not have any control.

· The corner stone of our capitalistic system is "Supply and Demand". If you can find a better job, take it. If you cannot find a better worker, you have to pay more.

That's why we have starving artists as the society does not need their work and that's why we pay accountants and programmers a lot of money relatively. If the rich does not invest (taking risk for the potential profit), there will be no jobs. It is also the catalyst (better wages) to ask folks to study what the society wants instead of what they want. I did not have the luxury of studying the field I really wanted.

Do not blame others but yourselves. Do not treat the rich as parasites. Do not blame China as a 50 cent per hour could be heaven for them. Again it is Supply and Demand.

My classmate wondered why the West wanted to take away his only job as a child labor. He needed that job for buying bread. There are always two sides of a story. Do not force others to follow your ideals. If you do, we have wars.

Links

Next Leaders:

http://en.wikipedia.org/wiki/Elections_in_the_People%27s_Republic_of_China#Indirect_elections

Lead to socialism:

http://www.tonyp4idea.blogspot.com/2011/10/democracy-leads-to-socialism.html

35 Could socialism lead to self-destruction?

In 2011, I heard more folks talking about it recently. It is what is happening in Greece today and to some extent in the U.S.

The major flaw of the U.S. political system is the election every four years, despite its strengths. Our leaders do not plan or care about the longer term. We've more poor than the rich and each has one vote. Hence, the politicians have to be pro poor. However, after the politicians have been elected, they have to pay back to the special interest groups which have funded their campaigns. That's why our democratic system could lead to corruption and self- destruction.

Politicians have to watch out for the benefits / welfare of the poor in order to buy votes. The rich will migrate to other countries where they pay less and fewer taxes and are rewarded for their investment for taking risks. It is the same reason why corporations moving jobs and investments overseas. We have to blame ourselves as we vote to elect our leaders. The middle class are squeezed by both ends.

Most of the recent protesters in Wall Street belong to the unemployed and about 40% of the citizens do not pay any Federal income tax. I do not blame the unemployed due to our economic mess. It is similar to taxation without representation in reverse. The able folks should take jobs with minimal pays (that are being taken by illegal aliens today) and give back some of their entitlements. They have been taking more from the society than giving back for a long time. Welfare and many entitlements are supposed to be a temporary safety net for most.

Greece has illustrated this concept thoroughly. Democratic systems especially the richer countries could lead to socialism and corruption, which in turn could lead to self-destruction. With the world interconnected, it could lead to a global recession.

36 Bad business practices

I have so many bad experiences recently. I bet their competitors do the same, so I do not want to show the names of the offending companies if I have an option.

· My car problem.

I could not take the key from my ignition switch all the time. It is a new car from one of the two major Japanese car manufacturers. They honestly acknowledged it was a common problem for my model. After several unsuccessful fixes and giving me goodies such as free oil change, I called the service manager and yelled at him it was THEIR problem not mine.

Finally, it was fixed with a solenoid costing about $5. What a waste of time, theirs and mine. This customer will not be happy and they still have to spend the $5 plus the oil change and all the free apples I can pocket. I still have not received my customer satisfaction survey.

· I received a letter from my one of my funds asking me to respond so it will not be treated as an abandoned property. The checks of the dividends and the capital gains must have been cashed by a ghost. I responded by closing the account.

· I was lured to another cable company for their generous offer. I asked my current cable company to match the same deal and they refused. I switched. Since then and 5 years later, I still received their junk mails offering better offers I cannot ‘refuse’. Cut down many trees in the process.

· My Sunday paper raised the price to $5. It is a dying industry as I got all my news from TV and the web. I quickly cancelled my subscription. Since then, they have left many messages and sent me junk mails almost once a week. If they did not raise the price, I would have stayed with them. Try to squeeze the last milk from a dying cow.

· I had a reader telling me to improve my writing style. I asked him whether he followed the book’s technique to accumulate cash before the correction in August, 2015. He did not and he is supposed to be a keen business man. Wrong objective for buying a book on investing!

· My ‘favorite’ charity called me 8 times for donations. I will not donate via them again. I hate to be disturbed during dinner. So are all the phone calls from politician calling for votes and I do not vote for any of them.

· My printer needs replacement of inks at least once every 3 months even I seldom use it. Never buy anything from that company.

· The ‘new and improved’ upright washers are problem-prone. My old ones never need repair for over 10 years. So are Yahoo!’s new ‘improved’ systems. So is Microsoft’s Solitaire – why the ‘improved’ system takes many, many, many times longer to load as they expect players also own Xbox. They all lose contact with their own products/customers or their stupid management tells them to do so.

· I want to know how all the three market indexes, oil and gold are doing at least once a day. One major financial web site now ‘hides’ this information in order to show their programmer can do a fancy job without caring what the customer wants. For me, just switch to another web site.

· I almost missed my connecting flight to Boston in Toronto. First, why I have to clear custom in a foreign country? Second, why the old process took minutes and this one takes almost an hour. The designer must have to change the system so s/he can hire more employees or just had too many drinks during lunch.

· One luxury hand bag company takes out the logo on their bags which is why their customers pay premium.

Filler:

### Kings of California

Due to its huge size, California should be broken up into two countries. The South and the North are quite different - some laws worked in the South do not work in the North. I will assign Trump to the South to fight the nasty Mexicans and myself to the North to enjoy all the wine and fresh air/water LOL.

Sunday, September 4, 2016

5 Inflation and deflation

36 Bad business practices