How smart can bankers be?

You think bankers have to be smart guys (to steal your money at least :-). I read the following incident, the french bank BBVA in Buenos Aires was undergoing restoration work and for that reason the owners of the bank decided to turn off alarms, disconnect circuit cameras and other security devices in order to make things easy for the workers. They were so smart that they didn't even bother to tell the local police station that the security would be turned off during the time of the restoration. So what happened? A bunch of more clever thieves dressed up in painters' uniform and wearing painters' masks, entered the bank pretending to do paint work and without any major trouble stole everything they could from it.
If bankers are so smart no wonder why we are in crisis.

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cc: Customer Capitalism!

With so much talk going on about how to save capitalism from the global economic crisis, I like to use radical thinking and toy with totally unheard-of thoughts in my mind.

Here's a recent one that's been toying my head.

We know of shareholder capitalism. Shareholders buy stocks and own a company. Shareholders make a profit (or loss) when they sell the stock or when the company pays dividends out of profits.

Now how about this. Imagine for a moment there are no shareholders and no stocks to buy in a publicly listed, publicly owned company. The company is owned by the founders but the rules are that dividends are not exclusively paid to the owners. After the company's profit is taxed and some money is invested in the business and a portion of it retained by the owners, dividends are paid back to the customers that bought the services and/or products of the company.

In other words, only customers who bought the products/services of the company and are the source of the company's profit get to receive the dividends. Every receipt for purchase of goods and services essentially functions as 'stock'. It entitles the customer that holds it to a portion of the dividends the company normally pays out. The individual portion each customer gets is equal to the percentage of his purchase amount over total sales.

A customer who buys a product and is entitled to a portion of the company's profit will tend to be a loyal customer. He gets a stake in the company and its products because he can make money from it. This incentive will keep him busy consuming because he will get some money back from doing so.

At a time where the global economy and certainly the US economy could be plunging into a deflationary spiral where prices go down with no bottom in sight we need people to consume and buy to help us get out of it.

Customer capitalism in the sense I described it above could be a smart trick to use to get everyone buying again.

Of course the system I just described is a thought exercise, a brain game if you like. I find it very exciting and stimulating to imagine how the economy would function if certain rules are changed.

If you also share a similar passion, I look forward to reading your comments thoughts and reaction on this. Thanks!

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Why the China man won't spend

SunTzu said: If the enemy is weak because he overspent, don't overspend or you'll become weak too. Said it but didn't write it.

SunTzu then said and wrote: "All warfare is based on deception...If you know the enemy and know yourself, you need not fear the result of a hundred battles"

The world hopes the Chinese and the other Asians will spend the West out of recession. Ok, here is why if you read SunTzu you know this will never happen.

The Chinese know themselves. They like to save. They look at the West and they see that it overspent and is in trouble. What's the lesson they get?

Stick to saving. Don't do what your rival did and got him in trouble. Just give the appearance you might in the form of big government spending plans.

How deception works. The government announces big spending plans and the world thinks the Chinese man will suddenly start spending. But the Chinese man will not do that because he knows it will get him into same trouble as the Western man.

He remembers Sun Tzu and decides to save a big portion of the money in order to buy the enemy later and win the battle without a fight.

Sun Tzu said: He who hearkens to my counsel and acts upon it, will conquer.

Time to read Sun Tzu from the Chinese man's point of view!

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Crisis? What crisis?

Of course we have a crisis, people lose jobs, companies go bankrupt and all explained on the basis of greed, lack of regulation and wall street walking on clouds. Some people argue that the good times was just an illusion. Well, if the economic growth, wealth creation and the excess profits of the last few years were an illusion, shouldn't then an illusion's fall and demise also be an illusion? That's the only logical conclusion you can make if you accept the premise of the illusion.

So it wasn't an illusion and we have a real crisis which means we did have real growth and wealth creation. Is it simply changing hands now in which case the crisis is a process of wealth reallocation and ensuing disruption? Or is wealth actually destroyed at a level below the one that existed before excess growth building began?

Physical wealth in the US, Europe and Asia is not being destroyed. We are not experiencing a World War. With the exception of oil depleting and a climate changing, bridges, roads and buildings are still in place. So the major destruction is mainly happening to the intangibles. That's why prices fluctuate like crazy.

Isn't the creation of intangibles, however, infinite? If you look at history and also believe in human nature then you must accept its ability to create new intellectual words out of old ones.

I am optimistic. To those who argue previous wealth creation and economic growth was just borrowed time and an illusion, I rest my case.

Crisis? What crisis? It's just an illusion!

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The defeat (?) of American-style capitalism

Nobel prize economists are saying that this economic crisis will eventually pass but a big loser will be support for American-style capitalism. Does this mean that if the crisis happened during the Cold War the Soviet Union would have been the winner now? That's scary, isn't it? I'm curious to see what most people believe could have happened. If this crisis took place during the Cold War, do you believe that...

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Scumbank

Now that Obama capped CEO compensation at $500,000, I am thinking of starting a new bank where Wall Street fat cats can park restricted stock bonuses, corporate jets, yachts and all sorts of ponzinous financial assets. Out of respect to the public, the bank's premises will be non-descript and decrepit-looking, the exact opposite of what a modern-day Poshbank would look like. Poshbanks are dead. Long leave my Scumbank in little Burglardeshi...

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How the gov can help with student debt repayment

Not all graduates whose education costs $30,000 or more a year will land high-paying jobs and fully repay the student loans fast and get out of debt. I see two ways of creating a system of debt-free graduates. The government fully repays the loan upon graduation if the starting salary is below a certain range and adjusts income tax a little higher for the individual in that income bracket. Or the government doesn't repay the loan but doesn't collect taxes either until the loan is fully repaid.

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Blame US Communism!

Everyone wants to convince us that capitalism failed but I beg to differ. It was Communism that failed and true Capitalism that will be restored after the crisis is over.

Not many people realize that unregulated markets where everyone can buy the equivalent to their income of a $700,000 house they can't afford is a communist thing. Soviet Union communism wanted to make everyone equally poor. The recent version of communism we experienced in the US and elsewhere wanted to make everyone equally rich. The Soviet Union collapse exposed the fallacy of the former and the current economic crisis the fallacy of the latter.

Not everyone is equal and not everyone can live equally the same, whether it's rich or poor. Unregulated markets were, therefore, a neo-liberal marxist tool to introduce unsustainable communism in an otherwise perfectly functioning capitalist system.

Communist subversives are now discredited and time has come to go back to true capitalism where everyone can live according to their means and true worth. I wonder why people can't see it was the greed of communism that failed and not the greed of capitalism. Capitalism would never aspire to make everyone equally rich or poor! Why don't people see that? :)

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Credit stylists turn to black

Gold has turned black. VISA came out with what it calls the world's most prestigious and exclusive card and named it the 'Black Card' (https://www.blackcard.com). Maybe it's just me thinking like that, but isn't black the color of mourning? When people everywhere experience the most severe credit crunch ever, black associates with bleak. It might be 'appropriate' to name the card black but will it make people spend? Why not name it the Carbon Card after the material it's made of?

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