Tuesday, October 27, 2009

High-Speed Trading, the final blow to your 401K and the end to disposable income.

High-Speed Trading,  The legal replacement for derivatives in stealing the wealth of a nation.

As simply put as possible, your friendly hedge fund manager Mr. Friendly, leases space for his computer in the same building that the NYSE has its computers.

Your computer is on your desk hooked up by modem to one in Des Moines Iowa (or Dhaka Bangladesh) which is then hooked up to the NYSE via a complex route that takes time..

You and others like you see a trend for Acme Products and offer to buy. Your friendly hedge fund manager sees this also. Mr. Friendly buys, his exchange is an nanoseconds, yours take one second. In that second minus a nano-second Mr. Friendly has driven up the price of Acme Products and your profits are diminished (or losses increased).

Every time you trade you lose. The more you trade the more you lose and the more Mr. Friendly wins. Eventually you are tapped out, because Mr. Friendly has deep pockets. and you are in Ocean Park, Washington.

If the mavens of Wall Street and our government agents in Washington want the consumer boom to re-ignite, they need to make sure more money flows down to Main Street, and so far I see the money going one way. Straight into the hands of the 1% enters.

Henry Ford knew that to have sustainable consumer growth, employees must be able to afford the products they made, and the time to use what they bought. Hence, Ford's paid better wages than others and made sure his workers had time to use the product up. (enough wages to buy a model T, and the forty hour week to drive it into uselessness). Ford also sensed that more than 40 hours per week diminished productivity and also decreased the number of potential buyers for his product. Once you bought your Model T he didn't have anything else to sell you with your overtime pay, so that money went to hire more workers. (of which there was a steadily increased supply).

That's as simple as it gets. Wall Street wants and has all our disposable income and if you let them have your meager savings, they will eat the rest and leave you nothing.

The inevitable outcome of unregulated capitalism, is the transfer of all wealth to a few.

For the Wall Street investment bankers and politicians, read some history of the French revolution and the Bolshevik revolution  and you might see why it could be a good thing to let a little wealth trickle down.

I'm betting that I am right, and in future postings, I will be musing about paradigm shifts and trends rather than causes.  I will keep my eyes open for new ways that the system will re-allocate your wealth. 

When we get through this mess, we will not be worrying about fashions and ipod upgrades but more fundamentally useful things like friends and family and a shared common wealth (good).

Tuesday, October 20, 2009

Simplify your life. Six easy and small ways with a link to 72 more.

I know the "baby boomers" are begining the de-acqusition phases of their lives. As I talk to my old and new friends, who are age peers, they are looking  for EASY and SMALL ways to simplify their lives.

They are not looking for leisure retirements, they are looking for ways to dump impediments to continued productivity.

For example, if taking care of my large yard is getting in  the way of my volunteer work, something has to give:

I dropped the yard work!

So here are few EASY and SMALL ways to simplify your lives:
  1. Make all your bills into e-billing and direct pays. Most e-bills can be put on credit cards so you don't always face over charging yourchecking account.
    • Reduces paper mail coming in and reduce recycling or waste.
    • It also saved me $15/month in postage, and the monthly drive to the post office for stamps.
  2. Give to charity all the clothing you have not worn in one year. (Of course save the raincoat, even if you live in Arizona, you might travel)
    • This simplifies your decision making on what to wear. It also keeps you more up to date.
    • It makes it easier to organize your closet.
  3. Take ALL your books and magazines to the used book exchange.
    • This simplifies cleaning the house and the inevitable internal question of "Tell me again, why am I saving this?"
    • Lets you return those "lost" library books!
    • Porvides you with a little income to maybe buy a current novel, or self-help book.
  4. Burn all that lumber you have been saving for that "project". Skip the project, you don't need a yard shed. (See above: drop the yard work)
    • Clears the garage for the car and makes getting into the house easier. I did this one!
    • Might save your life, if you need to get out of the garage quickly.
  5. Drop all memberships that don't contribute to the benefit of others (than yourself).
    • Lots fewer meetings.
    • Lots less junk mail.
    • More time to be productive helping others. (A very post consumer view.)
  6. Have your home phone disconnected (We did!)
    • No false emergencies at our houses. (We do have cell and email for close friend.)
Thats my list of six.

If you really want the full monty go to this website. Zen Habits

There are seventy-two ways to simplify. If that's too many read this excerpt from the site.

The Short List 
  • Identify what’s most important to you.
  • Eliminate everything else.

Sunday, October 11, 2009

Indicators of change to post consumerism society.

New indicators of a change in consumerism towards post consumerism.

Main stream media government and “wall street” keep telling us to buy stuff as the recession “has ended”. What a crock. At the same time they are bemoaning consumer spending they are saying look out for more job loses next year. You can’t have it both ways: If we are rightfully fearful of our future employment options why should we buy into their self serving demands.

This week, as your ever watchful post consumerist, I plucked these tidbits:

• Condé Nast looses big and closes four publications.

Condé Nast will be down $1 Billion in advertising revenue this year and will close four magazines and 200 staff are to lose their jobs:
  • Gourmet,
  • Elegant Bride,
  • Modern Bride
  • Cookie  
Will added stress from these loses decrease the cost of weddings (another blog opportunity) or raise the rates of bridal suicides. On the upside Bon Apetit and Brides magazines will continue to publish, so we won’t be completely bereft of very glossy very consumerist offerings in this area.

• JD Powers find Gen Y to have negative attitudes to car ownership

Mark Zimmerman of the LA Times reported that according to JD Powers and Associates (the perennial toastmaster of the auto industry) Gen Y teens and early careerists have shifted their perceptions (negatively) towards cars ownership and the auto industry. (Japan is showing “decline” in car ownership).
"The negative perceptions of the automotive industry that teens and early careerists hold could have implications on future vehicle sales," Chance Parker, vice president and general manager of J.D. Power's Web Intelligence division, said in a news release. (LA Times)
What implication?  Less car sales I think, or is it: “If I hate your product and have found a way to live without it, you will still find a way to sell it to me. Think again auto execs. A silver lining: the Chinese are wild about buying cars, and that’s a big market if you consider China has two nations (one the size of the US who are rich consumerists and the rest of their country that is illiterate an poor).

• America’s Top Chef show acknowledges people are entertaining home in latest episode. 

Bravo’s show Top Chef acknowledged that in these difficult economic times more people will be having dinner parties at home. I have found that to be a change in my personal life. Although we are not big on eating out except when travelling and as an occasional luxury, we have found ourselves at more and more backyard diner parties (we live in AZ and on the Washington coast so al fresco is then norm). We have probably held twice the number at our homes that we have in past years. Check out the Bravo episode of Top Chef and see how ten chefs in one home kitchen can really make a mess.

• Live music in our back yards.

Two weeks ago, I spent my Sunday afternoon in a friend’s back yard with fifty folks listening to one of the widest types of music you could imagine. From 16th century harpsichord, to Tom Lehrer’s satires from teh 60's to Gershwin to Joan Osborn. Flagstaff’s long time troubadour Jimmy Deblois.(see his YouTube hit) has teamed up with classical pianist Charles Spinning. They have performed at a variety of community venues and are planning more “backyard’ concerts. The highlight of the afternoon, was Groucho Marx’s ditty “Everyone says, I love you from “Horsefeathers” sung for the wonderful young couple (and their gracious family) who were having there wedding reception next door, and never called the police

Sunday, October 4, 2009

How the stock market works to redistribute wealth and the Vegas Sports Book

In the post consumer world two things will rule. Regular folks will have figured out the stock market is run to move small wealth from workers to large wealth capitalists. No more no less. Its an elite form of lottery with some winners so you can point to them to get the perpetual losers to ante up. Secondly, regular folks won't have superflous money to speculate heavily, like we have for the past two or more decades. Speculative investing will return when we have created a healthy balance of post consumer wealth.

I hadn't set out to write this post, but I can't get it out of my mind I believe in investing as a long term strategy, but I know I can't be an outsider and expect to make money. I have decided to make my speculative investments outside the stock market and in the local "slow money" movement. (See a future posting on "Slow Money")

Most people understand the Vegas sports book, there are winners and losers and the house always gets its cut of he action (win or loose). Simple, if I bet against Duke and they win, I loose, those who bet for Duke win. Except there is the "spread" where no one wins or looses and that's where the house really gets wealthy.

All stock exchanges work exactly the same. I bet that GE is going up and the seller bets that GE is going down, and the traders take a commission from both then buyer and seller. The traders just need to keep the uninitiated convinced that the market is always going up and the only losers are those sitting on the sidelines. (There are derivatives and futures, but at the fundamental level its the same thing, but stupider for the outsider).

The truth is that the stock market is a sports book, where very smart folks who went to the same universities or whose professors went to those universities make the rules and run the book. mnarket makers  know that if they are betting against other smart folks with the same educations they will get a net zero result. Except the house always makes its vig or juice. The "vig" is what you pay the bookie to have the right to make a bet. In the stock market its the traders fees or commissions.

So if the stock market can't work when only smart folks are betting, how do they get it to continue to seemingly work. That's where advertising, propaganda, and the included media come in. The market needs an unending number of "bigger fools" who will be willing to buy your questionable investments at a price higher than you paid. If there are an infinite number of bigger fools, you keep winning. When you are the last of the fools, the market collapses, and you keep lowering your price until you find a buyer.

Where are we now. The market seems to be going up, but that's a ruse. The "smart" fools who make and own the market are artificially driving the market up to convince those on the inside rail to get back in. However, if we buy now the insiders make a profit because they bought their stocks at trash prices from us when we could no longer stand to loose more. My post consumer mind tells me that the whole idea of buying and selling speculatives is a thing of the past that is running on its own momentum and will surely come to an end when the insiders come to realize that there is no one on the sidelines. We were wiped out, and have nothing to go back to the market with. There is another view that the sideline money is the really smart and really rich money waitng for the market to completely tank and buy based on the real value of a firm based on its ability to make profit and pay dividends. Paying dividends as a valuation method was one thing that seems to have disappeared sometime in the early 1990's when the market decided that real value was in "potential to make money" rather than actually making money.

Where do we go. I don't know, but I am moving forward but its not in the stock market. Right this minute, my best investments are at Kiva.org.