Global Censorship

I may have already written somewhere in this blog about the censorship that America faces in the world of International Media Conglomerates dominating what "entertainment" we see every day.  But I will say it again.  First from Mr. President Obama:

“We cannot have a society in which some dictator someplace can start imposing censorship here in the United States, because if somebody is able to intimidate folks out of releasing a satirical movie, imagine what they start doing when they see a documentary they don’t like, or news reports they don’t like,” Mr. Obama said.

Well, thank you Mr. Obama, Sony Entertainment (Japan), AMC Entertainment (Wang Jianlin company), Regal Entertainment. (Anschutz company), Cinemark and Carmike etc. (the oligopoly group), and all of you dweeb executives looking after your bottom line.  For ANYBODY out there who does not already know how heavy censorship is already in the US, this is your wake up call.


I have the benefit of living in East Asia just now and I can tell you this, the absolute garbage that dominates the international movie screens that is produced in America right now is a direct reflection of the need / desire / opportunity inherent in global media companies trying to sell "entertainment" to a global population when a very large portion of the global population is in nations with either Tsar type leadership (Russia), Religious Fiefdoms (you know this group), or communist dictatorships (umm China), or quasi-unpredictable elite run "democracies" (India, Malaysia, Indonesia...). 


Much of what dominates the screens, let's call it "trash action", is there because it has nothing to say, just BS violence with every antagonist being defeated by what seems to be the only nation on the planet capable of defeating anything.  And what nation might that be?  Well the US of course.  The US military and or police and or civilians in alliance with the US military or police seem to be the only group of people attacked by every space alien ever dreamed up, every global calamity... you name it.  And every one of these movies make the US look representative of the globe and the US always saves the globe... So if there is one theme that is consistent, it's that white people from the US (with the occasional non white thrown in for political purposes) are the only saviors of the human race.


The moral of the story is these companies want to sell their pictures around the world, most of who's cultures are still intact (outside of the window dressing played to their cultures by the elites of those nations who are pretty much global elite citizens, not really representative of their respective cultures), and in order to sell theses pictures around the world, they have to appease the governments and censors of the various nations to get their pictures shown.  This means you get movies that are treated like corporate food:  designed not to offend the pallets of a large number of people, ie; watered down, tasteless, bland and uninteresting content.  It's all economics, making money.


The films also reflect the culture of the WIERD defined in this paper as Western, Educated, Industrialized, Rich and Democratic, which may suggest why the films are popular.  The propaganda and forced consumption of everything from the WIERD countries by the non WIERD countries is one of the longest standing phenomena, culturally and economically, since the earliest days of colonialism to today's neo-colonialism, of the world's lesser developed nations.  As the WIERD countries become even weirder to many a people outside of the bubble of the WIERD nations, their "entertainment" reflects this and maintains it's curiosity level amongst people not from those nations. 


I can only imagine what some Afghani farmer, tilling his land with an Ox and living in a mud hut thinks when he sees an American Solder.  Martian?  Might as well be.  What about when their TV blasts the music videos commonly viewed by 10 year old WIERD children on a routine basis?  Don't you think that farmer just might want to vomit even thinking his child would view that Sh%@?


Well, it does seem that some of the most accepted and promoted attributes of American Media content in America are the most repulsive and or insulting to one hell of allot of people around the world, emphasizing how weird in fact the culture's of the WIERD nations are.  However, it seems repulsive and insulting usually gets through so long as it does not incite people to think! So if a media company from America wants their movies to regularly appear on the screens of the movie houses in nations where people aren't WIERD then they better make sure the themes are not going to challenge or offend either a) the balance of power of the non WIERD nation, b) the cultural value set that exist there c) the egos of the dictator/s that might run the non WIERD nation or d) the censors and politicians that might claim offence on behalf of their "constituents" for political theater. 


Though it must be said that the underlying themes in internationally successful movies like "Avatar" where complete mutiny and actions deemed treasonous in any WIERD nations that take place are celebrated around the world or the first "Hunger Games" where sectors of that fictitious nation riot against the state, occasionally get through the sensors, or maybe they don't for I have not seen the actual end version released of these films outside of the US (of course those themes also got by the average American who from my non-scientific observation did not even get or place any weight on those underlying themes).


And I digress...


The point I am trying to make here is a simple one.  There is a huge amount of self censorship in EVERY media outlet in the US right now being applied by the media conglomerates (oligopolies) in their global production of "entertainment".  In the new WIERD nation oligarchical reality (oligarchy has pretty much been the greatest indirect "export" of the WIERD nations for generations and for which the formula is now returning to home base, where the "democracy" is now pretty much theater and the "rich" is being narrowed down to those who work for the military state and it's various off shoots or multinational corporate entities), it's all about making money and placating the population with formulated reality, extreme scripted "reality" and bland, ethnocentric movies that feed self importance to the populous of the WIERD nations and make sure the non WIERD nation's people know who is out there ready to save the world from themselves.


It's all economics baby!  Culture is dead in the eyes of Media Conglomerates. They play by their own rules and get weirder every day.  The best thing any person can do who lives in a WIERD nation is to turn all of it off and read.

Krugman Offers No Solutions. Same ol' Same ol'

The following article makes me angry on so many fronts; I don’t even know where to begin:

The article can be found and starts here: 

On Thursday, the European Central Bank announced a series of new steps it was taking in an effort to boost Europe’s economy. There was a whiff of desperation about the announcement, which was reassuring. Europe, which is doing worse than it did in the 1930s, is clearly in the grip of a deflationary vortex, and it’s good to know that the central bank understands that. But its epiphany may have come too late. It’s far from clear that the measures now on the table will be strong enough to reverse the downward spiral.

And there but for the grace of Bernanke go we. Things in the United States are far from O.K., but we seem (at least for now) to have steered clear of the kind of trap facing Europe. Why? One answer is that the Federal Reserve started doing the right thing years ago, buying trillions of dollars’ worth of bonds in order to avoid the situation its European counterpart now faces.

To even begin to compare the US actions to the European Central Bank’s recent actions is archaic and insane to the least, and ignorant and arrogant to the most.  Europe until very recently essentially did not have a true “central bank” in the way one would understand what a “central bank” is.  Each nation in the Euro Currency block has / had its own central bank, taxing policies, economic policies etc. The European Central bank had almost no direct power to even purchase bonds issued by member countries let alone dictate the finances of each member country.  This “one currency, many nations” structure made Europe a completely different animal from the US where the central bank oversees the entire economy of a very large nation and has full autonomy to set policies and manipulate every aspect of monitory authority without any consent from the US government.  NOTHING like this existed in Europe.  In addition, Europe had a handful of countries that NEVER should have been converted to the Euro in the first phase of Euroization of the member countries.  Their governments were completely reckless, their citizens knew full well their economies were no where near on par with the nations that should have been included in the Core and they acted recklessly as their governments.  It all looked fine for a while, but like any economic anomaly such as pegging a currency, the flawed structure was doomed to fail, credit crises or not, until the Euro countries actually established a strong central bank able to act with autonomy and discretion irrespective of the desires of member governments.

You can argue, and I would, that the Fed should have done even more. But Fed officials have faced fierce attacks all the way. Pundits, politicians and plutocrats have accused them, over and over again, of “debasing” the dollar, and warned that soaring inflation is just around the corner. The predicted surge in inflation has never arrived, but despite being wrong year after year, hardly any of the critics have admitted being wrong or even changed their tune. And the question I’ve been trying to answer is why. What is it that makes a powerful faction in our body politic — call it the deflation caucus — demand tight money even in a depressed, low-inflation economy?

Krugman is completely ignoring the true underlying inflation in the US over the past 35 years.  The CPI number calculations have undergone revisions a couple times in the last 30 years that have dramatically altered the outcome.  Using pre 1980 data, inflation is and has been running near 10% for most of the first 15 years of this century, not withstanding a dip during the credit crises. 

Even using data as calculated in 1990 reveals over 6% inflation over the same period.

Anyone who lives in the US knows that the average paycheck adjusted for even the “official” CPI numbers reveals a paltry $200 annual (yes annual) increase in income since 1980!!  This where all you have to do is go to the US Dept of Labor Statistics and see what the earnings of 1980 are worth in 2013 dollars.   You need $294.18 to match the buying power of $100 in 1980.  What does that tell you about the value of a dollar over this time?  What difference does it make that you now make $47,000 when your parents made $16,354 in 1980?  It has the same purchasing power!  And this is BEFORE we know the true results of the Trillions in dollars printed over the last 5 years. Note: the 1980 number came AFTER the serious spiraling of inflation of the 1970’s.  So what is Krugman trying to say about inflation?  That it is a “political issue” whether or not all this money printing is going to have any longer term affect?  Really?  What about China?  The US may have used somewhere near $14 Trillion to bail out the “financial system” during the crises and gone on to print a few Trillion Dollars but China has outshined all nations combined printing a whopping $15 Trillion!!

One thing is clear: Like so much else these days, monetary policy has become very much a partisan issue. It’s not just that talk of dollar debasement comes pretty much exclusively from the right of the political spectrum; inflation paranoia has, to a remarkable extent, become a matter of conservative political correctness, so that even economists who should know better have joined in the chorus. So we can focus the question further: Why do people on the right hate monetary expansion, even when it’s desperately needed?

One answer is the power of truthiness — Stephen Colbert’s justly famed term for things that aren’t true, but feel true to some people. “The Fed is printing money, printing money leads to inflation, and inflation is always a bad thing” is a triply untrue statement, but it feels true to a lot of people. And, yes, a tendency to prefer truthiness to more complicated truth is and pretty much always has been associated with political conservatism, and this tendency is especially strong in an era when leading politicians get their monetary theory from Ayn Rand novels.

Another answer is class interest. Inflation helps debtors and hurts creditors, deflation does the reverse. And the wealthy are much more likely than workers and the poor to be creditors, to have money in the bank and bonds in their portfolio rather than mortgages and credit-card balances outstanding. Back in the Gilded Age, the elite mobilized en masse to defeat William Jennings Bryan, who threatened to take the United States off the gold standard; campaign spending as a percentage of G.D.P. was far higher in 1896 than in any presidential election before or since. Are the wealthy similarly mobilized against easy-money policies today?

Is Krugman serious when he quotes Stephen Colbert, a comedian, then waste 3 paragraphs telling us all the concerns about the recent policies of Central banks from China to Europe, policies that have taken humankind into completely uncharted territory with respect to Central Bank policy and experimentation to counter the largest credit crises in history which was preceded and followed by the largest expansion of debt in history at EVERY level of the economy and continues to expand under near forced direction by central banks today where they are saying “buy debt and issue debt and if you will not we will do both”, is nothing but a political / class issue? Does he even understand inflation?  Saying the “wealthy” are only to be hurt by inflation because they have “bonds in their portfolio” rather than “credit-card balances and mortgages”?  Does he even understand that the “wealthy” own real property that tends to keep up with inflation not the mortgaged and credit-card poor.  In fact, by pure definition, if the “poor” wages rise relative to their mortgage at fixed rates and credit cards capped interest, they would actually be better off as long as they don’t loose their jobs!!  What is he trying to say here?  In one paragraph he is trying to say the rich are not complaining so why should we worry?  Are the wealthy not the ONLY class of people that have benefited from the huge injection of cash which has allowed companies to refinance and issue debt to buy back their stocks and increase dividends with almost free money driving the stock markets higher and higher in the process?  The wealthy are the ones who have seen their bond portfolios increase in value year after year as interest rates fell to zero and are kept there under central bank policies.  The distortions in managing “risk” at every level are so outlandish today in the markets that this distortion is now being called “the new normal” on Wall Street!  Complacency is ripe, risk is high, volatility at historic lows, and everyone is chasing yields pushing rates down on essentially bankrupt nations like Spain, with 20% unemployment below that of the US!  High yield debt almost does not exist as spreads of low grade bonds of all kinds’ trade at premiums to US Treasuries at levels not seen since 2006, at the height of the credit bubble.  I could go on.  So all Krugman has to say is the debate is a political and class debate and not to worry, all central banks should follow the US lead, irrespective of the dynamics on the ground and just print money, buy bonds, support risk taking, force banks to lend, lend, lend….

As far as I know, we don’t have rigorous evidence to that effect. There are certainly a lot of wealthy investors in the debasing-the-dollar crowd, but we don’t know for sure how representative they are — and you could argue that big investors should like the Fed’s expansionary policies, which have been very good for the stock market. But the wealthy may not trust that connection, in part because the inflationary ’70s were very bad for stocks. And we do know that the very wealthy are much more likely than the general public to consider budget deficits our biggest problem, even though fiscal austerity is probably bad for profits. So perceived class interest is probably also a key motivation for the deflation caucus.

Is Krugman serious here?  Comparing today’s Fed’s expansionary policies to the 1970’s?  Does he even have the capability to differentiate the 1970’s oil price driven global inflation surge which came on the heals of the end of the US productivity surge of the 1950-60’s, the tail end of a protracted pointless and expensive war, and the end of US industry’s life cycle of post war investment in production which started the long decline of industrial production?  Does he really get away with comparing this era to today?  Fiscal Austerity?  Does he even comprehend the level of recklessness of the budgets of ALL nations who command the “hard currencies” of the world today and how this is going to radically alter the shape of global finance in the future?

A side note: Europe’s wealthy aren’t as wealthy or influential as their American counterparts, but creditor interests are nonetheless even more powerful than they are here because creditor nations, Germany in particular, have ended up dictating policy for the whole of Europe.

Is he serious here?  Europe’s wealthy may not be on the front page of Bloomberg every day, but they hold their wealth in “productive capacity” and “hard assets” accumulated over a very long time, not just in “paper” i.e.; stocks that have ever risen to unrealistic heights catapulting them to the stratosphere and making them de-facto mouthpiece of the American multinational and reminding people that our nation’s economic structure far more resembles the same 1896 he quotes in this article, with the robber barons, oligopolistic structure of industry and bought out government then some 21^st century successful economic system?  To make a statement like this is completely ignorant, arrogant and ethnocentric as one could make!!

And the important thing to understand is that the dominance of creditor interests on both sides of the Atlantic, supported by false but viscerally appealing economic doctrines, has had tragic consequences. Our economies have been dragged down by the woes of debtors, who have been forced to slash spending. To avoid a deep, prolonged slump, we needed policies to offset this drag. What we got instead was an obsession with the evils of budget deficits and paranoia over inflation — and a slump that has gone on and on.

Once again, even his final statement is hogwash to no end.  He suggest NO structural remedies for what we all know was a “crises” predicated on a never before seen debt bubble facilitated by ever creative “products” designed to off load risk that became the core of the irresponsible lending mantra.  All of these “products” were created and traded in casino fashion, were completely unregulated, dragged in the participation of every financial institution including taxpayer insured banks, were built on the back of every possible category of debt imaginable (and some unimaginable creations).  Yet he suggests that the role of central banks is to somehow “counter” this?  All the central banks on the planet did not have enough firepower to counter the crises. This is blatantly obvious.  They have had to print Trillions of Dollars, everywhere, to make a dent in the disaster.  Yet people like Krugman have NOTHING to offer to cure this complete collapse and failure of the “free market system” other than to say, just print more money so the party can go on!  What a complete looser!

The Bizarre Economic Theory Behind US Foreign Policy

I just finished reading the article in The Atlantic written by Jeffrey Goldberg where he talks with Hillary Clinton about Foreign Policy.

The article for the most part has nothing interesting to add to anyone's understanding of US foreign policy if said person takes time to keep up on what is going on around the world and has a basic understanding of recent history.  I don't even know why the article got so much hype.  The headline that drew me to the article was from another media source which claimed Ms. Clinton was critical of President Obama's foreign policy.  In fact she simply suggested there were factions, including apparently herself, that felt the Obama should have been more proactive and directly engaging in helping anti Syrian protesters turned militants to overthrow Assad.  Big deal.  If you read the whole article you will see that there is no guarantee that this would have resulted in any better outcome and
the US policies towards Libya are cited as evident of such.  It is also normal in any administration to have issues that draw strong feelings on both sides and an administration / leader has to make a decision some will not like and they are free to resign in protest.

For me, the most striking statement made by Ms. Clinton hits a very strong nerve in my understanding of the ignorance of one aspect of US foreign policy (and that of many other governments around the world who pump boatloads of humanitarian aid into developing nations) that has hijacked "group think" amongst most of the international organizations that are financed and overseen by "The Western Powers" ie; the US and Europe, and that statement is:

You can’t grow your GDP without opening the doors to full participation of women and girls in the formal economy.

I will not attempt to argue the merits of this statement other then to say, having lived in Washington, DC for some time and being privy to the occasional presentation / discussion / conversation on the topic of foreign aid and development of underdeveloped countries, I have seen the progression and metastization of this idea over some time.  I have often questioned its merits.  I have seen where the "research" on the issue comes from and read many articles that profess it's validity.  However, it is also clear the the statement is completely false if taken in the context of what it is supposedly implies: that "full participation", meaning the education and workforce participation of women vs woman's traditional participation in the "economy", i.e.; not through education and workforce participation, which was predominant through the middle of the 20th century in the same "western" nations that now profess this role, "must" be redefined to fit the "group think" of the global powers that control and shape "development" aid around the world.   Think about this: Was there not incredible economic growth in Western Nations between 1790 and 1860 or between 1860 to 1930?  What was the "full participation of women and girls in the formal economy" then?

What I am going to do is call a spade a spade and stick my neck out and say something that may offend many people and I really don't give a damn because I strongly believe the current thinking on the subject in the West does more to feed distrust and push-back against the West then any other single foreign policy issue on the international agenda.  The ideology that backs the statement Ms. Clinton made is an ideology designed specifically to attack a core value of what defines Muslim Identity around the world.  The overriding emphasis on this "full participation of women" ideology is the most powerful public policy agenda against Islam and the most powerful rallying call to the populations of nations who are called upon to submit their young people to war against people who call Islam their religion.

I am not going to say that the emergence and success of something like "micro-lending" around the world, which goes primarily to women, and assumes that these women's economic success are at the core of pulling people and hence nations out of poverty, does not have merit.  But where is the world's poverty index in the 20 odd years of this phenomenon?  It is amazing how many "economic" studies still use $1 or $1.25 as some kind of base number to measure poverty!  They also use 1990 as a base year... You do the math.  How many dollars does it take to equate to the real purchasing power of $1.25 in 2014 relative to 1990?  Try $2.25, almost double. Take even a smaller increase in this number to $2 and you get:

In all, 2.4 billion people lived on less than US $2 a day in 2010, the average poverty line in developing countries and another common measurement of deep deprivation. That is only a slight decline from 2.59 billion in 1981.

In the US alone the poverty rate has doubled in near urban suburbs and gone up 50% in cities since 2000 according to this Bloomberg article just released.  The US has a "full" participation of women in it's economy today, not entirely by choice, but also out of the need to survive as the vast majority of Americans do not have access to the jobs of the elite 30% or so of the nation's population who have the education and access to high paying jobs. Besides, it only takes a decade of completely reckless Western financial markets that have essentially turned the global economic system into one large gambling casino functioning much more like its 1914 then 2014, to completely reverse ALL of the International efforts to eradicate poverty over the same time.  You know how easy it is to wipe out 20 years of economic "progress".  The people who play in this casino have NO interest in their repercussions on the world's population. That is not what makes them tick.  How large the participation of women in a given economic system is moot when taking this into consideration.

So the next time you hear some "do good", well educated (well indoctrinated) person stand up and try to make a case that "You can’t grow your GDP without opening the doors to full participation of women and girls in the formal economy.", ask them where that idea ever came from in the first place.  They will not be able to answer you in historical terms, only in the propaganda they have been fed over the last couple of decades, those same decades where "we" (the West) have been in an ever growing global war against Islam and the same two decades where in our world the "labor force participation (i.e.; economic) of women and girls" has long since peaked and at the same time the poverty indexes of many developed nations with this high participation rate have also increased, jobs have evaporated and the standard of living has worsened.

So show me where Ms. Clinton's statement is more beneficial then harmful in foreign policy today and show me the economic proof that historically what she claims is true.

Americans Have Completely Lost it Or?

Just read this article in Marketwatch and am severely disappointed at what I read, hence the title of this post.

Now remember those recent debt stories like this one also in Marketwatch, or this one in the NY Times about the exploding sub-prime auto loans?  Well Americans are not stupid, they have just lost their minds.  When they are gonna get a sub-prime loan, might as damn well get the fattest vehicle on the lot!!  Hell yea, "we don't deny anybody" ads are everywhere.  If you not gonna pay anyway, might as well ride in style for 2-3 months!! 

Now the last SUV boom went from early 90's to about 2007-8 when subprime loans hit the fan the first time and gas in the US hit $4/gallon (really gallons?  WTF or where in the world is anyone still using gallons?).  That was when reality hit the debt laden Americans.  It was not just the SUV (truck charade as a passenger vehicle with a fancy new acronym and commercials of vehicles on driving on unpaved roads into the sunset, in a nation with more paved roads per-capata then anywhere else on the planet) monthly $500 for five years, but the $1,000 it takes to change the tyres or the estimated $9,000 a year cost of owning the vehicle on top of the monthly payment (including depreciation, gas and maintenance according to AAA), that really set the average debt laden American to think twice about continuing to buy them, free money or not.  Lets also not forget the crash of the debt bubble which cost millions of American jobs in the course of a few months.

Either way, I was ecstatic.  Whatever it took to make the idiot Americans who just spent some $2 Trillion dollars on two pointless wars wake the F&%^ up was just fine with me.  The SUV craze, and the most stupid thing that ever happened to the American Consumer landscape was finally over.

Unfortunately it took till 2012 for nearly every auto maker to have a decent "small car" on offer.  People actually bought them.  Unfortunately according to the articles I just read, those sales peaked just last year.  When I was back in the US visiting this spring the only small car on the TV I can remember being marketed hard was the Mini.  Every other ad I can remember was for Trucks / SUV's again, climbing mountains with no paved roads, bringing families to camping sites or the beach with their Truck/SUV filled with Chinese plastic BS, not carousing suburban mall parking lots where 99% of them end up.  It's working.  Now the Truck/SUV is topping sales again!  What is up with that?  Gas gas prices are only $.50 from their all time high, averaging $3.50 / gallon nationwide?  

It is the Sub-Prime Loan.  Cheap easy money going to those who are MOST affected by the millions in marketing dollars poured into mass media also happen to be those most likely to max out what they can spend, giving into the unscrupulous and money driven dealers and sales people who know how lucrative it is to make that high interest loan and fat paycheck when those loans are sold to the Wall Street Vultures who will repack them and strip them and sell derivatives on or against them... You know the drill.

Have Americans completely lost it?  Damn right they have! There are like three active wars in the Mid east now not to mention the complete destabilization of Libya and Egypt and most of N. Africa is in some kind of conflict with rebels.  Ukraine is at war with very large implications.  Anything could spark a major oil price hike.  Are the US people completely ignorant of these things?  Absolutely.  That gas could be $5-$6 in the next 2 years?   Yes. That the US fund to build roads / highways / etc. is bankrupt and has to be bailed out right now by legislation / budget items?  Damn right!  That several states are being forced to increase their gas taxes and the Fed might do it as well?  Yes, Yes Yes...  It's better than an orgasm, it's a perfect storm brewing.  Americans are prone to mass suicide in more ways then any culture / experimental nation in the course of history. 

I hated SUV (living room trucks) since the day the first one was made.  I hoped they were going to be a footnote one day.  Guess I am wrong on that one.  There is a saying about markets:  "Markets can remain irrational longer than one can remain solvent." or something to that effect.  Well it seems Americans can remain Completely Insane much longer than any rational person would think they could get their S%&^ back together again.

I guess all the hormones and chemicals and GMO fat and sugar laden nutrient deficient food has managed to not only double their body size, but their ignorance as well.  

Net Neutrality, My Take on the "Open Internet"

FCC

Washington, DC

Re: Protecting and Promoting the Open Internet

Dear FCC Commissioners,

I am writing this letter with respect to the “Open Internet” discussion.  I am inspired to write on this issue as for a substantial part of my initial career as an owner of a company that sold telecommunications services, I was constantly affected directly or indirectly by the telecommunications industry.

First of all I would like to make perfectly clear to you commissioners that there exist no real issue with respect to so called “Open Internet”.  The reason this discussion is called “Protecting and Promoting the Open Internet” is because the “industry” that controls Internet traffic has created or let’s say “manufactured” this issue by attacking the “21^st Century” companies that are delivering content via the Internet.  Once again they are using their overwhelmingly powerful positions as virtual monopolies in the delivery of service and oligopoly status as backbone providers to lobby the government to maintain this power and position just like they have done so in the past.  In reality there is no issue.  The Internet is just fine as an open network with equal access to all.  It just so happens, some of the companies that control access to the Internet also are “last mile” companies, providing consumers access to the internet.  These companies also have invested in content creation, for example Verizon’s investment in making FIOS an alternative to Cable for TV viewing, and are in direct competition with true new generation Internet Media Companies like Netflix or YouTube (Actually today many prior mostly information providers like AOL or retailers like Amazon are getting into the “program creation” game).  Other “last mile” companies like the cable firms are also very interested in making this an “issue” as they to are in the content business, especially Comcast (now in merger agreement with Time Warner Cable), who also owns NBC Universal, also a “Media Company”.   

Another entire area of explosive growth via the Internet are communication services like Skype, Viber, Kakao, Google Talk, Nimbuzz and a host of others that are rapidly making the last dominant area of the Regional Bell companies and Long Distance providers completely obsolete, driving their legacy business further in the grave.  I use these services myself and I believe these services present the most disruptive alternative communications technology that has emerged.  They are connecting people all over the world for no extra cost then their Internet connection whether it is broadband, landline (DSL, cable and the like) or over mobile networks.  In my mind the Internet providers via their PR firms, lawyers and lobbyist are using Netscape and other such content delivery services as a scapegoat for practical reasons, to divert focus of the real threat to their legacy telecommunications services (the Public Access Telecommunications Services).  The reality today is the Internet is the Public Access Telecommunications Service of the 21^st Century and there is no questioning this reality any longer.

We all know the tendency of these Telecommunications providers, be they Internet Backbone or Last mile service providers or both, to cry foul when someone is disrupting their dominant positions.  We also know their cries are completely foul and without merit.  If one looks at Netflix for example, one must also look at Amazon.  Amazon took upon the challenge to host Netflix’s content nationally and the explosive growth in Netflix’s popularity did not cause Amazon to cry foul and run to the government for “help” or a “bail out”.  Instead Amazon worked and continues to work day and night upgrading their technology, to deliver an impressive load of as much as 30% of the traffic of the Internet during peak times not just to TV’s all over the nation but to any and every devise out there that is capable of receiving Netflix’s service, all scaled to maximize the user experience while minimizing the use of network resources and delivered from the nearest access point in a few milliseconds.  Why are the RBOC’s and Internet Backbone and Cable companies not taking up the same challenge? The technology is there to manage all the Internet traffic the most robust providers of content can muster.  Whether you are Facebook, YouTube, Netflix, Vimeo, AOL, Yahoo, Google or the latest new entry into the content space, the ability to offer “Open Internet” access is NOT Challenged.  As long as customers demand access to these services and are willing to pay for Internet access, there is a business model that will be profitable.   

Any person with even the slightest knowledge of what is going on in the Internet / Media / Telecommunication industry knows where there are HUGE conflicts of interest and knows why, especially in the US, where regulated (or unregulated depending on what side of the spectrum you are on in your interpretation of reality) monopolies aka Internet Service Providers, control consumer access to the Internet / Television, this has become such a “big” issue that has now made it’s way the FCC.   However, I cannot stress enough that the issue of “Open Internet” is completely manufactured primarily these ISP’s and it is these same firms that have kept Americans in the dark so to speak with respect to reasonably priced high speed internet access for a couple of decades now.  Only today, in 2014, they have grown larger, their control over access has become more concentrated and their behavior more monopolistic. 

Let me give you a little history lesson from the 1990’s.

I started my business in 1988-9 before the Internet was a readably available service.  Dealing with the Regional Incumbent Bell Operating Companies (Bell Atlantic at that time) was a nightmare.  They were rigid, expensive, had poor customer service, belligerent, righteous and completely unpleasant to deal with (As of 2012, the last time I had to deal with them from a business perspective, nothing had changed. To wake up knowing I had to deal with Verizon that day meant 4 plus hours of my time in agony and disgust).  The biggest game in town at that time was Long Distance and the circus of companies trying to obtain your business, including the RBOC’s, either legally or illegally (cramming, slamming etc.) was intense.  I cannot tell you how many times I tried to do something with my telephone service and had a “customer service” rep literally read me regulations, regulations they essentially used to their advantage for years and helped write, telling me what they could not do.

Within a few short years the Internet emerged via dial up Internet Service Providers who were soon knocking at my door and mailing disks and calling me all to obtain my business.  This ISP industry exploded in the back yards of the RBOC’s and they completely blew it off.  They were busy taking the money they were gouging from us suckers who were stuck in their service areas and “investing” it overseas or busy paying out huge dividends to their shareholders while continuing to operate analog switching technology, upgrading at a snail’s pace to digital technology (while the rest of the developed world was already offering early more reliable digital services like ISDN not to mention already having launched digital wireless services).  It was not that the RBOC’s were unaware of these technologies.  They would be fighting in say the UK or some country in S. America for competitive access to the local telecommunications market at the same time back in the US they had armies of lawyers defending their monopolies and their poor operating practices.

Anyway, after a few short years these telecom firms woke up one morning and realized their half century or older legacy networks could no longer handle all this traffic that was being routed on their networks by the emerging ISP industry.  Just like good monopolist what did they do?  Well they ran to Uncle Sam of course and the FCC and cried for “metered” local telephone service saying they did not have the money to upgrade their networks, or they were just plain unwilling to make the investment for “someone else’s benefit” i.e.; the ISP’s who were charging $10-$30 per month per phone line to access the internet.

The Smartest thing the FCC and Congress did in my lifetime with respect to telecommunications was to tell the RBOC’s “NO” to metered service.   As we all know now, that stampede of ISP’s entering the telecommunications industry was the largest motivation for the 1996 Telecommunications Deregulation Bill that passed congress and became law only to have nearly every aspect of it overturned through the courts with the hundreds of millions of taxpayer / ratepayer monopoly dollars the RBOC’s, led by Verizon, threw at the law through the courts to have it overturned.  The idea that the infrastructure could be shared by competing firms who could offer local telecommunications service, internet etc. using new technology was squashed nearly as fast as it took hold. As it is today, those facilities all over the nation that housed legacy analog switching technology could have easily housed multiple companies accessing the network.  I have seen in my own back yard these legacy buildings being torn down or redeveloped into condos or what have you.  In the mean time, the RBOC’s of the time held manipulated congress and FCC threatening not to upgrade their networks (installing Fiber etc.) as long as there was competitive access.  This was a very tactical game played by the Lawyer run RBOC’s in a strategic battle to maintain their monopoly status and continue to soak as much money as possible out of their monopoly territories while stifling all competition’s attempts to circumvent their outdated legacy technology and offer better services to the end users.  The RBOC’s won that battle and still operate as monopolies today (along with their cable brethren).

What is the moral of this story?  Simple. For anyone with any understanding of the recent history of Telecommunications in America today knows without question where and why there is an “issue” of “Open Internet” today.  These same companies since those days 20 years ago have become entertainment providers, using their monopoly status to capture every aspect of communications in the end user’s house, their phone service, internet service and television service and in many cases their wireless service. 

Now there are alternative “content providers” using the Internet to deliver their content and at the same time are charging their end users a monthly fee (not unlike ISP’s in the early days of the Internet) the ISP’s of today (the same old monopoly operators) don’t like it and they have never liked when they are not getting a piece of the action.  They are doing nothing but the same old asking for metered service of the Internet just like they did with local phone calls 20 years ago.  They are likely prepared to sue, or threaten not to invest / upgrade their networks, claim they cannot handle the traffic or a combination of all of the above plus whatever else their lawyers and accountants can think up to put the fear of Jesus into the FCC and Congress that the whole house is about to come crumbling down if they don’t do something.

Well I have the solution for you.  You, the FCC, tell the companies that control access to the Internet and or the Backbone to the Internet or both, “You either invest in your networks to keep up with the demands of the Internet as a whole or we will pull your charter to operate in the United States and auction it to someone who will.”  It is a simple as that.  Expect a check in the mail once the auction is over with and see ya! 

That is my suggestion to you nice people there in the FCC and Congress.  Don’t take their crap.  They are NOT leading the world in any aspect of what they do.  They have forever scalped their end users with inferior technology and kept America years behind other developed (or even developing nations going back 20 years if you consider Korea or Hungary for example) nations in Internet access technology and services.  Keep the Internet Open and put it in Law.   The Internet is the new Public Access Communications Platform of today and Open Access is not to be threatened again PERIOD.  Like it or Leave it. It’s as simple as that.

Sincerely,

The Office Supply Oligopoly is Reeling

Today's earnings announcement from one of the two major players in the "bricks and mortar" office supply retailers, Office Depot, was another telling story of the state of retail in America. Fewer and fewer players are offering more and more shelf space to fewer and fewer suppliers, resulting in lower selection, quality and higher prices to consumers over the last 20 years.  FINALLY this is catching up to the retailers and is sending their businesses into a free fall.  Anyone with 1/2 a brain knows to buy office supplies on line from Non-Brick and Mortar companies that gouge and rip off any flesh and blood buyer that walks into one of their stores.

The announcement read on Seeking Alpha states Office Depot will close 400 stores after it's merger with the other oligopoly player Office Max in November 2013. Staples, the 3rd oligopolist, announced just about a month ago the closing of over 200 stores. 

There is no mistake in why these companies are reeling from their business models.  They are totally flawed.  The model has been replicated in retail across the US for a couple decades:  Open big box stores with a large selection of supplies in every category.  Start with low prices that drives out all the "mom & pop" business that dominated the industry since the beginning of time.  Then start weeding out your suppliers, shrinking the selection of products in each category, while slowly raising prices.  Eventually each product category is down to one supplier and maybe your store brand.  Then keep raising prices.  Meanwhile, the producers of all of the products you used to sell start to also go out of business.  Thousands more manufacturing jobs disappear as the major retailers squeeze out the supply chain till it virtually disappears for all but the select few suppliers.  Now the retailer "is" the supply chain and those who produce products sell directly into that supply chain and are forced to continuesly lower their prices (forcing more and more production "off shore") to increase the profit margin of the retailer.  The also start to lower the quality of their own products to meet this spiraling need for higher profits every quarter to their investors as well.  If they don't play this game they will get swallowed up or merge or go out of business all together.  In the end it is just the end consumer who looses every time.

Enter the Internet and the migration of some of the more tech savvy "mom & pop" businesses.  They find those suppliers left producing and selling products to the non-oligopoly retailers and start selling  online at steep discounts to the brick and mortar retailers.  This phenomena starts to seriously eat into the business of the oligopolist.  Business, the bread and butter of the office supply industry, are not stupid. They go to alternative suppliers. The brick and mortar business start to market more to retail buyers, trying to sell consumer electronics, back to school supplies and other non-core products to consumers who are not as knowledgeable about pricing, are less frequent buyers and easier to rip off.  Eventually even this approach fails as consumers catch up to the game.  Stores close.

The above scenario has happened in many retail industries in the US.  One has to wonder what is on the minds of the Fed and other "economist" when they say there has been no inflation for so long and they are hell bent on increasing this supposedly non existent inflation.  Obviously they have no understanding of the retail dynamics that have been going on in the US for years. The fact that so many of the products Americans buy are sold by so few sellers and those sellers have been diligently shrinking their suppliers, resulting in prices that have done nothing but rise for the last two decades to the retail consumer seems to escape them.

Case in point: I went to buy one gallon of deck sealer a week ago for my deck.  I went to Sherwin Ripoff, I mean Williams.  This is another brick and mortar retailer to both consumer and contractor businesses that had to merge with Duron to stay in business, creating yet another strong oligopoly player in the paint business.   The result: One gallon of deck sealer is $47!  Yes $47 for a GALLON of deck sealer!!  This is INSANE!  I could start replacing the wooden deck boards for the cost of just two gallons of sealer to protect the wood!  Why is this so?  How is it possible?  (The Fed would say there is no inflation because the quality of the deck sealer has increased so much it is now WORTH $47! Ha!) Simple, from the chemical manufactures to the retailers there has been such consolidation that there are no other product options available.  What better then a heavy, expensive to ship item like paint to create an oligopoly industry in.  I could literally buy raw ingredients and make the gallon of deck sealer for less than $47 if I really wanted to. 

I refused to buy the Sherwin Ripoff sealer.  Instead I went to one of the other oligopoly sellers of paint products, Home Depot (the other being Lowes) where the retailer has followed the same pattern explained above and only allows ONE brand of deck sealer on their entire shelf space, Bear.  What is the result?  I got a gallon for ONLY $33.  Yea, deck sealer is worth about $8-$10 Max.  But we as a retail buyer are paying $33-$50 for the product.  Sure the profit margins are rising across the board for the few companies still manufacturing and selling the products but for how long before the entire game implodes? 

Who pays the most for this consolidation?  Well simply put, I can still swing the $33.  But to the rest of the world where $33 can be a day to a week's wages, no way.  The cost of buying nearly EVERYTHING has gone further and further out of reach of the rest of the world.  Yet you will hear hot shot economists bragging that the number of people living on less than $1 a day has declined to like a billion people.   Big F&%#@ing deal!  One needs $3 a day to even think about living in today's world without completely starving yet economist are still using a 25 year old metric to measure poverty.  Where are the central bankers and economist who actually see how the world works, not just plug in numbers in the latest modeling software and call it a day?

From the Horse's Mouth

Six years ago, our current president Obama was talking about rebuilding our national infrastructure.  Of course, after 2 pointless $1 trillion + wars we are sitting on an infrastructure that is essentially six years older with little to show for improvement.  So Vice President Biden's quote about LaGuardia Airport in NY is kind of ironic.  I mean it is his administration that ran on the premise they would increase investment in the nations infrastructure.

Here is the quote:

"If I...blindfolded you and took you to LaGuardia airport in New York, you'd think, 'I must be in some third world country."'

Why on earth does this obvious statement get so much attention?  My latest trending thought process goes something like this:  "America is in a great big state of denial." That this Biden Quote gets any attention at all by the mainstream press is proof of this.  I can see some of the regular folks who have been harping on the decline of America to a 2nd world status jumping on this statement and saying, "See, finally someone who runs the country is starting to understand how bad it is." or whatever.

But for mainstream media?  I mean aren't these folks people who travel regularly?  Don't they go to European and Japanese, Korean airports and even Middle Eastern airports that represent what can be  built in a developed environment?  Is it not painfully obvious that the miles of "drywall" that fills the interior of "public" spaces in the US and the extremely poor workmanship, lack of energy efficiency, lack of technology in nearly every facet and a general feeling of inhumanity is everywhere?  There are exceptions as the US rebuilds it's urban infrastructure after 4 decades of urban decline (in select cities) but for the most part we are still decades behind in our infrastructure upgrades. 

The FT article that discusses the US infrastructure issue also quotes from ASCE:

The US would need to invest $3.6tn to return its infrastructure – including energy, parks, schools and transport – to a state of good repair by 2020, according to estimates last year by the American Society of Civil Engineers.

Then they go about discussing all these stupid ways various cities are going about raising extra money JUST TO KEEP UP WITH MAINTENANCE of the existing infrastructure.  Well, funny the $3.6 trillion is just about the cost of the two pointless wars (with interest, long term care of the solders etc.).  This nation has plenty of money to take care of all it's issues but it has a tax system the favors the rich and upper middle class so extremely they keep getting richer and richer while everything falls apart outside of their isolated little burroughs where their exceptional tax base supports the perception in their environment that everything is just fine. 

So while 50% plus of children drop out of high school in many top urban areas in the US and while the nations infrastructure, manufacturing base and wages go into a free fall, while the average weight, income disparity and per-capita energy use continues to increase, Americans are just plain "in a state of denial" about nearly every reality around them.

So this is my latest rant and thinking.  As many people who know me know, my ideas and trend thoughts shift every 6 months to year.  Moving to the 2nd world has been around for a while, living in a state of denial is the latest reality...  Hope to contribute a bit more going forward.

By the way, it looks like I will be pursuing my Master's in Econ this year going forward, so stay tuned for some interesting reads!