YOUR MONEY

How to avoid Destroying the World Economy

It is now exactly 8 years since the Financial Crisis due to earthquake-like disasters in U.S. subprime housing market, leveraged and over-extended (bankrupt) Lehmann Brothers and forced, worldwide bank write offs of billions of dollars as stupid, leveraged certificates (based on those U.S. bad housing loans) all collapsed as the bubble burst.

Since then, ‘emergency aid’ of previously unheard levels -- of trillions of dollars --- Central Banks has continued for close to a decade:  Growth and GDP and China-- the world's second largest economy and till now the world’s unending maw for raw materials -- have never recopvered and  leveled off at under 2% in the developed world and to well below Chinese government's inflated figures of 7% to 9 %.

The new normal has been very modest growth of 1% to 2% across the developed world -- and even China.

Consequently Central bankstried and continue to kick start growth to well above 3% with cheap money and negative interest rates (as a penalty for saving) but these strategies have proven dismal failures in Japan (for some 30 years), America and Europe with no  impact on manufacturing and corporate investment and expansion.

Instead, almost free money has fostered more and more reckless speculation and high risk ‘gambling’ by the super rich, sovereignty funds, derivatives funds, international bank stock brokerages and even pension plans. 

Making things worse has been the vacillation and hollow warnings of upcoming interest rate hikes from Federal Reserve Chair Janet Yellen. In September, 2015,-- a full year ago -- she warned one and all that the Fed would soon start to raise rates at ¼% every few month so as to return to ‘historic normal’ levels of 4% to 5%.

But she has been more like the Boy-who-cried-wolf as rate hikes have not materialized whatsoever and the pronouncement this past Tuesday was that no increase will occur until December at the earliest.

Surprise, surprise!!!  With a close Presidential and Congress elections just over a month away, would anyone in their right mind 'rock the boat' after a full year of delay? 

Who would have guessed.

So we all must wait for another 3 months -- or more -- for any start to a return to 'economic normalcy'.

The Fed., put simply, continues to  created uncertainty and toys with the financial plans of all concerned: those who benefit from almost-free money and those who are facing destitution and ruin on fixed incomes.

Everyone is left dangling.

And as any student of the world stock markets know, we are in the 8^th year of the recovery and a recession may be around the corner – based on historical cycles.

But the new normal of the last few years defies old thinking.  Stocks in the U.S. are at highly inflated valuations compared to earnings – some 23 to 1 rather than the standard, safe risk factor of 17 to 1.

And exchange volumes are down and relatively few players are in the game and calling the shots.

Q: So what would revive the world economy and normalcy - or at least the developed world?   

A:  RAISING INTEREST RATES! 

Starting with an automatic increase in December , 2016 – we have already lost a full year to dithering and hypocrisy and cowardice – and announcing a fixed schedule for further regular increases in 2016 and 2017 that must be set in stone!


Yes, expect a stock market swoon for at least a few days or more, and gold will do its usual piroet, but the economy is NOT the stock market or the price of gold,; it is main street and the fileds of farmers and ranchers of middle America and Canada.

Put simply, a 1/4 % rate hike is not the end of the world when prime rates are close to zero instead of historic post-WWII norms of U.S 4% to 5%.

And the above would send clear messages and have immediate impact:

1. no more rampant speculation with free government money

2. No more housing market free for all as totally unqualified buyers get stuck with huge mortgages they will not be able to pay at 3% interest let alone the historic house mortgage  norms ranging from 6% to 7%.

3. Companies still sitting on trillions of dollars will expand and invest in their businesses immediately before interest rates rise to the above mentioned normal levels.

Kindness and cheap money has not worked..

Penalizing savings with below inflation returns and negative interest rates has not worked either.

 Pension plans and seniors and insurance companies have all suffered as a result and face insolvency.

Capitalism and logic demand that Central banks raise rates and do so on a fixed, written-in-stone schedule: to end uncertainty and rtoller coaster stock market volatility. 

Only this will save the world economy.

TECHNOLOGY and MEDIA

Apple – iPhone 7 and wireless ear bud insanity

As anyone reading this blog knows, I have never been a big Apple fan as they have always taken credit for innovations by others though Steve Jobs more artistically packaged them, usually in Zen white boxes.

So here is the bottom line:

This super/over-valued company (which cuts tax corners and cheats on its taxes as the EU has now revealed) has not had a new successful ‘invention’ in years and is doing catch up all the time.

Apple TV has failed dismally and the Apple watch has gone through 2 or 3 upgrades and is still – like the Samsung and other predecessors – a niche product that most buyers soon leave in a drawer.

And as smart phones by all manufacturers have systematically and more and more widely replaced iPods and similar music only devices, cameras, desktop computers and even laptops and tablets, Apple, among others, now finds itself in a pickle.

Its smart phones account for 70% of revenue – and no new ‘break through’ device is on the horizon for Apple or any of the numerous, other competitors.

Apple Pay may help the bottom line, but it was a concept invented years ago in Africa to meet the needs of people without any nearby bank branches.  Barclay’s of Britain then copied the concept and it has spread around the world and even now to the mighty Apple.

So, for the moment, smart phone ‘upgrades’ is everyone’s focus and selling point.

And this brings us to the iPhone 7 and iPhone 7 Plus.

Will a faster processor and fancier cameras really get people to abandon last year’s purchase?

Are wireless/cordless ear buds superior?   Because that IS the only ‘new’ feature of the iPhone 7 lineup.

And please note that it is NOT an Apple creation; far from it.

I t is a descendent of the Bluetooth wireless technology invented by Ericson in 1994 – over 20 years ago!

And again, even for smart phone use, Apple is not the great innovator as wireless ear buds have been available for almost a year from Motorola and Bragi. (See https://9to5mac.com/2016/01/08/iphone-7-wireless-headphones-beats/)

The above website already has warned the wireless ear buds require separate chips and batteries that will run less than 4 hours.

And so far, feedback and reviews have been less than enthusiastic.

Individual ear buds are already being lost and the separation of the cord – the pseudo-umbilical cord – will not be an easy adjustment.

More importantly, the new ear buds, as a 3rd level of digital sampling and compression is simply BAD for sound quality which no extra speaker can overcome.

Digital sound is ‘sampling’ and there is always some ‘dropped’ notes and sounds in digitizing.  That was a secret Sony and other kept hidden for decades as quality analog and vinyl records were replaced by sampling CDs.

All sound on an iPod and iPhone or competitor devices which store sound as digitized files already have degraded the original analog sound, and further file compression to save storage space creates another layer of deteriorated sampling.

Compared to a live a concert or vinyl record, such digitized and compressed sound is noticeable ‘dulled’. 

Just ask Neil Young who has withdrawn his music from Spotify as streaming is even worse.

And replacing analog cords with another layer of digital compression causes further degradation and quality drop.

Put simply, the iPhone 7 and wireless ear buds add a 3 round of sound quality reduction.

Just check the test results comparing iPhone 6s corded system and iPod 7 wireless at http://bgr.com/2016/09/20/iphone-7-headphones-jack-sound-test/.

Such a tradeoff will not create the havoc that 8 track produced as adjoining songs slipped into each other, but quality will certainly decline.

So, because our ears are designed to hear continuous sound waves and are sensitive enough to discern the disparity between continuous, layered analogue sound as in a symphony concert or U2 vinyl record recording – people talking, instruments playing, by comparison digitized ‘sampling has a ‘tinny’ and ‘dull’ quality.

Adding a third digital and compression round on an iPhone 7 is, consequently, a very BAD idea.

If Apple needed more space to ‘squeeze in’ better camera technology and other features, the price of cutting the analog cord is too high.  And a conversion cord adaptor will not solve the problem. 

Garbage in … garbage out.

Better to make the device less anorexic and keep the sound quality higher.

Perfectionist Steve Jobs may well be rolling over in his grave.

TECHNOLOGY

Electric car mania and the laws of  Physics

Gwyn Morgan in his July 4, 2016 article (G&M, B2) points out some basic facts of the Laws of Physics: namely, that every time a form of energy is converted from one state to another there is a significant ‘loss’ at each step.

Energy Loss Chain

  1.  Building and running machinery to create electricity in power plants or wind turbines or solar panels. This involves converting mechanical ‘energy’ and usually electricity itself to operate and monitor the equipment.

      2.   Transmission and distribution Loss – i.e., leakage from electric overhead lines, transformers, etc. increases with distance, so the greater the distance from the power generation site to the end use, the more electricity leaks out.  According to the Electrical Engineering Portal (http://electrical-engineering-portal.com/total-losses-in-power-distribution-and-transmission-lines-1) line leakage is around 17% and another 50% is lost in the distribution network.

     3.  Conversion of electricity to battery storage chemistry in electric cars, etc..

     4. Conversion of battery chemistry back to electricity.

Such losses can easily amount to 75% according to Gywn Morgan, and therefore it would be better and simpler to simply put gasoline and diesel into our vehicles than have all these numerous and wasteful ‘intermediate steps’.

So keep it simple and stick to Gaia’s ready to-use-gifts: natural gas, petroleum and even coal.

TECHNOLOGY

Electric car mania – Ontario style

As reported on July14 (G&M, A8) the Ontario government has committed to building 500 electric recharge stations across 250 locations on the highways from Windsor to Ottawa and up from Toronto to North Bay -- as well as “workplaces and public spaces”.   Cost quoted at a mere $20,000,000.00.

So what does this really mean?    

·        * EACH electric recharge ‘pump’ will cost $40,000.00 to install ($20 M /500)

* 

·       *  On average, there will be just 2 rechargers per location.

·        *  Windsor to Ottawa = 405 km and Toronto to North Bay = 356.6 km. This totals 761.6 km !!!!

So, put simply, this is at best a very, very, very, very baby step and one which is not sufficient to really meet reality.

Unless you own a Tesla vehicle with a GPS system and built in list of nearby electric stations every 150 or so kms and you can line up for the two electric rechargers and spend 15-30 minutes for a medium to major recharge, the concept will not work!!!  20L or larger jerry can as does gasoline.

A car can on a full tank drive up to some 600 km;  an electric car less than 1/3 as far.

So in the real world you need much more frequent stations – 3 times more frequent – and with a lot more than just 3 electric rechargers each.

A proper network for Ontario cities, towns and all highways would require in all likelihood 5 times as many stations as our currently in the province, at an installation cost in the billions!!!

And don’t forget electricity does not drop from the sky.  Yes, solar powered panels and wind turbines exist but they will never generate enough electricity to replace Gaia’s gifts of: coal fired plants, or natural gas plants or nuclear power plants or hydro dams to create electricity – all so-called ‘enemies of the environment’.

So buy a Prius from Toyota if you must, but do not expect electric cars and mass recharging stations to even remotely replace the gasoline/diesel vehicles in the next 25 years.

Not unless, of course, gasoline rises to $25 a litre.

NOTE: In 2014 there were over 240,000,000 cars registered in the USA alone with just under 8 million new cars sold that year. (https://www.statista.com/statistics/183505/number-of-vehicles-in-the-united-states-since-1990/).

YOUR HEALTH

More teeth cleaning fallout

As mentioned a while back, it is no longer recommended that teeth be brushed more than twice a day as the friction weakens tooth enamel.  Hence the new enamel renewing toothpastes.

We have also been told to cut back on toothpaste.   Forget the TV ads showing a one inch strip of toothpaste covering the  entire brush tips. The advice for some time has been to only apply a pea-size amount as the chemicals -- and even fluoride -- can be harmful when used in 'excess'.

Now the third part of the healthy teeth triangle has been undermined.

Recently, an investigation of flossing has determined there are no scientific studies whatsoever proving flossing helps to remove decay causing bacteria.  

In fact, as noted by columnist Margaret Wente (G&M, Aug. 6, F7), British dentists do not advocate flossing whatsoever nor do they do so themselves; it is a U.S. and Canadian mania only.

So what do I do and suggest-- as I have a tendency to weak enamel and calculus/tartar/plaque build up? 

       1.  Brush just at wake up and before bed.

2. Use mouthwash at other times to fight bacteria -- or on a rare occasion swish the mouth and teeth and gums with a shot of whiskey or vodka. 

3. Use dental floss picks.  They can be used anytime and anywhere to rid food stuck between teeth and in the gaps = super toothpicks. 

4. Chew sugar free gum -- a lot 

5. Have a dentist check your teeth and do a professional tooth scaling at least once every 6 months. I go every 4 months.

7. AVOID whitening toothpastes unless the active ingredient is mild baking soda as with Arm and Hammer. 

So keep on smiling and follow the Golden Rule: EVERYTHING IN MODERATION.