Month: October 2008

Pirates and Insurance Blackmail

by

I have previously discussed how effective measures to combat modern day piracy on the high seas won’t come about until the insurance costs get too high. Piracy will continue until the the increase in insurance premiums for getting attacked by pirates exceeds the amount the underwriters will charge if armed guards are placed on board.

This recent post at StrategyPage.com pretty much says the same thing. NATO warships might be tasked with anti-pirate patrol, but they won’t actually shoot anyone for fear of bad press. The pirates know they have a good thing going, and there will be more attacks in the future. The shipping companies aren’t about to place armed guards on board their vessels since the higher premiums they have to pay for pirate insurance is less than what the underwriters will charge for having private troops on the vessels.

I figure one of two things will happen.

The gangs will continue to raid enough ships for them to have a big (in Somalian terms) payday through ransom money, but not enough for it to make sense to actually attack the outlaws. It will be the same-old, same-old for years to come.

More pirate gangs will form to grab a slice of the pie. Either the number of attacked ships passes an economic tipping point, or some undisciplined criminals start slaughtering innocent crew members that they have taken hostage. Eventually NATO starts to clean house, and the number of pirate attacks are reduced for decades afterwards.

It looks to me like more of the same-old, same-old is more likely in the foreseeable future.

Sarkozy on Obama

by

According to Haaretz:

French President Nicolas Sarkozy is very critical of U.S. presidential candidate Barack Obama’s positions on Iran, according to reports that have reached Israel’s government.

Sarkozy has made his criticisms only in closed forums in France. But according to a senior Israeli government source, the reports reaching Israel indicate that Sarkozy views the Democratic candidate’s stance on Iran as “utterly immature” and comprised of “formulations empty of all content.”

Read more

Good Idea, Wrong Place to Advertise It

by

This morning on the radio I heard a promotional advertisement for Feed the Pig.  I have heard things about this site before and decided to check it out.  It is outstanding.  They have calendars so you can see ways to save money throughout the year, and there are many tips on how to pinch pennies.

Basically the concept is to teach people how to save, knock down their debt, and generally help them to not waste money (things that many modern day Americans are horrible at).  I can’t really see a downside to this.  The site is sponsored by the American Institute of CPAs.  I am not sure why they put up the site, but I wholeheartedly support it.

I give the site a big thumbs up, but think I will give their choice of advertising venues a small thumbs down.  I was reminded this morning of Feed the Pig while listening to Bloomberg Radio on XM on the way in to work, getting my business news for the day. 

**Quick aside:  I have three choices of business news to pick from on XM:  Fox Business, CNBC and Bloomberg.  I choose Bloomberg because it is just the facts, with interviews sprinkled in – and the interviews are with interesting and smart people.  In addition, the interviews are always respectful and low key even if people are disagreeing, unlike some of the other places where there are a bunch of idiots yelling and screaming at each other.  In other words, Bloomberg Radio seems more professional to me.**

I really don’t think that anyone who seeks out Bloomberg Radio doesn’t understand the simple concepts of saving and debt that Feed the Pig is trying to teach.  I just think that these are wasted advertising dollars.  A better target IMHO would be radio stations, magazines or TV networks that reach places where the people are perhaps not educated or are unaware of the concepts that Feed the Pig is educating people on.

It is almost like putting ads up for scrap booking during an NFL football game.  Not the right demographic.

Cross posted at LITGM.

Jack & Suzy Welch on the Economy

by

In their BusinessWeek column, Mr and Ms Welch respond to a reader’s question:

How does today’s financial crisis compare with the beginning of the Great Depression and the 1930s?

In response, the Welches say that while “real global pain” lies ahead, the situation is unlikely to wind up in a catastrophe on the Great Depression level. Their reasoning is interesting–basically, they offer 4 factors that differentiate the Depression era from our own:

1)”In 1930 the protectionist Smoot-Hawley Tariff Act ushered in years of international retaliation and discord. Today’s crisis is marked by a high degree of free trade and global cooperation.”

2)”In 1933 the National Industrial Recovery Act encouraged labor and industry cartels. The result was a decline in U.S. competitiveness—again, hardly the current case: American companies have never been in better fighting form.”

(The NIRA was passed in 1933 and was in force until it was found unconstitutional in 1935. It involved cartelization and extreme micromanagement of the economy, and is generally considered to have been one of FDR’s more unwise innovations, delaying rather than assisting the recovery from the Depression. Interestingly, NIRA was strongly backed by Gerard Swope, one of Jack Welch’s illustrious predecessors as head of GE.)

3)”Finally, a second Great Depression is unlikely because of the institutions created to prevent one, foremost being the Federal Deposit Insurance Corp., with its authority to insure deposits, critical to stabilizing the banking system.”

4)”Others say we’re marching into French-style socialism. Au contraire. The U.S. government has a century-long history of handling interventions with a fast-in, fast-out approach. In 1984, to take a recent example, it bought 80% of Continental Illinois National Bank but sold it just 10 years later to Bank of America. In 1989 it created the Resolution Trust Corp., which cleaned up the savings and loan crisis, then quickly packed up. TARP, the federal bailout plan, looks to be no exception, as its loan terms give banks flexibility and strong incentives to pay off the government within five years.”

I agree with Jack and Suzy Welch that we should not be panicking about the economy and that comparisons with 1929 are overdrawn. However, I also think that the economic future will be tremendously influenced by the election results–and that an Obama administration, combined with a strong Democratic congressional majority, would, very likely, dilute or negate three of the four factors that they list as separating us from the Depression era. While the result would probably not look as grim as 1929, it would still be pretty bad.

Read more

On German-language newspapers in pre-US* America

by

* Or at least before America officially became the United States of America

David writes here about Sgt. Mom’s intriguing trilogy of books on German settlers in Texas and their influence, cultural and otherwise, on the state of Texas.

I couldn’t possibly do the subject, much less the lovely and erudite Sgt. Mom, any justice on this short notice. So here are just two somewhat surprising facts about a (kind of) related subject, i.e, the German-language press in America:

– In 1732, Benjamin Franklin published the Philadelphische Zeitung, the first German-language newspaper in North America. Unfortunately it only lasted for two issues.

– On July 5 1776, The Pennsylvanischer Staatsbote was the first newspaper to report the adoption of the Declaration of Independence.

PS: Some years ago, Sgt. Mom was kind of enough to mail me the recipe for some delicious caramel. I’ve made it several times since then (maybe a bit more often than my waistline can take, but it sure is worth it :)