Rethinking the Value of the Internet

The brochure claimed there were 32 bookstores in the Harvard Square area. Nothing makes me drool more than strolling through delicious rows of books, picking a few to consume and digest later. My wife and I caught the subway and rode it out to Harvard.

One store was devoted to Law books, another to medical textbooks and one store just had travel journals. But I saved the most enthusiasm for a rare bookstore in the basement of one shabby chic walkup. It was way too organized – this threw off my

Even the Chinese Can See It – Why Can’t We

For the past three years, I have been telling people to put away their copies of “Rich Dad, Poor Dad” and come to realize that the advice is not biblical and also doesn’t work for most people. People have scoffed at me and said I was backward in my thinking.

My reasoning for why “Rich Dad, Poor Dad” is nonbiblical is this:

1. It is based upon greed.

2. It is based upon a false ideal that the future is in any way predictible. We are told repeatedly in the Bible that you should not count on the future being there.

3. It proposes that we should make money off the misfortunes of others. I won’t attempt in this post to explain how leveraging does that, but it certainly does.

My reasoning for why it doesn’t work is this:

1. There is only so much wealth. You cannot have everyone leveraging their investments. If they do that, then the whole system will come crashing down as real value will become submerged in paper value. This is exactly what we have today.

2. In a falling economy, cash is king. And all economies fall from time to time. And there is little way to predict when your leveraged investments will be called in.

3. Leveraged investing, which is at the heart of “Rich Dad, Poor Dad” is what caused the Great Depression and the Great Tulip Futures Crash of the 1700s (history’s greatest Depression).

Now the Chinese are trying to tell us to stop doing this. In a fascinating article from “Atlantic Online” one of China’s most successful bankers tells the United States what we don’t want to hear: That they will soon own our country. And believe it or not, he doesn’t want to own our country. He wants us to get on our feet again so China can trade with us.

In his analysis of our economy, he has some fascinating points. But the one that intrigued me was this quote:

Think about the way we’ve (i.e. Americans ) been living the past 30 years. Thirty years ago, the leverage of the investment banks was like 4-to-1, 5-to-1. Today, it’s 30-to-1. This is not just a change of numbers. This is a change of fundamental thinking.

People, especially Americans, started believing that they can live on other people’s money. And more and more so. First other people’s money in your own country. And then the savings rate comes down, and you start living on other people’s money from outside. At first it was the Japanese. Now the Chinese and the Middle Easterners.

We—the Chinese, the Middle Easterners, the Japanese—we can see this too. Okay, we’d love to support you guys—if it’s sustainable. But if it’s not, why should we be doing this? After we are gone, you cannot just go to the moon to get more money. So, forget it. Let’s change the way of living. [By which he meant: less debt, lower rewards for financial wizardry, more attention to the “real economy,” etc.]

As an amateur economist, I love to read comments from smart people. This article should cause all of us to sit up and take notice.

12 Errors of Fact in the President’s Speech

The President decided Congress needed help implementing his Bailout plan for the economy. So he spoke to the American public on Wednesday night, hoping that we would be sufficiently frightened or angry enough to convince our members of congress that they needed to jump on the bailout bandwagon without even reading the three-page outline of how to distribute 700 Billion dollars.

Understand once again that I have no horse in this election race. I can’t vote because I’m not a citizen. But I do listen to speeches carefully to weigh what is rhetoric and what is fact.

There are four types of “errors of fact”.

1. Errors of Data: The data presented is not accurate
   
2. Errors of Exaggeration: The data presented is exaggerated
   
3. Errors of Assumption: The assumption is wrong, therefore the conclusion is wrong
   
4. Errors of Omission: What is not said is critical to the facts, therefore the facts are wrong.
   

I listened with my skeptic ears and heard many things I had to look up; I had to see if what I was hearing was true. I heard a fear-filled speech. This speech suggested that there was a “panic of mass destruction” waiting to destroy our economy. So I downloaded the entire speech and looked it over very carefully. I found at least twelve errors of fact in his presentation.

Here are the 12 errors: (taken from the actual transcript)

1. “Credit markets have frozen, and families and businesses have found it harder to borrow money.” The word “frozen” suggests that no one can borrow money at this time. This is patently untrue. It is the secondary lending market (i.e. those who are borrowing money to invest it in leveraged investments) that has dried up. Home sales are up in California from last year. The Federal Government is borrowing money like it is printing it in the basement (oh wait…it is).
   
2. “We boosted confidence in money market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain.” The government hasn’t done anything yet.

Follow the Money

You won’t like what I’m going to say. But history backs it up and we all know that those who ignore history (or sleep through it if you took it first period) are doomed to repeat it.

Here is the historical fact: God gives financial prosperity to those places where the Church is most committed to sending the Gospel to the rest of the world. Don’t believe me? I can prove it from history very easily.