There’s a lot of noise flying around about the publication of Emperor Ken Henry’s tax review on Sunday.

But let’s get one thing straight. Behind all the sound bites about “helping battlers” and “ensuring the rich pay their way” and “closing loopholes” and “making tax returns easier”, the ultimate objective is for the government to increase the amount of tax it takes from you.

When the government says it wants to make the tax system more efficient, it means that it wants to make it more efficient for it to take your money.

When the government says it wants you to be able to lodge your tax return with the click of a mouse, it means it wants to make it easier and quicker for the government to take your cash.

There is zero chance of the tax burden on Australians being reduced as a result of the Emperor’s tax review.

Unfortunately we don’t know what’s in the review yet, that will be released on Sunday. But one of the hot topics is the supposed resource rent tax. It’s the idea that mining companies could be taxed up to 40% of their profits. And that this would replace state royalties and the corporate tax rate.

What will that mean to Australia’s resources companies? According to Digger’s & Drillers editor Dr. Alex Cowie:

“Miners currently have a 30% corporate tax rate, with state production royalties of 2-8% on top. The theory goes that the review would scrap both taxes, and replace them with a single 40% tax rate. Those companies already paying higher royalties, such as coal producers, would be less affected by the change than those companies paying lower royalties, such as gold producers.

“Looking on the bright side, there are a few obstacles in the way of the proposed tax changes. Realistically, the state governments would first all need to agree to give up their royalties, which would be about as easy as rounding up a room full of cats. WA’s premier, Colin Barnett, is getting ready to defend his state’s royalties with a good punch-up with Kev if he has to. The resource sector is not taking the proposed tax very kindly either.”

But not surprisingly, the collectivists such as the trade unions think a resource tax is a wonderful idea. As Tony Maher, the top commissar of the Construction, Forestry, Mining and Energy Workers’ Union (CFMEU) told the ABC:

“This is a tax on the super profits, the profits above and beyond a normal or generous rate of return… They should share some of the billions they are making with the community.”

He goes on:

“Everybody knows that no-one likes to pay tax, but they have to pay a tax on the resources that are owned by the Australian people that they make squillions [sic] out of. It is only fair and it is the smart thing to do. Other countries have sovereign wealth funds. This is the opportunity for the Australian people to have a sovereign wealth fund that can pay dividends after the minerals are gone.”

We’ve chosen these quotes because they contain everything that is wrong about the socialist and mainstream approach to economics.

We’ll look at the key points that Commissar Maher raises. Although we’ll point out that he isn’t the only one with this view. And we’ll also point out that it isn’t just the ’socialist socialists’ that adopt this view either. It’s the ‘conservative socialists’ that take pretty much the same line.

So, let’s take a look at the first point, the idea that “This is a tax on the super profits, the profits above and beyond a normal or generous rate of return.”

Our simple question is, if current profits are “above and beyond” what the socialists determine to be a normal rate of return, what level do they consider to be a normal rate of return?

Is a profit of $1 billion too much? What about $990 million? Or $826 million? Would that be OK?

And who determines what that profit level should be? Do these control freaks envision a panel of [hehem] experts setting profit levels for specific industries?

Retailers can make X amount of profits. Miners can make Y amount of profits. And chemists can make Z amount of profits.

But then what happens to a diversified company such as Wesfarmers?

It’s clearly a lot of nonsense.

What Mr. Maher and others fail to appreciate is that there’s no such thing as a “normal” rate of return. There’s no such thing as a “normal” profit. “Normal” profits only occur in the mythical world of a planned economy.

Except in those circumstances the profits aren’t real anyway.

A profit only occurs if consumers are prepared to pay more than what it costs the company to produce the product. A profit level can’t be arbitrarily set by a Profit Tsar.

If consumers don’t believe a certain product is worth the price set by the company then consumers won’t buy it. The company will have to reduce its price. And sometimes it may have to reduce the price so much that it makes a loss.

Maybe in the world of trade unionists they’d prefer that companies didn’t make any profit. But then of course what would be the incentive for the entrepreneur to go into business in the first place?

These so-called super profits merely indicate that buyers are prepared to pay up for something they want. It’s a bit like housing right now. Buyers are prepared to pay ever higher amounts for a house.

There isn’t much different as far as we can see. Except one – resources – has an end use, whereas the other – housing – is bought simply in the belief it can be sold at a higher price to someone else.

But in both cases the boom won’t last. The housing market will crash and burn. And China will crash and burn too.

Both are inevitable. But that’s a different story…

So, the fact is, there’s no such thing as a normal profit level.

What about the next part of Commissar Maher’s statement, “They should share some of the billions they are making with the community… they have to pay a tax on the resources that are owned by the Australian people…”

We have to say that those comments are the biggest load of hogwash there is. But again, Maher and the union movement aren’t the only ones to say it. The idea that all Australians own the natural resources in Australia is engrained in people across the country.

But is that really the case? Do you really own 1/22,000,000th of BHP Billiton’s Olympic Dam project in South Australia?

Do you really own 1/22,000,000th of Bow Energy’s coal seam gas fields in Queensland, or Woodside’s gas fields on the North West Shelf?

Of course not. You no more own 1/22,000,000th of the natural resources of Australia than do you own 1/22,000,000th of your neighbour’s backyard.

Just because Western Australia has a whole bunch of iron ore and copper several hundred metres below the surface doesn’t make it the property of the nation.

I mean, what have you or I done about all the natural resources buried deep underground in Western Australia? It’s not as though we’ve been in any hurry to raise millions of dollars in capital, pick up a shovel and head west. Well, maybe you have, but your editor hasn’t.

The fact is, the natural resources that are underground are owned by no-one. They only become someone’s property when an individual or an organisation invests the capital to recover them.

At that point it’s their property and they should reap the rewards of taking the risks. After all, how many explorers spend millions and billions searching for a resource only to strike dirt or water? The Australian Stock Exchange is littered with zombie miners perennially searching the outback for one big find.

Think about it, why should your editor take a 1/22,000,000th stake in Fortescue Metal’s iron ore mine when we’ve not done one single thing to earn it?

But let’s look at it this way. Let’s say a 40% tax is introduced on resource company’s profits. That means the “nation” supposedly gets 40% of the profits and the company and its investors keep 60%.

If we’re talking about having a fair tax system, how is that fair? The resources explorer only gets to keep just over half of the returns yet it’s the resources explorer and its investors that have taken all the risks.

The explorer will have spent millions of dollars searching for the resource. It will have spent millions more trying to recover the resource and then processing it. And then when all that’s done, the government steps in and says, “Thanks, we’ll take 40%. And if you don’t hand over the cash we’ll send you to jail. So pay up sucker!”

What has the government done for the money? Nothing. And what have you or I done, each as 1/22,000,000th owners? Nothing.

And as for the idea that resources companies should share the bounty with the community. Well, they already do that. They employ people to work at the mines. Those people don’t offer their labour for free, they demand a wage in return.

Then there’s the allied services that benefit from the exploration of the resource. And we’re talking real investment here, not a sham investment of building a school gym or a new hospital wing.

Not to mention other beneficiaries in the community. Such as steel makers who need iron ore. Or construction firms who need steel. Or electricity installers who need buildings to install wiring.

That’s what real investment provides to a community.

Of course, we suppose the nanny-staters wouldn’t get that. They’re too busy believing that money can just be printed to build stuff rather than wealth being created through real investment.

And don’t forget, you can draw a straight line from the mining sector all the way through to personal taxation. The government does the same with your income.

It would seem that if we use the same standards applied by Maher to the mining industry then the same standards must apply to your income. That is, that each Australian owns 1/22,000,000th of your income.

That’s why at the end of each week you only get to keep about 60% or 70% of the money you make. The rest is syphoned off to be shared by the community.

Finally, what about the idea of a sovereign wealth fund, “This is the opportunity for the Australian people to have a sovereign wealth fund that can pay dividends after the minerals are gone.”

Again, it’s the idea that money should be taken from you and given to the government to invest. Supposedly on your behalf. In reality it’s on the behalf of the government and its cronies.

Unfortunately, a sovereign wealth fund is undoubtedly on the cards. It’s the next logical step for Australia’s superannuation system. As we pointed out yesterday, it’s all about taking away control from the individual and placing it in the hands of “experts” and bureaucrats.

Make no mistake, Australia and all Western nations are heading down the same path of self destruction. It’s an economy where entrepreneurialism, initiative and effort are despised, frowned upon and penalised by coercive governments.

And where the mainstream view decrees that entrepreneurialism, initiative and effort are surplus to requirements because as Prof. Kriesler from the Australian School of Business reminds us, “printing money as a way to increase demand is a good move.”

Why go to all the trouble of exploring for minerals in the middle of a desert when the government can just print money and use coercive means to take it from its citizens instead.

I don’t know about you, but it’s pretty clear which one provides a real benefit to the economy and which one is a money printing, inflation loving parasite.

Cheers.
Kris.

Tags: General

In a previous post we looked at the role our emotions play in making most decisions of significance. As human beings, we are a strange creature – making very important decisions based on what we want at the moment rather than what we know is really best for us.

Yes, before we rationalize (tell ourselves rational lies) with logic, we make decisions based on many types of emotions.

But here’s the key:

All emotions – perhaps all human action – can be boiled down into the following:

The desire for pleasure.

The avoidance of pain.

We decide what actions to take (buy or not buy a product, service, concept, idea, opinion, etc., and even like or not like a person) based on those two factors; pain and pleasure. They are what “make people tick.”

Let’s talk about those two major “emotions” because this subject has everything to do with the topic of positive persuasion or – as I often call it – “Winning Without Intimidation.”

What kind of pleasure do we as human beings pursue?

We know about physical pleasure, such as sexual plea­sure or the pleasure of eating something mouth?water­ing such as your favorite flavor of ice cream or – dare I say; a morsel of delight from one the many fine establishments known as, that’s right…Dunkin’ Donuts?

What about emo­tional pleasure – enjoying family and friends and the fun of doing fun stuff like vacationing, going to a ballgame, buying cool toys? The list is endless.

Then there is the emotional pleasure of power when dealing with people. Ahhh, now that is part of the ego. The ego THEY have.  (Oh no, not us; Heaven-forbid.)

In fact, it’s at this point that the ego steps in as star of the show. And, we’ll discuss that in Part Two.

Tags: General

Another quick Money Morning today as we try to wrap up the April issue of Australian Small-Cap Investigator…

Gee whizz, yesterday’s Money Morning certainly caused a few Keynesians to crawl out of the woodwork.

Needless to say their attempt at refuting our refutation of Osama Bin Keynes was rather limp. Most of the responses claimed we’d taken his Lordship’s comments out of context or that it was merely an analogy and shouldn’t be taken literally.

That’s fine, as you know we’re not averse to the odd analogy ourselves.

However, we’ll reprint the entire quote again just to clear the air:

“If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of lasses-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”

OK. We’ve read it again. And it’s pretty clear, especially the last sentence, “It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”

It’s clear in his whacky old-timer way, Osama Bin Keynes did think that as a last resort, burying banknotes in bottles at the bottom of a mine “would be better than nothing.”

What a kook.

But these kooky ideas are the sort of things 98% of the mainstream economists agree with. All the economists at the major banks have flown the Keynesian flag more prouder than ever these last eighteen months.

What a sad, sorry and illogical lot they are.

But that’s not the real scary stuff. The REALLY scary stuff is that this is the sort of thing being taught in universities across Australia and across the globe. To the next generation of banking economist sad sacks.

Take the following quote from the Australian School of Business that was sent in by a Money Morning reader:

“No economic theories say debt is a bad thing or that the government deficit needs to be financed by private sector borrowings, Kriesler points out. Governments aren’t like households. They don’t have to repay the debt – instead, they can print money.”

Here we go again! The article goes on to quote Peter Kriesler, who is apparently, an economics professor at the ASB:

“With unemployment at high levels, printing money as a way to increase demand is a good move.”

Such a view probably pleases Money Morning reader Jon who wrote to us yesterday to say:

“One thing about Ruddy and his spendthrift colleagues that you have failed to appreciate, is that should you lose your current employment, at least you have 28,000 infrastructure projects paid for by the government to work on. Not just a job, but which of 28,000 projects would you like to work on Sir!”

It’s amazing isn’t it? How logic and common sense can be ignored purely on the basis that some senile old duffer (Keynes in case you’re wondering) spouted on about burying notes in mines about 80 years ago.

I don’t know about you, but I always thought professors were supposed to be smart – until we realised that ‘professor’ was just a job title rather than a qualification, but that’s a different story.

But let’s get this straight. According to Prof. Kriesler, “printing money as a way to increase demand is a good move.”

A good move for who? Well that’s obvious isn’t it? It’s a good move for those who get the printed money soonest. First in line is the government. Second in line are either the banks or the government’s favourite people and businesses.

Those last in line are people like you. By the time this “good move” of printed money filters through the economy into your pocket all that’s happened is that you’ve got a bunch of devalued dollars in your pocket.

And they’re devalued because by the time they end up in your pocket prices have already risen. The inflated dollars have been wasted on the “28,000″ projects. Projects that have cost three times as much as they should.

Of course, in the Keynesian way of thinking that’s good. The more money spent the better.

So not only do you have a devalued dollar but you need to earn more of those devalued dollars in order to pay for the goods that have risen in price.

Yeah, that sounds like a really “good move” prof.

Were politicians and central bankers – and mainstream economists – all brought up without hearing the saying from their parents that “money doesn’t grow on trees”?

Apparently they were. It’s the only explanation we can come up with. Unless they’re just doing it to prove their parents wrong, “See ma, I can make money… Mwahahaha!”

But it’s not just the Osama Bin Keynesians that have belted us, we’ve also been rapped over the knuckles for not appreciating the fact that the Australian government had been good enough to keep the budget in surplus and therefore it was able to withstand the economic downturn by spending that surplus.

Of course, that’s a nonsense argument.

The idea that it’s good for a government budget to be in surplus is a fallacy. The reality is that a budget surplus is just as bad as a budget deficit.

In both instances the government is taking dollars from your pocket and preventing you from using those dollars as you wish – dollars that you’ve earned by the way.

A budget deficit means that the government is spending now and will need to snatch the money from you later through higher taxes. Whereas a budget surplus means that it’s snatching the money from you now to spend later.

There is absolutely no difference.

Surely it would be much better for you if the government allowed you to keep the money you’ve earned rather than expropriating it from your pocket and sticking it in its own piggy bank.

Yet in this nanny state it seems individuals aren’t trusted to look after their own money. And sadly it also seems that many people not only don’t trust themselves but because they don’t trust themselves they take the view that others shouldn’t be allowed to look after their own money either.

It’s typical socialist thievery.

Take this morning’s revelation on the front page of the Australian Financial Review (AFR) that “Henry review targets bigger tax slug on super”.

According to the article:

“An increase in the superannuation contributions tax rate from 15 per cent to as much as 30 per cent has emerged as a key reform option to be pursued by the federal government in its response to the Henry tax review.”

It goes on:

“Changes to the contributions tax have been backed by business, unions and the industry in submissions to the review.”

Hmmm, why would business back it? Well, it makes no difference to them whether employees are taxed 15% or 30% or 50%. As a big business, senior management can just increase their benefits to counteract the increased tax anyway.

And besides, the more individuals are taxed, the less likely the government will need to increase taxes elsewhere.

What about unions, what’s in it for them? Being pro-nanny staters all taxation is good. Any measure that forces individuals to rely more on the state or on collective groups – such as unions is a good policy for them. Any measure that increases the power of the individual and puts more money in the pockets of the individual is bad news for the Stalinist union movement.

And finally, the industry. We’ll presume it means the Superannuation industry. This one is harder to pick without looking at the individual submissions. As we don’t have the time to read through them this morning we’ll have to take a guess.

So here we go. An increase on the tax rate for Super means less money for the Super funds to play with. That can’t be good for them. Therefore for the industry to support increased taxes must mean they’re confident of gaining something else.

For instance, as the article also points out, “The government is not expected to pick up calls to make it compulsory for superannuants to put a portion of their payouts into annuities, but is likely to announce changes to social security system rules to make annuities more attractive.”

In other words, what the industry will lose out on with higher contributions taxes, it will gain by ensuring more people are forced or cajoled into annuities – which can only be provided by the “industry” – rather than taking out other investments such as property, cash or shares which aren’t annuity based.

Really, this is the nanny-state on steroids. And it blows out of the water the idea that individuals should think about saving for their own retirement.

Higher taxes provide a disincentive to save. Individuals will believe there’s no point or no need to save as the government will provide everything they need in retirement.

It’s the moral hazard of retirement. Why save now when the government will only take the savings off me anyway, I may as well just spend it because the government wouldn’t let me starve when I’m a pensioner! Would they?

Well, they will, as anyone on a state pension would know. But this time it’ll be different. Yeah right!

As we’ve been warning for the last two years, it seems our fears about a new Super Aged Pension is another step closer.

Higher taxes, a lower incentive to save and a greater reliance on the government. Sadly, most will lap it up.

Socialism lives on!

Cheers,
Kris.

Tags: General

If you’re a network marketer based in Australia, or doing business in Australia, you should familiarize yourself with the new Australian Consumer Law (ACL) reforms. The first part of the reforms came into effect on 15 April 2010.

The laws give the Australian Competition and Consumer Commission (ACCC) new enforcement powers to protect consumers, including the ability to seek or issue:

• civil monetary penalties
• banning orders
• substantiation notices
• infringement notices
• refunds for consumers
• public warnings.

Under the new laws, the ACCC can seek financial penalties of up to $1.1 million for corporations and $220,000 for individuals for

• unconscionable conduct
• pyramid selling and
• false or misleading conduct.

The second part of the ACL reforms, dealing with unfair contract terms, will come into effect on 1 July 2010. Further amendments to the ACL are also expected later this year.

For more information visit the Australian Competition & Consumer Commission website or contact the ACCC’s Infocentre on 1300 302 502.

What does it all mean for network marketers?

All three areas of offence can involve network marketing companies, individuals, downline organizations and leaders. The really interesting message in the new reforms is the DOUBLING of penalties for individuals, while the penalties for companies are unchanged. That suggests that there will be more intense scrutiny of individuals in future.

Unconscionable Conduct

This has traditionally been applied to large companies in their dealings with small businesses, by using their size, marketing power, connections, etc to take unfair advantage of small businesses. In the future it may be applied to MLM companies that use unconscionable practices, such as forced arbitration of disputes with their distributors (especially while witholding bonus payments and delaying hearings) — an issue recently the subject of adverse judgements in US courts against MLM companies who use the technique to disadvantage distributors.

But it could also be applied to upline leaders who abuse downline team members in a variety of ways.

Pyramid Selling

This is a really interesting one. Most network marketers believe that MLM is not at risk from anti-pyramid selling laws. As a general rule, this is true, with an occasional exception. But with more and more MLMers turning to Internet marketing methods, including affiliate programs to add more income streams, and getting involved in online publishing, training and starting their own affiliate programs, this opens up a whole new can of worms.

Internet marketing is rife with affiliate programs that breach anti-pyramid selling laws. It’s built into most of the software used to automate affiliate programs.

I’ve been wondering how long it would take authorities to pick up on this, and wrote about it in my 2007 report on PayPal (download your FREE copy from http://sellerbeware.info).

If you belong to, operate or promote a so-called “closed” affiliate program (where you have to make a personal purchase in order to become an affiliate), you are in breach of Australia’s Trade Practices Act (1974) and liable to fines of AU$220,000 for each offense. (How many affiliates did YOU recruit or refer? Each one is classed as a separate offense!)

False or misleading conduct

If you use many of the presentation and prospecting approaches common in network marketing, you are almost certainly at risk of breaching this provision of the law. Much of the hype, buzz and spin used in MLM promotion is unquestionably cause for action. Anything from dodgy income claims to medical claims for nutrition products can put you over the line and facing fines that will mean selling your home to pay them. (Banks won’t lend you money to pay court penalties.)

The BIG Stick now given to the ACCC…

The other BIG news in all this is that the ACCC no longer has to go to court in many cases. It can issue penalties of various kinds unilaterally against offenders. Yes, you can probably insist on your day in court, but the stakes will rise accordingly — and only the lawyers will win!

So what do you need to do?

You need to ensure that everything you say and do when dealing with prospects, customers and downline members (including their prospects, customers and downline members!) has to be squeaky clean and 100% above board. No more compulsory personal purchases before being eligible for commissions. No more medical claims for your products. No more flaky income claims.

In other words, be honest.

As I’ve said before… we live in interesting times!

Disclaimer: The content of this article is for information purposes only and is not offered as professional legal, financial or other advice. Before taking any kind of action on the basis of this article, you should seek competent professional advice. Neither the author nor publisher will accept any liability for any results based on the content of this article.

Tags: General

1. Nu Skin Enterprises Reports Record 3rd-Quarter 2009 Results
2. Nu Skin: Earnings to Surpass Estimates, Shares Keep Soaring
3. Nu Skin 2009 forecast is below analyst estimates

Tags: General

The single most common competitive mistake investors, CEOs, and entrepreneurs alike make is this: striving to do slightly better what their fiercest rival already does incredibly well.

The result is usually a muddled, incoherent mess of a strategy — one that fuels not disruptive, explosive differences between a firm and its rivals, but their very opposite: bland, boring similarities.

Most companies are competitively challenged — and the Golden Rule of Strategy is how I triage them. It says:

"What your fiercest rival does badly, do incredibly well."

Consider an example. My Macbook Air recently developed the dreaded cracked hinge problem. Getting it fixed? A Kafkaesque task fit for an existential Hercules. First, I had to book an appointment at the Genius Bar, pointlessly delaying my repair by nearly a week. Then, the guy at the bar was less "genius" than the Steve Jobs control freak remix of Homeland Security. Barking at me, my interrogator began: had I dropped my laptop? Why were there scratches on it? Was I trying to pull the wool over Apple's all-knowing Cyclopean eye? Half an hour of hardball later, he (very) grudgingly agreed: just this once, out of the kindness of its heart, Apple would fix my laptop — even though it was slightly beaten up. The magnanimity!

To put it kindly, Apple's service stinks like a skunk trapped in an outhouse. For their competitors, that should be target, acquired: "What your fiercest rival does badly, do incredibly well." But Apple's rivals — Sony, Dell, Samsung — haven't mastered the Golden Rule. They're churning out Apple look-alikes and feel-alikes, trying to beat Apple at its own game — simple, usable, beautiful design — instead of changing the game. Dell, for example, has even worse service than Apple. Result? No brainer: uglier products + worse service = Apple wins. All should be applying the golden rule of strategy instead, and hitting Apple squarely in the pot-belly of poor service, where it's soft, weak, and vulnerable.

In difference lie the seeds of disruption. In similarity, only obsolescence, and decay. As Michael Porter and Gary Hamel have both so eloquently discussed, the essence of strategy is discovering meaningful differences that make a firm inimitable, singular, and unique. Strategy's cornerstone, that is how to build a disruptively different business.

To see its power, let's apply the Golden Rule. What does the Golden Rule say in autos? Ford, Chrysler, and GM spent a decade trying to best another at churning out the biggest, hungriest SUV — but none tried to do what all sucked at: make a smaller, cheaper, more fuel efficient car instead. What does the Golden Rule say in food? Big Food has spent half a century trying to make food cheaper, with artificial flavors, colors, and ingredients — but none tried to do better what all sucked at: make food more nutritious instead. What does the Golden Rule say in media? Incumbents tried for decades to lock down content in walled gardens — but none tried to open it, unlock it, and free it.

Enter a new set of revolutionaries, wielding the Golden Rule like a superweapon. Who did well what auto incumbents did badly — making a smaller, more fuel efficient car? Tata, with its revolutionary Nano. Who did well what food incumbents did badly — delivering healthier food? Whole Foods. Who did well what media incumbents did badly — freeing and unlocking content, so it was easily discoverable? Google.

The Golden Rule is powerful because it's like an economic electron microscope. It sees through overblown jargon, billion-slide presentations, endless meetings, pointy-haired consultants, evil bankers — straight to the beating heart of competition itself. When a firm employs the Golden Rule, it sees what's missing in an industry, market, or sector. The result is a strategy with power, precision, and poise.

Lazy, indolent, entitled incumbents of the world, look out: the Golden Rule's got your name written all over it. Consider the ultimate incumbent: America itself. What does the Golden Rule say for countries? America should do incredibly well what China does badly: make awesome stuff that's meaningful to people, with love, justice, purity, and passion. That's where the seeds of renewal really lie. But we're not quite there yet.

For countries, companies, and people, a strategy that doesn't challenge is like a bike with square wheels. It might get you where you want to go, eventually — but only in the slowest, hardest way possible.

Do you have what it takes? Are you attacking your rivals — or merely confronting them? Are you mastering strategy's Golden Rule? Or will it master you?

Tags: General

Many years ago, a brilliant young visionary stirred audiences by telling them, “You can have everything in life you want — if you will just help enough other people get what they want.”

Through the decades, these twenty words have been repeated so often, and by so many people, that they have become elevated to iconic status. They are the battle cry for all those drawn to add great value to their world while living a life of abundance.

They were first spoken, of course, by the legendary Zig Ziglar.

It’s difficult to for me to imagine a single sentence that could serve as a greater example and finer embodiment of the Go-Giver philosophy.

It is equally difficult to imagine a bigger thrill for John and me than having the opportunity to present Mr. Ziglar with the First Annual Go-Giver Lifetime Achievement Award.

We had the extreme honor of doing exactly that last Friday, April 23, at Thom Scott’s and my Fourth Annual Extreme Business Makeovers event in Orlando, Forida.

Halfway through Zig’s appearance, as he sat between his lovely wife, Jean (“The Redhead”) and his son, Tom (CEO of Ziglar), John came up on stage and together we presented the 83-year-old legend with an engraved crystal bowl … along with our extreme thanks.

Zig Ziglar: a great man, a true Go-Giver!

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Tags: General

Years ago, a brilliant visionary said, “You can have everything in life you want, if you will just help enough other people get what they want.”

Those famous words, spoken by Mr. Zig Ziglar have been repeated so many times throughout the years they’ve almost become a battle cry for those who desire to add great value to their world while living a life of abundance.

It’s difficult for me to imagine two things:

1. A saying that could be a greater example and finer embodiment of The Go-Giver philosophy and…
2. A bigger thrill for both John David Mann and me than having the opportunity to present Mr. Ziglar with the First Annual Go-Giver Lifetime Achievement Award.

This we had the honor of doing last Friday at Thom Scott’s and my 4th annual Extreme Business Makeovers event in Orlando, FL.

Halfway through Zig’s appearance — as he was sitting between his lovely wife, Jean (“The Redhead”) and his son, Tom (CEO of Ziglar) — John came up on stage and together we presented the 83 year old legend with an engraved crystal bowl…and our extreme thanks!

Zig Ziglar; a great man, a true Go-Giver!

Tags: General

The advice from the mainstream commentators seems to have dried up.

Are they lost for ideas? Of course not. The truth is they never had any ideas. Well, not good ones anyway.

But here’s the baffling thing. Based on everything you’ve been told by the mainstream press over the last two years, their argument is that the best thing to reinvigorate an economy is for the government and the public to spend money.

The more the better.

That will supposedly stimulate the economy into recovery and everything will be fine.

So, we ask, why isn’t that advice being given to the Greeks now?

After all, from what we can see there’s no difference between the problem the Greeks are in and the pickle everyone else is in.

In that case – if we go by the mainstream theories – the best thing for Greece and the Greeks is to spend as much money as they possibly can. That should fix it.

Trouble is, they’ve already done that and look where it’s gotten them.

In fact they’ve spent so much they’ve got another problem. They’ve run out of their own money and they’ve run out of borrowed money. And now, they can’t spend any more money because no one wants to lend them more.

Least of all the Germans. Or rather, investors will lend the Greeks money but not at the price Greece is willing to pay.

Yesterday we compared the problem in Greece to the problem here. We stand by the comparison. In essence there’s no difference in the set-up.

All that’s different is that Greece is further along the path of self destruction. The fact that Australia isn’t there yet doesn’t mean that we have a bunch of wonderful bureaucrats and central bankers who are guiding us safely through the mess. It just means our hasn’t come yet.

As I’ve written before, just because we haven’t died yet doesn’t mean it won’t happen sometime [touch wood, not yet please - gulp!].

But our comments did result in a few responses into the Money Morning mailbag. Such as this from Tim:

“You really are an idiot!”

All we’ll say is that we’re happy to be an idiot if the alternative is to be a Keynesian – more on that in a moment.

However, we did like this comment from another Money Morning reader:

“The constant slur on PIIGS [Portugal, Ireland, Italy, Greece, Spain] etc. is not an honest assessment without also stating the UK, US and other countries which have less than perfect economies.”

I think the reader has a point. We’re not sure that we’ve used the term PIIGS, but now we think of it there is something of a superiority complex when it’s used by certain people in the mainstream.

As if to say, “Oh, those Southern Europeans are so laaaaaaazy and hopeless, this was bound to happen to them, the vagabonds. Tut, tut. Another brandy please Manuel.”

Of course that same comment is coming from some pinstriped chinless wonder who’s got a million dollar mortgage, a lease on a Porsche and who racks up $30,000 a month on the credit card.

Again as we’ve written before, there’s not much difference between the net worth of a hobo and the net worth of most of the supposedly well-off people in Western society. The major difference being a crucial one – the ability to access debt.

That’s pretty sad isn’t it?

While we’re on the subject of the Greeks, below is an updated version of the Greek 2-year government bond chart that we showed you yesterday:

Click to enlarge

But as we mentioned above, we’re still baffled. Because if spending your way out of debt was the cure to a debt fuelled boom then surely other governments and investors would be falling over themselves to buy Greek debt.

But if the story in German newspaper De Bild is anything to go by, you can see why our German friends aren’t so keen to help out.

Daily Reckoning contributor and resident German here at the Moon Factory on Fitzroy Street, Nick Hubble sent us this article titled:

“STREIT UM MILLIARDEN-HILFE: Warum zahlen wir den Griechen ihre Luxus-Renten?”

We said thanks, but asked if he’d be so kind to send the English version. So he did. And that reads:

“MULTI-BILLION EURO AID TO GREECE: German anger at paying for luxury Greek pensions”

Aha! Now we get it. And rightly so. It looks like the Germans are taking our advice from yesterday and telling the Greeks to stick a Banane up their Kokospalme.

And just so De Bild readers know exactly how things stand, the newspaper has provided readers with the following table:

Does that make the Greeks lazy and inferior to other European nations? Or is it that the Greek politicians have been doing the same as other economies by suffocating the country for generations with overly generous state benefits.

State benefits that have ended up crippling the economy.

As I say, look at Australia with its burdensome state benefits. Look at the UK with its National Health Service. Look at the US with its new universal health care system.

And now look at Greece. What you’re seeing in Greece is an image of Australia, the UK and the US in the near future.

Look, if the Greek debacle proves nothing else, it proves what a great big tissue of lies the mainstream press, economists, politicians and bureaucrats have been waving at you for the past two years.

But then again, it’s hardly surprising when you see where they get their inspiration from – the economic terrorist himself, John Maynard Keynes.

We’ll be honest, although we’ve banged on about the idiocy of Keynes’ theories, we’d never bothered to pick up and read a copy of his magnum hopeless [Reader's voice: surely you mean magnum opus], The General Theory of Employment, Interest and Money.

I know. It’s a terrible confession. We really shouldn’t criticise something unless we’ve bothered to read the subject we’re criticising.

We’ll cop that.

Our only excuse is that based on the baloney that gets spurted out from Keynesian supporters we figured they must have a good enough handle on the old timer’s theories and so that was good enough for us to argue against.

Our only regret now is that we didn’t take the time to read it long ago. Because if we had, our case against Keynesianism would have been even stronger than it already is.

Anyway, a couple of weeks ago we decided enough was enough. So, we ordered The General Theory of Employment, Interest and Money from our favourite online bookstore (free delivery worldwide and books half the price of what you pay in the local bookshop!) and waited for it to plop into the mailbox.

Then this past week we decided to settle down and read it…

There’s no doubt, the last seven days have been the dullest we’ve ever experienced. Although that shouldn’t have been a surprise, because from what we’ve heard even ardent Keynesians find his Lordship’s economic effort to be a hard slog.

Anyway, by the time we’d reached page 85 of our version we were ready to do a header out the window. It was that bad. But then we started reading this passage:

“If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of lasses-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”

I wouldn’t lie to you, that’s what it says. We’ve lifted that quote verbatim. If you click here you can download an online version and find it on page 126.

If you fancy reading the entire book then do. I’d just recommend you read it on the ground floor, or at least lock all the windows and hide the key first.

But as if to rub salt into the wounds of any free market lover, Osama Bin Keynes follows up with the following sentence:

“The analogy between this expedient and the goldmines of the real world is complete.”

Oh Lordy! That’s right, burying bank notes in bottles at the bottom of disused mine shafts is the equivalent of mining for gold!

Clearly if Keynes hadn’t kicked the bucket in 1946 he would have soon ended up in a nut house with a pencil up each nostril rocking back and forth. Incidentally, little did we realise until this morning that we’d started to read The General Theory last Wednesday, the 64th anniversary of Keynes’ death.

We can only mourn the fact that he didn’t die before he’d written the most economically destructive economic treatise the world has have seen. The Greeks and Germans are probably thinking the same thing right now.

Remember, this is the dude governments all over the world have been relying on for financial guidance since the financial markets started to meltdown in 2008.

So the next time you hear or read a mainstream hack or economic blurting on about Keynes, just remember his “unique” solution to creating wealth.

Osama Bin Keynes’ hiding-money-in-a-mine theory is exactly the same theory that governments have followed with their make-work policies. Such as the school building projects and the housing insulation programme.

It’s about bureaucrats creating work from thin air. Just as central banks create money from thin air.

Using Keynes own example, does that really sound like the model for a sensible economic policy? I mean, really.

I’m not even sure that I need to go to the effort to refute it. His Lordship’s own words explain everything.

And sadly it explains exactly why the global economy is still in the depths of a long-lasting depression. And why we’re not in the recovery the mainstream has fooled itself into believing in.

But don’t expect the mainstream to change their spots. You’ll continue to read the usual pap, as they try to convince you that somehow, Australia is different…

Cheers,
Kris.

Tags: General