--Three Equivalent Standards: Gold, Euro and Dollar

An alternative to popular faith

A gold Standard, indeed any Standard, consists of two parts: An asset (gold) and a system. Of the two, the system plays the leading role.

In any Standard, the system requires that for every unit of currency a country issues, that country must own a fixed amount of the chosen asset. The fundamental purpose and effect of a gold Standard, or of any Standard, is to restrict the ability of a nation to issue money.

Gold has been a popular asset with attractive attributes. It’s consistent, malleable, permanent, pretty and scarce. But, other assets can be part of a Standard, for instance: silver, platinum, copper, wheat, the euro. The euro?

Yes, nothing says the asset in a Standard must be a physical substance. The only necessary attribute is some degree of scarcity. Today, much of Europe is on a “euro Standard.” This means that to spend money, each nation first must obtain euros. The fact that the money and the euros are identical is irrelevant. Rather, the necessity of owning euros restricts each nation’s issuance of money. This restriction is the key to any Standard.

The United States abandoned the gold Standard in 1971 because it restricted the issuance of dollars. The U.S. found itself unable to obtain enough gold to fund its growing economy. It easily could have been unable to service its debts, i.e. gone bankrupt. With the elimination of the gold Standard, the U.S. government demonstrated it is able to service any size debt, while creating unlimited money to fund economic growth.

Today Greece finds itself in the same restricted position. Being on the euro Standard, Greece is now unable to create sufficient currency to fund its growth, and having been forced to borrow, now faces the (unlikely) prospect of bankruptcy. The EU has ordered Greece to reduce its debt supply (aka money supply) by raising taxes and reducing expenditures – a prescription for recession and depression.

Any political entity that cannot create money eventually will be unable to service its debts, and faces economic stagnation. American states, counties and cities are on the “dollar Standard.” Unlike the federal government, they cannot spend money without obtaining dollars. Over time, all must obtain money by raising taxes and/or cutting expenditures, both of which have a depressing effect on their economies.

To save the state, county and city economies, the U.S. federal government increasingly must support local spending. Roads, bridges and dams are local initiatives, that might have been the financial responsibility of local governments, will need to be funded by the federal government. Education, local transportation, health care and anti-poverty programs also will require federal support.

The federal government, because it can create unlimited money without taxation, ultimately will fund the vast majority of local programs, the key political question being: Who will have the power to direct these programs, local agencies or the federal government?

Just as the American states, counties and cities can, must and will be supported by the U.S. government, the members of the EU can, must and will be supported by the only entity with the unlimited power to create money: the EU itself.

Eventually, it will become apparent that forcing EU nations to raise taxes and reduce spending only will serve to make economic growth impossible. At that point, the EU will assume the money-creation role for the euro. Thus, the euro will force a de facto “United States of Europe,” well before formal treaties are ratified.

Rodger Malcolm Mitchell

http://www.rodgermitchell.com

[Via http://rodgermmitchell.wordpress.com]

Foreclosure Tsunami Off Coast

For the last two years, real estate experts such as Jeff Adams (www.realestatemillionairecode.com) have been predicting the existence of a second wave of mortgage defaults and foreclosures closing in on the US economy like a tsunami due to strike this year.  So far we have only seen the meltdown from the failures in prime loans and option-arm loans.  The tsunami that is coming will include more prime and option-arms, but also present a new crop of subprime and ALT–A loans that were put into motion by Fannie Mae, Freddie Mac, and their love child Ginnie Mae, oh and lets not forget the FHA.  In addition, the FHA is changing the rules on purchase money loans, making it more difficult to qualify, and therefore limiting the number homes that will actually be purchased by owner occupants.

All of this spells difficult times for those who are struggling to pay their mortgage, are out of work, or trying to purchase a new home.  However, for those ready to move on this investment opportunity there will be opportunities abounding – especially for those willing to hold the property as a landlord or provide seller financing through Contract for Deed, Sale and Leaseback, or even a traditional rent to own.  If you are ready to capitalize on this “fire sale,” then simply place your name, email, and areas of interest in the form on the right hand side.  We can help you enter the real estate investing market or grow your portfolio of properties.  We do not sell products, systems, or courses.  We work with you in contractual joint ventures to provide for a successful relationship.

[Via http://freedupinvestments.wordpress.com]

China's Workforce is 2.3 Billion People: Are you Working?

“China and India have a combined workforce of 2.3 Billion people. If you include the rest of Asia, then you are looking at a workforce of 3 Billion.  China, India along with other Asian countries are in the beginning of an economic revolution that will go on for many years.

 Do not over-look the fact that 1000’s of American companies have opened manufacturing plants in Asia. China will be known as the manufacturing country of the world and truthfully, they already are.  We are in the beginning phase of a massive Global Economic Expansion. 

 …. And no one is talking about the new purchasing power of the Asian workers

 Oh, you may hear a story here and there, but no one is really talking about the fact that we will witness, in our lifetime, an Economic Explosion that could ultimately be so strong and so monumental, that fortunes will be made and lost many times over.  

Soon the newfound wealth for the Asian workforce, two-thirds of the world’s population  in China and India alone, will increase their purchasing power, and in turn, they will develop a taste for what money can buy.   A middle class is evolving in China.  This middle class is developing a desire for electronics, autos, clothes and better housing and this will turn into epidemic proportions. 

According to an article in the Deccan Herald, dated 8/24/2004, from D RAVI KANTH,  “China and India are set to overtake the United States by five times in their combined purchasing power by 2030 subject to implementing investor-friendly policies, says UBS, the Swiss-based banking behemoth.”

 China may become the manufacturing capitol of the world but the USA has always been the Innovators of the world.  Do you want the chance to be a part of this economic expansion?

 Or will you be mumbling to yourself, something about the “road not taken”? 

So,   what about the opportunities for the average American worker?

 This Global Economic Expansion will last for years.  It presents an opportunity of a lifetime, for those who wish to participate, but participation comes with a price.  That price is our time, the time it takes to educate us about the world markets and understand what makes the foreign economies grow.  Well, they work the sameway overseas as they do here in America, thru “Supply and Demand”. 

We need to take the time to educate ourselves.  There is much to consider if we want to eventually be employed by a company that will actually need our expertise, and not just hiring us with Stimulus money, for a week, 5 weeks or 3-4 months, on an hourly wage.  An hourly job is not the way we want to live the rest of our working lives, this will not help make a future for us and our family. We will need a job that has a future so we can grow financially.  What will we need to do?  We need to Educate ourselves.

 If we are unemployed, we need to get off the couch and get to work deciding what we want to be when we grow up (again) and hopefully that will be TODAY.  We have already been out in the real world long before we lost our jobs, so we have an idea of what type of work we are interested in doing.  Or maybe we want to change careers.

 Where there’s a Will there’s a Way.

 We can’t let, not having money stop us from educating ourselves.  Many unemployed can get government assistance right now, for school.   Go apply,  the money won’t last forever.  There are private grants we can apply for.  If we have savings there is no better way to spend it than by educating ourselves for a financially secure future (except on food).  We may need to borrow money from a family member, if we can, or sell something that we have that is worth some extra cash.   If we know what we want to do, then maybe we can find someone in the same field who will let us be an apprentice, with or without pay.  If there is no other way, then we need to go to the library and read, study, and give ourselves tests.  The more we know the more ahead we are. We need to keep doing this, and if we really work hard at it we may be able to take some entrance exam and still get a job in the field we want.  No matter what happens knowledge always comes in handy.  We need to use our imaginations. 

 Now, that we have an opportunity to start over, though it may sound like it will take a lot of work on our part to re-educate ourselves, lets face it, what else do we have to do, sit on the couch and watch all the misinformation on cable news, with the exception of Fox News, of course?   

All that learning, going to school, reading and studying will prepare us for what lies ahead.  And in the long run we will be ahead of everyone else, maybe 20 Million some unemployed potential workers, in the USA alone.  Yep, starting over will take quite a bit, of initiative on our part, but in the end we will be equipped to compete on a global basis, which is what we will need to do in order to survive.  Let’s face it what is the alternative, do nothing?  That’s the attitude that got us into this mess in the first place.  Wake up, America.  

[Via http://snappysandy.wordpress.com]

Wynn Resorts (WYNN) and Wynn Macau (1128:HK) (I): the worst and best of times

The WYNN story

WYNN is a story of two casino complexes:

–one is in Las Vegas, and consists of the Wynn Las Vegas and Encore hotel/casinos,

–the other is in the Chinese Special Administrative Region of Macau, and consists of the Wynn Macau and soon-to-be-opened Encore (414 rooms), plus a third hotel planned for Cotai (at a cost of roughly US$2 billion).

This is really a tale of two cities–or rather, one city and one SAR.  The former is mired in recession, the latter is booming.

I recently listened to the WYNN fourth quarter earnings conference call and have taken at least a glance through the 10-K.  In this post I plan to make some general remarks about WYNN and then write about the US operations.  In tomorrow’s post, I’ll write about Wynn Macau.  For what it’s worth, I own both stocks.

A Chinese company

If we judge by Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), which is a common measure of the cash generated by operations, WYNN has been a Chinese company for the past couple of years.

—————————-Macau—————-Las Vegas     (EBITDA in US$ millions)

2009                                     $502                               $244

2008                                     $486                               $253

2007                                     $364                                $417

If the first two months of 2010 are any indication, the percentage of the total generated by Macau this year will be even larger.

The contrast is even more stark if we compare pre-tax income:

————————–Macau—————-Las Vegas (in US$ millions)

2009                                 $272                       -$230

2008                                 $254                       -$105.

This difference hasn’t been lost on Wall Street or in Hong Kong (where investors nevertheless continue to be dubious that US-style casino-hotels will be successful in China).  The market capitalization of WYNN is $8.2 billion, that of 1128 is $6.8 billion (all the figures in this post are US$).  WYNN’s 72.3% interest in the latter is therefore worth US$ $4.9 billion.  This implies the stock market is currently valuing WYNN’s Las Vegas holdings at $3.3 billion.

WYNN’s assets

How do WYNN’s physical assets stack up in each place?

————————Macau               Las Vegas

hotel rooms                  600                      2,450

casino space        222,000 sq ‘           186,000 sq ‘

table games                 390                        220

slot machines          1,200                      2,710.

Which is the cheaper stock?

That depends (another way of saying I don’t know).  The two stocks, WYNN and 1128, exist in different markets, offering different alternative stock choices and catering to investors with potentially sharply differing risk preferences.  To state the obvious, neither will do well if Macau falters, and diversification of Las Vegas probably won’t help WYNN all that much.

Las Vegas is bouncing along the bottom at present and offers the possibility of surprisingly positive earnings results as and when demand returns.  The implied valuation of WYNN’s Las Vegas assets is about the same as the market cap of MGM, a company that I think is significantly weaker than WYNN.  WYNN is the value investor’s choice, I think.

Macau is booming.  1128 is gaining market share (I’ll elaborate tomorrow).  On the other hand, the heavy hand of government regulatory tightening can appear at any time.  Wynn Macau is the growth stock investor’s choice.

WYNN’s Las Vegas strategy

Aggregate statistics for Las Vegas in 2009 make grim reading.  Visitors were down by 3% year over year, but overall gaming revenues were down almost 10% and room rates were off by 22%.  Conventions held in Las Vegas were down by 14%, and the number of convention attendees was off by 24%.

Steve Wynn doesn’t expect recovery in Las Vegas any time soon (more about this below).  In hindsight, the decision to build Encore (cost:$2.3 billion) was a mistake.  Wynn expected it would generate $250 million in annual ebitda, but the way I read the figures it ended up only making WYNN’s loss bigger.

bouncing along the bottom

My guess is that Las Vegas is starting to bounce along the bottom.  Two reasons:

–the last of the new hotels, MGM’s City Center, has come on-stream, adding the last 6,000 rooms of (over-)capacity to the market.  So all the bad news is out there for everyone to see.

–the economy is gradually recovering, and Las Vegas has become really cheap.  Visitor statistics are starting to reflect this.

So Steve Wynn’s view may turn out to be too pessimistic.

WYNN’s strategy for Las Vegas?

Even though the profit figures are very ugly, on a cash flow basis WYNN is in better financial shape than competitors LVS and MGM.  Wynn’s idea is to plow money back into upgrading the Las Vegas properties so they offer increasingly better value for money, that is, new amenities and better customer service. than rivals’.  For example, the company is converting the porte-cochere in front of Encore–which looked at the skeletons of abandoned casino projects across the street–into an inward-facing beach club/night club complex.  It’s also beginning to refurbish the rooms at the Wynn Las Vegas hotel.

This is probably the best (read: only sensible) WYNN can do.

A small move back east

Last month WYNN also announced an agreement to develop and run a restaurant/casino complex on the Philadelphia waterfront.  It’s hard to know what this means for the company other than establishing a potentially powerful marketing outpost for the Las Vegas properties in a part of the country that the Golden Nugget used to dominate.

The sources of Steve Wynn’s pessimism

1.  recession and overcapacity in Las Vegas

2.   disfunctional Washington, implying slower recovery than otherwise possible

3.  President Obama’s frequent lambasting of Las Vegas, which, putting the best possible face on it, gives corporations an excuse to locate conventions at cheaper venues.  To Wynn, this hostile attitude toward a world-leading, employment-generating industry contrasts sharply with the rescue from bankruptcy of GM and Chrysler, firms that are not technologically competitive and that have inferior performance records over long periods of time.

4.  Casino customers are not, by and large, employees or executives of large corporations.  Instead, they’re entrepreneurs, professionals or small business owners.  Washington policy is hurting this group’s confidence in two ways.  Health care reform will likely mean higher expense for providing medical benefits for employees.  The idea of increasing personal income taxes for “rich” Americans hits this group as well.  Many structure their businesses so their results appear on the owner’s individual tax returns.

If I ran a Las Vegas casino complex, I’d be upset, too.  But Wynn may be too close to the problem.  My guess is that Washington may delay recovery a bit, but it won’t stop it from happening.

Of course, the latest figures from the Las Vegas Convention and Visitors Bureau are for December, which showed a continuing mild uptick in visitors.  Steve Wynn has figures, for his properties at least, for January and February 2010, which we don’t.

The conference call

It was one of the odder I’ve experienced.  The analysts on the call ranged from very savvy to some who didn’t appear to know basic accounting concepts (welcome to post-recession research departments).  There was even a retail broker, apparently a big fan of Steve Wynn, who had a lengthy chat–something I’ve never heard before.

A large dose of political views (another first for me) aside, the company appeared to be very bullish both about Macau and about WYNN’s ability to create the same market niche there that it has established in Las Vegas, and once had in Atlantic City.

Trying to focus on what WYNN is doing in Las Vegas, rather than railing about, the company message seems to be that it isn’t depending on movements in the general economy to bring it back to profitability.  Unlike rivals, whose casinos looked distinctly shopworn last time I was there (admittedly, months ago), WYNN seems to be concentrating on improving its properties and waiting for the day when it can raise room prices.

What WYNN needs most is time, I think.

[Via http://practicalstockinvesting.com]

Quick, Alert the Media!

It’s a good thing the mainstream media and the federal government are all over the Toyota recall efforts.  Yes, I said “efforts”, in plural.  We all know that Toyota stunk up the joint with their recent issues.  Their President publicly took the blame for the problem.  The company has halted production to fix the slew of problems.  And they are having to give account of themselves to Congress.  Anything to keep the company honest, right?  After all, they assemble cars and trucks, right here in America.  They need to do things the right way, and the MSM is making sure the story gets out.

In showing a shockingly high level of consistency, the MSM, the Obama administration, and Congress are also showing disdain for another auto company who has just quietly recalled a number of their models.  Consumer complaints deal with power steering lock-ups.  If the driver cannot control their car, the problem is significant.  Harry Reid is all over this story, as are David Axelrod, Nancy Pelosi, and the union leadership country-wide.

Oh, I’m sorry.  That last paragraph is just not true.  Not when Government Motors is the company issuing the recall.  We wouldn’t want the truth to be known, would we?

Oh, I need to do an about face on the MSM involvement.  Depending on the search terms used, MSM coverage of this event does not occur until the second or third page of search results.  Everything else is either related to auto industry publications or blogs.  HuffPo ranked higher than other MSM outlets in covering this story.

Who says we don’t have a government, controlled media?  Idiots!

[Via http://somanyidiotssolittletime.wordpress.com]

Business Cards And Marketing Have Come A Long Way

Public Domain

This is a business card for one of the many attorneys specializing in pension claims, circa 1895. SSA History Archives.  This attorney specialized in Civil War pensions in Wapello, Iowa.

It’s amazing that business cards have stood the test of time as a reminder of those we have met and the services they offer.  Although paper,  printing and design have changed over the years, many parts of the business card remain the same.  Notice how Mr. Wright has his photo and information about his company on his card (phone numbers were obviously not around at the time).

Now, check out a more modern business card.  Hollywood Icon Magazine needed to refresh their business cards and it was done with a flashy, yet understated logo that emphasized the focus of the publication.  Jen Brookman Graphic Design did the logo and the business cards.

If your company needs a change to perk up business in this tough economy, Refresh My Business Cards is the place to go.  The combination of a re-design of your cards and full-color printing and state of the art marketing expertise are sure to make your cards the talk of your town.  Leave your contacts something they can remember you and your employees by.

Refresh My Business Cards

Email: refreshmybizcards@gmail.com

Phone: 310.502.9877

[Via http://refreshmybusinesscards.wordpress.com]

Kyl “Supports” Our Troops Just Like The Unemployed

Smart move, Arizonans, to keep sending this clown back to the U.S. Senate; a shame he’ll pay no price for this until maybe 2012 at the earliest (and wouldn’t it be nice to give Kyl the opportunity to test his theory on himself?).

Actually, I’m kind of getting second thoughts about showing this video. You never know; Kyl may say next that it’s better to shoot the unemployed as opposed to trying to revive our seemingly-forever moribund economy and spend the money to create jobs for them.

[Via http://liberaldoomsayer.wordpress.com]