Month: February 2012

Poverty is $11,139 dollars per year for an individual or $22,113 for a family of four. The Census Bureau found that the number of Americans living in poverty grew by 2.6 million to 46.2 million.

…”we estimate that over 1/3 of the increase in the US poverty rate in ’10 resulted from the rapid rebound in oil prices.”

by John Hempton

I consider myself a bit of a Buffettphile – but I did not even know Berkshire had a sizeable agricultural machinery operation. Sure agriculture has been good and because the capital equipment is a lean off that it has been very good. But this throw-away quote from the annual letter is astounding:

Vic Mancinelli again set a record at CTB, our agricultural equipment operation. We purchased CTB in 2002 for $139 million. It has subsequently distributed $180 million to Berkshire, last year earned $124 million pre-tax and has $109 million in cash. Vic has made a number of bolt-on acquisitions over the years, including a meaningful one he signed up after year end.

This business has – in a decade – distributed well over 100 percent of its purchase price in cash to Berkshire and its pre-tax earnings are roughly the acquisition price.

Of the thousands of listed companies in the world how many have been that good in the last decade. Surely not many.

John

gold

As ‘bandwagon’ investors join any party, they create their own truth – for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices.

In these bubbles, an army of originally skeptical investors succumbed to the ‘proof’ delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But…

We uncover fools. Our mass media fails.

Glen Beck’s gold company forced to make refunds.

He told listeners and viewers that he personally bought gold from the company and calling its executives “people I trust.”

Prosecutors in Santa Monica charged six of Goldline’s executives with fraud and accused the company of running a bait-and-switch operation that lured customers into buying overpriced antique coins as investments—coins that Beck promoted on his shows. The Santa Monica city attorney obtained a judgment and injunction against Goldline that requires the company to radically overhaul its practices and to stop deceiving customers about prices, among other things.

Millions of citizens led astray. We can’t afford that.

Kirby Ferguson examines modern attitudes toward “intellectual property” and how these attitudes rather counterintuitively stifle creativity rather than fostering it.

This is social evolution.

Copy, transform and combine. It’s who we are, it’s how we live, and of course, it’s how we create. Our new ideas evolve from the old ones.

But our system of law doesn’t acknowledge the derivative nature of creativity. Instead, ideas are regarded as property, as unique and original lots with distinct boundaries.

But ideas aren’t so tidy. They’re layered, they’re interwoven, they’re tangled. And when the system conflicts with the reality… the system starts to fail.

Stafford Ray:

Primary Producers are at the center where all loops begin. They grow and raise food so they are not working in an expendable industry.

My maternal grandfather was a farmer who used horses for everything from hauling logs to powering the sulky that took him and Grandma to town. But that all changed when he bought a tractor. Tractors do not eat grass and do not self propagate, so his purchase started a second line of loops that include tractor manufacturers, whose demand for materials created the next level of loops of miners, oil drillers, refiners, service mechanics, you get the picture.

More tractor manufacturers joined in so dealerships sprang up and new loops were formed that managed sales for manufacturing, a services not directly producing food or an object we can see and feel. But soon the dealer no longer had time to sweep out his showroom so he hired a cleaner and yet another loop was created.

Then the cleaner became so busy he hired Jim’s Pooch Grooming Service and now, every Thursday morning, Deefer gets a wash and a brush, her claws trimmed and anal glands expressed and yet another class of loops was added.

We need these loops to create employment as productivity increases and industry continues to automate but we now have more people in outer loops than inner loops and it is these outer loops that are first to go when money gets tight.