NY times - Clueless in America

Interesting reading. Link

Id like to see how such a thing gets addressed in a free market economy.

Free market economy vs. Command economy

CERN are close to opening their Large Hadron Collider later this year and it got me thinking. The project has taken 14 years to build and has cost billions. There is no immediate benefit that can be sought from such a project except to further human knowledge in particle physics.

Can you imagine such a facility being developed in the U.S.? The free market economy capital of the world? My thoughts on the matter are that free market economies are very much short term in their vision as the want for wealth essentially overtakes all other value systems.

Something to think about.

English writing

Quick post..

was reflecting on my written skills back in high school and realised that had I known how to touch type back in highschool, I could have practicised writing essays on the PC. First and major benefit is you save time. Lots of time!

Credit Crisis

So I was reviewing my blog after almost a 5-6 month absense and noticed I wrote a bit on this subject back in August.

Well, interesting to see now that many commentators and many people saying that when the collapse comes (not if) its going to be BIG. It will be bigger than the dotcom bubble burst, and quite possibly may match the depression of the 1930s.

Supply vs. Demand

Anyhoos, I was reading reddit and some article on current affairs in the U.S and the following thought came to me;

Economics is based on supply and demand, correct?
So the question I want answered is, does demand include the ability to purchase or is it simply a want? Same goes with supply, does it include the ability to actually sell a good/service and not simply based on speculation?

The above questions came when I was reading about the rich/poor divide in the U.S and got to thinking, if there were only two people in the world, one super rich, the other very poor. Does the 'wealth' of the super rich guy equate to nothing if the poor guy cant afford what the rich guy has, or better yet, has no desire in getting his wealth?

Just some random thoughts....

Labour costs?

So I was busy gardening today and while on my hands and knees pulling out weeds (hey that rhymes!) I got thinking about how expensive it is to get one of those professional gardeners to mow the lawn etc.

My thoughts turned to plumbing/electrical for some reason and how relatively cheap it is to get a handyman from a street corner in Karachi to come to your place and fix-up whatever it is that needs doing. And relatively speaking these labourers are very cheap as compared to plumbers and technicians here in Australia.

A couple of reasons as to why they are cheap over there is possibly due to the lack of higher education the majority of the population has, thus very difficult to move up from poverty standard of living into middle class. Also, the supply of labour is excessive.

A couple of reasons as to why labour costs for such trades is so expensive here in Australia (and probably applies to other western countries); not many people actually aspire to do such jobs (even though many of these people are multimillionaires!); There are barriers to entry into such roles. There are rules, regulations, certifications which must be met/passed before any sort of work can be done. I guess the basic premise is to protect the consumer? As a result of such barriers, supply is limited.

This is an analogy that applies to China and India. Excess labour supply is what allows China to maintain such cost competitive manufacturing, while in India although the I.T. sector is seeing a significant rise in costs, the number of engineers, scientists etc coming out of universities is tremendous. This is the case in China also.

Hmm something to think about....

Mr Bush and Ecomonics... oh dear.

Found this on reddit.com

Brilliant article here

7 countries considering abandoning the U.S dollar

Check this out... link

My dad was telling me the other week, how middle east oil producing countries are considering a move away from the U.S dollar. Their whole economy is pretty much 'pegged' on the U.S dollar. With the fall of the dollar, their asset values pretty much declines as the dollar does.

Now on the free market, the U.S dollar will rise and fall against other currencies, just that this time around its falling sharply against ALL currencies. The article link above is brief, but worth the read.

Serious 'economic correction' on the cards for U.S

Wow, so eloquently put. Check out this article in todays SMH, which quotes billionare George Soros : Click here

Ive been reading social news networking sites such as reddit.com and digg.com for the past two months and the U.S economic and political situation does seem quite serious. I must admit I was chatting with my dad the other day and it definitely feels like a serious recession is on the cards.

To be brutally honest a U.S recession is unlikely to have serious implications here Australia.

Something worth tracking for the next couple of months.



PS: I've been out of blogging action for the past two-three months primarily due to work, but I should soon be able to start regular posts come mid-November.

Stock market correction

I learned something new today. When the stock market drops more than 10% its officially labelled as a correction. The ASX is now sitting somewhere around 5700 points. The market hit a high of 6400 back in July 13.

I still think now is going to be an excellent time to buy some cheapish stocks.

Vocabulary

Analogy time!



Okay, theres no back story to this so straight to the point.... ever wondered how having a good vocabulary allows you explain yourself, your story, your background to others more easily. Infact forget others, just yourself, having a higher vocabulary range allows thoughts and actions to be more easily defined and put into context.

Ok so what? Well this is analogous to how numbers, equations, mathematics, gives us added ability to understand the physical and natural world better, simply because we can interpret those into numbers which simply stated go from 0 to 9.

Take telecommunications, my field of profession, has many complex equations to understand how nature and the enviroment will affect say, the transfer of data via radio waves. Same goes for understanding fibre optic signals etc.


I'm beginning to realise that having a good foundation in vocabulary and numerical mathematics (in my case telecommunications, but I also want to learn about finance) has huge benefits in terms of accelerated learning. Taking a quick side-step from all this, in the telecommunications field, we have this thing called the 7-layer OSI model. It basically outlines what the data has to do for it to travel between two PC's for example across a network. These seven layers incorporate what the software must do, what the network protocol does, and how it goes on the physical medium.


The lowest layer in the 7-layer OSI model is the physical layer. This is basically the bare minimum that is required for data to traverse over. Eg: copper network cables, fibre optic connection, air for wireless connections. Now think of having a good vocabulary and number skills as having a superior physical medium. Now what I want to know is what things are there above this that one can learn and improve to better understand the environment around him/her?


One thing that has been on the back of my mind for the past month or so, is understanding psychology of humans. For example, listening to Dale Carnegie's audio book 'How to win friends and influence people' and also reading Stephen Covey's book 'The 7 habits of highly effective people', they both recommend being empathetic towards others. To be genuine when around others, first understand then be understood, etc etc.

The list goes on, so basically psychology OR understanding human behaviour is a somewhat important skill that should be developed. Im going about this via reading and then trying to read and see examples by observing people around me. At this stage Ive identified psychology to be one layer that would sit somewhere above vocabulary/numerical. What else can one identify?

Perhaps Im going about this all wrong? Perhaps layering is not the best way to look at this? Its about identifying basic 'things' (I could not come up with a better word) that one can work one in improving ones-self.


Oh and in this particular instance all this layering applies to career and relationship. Different layers would apply for wealth and spirituality.


I know I keep saying this, but Im going to try and return to this topic after Ive thought it through a little more. Watch this space.

Ross Gittins

Another good easy to read and understand article by Ross Gittins, the Sydney Morning Heralds economics editor.

Click here

I have a strong dislike for lying politicians.

Why our internet costs are so high

An excellent article found on www.smh.com.au Find the full story here

I hope our politicians and policy makers read this.

Be frugal with electricity use

Simple policy by which to live by;

If not in room, turn of the lights.
If not using computer for more than 1 hour, turn it off. Leaving your PC running all day while your at work, is firstly consuming unnecessary electricity (unless your downloading stuff), second your actually diminishing the life of the PC.
If you have speakers attached to your PC, turn it off while not using. Same goes with printer, scanner etc.
Be wary of phantom lights around the house. Phantom lights are basically standby lights notifying you, your television or DVD player is still on. These lights stay on when you happen to turn off these devices via the remote. Get into habit of turning them off from the switch on the device itself or from the main wall socket.

The ASX down another 100 points this morning!

The ASX down another 100 points this morning! Wow, its currently sitting on 5900. Damn.. the market was sitting on 6400 about two weeks back and now this.

Oh how I wish I had some spare cash to buy.

Free Market System?

We live in the information age. The global economy. Capitalism rules!

Over the past decade for example, import tariffs on cars has steadily dropped. I think its almost down to zero nowadays. As a result imported cars have become cheaper. The federal government introduced new law called 'Work Choices' basically instead of having an award wage, each employer can negotiate their salary, terms and conditions individually (now I'm light on details basically business and business owners also have more power to easily sack people etc.)

From an economic standpoint, the whole reason for bringing in such laws is to allow Australians to compete in say, manufacturing against up and coming economies like China, India, Brazil. Labour costs in Australia (and I would assume also in other western countries) is quite high compared to other less well off Asian countries. It is in-fact a strong contributor to the high standard of living Australians enjoy, because generally speaking, everyone is very well off.

I personally admire the U.S. free market system. It actually stems from the whole free world thing. You work hard, you will see just rewards for your efforts. As a result, high production output and then good consumption has lead to the U.S being the worlds largest economy.
The rise of China and India economically speaking is a very good thing. Economically speaking it means the global economy will be less driven by U.S. activity alone. The saying goes, 'if the U.S sneezes, the rest of the world gets a cold'. (No more global recessions, we can rely on India and China thanks.) There are 2 BILLION people in India and China, can you imagine how good it will be for the rest of us, if they start buying our products!!

Take China, a communist country. The first definition found on google for communism is as follows;

An economic theory which stresses that the control of the means of producing economic goods in a society should reside in the hands of those who invest their labor for production. In its ideal form, social classes cease to exist, there is no coercive governmental structures, and everyone lives in abundance without supervision from a ruling class. Karl Marx and Friedrich Engels popularized this theory in their 1848 Communist Manifesto.

One thing I find somewhat interesting is that if the whole world were a true free market system, we'd end up living like communists. Hey! whoa! hold on there!!

Let me explain. In economics, free economics especially, resources (ie: labour, capital, assets etc) move where there is demand. Simply speaking, its all about supply and demand. If the whole world were a true market system, where there were no international boundaries, no tariffs, no duties, no subsidies, no fixed exchange rates etc, everyone and I mean EVERYONE would end up making the same pay, everyone would be able to afford the same thing as the guy next door.
I also think as a result, goverments would cease to exist. There would be no requirement for such antique legacy systems. Democracy? nope, don't need it.

Free market system which would really be just another form of global communist society.

Value of dollar?

I read an excellent blog post at Binary Dollar and it was about the 'cross over point'. That is when your investments earn enough money that they surpass your expenses. You could classify this by saying your financially free.

One thing of interest I found (in the comments actually) people generally speaking probably do not take into account inflation when investing for the future and what dollar value their assets will be worth after the term of investment.

Analogy: Take car ownership. When calculating weekly costs of a car ownership, you put in such things as fuel, insurance, wear & tear/servicing etc. BUT people do not include depreciation.
Apparently in Australia now half the cost of owning a vehicle is now gone in depreciation. Reason for this is simply because so many new vehicles are being sold, the demand for used ones falls rapidly. The average value of a brand-new car is almost 50% after three years of ownership!
If you think about it, same thing needs to be applied to housing/property.

Anyhoo, getting back on topic of dollar and its purchasing power, whole point to investing is obviously to grow your money/assets but also to beat inflation. That is, your purchasing power should never diminish! Im going to have to work out some new graphs and put them up here for comparisons sake.

Keep in touch for follow up post on this topic

Subprime lending

The whole subprime lending catastrophe (well not quite catastrophic) thats happening in the U.S. thats causing world wide share market fall, Im wondering how long it will last?

There's an excellent article by Ross Gittins in todays SMH (www.smh.com.au) about how it doesnt really affect the economy in any major way. That is we're still working, still producing and still consuming, so no cause for alarm about having a possible recession. Apparently he said that the 1987 sharemarket crash did not, I repeat DID NOT, result in a recession. Very interesting.

Ive gotta focus on increasing my income so I can actually have more to invest. Sitting on median salary is not cool.

Policy: Car - Wheel alignment once a year

As I experienced a flat tyre today, I was unable to simply get the tyre patched up, because one side of the tyre had worn out considerably and thus illegal to fix according to the tyre service centre. So I have to buy two new tyres as another one was also showing signs of wear.

Heres a new policy in relation to keeping your car well maintained and potentially saving you some cash. Get your car tyres/wheels aligned at least once every year. It should ensure your tyres last longer.

$250 out of pocket.. signing out!

Oh I wish I had some spare cash!!

To invest that is. The ASX has dropped almost 4-5% in the last week following drops on the U.S. market.

Here's what happened to the top ASX 50 shares.

AGK	AGL ENERGY	$15.10		-$0.37
AIO	ASCIANO	$9.20		-$0.32
ALL	ARISTOCRAT	$13.40		-$0.25
AMC	AMCOR	$6.71		-$0.14
AMP	AMP	$9.77		-$0.29
ANZ	ANZ BANK	$27.52		-$0.78
ASX	ASX	$46.55		-$2.50
AWC	ALUMINA	$6.92		-$0.38
AXA	AXA ASIA	$7.04		-$0.31
BHP	BHP BLT	$35.96		-$1.04
BSL	BLUESCOPE	$10.33		-$0.62
BXB	BRAMB LTD	$10.85		-$0.23
CBA	CWLTH BANK	$52.25		-$2.01
CGJ	COLES GRP	$13.80		-$0.71
CNP	CENTRO.	$7.75		-$0.21
CSL	CSL	$86.00		-$2.95
FGL	FOSTERS	$5.83		-$0.08
FXJ	FAIRFAX	$4.77		-$0.07
GMG	GOOD GROUP	$5.92		-$0.16
GPT	GPT	$4.50		-$0.01
IAG	INSUR.AUST	$5.52		-$0.18
LLC	LEND LEASE	$18.16		-$0.47
MAP	MACAIRPORT	$4.15		-$0.22
MBL	MACQ BANK	$73.70		-$8.80
MGR	MIRVAC GRP	$5.09		-$0.05
MIG	MACQ INFRA	$3.06		-$0.21
NAB	NAT. BANK	$37.08		-$1.28
NCM	NEWCREST	$23.84		-$1.06
NWS	NEWSCORP	$26.49	-	$0.00
ORG	ORIGIN ENE	$9.50		-$0.33
ORI	ORICA	$26.62		-$1.33
PBL	PUBL&BROAD	$18.02		-$0.50
QAN	QANTAS	$5.59		-$0.15
QBE	QBE INSUR.	$28.54		-$1.43
RIO	RIO TINTO	$91.20		-$1.88
SGB	ST.GEORGE	$32.80		-$1.70
SGP	STOCKLAND.	$7.62		-$0.11
STO	SANTOS	$12.94		-$0.36
SUN	SUN MET	$19.04		-$0.36
TAH	TABCORP	$15.92		-$0.33
TCL	TRANSURBAN	$6.82		-$0.36
TEL	TELECOM NZ	$3.96		-$0.09
TLS	TELSTRA	$4.49		-$0.11
TLSCA	TELSTRA	$3.02		-$0.10
TOL	TOLLHOLDGS	$13.75		-$0.48
WBC	WESTPAC	$25.55		-$0.65
WDC	WESTFIELDG	$18.89		-$0.16
WES	WESFARMER	$37.50		-$1.49
WOW	WOOLWORTHS	$26.55		-$0.74
WPL	WOODSIDE	$42.20		-$1.09
ZFX	ZINIFEX	$18.61		-$1.30

If the market continues to slide, or even it starts to go up, now is an excellent chance to get some 'cheapish' stocks. Just my opinion.

Hmmmm

Wow. August. Already!

July was uneventful, apart from the Pasha Bulker and the near-end-July stock crash. Anything else that may have happened I just can't care to remember.

I'll try to make 10 posts at least this month.

POLICY: Mind - Dont compare yourself to others

Simple. Compare yourself to yourself alone.

Quality vs. Quantity: Friends

I have a definite preference towards 'quality' friends.

Ive never been one to go make friends simply because I felt I wanted more. However, in social networking, having quantity can be advantageous.

TIP: Make good associations and respect your colleagues. Who knows it may serve you well.

Catch the train!

Ever had one of those moments when your running towards the train platform only to see the train shut its doors and leave. When you were oh so close to getting it. That train was going to get you to your party/work/interview etc on time. Now your going to be late.

Well now that you missed the train you were supposed to get, are you going to wait around for the next one? Uh yes??

Now apply this logic to that goal you missed today? or was it yesterday?

So you missed that slight deadline, for whatever reason, are you going to stop simply because it completely stuffs up your plans? Apply this to your missed goals and keep going. Its difficult, but you'll thankyourself later :)

Are you leveraging?

Ever read any entrepreneurial or business books. They all talk about leverage. Using leverage to grow your business and wealth.

So whats leverage? Definition: Leverage is using given resources in such a way that the potential positive or negative outcome is magnified.

Well a lot of small business grow and expand by leveraging their resources, capital, assets, knowledge etc. Okaaayy.. so what am I trying to say?

Well this post falls under my random thoughts label.

Well I was thinking of your local plumbers/electricians etc. They manage to start some good profitable businesses, after completing their apprenticeships, once they build their skills and enough experience, they make the big jump of going into business.

Alright.. so lets think about those people who are employed in a corporate environment, lets take engineers for example. How do engineers go about leveraging their skills and knowledge to start a business?? Can it be done? Honestly Im sure it can be, but I cant think how you would go about doing it.

Hmm something to think about.

Paradigm Shift anyone?

So I bought 'The 7 Habits of Highly Effective People" and I must say it looks like a ripper read.
Ive only read the first chapter and already he's got me thinking. He talks about paradigm shifts and stuff. More importantly he talks about making the inside-out change, about how being positive, doing external good things may not change who you are deep inside.

Let me finish this book, and I'll try to write up a little more on my thoughts.

Image....its such a relative thing.

Image conscious beings we all are... Are we???

Ignoring your teen Hilton wannabes, Do the rest of secretly admire, or to put it less politely, envy the success other people have?

How often is it, you wonder 'how come that dude got that promotion!?' OR 'How on earth did he/she manage to get that job, I know more than he/she does!!'

Right from the birth of a child, most parents (like it or not) try to compare their children to others'.
Initially its probably pride when you think your child is the most beautiful, or behaves very well, doesnt wake you up at night etc etc. Now allow interactions to begin, that child starts to play with other children, uncles, aunties etc. Its here that comparison and opinions start to take place on how you think that child should think, do, act.


Now in this modern day capitalist society, it is no secret that most of are trying to compete with the Joneses. We all seem to want that car, that mobile phone, that watch, that plasma/LCD television set, that career, job, MONEY!!

Most people I know have goals that they're trying to achieve. Some have done very very well in their short careers. But how often do we see people get side-tracked by getting envious or jealous by the 'instant' success of others? We lose sight of our original goals just so we can copy what the other person did and try to ride our way into the same success situation. Fact is some people do get a break in their lives that others don't.... Im not doubting this.

The world is so unfair isn't it.

Changes we see in others, the success we see in others, isn't some magical instant change. It is a slow steady act of working towards what it is that they desire. Its the slow steady addition of skils compounding away that gives a person that 'break' that so many of us crave.

Fact of the matter is that we're all successful in our own right. A lot of us practice, I'd say majority of us, practice good honest habits. Unfortunately we lose sight of our goals due to infinite number of reasons. Technically speaking these are called excuses, but Im guilty of this as well. As much as I try and go for my goals, I lose track and develop excuses. Prime example: My CCNP study has been lagging. Seriously lagging. My excuse is the rhythm just isnt there.

So whats my point in all of this!? Point is, respect yourself first. A healthy respect. We all have many great and varied qualities. Just because you and I are not famous for our achievements, it is no reason to feel small and guilty. Your image is yours alone. My image is mine alone. No one can copy or become who I am and same goes for everyone else out there. So if you are on a path to success via those goals you've written down, be patient, work at it slowly, have balance in your life and enjoy the journey.

Life is a beautiful thing. Enjoy it.



PS: This article is not as fluid as I would like it to be. Thus why its labeled under Random Thoughts

Unlimited Wealth by Paul Pilzer

An excellent book. Definitely recommended from my end.

Its not so much about how to get rich or anything but he talks about economics and our perception to economics and other issues. Fascinating read.

Success = Compound Returns!! Part II

I wrote a post on compound returns and financial success a while back.

Many of the PD (personal development) gurus out there quote Einstein who said something along the lines of 'compound interest is the 8th wonder of the world'. When you think abou it... its an incredible thing. Unfortunately, its application is always applied to money/personal finance, getting rich over the long term etc etc.

Well I was listening to a Jack Canfield CD this weekend, and he talks about developing 4 new (good) habits per year. Thus in 10 years you will have developed 40 good habits, which will aid you in your success.

Now if you develop one good habit and it helps you to develop the next habit, then its like compound interest. Your effective returns increase with time and effort. Brilliant.

As stupid as it sounds, its such a simple idea, yet we fail (well, me) to apply it. We seem to lose track of ourselves. So work on the fundamental foundation habits and work your way upto building that skyscraper. :)

Cheers.

POLICY: Health - Balance

I dont quite know how to put this, but I'll try.

Over the past two weeks I have felt that I am no longer in an equilibrium balance. I feel like a vegetable. Whoa? what!?

During high school, when I was studying for the HSC, I always heard people say, its important to keep a balance so as to avoid burn-out. There is a certain activity that I regularly fail to define as important. Your probably thinking... exercise, reading, daily goal revisions etc etc???

Its Socialising! I am what you would call an anti social person. This is an honest definition. Im serious! Im single, I only really have a select handful of friends and even then we very rarely do anything that would constitute as a social activity. Over the past 12 months I have tried to do something 'outdoorsy' like, watch a movie with my brothers (Outdoorsy for me is anything outside of home :p). Doing this really does make me feel good, because its a change in setting and scenery.

As easy as it sounds it rarely happens on a regular basis. Trouble for me is (here come the excuses) is that my work is based around 24/7 shift operation. There are sometimes weeks on end where I'll be working on the weekends and my days off fall on weekdays. *sigh*

Now take these couple of weeks as an example, even though sometimes my brothers and I have gone and watched a movie on weekdays, its not possible for at least another two weeks, due to their uni exams. (There is no way Im going alone to the cinema! But I sooo wanted to watch the new Pirates movie. Oh well.)

Now thankfully I actually budget for my socialising. I allocate roughly $30/week for this type of stuff. Now being the future type thinking person I am, I'd go as far as calculating how much interest return I'd be losing! This potential lost opportunity could be used instead to put more money away for shares, OR a motorcycle I may want in a years time, OR a new PC. The options and possible choices are infinite.

So whats my point? My point is, sure there are other 'non-social stuff' you could spend that money on, but dont! Use that money, that time, to give yourself a change. A much needed change from the everyday/weekly humdrum of work, life, home etc. I see it as a consicous health choice. Hopefully I'm not infringing on any copyright or trademark, but, Live hard Play hard.


My policy is thus;

1. Once every two weeks, go watch a movie with brothers/friends.
2. At least once every two months, catch up with friends for coffee/dinner/movie.
3. If I know the above is not happening, then at the very least go get take out. Try something new.

PS: This policy business is harder than I thought. Im not trying to win any votes here except convince myself that what I'm doing is in my best interests. I'll add more as I think them through.