Q: Why does nothing seem to work anymore? A: Maybe because it does not?

The reason that nothing seems to work anymore is maybe because it does not. Virtually every single organization seems to have been co opted and overrun with people that simply do not know what they are doing. Anyone of any competence is systematically purged from the organization over time for fear of making people of less merit ‘look bad’.

Part of what has driven this trend is the ultra low interest rates and The Federal reserve buying up all manner of assets, causing sky high asset prices. The end result, is ‘making companies look better than they really are’ has been rewarded by large multiples to stock prices and anyone that has sufficient control over such to award themselves stock or options on these large run up in prices, benefits from it.

In many cases we have companies where large parts of their profits are spent on stock buybacks; meaning any re investment in the business has to come from borrowing or not done at all. One example of this shocking development is Apple Computer ($APPL). Their recent 10K report shows record annual profits of $150 billion, and also a stock purchase plan of $330 billion. How can a company keep purchasing more stock than it makes every year? The answer is that is can’t, eventually any company that goes down such a path will have nothing on its balance sheet except treasury stock and debt used to buy said stock and a product line that will be all ‘hollowed out’ from lack of reinvestment in its business.  I am surprised that any company in the tech industry would engage in such financial engineering since within tech things can changed within the space of a few years. Blackberry in the late 1980s/early 1990s was the leader in pagers and messaging devices and within the space of several years it simply faded away, and that was without the drag of all these financial engineering gimmicks.

It is hard to stay in the front of technology, harder when one throws their profits away on gimmicks to boost stock prices.

Good Luck and Take Care

Louis J. Desy Jr. – Thursday, Jan 13, 2022

Would Economic Development Be a Better Use for Mexico Border Wall Funds?

            As I write this, 2pm on Saturday, December 29, 2018, parts of the US Government are still shutdown from since December 22 due to not passing a Continuing Resolution (CR) to fund all of the government, that includes funds for a border wall with Mexico. While the House of Representatives did pass a CR with some border wall funds, there has been no vote in the Senate, plus the President has said that he would not sign any bill that did not have the border wall funds of around $5 billion. At the moment, it does not even look or sound like there are any negotiations even going on to resolve the impasse between the administration and Congress.

            While this has all been going on, it occurred to me that maybe a better use of boarder wall funds would be a program of development for the areas of Mexico that are next to the border with the US so that people would be able to find work in Mexico and not want and/or need to somehow get into the United States to survive. A border wall with Mexico, if and when built, will not really do much to help anyone get a job or develop anything and even cost money to maintain for the decades to come. Economic development on the border areas has the possibility of making the areas in Mexico much better off than they are now, and the program could even turn some kind of a profit if done properly. In some quick research on the internet, it looks like the cost of a border wall is on the order of about $21 billion USD and expected to take 3.5 years, but some sources seem to think the total boarder wall would be around $75 billion USD in total.

            It seems that with all of the money spent on various government programs, that maybe spending $20 billion per year to improve the areas of Mexico that boarder the United States would be a good program to try. The hope is that at some point people arriving in Mexico or in Mexico would be able to make a decent living in those areas, plus maybe once the areas are improved there would be demand for good and services from the United States to those areas at some point. I also expect that spending money in Mexico to improve the areas in Mexico would get a lot more purchasing power and benefit from the money than building a boarder wall with much more expensive labor and material sourced from the US side.

            While this may all take a while to see how it works out, I expect the end results would be worth the effort and settle the arguments on the issue instead of having  the current budget and legislative grid lock with nothing getting done by anyone.

Good Luck and Take Care,

Louis J. Desy Jr.


Saturday, December 29, 2018