Investment Education for the People (1)

Prosperity, ECONtrepreneurs! By popular demand I'm privileged to present The Delasol Group's Investment Education for people who talk themselves out of investing. "That's only for the rich." "One day I will..." "I'm too busy paying bills." "I don't know anything about investing." My hope is that you will be briefed with high quality information to enlighten even the casual investor. No investing experience necessary.

**You will, however need access to either Google Finance or Yahoo! Finance. It's free and you dont' even need to sign up! This is personal, practical economics, so you know it's hands-on. Throughout the Investment series we'll reference these applications (also available for your smartphone) for you to get used to using them for yourself.

A proper introduction to investing demands an understanding of risk. Straight up, risk is the possibility that you will lose; in this case, your personal investment of the Almighty dollar. Which brings us to our first rule of investing:

• Don't invest more money than you can stand to lose.

There's no such thing as a free lunch, and investing should not be viewed as the pathway to getting rich quick. Substantial returns are available to smart investors who take substantial risks. And what makes a smart investor? One who is armed with both common sense...

• If it seems too good to be true, it probably is. Suckers and their money are easily separated. Bernie Madoff's hedge fund promised double digit returns a year with grossly insufficient information as to how the money was invested. It was all just smoke and mirrors.

B. Money & his role model, Ponzi.

...and information (enter Delasol). Take a closer look at risk: there's Perceived Risk and Actual Risk; and their definitions are literal.

• The risk we perceived last week when Congress was fighting over the debt ceiling was based on what we were feeling: uncertainty, anger, regret, ambiguity, confusion.
• Actual risk works opposite it's counterpart (...usually..) and is measurable. Although the Dow Jones Industrial Index displayed all of our perceived risk (the market has been extremely volatile), the actual risk was much less severe.

What measure(s) you choose to determine how much risk you can stomach is up to the individual. To help, I present some valuation variables that budding ECONtrepreneurs may adopt to kickstart their research. For this part let's keep it simple and focus only on one stock, say McDonald's. Risk should be assessed for all types of investments, however, not just stocks.

• Profits: Also called Gross Profits, also called Earnings. It's the benefit of a business making more money than it needs to run itself. After accounting for expenses (overhead costs, taxes, et cetera) what's left over is the good stuff that Wall Street and Fox News go nuts about every quarter. Here's an exercise. Let's research profit for McDonald's. Using Google or Yahoo! Finance, enter in the ticker for McDonald's stock. The ticker symbol is MCD. Both services offer you the option to look at additional Key Statistics. Follow this to Mickey D's profits. What is the amount?*
• Price per Earnings Ratio: Aka Price Multiple, aka Earnings Multiple. If a company issues stock, the P/E ratio can be another useful resource Calculating it is unnecessary, as it's normally given as a stock's Key Statistic. Generally speaking, the higher the P/E ratio, the better. Warning: comparing P/E across industries is not wise...so compare MCD's P/E ratio to say, Wendy's (WEN) and not Toyota (TM).
• The 52-week High/Low: The highest and lowest point at which a stock has closed (at the end of the trading day which is from (9:30A - 4:00P Monday thru Friday). A good perspective when making a decision on what you feel the intrinsic value of a stock is. Google and Yahoo! also give the daily high and low as a show of the stocks volatility.
• Beta: The standard measure of a stock's volatility. A beta of 1 indicates a stock's price is in tandem with the overall market of stocks (the Dow or the S&P, for example). A beta of less than 1 means a stock will be less volatile than the market; and a value greater than 1 means, you guessed it, more volatility and fluctuation. Shop around with this one: Yahoo! says MCD has a calm beta of .36. Google says it's more rowdy and gives a value of .48. You be the judge.
• Earnings per Share (EPS): Another lovely measure of profitability that is misleading if not examined closely. Company A and Company B have identical EPS. But Company A achieves this by taking on debt. Company B uses it's profits more efficiently and takes on more (if smaller) investment without the debt. Knowing this can help you make a more informed decision on whether to invest in Company A and B.

Try this over the next week: think of companies you like and search within Google or Yahoo! Finance and see if they have a ticket symbol. Then, think of a competitor. Compare and contrast the two companies on the basis of profitability, volatility, and type of business (what they make, if they're any good at selling it). Consider the value you'd place on the stock (in dollars) and see if it's comparable to the market price. You may (not) be surprised!

After you've had a chance to digest this, our series will continue focusing on Types of Investment Securities available besides stocks.

Have comments? Please post them!
Have questions? Check out www.investopedia.com or send me an email!

prosperity,

dls




*McDonald's profit as of 13August2011 is $9.64 billion.

Notes on a Scandal: Oil Spill Monsters

Rumor has it that the Global North - rich in human resources and ingenuity - has systematically exploited the Global South - rich in natural resources - for personal gain. This is not entirely true.

"Global South" and "Global North" are alternative designations for developing countries and developed nations, respectively. It's a nod to the United Nation's Human Development Index; a low score (<0.5) indicates there's room for economic and social improvement. The geographic location of said countries, however, is approximate: e.g., Nigeria (0.4) is technically in the Northern Hemisphere, as New Zealand (0.9) and Australia (0.9) are in the Southern.

The truth is that nations of the Global North have natural resources as do their Southern counterparts. However, an economic principle called Comparative Advantage allows some countries (in the Global North) to exploit the benefits of world trade (globalization), albeit often at the expense of each other (read: the Global South). So Florida becomes a major producer of oranges, although the citrus treat is indigenous to Asia. New agricultural methods, technology and lower costs can remarkably make "Florida oranges" a household name.

Oil doesn't make one think of the United Kingdom, but believe it or not, it's rich in it! Because of comparative advantage, it's cheaper for a country rich in applying the human resource to technology to import it from say, the Persian Gulf or the Niger delta. Since the early 1900s, the UK has had a presence in the global oil industry. Through a series of mergers & acquisitions over the years, we have present-day energy conglomerates BP and Shell. The two UK energy firms have had their share of ups and down in the global markets, including anathema to Big Oil: a spill. Or worse yet, an environmental catastrophe.  Volatile stocks, environmental damages and consumer confidence have left both firms humbled. Or has it?

BP:

• Most recently claimed culpability in the Deepwater Horizon oil rig disaster last April. The Consequence: BP has to cough up $20 billion to compensate residents and businesses for the damaged coastline. The Rub: The claims & distribution process for victims is slow and unjust. Only 25% of the BP compensation fund has been paid out in the last year! Delasol filmed on location this Spring alongside a Native American community in Louisiana.
• Profits: Up 21% from the previous quarter. Consider that rising commodity (gas) prices is a boon for BP; though this is only part of the story.
• Production is down 11% from the same time last year. The company said the damage to its reputation as a result of the Gulf Oil Spill could hurt global business prospects now and in the future. Nonetheless, a new joint venture in India in is the works.
• Share Price (BP) as of August 8th closed nineteen cents above $38 on the New York Stock Exchange (NYSE), hovering closest to it's 52-week low of $34.82 last August. Not a good indicator of investor confidence.

this ad does not reflect the position of the delasol group, but it was both effective and apt.

Shell:

•  After considerable pressure from the United Nations and a lawsuit on behalf of a Nigerian king, the Royal Dutch Shell company has accepted liability for two oil spills that devastated a community's freshwater supply in 2008. At least 7,000 oil spills have occurred in the area since Shell first discovered the Niger delta oil in 1956.
• Profits (for the second quarter) are up 97% from a year ago, again highlighting the industry's heavy dependence on retail oil prices.
• Production is down year-on-year, but relative to its competitors, prospects are looking up for Shell. Although many oil-producing nations restrict the movement of Big Oil, there is hope in the profitability of the $20B Pearl project in the Persian Gulf state of Qatar.
• Share price (RDSA) is doing relatively (to itself and other oil stocks) well and trading within an acceptable range for the stock on both the NYSE and the FTSE 100 index in the UK.

So are oil spills a cause for shame or the impetus to fame? Shell has fared well while BP has struggled, but what's the end game for these firms? More production leads to higher profits and a greater number of environmental incidents. If handled ethically (and what is that?) Big Oil can bring the change we want to see. It seems to be a good start for Shell to own up to the land and it's people before its own bottom line.

your comments are welcomed!
dls

Pass the Peas, Please or Welcome to the Hotel California

To reduce debt or raise debt? That is the question...

Debt and Congress go back like babies and pacifiers. Or rather, more like babies and pacifiers laced with cayenne pepper. The two simply do not mix. When fiscal year spending is being determined in Congress, it's outside the sphere of influence the Treasury has over it's awe-inspiring $14.3 trillion debt limit. Thus, the last six months has been a slow brewing maelstrom of media soundbites and political face-offs over how to position the band aid and what shade of neon it should be.

First quarter GDP grew by an annualized 1.8%. Historically, we're more a 2.5% growth nation. With unemployment way up and structural unemployment running rampant, the tax base is not growing. In my humble opinion, Republicans are correct in being against a tax increase. Where will the money come from? The rich have it, but not like that anymore. America's imperative to "Eat it's peas" (see the President's video clip below) means that the fun is over and it's time to get down to deleveraging. There's no light at the end this tunnel without coming face-to-face with dealing with our drunken obsession with debt.

Deleveraging is debt reduction and debt reduction is obviously our only option. Nevertheless, it's a tough choice, but the big debate in Washington is whether it's the only choice we have. Some lemons have been given to us to make lemonade (albeit without the benefit of sugar), such as high petrol prices that increased by almost a dollar in the first half of this year. Or consider inflation, which is eating away at consumer purchasing power, meaning we leave from the stores with fewer bags, if any. But the only things we are buying these days are veggies: long gone are the months-long binges on life's indulgences. Wallets are flattened, belts are tightened, as we come to know first-hand what eating, praying and living healthy feels like. Supply and demand gave us the lemons. Sheer chance presented us with the obligation to be economic stewards of all this wealth we have amassed - come what may - and be accountable for gorging ourselves on dessert first.

As the Treasury's "D-Day" of August 2nd quickly approaches, the looming question is if the U.S. of A. will be able to pay her bills. If not, it's default city. Since inflation is up and demand never sleeps, the American infatuation with credit presents an alternative to debt reduction. Just increase the debt limit. Otherwise, soldiers, pensioners, China, somebody isn't going to get paid. And just like me and you, if there's more going out than what's coming in, Uncle Sam will have to issue a few I.O.U.s, prioritize creditors, and pay on a "get it while it's hot" basis.

The Great Debate between Obama and the Republicans centers on who's the best at bluffing. Do we dare let the greatest country in the world's sovereign debt plummet to sub-AAA status and become as *gasp* Greece?? Or will even more debt fix our deleterious debt dilemma?

Neither, pardon my facetiousness. This is not an economic problem, but a political one. Greece is bad, but not as bad as the U.S. which can't lower unemployment, raise production or export goods to save our credibility in the global markets and is quite possibly staring a double-dip recession in the face. If August 2nd puts us into a tailspin it's only because we were graciously saved the embarrassment of it not happening in the previous 24 months since the Great Recession ended. Plenty of time - especially since the debt talks began in earnest in January '11 - to think of practical ways to deleverage. Like putting both public and private spending in check. Like shredding all access to easy credit. Like stepping back from the table. If you're up to your eyeballs in debt and you call Visa to issue more, they'd ask how the sanatorium got their number.

Get smart: America boasts a AAA rating alongside other countries such as Germany, France and the UK, all of which have lower debt levels. If ol' Uncle Sam was Samuel Jackson, his debt to income ratio would have him paying cash and showing 3 forms of ID to buy gum. A credit downgrade is inevitable and has been for a while since spending levels are off the meat rack. Deleveraging is our best bet to return to the long-term economic growth rates we've become accustomed to. Our vegetables, while unpopular and unpleasant, make us healthier, wealthier and wiser over time.

However, the media likes to push financial Armageddon, "the end is nigh" and blah blah, so I'll leave you on this "note" (double pun intended) regarding our raging lust for debt bound for default:

"You can check out anytime you like, but you can never leave!"
- the eagles

Prosperity and practicality,

dls

Labor Pains

Despite months (what's felt like years) of the stalemate between players and owners in the National Football League, the end is surely in sight.

Collective bargaining - or labor negotiations - is as American as apple pie. It gives workers (football players) a voice to sound off to the employers (league owners) if they are unsatisfied with the pay-for-play structure. The current quagmire thrusts workmen's compensation and two lawsuits into the lockout limelight, the most pronounced since 1987. If the last four months of athletic uncertainty have left you frustrated and anticipating soundbites from Roger Goodell and DeMaurice Smith, let's apply some economic theory to the situation for peace of mind.

1. There are 32 owners in the NFL. 24 (75%) are needed to agree on a league-wide labor contract. Constrast this with 1900 players which require a 50.1% unanimous vote (951 men at least).Collective bargaining usually covers issues like hours, wages, benefits, working conditions and the like, so one can understand the player's hesitation to accept a longer regular season. Statistically, more games played increases the liklihood of more injuries. In the world's most protective (in terms of gear) sport, safety is the number one issue! The bid to add two more games was on the table at the owner's meeting, as was an effort to dissuade players from gaining from California's notoriously biased support of employee Workmen's Compensation claims. Economic game theory (pun intended) reveals that owners have it in their best interests to emphasize the number of extra minutes played rather than extra dollars made per season.
2. There's also $9.3 billion in annual revenue at the forefront of negotiations. Owners were able to agree on a supplemental revenue-sharing agreement to take a share of the money back from the players. Under the new CB agreement, players get roughly 46-48% of revenues, down from a 54-59% range in the early 2000s. Oddly enough, the NFL Player's Association had little to say against this measure. But no NFL franchise appears to be unprofitable - a MAJOR incentive to end the insanity - and the new agreement says that while rookies will make less (harder salary caps), retirees will see an increase in benefits (longer pensions), while current players will hardly take notice (Pareto efficient save for the new guys). Any complaints?

Without the profit struggles that the NBA faces - Commissioner David Stern says that 22 of the leagues 30 teams lost money last season!! - the NFL can have a win-win season for players and owners alike if they can simply focus on the game to get along. With the birth of the 2011-2012 pigskin season as early as next Wednesday if the egos can get over themselves, the labor pains never hurt so good.

Cheers,

dls


ESPN.com, the NFL Lockout Facebook page, and the Journal of Sports Economics were the primary sources for this blog.

Addressing Welfare: To Whom it May Concern

Dear Poor People:
Dear Drug Users:
Dear Poor, Drug Users:

Last week on Facebook, a friend posted a controversial headline that sparked a lively cipher of opinions & facts about the state of America's welfare class. Specifically, friends chimed in on whether or not people on welfare should be drug-tested in order to apply for and receive benefits. Florida Governor Rick Scott trailblazed a new law that will commence the program beginning July 1; the first of its type in our country!

DLS founder S. Holmes studies America's indigenous welfare class.

I contend that this is "controversial" because ideas about economics can be either Positive or Normative. Positive economic statements are factual in nature; that is, they can be tested (E.g., "Randomly testing welfare recipients in Florida will result in a majority of positive outcomes"). Normative economic statements are opinions, and while popular, are in essence reflective of a person or group's values (E.g., "People on welfare deserve to be drug tested more often than people who are not on welfare").

One of Scott's campaign promises was to unburden the Florida taxpaying class by reducing the benefits extended to TANF (not Federal food stamp) recipients. TANF is a Federal welfare program - that by design - limits the amount of time people can receive benefits (the T stands for 'temporary'). The 50 states are allowed to allocate TANF funds how they see fit. In Florida, the Department of Children & Families (DCF) decides who's eligible. Without argument, rampant drug addition (and otherwise riotous living) among persons receiving cash transfers from working citizens should be checked and corrected. Just last year, the Los Angeles Times reported that $69 million was squandered from the state's coffers on gambling trips to Vegas, Hawaiian vacations and pilgrimmages to the Disneyland Resort.

Scott's seminal law in Florida will require recipients to complete a 3-step process:

1. Pay for the drug test out of pocket.
2. Pass the drug test to qualify for benefits.
3. Test negative periodically to continue receiving benefits.

If a person tests positive, they are denied benefits for one year after the first infraction and banned three years after the second.

The goal here (presumably) is to lock out people who would be most likely to spend cash on drugs. That way they can focus on getting clean and holding a job. Thus the tax burden is lessened, Florida's unemployment rate falls, and people have more cash and less dope to contend with.

Delasol presents a few fallacies that accompany a purely Normative view, just for discussion's sake. Not that Scott is wrong to implement such a program, but is it really addressing "the welfare problem?"

• Yes, you read correctly, people desiring welfare and work must pay for the drug tests out of pocket. Not exactly an incentive to go..and without jobs, where does this money come from?
• Assuming a positive approach to Governor Scott's view that people on welfare are disproportionate drug users, we can test this. No need, actually, since the state of Florida ran a pilot testing program in 2001. The results? If you use drugs in Florida you are just as likely to be on welfare as you are to be employed*.
• A 2011 report on cost effectiveness** of such a program revealed that taxpayers end up paying more to execute drug testing on this level (without suspicion) than less humiliating methods that spare the dignity of people who choose to "just say no."

Is there a more direct way for Floridians to address the welfare problem? Or does the focus seem to be more on identifying the drug problem by class??

You can watch a clip of Gov. Scott's CNN interview with correspondent T.J. Holmes here.

Personal, practical economics. For everyone.

dls

*"No significant difference" was found among drug users by class or employment status.

**Conducted by the Center for Legal and Social Policy (CLASP)

A Native Inquiry: Seeking Economic Justice in the Bayou

Towards the end of 2010, a financial management firm run by a former colleague of Delasol founder, Suneye Rae Holmes, approached us with a unique project: providing economic education to victims of the BP Deepwater Horizon oil spill who are of Native American descent. We were of course intrigued, as The Delasol Group was organized to galvanize people of color towards economic parity. Since that initial meeting, the Fiduciary Management Group (FMG)** has made an apprentice, and a believer out of Delasol. We've been hands on at ground zero: greeting potential claimants, answering questions, explaining terminology, exchanging life stories, parsing through documents and educating the masses. People have told us the dogged truth on how their lives have forever changed since this catastrophe. The need for reparation is great, but the story is not to end there. On this, the one-year anniversary of the BP Oil Spill, we invite you to view our vlog documentary on our work that is ongoing in the Gulf of Mexico; the first of its kind on the ECONtrepreneur. The Delasol Group is committed to partnering with FMG and the U.S. Government to see that this community gets the compensation and education it rightfully deserves.

Personal, practical economics. For everyone.

Prosperity,

delasol

**The link above is the correct web address for Fiduciary Management Group; on the documentary film credits, the web address is incorrect. Apologies for the confusion. dls.

Africa's Heart of Darkness

Consider this post the Rosetta Stone on the turmoil in Egypt.

Millenia ago Egypt thrived as a global economy because of natural and geographic considerations: Africa's diverse resources could trade with ease from Egypt's location on the northeast corner of the continent; and the drying of the Sahara forced migration to more lush region, such as the Nile River Valley. From the start the economy was planned, meaning a central figure made the economic decisions for everybody. In Egypt's case, the pharaoh appointed a bunch of bureaucrats to oversee all of the industry: Mining, fishing, farming, slavery, warfare, energy, commerce, et cetera.

Unlike Cuba, the government didn't tell people what they could and could not produce. In Ancient Egypt, this was likely a decision made by the innate capabilities of the farmers and of the land itself. Not unlike Cuba,
Egyptian bureaucrats remeasured and reassigned the land to farmers after every rainy season based on past crop yields, assessed the expected crops for the next harvest, collected part of the produce as taxes, and stored and redistributed it to those on the state's payroll.

If your family was successful, you didn't live hand-to-mouth, and could store surpluses for future use. If you were really wealthy the men in your family may have access to the trading route to use extra goods to barter for others on the market. A market is anywhere buyers and sellers meet, and seeing as how Egypt had both command and market economy characteristics, it's what's known as a mixed economy.

To be fair, the percentage of produce and even manufactured goods which reached markets was probably small. Most people living over 8,000 years ago found personal financial gain of marginal importance to the tests of survival of the day. But we already know that international trade provided part of the economic base for the developing Egyptian high culture (e.g., wholesale merchants acting for the crown) that has influenced every civilization since. The extent to which private individuals were involved in trading goods and services cannot be estimated. Major changes to the early barter system began to with the influx of foreigners to Africa's shores, and the introduction of coined money in the Late Period. As expected, market forces (natural Supply and Demand) seem to have played a role above all during the periods when the Government was in upheaval.

Well, the government is certainly in upheaval now. Amid an ongoing promenade of marches, rallies, civil disobedience and riots people of all faiths colors, and backgrounds have gathered to protest a plethora of economic ills; namely the rising unemployment rate, creeping steadily back to 10%; the high cost of food because banks are now closed due to the local instability and the demand for groceries is outstripping the supply to the shelves; low wages have sparked flames of public outrage since 2004, but are gathering oxygen for the long slow burn today; and steadily falling Gross Domestic Product growth when they need it most.

The focal point of all of this righteous angst is President Mohamed Hosni Mubarak, the "Pharaohonic" figurehead in power for the last 30 years. Sounds like Zimbabwe (and President Robert Mugabe) all over again.

What is the eternal unrest that darkens Africa's heart? Despite birthing the
race of mankind, the governments of the Motherland quarrel against the very

people they were formed to serve, making a mockery of the notions of independence, sovereignty and civil and human rights. For years, Zimbabwe was Africa's "Golden Child" excelling far beyond its expectations as a former British colony. Has a history littered with slavery and marginalization based on color and culture poisoned the population of potential leaders of the people? Or are the vices and bad economic decisions of government officials an individual flaw (repeatedly observed) that rests in the heart of the person and not of the people? Is ECONtrepreneurship the responsibility of the person, the government, or the colonizer? We'd love to hear your thoughts.

Our hopes for a brighter Egypt, and thus, a more prosperous Africa.

dls









* Thanks to this summary of Ancient Egyptian Economics for research, Bloomberg BusinessWeek 

The State of the Union 2011

We revisit the President's annual address on what's going on in the U.S. and provide a briefing for busy ECONtrepreneurs.

After the opening preliminaries to thank us, shoutout the audience and squash partisan politics, he delved into some heavy positive (verifiable) and normative (opinion) economic information on Innovation that was broad in scope but riddled with detail.

President Obama rightly noted that technological advances have forever changed how we live, (look for) work, and play. While it's false that America is the largest and most productive economy (as based on Gross Domestic Product data, which is generally accepted in this country), it is true that the economy has escaped the snares of the recession and we are in the upswing of a recovery phase. This is the area of the business cycle that follows a downturn in economic activity. America is now progressing towards a new peak, led by corporate profits, net exports and (hopefully) employment. In the graphic below, "Real Output" is another name for the Gross Domestic Product.

Next, he considered our technological capacity to the education initiatives of boom economies such as India and Japan. While advances in gadgets and digital medium has largely contributed to U.S. economic growth over the last thirty years, India and China invested in their children, resulting in a smarter, more effective labor force. Consider the implications if America were to follow suit, coupled with our technology. Obama called for a reinvention of our energy policy to spearhead U.S. economic growth into the future. His vision is to develop the most able researchers and the most green policies on the planet. Think solar- or water-powered automobiles in the next decade. Not just more jobs, but more high-paying jobs. By 2035, he challenges the country to get 85% of its energy from renewable sources such as those just mentioned.

And speaking of education: it is positive information that investing in education is a predictor of the economic performance of a nation; we are more productive, live longer and engage in less crime. Race to the Top is an Executive-level initiative that provides monetary rewards for ideas to improve student achievement and teacher quality at the state level. Thrifty ECONtrepreneurs will dually be on the lookout for the now-permanent Tuition Tax Credits. A tax credit is an amount you are allowed to subtract from what you owe in taxes. So if you spend money on a student's expenses, you may qualify for the American Opportunity or the Lifetime Learning Tax Credit; incentives to consider the long-term implications of what higher education can do for you.

The President then went in on the ongoing debate on illegal immigration and demanded that we suffer the uncomfortable dialogue on national etiquette and policies to protect America's labor force and best economic interests, the nation of origin of the employee nonwithstanding. He normatively opined that kicking out the undocumented young intellegensia could result in vacant university seats or a decline in small business formation.

Infrastructure in the 2011 address now refers to both physical and digital innovations: American needs to improve both its interstates and information highways. Obama repeated a plea to push forward with plans to build a high-speed transportation system to compliment the high-speed internet which now transverses our country's citified and rural terrain. Public transportation investments can go a long way towards extending job mobility and business growth on the homefront.

The last point was a tricky one: to lower the corporate tax rate without adding to the deficit. How? Doubling exports by 2014, parterning with India, China and South Korea to add to the domestic workforce, enforcing our trade agreements (especially in the Asia-Pacific region), continuing to amend legislation as necessary to protect the American people (think health care and credit cards among others) and encouraging that "key word": Innovation. American exports are notoriously low compared to our imports, one big reason why our GDP (and therefore our productivity, as Obama pointed out) lacks behind that of the European Union.

Obama then began to speak in detail on how these ambitions could be reached, most notably a 3-year freeze in annual Federal spending, so as not to increase the deficit any more. The estimated savings, he warned, while good, will not be enough, so we much move to cut excessive spending wherever it is found, not just in the domestic arena. A powerful motivator for fledging ECONtrepreneurs who are seeking to maximize their futures, and not capitalize on the offerings of the present alone. While Medicare and Medicaid will likely take cuts, he wants to focus on continuing or increasing benefits for those Americans who require assistance to sustain themselves: retirees, the indigent and the impoverished. Other ambitions such as simplifying the tax code, keeping government progressive and of course, not allowing bipartisan politics to hinder our overall growth.

What can the State of the Union 2011 do for you?




cheers,

dls

Goudou Goudou

As we welcome in the new year we can reference the Andinkrah symbol, Sankofa:

Literally translated from the language of the Akan people (W. Africa) as "it is not taboo to go back and fetch what you forgot;" we need to know where we came from to know where we are going! With that, the Delasol Group begins 2011 looking at the progress and setbacks experienced by the Haitian macroeconomy since the devasting earthquake one year ago.

Haiti is a country steeped in stories of triumph and scandal. Located on the eastern side of the island of Hispanola, the French exploited hundreds of thousands of African citizens to develop sugar and coffee plantations; the most profitable of all the French colonies at the time. In 1791, when slaves outnumbered colonists 10 to 1, a violent uprising resulted in the country becoming the only nation to gain independence following a successful slave revolt. For the African Diaspora, Haiti represents hope against all odds and freedom by any means. The new flag was France's, turned on its side and devoid of the white stripe, for obvious reasons.

Prior to January 12, 2010, Haiti was the worst off economy in the Western Hemisphere. Over half the population lived in abject poverty. The majority of production is agricultural, so the Carribbean nation is subject to frequent natural disasters that completely disrupt commerce. In 2008 alone, four hurricanes ripped through the island (Fay, Gustav, Hannah and Ike) in less than a month's time, causing billions of dollars worth of damage. The lack of technologically-efficient industries and domestic investment means that aid and financial captial to rebuild must be obtained from external sources.

One year ago today, the country was brought to its knees by the most devastating earthquake in two centuries. Close to 300,000 human beings lost their lives and the total cost of the disaster was estimated between $8-14 billion by the Inter-American Development Bank*. So what, if any, is the upside for Haiti?

A strong dose of resilience for starters. The term 'goudou goudou' (pronounced "goo DOO goo DOO"), the title of this post, is Creole slang for the disastrous earthquake. Saying it quickly over and over mimics the sound of buildings unrelentlessly shaking free of their foundations. A lighthearted attempt to bounce back from the darkest hour in recent history.

Another bright spot is legal measures that improve trade. The HOPE Act manifests an appropriate acronym: the Haitian Hemispheric Opportunity though Partnership Encouragement Act; specific legislation aimed to increase exports of Haitian goods and services (namely, apparel) to wealthier customers in the U.S. A very BIG deal, because exports are a boon to a country's production capacity, or GDP. While great in theory, HOPE I (passed in 2006) needed some tweaking, which necessitated the need for HOPE II (2008); legislation that broadened the scope of what types of goods are traded. Early evidence supports a positive response to HOPE II initiatives.

A third area is external aid. To date, world governments have committed more than $9 billion, including over $1 billion from the United States. But perhaps the best way to help a person or a country in need, is to help them help themselves. We here at the Delasol Group are staunch advocates of learning from experience and education: rather than depend on others to solve our economic problems, what common sense tactics and bold steps can we take to secure our own future wealth? Will Haiti summon the Sankofa principle to create a better tomorrow for its children? The selection of an incorruptible, solvent government by the people would be a step in this direction. Unfortuantely, there's still much work to be done.

Peace and Prosperity to Haiti!


delasol


*Established in 1959 to support development efforts in the Caribbean and Latim America to reduce poverty and income inequality. Visit their site here.

More info on the HOPE ACTs (PDF file)