Is Apple's Next Product the iZune?

With the introduction of Apple's iPhone 5 nothing less than a debacle, this might be the time to entertain the heretical thought of shorting AAPL.

 

Here's my reasoning:

First of all, Tim Cook is no Steve Jobs--he lacks the humanism, the vision and the poetry Jobs had.

Second, the iPhone 5 could have been made by Microsoft--it was nothing revolutionary, just a facelift.

Third, there's now too much competition in the smartphone market and the competitors' hadnsets are not only better than the iPhone, they are outselling the iPhones.

Fourth, as everybody knows, the iPhone 5 has been a disaster on many counts.  The smaller port is going to force iPhone customers who have iPhone accessories such as docks, charging cords and clock radios into purchasing a lot of outrageously and needlessly expensive adaptors.  The new map feature is so bad that it's  driving people crazy and the forums are full of the worst errors: my pick of the worst of the worst is that the map shows a new airport for Dublin, Ireland, in a place that is actually a farm!  And the revised Siri has troubles, too: it can't distinguish between towns with the same name, confusing New York, TX with New York, NY.  And sales of the new iPhone fell below expectations.

Fifth, Apple continues to manufacture its products in Communist China adding $1.9 billlion to the U.S. trade deficit with that country. The Foxconn factories making the Apple products employ virtual slave workers being paid around $315 per month.  On the other hand, according to Reuters, in November 2011, Apple  announced that it gave six of its top executives bonus of $60 million each in company stock in the form of 150,000 restricted Apple shares that would fully vest in 2016.

And finally, as financial commentator Reggie Middleton pointed out recently on his BoomBustBlog, with all the lawsuits against Samsung [one of which, in Korea, Apple lost], Apple has shifted from innovation into litigation.  Accoridng to Middleton in an interview with Max Keiser, "Apple no longer out-innovates the competition, but out-litigates the competition. And that is a sign of decline."

My own view is that the days of spectacular growth at Apple are over.  We all know how how Microsoft stock stagnated between 25 and 30 for a decade or so; this could happen to Apple, too. No stock--just like no real estate--can go up forever. We learned that in 2008.  AAPL took a hit yesterday and may never see 700 again.

It looks as if Apple may now be entering its "Microsoft" phase of development i. e. making trouble-prone, user-unfriendly products.

What will Apple call its next device, the iZune?

Jagor

[Full disclosure: I own an iPhone 3GS and have no intention whatsoever of trading it in on an iPhone 5.]

More than two-thirds in U.S. live paycheck to paycheck

From Reuters, an article dated September 19, 2012.

More than two-thirds of Americans are now living paycheck to paycheck, according to a survey released on Wednesday by the American Payroll Association. The survey of 30,600 people found that 68 percent said it would be somewhat difficult or very difficult if their paychecks were delayed for a week. These results show Americans are still struggling with the recession's effects, the association said..

The main reason Kowalik's clients live paycheck to paycheck is that they have come to see luxuries as essential expenses, she said.

"Cable used to be a luxury. Now it's expected," she said. "People have an expectation that they should have a mobile phone, you should be able to have the Internet. People are going to have to change their outlook and put things into perspective."

The American Payroll Association, a trade group for more than 20,000 people who prepare checks, said it conducted the online survey between May and Sept. 7. It had a margin of error of plus or minus 1 percent.  Source 

Jagor's comment: It would appear that financial gadfly and former Wall Strate trader Max Keiser was right when he commented on his television program a couple of days ago that "The United States is a third-world country pretending to be a first-world country."  [e.g. Considering luxuries as neccessities.]

What happened? What is causing America to topple into third-world status?  The main culprit is the bogus doctrine of Reaganomics, whose main consequence was to accelerate the acquisition of wealth by the top 1% and accelerate the pauperization and improverishment of the ever-shrinking middle class.

So now, American society is starting to resemble those of Central Ameridan banana republics like Honduras or Guatemala or African petro-kleptocracies like Equatorial Guinea or Gabon, where most of the country's wealth and political power are concentrated in the hands of a tiny elite, while the overwhelming majority of the people strugle day-to-day in abject poverty.

We're not quite there yet, but when 68% of the American people are struggling to live from paycheck to paycheck, that's a sure sign that we're well on the way.


Jagor

A Third of Americans Now Say They Are in the Lower Classes

The percentage of Americans who say they are in the lower-middle or lower class has risen from a quarter of the adult population to about a third in the past four years, according to a national survey of 2,508 adults by the Pew Research Center.

 

Not only has the lower class grown, but its demographic profile also has shifted. People younger than 30 are disproportionately swelling the ranks of the self-defined lower classes. The shares of Hispanics and whites who place themselves in the lower class also are growing.

The survey finds that hard times have been particularly hard on the lower class. Eight-in-ten adults (84%) in the lower classes say they had to cut back spending in the past year because money was tight, compared with 62% who say they are middle class and 41% who say they are in the upper classes.
Those in the lower classes also say they are less happy and less healthy, and the stress they report experiencing is more than other adults.

About three-quarters (77%) say it's harder now to get ahead than it was 10 years ago.

Commenting on this study, gadfly Max Keiser put it succinctly on his television program, the Keiser Report, yesterday: "The United States is a third-world country pretending to be a first-world country."

It looks as if the United States has joined the ranks of the Latain American banana republics and the African kleptocracies.  Just ask the nefarious Koch brothers!

Jagor

Why They Hate Our Guts

Here's a headline and the first paragraph from a September 16, 2012, article on the CBS News web site:

Officials: 8 women killed in NATO airstrike

(AP) KABUL, Afghanistan - Afghan officials said a NATO airstrike killed eight women and girls who were out gathering firewood before dawn Sunday in a remote region on the east of the country.
The coalition said it believes only insurgents were hit.

Does anybody need any more reasons why the Afghans--and the Iraqis and the Yemenis and the Somalis and the Pakistanis--hate our guts?

If Obama would issue an executive order calling for an immediate cession of his assasination drone attacks on innocent Muslim men, women and children--including at least two American citizens who were murdered in Yemen with no due process whatsoever--Muslims might be throwing flowers at our embassies instead of Molotov cocktails.

Jagor

Here's How Mitt Got out of Paying His Taxes

In a recent "High and Low Finance" column in the "New York Times" entitled "A Tax Tactic That's Open to Question", Floyd Norris explains exactly how Mitt Romney and other plutocrats like him were able to finangle the law and pay such low taxes--unlike you and me.

It's a technique called "carried interest."

Read more to understand why little guys like you and me can't get away with this.

"The principal means [Romney] used to pay low taxes on his hundreds of millions of dollars in income was the technique known as carried interest, which allows managers of private equity funds [not little guys like you and me--Jagor] to treat most of the fees they receive for running the funds as capital gains rather than ordinary income.

"The technique strikes some — including President Obama — as outrageous, but it is legal under current law. Unless and until the Congress changes the law, Mr. Romney has every right to take advantage of the technique."

But there may be trouble in store for Romney and other plutocrats like him who have getting away with fiscal murder and cheating Uncle Sam. Norris concludes:

"Mr. Romney’s former colleagues in private equity may come to regret his candidacy, whether or not he wins. Few in the public understood this particular maneuver before the Bain reports were disclosed. Now many do. If and when Congress decides to reform the tax law, this area is likely to be a prime target."

Jagor

Romney Trashes "Politics Stops at the Water's Edge" Doctrine

According to an article in The Hill, Wall Street Journal columnist and former Reagan speechwriter Peggy Noonan on Wednesday said Romney struck the wrong note by calling Obama’s response to the deadly attack on American diplomats in Libya “disgraceful.”

“I don’t think in his statement on what happened in Libya last night and in his remarks today I don’t think he did himself any favor.  At a moment of crisis like this, I think it’s kind of a water’s edge moment,” she said during an interview on WSJ Live.

I remember--and I think Peggy Noonan does too--that not so long ago, when elected officials were patriotic, when they paid their fair share of taxes and when they didn't stash their millions in offshore tax havens, the unwritten but universally-acknowledged rule was:

Politics stops at the water's edge.

This policy was first enunciated by Republican Senator Arthur Vandenberg in 1947.

Vandenburg believed--rightly--that American politicians should always present a united front to other countries, despite political disagreements on their own turf. To air these disagreements weakened America’s show of strength.

Clearly, Mitt Romney--with his sleazy attack on the President--has thrown that doctrine into the garbage can.

I think at the same time Mitt Romney threw his chances of winning the election into the garbage can, too.

Jagor

Paper Money and Hyperinflation

Paper currency [i.e. fiat money] always fails any country that adopts it--without exception.  It is true now as it has been since the first paper money was issued by the Song Dynasty of China in the 10th cnetury AD:

The Song Dynasty in China was the first to issue paper money, jiaozi, around the 10th century AD. Although the notes were valued at a certain exchange rate for gold, silver, or silk, conversion was never allowed in practice. The notes were initially to be redeemed after three years' service, to be replaced by new notes for a 3% service charge, but, as more of them were printed without notes being retired, inflation became evident. The government made several attempts to support the paper by demanding taxes partly in currency and making other laws, but the damage had been done, and the notes fell out of favor.

The successive Yuan Dynasty was the first dynasty in China to use paper currency as the predominant circulating medium. The founder of the Yuan Dynasty, Kublai Khan, issued paper money known as Chao in his reign. The original notes during the Yuan Dynasty were restricted in area and duration as in the Song Dynasty.

However, in the later course of the dynasty, facing massive shortages of specie to fund their ruling in China, the Yuan Dynasty began printing paper money without restrictions on duration. This eventually caused hyperinflation. By 1455, in an effort to rein in economic expansion and end hyperinflation, the new Ming Dynasty ended the use of paper money.
Source; Fiat Money

Sound familiar?  All you need to do is change a few dates and replace a few names with "Alan Grenspan" and "Ben Shalom Bernancke" and the text would pretty accurately describe the dollar.

Then let's look at America's first attempt at paper money, Continental Currency, issued in 1775:
American colonists issued paper currency for the Continental Congress to finance the Revolutionary War. The notes were backed by the "anticipation" of tax revenues. Without solid backing and easily counterfeited, the notes quickly became devalued, giving rise to the phrase "Not worth a Continenteal."

The French were not far behind, issuing their paper assignats in the 1790's.  The idea was sound: the revolutionary government had confiscated all Church lands and would issue certificates worth no more than the total value of that real estate. Brilliant--paper money that was actually backed with more than promises!  But before long the revolutionaries began to run the printing presses 24/7 and the assignats rapidly hyperinflated into worthlessness.

The whole sorry saga is documented in a fascinating treatise that I had the good luck to read in high school. Its title is Fiat Money Inflation in France by Andrew Dixon White.  Read a summary of it.

The worst example of paper money failing a country in recent times was the Zimbabwean hyperinflation. In June 2008 the rate of price growth was 11.2 million percent per year and the country was issuing banknotes in the denomination of one hundred trillion dollars!

Source: Hyperinflation in Zimbabwe.

So, insofar as the U.S. dollar--or the euro or the Swiss franc or any other fiat money--is concerned, it's not a question of if the death knell will toll, but when it will toll.  And when it tolls, it will toll for thee...and me...

Jagor