The Daily Reckoning Presents

The Attack on the Washing Machine

You can chart the course of human progress in terms of how clean our clothing is. In early times people used animal skins, had no change of clothing, and had no soap. By Adam Smith's day, soap had improved in quality, was produced industrially, and was becoming available to the common man.

In fact, the Industrial Revolution, which is usually discussed in terms of iron, steam, and factories, was actually all about bringing products like soap and underwear - previously only available to the rich - to the common peasants.

Only after WWII did electric automatic clothes washers displace hand- cranked machines. Then detergent replaced soap in the washing process, and competition resulted in much more effective products.

In 1956 the product Wisk was launched as the first liquid laundry detergent. And in 1968 its famous "Ring around the Collar" ads came along.

Other companies followed with products that were even better. Between the 1920s and the 1970s, washing clothes went from a grueling full-time job to a weekly activity that could be accomplished by young children.

Demographic researcher Hans Rosling has called the washing machine the greatest invention in the history of the Industrial Revolution. It liberated homemakers from boiling water and washing clothes. For women around the world, it makes the difference between poverty and prosperity.

Only two generations ago, nearly every mother in the world slaved at washing clothes. Today, no one in the developed world does this. Instead, they can read, do professional work, teach children, hold parties, and generally apply their time to building civilization. As Rosling says, "even the hard core of the green movement use the washing machine."
But government is working on systematically reversing these advances - attacking the washing machine's workings at the most fundamental level.

In 1996, Consumer Reports tested 18 models of washing machines. It rated 13 models as excellent and 5 models as very good. They found that with enough hot water and any decent laundry detergent, any machine would get your clothes clean.

In 2007, Consumer Reports tested 21 models and rated none of them as excellent and 7 models as poor; the rest of the models were rated mediocre. The old top-loading machines were mediocre or worse.

Consumer Reports found that in most cases your clothes were nearly as dirty as they were before washing. The newer front-loading machines worked better, but they were much more expensive and had mold problems, and you cannot add a dropped sock once the machine is started. None of the top-loading machines performed as well as a mediocre top-loading machine from 1996.

The government's meddlesome hand is at fault. Between 1996 and 2007 the government's energy-efficiency standards were dramatically increased. In order to meet those standards, manufacturers had to switch to the inferior front-loading washers, which are more "energy efficient," and to design models that used less water. Less water in the machine means the machine uses less energy to rotate the clothes with the water and detergent. It also means less rinsing, which is a vital component to getting clothes clean.

The result is that clothes come out of the washer still dirty. The easy stuff like sweat is mostly removed, but all the tough stuff, like grease and body oils, largely remains. Most people are unaware of this problem, either because they have an older model, they don't do their own laundry, or they are just oblivious to this type of thing.

Among those who face this problem, the answers are few. Some do multiple smaller loads with larger water levels, but of course this results in higher - not lower - energy and water usage. Others have tried to solve the problem by using more detergent, but this usually does not help - it can make the situation worse - and it reduces the durability of the machine - yet another inefficiency.

So there you have it. Politicians, environmentalists, and meddlesome bureaucrats have teamed up to dream up another attempt to serve the public interest. Left to its own, the invisible hand of entrepreneurial competition would have naturally made doing laundry easier, better, cheaper, and more efficient. Instead we have more expensive, more inefficient, and truly ineffective clothes-washing machines.

Then there have been changes to laundry detergent, which have in combination with the "energy efficient machines" led to a return of "Ring around the Collar."

The invisible hand of the marketplace is the foundation of a free society and the source of prosperity. The invisible fist of government is the foundation of plunder and the source of social problems.

If we chart social progress by clean clothing, it is clear that we are headed backward in time. But the trend is easily reversed with a small change toward laissez-faire.

Regards,

Mark Thornton
for The Daily Reckoning

Cuba on the rise by Gary Scott.......

Cuba as Americans Shift Abroad

Many years ago an article about Ecuador entitled “Americans Shift Abroad” posted at this site.

The article said:  “60 million baby boomers will begin to retire in just a few years. Many of their pensions and social security will be severely squeezed by inflation, leaving these people with one of five options.

#1: Keep working

#2: Move to less expensive areas within the US

#3: Export their retirement

#4: Live in near poverty

#5: Die

This is why I also believe in Ecuador.  Imagine this.  60 million boomers will retire over the next 20 years. We boomers are the most spoiled group of consumers as a demographic class that has ever existed on earth. We were promised the world. We were given the world. Now the magic is about to disappear.

Assume that 10% of these will decide to move to less expensive countries. That’s 6 million people. Where is the most likely place to go? Eastern Europe offers great potential but are long distances from the US .

Canada is out…too expensive and too cold. Most people will head south.

Mexico stands to be #1, but prices there are rising quickly and there is a lot of anti-gringo sentiment. After all there have been numerous Mexican-American wars. The building of a fence across the border will not help either. Yet it’s still probably the place that will benefit the most due to location.

Cuba . By then will be ripe and good as well. A great place to be when you can assume no negative political circumstances. The low end Caribbean is also good except for those darn hurricanes that will put lots of people off…plus many water and transportation problems and the fact that few of the islands have a real infrastructure.

Security concerns have diminished American and Canadian interest in Mexico. We have seen many readers shift from Mexico to Ecuador.   So we have continued asking…”What’s next?”

Before I make this upcoming prediction… let me add that Merri and I are usually looking seven to ten years in advance.  We have been in Ecuador for 15 years, but the boom did not start until 2008.

We are pioneers usually in before the boom and out before the boom peaks.

With this in mind we have been keeping our eye on Cuba.

Cuba has low cost, low cost…. incredible access to the USA and offers some interesting services such as medical care.

Recent changes in Cuba have led us to start our research.   An April 16  2011 BBC article entitled  “Cuba President Raul Castro seeks 10-year term limits” reinforces this decision.

The article says:  Raul Castro realises Cuba’s communists “made real mistakes out of idealism”, the Cuban President Raul Castro has said top political positions should be limited to two five-year terms, and promised “systematic rejuvenation” of the government.

President Castro was speaking at the start of the first congress of Cuba’s ruling Communist Party in 14 years.

He said the party leadership was in need of renewal and should subject itself to severe self-criticism.

The proposal is unprecedented under Cuban communism.

Mr Castro, 79, made clear the limits would apply to himself.

He took over from his brother Fidel in 2008 and between them they have ruled Cuba for 52 years.

He acknowledged that “the confidence of the majority of Cubans had been tested, with regard to the party and the revolution”.

In his speech, Raul Castro said the limit of two consecutive five-year terms would apply to “the current president of the Council of State and his ministers” – a reference to himself.

There is no talk of political change inasmuch as Cuba’s rulers are going to allow other parties or hold more open elections.

However, I think they have seen what has been happening around the Arab world and are thinking it is best to be pro-active.

Very clearly, allowing presidents to stand for just two terms is a way they see of helping people get used to the idea that change is on the way.

Much of what he said concerned his plans to reduce the role of the state in the economy and encourage private enterprise.

It would take at least five years to update Cuba’s economic model, Mr Castro said.
Free education and healthcare would still be guaranteed, but mass subsidies of basic goods would be removed and social spending would be “rationalised”.

Mr Castro said 200,000 people had already registered as self-employed since changes were announced last October, doubling the number of Cubans working for themselves.

But he insisted the socialist character of Cuba would be “irreversible” and accumulation of property would not be allowed.

The general American public (US citizens wherever they live and non US citizens who are resident in the USA) cannot yet visit Cuba.

Journalists, government officials, those with relatives in Cuba, full-time professionals (including doctors, dental hygienists, environmentalists and actors) going to conferences or doing research, have been able to go to Cuba, under a General License.

Other activities that have been approved with a specific license include:

•    Humanitarian Travel
•    Free-Lance Journalism
•    Professional doing research or going to meetings that don’t meet the criteria for a general license.
•    Educational Activities – Long-term formal study programs.
•    Religious activities – i.e. seeing the Pope and proselytize.
•    Public Performances, Clinics, Workshops, Athletic and Other Competitions, and Exhibits
•    Exportation, Importation, or Transmission of information or Informational Materials

Rules are continually changing and one should stay current at the official US government site www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba.txt . This site is currently be updated to reflect 2011 rules.

We are working with a Canadian Chiropractor who is researching longevity and is visiting Cuba to check out opportunities and how medical tourism in Cuba may evolve.

These are early days… but so was 1996 in Ecuador.

Everything in the universe vibrates to a natural rhythm.  All reality runs in peaks and valleys, rises and falls. Great nations, strong concepts and beautiful ideals expand and wane.

Often nature’s waves are hindered by mankind… levees, laws and blockades contrary to the forces of nature.  Such blocks eventually create ruses… even floods of opportunity. We are fortunate that technology allows us to see and be mobile to follow such currents.

Ecuador enjoys a rising tide now.  If Cuba comes next, we’ll be prepared and hope we can help you be ready too.

Gary

An End to Debauchery

Eric Fry reporting from Laguna Beach, California...
"Qu'ils mangent de la brioche!"
English readers will recognize this infamous phrase as, "Let them eat cake." Marie Antoinette supposedly uttered it. Two centuries later, another member of French royalty comes along to express the phrase in 3-D.

Dominique Strauss-Kahn, the putative "public servant" overseeing the IMF, has been conducting himself in the classic tradition of lecherous, narcissistic, self-indulgent 18th century monarchs. And in the grand tradition of serfdom, we American taxpayers, along with working stiffs from 186 other "member countries," transport the fruits of our labors inside the castle walls of the IMF. We are the ones who provide the capital that puts the "fund" in International Monetary Fund.

For what reason? So that the IMF can give some of our capital back to us if we get into financial difficulty. At least that's the stated rationale for this large-scale larceny.Officially, the IMF functions to:

·                         Promote international monetary cooperation.

·                         Facilitate the expansion and balanced growth of international trade.

·                         Promote exchange rate stability.

·                         Assist in maintaining a multilateral system of payments.

·                         Provide resources to members experiencing balance of payments difficulties.

Unofficially, the IMF operates to fund the debauchery of lechers, while also bailing out profligate nations who may or may not repay the bailouts. Under the IMF's existing quota, the US is the largest member, representing 17.75% of the pie. In exchange for this membership, the US has provided the IMF with about $58 billion. Furthermore, this allocation will nearly double, thanks to the IMF's "Fourteenth General Quota Review."

Armed with its hundreds of billions of dollars, the IMF scatters bailouts around the globe like pixie dust. But as it turns out, the Chief Pixie, Monsieur Straus-Kahn, has been inhaling unhealthy volumes of this dust, himself. (Let's call it an occupational hazard).

Not only did he receive a $441,980 salary last year as Managing Director, he also received a supplemental allowance of $79,120 to cover "expenses." Presumably, such expenses did not include items like $3,000-a-night suites at the Midtown Manhattan Sofitel - an outlay which would probably fall on the IMF's travel expense line item.

But however one wishes to account for this pixie dust, the source of it is no mystery. US taxpayers contributed about $532.50 toward Strauss- Kahn's hotel suite, not including incidentals like Evian water from the mini-bar or in-room adult entertainment.

Strauss-Kahn's self-indulgent extravagance might seem almost tolerable, were it not for the fact that the IMF is, itself, a financial deadbeat. In 2008, the IMF proposed selling its gold holdings to close a projected $400 million budget deficit. This proposal also included spending cuts of $100 million over three years and the elimination of as many as 100 jobs.

At the time, Dominique Strauss-Kahn heralded the proposal as "a landmark agreement that will put the institution on a solid financial footing and modernize the IMF's structure and operations. We have made difficult but necessary choices to close the projected income shortfall and put the fund's finances on a sustainable basis," said Strauss-Kahn, "but in the end it will make the fund more focused, efficient and cost- effective in serving our members."

Wasting little time, the IMF unloaded 200 metric tonnes of its gold hoard to India in late 2009, raising $6.7 billion in the process...and clearing the way for Strauss-Kahn to violate whatever stood in his path, be it a hotel maid or a taxpayer from 187 countries around the globe.

Here are a few final questions: Will we taxpayers also be financing Strauss-Kahn's legal defense? And will we be absorbing his future medical expenses?

"Dominique Strauss-Kahn may have more to worry about than a possible prison sentence," The New York Post reports this morning. "The IMF chief's alleged sex-assault victim lives in a Bronx apartment rented exclusively for adults with HIV or AIDS, The Post has learned. The hotel maid, a West African immigrant, has occupied the fourth-floor High Bridge pad with her 15-year-old daughter since January - and before that, lived in another Bronx apartment set aside by Harlem Community AIDS United strictly for adults with the virus and their families."

This is a tragic story, dear readers...on many levels. But at least one part of this tragedy could have a happy ending: Abolish the IMF.

The lessons of the post-2008 crisis are becoming as homogenous as they are numerous: The big helpful hands of financial bureaucracies are no help at all. These hands are usually wrapped around your throat. Abolish the IMF; abolish the Federal Reserve.

Let the free markets dispense credit based on credit-worthiness, period. And let the free markets price credit based on real-world risks, period. Then let the lechers who guide us, or the academics who misguide us, earn money in the private sector to finance their peculiar interests.

If the next time you walked into Starbucks, Dominique Strauss-Kahn or Ben Bernanke or Timothy Geithner were handing you your double latte, would the world be any worse off?