I wonder: Why not cut out the middleman and buy directly from Vietnam?

Inefficiency -- (c) Per Jacobsen, 2013. All rights reserved

Inefficiency — (c) Per Jacobsen, 2013. All rights reserved

First the Indians got taken by the Chinese, watching helplessly as the Western world shifted its manufacturing outsourcing nexus from India to China, yielding to the relentless pressure of cheaper-is-better economics.

Determined not to let the same thing happen to themselves, the Chinese have stealthily been outsourcing to Vietnam.

This movement has now gathered so much momentum that it is starting to manifest itself in retail stores around you.

And, so, now when you buy goods, say furniture, from your local merchant, they are increasingly labeled “Made in Vietnam,” but they are still sourced from China (although, of course, in this hyper-effective world, they are drop-shipped from Vietnam to the merchant.)

Seems pretty inefficient to me.

Which makes me wonder… Why don’t we just eliminate the middle man, buying direct from Vietnam? Do we really need to support the Chinese economy any further?

If nothing else, it would be interesting to see how far the Chinese would go to protect their interests. The Indians, of course, responded by initiating a mad scramble up the value chain, spitting out IT workers at a relentless pace, so will China follow this path, going head-to-head with India in outsourced IT?

Also, from a geo-political standpoint, lifting Vietnam to the level of an economic super-power, the same way that we did with China, seems like a smart move, potentially creating a stabilizing influence.


This is London Calling…. — This is Nigeria listening

One of the interesting things about running a blog is the totally unexpected things that you learn from site statistics.

In a previous blog posting, for instance, I tested a hypothesis that a blog posting with a heading along the line of “I want to die” would generate significant hits from search engines, and I was surprised to find that it did, in fact, do just that.

In another — later — blog posting I tested a hypothesis that a blog posting with a heading along the the line of “Kill me” would generate significant hits from search engines — possibly more than did the blog posting with the heading along the lines of “I want to die,” and I was suprised — again, because it did not (in fact this blog posting generated very few hits, which was really surprising to me since Reddit, for instance, yield a number of web-sites and blogs with headings along the line of “kill me” (I will write more about this fact later — stay tuned.)

In another example, I created a blog posting about balance sheets and goodwill, which got a tremendous amount of traffic, but, oddly, most of the traffic was generated from google searches with the search term “lazy balance sheet.” This was interesting, because it reflects that there is an extensive interest in lazy balance sheets — something that I did not know. It is also odd, since the heading of my posting was clearly talking about goodwill, distinctly different than what make up lazy balance sheets. Regardless, since there is an interest, and since I, as a quasi-value investor, find lazy balance sheets very interesting, the searches did stimulate me to decide to write a posting about the problems related to lazy balance sheets (there are many,) and, accordingly, to add an entry to the Upcomming Posts column on the right side of this blog.

Most interesting though is the fact that my recent posting about Nigerian Scams and other related items, caused the blog to start getting hits from — wait for it … Nigeria.

Nigerian flag

In the past my blog had received hits from obscure countries in remote parts of the world, including countries in South America, Asia, and Africa, and, typically, hits from these locations were followed near-immediately by spam comments being posted on the blog, which are just as immediately deleted by Akismet, WordPress’ spam comment filtering software. None, however, had originated from Nigeria.

Phoney Western Union Form

Without fail, the Nigerian hits come courtesy of Google’s image search and — yes, you guessed it! — are centered around the terms “Western Union,” “form,” and “sheet” which appear to result in search results that include the phoney Western Union form included in my Nigerian Scam related posting and reproduced on the right.

In the forties, it may have been London calling, but today it is Nigeria listening…. Globalization once again, rears its ugly head.

Oh yeah, just a heads up… The second most common point of origination for hits leading to the phoney Western Union form in my blog posting was — drum-roll, please — the Czech Republic.

There may be an early warning here…  Let me get on the horn with the Federal Bureau of Investigations……  I am sure they will dispatch a team to Prague to investigate right away.

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Web-sites Getting 12 Billion Hits in Three Months — No, it is not Yahoo, Facebook, or Google

Can you guess what not-for profit, informational organization has web-sites that amassed 12 billion hits in three months, have no advertisements, are totally free to all citizens of the world, requires no registration, have a clean layout, will allow you to push or pull information without providing any disclaimers or copyright statements, have billions of dollars worth of assets, and, generally, makes Facebook’s social mission look like a the tinkering of a toddler?

No?  Here are some more clues… The information provided by the organization saves billions of dollars of property and countless lives every year, and is critical to national defense, industry, agiculture, and overall well-being.

Still, no?  The organization has annual operating expenditures of less than $1 billion, has more than 150 offices across the globe, collects and processes 76 billion set of data every year, and aggregates these data set into 1.5 million predictions, and 50,000 life and property saving alerts.

Tropical StormNo?  Well, here is the reveal then…   The organization in question is the National Weather Service (NWS,) a for-good government service whose mission is to provide weather, water, and climate data, forecasts and warnings for the protection of life and property and enhancement of the national economy.  Well, not entirely for-good, since NWS also, of course, has military utility.

NWS is headquartered in Silver Spring in Maryland.   It is a component of the National Oceanic and Atmospheric Administration (NOAA,) which, in turn, is an operating unit of the U.S. Department of Commerce with a total budget of approximately $5 billion.  You can check out NWS at their web-site at the URL http://www.weather.gov

The NOAA home page alone received more than two billion hits in 2005, and the Web sites of the National Weather Service and the National Hurricane Center received more than 12 billion hits during the months of August, September and October of 2005.

I first started thinking about NWS when I recently watched an interview with a politician (whose name I have happily forgotten and who I pray will be voted out of office tomorrow,) who spouted the emerging arch-view that government (or tax-payer) funded organizations such as NWS should be dismantled because their mission is being fulfilled by private media organizations such as the Weather Channel and local media organizations such as Fox TV.

This comment is, of course, so incredibly ignorant that it would have to come from a politician.  First, it has things backwards, since the media organizations are broadcast organizations — not meteorological organizations with extensive resources for collecting, collating, and analyzing weather data; the source for the weather information broadcast by media organizations is, all else being equal, NWS; and, at best, the media organizations relay the information provided by NWS, while, at worst, they distort it, dumb it down, and use it to, literally, scare up more advertising and subscription dollars.  Second, NWS does much more than do the media organizations — most of which is much more important than what the media organizations do with weather related information.  Third, the staff at NWS are scientists, not entertainers, providing data and analysis rather than fluff and scare-materials.  Fourth, in all ways the information provided at NWS’s web-sites is superior to that provided by the media organizations (compare, for instance the NWS web site with that of the Weather Channel.)  Fifth, the notion that something as important as hurricane, tsunami, and tornado forecasting and warnings should be left to a media organization such as Fox TV is so ridiculous that it deserves no further comment.

I like thinking of NWS relative to Facebook.   With expenditures of $1.927 billion in second quarter of 2012, $677 billion in first quarter of 2012, $488 million in fourth quarter of 2011 and $343 million in third quarter of 2011 (for total 12 months expenditures of $3.435 billion — compared to NWS estimated expenditures of $1 billion,) the general population (i.e. the market) has valued Facebook, a, frankly, not so important social media service, at between $50 billion and $100 billion, which raises the question of what the valuation of NWS is.

Totally off-the-cuff and based solely on Facebook’s valuation range and the relative importance of NWS’s services relative to those of Facebook, I would say that NWS should be valued at far more than $100 billion, which then raises the follow-up question as to what kind of insanity leads a (yes, granted, ignorant) politician — or, rather, demagogue — to want to scrap $100 billion, or so, worth of assets.

The answer, of course, is that in today’s political context, this sort of speak makes for great copy, and, I am  sure, is not totally without inspiration or lobbying by organizations such as the Weather Channel (imagine just for a second if an organization such as the Weather Channel could assume the NWS assets, become a monopoly, begin pricing the services at market value, and start scrapping non-profitable services — the subsequent IPO of the Weather Channel would make Facebook’s IPO look like petty cash.)  Or consider Facebook…  Just getting its hand on the National Hurricane Center’s web-site, which generated 12 billion hits during a three month hurricane season, would get Zuckerberg drooling, I am sure.

By the way, while it is easy to think of NWS and NOAA in terms of expenses, it is also misguided.   The amount of true economic value that is transferred to businesses from NWS and NOAA yearly (think agriculture and fishing scheduling, for instance) is, I am sure, far more than $5 billion per year, and, in fact, the broadcast industry that has sprung up around NWS and NOAA, piggybacking on freely available information, is, I am sure alone generating jobs and earnings worth way in excess of $5 billion per year.

However misguided the burn-and-slash/privatization form of thinking is, it is also becoming prevalent and, therefore, incredibly dangerous.   Consider, for instance, the current debate about the U.S. Postal Service and FedEx and UPS, which is precisely analogous to that of NWS and the Weather Channel (consider what would happen to the postal rates and universal delivery services if UPS could take over general delivery services — it wouldn’t be pretty, I assure you.)  Or consider the ongoing move to outsource absentee-vote processing, which is incredibly problematic for a democracy.

D-Day — Operation Overlord

In 1944, with the timing and success of Operation Overlord, the D-day invasion in Normady, including Operation Neptune, the largest amphibious landing ever attempted, hinging on the weather on exactly ten available days in the month of June, and with the risk of the German intelligence arm catching onto the timing and goals of the the operation increasing by the hour, accurate weather- and tide-forecasting was what caused the operation to be deferred from June 5th to June 6th, averting a possible disaster.

Moreover, it was weather- and tide-forecasting that indicated that the weather on June 6th was operationally adequate and, so, enabled Operation Overlord to commence, rather than be postponed to the week of June 19th — a postponement that would almost certainly have lead to the loss of the element of surprise, and, as it would show, would have been a disaster since to everyone’s great surprise the worst storm in 40 years hit the English Channel from June 19th to June 22th.

With the first day of Operation Overlord involving more than 156 thousand troops landing in Normandy from the sea and the air, supported by more than 195 thousand navy and merchant navy personnel in over five thousand ships and virtually all combat planes in the European Theater of Operations, I, for one, sure am glad that the the weather- and tide-forecasting was not outsourced to whatever the equivalent to Weather.com would have been in 1944.

On a side-note, the military significance of NOAA can be gleaned by the fact that the National Oceanic and Atmospheric Administration Commissioned Corps, a department of NOAA, is one of only seven federal uniformed services of the United States. The corps, which was created in in 1917, in the midst of World War I, but traces its origins back to 1807 as the United States Coast and Geodetic Survey department, was established with the sole purpose of avoiding that its staff, which was heavily involved in scientific studies critical to the military’s ability to achieve its missions, would be executed as spies when caught on or around battlefields.

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