Some Random thoughts:

Home prices are falling. Is this a bad thing? Hasn’t the misguided federal housing policy sought to expand home ownership?  Could they be more successful in their failure than they thought they were when they were ‘successful’?    In an effort to create home ownership for those who could not afford it, they destroyed it for those who could.

Socialism is simply the supremacy of political self interest for economic self interest.  Every new exemption from the disastrous health care bill proves that further.  Every exemption is a frank admission of failure of central planning applied to health care.  Exempt everybody.  It’s called a free market.

Does anybody believe the official inflation numbers?

Humanitarian aid usually looks like food and medical supplies, not cruise missiles.  There is a difference between humanitarian relief and taking sides in a civil war.  See The Discovery and Use of American Exceptionalism,  my article in today’s American Thinker.

The Coffee Party is a top down effort from progressives to counter the bottom up Conservative Tea Party Movement.  Top down is already in disarray.  If you cannot define your mission, changing names will not help.  It will only confuse and weaken the existing organization.  The No Name party and the Coffee Party are just very unoriginal efforts to distance themselves from existing labels that have lost their luster.  It’s the ideas that are failing, not the labels.

Unquestionably, some people have become very rich through the use of borrowed money.  However, that’s also been a way to get very poor.  When leverage works, it magnifies your gains.  Your spouse thinks you’re clever, and your neighbors get envious.  But leverage is addictive.  Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade- and some relearned in 2008- any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero.  History tells us that leverage all too often produces zeroes, even when it is employed by very smart people.

By Warren Buffett as written in the most current annual report of Berkshire Hathaway, Inc.

HKO comment-

This is just as true with individual debt as it is with business debt and government debt.  Debt is a dangerous tool in the hands of the competent; in the hands of fools it is a disaster.  The problem is that for a short period of time debt can make fools look competent.

“We have moved to the PhD standard from the gold standard.”

A very short but very wise assessment from James Grant.

Mr. Grant makes a point that explains more than just the Fed and an obvious failure in monetary policy. Our government has become a place where we have relied more on academic credentialism and delusional intellectual certainty than tried and true principles. When leaders propose a return to proven principles they are decried as simplistic and anti intellectual.  We need to overthrow the rule of intellectual idiots.

Having observed and experienced various degrees of success and failures for nearly 40 years I have tried to distill what is critical to success and what seems common to failures.

I have yet to find any simplistic secrets to success.  Everything that many business writers claim to be critical to success are often aspects that can also be seen in many failures.  Given that so many very bright have failed in a big way, it certainly isn’t intelligence.  And while many of the successful credit hard work, we all know there are many hard working people who never experience success.  Big successes and big failures seem to go hand in hand. That leaves flexibility and persistence  as my top two choices. Flexibility often means keeping debt low. And luck can never be ruled out.

But it is far easier to see what is common to failures in business.  Once you get beyond the really bad ideas and too much debt, the debate gets less illuminating.  It can be poor capitalization; the business owner just did not have enough money to consider the cash requirement of a growing business.

I have also contended that many small business people grossly underestimated the cost of the administration end of their business.  Complex tax codes and onerous regulations have made the costs of doing all those things other than buying and selling your product and service ever more expensive.  Little mistakes in administrative tasks can cost a business a fortune. Many new small business people are stunned at the unexpected costs of administering a business.

But the most underestimated cost in my experience is raw incompetence, not necessarily in your business staff but in all of the auxiliary people you deal with.

It is the health insurance company that mistakenly sends out notices to all of your employees that their health insurance has been canceled  when all you have done is modify the plan.  It is their seeming inability to correct this problem three months later.

It is the phone company that kills all of your phone lines by executing an order three weeks before the contract to install a new system dictated.  It is the credit card company that approved a suspicious charge that you brought to their attention without contacting the card holder and then stuck you with the charge back based on some fine print in the credit card agreement.

Or it is the credit card company that made 170 entries to correct the four fraudulent charges and then insists that the statement balance you are staring at was correct.  It wasn’t- you gave me $285 too much, but thanks.

Or maybe it was the charge that you never authorized that it took two hours on four phone calls to correct; half of it listening to a recorded message telling you how important your phone call was.

There are times when I think that if everybody just did what they were supposed to do when they were supposed to do it that we could all work just two days a week and make twice the money.  We spend as much time fixing and responding to mistakes and screw ups as we do actually accomplishing productive work.

This is not to contend that we should expect to live in an error free world. That is neither realistic nor affordable.  I can only ask that errors be faced and fixed quickly.  Nor do I think such incompetence stems from lazy workers. More often it comes from management and systems that treat workers like cogs instead of caring individuals.  But often it is managers that spend more time talking about how great their team is than fixing the problems that irritate customers.

It often stems from a cowardly lack of clarity.  Ideas are discussed in general terms without getting specific as to what is truly expected. Tasks are assigned without deadlines. Disappointment inevitably follows unclear expectations.

But this cost of incompetence Is not just from doing the right thing poorly; it can be even more serious if it is the wrong thing done perfectly.   We are a country addicted to speed but we can save a lot of time by doing less …. But doing it better.

But in a world where incompetence is just too common, competent people stand out from the pack.  It could be the lawyer who clearly is thinking through a case thoroughly and finds a thread that seals a case.  It can be the administrator that understands the organization so well that they can fix any problem caused by her company in just moments, or the waitress who listened when you spoke of a gluten intolerance and went across the street to Whole Foods and got you a gluten free desert (before you even ordered desert) while you ate your main course.  (Karen Silverman at the Capital Grille in Atlanta).

But while competence is often displayed by small extraordinary acts, it is most common and most valuable when it avoids the needs for any extraordinary acts.  It comes from very worker just giving a damn about their job and their customer.  It comes from an understanding of the consequences of their actions and inactions, thinking at least two steps ahead.  Such a worker can make up for their clueless boss and a nearly dysfunctional system.

The best thing a leader can do for his company is hire as many of these people as he can.

There was once an effort to counter the effect of conservative talk radio by launching a liberal talk radio net work, Air America.

It failed.

Now there is an effort to counter the Tea Party movement with the progressive alternative- The Coffee Party.

It too is failing.

Beside the total lack of any originality the reasons are similar. Both conservative talk radio and the Tea Party were  bottom up movements.  There was no top GOP official that made a decision to solicit political converts via AM radio, and there was no GOP elite who designed and launched the Tea Party movement.  What frustrated the media, the Democrats, and the Republican establishment was that there was no leadership structure.  Nobody know who to hold accountable for the movement.

Yet is spite of some failures the Tea Party exercised considerable influence on the outcome of the 2010 elections, still with nobody in charge.

The Coffee Party is doomed to fail because it is beginning with an organized elitist directive, a board and an organization that is already quarrelling before they have accomplished anything.  There is no groundswell support for the Coffee Party because it is already represented by the Democratic Party.  In fact I can detect hardly any difference between the Coffee Party and the Democrats.

The Tea Party formed because they found a large group who felt unrepresented by the Democrats and many Republicans, but felt that the Republicans was close enough to merit using them as a base.  This made them far more successful than creating a third party.

Read more about the implosion of the Coffee Party at Politico in The Coffee Party and It’s Discontents by Ben Smith.