Getting Paid For Your Blood

Let me first start by clarifying that it is illegal to sell body parts in America. By law, specifically the National Organ Transplantation Act passed in 1984 prohibits "any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce." It don't matter what body part it is. Selling your tissues, and organs even after you die will land you in jail.

As with all laws there are loop-holes or guidelines, as the government would like to call it, which I will not delve into as I am neither an attorney nor a bureaucrat. That said, thousands of people in the US visit hospitals, research centers and universities to sell, or donate as they like to say, their plasma or even blood. These so-called donors are compensated for their valuable time that they spend while travelling to and fro and the time spent while donating their blood. In some cases, they are also reasonably reimbursed for travel costs. The amount paid usually varies depending on what their blood/plasma is used for by the organization that they are donating to. Therefore some people end up getting paid as low as $30 per half a liter of blood to as high a few dollars per milliliter.

Like with the Red Cross blood drive, not everyone is eligible to donate blood. The screening is usually more stringent if the blood is to be used for treatment or blood infusion purposes unlike if it is to be used for research. With the latter use, they are the ones who pay more but they are sometimes very particular with their donors as they may be running long term research studies or require specific blood factors/components which vary across populations.

Donating Blood Saves Life

Recently I enrolled as a blood donor in a research center near my place of work. The requirement for this center is that I be willing to be a long term donor, not be taking certain medications and have good veins on the arm for drawing blood. The first two were the easy part. As for the third requirement, they don't use one of those small nice needles to used for withdrawing blood in hospitals. Ever seen what they use to jab cows? Okay, I've exaggerated a bit but you get the drift. Fortunately, its not that different from donating blood only that its done fast.

The research center pays $10 for the prick (needle stick injury) and $1 for every 2 milliliters. On average they collect 200 milliliters, so you get paid $110 (plus your income tax rate). You are called once every few weeks and the amount required can vary depending on their research needs.

For now, I'll try it for a while and see how it goes. I'm told some of their donors have been doing it for years and they are alright. All I need to do is eat properly (I have to cut down on barbecues and eating out!) and stay healthy. That means exercising so that my blood has the right balance. Which is good for me, only that I get paid for it. Although I would like to, my travels to Kenya prevent me from donating my blood to the Red Cross. So instead, I've chosen to get paid for donating my blood for research. If I were to get lucky and VERY healthy too, I could make more than $40,000 per year if I get to donate the maximum allowable quantity of 91.5 liters!

With the average man having between 5 to 6 liters of blood, it is possible to donate more than half-a-liter per visit. After all, blood regenerates fast because blood cells are quickly replenished by the body, so it's not that bad for my health. What's more, the blood used for research purposes could be used to discover life saving medicines or medical procedures or bring advancements science.

Rate Cut Recap

September 18th came and Wall Street got exactly what they had wanted. As promised by Blistering Bernanke, the Fed "acted as needed to limit the economic fall out from credit mess". Even before a week had passed after the FMOC had slashed the overnight rates, Alan Greenspan was quoted as predicting that home prices will drop further and hurt consumer spending despite the rate cut.

Source- Running With The Bulls

As expected, the stock markets reacted euphorically to the rate cut with all the major equity indices closing positive for the week. Now that the Fed has started easing the overnight lending rate, are the summer doldrums and credit crunch behind us ?

While the rate cut may have improved the economic outlook and brought some relief in the debt markets, it's important that we look deeper into the current mess. The housing market.

Between January to August this year, $263 billion adjustable rate mortgages reset resulting in increased payments for home owners. The number of defaulters and subsequent foreclosures sky rocketed bringing the credit market to its knees. In turn, housing prices tumbled due to inventory build-up and the troubled owners couldn't refinance as banks shut their doors. This is just the tip of the ice-berg. It is estimated that between September and December $700 billion worth of ARMs will reset bringing more pain and misery to the housing market.

S&P/Case-Schiller Home Price Index

The declining home prices and the 67.3% home ownership rates means that the effects of the housing bubble will not only be felt by sub-prime borrowers only but also a significant proportion of households who in turn are expected to cut back on home equity withdrawals. In addition, the tightening credit standards and the decreasing wealth effect brought about by the housing and stock market declines will have an added impact on consumer spending. All these factors will affect the lifeline of the US economy which is built on consumerism.

The fact that the world economy is booming doesn't mean much for US exports which in 2006 came in at $1,467 billion compared to the personal consumption expenditures which accounted for the $9,225 billion out of the $13,195 billion Gross Domestic Product in the US. In turn, the weakening dollar and rising inflation levels in China may have a deleterious effect on the already over-burdened consumers as the US relies on cheap imports to keep consumer prices low.

All these put together doesn't auger well for the overall US stock markets. Even though the rate cuts may bring some relief to heavily indebted households, it is very likely that we will the rate cuts will not bring immediate relief in the housing market.

That said, it will be interesting to see the course taken by the stock market in the next 12 months. Unlike the previous occasions when the the Fed cut rates, we have a very unique situation this time. My guesstimate is that like after the 2001 Tech bubble, things may hold for a while before the Bears have their way as the genesis of the current crisis is the real estate bubble. The fact that Goldman Sachs, which beat estimates last week when they reported, went short on the mortgage industry speaks volume regarding the direction of the market.

Giving Through United Way

Every year, the United Way carries out a fundraising drive at my place of work. Normally the leadership at my place of work set a contribution target, an amount higher than that of the previous year, which we have always exceeded year after year. Last year our local office consisting of less than 1,000 employees raised more than $1 million for the United Way campaign.

Usually the contributions can be given by way of automatic monthly deductions from our payroll or a one time donation also through payroll deduction, direct debit or by credit card. Like most fundraising drives, my employer organizes a variety of auctions, raffles, get-togethers and other events whereby employees participate in activities promoting the campaign.

For anyone who is keen on charitable giving to help the less fortunate members of the society, United Way serves a way to channel their contributions to needy causes. The campaigns serve as an opportunity for people who are not routinely or actively engaged with charities to make a charitable contribution. To this end the organization raised more than $4 billion last year.

A Labor of Love for Hurricane Katrina’s Victims

While I have some reservations regarding the organization, I have always participated in the fund-raising campaigns as the benefits from my giving outweigh the demerits of the organization. In particular, the organization has been embroiled in some financial scandals and I also don't think they are as transparent as I would like them to be. I find their website hard to navigate and I could not find full information regarding the use of the contributions they collect. You also have to realise that the withold a fraction of the contributions, probably to pay for their administrative duties.

On the upside, giving through my employer offers the following benefits;

• Designated contributions - I am able to designate my contribution to a specif charitable organization. Over the years, my choice has always been Samaritans Purse. Instead of allowing United Way to use my contribution as they see fit, I designate my contribution to a charity of my choice. Unfortunately, with this way you can't further designate the money for a particular project, like say helping displaced people in Dafur. In that case Samaritans Purse uses my contribution as they see fit.

• Matching contributions - My employer matches my contribution dollar for dollar. I'm not sure if this money is given to United Way or my designated charity. I would hope it goes to Samaritans Purse.

• Extra vacation days - Contributions over a certain limit, usually 1% of one's salary, is rewarded with extra vacation days. Since I have more vacation days than I could ever take, I just roll the unused vacation days to the next year.

• Tax deduction - My contribution is treated as a charitable deduction by the IRS.

• Automatic giving - I don't have to worry about giving once I have elected my payroll deduction. Once I make the commitment, my contribution is deducted regularly.

• Good publicity - My employer gets recognition and positive media coverage for the contributions made by us and the additional money the company contributes to match our contributions. Our participation ensures that my employer gets to be a good corporate citizen in my state by way of the matching donations and other contributions for the campaign.

That said, I look forward to the kick-off of this years United Way campaign as the activities also serve to break the monotony of work and provide an opportunity to informally socialize with other colleagues who I would not normally interact with.

Funding A Start-up

The August issue of the Entrepreneur magazine has a feature of America's top 500 fastest growing businesses. Compiled with the help of Corporate Research Board's database, the magazine evaluated 19 million businesses that were founded between 1998 and 2002, with 2002 sales greater than $100,000 and at least $1 million in sales in 2006, in addition to other business factors.

What stood out for me was the source of funds used in starting the successful businesses. Any budding entrepreneur knows that one of the biggest hurdles when it comes to starting your own business is having adequate capital. Luckily for it's readers, the magazine provided a break-down of the sources of funds used to start these fast growing businesses. Also provided was the amount of initial investment used to start the top 100 businesses. The biggest surprise for me was the fact that a few of the businesses started with less than $10,000 dollars capital and now have sales greater than $1 million.

One of these companies is the number 38 listed Vineyard Vines that was founded with $8,000 from credit cards in 1998 and had a revenue of $37.2 million in 2006. Another interesting top 100 business is that Ablade Odoi-Atsem who immigrated from Ghana in 1984. Fourteen years later, he went on to start his own business, Odoi Associates Inc. with $200,000 from his own savings. His business that deals with construction, facility and energy management first turned profit in 2003 and went on to generate $8.2 million last year and is projected to have 55 employees next year.

From the breakdown of the source of funding a start-up, we can learn a lesson or two about what it takes to be a successful entrepreneur. So what does it take to be one of the 839 successful businessmen (or 114 business-women)?

Discipline - The emphasis on being disciplined is reflected by 387 businesses that were founded using personal savings. By and large, I would loosely associate saving money with being disciplined. I think it is safe to say that it requires discipline to save (and stay away from debt) in the materialistic society that we live in. The fact that some of these individuals might have previously held well paying jobs should not be construed to mean that they could save some money because I know there are well paid individuals out there who are in debt up to their eyeballs.

Pedigree - Without generous and probably well to do kin and kith, it is hard to start a business. Why is this especially so? As we know, family and friends can be the biggest drain on our finances. That said, like the 117 entrepreneurs you need the support of your closest friends and family members. This could also come in by way of inheritance. The only thing that beats daddy and mummy's fund is trust funds from wealthy grandparents. The family and friends network is also important when it comes to establishing contacts and clients for your business. If anything, it helps a lot if they are also your first customers. If you don't come from a wealthy background, it certainly pays to have a network of deep pocketed friends.

Hot top 500 companies for 2007.

Industry	#
Construction	92
Business Services	86
Technology	68
Health	42
Government Contractors	29
Advertising and Marketing	23
Financial Services	22
Logistics Services	21
Food	19
Manufacturing	19

A good credit history - The only way you can get financial institutions to lend you money by way of credit cards, bank loan or line of credit is to prove that you are a good borrower. Having a bad credit history muddled with late payments, defaults, high debt and even bankruptcies is a sure way to get the banks to close the doors on you. If anyone agrees to loan you money, you'll pay a higher price thereby reducing competitiveness and increasing the chances of the business failing.

A good business plan - To convince private investors and venture capitalist to shell out some dough, you will require a detailed business plan. A novel idea could also substitute for a business plan and bring in the much needed funding to start a business. The more unique the business idea, the easier it is to raise funding.

Like these 953 individuals, I too want to run my own successful business one day. A few years back when I hit the big 3-0 I set up a goal of being 'ready' to start my own business when I turn 40. God willing, my plan is to have at least $1 million to start whatever business I will have decided then. That of course depends with if I get the courage to walk away from the comfort of employment and the feasibility of my intended business. My plan is to raise start-up capital from my savings, credit cards, borrow from my 401k, get a bank loan and if need be sell a stake of my start-up to friends and family.

Bottom line is you want to spend less of your time looking for capital and instead focus on growing the business and finding new clients. That said, I wouldn't wish to go for bank loans, venture funds or private investors as they are time consuming and yield the lowest amount of funding required to start a business. From the above numbers, I'd say anyone using their personal funds to start a business has a 50% chance of success.

To any one anyone out there who wants or is starting their own business, all the best wishes and may you go on to realise your dreams. I hope in the coming years a Kenyan will be featured in the Entrepreneur magazine America's top 500 fastest growing businesses.

PS. The real estate boom fueled the success of the construction businesses and now that the best is behind us, I wonder how next year's list will compare. It wouldn't surprise me if it mirrored the state of the US economy with technology, businesses services and health care taking the lead. I'm not sure which other industries would flourish during the coming slow down.

Taking A Break From The Equity Markets

Who can blame me from switching off from the equity markets. The way things have been going of late, the markets have become very volatile and also unpredictable. Because of this, I've decided to take a break from stock market.

The main reason for my decision lies in the Chicago Board Options Exchange Volatility Index, commonly referred to as the fear index. This index is a measure of the implied volatility of S&P 500 options calculated from both calls and puts. It basically represents the market's expectation of volatility over the next 30 day period. The higher the VIX, the greater the market risk.

This August, the VIX rose to 30.83 driven largely by the tightening credit crunch and has remained in the 20's since. A high VIX can be translated to mean that equity traders expect large swings in share price as we have seen this past month. Because of all this uncertainty, I would rather wait by the sidelines until to whole scenario has unfolded.

If you are a trader, there can never be a better market. Unfortunately for me, I would rather remain an investor and I'm too happy to wait for the spoils of these market doldrums. At the end of it all, just like at the end of the rainbow there is a pot of gold, there will be some good beaten up stocks begging to bought by investors. Until then, when calmness has been restored, I will steer clear till I am certain as to what lies ahead.

Though this bull market may still have some legs once the Fed starts easing rates, I may have to wait until we are in slow down mode before I can jump in with both feet. In the meantime I'll prepare for the next economic expansion cycle by saving aggressively so that I'm better positioned to go on a buying spree.

"If you're gonna play the game, boy, ya gotta learn to play it right.

You got to know when to hold em, know when to fold em,

Know when to walk away and know when to run."

-The Gambler, Kenny Rogers.

The Age of Turbulence Is Here

Not-so-Easy Al' Greenspan is scheduled to feature on 60 minutes a day before his memoirs, The Age of Turbulence, goes on sale. The larger than life former Fed chairman, is said to have admitted that he "didn't really get'' how the boom in sub-prime lending might hurt the economy.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,'' Greenspan said in the interview. "I really didn't get it until very late in 2005 and 2006,'' as he was about to leave office..."It was nothing to look into particularly because we knew there was a number of such practices going on, but it's very difficult for banking regulators to deal with that,'' Greenspan said in the interview.

I leave you with a quote from Senator Charles Schumer (NY-D), who chairs the congressional Joint Economic Committee, that captures the magnitude of the current credit crunch being experienced in all corners of the financial markets.

"Greenspan was one of smartest regulators this country ever had. If he missed it, then it should be a warning to the current regulators about the depth of this crisis." - Senator Charles Schumer.

Selling Chapatis

I've never given much thought to how the tortilla's sold in the supermarkets are made. Having seen the Mexican women in Californian restaurants making fresh tortillas, I should be forgiven for thinking that tortilla manufacturers employ human labourers to make pre-packaged tortillas for sale in supermarkets.

So how does this add up with selling chapati's. You see, my missus likes to buy ready made frozen chapatis from some Indian shop. Every few weeks, she goes to this grocery store to buy rice, ready to eat chapatis and other food-stuffs. The chapatis are made by a company in New Jersey and go by the Indian name Paratha. I've always thought that they are not really chapati's but since I can't cook chapati even if my life depended on it, I try not to voice my thoughts lest I be kick-out from the dining table. However, once in a while my missus evens it out and gives us a treat of home cooked Kenyan chapati.

On the very day we had these so-called chapatis for lunch, we went out to a Mexican restaurant for dinner. Oddly enough, during the lunch time I examined the Paratha packaging as I was interested in finding out where they were made. It surprised me to see that they were made right here in the US. This got me thinking that there may be a machine thingy that can be used to manufacture chapatis en-mass.

You can therefore imagine my delight when I saw a kitchen scale gas-powered tortilla making machine in the Mexican restaurant we were dining in. Because we sat close to the culinary department, I managed to catch a glimpse of the said machine. Being me, after we were done with the meal I enquired about it from the waiter and also took a picture of it with my cell phone. And when we got home I went online to check for tortilla making machines.

For anyone thinking of venturing into such a business, I don't think the perishable nature of chapatis and the population of Kenyans in the US would make it a lucrative business. But that is not to say that there can be no use for the machine in Kenya. The market potential for this kind of business in Kenya is enormous. Think about mid-to-high cost schools, middle class restaurants, working class Nairobians who live on their own and don't have time to cook, weddings and all manner of social functions. Heck, you could even have hawkers peddling chapati's to hungry motorist stuck in traffic jams on Uhuru Highway.

To cap it all, you don't have to worry about the cost of cooking gas. Instead of using Liquified Petroleum Gas (LPG), you could use bio-gas to cook the chapatis. All you need to do is locate your business close to a dairy farm and set up your own bio-fuel supply. That way you are immune to the price of energy and can sell your chapatis competitively. As the business expands, may be you can now switch to LPG. For all its worth, it may also possible to get favorable funding from a NGO or micro-financing institution for such a venture in Kenya.

Had I been a diasporan facing the prospects of deportation or stuck in a low end rut of a job, this is something I would quickly jump onto. It may seem unappealing to run such a business but when the money comes in people are not going to care about how you made your wealth knowing to well that you running a profitable business. They may call you Machapati like the Munguku fellow in Kiambu who started by selling eggs and is now a well respected multi-millionaire in Kenya.

Kenya Airways Flight Experience

The first time I flew on a Kenya Airways airplane was during a visit to their aircraft facility situated at Embakasi almost two decades ago. One of our high school teachers arranged for us to visit KQ in a bid to encourage us to take piloting and aeronautical engineering careers after high school. From what I can remember, the highlight of the visit involved a 20-minute flight from Jomo Kenyatta International Airport to Cairo International Airport in a flight simulator.

In July I had the chance of flying from Nairobi to Mombasa aboard a Kenya Airways flight. Unlike the last time we flew to Mombasa on a smaller Fokker 50, this time we flew on bigger Boeing aircraft. This meant that the flight was much more smoother than it usually is when flying on smaller air-crafts like the Fokker or Embraer jets.

The night before our depature, we got a call from the travel agent informing that the flight will depart two hours later than it had been scheduled. Not being one who likes to hang around airports, especially with kids, I was pleased that we had been notified in good time about the delay. Although when we got to the airport the following day, there was an additional two hour delay as the incoming plane had been further delayed from its departure point.

At the airport, we had a pleasant check-in experience as the Kenya Airways agent was very courteous and friendly despite the fact that the kids were all over the airport during the check-in process. As we waited for the aircraft, the airline went an extra step to pay for the drinks and snacks that passengers were buying during the wait although I didn't find out until I was just about to pay for my order. There was a Kenya Airways employee stationed at the restaurant check-out counter quietly dismissing Kenya Airways passengers queuing to pay for their order.

As expected with the large aircraft, the flight to Mombasa was short and smooth. Owing to the short nature of the flight, there was no in-flight entertainment although I had the chance to watch part of a very humorous Indian comedy which I followed by reading the sub-titles as there were no head phones in the plane. Unlike the US where they are phasing out drinks during such short flights, we were served with a sandwich meal which I thought was unnecessary but a good gesture anyway.

Unlike the outbound flight, the return flight was on time and we had a choice of two planes though we decided to stick to our original flight schedule as we had gotten good pre-booked seats. During both flights, the only scenery to enjoy was that of Mount Kilimanjaro which looked beautiful against the cloudy July skyline.

Against the backdrop of increased domestic passengers and a booming tourism market, I would have thought that KQ would separate its local flights like they had previously done using Flamingo Airways so that they can be able to differentiate between their competitive international routes from their domestic routes. This would allow them to dedicate airplanes for their domestic schedules and at the same time have aggressive cost savings by not having to maintain high standards like they do for their long haul routes and thereby increase revenues. At the same time, they would not have to use the large air-crafts which don't fill up during the domestic flights. For the first time in as long as I can remember, the plane was probably three quarters full while here in the US passengers flying stand-by have a hard time getting a seat.

Despite the wonderful experience flying Kenya Airways, I'm not sure when I'll fly them next but my guess would be the next time we visit Mombasa which we don't intend on doing soon. Should they commence direct flights from the Miami or Atlanta, as it has been rumoured, through west Africa I might consider flying with them to Kenya as I would really love to visit western Africa and yet go home on the same trip.

To Circumcise, Or Not To Circumcise?

There has been a lot of talk in both the Kenyan media and blog sphere relating to the connection of the spread of HIV and circumcision. According to one the studies carried out under the auspice of America's National Institute of Health, circumcision was shown to reduce the risk of infection of the AIDS virus by half such that they had to stop the study before it was completed as they considered it unethical not to offer circumcision to all the participants of the clinical trial.

Out of these studies carried out in Kenya and elsewhere in Africa, the US government has decided to channel more money in promoting circumcision as a way to fight the spread of the HIV in Africa. While I have not read all such studies, I am sceptical about this approach taken to combat the HIV/AIDS pandemic in Africa. Let me state that I support of circumcision (not the female type) and have no reason to believe that the study results are flawed. However, my opposition towards this strategy is based on the belief that these studies that have shown a correlation between circumcision and HIV may not be the solution to the HIV pandemic in some Kenyan communities.

My contention with the Kenyan study is the fact that it does not take into consideration the cultural background of the participants. The assumption is that the participants from the Luo tribe, who are known not to the practice circumcision, subscribe to the same culture and attitudes. As sensitive as the subject may be, it's hard to ignore the influence of cultural up-bringing on human behaviour. In essence, anthropology, sociology and psychology are all inter-connected at the groin when it comes to human sexual behaviour.

What am I saying? These studies mainly investigated the individuals without taking into account other intangible factors that play a large role in the lives of the subjects. In my humble opinion, you could forcefully circumcise every male in Kenya and do little to change the prevalence of HIV in the country. Even if it was made a mandatory procedure for every new born male, I doubt if we will see a dramatic change.

By all means, the anatomy and physiology of the male organ has been conclusively linked to the ease of transmission of HIV by way of the Langerhan cells on the foreskin and also through abrasion of the skin during intercourse increasing the risk of infection in uncircumcised (and also homosexual) men. Therefore it could be said that this is the connection between circumcision and the spread of AIDS and therefore the basis for the increased funding in supporting circumcision as a tool to fight the HIV epidemic.

Unfortunately, there is the another side to this coin, namely cultural behaviour. Because I not an anthropologist nor a sociologist and have limited knowledge on the cultural practices of uncircumcised Kenya communities, I would cautiously postulate that culture has the greatest influence on an individuals sexual behaviour. In turn, a persons sexual behaviour by and large determines their predisposition to getting infected with HIV.

If we re-examine the Kenyan study carried out in the western parts of the country, I would be surprised if there was not social up-bringing and/or cultural differences between those who got infected and those who did not get infected. Unless of course, all the participants recruited were said to be of the same culture and up-bringing. If they were not, it would be interesting to see how such data compares to what was reported.

As the saying goes, you can take a person out of the village but you can not take the village out of a person and the same could be said about the adoption of circumcision to fight HIV. If done as part of a multi-pronged approach it will bear much fruit. But in isolation it will be less successful in combating the spread of HIV in Kenya.

Going back to my argument, one of the main reasons for the high prevalence of HIV in Kenya is culture. Others have associated HIV with poverty, lack of proper health care facilities or even low levels of education but I am certain that these factors can also be found in other communities outside the African continent that do not have as high HIV infection rates like those in Africa. What's more, even within Kenya, the prevalence is not the same among all the communities.

In summary, those advocating for circumcision are better off joining their efforts with other schools of thought involved in fighting against HIV to ensure a greater success in the battle against the AIDS epidemic in Kenya. Taking a cow to the river does not mean it will drink the water and for that reason, a lot of the funds ear-marked to promote circumcision may end up in waste.

That said, the fight against AIDS will be won if we make use of all the available resources be it increased awareness, abstinence, fidelity to one's partner, proper use of condoms, circumcision, voluntary testing, counselling, ARV therapy and all other proven methods available in tackling the scourge. Above all, this fight requires the involvement of every Kenyan as we can not afford to take a passive stance because one way or the other everyone has been affected by HIV in the way of knowing someone who has been infected with the virus.

Must-read journal article- Male circumcision for HIV prevention in young men in Kisumu, Kenya: a randomised controlled trial, The Lancet, Vol 369, February 24, 2007 (pdf).

In Gold We Trust

In November 2005 Adrian Douglas, of Market Force Analysis, correctly predicted the mega-move in gold up to $720/oz by noticing a very large build-up of call options in the HUI (Amex Gold Bugs Index) component shares. True to his forecast, the price of Gold increased from $460/oz to $714/oz in a span of less than nine months.

Last month, Adrian Douglas was at it again forecasting that we will see a huge move in the price of Gold in the coming months. Based on his analysis of a similar build-up of call options for the October and December Comex gold contracts, there is a high possibility that we will see a repeat in the precious metals market in the near term.

Just this past week, Gold prices surged to 2006 highs of $700/oz barely a week after he had published his detailed analysis. With Gold stocks already outperforming the bullion, the dollar tethering on a cliff and the financial sectors in turmoil, it's about time Gold took it's place as a safe heaven haven for wealth.

Were it not that I am overweight in Gold, last month was definitely a good time to buy Gold while the major central banks were pumping money into the financial systems. Unfortunately, their strategy seemed have failed to restore liquidity in the credit markets as US consumers are being driven to insolvency by the frothing housing market and at the same time battling the not-so-contained inflationary pressures.

All the chatter about a possible rate cut when the FOMC meets on the 18th of September could also be the reason for the build-up of call options for the October and December Comex gold contracts. Should this be true, we may see the dollar tumble into unchattered territories.

As they say, lightening (in this case, Adrian Douglas) truely does strike twice. For now, I'll just sit back and enjoy the action as we await word from the Fed on the 18th.

Disclosure; In the money and long on CEF.

Hat tip; Investment Postcards from Cape Town

The High Cost Of Being Poor

While returning from running an errand in the city during my lunch break, I decided to pass by a fast food restaurant situated in the low income area of the city and grab a quick lunch. Not being a fan of KFC or Popeyes, I settled for a 'meal' at a Burger King restaurant. I placed my order and as I waited for it to be prepared, it dawned on me that I was paying more than I would have paid for the same meal at the Burger King restaurant closest to my home.

Two days latter I went into my local Burger King restaurant to see if there really was a price difference between the two restaurants. Just as I thought, I paid 32 US cents less at my local Burger King for exactly the same meal.

While this may have been a one time incidence for me, this is usually the norm for people who reside in low income areas. Even though they earn much less than the average suburbian, they end up paying more for exactly the same goods or services just because of their place of residence.

For instance, in my state, the amount of sales tax charged on a car purchase depends on where you reside regardless of where in the state you buy the motor vehicle. For a car costing $20,000, a city dweller would pay $1,548.20 in sales tax while if I were to purchase the same car I would pay $1,315 because I live in the county. Because of their locality, they end up paying higher car sales tax even though they may have bought the car from a dealership in the county. The same would apply for almost everything that they buy with-in the city limits.

In addition to paying higher sales tax, low income dwellers also get charged more for retail purchases, car insurance and, as was my case, food than if they would had they been residing in more affluent neighbourhoods which are mainly located outside the city limits. In addition, they also get charged higher interest on loans which increase their chances of defaulting because the added effect of all these additional cost ensures that they end up with very little savings or even no disposable income. As if to add insult to injury, many of them have to pay the city income taxes which is unlike the case for people who don't work in the city. It is because of such a scenario that billionaire Warren Buffet has been quoted in the press as saying that his real tax rate is lower than that of his personal secretary who earn $60,000 per annum.

A study report released in June 2007 by The Brookings Institution Metropolitan Policy Program details the extra burden placed low-income families in the state of Kentucky. This was in the form higher prices charged for just about everything from mortgage interests, credit card interest to key basic necessities. The report goes on to recommend a combination of initiatives to bring down costs, curb unscrupulous behavior and boost consumer knowledge that would bring down prices, creating up to thousands of dollars in extra family spending power for low income families.

These observations just go to reinforce my views that the system of commerce in the US favors the rich and places undue burden on the poor especially due to the materialistic nature of it's people. This makes the US a great country to live in if you are not poor as the dollars will open up doors for its holders. This is unlike the case in European countries which have socialistic tendency's and offer more public services to the poor although at the cost of its middle class citizens who have to bear the brunt of high taxes.

All these just goes to show that it costs a lot to be poor. If low income families are to break-off from the cycle of poverty, it will take much more than increasing their incomes. In my opinion, even though it is not that simple, moving away from the inner city may be the first step they take to achieve financial security. Call it urban-to-suburbian migration, if you will.

On A Chicken Wing And A Prayer

This past month we stumbled onto a new restaurant at the nearby strip mall. While looking for a dinner for the routine Saturday night family outing, we came across a new restaurant that probably opened while we were on vacation. From the outside, it looked like any other casual dinner so we decided to give it a try. From a far, it was kind of hard to read it's name but since it had a large parking lot that was almost full we took that to be a good sign to try out their menu.

As we pulled into the parking lot I noticed a drive-through lane leading to the back of the building and that is when we wondered whether this was really a casual dinner. To our surprise, it turned out to be a fast food restaurant that goes by the name Chick-Fil-A which I have never heard of before. Since there was seating space, we decided to try out their fast food 'cuisine' and from the pamphlets provided I found out more about this unusual dinner.

Founded in 1967 by S. Truett Cathy, Chick-Fil-A is a family owned fast food chain that prides itself on Christian principles. The privately owned company is run in accordance with the Cathy's family Christian heritage which is unique for a restaurant that has 1,300 stores nationwide in over 37 states. In line with the founder's beliefs, the company's statement of corporate purpose is to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-Fil-A. In addition to not opening it's stores on Sunday, the company also supports various Christian charities and politically active religious groups. The company's new stores are opened with an invocation and prayers are a common feature at it's offices.

Our decision to close on Sunday was our way of honoring God and directing our attention to things more important than our business. If it took seven days to make a living with a restaurant, then we needed to be in some other line of work. Through the years, I have never wavered from that position. - S. Truett Cathy

It turns out that the company is well known for it's Eat-Mor-Chikin slogan advertisements that feature semi-illiterate cows promoting chicken consumption. Another feature about the company is that they claim to have invented the chicken sandwich.

During my visit I was impressed with the store layout which gives it a casual-serve dinner atmosphere though they are essentially a fast food restaurant. The $6 meals are kinda unique and different from other fast food meals though I would have to spread my first impression over a few visits to get a better feel of their meals.

The fact that they have ample seating and parking spaces augers well for people seeking to eat out cheaply. Considering my kids love to eat junk food and are not fans of proper meals we might just pay them another visit soon. As for the nutritional value of the meals, lets just say you get what you pay for.

As a Christian, my faith is strengthened when I see a business of such a magnitude being positively influenced by the owner's Christian beliefs. The fact that the they have resisted going public with the business to maintain it's Christian heritage speaks volumes about it's their character. And to add onto that, the business continues to expand and is opening up approximately six new stores per month while growing its revenues by 15 percent.

CNN Video; Corporate Faith- Putting People Before Profits

Rate Cut Or Not? Take Your Pick

The summer is done, schools are back in session and full trading activity is bound to resume after what has been one of the most volatile month in the financial markets. Uncertainty though still reigns in the credit market despite the Feds assurance that they will do everything within their powers, including dishing out cheap money to troubled banks, to keep the US economy going.

Going into September, the big question is will the Fed cut the overnight funds rate? The answer depends very much on who you ask but the financial markets are certain that Ben Bernanke may do so before or during the September 18th FOMC meeting. With the discount rate slashed, it almost seems a foregone conclusion that they will start cutting the federal funds rate.

Back to the question, will the feds cut the rate? The short answer is the Federal Reserve Bank has no choice. To help understand why a rate is needed look no further than the US Treasury yield curve.

For a long time, financial analysts have been pointing out that the Treasury yield curve is inverted meaning that we are facing the possibility of the US economy going into a recession. On the other hand, policy makers and politicians alike have been quick to point out that the economy is doing fine and the just announced preliminary second quarter GDP report proves it. If you ask me, this like comparing apples to oranges. The yield curve in itself is a leading indicator, while the GDP report could be taken as a lagging measure or a coincident indicator depending on how you look at it.

Having very little faith in the politically correct Feds, I would rather go with the sentiments of the bond traders even though they are not always right. Didn't Bill Gross, the legendary bond investor, who manages the world's largest bond fund turn bearish on bonds in the summer expecting global rate hikes driven by strong worldwide economic growth? Unfortunately, this was one of the few occasions that the bond market got it wrong because he also went on to predict that "Central banks and asset managers are likely to shift away from safe-haven investments, such as U.S. Treasurys, as they seek out higher yields".

As it turned out to be in August, the sub-prime mortgage fall-out drained the liquidity from the banking system with investors rushing into US Treasuries driving down the yields. This in turn, caused the Treasury yield curve to invert even further as the Fed overnight rate is held at 5.25%. On the other hand, long term bond rates have not changed much thereby exacerbating the inversion.

In my opinion, the Fed has been caught between a rock and hard place with the dollar tethering on a cliff and the US economy staring in the face of a recession. So should the Fed cut the rates? My answer is a resounding no because doing so will hand more ammunition to speculators who have driven all asset classes into a bubble. 'Normalising' the yield curve will do little in the way of reverting the markets to their mean. The economy is over-due for a landing in preparation for the next business cycle.

Fortunately, my opinion doesn't count and the FOMC, which consists of very experienced economists, has various monetary tools that they can employ to steer the US economy from the R word. All in all, it remains to be seen what they will do as their decision will be felt in all corners of the nation and especially in Wall Street.

Whatever happens on or before September 18, I have no intention of fighting the Federal Reserve Bank. I'd rather stay in the sidelines and be safe than take a position against them, even if they get it completely wrong, as they hold all the instruments required for moving the financial markets in whatever direction they deem necessary.

Addendum - Deciphering the Treasury Yield Curve

Spot The Ball

Send your entry to;
The Sports Editor
Spot The Ball Competition 8-31-07
EA Standard Newspapers
P.O Box 30080, 00100 GPO, Nairobi-Kenya.

Entries should be received no later than September 10, 2007.

Lucky winner will receive two return air tickets to watch a Premier League football match in the UK.

Terms & Conditions; Competition open to residents of Kenya, aged 18 and over as of 31st August 2007. Employees of the Standard Group and their immediate family members are not eligible to enter. The decisions of the judges will be final and binding in all matters relating to the competition. By entering the competition, entrants fully and unconditionally agree to be bound by these terms and conditions.