Business: The Mobile Wave is Coming to South Carolina (and the World)

No, this isn’t another Hurricane Hugo. Yet it is disruptive and transformational. It’s the mobile wave. And, it’s bringing radical changes.

The Agricultural Revolution took place over thousands of years. The Industrial Revolution took centuries. Now the Information Revolution is expected to achieve huge changes in our lives and businesses in a matter of decades.

Michael Saylor’s recent book, The Mobile Wave: How Mobile Intelligence will Change Everything presents an excellent overview of the evolution of mobile computing and what the future may hold. Main frames, minicomputers, personal computers, the Internet PC have led to the fifth wave, mobile computing which features:

  • Multi-touch with an interface that is fun and easy and the use of shapes not symbols
  • Widely affordable
  • Longer battery life
  • Instant-on to for immediate information and communication
  • Apps that inexpensively perform a range of tasks easily and quickly
  • Sensing the world around us through GPS, voice commands, scanning and cameras
  • Easy to carry and available anywhere, anytime.

Is it any surprise that as a result of the mobile wave traditional bricks-and-mortar businesses are being upended, and a huge global digital economy is being created? Paper, credit cards, cash, doctor’s office visits and perhaps classrooms may be obsolete soon.

Two weeks ago, the Charleston area Chamber of Commerce hosted an event featuring ten start-ups focused on “riding the mobile wave.” They were the winners of a competition sponsored by Greenville’s Iron Yard, an organization dedicated to providing innovation, education, mentoring and capital to create a thriving start-up community and develop young entrepreneurs. There were 321 applicants this year from 19 countries.   

Companies included web or mobile products for targeting grocery ads, safe ride-sharing, highlighting athletic accomplishments for non-professional athletes, and others. These energetic, bright (many have Masters or Doctorates in computer science) entrepreneurs have plans to be part of the huge, growing mobile wave. It was exciting to meet these young leaders and to hear their plans and enthusiasm. They get it.

We’ve already seen this year the impact that mobile devices and social networks have had on politics in Europe, The United States, the Middle East and around the world. Mr. Saylor believes that the combined forces of mobile and social software may transform 50% of the world’s GDP in the coming decade. This would remake businesses, industries and economies. By 2025, we may see an almost universal use of mobile computers as our primary means of navigating through modern society.

The Mobile Wave is happening, bringing radical change. We’re right in the midst of this third major revolution, undoubtedly one of the most exciting periods in history.

Bonus Blog: My Love Affair with My Laptop is Over

fee-only financial planners, good postureI remember the first time I met a laptop. It just about took my breath away. Instead of the huge tower and monitor, here were all the charms of a computer in one nice, neat package. What a bombshell:  computer, keyboard and monitor all in one.  And, since it was so light, we could travel together all the time and be together endlessly. It was love at first sight.

It wasn’t a monogamous relationship at first. I continued primarily with my tower and monitor at the office. I used the laptop at home. Loved every minute of it. Over time, my tower grew old and clunky. The appearance of the monitor wasn’t what it used to be. I found myself using my laptop more and more.

Ultimately, about five years ago, I started using a laptop exclusively. The two of us were inseparable. Little did I know that this relationship was harmful to my health the more we were together.

It all became clear about a month ago. I was working on some large projects and was with my laptop for 10-12 hours per day for a few weeks. I started feeling back pains. My right shoulder ached. There was numbness in my right arm. Friends suggested I had developed a pinched nerve or herniated or bulging disk

A visit to my doctor confirmed this. Our vertebrae are cushioned by small, spongy discs. When healthy, the discs act as shock absorbers. When a disc is damaged, it may bulge. The bulging disc presses on nerve roots and can cause pain, numbness and weakness in the area of the body where the nerve travels. As you age, the discs dry out and aren’t as flexible. Further, discs can be injured in a number of ways, particularly poor posture over time. Fortunately, my injury wasn’t too severe. I’m on injured reserve now, but rehabbing and hope to better than ever physically in a few months.

I found that the basic reason this occurred was that I was a victim of “laptop-itis.” Don’t laugh. Researchers at UNC-Chapel Hill School of Medicine first coined the term two years ago. After much research they determined that “high use of laptops can lead to a new ailment called laptop-itis:  neck, back and arm issues that can develop from the use of a portable computer”. The health center there says that laptop-itis had become an “epidemic”.  And, remember, these students didn’t have aged, inflexible discs when they came to campus.

Many students use their laptops regularly, for online classes, homework, research and entertainment. For them and us, the laptop often results in the user hunched over the screen in a “scrunched” position. Posture is bad and the body positions are not ergonomically correct. Prolonged use of a laptop is causing headaches, neck aches, carpal tunnel, tendonitis, and back pain in young and old.

So, my love affair with my laptop is over. I have a new adjustable-height desk at which I work standing up half the time. I have my monitor attached to a movable arm that positions it for the perfect eye-level distance. I have a rubber keyboard and an “evoluent” wireless mouse, which operates while my hand is in a vertical position (like shaking hands) not a horizontal position. It’s basically an ergonomic showcase.

I’m sharing this sad story of love, damage and separation, because many of you may be using your laptop too much as well. Here are some pointers for the future if you are using a laptop:

  1. Take a break every 20 minutes. Stand up, walk around and stretch.
  2. If you’re going to use a laptop, don’t cradle it in your lap.
  3. Tilt the screen so you don’t need to bend your neck. 
  4. If you can, use a desktop computer for long durations at the computer.
  5. Switch out your laptop for a desktop or use a docking station.
  6. If you have pain, see a doctor.

Remember, don’t let your laptop seduce you. It may cause you pain in the long run.

Lessons from Iceland’s Meltdown into Materialism

fee-only financial planners

From The Charleston Mercury, Thursday, September 20

Remember Iceland’s collapse in 2008?  It’s an amazing story.

Iceland is a tiny country with only 320,000 people. Yet, starting in 1994, this nation of fishermen and farmers became an international financial center. Its three major banks increased their assets by the end of 2007 to an astounding 923% of Iceland’s GDP. Personal income soared. GDP per capita was one of the highest in the world (39% more than the U.S.). However, the widespread affluence of the entire country was, in fact, a mirage. Households had debt of 250% of their annual income. When the world financial crisis came, Iceland’s banks and economy collapsed. A country built on materialism and consumer spending had gone bust.

Before the collapse, two professors, Ragna Garoarsdottir and Helga Dittmar, started a study to compare materialism, debt and financial well-being. Iceland was their lab. Recently, the Journal of Economic Psychology published their results. The conclusion was that “people who endorse materialistic values have more financial worries, worse money-management skills and a greater tendency towards compulsive buying and debt.”

Their study pointed out that in consumer societies, materialism has long been considered a national goal. Hard work produces higher income which results in more consumption and therefore higher living standards. GDP has long been considered a proxy for a nation’s level of well-being. If so, then one might suggest that for households, greater consumption, or materialism, would produce greater financial well-being. That just isn’t the case.

Garoarsdottir and Helga Dittmar’s study focused on five variables; materialism, money-management skills, tendency to spend, compulsive buying, and financial worry.  Respondents were asked  to measure how much they agree or disagree with statements such as “The things I own say a lot about how well I’m doing in life”, “I always know how much money I owe”, “I spend extra money quickly”, “I sometimes feel that something inside pushes me to go shopping”, and “I worry about my financial situation.” They summarized the results and compared the variables for correlation.

Materialism has been defined as the “importance ascribed to the ownership and acquisition of material goods in achieving major life goals.”  This Icelandic study concluded that the level of materialism is related to “higher levels of financial worry, a greater risk of compulsive buying, and higher debt.”

Their conclusions don’t surprise me. Financial well-being doesn’t result from materialism. On the other hand, a realistic financial plan can help promote and provide financial well-being. Such a plan identifies goals in three categories; Needs, Wants and Wishes in that respective priority and requires tough choices based on income. Materialism puts Wishes as top priority and tries to find ways to fund them. That’s a bad strategy.

Les Detterbeck is one of a small number of investment professionals in the country who has attained CPA, CFP®, and CFA designations. His firm, DWM Financial Group, Inc., a fee-only Registered Investment Adviser, has offices in Charleston/Mt.Pleasant and Chicago. Les may be contacted at (843)-577-2463 or


Middle East: Muslim Rage Likely to Continue

muslim rageThe attacks on the U.S. Embassy in Benghazi and elsewhere were deplorable. American foreign policy in the Middle East must be clear and firm. Yet, a balance must be struck between supporting democracy and guarding our national interests. It won’t be easy. And Muslim rage is expected to continue.

The violence in Libya, Egypt, and across Arab countries may have looked spontaneous. It wasn’t. Many believe we can expect a new phase of Muslim rage. The Arab Spring replaced hated dictators. These dictators were all about control, including blocking internet access to prevent their people seeing inflammatory material and using their strong security forces to prevent or limit protests. That’s all changed.

Most new governments have fragile mandates, ever changing loyalties and weak security forces. They aren’t quite sure what to do or how to do it. According to the September 24th issue of TIME, “the tendency has been to look the other way and hope the demonstrators run out of steam.”

To be sure, the attacks are more than a reaction to an anti-Islam video. And, the rage isn’t directed only at America. Seven days prior to the killing of Ambassador Stevens in Benghazi, scores of people were killed in Iraq, the defense minister of Yemen survived an assassination attempt, and Syria’s civil war continued, with over 25,000 already dead. Salafists, the second leading vote getters in Egypt, attacked Sufi shrines in Tripoli and other Libyan cities. Small groups of hate mongers are taking advantage of the current situation to promote their religion and their politics, often to a suspicious and ignorant population.

Most Americans know little about the Arabs. And, they know little about us. Coincidentally, two weeks ago I completed a very interesting book entitled The Arabs: A History written by Eugene Rogen. I found it fascinating and highly recommend it. It details the last five hundred years from the rise of the Ottoman Empire until now. It outlines why the Islamic world seems to bear a grudge against the West. In their minds, Western intervention and imperialism, primarily by Britain and France, made many Arabs slaves within their own countries for centuries. And, even with independence, Britain and France still continued to extract economic benefits and support dictators who stifled individual economic and/or religious freedom.

Of course, Muslims resent slights to their religion. Hence, certain Muslim outbursts of rage play well for political parties. The Salafists are fundamentalists. They would like a fusion of government and religion as exists in Iran. Stirring up religious fervor is exactly what they are about. It’s not too difficult to do. Ignorance of the West facilitates rabble-rousing in Muslim countries. Protestors at the American embassy in Cairo erroneously believed that the offensive film was shown on “American state television”, which seemed very likely to those unaccustomed to independent broadcasting. We Americans know we don’t have a “state-run” television system, but many of the protesting Arabs didn’t know that.

The Middle East matters- big time. It’s the world’s energy’s center, at least currently. It is home to Iran, one of our committed enemies. And, it is the heart of Islam, a religion followed by over 2 billion worldwide. The Arab Spring will likely be good for America. However, now that change has come and the genie is out of the bottle, we can expect to see continued rage from a small minority of the Muslims for some time to come.

Housing: “Full Recovery” or “On the Mend”?

home prices upI loved the cover story for Barron’s on Saturday. Jonathan Laing’s article announced that the “national nightmare is over, home prices are headed up and the recovery is for real.” Wouldn’t it be great if he’s right?  After six years of major declines in home prices wiping out $7 trillion in home values, we’re all ready for a big turnaround. Unfortunately, though housing is certainly on the mend, a full recovery may still be far off.

Mr. Laing, of course, pointed to the Case-Shiller report that showed a jump in home prices of 2.3% in June over May and a 6.9% increase in second quarter 2012 compared to first quarter. He pointed to optimistic reports such as Moody’s Analytics’ Mark Zandi who feels home prices on average will rise 10% by the end of 2014. And, Lawrence Yun, chief economist of the National Association of Realtors, thinks that home prices could increase by as much as 5% in both 2012 and next year, in part due to lower inventory of houses for sale. Lastly, Ingo Winzer, president of Local Market Monitor is forecasting a cumulative increase of 7% over the next three years.

Others are not so optimistic. Nick Timiraos, in the Wall Street Journal on Monday, indicated that the strong sales in early 2012 signal that more U.S. housing markets have hit bottom. However, in his words, the housing market “remains far from normal.” In addition, “hitting a bottom shouldn’t be confused with a recovery, which looks a ways off.”

Here are some reasons that Mr. Timiraos, Barry Ritholtz and others believe that housing has stabilized but we are not in recovery mode:

  1. The economy is still limping along- consider weak job creation, flat wages and low household formation.
  2. The foreclosure process was slowed or halted for almost a year as part of the “robosigning” settlement discussions. Distressed sales fell from 38% to 28% of existing home sales. Now that this issue has been resolved, foreclosures are moving higher, putting more distressed houses on the market. This will likely reduce the average price of houses sold.
  3. Low inventory is not necessarily good. Home equity plunged in the last six years. Many homeowners would like to move on. But, they become buyers after they sell, and if they won’t have enough equity after the sale to buy, then they sit.
  4. Mortgage rates are at historical lows. Buyers get a huge increase in purchasing power with these low rates. What happens to home prices when mortgage rates start to rise?
  5. Results must be seasonally adjusted. Second and third quarters are historically the best months for home sales. Let’s see what the fall and winter bring.

There are good signs in housing. Yet, there are still plenty of headwinds before we see a return to normal. Regardless, it appears that housing has stabilized and hit bottom in parts of the country. That’s good news.


US Budgets and Debt: A Non-Political Primer

U.S. Budgets and Debt are key issues in the Presidential Race. Budgets, of course, represent priorities and choices. Just as elections do. I thought a quick recap of budget and debt might be helpful to each of us as we cut through the election rhetoric and try to evaluate various proposals for the future.

The U.S. fiscal year ends September 30th. The budget for the 2012 fiscal year ending in four weeks is expected to generate a deficit of $1.3 trillion. Our total revenue is $2.5 trillion, yet we willl spend $3.8 trillion. Our current debt is roughly $16 trillion and growing.

Revenue comes primarily from taxes:  50% from individual income taxes, 10% from corporate income taxes and 30% from payroll taxes.  Expenses are grouped into three major categories: Mandatory programs, Discretionary Programs and Interest.

The chart above shows the relative amounts spent on various items. Mandatory expenses, including social security, medicare,  medicaid  and federal pensions, account for 56% of the expenses. 37% of expenses are “discretionary” expenses, of which 20% is defense spending and 17% is everything else. “Everything else” includes education, transportation, veterans’ benefits, environment and others. Fortunately, interest rates are at historical lows, so interest on the $16 trillion of debt is “only” 7% of total expenses.

Hopefully, this provides some perspective on where the dollars come from and where they go currently.

Annual deficits of $1.3 trillion are not sustainable. You may recall that in 2010, the National Commission on Fiscal Responsibility and Reform (often called the Simpson-Bowles Commission) was formed to review and propose changes. The bipartisan committee delivered their final recommendations on December 1, 2010.

Their proposal was designed to save $4 trillion (through program cuts and revenue increases) over the next decade. Its five main “steps” were:

  • $200 billion reduction per year in discretionary spending, which included defense cuts of 15% and cutting the federal work force by 10%
  • $100 billion in increased tax revenues including an increase in gasoline taxes and restricting certain tax deductions
  • Controlling health care costs
  • Reducing entitlements, including farm subsidies, federal pensions and student loan subsidies.
  • Modifying social security to raise the payroll tax and retirement age.

Unfortunately, the commission fell short of the supermajority of 14 or 18 votes to approve the report and send it to Congress for a vote.  

A year ago, Congress voted to raise the nation’s debt ceiling (to $16.4 trillion). At that time, they established a super committee to identify at least $1.2 trillion in savings and submit them to Congress for a vote. If there was no approval, then automatic reductions of $100 billion per month would start as of 1/1/13. The supercommittee was unable to reach a budget deal last November and Congress has not moved forward with its own plan. Now, the automatic cuts scheduled for January represent part of the current “fiscal cliff”. The other part is the planned expiration of the Bush tax cuts.

There is much at stake in this election. Budgets and Debt are key issues. I hope this information helps.

FRAUD: Protecting Your Identity

Identity theftIt’s probably something you’d rather not think about, but identity theft affects more than 10 million Americans every year and is growing rapidly. If you haven’t been a victim, you probably know someone who has. Thefts range from an unauthorized charge on your credit card to a complete loss of your identity.

Many thieves have financial motives like taking out a loan, opening bank or credit card accounts, or using your account information to create counterfeit checks or cloned ATM cards to drain your accounts. They may use your information to get government benefits like Social Security payments.

Other thieves use your information to get a driver’s license, rent an apartment, open cell phone or utility accounts, or get a job using your social security number. Perhaps the scariest scenario of all: someone gets arrested and gives the police your information. When they don’t show up for court, the arrest warrant is issued in your name.

The good news is there are things you can do to protect yourself:

1.   SHRED everything with sensitive information. (Anything you wouldn’t hand to a total stranger). Ask your accountant how many years of tax returns to keep, and shred the oldest year’s return and related records each time a new one is filed. Shred old statements and credit card offers. Don’t leave receipts at ATMs or gas pumps.

2.   SHOPPING ONLINE is safe as long as you are on a secure website. The internet address should start with “https” and have a padlock icon in the lower right hand corner.

3.   COMPUTER SECURITY: Use anti-malware/spyware and anti-virus programs and keep them up to date. This will prevent hackers and malicious software programs from gathering data unbeknownst to you.

4.   TELEPHONE SCAMS: Never give out information to someone who calls you claiming to be from your credit card company, bank, etc. If they are legitimate they already have that information. Call the company yourself using a phone number from the back of your credit card or bank statement.

5.   In PHISHING SCAMS a thief sends a legitimate-looking email from a company you have an account with and asks you to reply with information or click on a link. Instead, contact the company directly through the website or phone number you would usually use. Watch which website you go to: there are scammers who set up websites that look legitimate but aren’t. (ie or

6.   USE A SAFE for all your important documents including your social security card. Keep your birth certificate, passport and other identifying documents in a bolted-down safe at home and use the hotel safe when you’re travelling. Losing any of these documents makes it extremely easy for someone to steal your identity.

 7.   CREDIT FILES can be protected by placing a security freeze on your credit reports. When a freeze is set at all three credit bureaus, a thief cannot open a new account because the potential creditor will not be able to check the credit file. When you need to apply for credit, you can lift the freeze temporarily. See:,, and

8.   Order a free CREDIT REPORT through from one of the three agencies every four months. You are entitled to one free copy a year from each agency so you can rotate your requests. Watch activity and check for inaccuracies. Also, be sure to close credit accounts you don’t want; don’t just cut the cards up.

9.   BE AWARE of who’s around when you are at an ATM, on the phone, or online in public. Someone may be eavesdropping. Hackers can steal personal information from nearby laptops and smartphones. Set a strong password (a combination of letters, numbers, and symbols) on these devices that automatically locks after a certain period of inactivity.

10.   MAIL envelopes with any sensitive information from a Post Office mailbox or secure mail slot, not your home mailbox where mail could be stolen. Eliminate credit solicitations by ‘opting out’ with companies you do business with and sign up for the Do Not Mail ( and Do Not Call registries (

This is one situation where Ben Franklin’s old adage “an ounce of prevention is worth a pound of cure” is certainly good advice.

An Investment Plan for the Truly Fed Up

From the Charleston Mercury, Aug. 23:

“The deck is stacked.” “The game is rigged.” “The system is unmanageable.”

No, these words were not spoken by another loser in Las Vegas. Instead, they were written by Ron Lieber, columnist for the New York Times a few weeks ago. Mr. Lieber’s article, “A Financial Plan for the Truly Fed Up,” was one of the most e-mailed for over a week.

It’s not surprising. Many people are upset. They’re fed up with Wall Street and they’re fed up with feeble or non-existent investment returns.

Lieber cites the recent frequency of “unfortunate” events including funky trading programs at Knight Capital, the “London Whale” debacle at JP Morgan and the LIBOR scandal as reasons why some people want nothing to do with big banks. Mr. Lieber isn’t the only one. Neil Barofsky, the former special inspector general of TARP, has just released a new book entitled “Bailout.” In it, Mr. Barofsky details his experiences and argues that the Treasury Department has worked with Wall Street firms to increase their profits at the public’s expense.

At the same time, returns on most equity indices over the last five years have been flat or negative, while the cost of living has increased 2% per year. And, what about those other concerns, like inflation and living longer?

O.K. So you’re fed up. Understandable. But, it’s not time to give up. You need to get returns that exceed inflation. Here’s a format to consider:

Group your investment portfolio in two pieces, Strategic and Alternative. The strategic piece would consist of long-only investments in stocks and bonds, utilizing mutual funds and/or ETFs. The alternative piece may consist of stocks, bonds and alternative assets and may hold both long and short positions, both liquid and illiquid depending upon your situation.

The strategic portion of the portfolio should be seen as the “core” piece representing the majority of your portfolio, say 70-80%. This portion is driven by the risk, return, and correlation of the equity and fixed income asset classes within. Hence, it incorporates a higher beta, or correlation with the market (and when we say market, we mean both the stock market and the fixed income market).

The alternative portion of the portfolio should be seen as the “satellite” piece representing the minority portion of your portfolio, say 20-30%. This portion is not driven by the usual market forces – it may employ hedge-fund type risk management components and strategies that are designed to protect the downside and participate in the upside – hence less reliance on beta and more reliance on alpha (defined as the value added by the investment manager).

Combining the “core” and “satellite” pieces gives you an overall portfolio that should enable you to participate from your market or beta-like exposure but also will protect you by your alternative/absolute return/alpha-seeking exposure. Of course, your overall asset allocation must be reviewed regularly. And both the strategic and alternative portfolios require ongoing rebalancing to adjust to targets and to take advantage of opportunities to increase return and/or reduce risk.

Yes, there are solutions for those ready to embrace them.

Les Detterbeck is one of a small number of investment professionals in the country who has attained CPA, CFP(r) and CFA designations. His firm, DWM Financial Consultant Group, Inc., a fee-only Registered Investment Adviser, has offices in Charleston/Mt. Pleasant and Chicago. Les may be contacted at 843-577-2463 or 

Where Have All the Investors Gone?

Where Have All the Investors Gone?Many non-DWM clients are upset. Their investment portfolios have stagnated or declined. Lots are so fed up, they have taken “their ball and gone home.” They are sitting in cash and/or C.D.s. That’s likely not the right answer.

On Sunday, August 19th, the Washington Post ran an article by Barry Ritholtz entitled: “Where has the Retail Investor Gone?” The article outlines reasons why investors are dropping out. Coincidentally, I submitted my latest article to the Charleston Mercury two weeks ago with the title: “An Investment Plan for the Truly Fed Up.” The article will run this Thursday, August 24th.

Therefore, I thought you might like a “two-fer” blog this week. Today we review reasons why people are fed up and, later this week, a better solution than dropping out. It’s the DWM approach- used by us personally and by our DWM clients.

Mr. Ritholtz is quick to point out that there is no one reason why investors are leaving the markets. He detailed ten reasons weighing on “people-formerly-known-as-stock-investors:” Here are some key ones:

  1. Secular cycle. We’ve been in a bear cycle since March 2000. Stock markets are effectively unchanged since 1999, except for the Nasdaq, which is still off 40% from its 2000 peak. There was a somewhat similar secular bear market from 1968-1982. However, many investors today were not investors back then.
  2. Psychology. Investors are scarred and scared. There has been a psychological shift from love to hate to indifference with stocks.
  3. Risk on/risk off. Central bank intervention has “trumped” fundamentals. 
  4. Poor returns across various asset classes. There have been booms and busts in equities (2000 and 2008-9), real estate (2006-?) and even gold (2011-2012). Some people are sick of the “investing game.”
  5. Wall Street scandals. First the bankers help to blow up the markets in 2008, and then they are bailed out. Individual investors got nothing but the invoice. It continues. Recently, MF Global, Peregrine, Knight Trading, the LIBOR scandal and JP Morgan Chase have also made investors quite uneasy. Theft and incompetency appear to have run rampant.
  6. Trendless economy and markets. Our economy continues forward slowly. Unemployment is still high. Real wages are flat and consumer spending is unremarkable.

It’s easy to understand why investors are fed up.  What’s not easy to understand is why investors would “drop out” or continue with an investment plan that doesn’t work.  Later this week, our next blog will suggest a better solution for fed up investors. 

Love that Cash!

Love that Cash!Ever wonder where worldwide currency gets printed? Certainly, here in the United States, our U.S. dollar banknotes are printed by the Bureau of Engraving and Printing in D.C. and Fort Worth, Texas. Of course, our Federal Reserve keeps them busy. Like the U.S., most large countries do their own printing. The smaller countries, and those under a time crunch, outsource the job.

South Sudan seceded from Sudan on July 9, 2011. It needed currency quickly for its new country. Of course, like all cash, it would have no intrinsic value, but it needed to appear of value to inspire public confidence. The product needed to be durable and secure. South Sudan needed millions of copies of their six bills produced cheaply yet safe from fraud. Ten days later, on July 19, 2011, the government introduced the South Sudanese pound, which included the image of John Garang, deceased leader of their independence movement.

South Sudan couldn’t have accomplished this without De La Rue, a British company and the world’s largest commercial banknote printer. De La Rue got started in early 19th century, obtaining a Royal Warrant to print playing cards. Today, it also prints passports, drivers’ licenses, stamps and bank checks. Its customers include 36 central banks, including the Bank of England, the Bank of Greece and the European Central Bank. There aren’t many worldwide “security” printers. Trust is one huge factor. A long history and established relationships with central bank clients are others. De La Rue’s two main competitors also both date back to the 19th century.

The Wall Street Journal on August 13th reported that African countries want to replace the U.S. dollar with their own. Angola, Mozambique, Ghana and Zambia have all recently enacted laws to reduce U.S. dollars in their countries. In copper-rich Zambia, the central bank has banned dollar-denominated transactions and now requires the kwacha be used. They’re serious about this. Violators may spend 10 years in prison. The desire is more than national pride. Small economies like Zambia do not want complete reliance on foreign currency. It’s working. Their recent changes have heightened demand for the kwacha and have pushed their currency to its highest level against the dollar in more than a year.

The financial crisis has also been good for banknote printers. The collapse of Lehman Brothers in 2008 has led to people holding more cash. Around the world, low interest rates and fear of banks in general have resulted in more cash being stuffed in mattresses. Furthermore, if, in fact, Greece exits the euro, commercial banknote printers will undoubtedly be asked to produce, in secret, millions of drachmas in a very short time. And, can you imagine what would happen to the banknote printing industry if the euro zone splits apart?