Why our economy stinks

It all begins with our leadership...

"I think this is a case where Freddie Mac (NYSE:FRE - News) and Fannie Mae (NYSE:FNM - News) are fundamentally sound. They're not in danger of going under I think they are in good shape going forward." -- Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008

Caroline Kennedy for Senator: What a joke!

As a New Yorker I get to weigh-in and state categorically that appointing Caroline Kennedy to fill Hillary Clinton's position would be a fiasco for many reason. Here are my three reasons why.

1. Better Candidates: There are many other NYers (both politicians and non-politicians) who are better qualified to represent the interests of NY and serve as a Senator. On the political side; Suozzi, Maloney, Silver, Bloomberg and Cuomo all would be a better choice then Caroline Kennedy. Additionally, there are many retired first rate executives throughout NY most any of whom could do an admirable job.
2. She's never run for anything: Caroline is a nice person but certainly not a Senator or even a school board member. Heck to the best of my knowledge she's never sought votes, raised money or run for anything of note. Worse, her interviews over the past week have been as embarrasing as her own voting record.
3. Kennedy name: In 2009 the Kennedy name means little to the majority of NYers; only those in the media think it carries any cache. Worse, most every American is turned-off by the notion of gaining an advantage because of one's surname.  It's time to give opportunities to those who have worked hard, paid their dues and earned our respect; something Caroline Kennedy has not done.

Best explanation about what went wrong with rating agencies

http://www.cnbc.com/id/15840232?video=955037443

Business Sheet's Biggest Losers: A Classic

Of course all these guys in the "Biggest Losers" had the dough to lose. The comments are the best part.

Garden City Junior High School 1973 Boy's Championship Basketball team (12-2)

Ahh the 70's; when shorts were short and socks were long.

Left to Right: Bruce Bergwall, Keith Ladd, Richard Graham, Coach Ralph Kenny, Tom Bonanno, Jimmy Kenny and Mgr. Mark Chingas. Rounding out the team (not shown) are Phil Hoffman, Jim Evans, Pete Odenthal, Dan Sullivan, Marc Palminter, Bill Goefert, Dave DeLong and Jim Procelli.

A Good Argument for Bankruptcy of the "Big 3"

OP-ED CONTRIBUTOR

Let Detroit Go Bankrupt

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By MITT ROMNEY

Published: November 18, 2008

Boston

Enlarge This Image

Ronald J. Cala II

Related

Times Topics: Auto Industry Bailout

Times Topics: Mitt Romney

Readers' Comments

"The federal government needs to rethink its priorities. Let's spend our money wisely and invest in 'America' first."

Dr. Arnold Wolf, Sterling Heights, Mich.

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IF General Motors, Ford and Chryslerget the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

More vs Better Government

One thing is clear from this fall's financial debacle; our governments utter inability to hold anyone responsible for being asleep at the switch or in making the wrong decision. How is it possible that the likes of Paulson, Dodd, Frank and Cox and even President Bush himself (key public figures in a position of authority and responsibility when it comes to our nations treasury) are not being investigated by prosecutors on charges that the military used to be classify as "dereliction of duty". I fear that the $700,000,000,000 in funding provided for under the legislation that has recently be passed will go down as the greatest heist in the history of man kind. Greed knows no bounds and now where is greed more grievous than in Washington DC and Wall Street.

Franklin often inferred that even at the founding America's decline and ultimate demise will come from within via the corruption and incompetence that is bred by our current political system.

Psalm 28:29

"He who trusts in himself is a fool, 

    but he who walks in wisdom is kept safe".

Psalm Chapter 28, verse 29

Free Will vs. Security: The Grand Inquisitor Redux

I heard on the radio this AM a reference to the Doestefsky's brilliant novel; The Brothers Karamozov and in addition to bringing me back a few decades to one of my more memorable classes in college it reminded me of a fascinating chapter titled: The Grand Inquisitor that featured the famous quote:

"Nothing has been more insufferable for man than  freedom..."

With the dire state of our finances (both fed, state and personal), the ongoing War on Terror, Drugs, Poverty, etc and so many focusing on themselves rather than the well being of "our neighbor" the theme of the Grand Inquisitor seems fitting. That is in the poem the Grand Inquisitor's statement to Christ (this is a novel) that he must leave because he offers individuals the freedom to choose where as he [the Inquisitor] offers them no freedom only security. In other words the Grand Inquisitor states to Christ that with His offering of freedom to followers implicit is the freedom to choose wisely and unwisely; and if a choice is unwise it will lead to despair and unhappiness. The Grand Inquisitor knows that freedom opens the door for suffering because people have the freedom to make a 'bad choice'.  Whereas and without a choice his subject are far happier with security when compared to freedom. 

As we roll out our new big government programs of President Obama I'm wondering whether decent to a choice-less society - one more akin to that which the Grand Inquisitor would approve - is where we are headed. Stay tuned.

Why the Bail Out is a Bad Idea

A great article from CNNPolitico.com

By Jeffrey A. Miron
Special to CNN

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

Our Flawed Financial System

While reading through the Bible this AM I came across the following two (2) verses in Psalms that seemed all too fitting in light of the financial chaos that is wracking our nation.

¹⁵ The nations have fallen into the pit they have dug;
their feet are caught in the net they have hidden.

¹⁶ The LORD is known by his acts of justice;
the wicked are ensnared by the work of their hands. ^[c]

So much has been written about countries financial fiasco that I'll just leave my current thoughts with this these two (2) verses but rest assure what has happened to our financial system is no accident.

Commodity Futures Modernization Act of 2000: The cuprit for high oil prices

Commodity Futures Modernization Act of 2000

http://www.onlinejournal.com/artman/publish/article_3252.shtml

The ghost of Enron returns . . .

As that US Senate report noted, “Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called 'futures look-alikes.'
"The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.<>"The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC’s primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: 'The Commission’s Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation.'
"In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts (open interest) at the end of each day.” [1]

Brewing War Against Web Advertising

"War against the Web"

Randall Rothenberg, President & CEO of Interactive Advertising Bureau (IAB) warned us all that legislation is pending in both NYS and CT's legislature that could destroy the Ad Rev opportunities for web based pubs by requiring that all users be given the option of Opting Out of any advertising that may appear on their screen. Furthermore, the legislation would outlaw the collection of any user data (i.e. basic marketing info, ect). Worse yet, this legislation is being promulgated by legislators who at best have only a scant understanding of what they are doing and are being driven by the misguided and errant outcry's from such organizations as The Center for Digital Democracy and the likes of Penn's Prof Turow; both of whom are positioning web-based advertisers as the scourge of our nation. Their claims are ridiculous and would be laughable were in not for the fact that legislation is pending that could potentially wreak havoc in the on-line Ad rev business world; action is essential.

The best way to fight this idiocy is to contact NY and CT state legislatures to inform them of the damage such legislation could offer. Would they ban ads from newspapers and magazines? Why the web.

Melanie's Final Show

http://www.youtube.com/watch?v=ut_cWFrR8b0 YouTube video showing Melanie's final art project from the Moore College of Art. May 18, 2008.

The Paradox: by George Carlin

Every now and then Carlin is so right! One of his more thought provoking works as sent to me by my good friend Appolos. ___________________________________________________

The paradox of our time in history is that we have:

• taller buildings but shorter tempers,


• wider Freeways, but narrower viewpoints.


• We spend more, but have less,


• we buy more, but enjoy less.


• We have bigger houses and smaller families,


• more conveniences, but less time.


• We have more degrees but less sense,


• more knowledge, but less judgment,


• more experts, yet more problems,


• more medicine, but less wellness.

We drink too much, smoke too much, spend too recklessly, laugh too little, drive too fast, get too angry, stay up too late, get up too tired, read too little, watch TV too much, and pray too seldom.

We have multiplied our possessions, but reduced our values. We talk too much, love too seldom, and hate too often.We've learned how to make a living, but not a life. We've added years to life not life to years.

We've been all the way to the moon and back, but have trouble crossing the street to meet a new neighbor. We conquered outer space but not inner space. We've done larger things, but not better things.

We've cleaned up the air, but polluted the soul.

We've conquered the atom, but not our prejudice.

We write more, but learn less. We plan more, but accomplish less.

We've learned to rush, but not to wait.

We build more computers to hold more information, to produce more copies than ever, but we communicate less and less.

These are the times of fast foods and slow digestion, big men and small character, steep profits and shallow relationships.

These are the days of two incomes but more divorce, fancierhouses, but broken homes.

These are days of quick trips, disposable diapers, throwaway morality, one night stands, overweight bodies, and pills that do everything from cheer, to quiet, to kill.

It is a time when there is much in the showroom window and nothing in the stock room.

A time when technology can bring this letter to you, and a time when you can choose either to share this insight, or to just hit delete...

Remember; spend some time with your loved ones, because they are not going to be around forever.

Remember, say a kind word to someone who looks up to you in awe, because that little person soon will grow up and leave your side.

Remember, to give a warm hug to the one next to you, because that is the only treasure you can give with your heart and it doesn't cost a cent.

Remember, to say, 'I love you' to your partner and your loved ones, but most of all mean it. A kiss and an embrace will mend hurt when it comes from deep inside of you.

Remember to hold hands and cherish the moment for someday that person will not be there again.Give time to love, give time to speak!

And give time to share the precious thoughts in your mind.

AND ALWAYS REMEMBER:Life is not measured by the number of breaths we take, but by the moments that take our breath away.

Why is gasoline so cheap in the US?

Interesting read from CNN Money about just how cheap gasoline really is in the US.

Why companys fail at customer service - an Interview with Jeff Bezos in BusinessWeek

BusinessWeek has a great article and interview with Jeff Bezos on innovation and putting customers first. Below is just one of the great answers offered up. Much to learn.



Q: Every company claims to be customer-focused. Why do you think so few are able to pull it off?



A: Companies get skills-focused, instead of customer-needs focused.



When [companies] think about extending their business into some new area, the first question is "why should we do that—we don't have any skills in that area." That approach puts a finite lifetime on a company, because the world changes, and what used to be cutting-edge skills have turned into something your customers may not need anymore. A much more stable strategy is to start with "what do my customers need?" Then do an inventory of the gaps in your skills. Kindle is a great example. If we set our strategy by what our skills happen to be rather than by what our customers need, we never would have done it. We had to go out and hire people who know how to build hardware devices and create a whole new competency for the company.

Newspaper Demise - $42B+ up for grabs?

Today's Silicon Valley Insider claims that $42B in Ad Rev is up for grabs in the coming years and it's at least clearer to see why after reading their article. The online format is merciless on inefficiencies and throughout its history publishing in general is all about "warehousing" more information than you actually need. And worse newspapers try and do it everyday! That said it's easy to see why national newspaper such as USA Today and WSJ are actually gaining circ. with their new formats and style that include the incorporation of the web in their product whereas traditional papers are sticking to their knitting and dieing. (Only the NYT would make the new info free and charge for the archives; geez what a bunch of knucklheads.) Same with many periodicals such as BusinessWeek vs Wired. Its all about the product!

At the Web 2.0 Expo last week a statement was made that in general for every newspaper sold their are 10X viewers of that same content on line. However, the newspaper publishers have only been able to monetize those on-line viewers at a rate of approx. 1/10 that which they get from the ink-on-paper version. Hmmm. Why is this so hard for those in the newspaper business to figure out. Lead with the online; not the printed format and make sure that the traffic generated is efficiently converting those ads to leads not just traffic - click crap.

Web 2.0 Expo: Day Three

Jonathan Schwartz, CEO of SunMicrosystems, Inc. (JAVA) offered a compelling argument for why every CEO worth his or her salt ought to be blogging; its communication and not PR. Blogging is almost an anachronistic term and should instead be referred to simply as "communication". Among the chief responsibilities of any CEO is to communicate with their employees, shareholders and customers and a blog is simply just another means to do so. "Web 2.0/blogging what ever you want to call it is simply another way for me to reach those I need to connect. Yes there were bumps to get started but I my guide was to blog just as I would talk with anyone about the business."

Web 2.0 Expo: Day Two

Yahoo's Ari Balogh rolled out their new Search Monkey; a feature that enables 3rd parties an opportunity to upgrade their search results over those traditional organic results. The concept is simple but the idea that one of the premier general search engines are willing to allow web site owners the ability to upgrade search results that are displayed by Yahoo is truly revolutionary. It's no secret that with MSFT breathing down their necks Yahoo's Yang has to break the mold and try something new. Besides anything that could improve bail-rates from Yahoo's results would be a welcome improvement; something that only site owners could offer.

Will this Wiki-like approach to improving that which Yahoo serves up enable Yahoo to catch Google, probably not. But it will certainly improve some of the results and hence user experience. Bravo Yahoo; too bad you waited so long to offer this feature. I suppose necessity is still the mother of invention even in the Silicon Valley.

Mark Andreesen was interviewed by John Battelle and as usual proved to all why he shares the mantel in Silicon Valley lore with the likes of Steve Jobs, the Google Guys, David Packard, Larry Ellison and Gordon Moore as one of its true stars. Among the many things discussed was a stroll down the memory lane of the mid 90's when first his Mosaic browser opened the Internet to the public and then his Netscape Navigator to the masses. Additionally, he wouldn't take Battelle's bait (is MS "defanged") when queried on his feelings about MSFT and their incursion into Netscapes's space with IE but instead he took the high road and saluted Gates and gang for their efforts and in bringing a standard to the desk-top operating system that has enabled the development of all things Web 2.0. Prior to OS there were dozens of systems that ran PC's and developing products for those PC required multiple versions and lower productivity; something the cell phones business could learn from. Finally, he talked about his newest venture Ning; a social network platform for the masses. My guess is that like his Mosaic browser Ning will prove itself a winner especially given its unique viral format. Investors think so.

Presentation by executives from FaceBook and MySpace about marketing techniques and lesson's learned were informative (i.e popularity of the new 646 X 60 banner) and how paying attention to the four (4) pillars of an on-line ad programs 1) Ad Size, 2) Formatting, 3) placement and 4) ad network can dramatically impact your results. Hey, I'll always pay attention to someone who is speaking for a web site [ MySpace] that has 117 million UVs in March '08 and is adding [registering] over 200,000 new users each day!

Web 2.0 Expo - Day One; a view

This week's Web 2.0 Expo here in San Francisco is again a front-row seat to what everyone else is doing with their SocialMedia (blog) strategy. Much has changed just since last year's meeting - especially around the operating systems and software capabilities and thought I'd just give three (3) key items I observed today.

1. Microsoft's new Live Mesh renews lends credence that software's future lie in it's usefulness beyond a single device. Simultaneously it builds upon the economics of centralization - and the whole notion of ambient "cloud" computing. An impressive idea that whose value is obvious. Let's just hope it works.
2. Clay Shirky offered an interesting perspective on the changes in Media that are underway in part thanks to battle hymn of social media. In summary, media was offered solely for consumption and was created using a very ordinary, vertically integrated, command and control business model. Someone (networks) made it and the masses consumed it; usually from their couch. What's changing - and what traditional media can't stand - that that media is evolving into really three (3) parts: Consumption, Participation and Sharing. Still the vast majority of media is consumed but over time newer generation will come to expect that which they can participate in and share with others. Can you say Wikipedia, Facebook, MySpace, Slide. Clay went on to say that he estimates that Wikipedia has cost approx 100 million man/hours of time to create but that in the US alone we consume (watch) about 200 billion man/hours of traditional media. That is for all the time and effort that has gone into creating Wikipedia the amount of intellectual capacity that is still off-line during the consumption of traditional media is the equivalent of 2,000 individual Wikipedia's per year.
3. Little mention of Google beyond their utility-like characteristics as it relates to SEO strategies for blogs and social media sites. Strange in as much as how prominent Google was featured at this meeting last year with Eric Schmidt's roll out of their new Apps offering. Not that Google is unimportant but there are clearly many new participants some old (IBM) and some new (Slide, Orange Soda).

Religion vs. the Gosple

From time to time I find discussions with friends turn to issues of faith, God and spirituality and invariably "religion" comes up as a key topic and often is a great source of confusion for most. That is, when asked what do I believe I'll say the "Gospel" to which they say yes but what religion are you; as if that is more important.

All religions are "man made" whereas the Gospel is the message, 'the good news of Christ'; a big difference. To that end I came across the following that was posted by Mark Driscoll and thought it did a pretty nifty job of further clarifying the sublte yet very important difference.

• Religion says, if I obey, God will love me. Gospel says, because God loves me, I can obey.



• Religion has good people & bad people. Gospel has only repentant and unrepentant people.



• Religion values a birth family. Gospel values a new birth.



• Religion depends on what I do. Gospel depends on what Jesus has done.



• Religion claims that sanctification justifies me. Gospel claims that justification enables sanctification.



• Religion has the goal to get from God. Gospel has the goal to get God.



• Religion sees hardships as punishment for sin. Gospel sees hardship as sanctified affliction.



• Religion is about me. Gospel is about Jesus.



• Religion believes appearing as a good person is the key. Gospel believes that being honest is the key.



• Religion has an uncertainty of standing before God. Gospel has certainty based upon Jesus' work.



• Religion sees Jesus as the means. Gospel sees Jesus as the end.



• Religion ends in pride or despair. Gospel ends in humble joy.