Year in Review - 2009 from Jib-Jab

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The future of B2B Media

"You have to start not by thinking about your capabilities, but in identifying a need that your customers have."

This is a quote from a recent blog that was written by Dan Blank and whole heartily agree. To read the rest of this fine entry check out Creating Interest vs. Providing Solutions.

They'll be a test on this after viewing...amazing stuff

"The Year The Media Died"

Is the web making the sales rep obsolete?

Over the past few months I've had the chance to speak with a number of business owners, professional buyers and some sales managers re: the impact the web is having on how products are sold. And if there's one thing that's more and more clear it is that the traditional method of having your sales rep handle every aspect of a sale is going the way of the YellowPages and Classified Section of your newspaper. It's clear that among the many things that Amazon, Google, iTunes and even the TireRack has shown is that the current - and growing - generation of web-savvy users are far more interested in gathering info via the web (e.g. Facebook, etc.) and buying directly without having to speak with anyone.

Whether you are consumer looking for some info about a product or a professional looking for detailed product information one thing is clear that the first place to start looking is the web and as such among the last thing these 'informed' consumers want is a sales pitch from a sales rep when in fact all they want to do is process their request. Saw this article by Reid Carr titled Preparing for a World without Sales Representatives and thought it did a nice job more fully exploring this concept.

The Rise and Fall of AOL: a fascinating perspective.

SAI's Chart of the Day is among my favorite items to read because of charts like this that show you just how out of wack things can get. Think of this is early Sub-Prime in the Media sector.

Does your pay measure up!

And you wonder why healthcare

costs are too high?

Has America's business lost its "Soul"

I want to thank my good friend Phil Melnik for passing along the following by By Paul B. Farrell, MarketWatch;

"Yes, Wall Street has lost its moral compass. They created the mess, now, like vultures, they're capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation."

A fascinating read listing the top 20 reasons American capitalism has lost its soul and a heads-up re: the pending economic collapse in 2012...there's that date again! I look forward to your thoughts.

Good content will win in the battle of "New Media"

I found the following Q & A from an interview with Knight Kiplinger Kiplinger.com , and especially the last two (2) sentences (below) in an interview by Dara Pettinelli for Magazine Publishers of America insightful re: the importance and value of good content for media.[Photo]Magazine Publishers of America most interesting re: why and how quality content that monetizes the buy-side will continue to grow.

Question: What makes the newsletter model work? How has it survived this long?

Answer: Subscribers pay 100% of the costs of publishing newsletters because there is no advertising support. The newsletter model requires high editorial quality, which results in high renewal rates.After decades of under-pricing their magazines to subscribers (due to an over-reliance on ad revenues), many magazine publishers are now studying the newsletter model because of declining ad pages. I foresee a new era in which magazines will charge their loyal subscribers much more and accept the fact that circ levels will gradually drift down to more-appropriate, sustainable levels. Gone will be the revolving door, low-renewing readers who were initially lured in by agent-sold subs at rock-bottom prices. Advertisers will win, too, by getting a more committed audience of magazine readers who are more likely to actually see their ads.

"Sell-side" vs. "Buy-Side Media business models; look who'se winning.

A recent article in Ad Age by Bradley Johnson gives a good perspective on the ongoing upheavals taking place in the media industry but what caught my eye was one of his charts - shown at right - which shows that two (2) of the top three media categories that grew in 2008 vs. '07 - and which also grew in the first half of '09 - were from business models that monetize the "buy-side" via subscriptions. There are many factors impacting traditional ad supported media not the least of which is the shrinking ad budgets due to the down turn in the economy but what is most interesting to note is that consumers (e.g. professionals, homeowners, etc.) remain willing and able to pay for good, useful high quality content and will continue to do so. The Ad supported business model is not dead, far from it but it will remain under extreme pressure for years to come thanks to the more measurable, ever improving and less costly digital media. However, in the years to come I believe that there will continue to remain an opportunity for profitable, long-term growth for those media firms that can transition (no easy task) from a strictly ad supported business model to some combination of both ad and subscription or perhaps even a pure subscription-based business model. This transition won't be easy for many who have grown up and existed solely via an ad supported business model but those who can and will change will survive and grow.

E-Media Reality Check - IAB Ad Rev Report -

IAB's Analysis on the first half of '09's Online Advertising:

Below is the Exec Summary from the full IAB report re: Key trends underlying 2009 year-to-date results

• Revenues Decreased 5.3% in first half of 2009 —Internet advertising revenue in the U.S. totaled $5.4 billion in the second quarter of 2009, a decrease of 0.7 percent from the 2009 first-quarter total of $5.5 billion, and an decrease of 5.4 percent from the 2008 second-quarter total of $5.7 billion.

• Year-to-date Internet advertising revenues through June 2009 totaled $10.9 billion, down 5.3 percent from the $11.5 billion reported for the same six-month period in 2008.

“We are in one of the most difficult economic slumps in decades. Interactive is one of the advertising sectors that has been least affected,” said Randall Rothenberg, President and CEO of the IAB. “In recent years the digital revolution has driven a transformation of how consumers experience advertising and media. As the economy improves, we’re confident that brands will devote an even greater share of their budgets to reaching consumers as they make interactive media a larger part of their lives.”

• Search Continues to Lead, followed by Display Banners and Classifieds—Search revenue accounted for 47 percent of 2009 second-quarter revenues, up from the 44 percent reported in the second quarter of 2008. Display advertising, the second largest format, accounted for 35 percent, followed by Classifieds (10 percent), and Lead Generation (7 percent) of 2009 second-quarter revenues.

(Note: I was particularly intrigued with the chart on page 10 in the IAB report showing the difference in growth between Search vs. Lead Gen.)

_________________________________________________________

Folio's Matt Kinsman has put together a thoughtful summary on the state of the eMedia Ad Rev business titled "E-Media Reality Check" that's certainly worth reading for all of us who are thrashing about in the world of "NewMedia".

One quick thought re: both of these articles is that I wonder about the impact Google and the other search engines are having on the ad rev / lead gen market given that more and more advertisers are able to track the conversion of keywords on their respective web sites. Advertisers do in fact have a worthy though somewhat limited alternative for generating leads and when you factor in the info they can derive from Google Analytics the story becomes even more compelling...for them.

My friend Andrew

My friend Andrew was afflicted with ALS a few years ago. Struck down in the prime of his life at age 42 he and his wife Kelly have 2 young boys Briggs and Quintin both of whom are under the age of 10. Andrew's only mobility is via a wheel chair. The manner and speed in which ALS ravages one’s body and their family is truly terrifying.

In the summer of ’08 I brought Andrew’s plight up to our Men’s Prayer Group, a group of 6-7 who meet regularly on Monday mornings. Peter, an engineer with GE who leads our group suggested that we pray not only for Andrew’s physical restoration and family but most importantly for his salvation. I did not know where Andrew had ever heard the good news of salvation or had asked Christ to come into his heart [life]. A few months later I purchased a Bible and asked our group if they would sign it for Andrew. I had no idea whether Andrew would want to read it but when I stopped by to drop it off his wife Kelly was most grateful . For the next year our group continued to remember Andrew in our prayers.

Last Thursday afternoon Andrew’s wife Kelly called me out of the "blue" to say that Andrew would like me to could come over and read to him from the Bible that I had dropped off the previous year; I said “yes”! On the way over I called Bo Matthews, Sr. Pastor of Brandywine Valley Baptist Church in Wilm DE and Peter Mason, Sr. Pastor of Faith Baptist Church in Rexford, NY for advice on where to start when reading the Bible to someone for perhaps the first time - they both said start with Romans 8. I added John 3:16-17, Matthew 5 (first chapter of Jesus’ sermon on the mount) and two of favorite Psalms; 19 and 23.

After reading I asked Andrew if he would like to invite Jesus into his heart to receive the gift of eternal salvation and someday soon a whole new body. To do so all he would have to do is pray in his heart acknowledging to Jesus that he’s a sinner and to ask for forgiveness of those sins and believe that Jesus came and died on the cross to offer that forgiveness.

“If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness.”

I John 1:

There was no formal religious ceremony, just Andrew and the Lord. I closed by praying with Andrew and asked the Lord to wrap His arms around Andrew and to hold him and bring him the joy, peace and hope that can only be found through a relationship with the Lord.

I can’t wait to go back and read some more.

Winning New Business - More Important Than ever!

There are two things every business must do every day to survive and grow. They are:

1. Keep the customers they have

2. Find and close new customers

Read this blog from C.C. Chapman in iMedia Connections that does a solid job of addressing #2 for the media industry but is relevant for most any business.

5 steps for winning the pitch

By C.C. Chapman

September 15, 2009

"New business is the lifeblood of every company. No matter what industry you are in, finding new customers and getting that ever-elusive signature on a statement of work is crucial to your success.

With budgets being tighter than ever both on the client side and within your own agency walls, it is critical that when opportunities arise, you and your team do everything possible in order to land the business. For a lot of agencies, this still means pitching to win the work, whether you like it or not. Yes, it is an old way of doing business, but it is not one that is going away anytime soon, no matter how loudly some people yell.

With that in mind, you might as well get used to it and get better at winning the pitch.

What are the steps to winning the pitch? I've boiled them down into the following:

1. Get a reputation.
2. Come up with a great idea.
3. Do your homework.
4. Be early. Be awesome!
5. Don't forget the human touch.

Read the full blog.

Six Social Media Platform All Marketers Should Consider

Kent Lewis provides a concise and succinct list of the "in's and out's" of the six (6) leadig social media sites that every marketer should be familiar with - if not using - in his blog http://www.imediaconnection.com/content/24169.asp

Facebook

• Community mindset: connect
• Primary demographic: 25 to 45
• Ideal fit for: entertainment, lifestyle brands, and non-profits
• Biggest opportunity: using ads to build fans
• Biggest challenge: few appreciate Facebook advertising
• Metrics: fans, comments, likes, wall posts
• Helpful tools: Lexicon, ad interface, applications, analytics, connect, etc.

MySpace

• Community mindset: connect
• Primary demographic: 15 to 25
• Ideal fit for: music and entertainment
• Biggest opportunity: providing music samples
• Biggest challenges: noisy; losing market share quickly
• Metrics: friends, favorites, groups, impressions
• Helpful tools: Open Platform, MyApps, MySpace Toolbox

LinkedIn

• Community mindset: connect
• Primary demographic: 35 to 55
• Ideal fit for: service providers, industry associations
• Biggest opportunity: creating thought leadership via Q&A and Groups
• Biggest challenge: time commitment
• Metrics: profile connections, best answers, group members, discussions
• Helpful tools: Applications, Salesforce plug-in

Blogs

• Community mindset: create
• Primary demographic: 35 to 55
• Ideal fit for: technology
• Biggest opportunity: develop thought-leadership
• Biggest challenge: requires significant resources over time
• Metrics: feed subscribers, comments, Technorati score, pingbacks, inbound links, visibility in search engines
• Helpful tools: WordPress plug-ins

Twitter

• Community mindset: create (microblogging)
• Primary demographic: 35 to 45
• Ideal fit for: service industry
• Biggest opportunity: customer service, consumer insight, sales and marketing
• Biggest challenges: noisy; reliability issues; platform limitations
• Metrics: followers, @ replies, retweets, direct messages, custom hashtags
• Helpful tools: BingTweets, TweetBeep, TweetDeck, HootSuite, CoTweet, Mr. Tweet, Twitalyzer, blog plug-ins

YouTube

• Community mindset: vote
• Primary demographic: 25 to 45
• Ideal fit for: big brands and entertainment
• Biggest opportunity: creating viral content (e.g., United Breaks Guitars)
• Biggest challenges: noise; conversions
• Metrics: views, comments, subscribers, ratings
• Helpful tools: TubeMogul, YouTube Insight

Nine Rules of Media

Below is an excerpt from Tony Uphoff's blog re: his thoughts/insights on the where media and the media business model is headed. Good read.

What I found particularly interesting was item #8. Let me know if you agree.

___________________________

"The center of gravity in media has been on a decade long transition from analog to digital. Traditional media companies have taken their lumps during this transformative phase. At the same time many pure play digital media businesses haven't yet demonstrated the scale some predicted. The recession has accelerated these trends but also shut off the main driver of growth over the last decade;readily available, cheap capital that enabled P/E backed M & A. So we can safely predict that a series of new media rules will emerge out of this economy; driven by the perfect storm of the recession and the continued impact of technology. We can also safely predict that all of us will be challenged to rethink our businesses. So here's our take on the 9 new rules of media:"

1. Reach No Longer Equals Revenue. The new calculus is: Content Equals Engagement-Engagement Equals Revenue.
2. The Moment of Singularity in Media Has Arrived. Content and the applications and technology with which it's viewed and interacted with have become inextricably intertwined.
3. Below the Line Marketing Has Become Above the Line Marketing. The Traditional branding and advertising market has been devastated but not simply because of the recession. Branded response is replacing traditional branding.
4. Content as a Marketing Platform. Advertising is being rapidly replaced by knowledge exchange based on content.
5. Integrate, Integrate, Integrate. People naturally create their own information networks by integrating content from various sources. Make it easier for your audiences to integrate content or someone else will.
6. Live Media is the Original Social Media. Ironically live media, conferences and trade shows, showed extraordinary growth at the same time social networks were launched and started their growth curve. Live media will continue to serve as a central part of the media ecosystem.
7. Brands Matter. As Eric Schmidt CEO of Google has stated "the unbranded web is a cesspool". You will see a return to branded content as audiences and marketers drive a flight to quality and wake up from the hangover of the "User-Driven Content" era.
8. Paid Content Will Thrive. Given the amount of money the average person pays to have web access there is an inherent irony to the proclamation that the web is making all content free. People always have and always will pay for quality content. The challenge that many media companies are wrestling with is that their traditional advertising supported business model has been blown apart. When cable was launched there were dire predictions that people would never pay for television that they had been getting for free since its inception. Taken a look at your cable or sattelite bill lately? We will likely see several new business models emerge but there will be a vibrant and growing paid content business.
9. Challenge the Assumptions that Made You Rich. One of the hardest things to do is to change the core strategy that built your business. Even when you see it in decline. Company philosophy and culture should sustain. Strategy and business models should evolve and in some cases be blown apart. Redefining your business to adapt to today's market is tough. Far easier to simply cut costs and hope for an economic recovery. Saving your way to greatness isn't a business model however. This economy will recover but it won't come back as a clone of the economy before it. Use this time to truly rethink your business and challenge the core assumptions in your business models."

Some Background on US Inflation

My good friend Phil Melnik provided me with this insightful link from John Mauldin's blog FrontLineThoughts

"Inflation, to be properly understood, should be defined as a persistent expansion of money and credit that substantially exceeds the growth requirements of the economy. As a consequence of excessive monetary expansion, prices rise. Which prices go up and at what rate depends on a number of factors. Sometimes it is the prices of goods and services that are the most visible symptom of inflationary pressures. That was the case in the 1970s when the Consumer Price Index (CPI) hit a peak rate of 14% per annum. Sometimes it is the prices of assets such as homes, office buildings, stocks, or bonds that reflect the inflationary pressure, as we have seen in more recent years.

When inflation becomes pervasive, and other conditions are supportive, it can engulf a whole industry. We saw this in the financial sector in the period leading up to the crash. The supporting conditions or "displacements," to use the terminology of Professor Kindleberger, were financial innovation, deregulation, and obscene profits and salaries. These drew millions of bees to the honey. All great manias are accompanied by malfeasance, in this case the biggest Ponzi scheme in history and many other lesser ones. It is relatively easy to steal when prices are rising and greed is pervasive. Overspending and a general lack of prudence always become widespread when a mania infects the general public. Rational people can do incredibly stupid things collectively when there is mass hysteria.

The origins of post-war inflation go back to the late 1950s and early 1960s, though some would take it back much further. In the 1960s, the US dollar started to come under pressure as a result of US inflationary policy and foreign central banks' ebbing confidence in their large and growing dollar reserve holdings. The US responded with controls and government intervention in a number of areas: gold convertibility, the US Treasury bond market, the Interest Equalization Tax, and, ultimately, intervention on wages and prices. These moves clearly flagged to the world that external discipline would be subjugated to domestic employment and growth concerns. The policy was formalized when the US terminated the link between gold and the dollar in August 1971, essentially floating the dollar and setting the US on a course of sustained inflation. Of course, the dollar floated down, which, among other things, triggered the massive rise in general prices in the 1970s.

The next episode of credit inflation began in the 1980s, paradoxically triggered by the success of Paul Volcker's move to break the spiral of rising general price inflation through very tight money. He succeeded famously, and the CPI headed sharply lower along with interest rates, setting the stage for the massive US debt binge and the series of asset bubbles that followed. It was easy for the Federal Reserve to pursue expansionary credit policies while inflation and interest rates were falling."

John Mauldin

"Great American Bubble Machine"

A must read for anyone trying to follow what's been going on with our economy and why.

Packard's Law

"No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company. [And] If a company consistently grows revenue faster than its ability to get enough of the right people to implement that growth, it will not simply stagnate; it will fall."

Jim Collins How The Mighty Fall (page 55-56)

Examples of Legislature that has "screwed" our country

The Health Maintenance Organization Act of 1973 (Public Law 93-222)

For the first time combined payment with delivery and in turn took away market incentives. The birth of out of control healthcare costs.

The Homeowners Refinancing Act

Roosevelt cut a deal with bankers whereby they would make more money available but had the ability to choose to whom (what areas) they would lend. Most slums in today's major cities exist because of what Roosevelt allowed the bankers to do.

The Community Reinvestment Act (Pub.L. 95-128)

Enabled those who probably should not own a house to take title of house through easier credit and which contributed to the S&L collapse and then ultimately the realestate bubble and subsequent collapse of the US Economy.

Good intentions; bad results - Another Example of how our Fed Governement and politics has created the health care mess.

The law (PL 93 222) that gave rise to HMO's was a classic example of why the Fed government must not and should not be allowed to venture into dealing with health care. Though noble in intention it was thoughtlessly constructed and worst impossible to get rid of.

Our Constitution and its 27 Amendments lays out very clearly what the Fed governement should and more importantly should not be getting involved with and for good reason. It's remarkable to see how we allow our politicians to continually make the same mistake for the sake of self interest.

Putting the Fed Bailout in Perspective

Below is a fascinating blog from Barry Ritholtz's blog The Big Picture

" Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

______________________________________________________________________

data courtesy of Bianco Research

>

That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

The $4.6165 trillion dollars committed so far is about a trillion dollars ($979 billion dollars) greater than the entire cost of World War II borne by the United States: $3.6 trillion, adjusted for inflation (original cost was $288 billion).

Go figure: WWII was a relative bargain."

Health care is a scarce resource.

An excerpt (just one paragraph) from an article by Peter Singer in the New York Times:

"Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals."

Convert Debt to Equity; and fast!

Authorities 'Will Fail Us Again': Black Swan

TOPICS:Economy (U.S.) | Politics & Government | Treasuries | Treasury Department | Federal Reserve | Central Banks | Banking |Toxic Stocks | Toxic Assets | Recession | Debt | Economy (Global)

SECTORS:Banks

By: CNBC.com | 10 Jun 2009 | 08:34 AM ET

Text Size

The Obama administration's attempts to fight the financial crisis with more cash is like treating a bad tooth with Novocain instead of a root canal, Nassim Taleb, author of "The Black Swan," told CNBC Wednesday.

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The main problem is the level of debt, and Taleb compared the authorities' efforts with those of a not very skilled pilot who is trying to land a Concorde on a narrow strip, between an ocean of deflation and a mountain of hyperinflation.

"These people failed us, they're going to fail us again," Taleb told "Squawk Box."

omniNate

"They tell the banks to lend more but have less leverage," and expect people to go out and consume while unemployment is rising, he added.

"The way to restart everything is restructuring, conversion of debt into equity, convince people that debt is not good," Taleb said.

"Do not delay a root canal," he added. "Don't do piecemeal solutions to a problem that is fundamental."

"The solution is there, convert debt to equity. Usually it happens with Chapter 11, let's do it faster, and across the board," Taleb said.

• Slideshow: The World's Biggest Debtor Countries

Look at a trillion dollars

So what DOES a trillion dollars look like?

Trenton, Albany, Sacrementon Disease: Progressive Government

Why Obama Plan Will Not Work; look at Trenton, Albany and Sacremento:

This was the lead editorial from today's WSJ

President Obama has bet the economy on his program to grow the government and finance it with a more progressive tax system. It's hard to miss the irony that he's pitching this change in Washington even as the same governance model is imploding in three of the largest American states where it has been dominant for years -- California, New Jersey and New York.

A decade ago all three states were among America's most prosperous. California was the unrivaled technology center of the globe. New York was its financial capital. New Jersey is the third wealthiest state in the nation after Connecticut and Massachusetts. All three are now suffering from devastating budget deficits as the bills for years of tax-and-spend governance come due.

These states have been models of "progressive" policies that are supposed to create wealth: high tax rates on the rich, lots of government "investments," heavy unionization and a large government role in health care.

Here's a rundown on the results:

Government spending as economic stimulus. State-local spending per capita is $12,505 in New York (second highest after Alaska), $10,136 per person in California (fourth) and $9,574 in New Jersey (seventh).

Has all this public sector "investment" translated into jobs? Not quite. California had the nation's third highest jobless rate in May (11.5%). New Jersey and New York had below average unemployment rates in May compared to the national average of 9.4%, but one reason is that so many discouraged workers have left those states. From 1998-2007, which included two booms on Wall Street, New York and New Jersey ranked 36th and 31st in job creation. From 2000 to 2007, the New Jersey Business & Industry Association calculates that nine out of 10 new Garden State jobs were in the government.

Soak the rich. Mr. Obama plans to pay for his government investments through higher tax rates on the top 1% and 2% of taxpayers. Our troika of liberal states are champions at soaking the rich. The state-local income tax burden, according to the Tax Foundation, is the highest in the nation in New York, second highest in California and sixth in New Jersey. New York City boasts the highest business tax rate, 17.6%, according to a study by the American Legislative Exchange Council. Seven of the 10 highest property tax counties in America are located in New Jersey.

Instead of balanced budgets, these high taxes have produced record red ink. California's deficit for 2010 is projected at $33.9 billion, New Jersey's $7 billion and New York's $17.9 billion, despite multiple tax increases this decade. The Manhattan Institute finds that three-quarters of the loss in revenues this year in Albany is a result of reduced income tax payments by rich people even though the state keeps raising taxes on high earners.

California's debt burden has multiplied so fast that it now has the worst bond rating of any state, and Governor Arnold Schwarzenegger and state legislators are pleading with Washington to command the other 49 states to pay off its IOUs. The interest rates on Golden State bonds have nearly tripled in the last two years.

Powerful unions. Mr. Obama believes union power is a ticket to the middle class. The middle class is getting creamed in all three of these "progressive" states, where organized labor is king. The unionized share of the workforce is 20% in California, 19% in New Jersey and 27% in New York compared to 13% across the country. All three are non-right-to-work states, have super-minimum wage requirements and provide among the nation's most generous public-employee pensions.

Workers in these paradises are indeed uniting -- by leaving. New York ranks first, California second and New Jersey third in moving vans leaving the state. A study by the National Institute for Labor Relations Research found that over the past decade these and other high-union states (mostly in the Northeast) had one-third the job growth of states with low union penetration.

Government health care. New York, New Jersey and California are among the leading states in government spending on and intervention into the medical market. A 2008 study by the Pacific Research Institute ranked the states on the basis of government regulation of health care and found that New York is most regulated, while New Jersey ranks sixth and California seventh. "New York," the report declares, "suffers from government health programs that are out of control, a grossly overregulated private insurance market and almost completely uncompetitive provider markets."

Have government controls and Medicaid expansions ("the public option") lowered costs? Here is what the American Health Insurance Plans found. For family coverage annual premiums in 2006-07, the national median cost was roughly $5,300; in California it was $5,884, in New Jersey $10,398, and in New York $12,254. New York's coverage mandates cause families to pay more than twice what they do in other states for insurance.

As a result, California and New York have more than one-third of their residents uninsured or in Medicaid -- much higher than the national average of 25%. More government involvement in health care in California, New Jersey and New York has raised costs and often reduced private coverage. That's hardly a model for the nation.

* * *

So goes the real-life experience of progressive governance, with heavy tax burdens financing huge welfare states, and state capitals dominated by public-employee unions. Formerly rich states, they are now known for job losses, booming deficits and debt, wage stagnation, out-migration and laughing-stock legislatures. At least Americans have the ability to flee these ill-governed states for places that still welcome wealth creators. The debate in Washington now is whether to spread this antigrowth model across the entire country.

How the Current Tax System is encouraging our demise.

Another economic rant:

The consequences (intended or otherwise) of our current tax policy is excess consumption. Currently there is not one single incentive for individuals to save and invest which most everyone on both the "left" and "right" will finally admit is the foundation of a stable economy. Since the current tax policy was implemented in the 60's consumerism has driven our growth and simultaneously sown the seeds of our current situation (e.g. huge trade deficit, debtor nation, aka - no more money.) Additionally, our current income tax program is really just a wage tax on those who are paid "W2 wage". Those who file 1099s are not impacted by our tax system for the simple reason is that they have the ability to pay expenses with pre-tax and instead of post-tax money. It makes a huge difference that creates a tremendous inequeity and anyone who thinks everyone is paying their fair share is a fool.

Anxious to hear whether anyone feels the same and your thoughts on a new tax program (e.g. flat, fair, etc.) should finally be considered.

Good advice written 3,000+ years ago: Isaiah 48:17-18

"I am the Lord your God. 
      I teach you what is best for you. 
      I direct you in the way you should go. 
 ¹⁸ I wish you would pay attention to my commands. 
      If you did, peace would flow over you like a river. 
      Holiness would sweep over you like the waves of the ocean. 

25 Most Popular Blogs

As per Nicholas Carlson Silicon Valley Insider

1. Gawker Properties -- $170 million.
2. Huffington Post -- $90 million.
3. The Drudge Report -- $48 million.
4. Perez Hilton -- $32 million.
5. Sugar, Inc -- $27 million.
6. TechCrunch -- $25 million.
7. MacRumors -- $21 million.
8. SeekingAlpha -- $11 million.
9. GigaOm -- $9.5 million.
10. Politico -- $8.7 million.
11. SmashingMagazine -- $7.7 million.
12. SearchEngineLand -- $4.5 million.
13. Boing Boing -- $3.6 million.
14. ReadWriteWeb -- $3.4 million.
15. SB Nation -- $2.7 million.
16. Destructoid -- $2.5 million.
17. Mashable -- $2.5 million.
18. Alley Insider sites -- $2.25 million.
19. /film -- $2.1 million.
20. The Superficial Network -- $2 million
21. Neatorama -- $1.5 million.
22. Daily Kos -- $2 million.
23. Talking Points Memo -- $1.2 million.
24. VentureBeat -- $1 million.
25. Wowowow.com -- $1 million.

Medical Care Paradox

Some thoughts on how our advances in technology and medicine have in fact fueled the spiriling costs of health care.

Today we have "answers" for illness that are sheer marvels of technology and medical inginuity. Unfortunetly these "answers" cost money and continue to grow in complexity and effectivness. Years ago when some was diagnosed with a particular condition the (e.g. hyper tension) the "answers" were limited (e.g. lose weight, stop smoking, diurectics, etc.). However today the "answers" for that same hypertensive condition are geometrically greater and more effective; and more costly. There is an economic value to creating newer and better drugs because our medical system will always want to provide a better "answer".

Given that our healthcare system is designed to do all that it can to help those in need is it any wonder why our health care system's costs continue to spiril out of control. Afterall there's no ability to say "no" to our increasingly expensive healthcare solutions ["answers"] for no one - and rightfully so - is willing to deny care when and if its available.

Regulatory Effectivness - Why Gov't stinks

Warren Buffet authors one of the most insightful pieces of business writing each year called The Chairman's Letter. The following is a exerpt from that letter which I think summarizes very well the problem with our Regulatory Systems; No Accountability; No Penalty for failure. 

"For a case study on regulatory effectiveness, let’s look harder at the Freddie and Fannie example. These giant institutions were created by Congress, which retained control over them, dictating what they could and could not do. To aid its oversight, Congress created OFHEO in 1992, admonishing it to make sure the two behemoths were behaving themselves. With that move, Fannie and Freddie became the most intensely-regulated companies of which I am aware, as measured by manpower assigned to the task. On June 15, 2003, OFHEO (whose annual reports are available on the Internet) sent its 2002 report to Congress – specifically to its four bosses in the Senate and House, among them none other than Messrs. Sarbanes and Oxley. The report’s 127 pages included a self-congratulatory cover-line: “Celebrating 10 Years of Excellence.” The transmittal letter and report were delivered nine days after the CEO and CFO of Freddie had resigned in disgrace and the COO had been fired. No mention of their departures was made in the letter, even while the report concluded, as it always did, that “Both Enterprises were financially sound and well managed.”

In truth, both enterprises had engaged in massive accounting shenanigans for some time. Finally, in 2006, OFHEO issued a 340-page scathing chronicle of the sins of Fannie that, more or less, blamed the fiasco on every party but – you guessed it – Congress and OFHEO."

Exerpted from Warren Buffett's Chairman's Letter; page 17

Berkshire Hathaway Corp

Feb 27, 2009

http://www.berkshirehathaway.com/2008ar/2008ar.pdf

Warren Buffett Explains Derivatives

Below is an exerpt from Warren Buffett's Letter from the Chairman" that is an excellent explanation re: why we're in the financial mess that we're in.

"Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial system. They have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks. They allowed Fannie Mae and Freddie Mac to engage in massive misstatements of earnings for years. So indecipherable were Freddie and Fannie that their federal regulator, OFHEO, whose more than 100 employees had no job except the oversight of these two institutions, totally missed their cooking of the

books. 16 Indeed, recent events demonstrate that certain big-name CEOs (or former CEOs) at major financial institutions were simply incapable of managing a business with a huge, complex book of derivatives. Include Charlie and me in this hapless group: When Berkshire purchased General Re in 1998, we knew we could not get our minds around its book of 23,218 derivatives contracts, made with 884 counterparties (many of which we had never heard of). So we decided to close up shop. Though we were under no pressure and were operating in benign markets as we exited, it took us five years and more than $400 million in losses to largely complete the task. Upon leaving, our feelings about the business mirrored a line in a country song: “I liked you better before I got to know you so well.”

What's truly wrong with our financial system?

The last paragraph in an article titled How to play chicken and lose from The Economist Jan 24th '09 is perhaps one of the best explanations of why our financial system is in the mess it is.

"Over the past 35 years it has seemed as if everyone in finance has wanted to be someone else. Hedge funds and private equity wanted to be as cool as a dotcom. Goldman Sachs wanted to be as smart as a hedge fund. The other investment banks wanted to be as profitable as Goldman Sachs. America's retail banks wanted to be as cutting edge as investment banks. And European banks wanted to be as aggressive as American banks. They all ended up wishing they could be back precisely where they started."

"...there's no place like home."