Business
03/16/08 -
Random Walk To Wealth - Its hard to say where it all began, but one of the first places it reared its ugly head was in the private equity market. It was in that market that we were introduced to "Pik-Toggle" and "convenant lite" loans as well as bridge loans that slowly transformed themselves into "pier loans." After setting all kinds of LBO records and seeing 6 of the top 10 LBO deals in history in a year-long period...
03/16/08 -
Stephen Covey - With today’s technology, multitaskers are using PDAs, cellphones, text messaging and emails to stay in connected 24 hours a day. While lighthearted nicknames like “crackberry” have been coined to describe this almost obsessive behavior, what happens when we become addicted to this connectivity? Do we exclude the other important dimensions of our life? Q: What does it mean to have work/life...
03/16/08 -
Peridot Capitalist - One of the great things about listening to Warren Buffett speak, and I suspect one reason why thousands gather each year in Omaha for his company's annual meeting, is that despite the fact that he is a brilliant man he speaks in plain, logical language that is easy to follow and usually hard to argue with. If you want the truth, without the media spin, and in as few simple words as possible, just...
03/14/08 -
Personal Financier - Motivating employees is always one of every manager’s goals. Motivated employees contribute to productivity thus directly increasing profitability for the organization. Structuring jobs and roles correctly is very important in elevating the motivation of employees. The main stream theory on motivation in general is based on Maslow’s needs hierarchy. Maslow’s constitutes a hierarchy of needs...
03/14/08 -
Debtfree Revolution - Looking back, I can see why I ended up in money troubles over the years. We learn how to handle money by watching our parents…and if they don’t teach us the proper way, we go out and learn from anyone who will. I know it’s not just me. Hubby said his father never taught him how to aggressively negotiate on vehicles when he was buying the truck (yes that one we are still paying on…that...
03/14/08 -
becker-posner - Modern national income accounts developed about 75 years. Although a sterling achievement that won Richard Stone a Nobel Prize in economics, even pioneers like Stone and Simon Kuznets recognized that these accounts had serious limitations as measures of wellbeing. Among the major oversights that remain to this day are that these accounts neglect the value of time spent in households at housework...
03/13/08 -
Gavingham - “I want to be professional”. I’d have a decent sized pot of cash if I’d received a pound for every time a salesperson has said this to me. “I want to be professional”. What do they mean by this? Is there such a thing as a professional salesperson? Does it matter anyway? And how can you become a professional salesperson?...
03/13/08 -
Lew Rockwell - It takes a lot to surprise me these days. It's hard not to be cynical when surrounded by uninformed opinions and comments based on ignorance of economics, and by a disdain for personal freedom. Thus, I was delightfully and honestly surprised when I saw this Mises.org blog entry about an editorial in the New York Times called "Charity Begins in Washington." Having found it so incredibly laughable,...
03/13/08 -
Part-Time Pundit - Since 1970, the health care industry has undergone a revolutionary change. Before that time people were overwhelmingly (about 70%) in traditional indemnity plans where patients pay a certain percentage of health care costs. With the passage of the Health Maintenance Organization Act written by Ted Kennedy (D-Mass), very quickly over 70% of Americans were covered by HMOs. ...
03/12/08 -
Mish's Global Economic Analysis - Several people have asked me recently if I have been changing my tune on a Fed bailout. The answer is no. I long ago predicted the Fed would try all sorts of things to stop a deflation threat. But I also have also said, these measures would not work and indeed they haven't. What is happening is the Zombification of Banks, that is exactly what happened to Japan as well....
03/12/08 -
Enterprise Resilience - Debates about how best to bring people out of poverty are endless. Some people, like Steven Pearlstein, believe that wealth should be redistributed through taxation [see my post Looking for a Globalization Strategy]. Others believe that dole simply establishes a pattern of dependency that traps recipients in poverty's grasp....
03/12/08 -
Vox - Many observers have argued that central banks should use monetary policy to prevent the rise of asset price bubbles. Recent research shows that monetary policy is too costly and too slow to serve such a role. The subprime crisis and falling property prices in the US and elsewhere have put central banks back in the firing line....
03/11/08 -
econweekly - Productivity is the main determinant of long-run growth. In the United States, between 1958 and 2007, the average growth of output per capita has been 2% per year, whereas the average growth of productivity —output produced in one hour of work— has been 2.1%. But productivity growth fluctuates a lot, and the latest changes are uncomfortable to look at....
03/11/08 -
irvine housing blog - Commodities are items of value and uniform quality produced in large quantities and sold in an open market. Although every residential real estate property is unique, these properties became uniformly desired by investors because all real estate prices rose during the Great Housing Bubble. The commoditization of real estate and the active, open-market trading it inspires caused houses to lose their...
03/11/08 -
Agonist - The US will go into a recession at best, a depression at worst. Expect first stagflation (high inflation and high unemployment), both because of the increased price of imports and deliberate pump priming by the Fed, then deflation, as asset prices collapse so hard they take everything else with them. The other likely scenario is stagflation followed by hyperinflation. Formal inflation numbers put...
03/10/08 -
Erick Schonfeld - The cable companies may control the set-top boxes, but they only collectively control about $5 billion of the $70 billion spent each year on TV ads. Most of those are local spots. With better ad targeting through Project Canoe the cable companies hope to triple their take to $15 billion. But that may be wishful thinking....
03/10/08 -
interfluidity - Buffet, as always, writes charmingly, and the logic here is unassailable. But there's a subtle point lost in this analysis. Sure, active investors as a class must earn less than passive investors as a class, if passive investors make the same investments in aggregate and pay lower fees. But it does not the follow that active investors, as a class, would have done better had they been passive investors....
03/10/08 -
Robert Reich - Much of the Middle East is swimming in oil money -- petro-dollars -- while China has built up its own huge stock of sino-dollars. These petro-dollars and sino-dollars aren't just sitting there in the Middle East and in China. They're being put to work - building new infrastructure in both places: skyscrapers, power plants, power grids, roads, ports. And building middle classes that, while still...
03/09/08 -
Calculated Risk - Several people have sent me this piece from interfluidity: Repurchase agreements and covert nationalization. Steve Randy Waldman does a good job of describing the situation, but I think he takes it too far. As Waldman notes, the Fed offers loans only against certain collateral, and requires that loans be overcollateralized. I've seen the lendable amount sheet, and I think the Fed is pretty well...
03/09/08 -
productivity shock - First, a solid majority of almost two-thirds opposes subsidies to large farms, defined as 500 acres or more (aside: how many Americans have any conception of how big an acre is?). And of those that support subsidies to small farms, the majority would only do so in "bad years," meaning that once again close to two-thirds of Americans oppose farm subsidies on a regular annual basis (aside: only half...
03/09/08 -
trustedadvisor - Me, I’d pick the CFO. Why? Because (s)he’s most likely trained in accounting. And I have come to believe that accountants have—overall—the clearest and most practical view of the world of all the professions. I suppose it has something to do with a closed system view of the world. Everything’s either a debit or a credit; it must have an account, and an offsetting account. And everything...
03/07/08 -
Big Picture - Ever since the Primary on Tuesday, the market's have aggressively sold off. This clearly indicates the equity market's fear of a McCain presidency. As the charts below show, ever since Tuesday -- when McCain's Intrade price soared -- stocks have been under continual pressure. Had Barrack Obama knocked out Hillary Clinton, a mano-a-mano contest would have taken place. A well rested, fully funded...
03/07/08 -
econo speak - Almost 99% of the 2.4 billion shoes purchased in the U.S. every year are imported, 86% of them from China. The problem of obtaining components is especially acute when it comes to materials uniquely designed for shoes, as opposed to generic items such as cardboard boxes that are used by a wide array of manufacturers. This is one reason why Red Wing prepares its own shoe leather, says Mr. Murphy....
03/07/08 -
chicago boyz - There’s an old story about a Soviet-era factory that made bathtubs. Plant management was measured on the total tonnage of output produced–and valves & faucets don’t add much to the weight, certainly not compared with the difficulty of manufacturing them. So the factory simply made and shipped thousands of bathtubs, without valves or faucets. The above story may be apocryphal, but the writer...
03/06/08 -
Mark Hendrickson - The iPhone still has a tiny 0.14% market share in the mobile world. But even so, Apple CEO Steve Jobs claims that 71% of web browsing on smart phones occurs on iPhones. As someone who’s used many mobile devices over the last couple of years, that’s a believable statistic. Surfing the web on an iPhone, with the high resolution screen and touch interface is a superior experience....
03/06/08 -
cafe hayek - It's funny how numbers can be used to scare and mislead. One hundred and fifty one percent seems like a big increase. But the size of that number tells you nothing. It does sound scary. But it tells you nothing. Nothing. All it tells you is that in 1989, the median family with debt had debt of 22,000. In 2004, the median family with debt had debt of 55,000. Good or bad news? You can't tell. It...
03/06/08 -
edugree - First of all, in order to ask your boss for a raise, you’ll need to know you’re worth it. Have you made improvements at work? Have you pulled some late nights? If you’re confident in your abilities and what you’ve done for the company, then you have what it takes to follow it through....
03/05/08 -
Econbrowser - Start with autos. Every sales category was down-- imports or domestic, cars or light trucks-- relative to February 2007. But the sharpest drops were seen by domestic light trucks, a category that includes the SUVs and still accounts for more than half the number of light vehicles sold. Domestic light truck sales last month were down 12.4% compared with February 2007. The graph below records the...
03/05/08 -
concurring opinions - Though I've been critical of some recent popularizations of economic thought, Dan Ariely's Predictably Irrational looks like a quality addition to the genre. As NPR relates, the book "explains how the reasoning behind [common economic] decisions is often flawed because of the invisible forces at work in people's brains: emotions, expectations and social norms." Ariely's research shows that a series...
03/05/08 -
penelope trunk - Since today’s job market is employee-driven, many candidates are fielding more than one or two offers at a time, and at this point, maybe it’s the employers who need the advice on how to attract the employees, instead of the other way around. ...
03/04/08 -
inflation usa - The firm-size dependent evolution of productivity and sales/payroll ratio potentially provides a good indication of the performance of these firms at stock market. For example, the growth in the density of the largest and smallest firms is likely related to their higher relative productivity. This process is likely industry dependent, however....
03/04/08 -
copy blogger - You’ve heard it a million times if you’ve spent any time studying copywriting, marketing or sales—stress benefits, not features. People must be expressly told what reward they can expect when buying from or even paying attention to you. This all boils down to basic psychology and an understanding of what truly motivates the person you’re trying to reach. But what’s really going on inside...
03/04/08 -
Geek Doctor - Organize the meeting in the most painless way possible Outlook invitations work well for folks who have a lot of flexibility in the calendars or who are always working in a single location. For executives who attend meetings 12 hours a day and who travel between several corporate locations, automated invitations just do not work. I cannot be in Los Angeles for breakfast and Boston for lunch. Outlook...
03/04/08 -
Vox EU - Since 1900, consumers have enjoyed a dramatic explosion in the number and quality of goods available. This column discusses a simple method for quantifying welfare gains from the introduction of new goods into the economy and their subsequent quality improvements using the personal computer as an example....
03/04/08 -
be rich - Are you in college or about to attend college? Are you in your junior or senior year? Consider sending this to your parents. This article has a lot of with ideas that may help save your parents thousands of dollars each year and may even put some extra money in your pocket....
03/04/08 -
escape from cubicle nation - Almost a year ago, I was interviewing my young, bright friend Ramit Sethi on my radio show. At the ripe age of 26, Ramit had already started a screaming hot blog with a huge following (I Will Teach You to Be Rich, a personal finance blog for college students and recent graduates), gotten 2 degrees from Stanford, started a company and struck 2 book deals. So I asked Ramit a question that I have...
03/02/08 -
Cato At Liberty - “I am sick of everyone blaming the breakdown in the credit and housing markets on subprime loans,” says D.C.-area homebuilder Michael Hill in the Washington Post. Subprime mortgages were only a symptom of the real problem, which is unaffordable housing. But what made American housing unaffordable? Hill is silent on that question, but University of Washington economist Theo Eicher knows the...
03/02/08 -
The Peridot Capitalist - Warren Buffett's annual letter is always a good read and the recently released 2007 version is no different. There are a couple points that Buffett mentions this year that I think are worth pointing out and commenting on regarding the current market environment; corporate creditworthiness and sovereign wealth funds. Buffett is often criticized for speaking out against the widespread use of...
03/02/08 -
Stumbling and Mumbling - In his speech to the Labour conference yesterday, Gordon Brown urged us to "embrace this new age of ambition" where "what counts is not how high up you start, but how high you can reach." Include me out. I'm with John Stuart Mill: I am not charmed with the ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling,...
02/29/08 -
Eliot Van Buskirk - When the RIAA sues a student for sharing files or a company for infringing its copyrights, they're fond of trotting out the artists they represent, claiming that infringement steals from them. As it turns out, artists may not be receiving their fair share of the hundreds of millions of dollars in settlements that EMI, Universal, and Warner won from Napster ($270 million), Bolt, Kazaa, and other...
02/29/08 -
life is your career - Meetings. Its a reality of a corporate environment. Same goes with team projects and all other assorted types of working in groups. The theory is that by taking many people’s different ideas and abilities you will be able to make a sum that is greater than the whole of its parts. And it works in theory…. to the same extent that communism worked in theory....
02/29/08 -
early retirement extreme - There are three versions or forms of the efficient market hypothesis. These are known as the weak, semi-strong and strong version. The weak version says that investors can not gain an advantage by knowing the past history of stock price movements. In other words, it says that technical analysis is futile. This may have some truth to it now as few technicians make a killing in the market. It was...
02/26/08 -
Econbrowser - Today we received updates on U.S. house prices from two different sources. The OFHEO national house price index recorded a 1.3% decline in the price of a typical U.S. home during the fourth quarter of 2007, while the S&P/Case-Shiller home price index registered a 5.7% decline during the last three months of 2007. Here in San Diego, the respective numbers showed a 2.6% decline according to OFHEO and...
02/26/08 -
Energy Bulletin - Elizabeth Kübler-Ross defined the five stages of coming to terms with grief and tragedy as denial, anger, bargaining, depression, and acceptance, and applied it quite successfully to various forms of catastrophic personal loss, such as death of a loved one, sudden end to one's career, and so forth. Several thinkers, notably James Howard Kunstler and, more recently John Michael Greer, have pointed...
02/26/08 -
William Polley - Students occasionally ask what economics book they should read for pleasure. If you're an econ professor, you know what I mean. Greg Mankiw tells us of a recent conversation he had... Student: Professor Mankiw, if you could recommend just one book, what book would it be? [Mankiw]: Am I allowed to recommend my favorite textbook? Student: No. Textbooks are disallowed. ...
02/26/08 -
Marginal Revolution - I haven't figured this out yet, but I'm experiencing ongoing worries. Let me try to articulate them, maybe one of you can cure me. One story I hear is that the new, carbon-friendly energy technology will be subject to decreasing costs, or alternatively increasing returns to scale. In other words, there are high start-up costs, but once it is underway it will be pretty cheap and lots of countries...
02/26/08 -
Show Me The Money - Hi. My name is Janice Ferrante. I am a time management junkie. I have bought almost every time management program that I could get my hands on. I have promised myself that I will not buy another program, only to buy “one more” because I have really wanted it “for a long time”. Yesterday is a long time to waste if you are not managing your time properly. This one will...
02/26/08 -
Brazen Careerist - Do you want to know how to tell if you have a business idea that will succeed? You know what? I don’t know how you know that. And if I did, I’d be a venture capitalist, right? But I do know how you can tell if you have a business idea that is worth reorganizing your life to try. Who knows if you have a good idea?? No one. Actually, in some cases some people can tell you for sure that your...
02/24/08 -
Alan Moore - Consumers prefer pull to push and Fragmentation drives complexity whilst Engagement remains theoretical, while reach and frequency reign. Hmm interesting the last point. As the Ex Coke Steve Heyer CEO said in 2004 – I am describing a process that is transformational. Theoretical? - Engagement is not possible whilst the old way of counting the audience remains in place - is the point. Just...
02/24/08 -
Brazen Careerist - I am a huge fan of delegating. Part of what makes me good is that I love time management advice, and I’m constantly asking myself what is most important to me. I keep my list to about five things, and everything else is fair game for delegation. Also, I am lucky to have many traits of a good delegator, including:...
02/24/08 -
consumerist - A former Sports Authority manager came forward to explain why their coupons are so damn useless. According to our tipster, "the coupons are always a sham," but apparently, gift cards worth less than $10 can be redeemed for cash. Read his other nuggets of knowledge along with zesty executive customer service contact information, after the jump....
02/23/08 -
Dani Rodrik - David Leonhardt of the New York Times surveyed economists to find out, and he says the answer is definitely yes: I received dozens of diverse responses, but there was still a runaway winner. The small group of economists who work at the Jameel Poverty Action Lab at M.I.T., led by Esther Duflo and Abhijit Banerjee, were mentioned far more often than anyone else. Ms. Duflo, Mr. Banerjee...
02/23/08 -
Caveat Emptor - You Walk Away promises to help homeowners walk away from their current mortgage with no debt, no strings, and says ballsy things like this: You will immediately know the exact amount of days you have to live in your house payment free. We stay on top of your walk away plan and keep you up to date with weekly progress emails. We also will notify you if the lender is taking longer than expected...
02/23/08 -
Consumerism Commentary - As my partner and I are active landlords and property investors, it’s no surprise that people approach us with real estate offers. Sometimes they’re great deals, too – people occasionally inherit properties they want to get rid of quickly and therefore cheaply, or learn of a house at a great price that just isn’t selling. With the current housing market downturn, it’s happening more and...
02/21/08 -
cafe hayek - One comment on this post about the state of America mentioned our rising debt, negative savings and so on. Savings is mismeasured in the US--it doesn't include investment in human capital and ignores asset appreciation. As I said in the post, yes, debt is rising. But debt isn't what matters. It's net worth. Here are the data on real net worth. It's at an all-time high. And yes, I know this is...
02/21/08 -
voxeu - Nothing lasts forever. The fall of the dollar continues to strengthen the euro, while there are signs that financial turbulence will put the euro-zone under stress for some time to come. Given this, exit from the euro is now conceivable – if not very practical, as Barry Eichengreen has argued – especially where economic pressure meets a political climate for change, as in Italy. The closest...
02/21/08 -
sales machine - If you’re not careful, your marketing group might set up sales channels that ruin your firms ability to forge long-term customer relationships. The software business is notorious for this. There are now many companies that let you have exactly one support telephone call for free. After that, they charge you $35 per service call. The reason that software vendors charge for support is that their...
02/21/08 -
Scott's Entrepreneurs Blog - Back in November, I marked my five-year anniversary at About.com with 5 Things I've Learned in 5 Years at About.com. It was one of the most comment-provoking pieces I've ever written. In particular, some people really took issue with my third point, "Sex sells." I received several emails from people criticizing me for including this in my list. The following was a typical example: Dear...
02/21/08 -
An Amazing Mind - Linux isn't very popular on the desktop. It's a far third behind OS X, which is a very far second behind Windows. Most people cite pre-installed operating systems as the reason. But as a student of psychology, I see something most people don't. There's one big factor in why Linux isn't popular on the desktop. Linux is free. I know this sounds like complete dog's bollocks, but hear me out before...
02/21/08 -
Consumerism Commentary - I’m paid bi-weekly, which is typically twice per month. Every now and then, there’s a month or two sprinkled throughout the year when I’m paid three times per month. But regardless of how often payday arrives, most of my salary is already spent before I see a dime. Why? Because, excluding taxes, there are several transactions that process automatically through payroll allotment:...
02/20/08 -
Big Picture - For quite some time in these pages, we have been lamenting the mistaken belief amongst some on Wall Street that there was a free lunch to be had. Lowering interest rates, the Panglossians argued, would stimulate the economy, whose slowdown would prevent inflation. If that argument strikes you as both circular and contradictory, welcome to the club. That obvious flaw was apparently lost on its...
02/20/08 -
Vox - A key advantage claimed for the outward-oriented development strategy is that it allows poor, labour-abundant countries to specialise in labour-intensive products and, thus make efficient use of limited capital stocks. To quote Anne O. Kruger (1985), “An export-oriented strategy permits countries to use the international market to exchange their own, relatively labour-intensive commodities for...
02/20/08 -
Visible Hand - The Standard links to an interesting LA times article on loss aversion. Now loss aversion in itself is a very interesting issue, something Rauparaha may like to write about ;). However, my focus is going to fall on the same result that The Standard was interested in namely that people would rather earn $50k when everyone else earns $25k than earn $100k when everyone else earns $250k. The article...
02/19/08 -
Econweekly - With Federal Reserve and government doing their best to stimulate demand, people have started looking at inflation. The worry is that the economy is not as sick as our policymakers think, and so the fiscal and monetary medicines are excessive. Markets disagree. Expected inflation is an important determinant of future inflation. If the public expects higher inflation, workers demand higher wages,...
02/19/08 -
econlog - As a rhetorical strategy, Benabou's probably right. Non-economists are much more anti-market than economists. If we told them that the economic way of thinking is consistent with (or better yet, justifies!) their anti-market prejudices, we'd be more popular. ...
02/19/08 -
tvhe - The Standard links to an interesting LA times article on loss aversion. Now loss aversion in itself is a very interesting issue, something Rauparaha may like to write about ;). However, my focus is going to fall on the same result that The Standard was interested in namely that people would rather earn $50k when everyone else earns $25k than earn $100k when everyone else earns $250k. The article...
02/18/08 -
Mish's Global Economic Trends - I have been writing about the Credit Default Swaps (CDS) ticking time bomb for a long time. In Who's Holding The Bag? I compared Warren Buffet's position to Greenspan's. Here is Greenspan's position: "Perhaps the clearest evidence of the perceived benefits that derivatives have provided is their continued spectacular growth." Buffett's take is quite different of course. Discussion of Credit...
02/18/08 -
constant dream - The digital platform that connects Bangalore, Boston and Beijing enables users from any of these places to “plug, play, compete, connect and collaborate,” and is changing everything, says Friedman. He lists some basics to keep in mind: Whatever can be done, will be done, “and the only question left is will it be done by you or to you.” Friedman describes a Budapest limo driver who asked him...
02/18/08 -
Macro Market - The subprime crisis is Alan Greenspan’s fault, or so we are increasingly told: he offered bankers too much monetary candy and should have put them on a monetary diet instead. Is this criticism justified? And what does it imply for the future behaviour of central banks? Few now have as much confidence in the self-restraint of the financial children as Mr Greenspan was wont to. No less certainly,...
02/15/08 -
Angry Bear - The South Sea Bubble, the Megatherium Trust, Tulip Mania, the Dot.Com Boom, the Bre-X gold mine bubble, the recent sub-prime housing bubble and Enron's … well, Enron's everything, all show this progression. Various large frauds also show this progression. Most of these properties had a real-value component (tulips, rum, slaves, electricity, international postal reply coupons) but that real...
02/15/08 -
Jeff Jarvis - The hope is that quality wins. Left purely to traffic, that may not be the case. Paris Hilton would win. But that’s where the role of the packager come in — the editor with the reliable brand who went to the trouble to find the best news from the best sources and to add value through vetting and packaging. If you go to that packager because of that value, then the sources the packager uses will...
02/15/08 -
Econbrowser - The most commonly reported statistic is the median price of homes sold during a given period. This has the advantage that we can obtain detailed and up-to-date numbers from real estate networks. The main drawback is that the numbers can be seriously contaminated by a composition effect-- you don't know whether individual homes have fallen in price or if people are simply buying more homes in areas...
02/15/08 -
Angry Bear - Trade and inventories are treated differently in the GDP accounts. All other GDP data is the average of the three months data. But trade and inventories are the change from the end of the quarter to the end of the quarter. This is because we not not directly measure output. Rather, we measure consumption and adjust that for the change in trade and inventories to indirectly estimate output. But...
02/15/08 -
Seth Godin - Everybody already knows how powerful the brain is. Take a sugar pill that’s supposed to be a powerful medicine and watch your symptoms disappear. Have a surgeon not perform bypass surgery on your heart (link.) and discover that the angina that has been crippling you vanishes. The placebo effect is not just for sick people anymore. Why do some ideas have more currency than others? Because we...
02/15/08 -
Seth Roberts - A big study of managers reached essentially the same conclusion: Good managers don’t try to make employees fit a pre-established box, the manager’s preconception about how to do the job. A good manager tries to encourage, to bring out, whatever strengths the employee already has. This wasn’t a philosophy or value judgment, it was what the data showed. The “good” managers were defined as...
02/13/08 -
Market Vise - When Microsoft announced its acquisition offer for Yahoo, some of my coworkers at VantagePoint remarked “it’s about time, this should have happened a long time ago”. Earlier today I was reading Fred Wilson’s (from A VC blog) take on the deal. Fred argues that Google will emerge as the champion of search because more oversight from a behemoth like Microsoft will not solve Yahoo’s problems....
02/13/08 -
Powerblog - In any period of economic transition there are upheavals at various levels, and winners and losers (at least in the short term). We live in just such an age today in North America, as we move from an industrial to a post-industrial information and service economy, from isolationism to increased globalization. There’s no doubt that there have been some industries and regions that have been more...
02/13/08 -
Sports Biz Blog - Is it because they got their clock cleaned at the World Cup last year by archrival Adidas? Is it because the world's best marketing opportunity dawns in a few short month's in China, that is, is it because it's an Olympic year? Or is it just because it's All Star Weekend next weekend? Whatever the reason, Nike has embarked on an unprecedented public relations campaign for the notoriously secretive...
02/13/08 -
AutoBlog - Bob Lutz understands how the automotive media operates, which is why on the same day that General Motors announced its largest loss ever, he pops up on the GM Fastlane Blog to talk about some good news: retail sales in January were up 11.2%. The interesting thing is that this record $38.7 billion loss that the automotive media's talking (too much) about is not at all attributable to GM's performance...
02/13/08 -
Seeking Alpha - This is an article that I have wanted to write for a long time, but a number of recent events have inspired me to finally commit it to paper. Phil DeMuth and Ben Stein recently published a book, Yes, You Can Supercharge Your Portfolio (Hay House 2008), in which they are attempting to bring the value and concepts of portfolio theory to a broad audience. The core of the book explains how a good...
02/13/08 -
Political Calculations - How much does having you on the payroll really cost your employer? You can thank or blame King Banaian for the brand new tool we're featuring today, in which we seek to answer that very question! To answer the question, we're focusing on those things that represent the recurring cost of compensating you for your boss and those things that are required for all employers by law, such as all...
02/12/08 -
Housing Wire - The Wall Street Journal covers something regular HW readers already know; that some Wall Street firms are heading back to the well in terms of mortgages: … Wall Street seems to believe there still is money in failed mortgages. In fact, firms such as J.P. Morgan Chase and Bear Stearns are sidling back toward their subprime exes, looking to buy some assets on the cheap. Jamie Dimon...
02/12/08 -
Megan McArdle - Why do CEO’s make so much money? The question seems to obsess us, probably more than it should. Discussions of income inequality often turn to the topic of outsized CEO pay packages, even though massive payouts to a handful of people cannot possibly account for the trends we have seen in the nation’s income statistics—there simply aren’t enough CEOs of large companies to produce the change,...
02/12/08 -
Frontal Cortex - I'm morbidly fascinated by the massive losses recently incurred by the French Bank Societe Generale. My fascination is partly rooted in the sheer scale of the disaster, a scale that's essentially incomprehensible. (I have no idea what a $7,000,000,000 loss really means.) But I'm also interested in how, exactly, a trader could lose so much money and not get noticed. It now appears that the...
02/11/08 -
Blogging Stocks - Which is the better investment, Apple Inc. (NASDAQ: AAPL) or Bank of America Corp. (NYSE: BAC)? Most investors would take Apple's side. Even though there is some concern about the softness of iPod sales, almost no company has been more innovative over the last year in producing hot-selling new products. Unit growth prospects for the Mac and iPhone are the envy of the computer and handset...
02/11/08 -
Enterprise Resilience - It will come as no surprise to truly creative people that innovation takes hard work. Eureka moments are, to use an old adage, as rare as hens' teeth. This truism is the focus of a New York Times article by Janet Rae-Dupree ["Eureka! It Really Takes Years of Hard Work," 3 February 2008]. "We've all heard the tales of the apple falling on Newton’s head and Archimedes leaping naked from his...
02/11/08 -
Brazen Careerist - For a while, I was a visual artist. Well, sort of. I mean, I made money from it. But you know how I am about specializing, and I realized that I had a better chance of being outstanding in my field by focusing on writing instead of visual art. But I did learn some lessons from my visual art mentors, and one really cool thing someone taught me is that the color I choose is most interesting where...
02/09/08 -
Peridot Capitalist - One of the great things about listening to Warren Buffett speak, and I suspect one reason why thousands gather each year in Omaha for his company's annual meeting, is that despite the fact that he is a brilliant man he speaks in plain, logical language that is easy to follow and usually hard to argue with. If you want the truth, without the media spin, and in as few simple words as possible, just...
02/09/08 -
A Random Walk To Wealth - Here's a short history of the "Credit Crisis": Its hard to say where it all began, but one of the first places it reared its ugly head was in the private equity market. It was in that market that we were introduced to "Pik-Toggle" and "convenant lite" loans as well as bridge loans that slowly transformed themselves into "pier loans." After setting all kinds of LBO records and seeing 6 of the top...
02/09/08 -
Stephen R Covey - With today’s technology, multitaskers are using PDAs, cellphones, text messaging and emails to stay in connected 24 hours a day. While lighthearted nicknames like “crackberry” have been coined to describe this almost obsessive behavior, what happens when we become addicted to this connectivity? Do we exclude the other important dimensions of our life? Q: What does it mean to have work/life...
02/08/08 -
Concurring Opinions - Which channels for legal authority are most efficient? This enforcement-efficacy question is a tough one, understudied by traditional L&E and even BL&E. Most instrumentalist theories of law spend relatively little time thinking about the costs of distributing legal rules, and the likelihood that their recipients (citizens) will internalize them. Indeed, the basic L&E approach to criminal law (Becker's)...
02/08/08 -
Econbrowser - Michael Dueker is a senior portfolio strategist at Russell Investments and formerly was an assistant vice president in the Research Department at the Federal Reserve Bank of St. Louis. He has been doing some very interesting economic research recently in developing what he calls a Qual VAR model for predicting recessions. We are pleased that he agreed to share some of the current implications of...
02/08/08 -
Consider the Evidence - Douglas Hibbs’ “bread and peace” model has been extremely effective at predicting the outcomes of U.S. presidential elections. This chart, covering elections from 1952 to 2004, gives you the gist: On the vertical axis is the incumbent-party candidate’s share of the two-party vote. On the horizontal axis is the growth rate of per capita real disposable personal income (DPI) over the three...
02/06/08 -
A random walk to wealth - The war for the internet started long ago, but it escalated dramatically this week. Much has happened over the last few days, but I'll start with a Google update. After an earnings release that disappointed analysts Google's stock tumbled after the close yesterday. For the first time since Google went public its stock price dipped below its 200 day moving average. The introduction has gone fairly...
02/06/08 -
Mish's Global - Actually we need to stop right there for a moment because Deflationistas, at least this one, have not repeatedly called for "all-goods prices declines for the past several years, since at least 2005". While I cannot speak for others, I am not aware of any Deflationistas on Minyanville making that specific claim either. The general Minyanville Deflationistas Viewpoint (if indeed there is such a...
02/06/08 -
Seth Godin - Rudy Giuliani was the fear candidate. He tried to turn fear into love, but failed. Few products or services succeed out of love. People are too selfish for an emotion that selfless, most of the time. It's interesting to think about the way certain categories gravitate to various emotions. Doctors selling check ups, of course, are in the fear business (while oncologists certainly sell hope)....
02/05/08 -
Duncan Riley - One argument against the acquisition is that it lessens competition. While in terms of major players it does, a combined Microsoft/ Yahoo will actually increase competition in spaces where Google is dominant, and in some countries all but a monopolist provider. Scale is the key here: Google has it, and Yahoo and Microsoft need more of it. The combined Microsoft/ Yahoo would still have less than half...
02/05/08 -
Big Picture - There are lots of things that investors believe which I find perplexing. The Superbowl indicator is one, but the oddest to me is the so-called Fed Model, also known as the IBES Valuation Model. It is not that the Fed model is so terribly wrong -- it has been both right and wrong over the years. Rather, it is the way too many people conceptualize it. First, the definition of the Fed Model:...
02/05/08 -
jessica shortall - One of the most important part of the entrepreneurial process is managing and developing the role of key people. As some of my previous posts reveal, I am dead-set against some of the cult of individual 'heroes' that surrounds many social entrepreneurship initiatives, funding schemes, and communities. That said, I believe firmly that people and teams are a key component to building any successful...
02/05/08 -
Greg Mankiw - I thought it might be useful to put the debate over fiscal stimulus in a broader perspective. When designing a tax system and evaluating tax proposals, policy analysts have at least four goals in mind: 1. Efficiency: The tax system should distort incentives as little as possible (and, in the case of externalities and Pigovian taxes, correct incentives when necessary). 2. Intergenerational...
02/04/08 -
Buzz Machine - At Google’s blog today, David Drummond, the company’s chief legal officer and senior VP for development, comes out with phasers set to kill against the Microsoft bid for Yahoo. A week ago in Europe, I ended up at a small dinner and a few other events with Drummond. He’s a serious guy with a stoney glare. I’ll bet he could stare down Steve Ballmer in a contest. Implicit in Drummond’s...
02/04/08 -
Global Economic Analysis - There was an interesting post on iTulip over the weekend about the Bubble Economy Endgame. The post was written by Eric Janszen, and called Door Number Two. Here are some highlights: Today one of our best and brightest iTulip members posted an excerpt and a link to yesterday's comments by Stephanie Pomboy: Economic Fear Taking Hold. In it she says a US deflationary spiral is a mere 3% away....
02/04/08 -
Small Business Trends - Seth Godin, SethGodin.com – “Make promises and keep them. So obvious, it’s become a secret.” Jackie Huba, Church of the Customer – “Attracting is the new selling. It is the least-visible, and least-examined principle behind most companies today that are growing quickly through word of mouth.” Jonathan Fields, Awake at the Wheel – “Decide whether you want to feed your ego or...
02/03/08 -
Blogging Stocks - For those who wish to hedge a portfolio against downside risk, Nate Pile suggests a pair of ETFs that benefit from a market decline. Here is the latest from his Nate's Notes. "Although I would argue that much of the potential bad news has already been factored into stock prices, one of the mantras I have come to respect over the years is 'don't find the trend'... and the trend is currently...
02/03/08 -
Econbrowser - First, the good news. Each of the three indicators that initially turned our Little EconWatcher's face blue last month all took a favorable turn in the numbers just reported. The first of these is the Institute of Supply Management's manufacturing PMI reading. This index is based on a survey of managers, with a value below 50 indicating that more plants are reporting declines rather than increases...
02/03/08 -
Consumerism Commentary - Save 15% of your gross income. In addition to whatever short-term savings goals you might have, like a down payment on a house or preparing for children, 15% of your gross income should be saved for your long term retirement goal. Kiplinger’s calculates you’ll need $671 per month invested in the stock market if you’re starting from scratch at this age....
02/02/08 -
Alex's Adventures - Is Microsoft going down the same road as the ill-fated AOL-Time Warner merger with its hostile takeover bid of Yahoo? Microsoft has offered $44.6 billion in cash and stock to purchase Yahoo, or $31 a share, a 62 percent premium on Yahoo’s closing price on January 31. Microsoft predicts that the merger would bring about efficiencies that would save around $1 billion annually. As it estimates...
02/02/08 -
Mankiw's Blog - I thought it might be useful to put the debate over fiscal stimulus in a broader perspective. When designing a tax system and evaluating tax proposals, policy analysts have at least four goals in mind: 1. Efficiency: The tax system should distort incentives as little as possible (and, in the case of externalities and Pigovian taxes, correct incentives when necessary). 2. Intergenerational...
02/02/08 -
Marginal Revolution - It's a pleasure to be back at the Marginal Revolution. Let me start out by agreeing with Tyler and Bryan. Tim Harford is one of the leading popular social science writers and we're lucky to have him. Today, I'll focus on Chapter Two of Tim's book, "Las Vegas: The Edge of Reason." In this chapter, Harford describes game theory. In a nutshell, game theory studies any situation where (a) you...
01/31/08 -
personal financier - Inflation simplified is increase in prices for popular commodities. This price increase devalues each dollar and as a result devalues our earnings and investments. Each dollar can buy less. How do we protect our money from inflation then? The rule of thumb is to invest in real assets. These assests' value is not dependent, or is adjusted to price levels. Let's have a look at some of the steps we...
01/31/08 -
ann althouse - What's wrong with Starbucks? Certainly not that it's pushing out independent coffeeshops. They are prevailing. The big trick: Make better coffee! Meanwhile, Starbucks has been switching to push-button espresso machines. In New York City, I'm stuck patronizing Starbucks, and I was shocked when I saw that they had automated the machines. Starbucks used to seem like a luxury brand, and now it feels...
01/31/08 -
Greg Mankiw - The current debate over fiscal stimulus involves trading off these goals. The stimulus package being discussed is mainly aimed at achieving goal 4, but it does so at the cost of sacrificing goals 1 and 2 to some degree. Efficiency is sacrificed because the phase out raises effective marginal tax rates and because the higher future taxes that result from the extra government debt will likely be...
01/30/08 -
Econbrowser - Today the Federal Reserve announced a further 50-basis-point cut in its target for the fed funds interest rate, bringing it down to 3.0% for a total reduction in January of 125 basis points. How long should it take before this has an effect on the economy? In a recent research paper (quick summaries here and here) I sought to develop new measures of the time delays between when the Fed acts and...
01/30/08 -
John Quiggin - The news that over a million homes went into foreclosure in the US in 2007, affecting about 1 per cent of all households or around 3 million people, supports the view that foreclosure has taken over from bankruptcy as the primary mode of financial catastrophe. As with bankruptcy, however, the high frequency of financial distress is partly offset by the fact that US law and standard contractual...
01/30/08 -
ER Nurse - Hospitals are corporations. If you think they aren't you're fooling yourself. They are no different than McDonalds or Macy's. The product is health care and the customer is the patient. Just like a corporation they live in a competitive environment, trying to attract customers toward their product in various ways. Right now the focus in hospitals seems to be on getting different certifications. My...
01/30/08 -
Conglomerate - Last night I flipped past 60 Minutes, then noticed the segment was on the subprime mortgage crisis, and flipped back again. The part of the segment that caught my attention featured television journalist Steve Kroft questioning two California homeowners who were considering letting their house slip into foreclosure, now that the amount owed on their mortgage was more than the fair market value of...
01/30/08 -
TCS Daily - There is a large and potentially risky disconnection between the causes of the current financial crisis and the various macroeconomic stimulus packages proposed by the Fed, the president and others. We propose a precisely targeted stimulus that would seek directly to reduce the underlying uncertainty that is driving markets down....