Apple: The New Nike

Someone mentioned the other day that Steve Jobs aspired for Apple to be like Nike.  Looks as though his wish came true:

 "Apple said the child workers are now no longer being used, or are no longer underage. "In each of the three facilities, we required a review of all employment records for the year as well as a complete analysis of the hiring process to clarify how underage people had been able to gain employment," Apple said, in an annual report on its suppliers.
Apple has been repeatedly criticised for using factories that abuse workers and where conditions are poor. Last week, it emerged that 62 workers at a factory that manufactures products for Apple and Nokia had been poisoned by n-hexane, a toxic chemical that can cause muscular degeneration and blur eyesight. Apple has not commented on the problems at the plant, which is run by Wintek, in the Chinese city of Suzhou."

http://www.telegraph.co.uk/technology/apple/7330986/Apple-admits-using-child-labour.html

Assuming this is actually from yesterday..

yay Greece!


http://www.youtube.com/watch?v=iXr0A9MB83w&feature=player_embedded

So Much For Business Spending

Its seemed like business spending would drive very slight increases in GDP in the first few quarters of this year, and this is something that I had conceded (partially so as to not seem perma-bearish).  But, it appears as though I was wrong:

"The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $518 billion equipment finance sector, showed overall new business volume for January declined by 24 percent when compared to the same period in 2009.
We will point out, once again, that this time last year was just about the nadir for everything, so the fact that equipment financing is down this sharply from a year ago should be an eye-opener. And the source of that weakness is the one source that no amount of government largesse can engineer: demand."


http://markettalk.newswires-americas.com/?p=9124

Disruptive Payment Processing?

Potentially a HUGE shift...

"TradeShift, which has been operating under the stealth name of Porta till now, is aiming at a very, very big target.
It wants to disrupt how banks and credit card companies process payments between any kind of business, and use the Internet to do it.
For the last 10 months the dozen strong team in Denmark has been building what could be described most simply as an e-invoicing company.
But instead of the kinds of charges levied for credit card processing and other banking systems, transactions will be free across the network, but with the security of being legally binding. That is incredibly disruptive.
Financially it is backed by seed investors and is “currently self sufficient”.
How so? TradeShift has now signed up two undisclosed regions in northern Europe and a yet to be named city in Brazil for its platform. Crucially, it looks like Tradeshift will be hugely beneficial to emerging nations like Brazil which currently are not locked into old EDI systems.
The problem is simple. Businesses still trade on exhancging and printing out PDFs. Microsoft and SAP haven’t solved this. So Tradeshift wants to let global SMEs to participate in hard core business processes traditionally ruled by these companies.
Old fashioned Electronic Data Interchange (EDI) is dominated by huge IBM mainframes and pre-Internet protocols. Of course, it’s only natural that this should move to cloud computing.
The idea is this. Dynamic invoicing will, instead of being laborious hand-created entities, simply move between companies electronically. Accounts running on Tradeshift will constantly monitor exchange rates and automatically withdraw funds or make purchases just when the price is cheapest for the goods your company requires."



http://eu.techcrunch.com/2010/02/25/tradeshift-launches-to-disrupt-an-entire-financial-system-and-morten-lund-is-behind-it/

Confirmation Bias in Wine Consumption

Not that this will come as a surprise.....


"While oenophiles may sincerely believe that they can suss out the difference between a $95 bottle and a $19 one, science indicates otherwise. What experiments show, in fact, is that the amount of pleasure contained in a bottle of wine follows the price tag — not the other way around.

Take, for instance, a recent experiment conducted by researchers at Caltech and Stanford, which looked directly at the relationship between the price of a bottle of wine and how much consumers enjoyed it. In the experiment, 20 volunteers were told they would be sampling five wines, priced at $5, $10, $35, $45, and $90 per bottle. Unsurprisingly, the participants consistently reported that they preferred the $90 bottle to the $5 bottle; they also reported that they preferred the $45 bottle to the $35 bottle.

But, there was a catch. The participants weren’t really tasting five wines; they were tasting three, with two of the wines being tasted twice, labeled at different prices. For example, Wine 2 was presented as the $90 wine and as the $10 wine. So how did that affect people’s enjoyment of the wine? As the “$90 wine,” they loved it; as the “$10 wine,” not so much.

What’s more, these levels of enjoyment were confirmed not just by people’s reports of how much they liked each wine, but inside a brain scanner. Higher ratings of how pleasurable a wine was matched up with greater activation in the medial orbitofrontal cortex, a part of the brain thought to encode for the pleasantness of an experience."

http://www.smartmoney.com/spending/deals/the-best-way-to-enjoy-wine-try-overpaying/?hpadref=1

Google: Microsoft 2.0?

"WASHINGTON— Google Inc. is set to announce later Tuesday that European antitrust authorities have opened a preliminary probe into complaints made against it by three European Internet companies, according to people familiar with the matter.
The inquiry into allegations of anticompetitive behavior is at an early, fact-finding stage and may not result in any action. But it appeared to be the first time that European antitrust authorities have examined Google's conduct outside of a merger review."



http://online.wsj.com/article/SB10001424052748704188104575084062149453280.html?mod=WSJ_business_whatsNews

When Even The Creditworthy Ditch Mortgages

Yet again, we see proof that a mortgage doesn't buy groceries....and sets the housing market up for continued declines.  Huzzah!  By the time I can afford a house, prices might be somewhat close to fair value.

"The shift to a consumer preference to stay current on unsecured debt, as opposed to secured debt, began last year. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on credit cards. In 2005, credit card delinquency risk was three times greater than today. In 2008, the lower to credit cards being just 1.6 times more likely to become 90 days delinquent than were mortgage loans.
The results echo data released by credit info provider, TransUnion, earlier this month. That study from earlier this month, found the share of borrowers who are delinquent on their mortgages but current on their credit cards rose to 6.6% as of Q309 (from 4.3% in Q108). At the same time, the share of borrowers that are delinquent on credit cards but current on their mortgages slipped to 3.6% from 4.1%."



http://www.housingwire.com/2010/02/23/fico-finds-more-borrowers-default-on-mortgages-over-credit-cards/

NBC Sucks

Really NBC?  Really?

"Ready for some fresh NBC outrage? Just wait until tomorrow, when Oregon discovers that the broadcast for USA Hockey's quarterfinal doesn't start until three hours after the actual game does. I understand hockey really comes to life on the radio

Many Americans were quite peeved when Sunday's game against Canada was assigned to MSNBC, denying folks without cable or (or an MSNBC HD feed) a prime viewing experience. The network heard those cries, however, and will broadcast the USA's next game on the NBC mothership. Unfortunately ... none of NBC Classic's Olympic programming gets broadcast live on the West Coast. It appears that the game will be shown at 3:00 p.m. in the both Eastern and Pacific time zones. So, if you don't want to know what happens, put a bucket over your head for three hours. Maybe bang it with a wooden spoon just to be safe."

http://deadspin.com/5478398/nbc-to-west-coast-hockey-fans-kiss-our-moose

Consumer Skepticism Index Reaches New High

As if to slap the administration rhetoric of 'things are getting better' in the face, consumer confidence data is released showing a ridiculous drop in consumer confidence.  My question is: how was this unexpected?  Companies ARE NOT HIRING.  Unemployment is close to 10% - and its not going to get better b/c of a "paradigm shift they believe it's permanent. This process of implementing new efficiency gains may have only begun and we may be in store for further efficiency improvements and high productivity growth for some time. If so, the rate of job creation will be frustratingly slow."


From the WSJ : "U.S. consumer confidence plunged more than 10 points in February, raising concerns about the outlook for consumer spending, according to a report released Tuesday.
Separately, U.S. home prices fell in December but were up when adjusted for seasonal factors, according to the S&P Case-Shiller home-price indexes, as yearly declines continued to ease.
The Conference Board, a private research group, said its index of consumer confidence declined to 46.0 this month, from a revised 56.5 in January, first reported as 55.9. The February reading was far below the 54.8 expected by economists surveyed by Dow Jones Newswires."

No M&A Boom?

"The conclusion is that one should be very wary of generalizations such as those by JP Morgan which claim that companies, sitting on huge cash war chests, are now ready to go out and spend, spend, spend. The truth is that had companies not been using various accounting fudge factors, their real cash position would have been much more precarious. Should companies revert to their mean Net Working Capital and CapEx exposure over the past 4 years, we will see $155 billion of cash disappear merely to plug the hole that was dug over the past 3 quarters merely to make S&P 500 balance sheets more palatable."


http://www.zerohedge.com/article/accounting-cash-gimmicks-have-boosted-collective-sp-500-cash-balance-over-150-billion-start-

Agreed

http://thehill.com/business-a-lobbying/82387-muslim-group-wants-government-to-call-austin-plane-attack-terrorism?sms_ss=digg

If you live in Hawaii, set your state withholdings very low..

... because if you are scheduled to get a tax refund, it ain't comin'!

"
Death and taxes may be life's only certainties, but many taxpayers won't be able to count on a timely income tax refund this year, as struggling states impose delays on refund checks to help solve their budget crises.

As New York weighs a potential delay, two other cash-strapped states, North Carolina and Hawaii, have already announced they will put a hold on refunds until June and July, respectively, allowing them to retain funds longer and cover their budget shortfalls with hundreds of millions of dollars owed to individuals and businesses.

The move will allow Hawaii to reallocate the $275 million it saves in the short run to balancing its $721 million deficit. North Carolina's Department of Revenue, now in its second consecutive year of refund delays, said slow collection of taxes contributes to the delays -- and hurts an already $1 billion shortfall."

http://www.zerohedge.com/article/expecting-tax-refund-if-you-live-hawaii-or-north-carolina-and-soon-new-york-you-will-have-wa

Invention Capital

A good read about a certain intellectual property company on the eastside:

http://www.nytimes.com/2010/02/18/technology/18patent.html?ref=technology

Surprise! Underemployment is expensive..

....and hurts the poor disproportionately:

"This $148 billion number is a good lower bound for the annual dollar cost of underemployment on society. The true figure will be higher: as the paper notes,

There are other important losses to these underemployed workers, including less training provided by employers to part-time workers, a lower return to future wages from part-time employment today, and lower future earnings.

Barbara Kiviat has noted this too: it’s possible to do serious harm to your lifetime earnings by taking a part-time or temporary job today rather than staying unemployed and looking for a full-time job. But of course many people have no choice."


http://blogs.reuters.com/felix-salmon/2010/02/11/the-massive-cost-of-underemployment/

The New Economy? Incremental Change...

Rather than simply linking to an article, I figured I'd write a little something of my own.

It has become clear over the last two decades that manufacturing in the US has become a thing of the past.  We no longer have a competitive or comparative advantage in most manufacturing elements, and this discrepancy compared to other parts of the world has expanded as a result of increasing healthcare costs.
Seeing as how there are large swaths of the US that lack higher education and vocational training in anything other than manual labor or manufacturing, how can we expect these regions to integrate into what is loosely defined as 'the new economy'?  The truth is we can't - right now these people are destined to fail - and they will continue to fall behind, further depressing what was formerly known as the middle class. 
Traditional Keynesian economics dictates that government spending should increase to attempt to compensate for depressed consumer spending.  The thinking is that government spending on certain items has a multiplier effect, creating aggregate impacts on GDP that are greater than the amount originally spent by the government.  But yet, how has our stimulus money been spent since the recession began?  Tax rebates, armed conflict, purchases of toxic assets, etc.  I don't believe those have significant multipliers, nor do I believe that they prepare us especially well for the future.
In all reality, we should be subsidizing continuing education for the unemployed.  The long-term impact of this type of spending would have an incredibly meaningful impact on the viability of our economy.  Furthermore, the government should find a way to free up credit for entrepreneurs and subsidize R&D, as innovation is what drives the US economy forward (whereas the retroactive financing of destructive financial innovation does nothing more than avoid hard-earned pain).

Do People Not Read The WSJ Anymore?

This article provides a slap-in-the-face pronouncement for the near-term future of the US Economy.

Keep in mind that these are the same people who, on the whole, failed to see the risks associated with asset bubbles and the old economy.  So, for board members to be this bearish indicates that we are in for a bad time.  My favorite part of the quote is highlighted in yellow - a fantastic point.  The best indicator of future company earnings would probably be some measure of the change in R&D spending, but for now I'll take a generalization on how cost cutting across the board will make companies less competitive.  Then again, I'm guessing that there will be very few companies who haven't made these type of cuts - its all relative, right?

"A whopping 66% of 1,200 corporate board members surveyed recently said U.S. companies wouldn’t return to “business as usual” until at least 2013, and will operate till then in an environment of sluggish sales and growth. Roughly 45% said the economy wouldn’t return to precrisis levels in terms of investment, employment and productivity before 2013, according to the survey, conducted by KPMG LLP, while 22% said it would come beyond 2014.
“Not withstanding what economists are saying about the recovery, we are hearing from board members that they just don’t see it,’’ says Mary Pat McCarthy, a KPMG vice chairwoman who oversaw the survey of directors at publicly traded companies of varying sizes across the U.S.
McCarthy spoke to Deal Journal this morning from Miami where KPMG was hosting a conference of primarily audit committee members of corporate boards. “We are hearing a steady drumbeat down here that a recovery is a way’s off,” she said.
Another concern among board members: That the cost-cutting and layoffs that have helped boost corporate profits are going to hurt companies in the long term. The survey found that 67% of the respondents said were most concerned that cost-cutting would drain a company’s employee talent.
Other concerns: 36% said they worried cost-cutting would weaken internal controls, 25% said it could raise the risk of fraud and 22% said they thought the integrity of financial reporting could suffer in the hands of leaner staffs."

Lest We Forget Dubai

Happy valentines day!  Love, Dubai:

"Dubai stocks retreated the most in almost three weeks as Zawya Dow Jones said Dubai World, the state-owned holding company seeking to restructure $22 billion of debt, may offer creditors 60 cents on the dollar after seven years. Kuwait’s benchmark index surged the most in six months...
Credit-default swaps linked to Dubai debt on Feb. 12 jumped to 631.08, the highest since Nov. 27, according to CMA Datavision prices on Bloomberg. Credit default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements"


http://www.bloomberg.com/apps/news?pid=20601087&sid=a4FwvCqpkEUc&pos=4

Commercial Real Estate Implosion: Get Ready for Q2 2012

Is nobody reading this stuff?  Or has the market already internalized it?  I'm VERY hesitant to believe in the efficient market hypothesis if the banks with the largest exposures are still believed to be solvent....

From the senate report:
"Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the
end of their terms. Nearly half are at present ―underwater‖ – that is, the borrower owes more
than the underlying property is currently worth. Commercial property values have fallen more
than 40 percent since the beginning of 2007. Increased vacancy rates, which now range from
eight percent for multifamily housing to 18 percent for office buildings, and falling rents, which
have declined 40 percent for office space and 33 percent for retail space, have exerted a powerful
downward pressure on the value of commercial properties.
The largest commercial real estate loan losses are projected for 2011 and beyond; losses
at banks alone could range as high as $200-$300 billion."



http://cop.senate.gov/documents/cop-021110-report.pdf

Further Confirmation of a Jobless Recovery (PS. I love math)

Now if I only had time to forecast this over time and compare to the number of people exiting the workforce due to retirement (think baby boomers).....

"Economists in the survey are predicting a slow upswing for the economy as a whole. Respondents on average expect economic growth to settle at about 3% in 2010, off sharply from the powerful 5.7% seasonally adjusted annual growth rate in the fourth quarter.
This is why job creation has become such a worrisome issue: Based on that growth projection, over the next year economists estimate the U.S. will add about 133,000 jobs a month. That sounds good and it's certainly better than more job losses. But with about 100,000 new jobs a month needed just to soak up new entrants to the work force, that pace of job creation will only slowly reduce the high unemployment rate.

The White House released its economic forecast Thursday, projecting payrolls will increase by an average of just 95,000 a month this year with the unemployment rate averaging 10%. The Council of Economic Advisors expects GDP growth to be about 3% in 2010, in line with the surveyed economists.
It isn't just weak growth that's damping job growth. "Companies, in the name of making money, substitute against labor through outsourcing or technology," said Allen Sinai of Decision Economics. Wages and benefits make workers "so expensive that who wants to hire them? As a result, the displaced workers won't be rehired unless we have double the growth rate we're expecting."


http://online.wsj.com/article/SB10001424052748703382904575059424289353714.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

WHAT?!?!? $200M+

How the hell have you spent $221 on the planning of the 520 bridge without finalize a design?!!?!?  Holy sh*t.  I'm not a mathematician, but that appears to be almost 5% of the price of the bridge itself. 

$221M seems to be a bit excessive. 

"Washington state taxpayers have spent $221 million so far on planning, environmental studies, public meetings and engineering for a new Highway 520 floating bridge.
The state Department of Transportation last month signed a contract for pontoon construction to start late this year in Grays Harbor County, the first step toward building the $4.65 billion project.
But the planning isn't finished. A Montlake Interchange design is far from settled, and there's no final decision on how wide to make the floating bridge's deck.
The State Department of Transportation released the $221 million figure Wednesday, in response to requests by The Seattle Times and another news service."

http://seattletimes.nwsource.com/html/localnews/2011039409_520cost.html

Game Theory Fail

"Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan."
 
Oh China.. your fate is far more linked to the US than you care to admit.  You'll just be screwing yourself.  Then again, this is probably all posturing...

http://www.zerohedge.com/article/senior-chinese-military-officers-joins-iran-delivering-punch-us-propose-selling-treasuries-a

Another Chinese Datapoint

 I do believe that one of the charts in the linked graph is saying that Chinese property values, on average, have increased 160% since early 2009.  (picture of Chinese real estate agent here)

http://ftalphaville.ft.com/blog/2010/02/08/144246/chinas-metropoli-bubble-fear/

MANCESSION 2010 - The New Hotness

A big thanks to the NY Times for coining another 'man-something' phrase.  If I were Ben Huh, I'd start a new site called 'mancessionfail.org' to mock those who aren't giving mad respect to the recession.  Regardless, the point of the article is to let men know that women outnumber them in the economy. 

I did get a small chuckle over the sentence in yellow below - 'years' - not just months... friggin years.  Maybe even a decade, if we are lucky.

For the first time in recorded history, women outnumber men on the nation’s payrolls.
This benchmark is bittersweet, as it comes largely at men’s expense. Because men have been losing their jobs faster than women, the downturn has at times been referred to as a “man-cession.”
Women’s new majority in the nation’s workplaces comes decades after women first began trading in their aprons for pantsuits in droves, and it reinforces expectations that women will continue on the path to pay parity.
“Important milestones remain to be achieved, but women’s surpassing 50 percent of employment is something that historians will note for years to come,” said Casey B. Mulligan, an economics professor at the University of Chicago who has been tracking the recession’s effects on both sexes.


http://www.nytimes.com/2010/02/06/business/economy/06women.html

Tens, If Not Dozens of New Jobs Created in Atlanta: Thanks to 'Lil Magic'

In more arousing news, the Atlanta Journal Constitution posted a wonderful story about a magical source of new jobs for young ladies around the country.

"But that hasn’t slowed the would-be dancers lining up to apply for the $350 permit to work in the city’s 19 clubs, Atlanta police say (the police give out the permits? wtf). Among the usual aspiring actresses (if this is true, I have no idea how Rosanne became an actress) and dancers, there are more college students, single mothers trailing toddlers, health and office professionals and even a few age-defying grandmothers (gross)— all looking for well-paid work in a city with unemployment above 10 percent.  “We have them coming in daily looking for work,” says Michael “Lil Magic” Barney Jr., the 28-year-old general manager of Magic City, a downtown Atlanta fixture founded by his father."



http://www.ajc.com/business/hard-times-push-more-292179.html

Social Security: Ruh Roh

 Seems as though the high unemployment rate has elderly workers saying 'screw it.. I'm retiring'.
And yes, I was slumming it with my reading material today.  The USA today isn't exactly a fountain of useful information, but I blame my visiting their site on a faulty link.

"WASHINGTON — Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability.

The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.

"Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two."

Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed.

Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017."

http://www.usatoday.com/news/washington/2010-02-07-social-security-red-retirements_N.htm

ChinaFail.org

Should be the title of the next icanhazcheezeburger site.

"Yellen demonstrates that while China is forced to look to growing its own internal economy now that the export-led, current account surplus model is over, the transition will require yet more stimulus, thereby further inflaming the asset bubble, spurred by the massive overcapacity already in place in the country, and further pushing the country into a monetary-fiscal zone of disequilibrium. This would be exacerbated by any move to strengthen the Yuan, which is what has to happen for the US to keep inflating its troubles, yet won't happen so long as China continues being in denial about its bubble conditions, thanks to a phenomenal precedent set by none other than the Federal Reserve itself."

In the words of Ben Reiber - "BOOMSLAM!"  Yet another confirmation of what we already knew - the bubble in China will only become a bigger issue as time goes on (and it begins to pop).

My prediction: as it becomes apparent that hits is a jobless recovery, and consumer spending continues to lag, business spending that has so far been leading the 'recovery', will drop in a meaningful way.  October 2010 = Dow 8,000.

The Overlooked Economic Indicator: The Health of Small Businesses

“It suggests that a V-shaped economic rebound is even more unlikely than suggested by many standard economic indicators,” said Andrew Tilton, an economist at Goldman Sachs Group Inc. in New York, which sees gross domestic product growing 2.3 percent this year.
The National Federation of Independent Business’s index of small-business optimism has been near historic lows for 15 consecutive months, declining to 88 in December from 88.3 in November, the federation reported Jan. 12. During the four prior recessions, it dipped below 90 only once....

Lack of access to credit is also affecting small businesses disproportionately. The Federal Reserve reported Feb. 1 that banks were continuing to tighten standards for loans to small firms, while standards for large companies were unchanged.
Growth in 2010 “is going to be a challenge if the credit markets stay tough” and potential licensees aren’t able to borrow funds to open new restaurants, Sonic’s Chief Financial Officer Stephen Vaughan told investors in a Jan. 11 conference call"

http://www.bloomberg.com/apps/news?pid=20601109&sid=apZULWyXpqhE&pos=10

Why The Speculative M&A Market Won't Return (until after 2014)

"While certain conditions have eased over the past year, refunding risk still faces huge uncertainties over the next five years. The sheer volume of debt due to mature in 2010-2014 will continue to raise concerns about the market’s ability to absorb this wave. More than half of this tower of debt—$550 billion of a total $805 billion over this five-year period—comes due in 2013 and 2014. And while issuers’ credit ratings are on the mend in general, the level of maturing debt from low-rated speculative-grade issuers has also been climbing. How the markets avoid being overwhelmed by this onslaught of debt will depend on a number of factors in 2013-2014 that cannot be predicted today, including the strength of the U.S. economy, the prevailing interest rates of the day, and the credit markets’ appetite for speculative-grade debt."
Good chart on speculative bond maturities in upcoming years: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/madoff/Bonds%20by%20Ratings.jpg

http://www.zerohedge.com/article/lbo-refi-wave-approaches-800-billion-junk-debt-maturing-2014-adds-multi-trillion-fixed-incom

New Phone

I'm thinking about getting a new phone.... what should I get?  I'm looking at the Nexus One, and debating about whether to wait for the HTC HD2 to come to T-Mobile next month.

Thoughts?

Siri: The Personal Assistant I Didn't Know I Needed

I had no idea that I needed a personal assistant, but this new app is somewhat cool.  You can ask questions and the app will respond.  "What is playing at the Crocodile?"  The app returns upcoming concerts.  "I need a florist."  The app returns florists within walking distance.  Cool stuff.

==

Ok - edit after the fact.  I was screwing around with it, and jokingly said, "I need a hooker."  You know what Siri did?  It returned a list of escorts in Seattle.  Go Siri.  I think this app is growing on me.

HA
http://www.engadget.com/2010/02/05/darpa-based-siri-virtual-assistant-hits-the-app-store-smartphon/

Don't Let Your Kid Buy Their Own iPhone

"The Pew Internet Project says that kids who buy their own phones are four times as likely to sext – that is send inappropriate images or texts to other kids"

http://www.crunchgear.com/2010/02/04/pew-report-kids-who-pay-for-their-own-phone-are-4-times-more-likely-to-sext/

Company Says It Will Run For Confress

"Following the Supreme Court decision implicitly granting corporations the right to free speech (by determining that political spending is a kind of speech), a corporation has decided to take what it believes to be “democracy’s next step”: It is running for Congress.
With more than a twinge of irony, Murray Hill Incorporated, a liberal public relations firm, recently announced that it planned to run in the Republican primary in Maryland’s 8th Congressional District."



http://economix.blogs.nytimes.com/2010/02/02/corporation-says-it-will-run-for-congress/

Jay-Z's Real Estate Investments Are Whack

Article here.

“In August 2007, a company controlled by Mr. Carter borrowed $52 million as a loan to purchase Manhattan property for a future boutique hotel,” Nina Devlin, a Highland spokeswoman, said in an e-mailed statement yesterday.The loan, held by funds managed by Highland, matured in August and is in default, Devlin said.“Highland Capital Management believes the claims asserted by Mr. Carter are meritless and will vigorously defend itself and intends to pursue the obligations owed to Highland’s investors,” she said."

Further Proof That China Is Too Hot-To-Trot

"Chinese regulators have imposed a partial ban on listed companies raising capital from equity markets to repay bank loans or replenish working capital, amid a general tightening of liquidity and official curbs on soaring bank debt in the country.At least 34 companies, mostly in the industrial and real estate sectors, have cancelled or reduced plans to raise money through private placements or secondary offerings in recent weeks.
Many of those companies said their plans were vetoed by the securities regulator, which said they are no longer allowed to raise money for working capital or repaying bank debt."

Up next - allowing the currency to fluctuate naturally.  After that - China's 'lost decade'.

http://ftalphaville.ft.com/blog/2010/02/04/140621/china-first-the-banks-now-the-corporates/

A Tale of Failed Institutional Innovation

Written by a former exec at MSFT, Dick Brass, this article walks through the failure of Microsoft to innovate.  Brass likens Microsoft to GM/Chrysler in the early 2000's - they have a few core products that will clearly be obsolete in the next few years, but they refuse to innovate.

"Microsoft’s huge profits — $6.7 billion for the past quarter — come almost entirely from Windows and Office programs first developed decades ago. Like G.M. with its trucks and S.U.V.’s, Microsoft can’t count on these venerable products to sustain it forever. Perhaps worst of all, Microsoft is no longer considered the cool or cutting-edge place to work. There has been a steady exit of its best and brightest.
What happened? Unlike other companies, Microsoft never developed a true system for innovation. Some of my former colleagues argue that it actually developed a system to thwart innovation. Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers...
Another example: When we were building the tablet PC in 2001, the vice president in charge of Office at the time decided he didn’t like the concept. The tablet required a stylus, and he much preferred keyboards to pens and thought our efforts doomed. To guarantee they were, he refused to modify the popular Office applications to work properly with the tablet. So if you wanted to enter a number into a spreadsheet or correct a word in an e-mail message, you had to write it in a special pop-up box, which then transferred the information to Office. Annoying, clumsy and slow. "



http://www.nytimes.com/2010/02/04/opinion/04brass.html?ref=opinion

You Cannot Buy Groceries With Your House

Obvious from a logical perspective, I just read an article that said people will pay credit cards before paying their mortgages.  Why?  Because "You cannot buy groceries with your house".  People are rational. 

"In California, the percentage of consumers delinquent on mortgages, but current on their credit cards increased from 3.5 percent in the third quarter of 2007 to 10.2 percent in the third quarter of 2009. In Florida, this same variable increased from 5.1 percent to 12.4 percent.  In this same time frame, the United States increased from 4.0 percent to 6.6 percent."

Interesting stuff.... yet another reason why the housing market is far from the bottom.   Too many foreclosures + shadow inventory + resetting ARMs + continuing increases in unemployment = we can't see the bottom yet

"Every Single Human Being Should Short US Treasuries"

The author of "The Black Swan " just spoke in Moscow about the state of US Treasuries:

"It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

Taleb said investors should bet on a rise in long-term U.S. Treasury yields, which move inversely to prices, as long as Bernanke and White House economic adviser Lawrence Summers are in office, without being more specific"

Keynes vs. Hayek: Rap Battle

I saw this about a week ago, but haven't had time to throw it on the blog yet.  Definitely worth a watch, even if you know nothing about economics.... but even better if you happened to take a few macro classes.

"The multiplier driving higher the economy's wealth"

http://www.youtube.com/watch?v=d0nERTFo-Sk

Short China Because of Its Reserves?

 Article here

Friedman made a comment that shorting China would be a bad idea because of their excess foreign currency reserves - roughly $2 trillion.  But, Willis counters by saying that the only other times that a given country has held foreign currency reserves that were materially equatable to global economic output in terms of size, shorting would have been the right call.  In the 1920's, the US held huge foreign currency reserves.  In the 1980's, Japan held huge foreign currency reserves.  Thus, if you had shorted these countries in both instances (over a long period of time), you'd be 2-for-2 and have a little extra wealth in your pocket.

"It was the very process of generating massive reserves that created the risks which subsequently devastated the US and Japan. Both countries had accumulated reserves over a decade during which they experienced sharply undervalued currencies, rapid urbanization, and rapid growth in worker productivity (sound familiar?). These three factors led to large and rising trade surpluses which, when combined with capital inflows seeking advantage of the rapid economic growth, forced a too-quick expansion of domestic money and credit.
It was this money and credit expansion that created the excess capacity that ultimately led to the lost decades for the US and Japan. High reserves in both cases were symptoms of terrible underlying imbalances, and they were consequently useless in protecting those countries from the risks those imbalances posed."

http://blogs.reuters.com/felix-salmon/2010/02/03/shorting-reserves/

Oil Filled Glasses: The Future of Sight In the Developing World

What a brilliant idea - create glasses that have adjustable prescriptions through the use of a variable fluid membrane.  Basically, you inject fluid, or take fluid to change the concavity or convexity of the lenses (and therefore the level of correction).

"They require very little training to dispense, can be dispensed by an organisation's volunteers in the field, they only need to be delivered once and can make a difference for years afterwards, and are inherently safer (and less valuable on the black market) than items such as prescription medications."

http://gizmodo.com/5463368/how-oil+filled-lenses-are-bringing-sight-to-those-in-need

Ethics and Mortgages: How Do I Fit In?

I just read this great article talking about 'strategic default' - i.e. those mortgage holders who default on mortgages rather than continuing to pay for a grossly underwater mortgage.

This paragraph got me:

"Using credit bureau data, consultants at Oliver Wyman calculated how many borrowers went straight from being current on their mortgage to default, rather than making spotty payments. They also weeded out owners having trouble paying other bills. Their estimate was that about 17 percent of owners defaulting in 2008, or 588,000 people, chose that option as a strategic calculation….
In the current bust, lenders first noticed something strange after real estate prices had fallen about 10 percent.
An executive with Wachovia, one of the country’s biggest and most aggressive lenders, said during a conference call in January 2008 that the bank was bewildered by customers who had “the capacity to pay, but have basically just decided not to.”

I realize the Wachovia quote was from 2008, but I'm guessing the last year has only exacerbated the issue.  What are the consequences for walking away from an underwater mortgage?  And what are the ethical ramifications?  If banks are acting in an unethical manner (think about how people view bankers in 2010 versus 2007), are we then allowed to loosen our ethical footing?

Long story short, this is an issue that will continue to drastically influence the housing market going forward.  As much as the government views its job as 'creating expectations of increasing home values', there are too many other actors and influences that will move housing prices lower.

Haggling 101

A great article on haggling in the reality of the post-financial-collapse economy:

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/28/AR2010012803512.html

Economic Propoganda: Not Sure How I Feel About It

Look at this graph: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/madoff/ABC%20Feb%202%20-%20comp.jpg

I'm not sure how these surveys differ in methodology, but that gap is growing (and the ABC line isn't moving anywhere that we want to go).

"It’s -6 among those with the highest incomes but -75 among those with the lowest, -39 among people who’ve attended college vs. -70 among those who never finished high school (their lowest since November), -46 among homeowners but -61 among renters (their lowest since October) and -47 among men vs. -52 among women.  Notable this week is the racial gap, -51 among whites (a point from their lowest ever) vs. -47 among blacks"

Clearly those who are hurt most in the current economic reality are the unhappiest.  But damn... those are some sad statistics.

Entire article here: http://www.zerohedge.com/article/abc-consumer-index-drops-lowest-reading-fall-divergence-umich-propaganda-reading-record

So Much For My Book Arbitrage Theory

Amazon has managed to knock over the domino that has set the ebook biz ablaze.  So much for books that were $9.99....

"And here's the deathblow: Murdoch says News Corp's deal with Apple "does allow some flexibility and higher prices" and now Amazon's willing to renegotiate. It seems brutally clear that every publisher is going to shift to the agency model: They set their own price for books, and whoever's selling it takes a cut. Sure, they get less absolute dollars per book than selling it wholesale—say, selling it to Amazon for $15, who takes a $5 hit to sell it for $9.99—but they're convinced it'll preserve the value of books. I'm sure that's exactly what's going to happen when ebook prices everywhere creep up by several dollars—people will totally think they're worth more."

http://gizmodo.com/5462724/another-blow-in-the-great-amazonapple-publishing-war-harpercollins

Hiring Tips From FailBlogger-In-Chief

"We advertise lower wages for entry-level positions because the worst candidates focus on money the most. Believe it or not, advertising lower-than-market wages actually helped us yield better candidates.
Higher advertised wages resulted in much higher level of noise from candidates who really didn’t care about the job. (FYI: Advertised pay and actual pay are two different things.)
It’s become clear to me that bad candidates focus on money like that’s the only thing they’ll get out of the job. The best candidates just want to do the job that’ll make them happy. In fact, for our entry-level positions, I believe that our biggest selling points as a company are our shared vision of making our users happy for 5 minutes a day and the huge opportunity for growth.....
But if you really want to have a great career, don’t worry about how much you’ll be paid now. Instead, focus on finding a company you’d love to work for and a job you’ll enjoy doing, then find a way to live within your means. That’s the recipe for growth both financially and personally."

I'm reading a great book entitled 'Drive' about human motivation and the implications for the modern workplace.  Basically, the hypothesis is that financial incentives are detrimental for job performance when the job requires any degree of creativity or thought outside of a linear process.  This jives with Ben Huh's idea that job candidates who are solely focused on extrinsic motivation (cash in this case) will find much less success than those who are intrinsically motivated.  Check out the book - its a great read.

http://www.techflash.com/seattle/2010/02/are_you_what_you_earn.html

Grooveshark >= Pandora

For those of you who haven't used Grooveshark before, check it out.  It is a music service that allows you to listen to any song you want (assuming it is in their library).  You can create a virtual music library of your own from which you can piece together playlists, listen to entire albums, or create smart playlists (aka Pandora's sole redeeming value).

I use the service constantly at work, at school, and in my house.  Now if the Apple store would only approve their pending iPhone app.

I'm Not An Economist, But I Did Stay At A Holiday Inn Express Last Night

This chart calls out the explicit relationship between low interest rates and housing prices.  My favorite part of the chart is the box that calls out "Government actions that increase expectations of higher prices."  Ahh... so you are saying that it is the role of the government not only to keep the cost of capital down, but to expressly manipulate consumer sentiment regarding the direction of housing prices.  Huzzah!  Furthermore, I'm not a psychic, but I do believe that interest rates have nowhere to go but up from here (although it might be a little while before the Fed raises rates) - so there is no doubt that housing prices aren't headed in a positive direction (too lazy to link the articles I've been reading about how bad commercial real estate is... short the sh*t out of commercial REITs)

So, slap a band-aid on this b*tch and lets go back to inflating housing prices.  Nevermind the issues with interest rates, housing oversupply, foreclosures, etc - the market is undervalued, right?  At least it isn't as bad as it is in China: "Many properties bought for investment are now left vacant and rental yields are low, pointing to a “bubble."  Not that epic of a quote - I couldn't find the article that I read earlier today that quoted multiple large property management firms in China saying that they were building and selling rather than holding because it was clearly a bubble.

But, at least if you can't afford rent in China, you can still see Marbury attack the lane.

Entire article here: http://ftalphaville.ft.com/blog/2010/02/01/138151/us-housing-bubble-v2-0/

Economic Masturb*tion: In the End, You're Just Paying Yourself

This graph shows that transfer payments now equal almost 20% of personal income in the United States.  Holy crap. 

http://panzner.typepad.com/.a/6a00d83451591e69e20120a828fdd7970b-pi

The Housing Market: We're Just Getting Started

Stealing 100% of this from Zero-Hedge (who probably stole it from someone else)

1. Short-lived remedies; used by the administration to prevent further price deterioration (tax-credits);
2. Shadow Inventory; in reality when accounting for the surging shadow inventory which very few dare talk about, the total number of available unit double to over 8 million, representing a record high 16 months of supply.
3. Strategic defaults; the amount of households with negative equity is roughly 10 million or about 20%, in 2009 25% of all foreclosures were strategic; as populist anger against banks accelerates look for strategic defaults to keep rising
4. Quantitative Easing expiring; This needs no introduction: the sole reason why mortgage rates have been as low as they have, has been due to the Fed's constant manipulation of the MBS market via the $1.4 trillion MBS/Agency QE purchase program. With this program set to expire in 2 months, rates are set to explode.
5. House Prices are already entering a double dip; Previously we discussed the Case Shiller NSA home price index number which indicated that a double dip in prices has already commenced. A positive feedback loop will only lead to further deterioration here

http://www.zerohedge.com/article/next-leg-housing-crisis-five-simple-charts