Showing posts from October, 2011

Articles for a Halloween

Here are some articles I read in the last few months that you may find interesting... (Recommended) " The second economy " (McKinsey Quarterly; free reg required): An insightful article on, what the author calls, the second economy. This is the largely invisible, rapidly expanding, economy that underlies the physical economy. Information technology, particularly digitization and automation, drives this second economy and the author suggests it may be as large as the physical economy in 20 or 30 years. The emergence of this second economy can potentially increase wealth on par with what the Industrial Revolution did, while also causing large unemployment due to its nature (i.e. automation of jobs). The author almost suggests that the biggest problem in the near future will not be creating wealth but distributing it. Very Peter-Drucker-like article that is worth reading. If you are interested in economic changes to societies, it's worth checking out. The Technology Batt

Sunday Spectacle CXLVI

Potential Precursor to What May Happen in Europe... MF Global Stock Collapses MF Global is a mid-sized brokerage firm—at the end of 2010, its market cap was around $1 billion, book value hovered around $1.5 billion, and had assets totalling roughly $40 billion—that is being sold off by the market. Investors are clearly heading for the exits and, as many market followers would know by now, loss of confidence in a financial firm often results in its end. I don't know much about the company but it appears to be mostly focused on commodity brokerage operations. There was a commodities broker, Refco, that failed during the financial crisis era a few years ago but the problems faced by MF Global are different and may signal what may unfold in Europe. MF Global is collapsing, not because of its commodities derivatives business, but because it appears to have made outsized bets on European sovereign debt of some questionable countries. The firm is run by a former CEO of Goldman Sa

Sunday Spectacle CXLV

source: Quarterly Review and Outlook, Third Quarter 2011 . Hoisington Investment Management.

Sunday Spectacle CXLIV

Long-term Industrial Commodity Price Index (real) From The Economist , For 150 years, commodity prices have trended ever downward. As Mr Pielke notes, a spike in prices in the 1970s prompted the famous Ehrlich-Simon bet, between an ecologist and an economist, over whether resource prices would rise or fall between 1980 and 1990. The economist, Julian Simon, argued that they would fall, as rising prices in the short-term would prompt markets to find new supplies and efficiencies that placed downward pressue on prices over the longer-term. As it turned out, he won the bet. Had it been a 30-year bet, however, he would have lost. Mr Pielke then asks the inevitable question: are the commodity price increases of the past decade likely to trigger a similar market response, such that a decade from now we're once again enjoying a time of plenty? Or is dramatic emerging-market growth combining with dwindling supplies of critical resources to push the world against fundamental limi

Talk about a CEO getting fired before he even gets started

This must be one of the quickest CEO firings... can't believe it lasted less than two weeks : Olympus Corp. shares fell 13.5% in Japan on Friday morning after the Japanese camera maker dismissed chief executive officer Michael Woodford just weeks after appointing him to the role. Olympus named Woodford, who was also the firm's president and chief operating officer, as its new chief executive on Oct. 1. In a statement, the firm said: "Woodford has largely diverted from the rest of the management team in regard to the management direction and method, and it is now causing problems for decision making by the management team."

Opinion: USA shouldn't create a repatriation tax holiday

The Obama administration has been looking into waiving the rapatriation tax on foreign income. The thinking is that this would lead to investment within the country and lead to job creation. For those not familiar, many US corporations are sitting on huge cash balances but a lot of that money is overseas (earned from their foreign operations). If they bring that back into the country, they would pay a repatriation tax. Many executives of multinational firms have been pushing the US government to waive the taxes. Most readers, that own shares in these firms, would benefit from such a tax holiday. I am not American so take it for what it's worth but I believe the US government shouldn't waive the tax.

The computer is the... bicycle for our minds... -- Steve Jobs, 1955-2011

Steve Jobs was born in 1955, into an era of rotary phones and room-size computers. He died on Oct. 5, 2011, having put a computer inside a phone and that phone into 120 million pockets. — Bloomberg Businessweek Unlike many others out there, I am not a huge fan of Steve Jobs. His demanding personality doesn't sit well with me and if I was working for him, I may not survive for long. I was sort of a "geeky" guy who grew up with computers in the 90's but I was a PC user and hence not too familiar with Apple products. Having said all that, I do respect Steve Jobs as one of the most influential people of all time. He was an entrepreneur and a designer and a salesperson and a leader and an executive. He is, without a doubt, one of the top executives in American history. His resurrection of Apple may be one of the biggest business turn-arounds in modern history. One of the most remarkable lessons about the life of Steve Jobs is how he battled failures and

Sunday Spectacle CXLIII

Computer Industry Pioneer... Consumer Electronics Industry Pioneer... One of a Kind... Image Source: Esquire (Diana Walker/Time Life Pictures/Getty Images) Harishragunathan's Blog (photographer unknown) ("Goodbye" by Robert Padbury. Oct 5 2011) arvino's posterous Blog (photographer unknown. Jan 3 2010) Edible Apple blog (April 20, 2009) Cult of Mac Apple

Sunday Spectacle CXLII

Americans Protest Against Wall Street (Image sources: Reuters , The Atlantic , Davids Camera Craft , adbusters , ) I don't support the protests (although I understand their frustration with crony capitalism, including some questionable actions unfolding in Europe) but this could turn out to be a pivotal moment in American history. Although the protests are small, serious protests against Wall Street probably hasn't occurred since the 1930's (there have been many protests against WTO, IMF, UN, police departments, Federal government, Federal Reserve Bank and other similar bodies but not specifically against Wall Street banks in the recent past—someone correct me if I'm wrong because my knowledge of historical American protests is weak). If the youth lose faith in the system, change is certain. It's also interesting to me that the two protest movements, the current Wall Street protest and the Tea Party movement, started mainly due to dissatisfa