Friday, October 31, 2008

What Does the Recession Really Mean?

Here is what I wonder about...on a vast, global scale, what does a recession and economic crisis really mean? I think I have a decent grasp of capitalist economics 101. I understand that if a person, or demographic, or maybe even an entire country, has over-consumed and under-saved, they will have failed to accumulate the capital necessary to invest in a future. I get that, for the scope of an "open system".

But in scientific terms, the global economy is a closed system. There is no external creditor to borrow from. So I can't quite get my puny mind around what the implications are on a global scale. Why does there have to be a crash? Why can't we all just more or less keep doing what we have been doing?

I mean, I could understand a global economic crunch caused by a non-economic event, like war, or by a critical resource shortage. That I get. But I don't really, deep down, understand what is different, except that there is a crisis of confidence. Is it that simple? That could do it--if one day we all wake up, and decide to not spend a dime, that would cause the gears of commerce to grind to a halt. Paul Krugman alluded to that in his "Consumers Capitulate" column.

Or is the explanation more subtle? Have we felt flush for years, and been too willing to spend money on frivolities, such as meals out or manicures, for example? And now, as we come to realize that our net worth's aren't what we thought, and our incomes aren't going up like we thought they would, are we generating an economic dislocation, by suddenly shifting our consumption preferences? So we have too many restaurants and cosmetologists, and too few appliance repairmen (to keep our old appliances going, instead of buying new ones)?

Consumers Capitulate

Krugman: To appreciate the significance of these numbers, you need to know that American consumers almost never cut spending. ..So these data are basically telling us what happened before confidence collapsed after the fall of Lehman Brothers in mid-September, not to mention before the Dow plunged below 10,000. Nor do the data show the full effects of the sharp cutback in the availability of consumer credit, which is still under way. So this looks like the beginning of a very big change in consumer behavior. And it couldn't have come at a worse time.

It always does come at the worst time.

Thursday, October 30, 2008

Tapping 401k for Mortgage Payments

There have been bills introduced to allow distressed homeowners to tap their 401k's, without penalty, for mortgage payments. I think this is generally a bad idea, from a social-policy standpoint. Although it is wrenching for a family to lose their house, they can recover. Displaced homeowners will find somewhere else to live--maybe an apartment, maybe renting a house in the same neighborhood, maybe even renting their own house. I don't want to minimize what a blow this would be, but from society's point of view, these are acceptable outcomes.

Whereas if people raid their 401k's in order to make mortgage payments, they are going to arrive at retirement, 20 or 30 years down the road, with nothing. And that is a social problem. So better to lose the house and downsize now, than be without a living in retirement.

Modern-Day Pirates

I have read a lot recently about modern-day pirates, particularly off the cost of Somalia. Here's what I don't understand--why can't large shippers use technology to foil them? Just like banks have panic buttons by every teller, a ship could have multiple panic buttons, that wirelessly set off a dozen hidden transponders.

Wednesday, October 29, 2008

Counting Calories Is Fundamental

For the last few decades, the most popular diets were complex formulas that promised abundant eating with just the right combinations of fat, protein and carbohydrates. Now those regimens are starting to look like exotic mortgages and other risky financing instruments. And just like a reliable savings account, good old calorie counting is coming back into fashion.
Yep, this seems pretty reasonable. There are some secondary considerations to what kind of calories you consume--more calories are used turning protein into stored fat than turning fat into stored fat--but the primary factor is just the number of calories.

I take the same view of calories in relation to exercise. I have always believed, for those interested in weight-control and general conditioning, that total number of calories was probably the most important factor. (Training for finely-tuned competitive althletes, seeking to maximize performance, may have more subtleties.) Likewise, in terms of fitness and especially weight-loss benefits, I think that total calories burned is more important than which zone you are in, or what your heart-rate is. (Although some of the literature on interval-training does make it sound "magical".)

Saturday, October 25, 2008

Cell Phone Feature: FInd Me

Problem
Particularly as cell phones get smaller and smaller, they can get mis-placed. The key to finding them is to realize it soon after they have been lost, so you can call it and listen for the ring. But if Murphy's Law is alive and well, you will have mis-placed your cell phone some time when it is in silent mode.

Proposed Features
Find Me
So, the proposed cell phone feature is a password-enabled Find Me mode. You call your phone, and when it answers by going to voice mail, you have the chance to "enter 9, for Find Me option", followed by your 4-digit PIN. This causes the phone to switch to its loudest ringing mode.

Wake Up and Find Me
And what if the phone is not merely silenced, but is turned off? Well, contemporary cell phones have internal functions even when powered off, so that their alarm clock function works relaiably. So I can envision a more elaborate feature that would work this way:
  1. When powered off, the cell phone wakes itself up every 12 hours.
  2. When it wakes up, it "polls" the voice mail system.
  3. If it finds a "special" voice mail, in which the user activated the Find Me feature, it keeps itself awake but silenced, and will now respond to the Find Me feature described above.
Asessment
As I think about it, this second version adds a lot of complexity, and poses some issues for environments in which cell phones must be turned completely powered off (airplanes and medical equipment are the two I am aware of). So I guess there would have to be an override option on the phone, that you set before turning it off. And therein lies mounting complexity--the average phone user will not be aware of the Find Me feature, and even less aware of the need to override in sensitive settings. So perhaps this part of the feature can be filed under the category of "cool idea in theory, but too many complications in practice".

Regarding the basic Find Me feature, I think there are fewer usage-oriented complications. I'm not a cell phone systems engineer, but I am pretty sure that the complicating factor for this feature is creating the ability for voice mail to call back into the handset functionality. I don't think it is anything that is impossible to solve, but I don't think it is how cell phones work. Maybe an opportunity for the gPhone/Android?

Working Class

Politicians and commentators frequently make references to "working class (Americans)", but in my opinion, working class is a meaningless term in modern America. (1)

Although Wikipedia offers a conflicting definition, I take "working-class" to mean someone who is not either independently wealthy (a member of the aristocracy), nor a member of elite, independent professions (traditionally medicine, law or the clergy), nor an business owner. In other words, somebody who has to show up, day in and day out, to earn a paycheck. That could describe a factory worker, but it could also describe a well-paid professional. (The Japanese term, salaryman, neatly captures the idea as related to professionals.)

Anyway, what got me thinking about this subject enough to finally sit down and write about it was this quote I came across:
"A stunning statistic is that unlike in past epochs, the higher up the income ladder you go, the more hours you work," said Dalton Conley, a sociology professorat New York University.
The key point being: working, in the sense of trading one's time for income, is highly correlated to economic status.

_________

(1) In fact, it is probably an irrelevant term for almost all parts of America, for all times, except maybe plantation owners in the pre-bellum South.

Thursday, October 23, 2008

Risk Issue Problem

In software development, people tend to use the following definitions:
Issue: something that will cause complications or setbacks for the project.

Risk: something that has the potential to cause complications or setbacks for the project, if it occurs; and there is no plan to actively prevent it.
Under these definitions, an Issue is more severe than a Risk.

To me, that is backward:
Risk: something that has the potential to cause complications or setbacks for the project, if it occurs; and there is no ability to completely be sure of preventing it.

Issue: a complicating detail to attend to. Something intrinsically manageable, however, so that as long as it is addressed as planned, there will be no significant negative consequences to the project.

Problem: a complicating detail which is not routine, and presents a significant challenge to overcome. This seems to be what most people want to call an "issue".
It seems that the general lingusitic trend of replacing the word "problem" with "issue" has crept into software development.

What Will Be the Last Major Sports Venue NOT To Have Naming Rights?

Yankee Stadium is gone, Shea Stadium is going...nobody wants to pay for naming rights to something really old, with a really well-established name that people might keep using, instead of adopting the new name (BigCo Park, Amalgamated Products FieldHouse, etc). They want to slap their names on shiny, new facilities. Maybe Lambeau field will be the last?

Corporate and Other Discounts on Cell Phones

First rule of getting a cell phone plan--make sure to ask for a corporate discount. Depending on which company you are affiliated with, that will be between 10-20%, off the top. Just for asking--not insignificant.

On top of that, if you drive a hard bargain, you can do much better than store prices. What I did, when switching to T-Mobile for a family of 5, was shop Amazon for our phones. Amazon has amazing, post-rebate prices, but there are a few catches. First catch is not too surprising--2-year service contract, just like you would get at the company store (though even more restrictive in details). Second catch--you have to mail in the rebate in a window--after 60 days, before 120 days of service. That is a big gotcha--everybody knows rebates are dicey at best, but having to remember to send it in after 60 days ups the ante. Third catch--they don't have a way to give you the corporate discount. To get that, you will have to ask after you sign up. I think that works, but it's not the best position to be in, so if you go that route, verify in advance that you will be able to get the discount (and nail down the % off) after the fact.

Those are complications, not automatic showstoppers--the Amazon phone prices are jaw-droppingly cheaper, especially for high-end phones (and it really adds up when buying 5 new phones). What I did, though, was to call T-Mobile to compare. I didn't bother with the store, I went to the business division. They couldn't quite match Amazon's phone prices, but they came close, with less of it in the form of rebates. The clincher, though, was that they offered a one-year contract. I was really kind of stunned by that--everybody knows to get the big discounts on phones, you have to sign up for 2 years. And we were getting the discounts on 5 phones.

1 year is terriffic. That just opens up your options. Either to switch carriers, if either dissatisfied, or just seeking a better deal.

Wednesday, October 22, 2008

We still haven't really had to turn on the heat

(though I did for 1 hour yesterday morning, just to be generous), but the dreaded first appearance of snow in the forecast has appeared. Before anyone gets too excited, it is for the slightest flurries, but still, it is an unwelcome milestone.

Sunday, October 19, 2008

Why I Probably Will Never Be An Apple Customer

This article helps explain why I will never be an Apple customer, unless I win the lottery (which I don't play):
Apple has had great success in part because it has convinced customers to turn away from a $1,000 Windows laptop and to buy its $1,600 laptop instead for its stunning displays and ease of use.
$1000? $1600?! You've got to be kidding--$500 is more than I want to spend on a home laptop.

I briefly thought about a Mac. I've heard rave reviews, including "runs Windows better than Windows". I could see paying, oh, say a 30% premium for the Apple experience. But 100-150% premium? I don't think so. Same thing with the iPod--they are double what competitive MP3 players cost. I held out from buying one, and now am using my new cell phone. Definitely not nearly as slick, but one device meets both needs, and anyway, I'm a light user.

Friday, October 17, 2008

The Problem of Government Meddling

Many people say the same about Healthcare and College Tuition (government involvement led to exorbitant, destructive increases in cost).
Many believe that wild greed and market failure led us into this sorry mess. According to that narrative, investors in search of higher yields bought novel securities that bundled loans made to high-risk borrowers. Banks issued these loans because they could sell them to hungry investors. It was a giant Ponzi scheme that only worked as long as housing prices were on the rise. But housing prices were the result of a speculative mania. Once the bubble burst, too many borrowers had negative equity, and the system collapsed.

Mild Ride

Parental controls for cars--when my kids were born 14 years ago, I figured something like this would be available by the time they started driving (probably still too late for us, since will only be in new cars, and I don't see one of those in the immediate future...)
MyKey allows parents to limit teenage drivers to a top speed of 80 miles per hour, cap the volume on the car stereo, demand seat belt use and encourage other safe-driving habits.

also highlighted MyKey’s low-fuel warning, which lights up earlier than normal. He called it “a little thing for Mom and Dad.”
This is a great idea. I think 60 mph would be a good upper limit. Maybe 50, if you could be sure your child wasn't going to need to go on the highway.

Niche PC Ideas

In general, the Windows PC is ultra-commoditized. It is very hard to do anything to earn a higher margin. My ideas for carving out a niche would be:
  • Crapware (aka, Trialware)-free (because right now Best Buy is getting some people to pay an extra $75 for this)
  • Built-in backup (software, but also a mirrored hard drive)
  • One or two very modest design and engineering touches--such as the Mac-style magnetic power cord
  • The crowning glory would be easy-to-use virtual machines (VMWare), so that you could always roll back to a pristine install

Paying Best Buy to "Optimize" Your Computer

The excellent price I got from Best Buy on our new laptop was the happy part. During the brief sales process, I was prepared for the sales guy to try to upsell me. I politely declined the offer to install anti-virus software for me. But when he asked me if I wanted them to optimize remove the pre-installed crapware for me, it was almost too much. He literally said "we will remove all the junk they pre-install on it"!

I know I am not the first person to make this observation, but how ridiculous is that--I'm supposed to pay them to remove the junk that comes on the product they sell to me?! As I've said before, it just completely undermines the user experience, unlike when you buy Apple. Needless to say, I curtly dismissed this pitch.

I think a big part of the problem is that margins are so thin in the PC hardware business, that the OEMs are just desperate for incremental revenue. It's almost like spam--even if only one person in 500 upgrades their pre-installed trialware to the payeware version, the comission on the pre-install still represents a desperately needed revenue stream for the OEMs.

I still say that a better user experience is an opportunity for a niche player in the Windows PC market.


PS What did surprise me was that the salesman never bothered to pitch two of the usual favorites--expensive cables and extended warranties. I guess my profile--cheapest laptop in the store, no time of day for the virus protection--told him I was a lost cause.

Wednesday, October 15, 2008

More Mortgage Problems

I am afraid I agree with this article, that lays out a reason why the mortgage crisis will continue unabated:
It seems that the majority of investors, economists, and governmental leaders are overlooking a very important right hand side of this mortgage rate reset graph. The subprime loan reset period (represented by the green bars) may be nearing the end, but the lightly-shaded yellow bars represent $500 billion worth of option-ARM loans expected to reset from mid 2009 through 2012.
I also think the author is overlooking another factor, which is that 5/1 and 7/1 ARMs for non-subprime borrowers will also be re-setting in the next few years. The results may not be quite as catastrophic, but there will still be a lot of rate jumps, particularly if prevailing rates go up between now and then.

Buy Cheap When It Comes to Laptops

I just bought a laptop at Best Buy. My philosophy of computers, especially laptops, is--buy the cheapest one that meets your basic requirements. The expected life of a laptop, before it is lost/stolen/broken/obsolete, is somewhere under 3 years. I used to be anti-laptop, for casual home use where portability is merely nice, not essential, because the laptop cost substantially more, carried much higher risk of breakage, and was prohibitive to repair. However, laptop prices have plummeted so much, that I have changed my view. Just plan to buy cheap and replace as needed.

On that score, I think I did pretty well. I went in, looking for the $499 Dell Inspiron that was advertised. While I was waiting for them to fetch me that, though, I saw an almost-equivalent Acer, clearance-priced for $375. That is about as low as I can possibly imagine getting a Windows laptop; or, for that matter, any PC. And it even came with Vista Home Premium. I believe Micro$oft has given up on trying to extract a premium for VHP over Vista Home Basic--even the very cheapest laptops now come with VHP.

Tuesday, October 14, 2008

I Don't Like Door-to-Door Campaiging

I am not a fan of door-to-door campaigning, unless the person appearing on my doorstep is the candidate herself. Otherwise, what is it really about? The visit serves no truly useful purpose, other than trying to increase the popularity of their candidate. It is not much different, in spirit, than junior high school student student council campaign.

As was observed in the early days of email spam--unsolicited, unwelcome email is still spam, even when it comes from a charitable organization.

Saturday, October 11, 2008

A great Steve Yegge article screed on the importance of touch-typing, and the fact that it is never too late to learn.

Thursday, October 02, 2008

On The Fly Price Comparison

two companies showed off their Android applications. Big in Japan showed ShopSavvy, a neat tool that scans a bar code and then searches the web and local stores for the same item
That's a pretty good idea. I have thought something like that would be useful when considering a purchase. If you aren't tuned in to the price point for an item you are considering purchasing (probably as an impulse), you can very quickly get a readout on what is a good price. Of course, as with so many things, the business model seems like a great big question mark.