Musings

Original thoughts — creative, humorous, and otherwise — about life, liberty, and the pursuit of meaning.

  • Consumers Go On Strike

    ByHeather

    As the economy continues to sour, consumers have gone on strike. For the past few months, I have been contemplating the following economic and social trends that seem to explain why.

    • American productivity has risen almost 20% in the last decade (Source)
    • Real median income over the same period has declined (Source)
    • Executive compensation has risen astronomically (Source)
    • Consumer debt has risen substantially (Source)
    • Consumer spending comprises 70% of GDP

    Rising productivity is what enables companies to increase employee’s pay. Increases in pay result in the overall rise in our standard of living. However, in the last decade, this relationship between productivity and rising employee pay seems to have been fractured.

  • Simple Financial Recovery Plan

    ByHeather

    My new favorite podcast is Planet Money. As the economic turmoil has progressed from frightening to surreal, the NPR crew at Planet Money have done a wonderful job explaining the intricacies of the complex financial world in terms that are easy to understand.

    Here is what I have been able to figure out so far. Forget about the subprime mortgage crisis. A huge part of the problem is these credit default swaps – to the tune of $55 trillion dollars. These “insurance policies” were not only taken out by people who lent money to protect themselves against potential loss. Financial gamblers were also taking out credit default swaps on other people’s loans! This is raw gambling. Some analysts estimate that for every CDF taken out to by a lender to protect a loan, ten other CDFs were sold by and for third parties on the same loan.

  • On the Financial Meltdown

    ByHeather

    As they say on Wait, Wait, Don’t Tell Me, “and now for some quotes from this week’s news.”

    First, a delightful blog I discovered called The Big Picture by Barry L. Ritholtz. In a post titled The Underlying Basis of Finance and Credit, Mr Ritholtz observes:

    Over the entire history of human finance, the underlying premise of all credit transactions — loans, mortgages, and all debt instrument — has been the borrower’s ability to repay.

    Except for [the 5 year period from 2002 to 2007] the entire history of human finance was rather reasonable about the basis for making loans in general, and extending mortgage loans in particular.

    For 99.9996% of the last 1.2 million years, loans were granted primarily on the condition of whether or not the lender believed that the borrower could repay. Between 2002 and 2007 this condition was dropped.

  • Gorilla Marketing

    ByHeather

    I am an avid fan of podcasts. I listen to many hours a week of interesting and compelling content completely on my own schedule. The TWiT Network produces some of the best, including This Week in Tech, MacBreak Weekly and Roz Rows the Pacific. Leo Laporte is a master behind the microphone.

    Leo continues to chase profitability by adding an ever-increasing array of sponsors for his “netcasting” ventures. Drobo and GoToMeeting are recent additions and he is pushing the boundaries of tolerance with the seemingly endless droning on about Visa’s security protection for online fraud. …

  • Redefining WMD

    ByHeather

    MSNBC ran the startling headline this morning: Man arrested near Capitol faces WMD charge. How intriguing! Was a criminal mastermind skulking through the streets of DC with a nuclear bomb in his trunk?

    [The suspect] tried to manufacture a “weapon of mass destruction, that is, an explosive device capable of causing multiple deaths or serious bodily injuries to multiple persons, or massive destruction of property,”

    At the height of the Cold War, “weapons of mass destruction” meant nuclear warheads that were capable of eliminating broad swaths of humanity with a single explosion. With the onset of the “war on terror” we expanded WMD to include bio-weapons that could infect the water supply for an entire city or chemicals that could poison the air of a local community. …

  • What’s wrong with online advertising

    ByHeather

    When the news broke today that a crane had fallen in New York City I immediately went to the web in search of video footage. CNN was my first stop. As expected, they had a video clip at the top of the page.

    The next two minutes were a stunning realization of all that is wrong with the current attempts to monetize online video. The clip was 75 seconds long. In order to watch the clip I had to endure a 30 second pre-roll advertisement . . . for VIAGRA! …