Random thoughts

The GUI acts now as it should be (more stable). Just a couple of scenarios/bugs in the GG engine and the deployment phase should start in earnest.

The federal catch 22: labour market is in the doldrums. Stimulus vs. outsourcing? Spend more tax payer money that could be sent overseas in 2/3 years? Black Friday purchases shrunk almost 10% in compared to 2008. Not a seat for the faint of heart.

Parlez vous francais?

The average workweek is below 35 hours. The total hours worked are shrinking.

Big companies are announcing more layoffs. Small companies' hiring, the traditional driver of

employment, is MIA.

Fed officials will keep rates near zero because "the job prospects are grim".

Banks are not lending, consumers are up to their necks in debt and reducing their debt levels.

So this is a "rally" where companies are selling to uncle sam?

Short bits...

Holiday season hiring blows. White House economic advisors warn that job market will be horrible for the next 18 months at least. Chicago manufacturing fell in September. JP Morgan warns of significant credit cards losses next year.

And the "rally" is to survive?

Laggard, laggard!!

I am curious about the following: the latest employment numbers in US are horrible. But it is a lagging indicator.

So why not talk about the other indicator that was reported around the same time: factory orders. This is a forward indicator, or at least it's not a lagging indicator.

It came below consensus, in a quarter when people are coming back from summer, classes begin, and Christmas inventories should start to build up.

HSBC moved its headquarters to Hong Kong.

Le's continue talking about the lagging indicator...

Dressing the tick...

The SEC made a temporary rule to prevent abusive shorting permanent. The rule requires the brokers to "promptly purchase or borrow shares to deliver on a short sale". Well, this is like an "up-tick" rule disguised. Who was the genius that eliminated the uptick rule? Maybe in a thinking-tank.

At least this makes sense...

Kool-aid²

How many "job-less recoveries" can be sold? 2 or more? By all accounts (from left to right) the

growth experienced worldwide in the recent past was a direct cause of american consumer spending.

Now this group of people is overleveraged, with the lowest savings rate in the developed world, their 401K mostly wiped out, health coverage worries, delaying retirement, outsourced, etc.

Business spending? They need a reason to do that. It usually ends up being consumer spending/demand.

So the worldwide economy needs a consumer collective that picks up that tab.

Europeans: aging, Chinese/Indians: depending on somebody else's spending, Rest of Asia: ?, Latinamerica: thinking about "El Che" and other forms of wasting time. Africa: deeper problems.

Wouldn't it be funny that after all the real economic power lies in the people?

The New Raw Deal

It is no secret that the economic growth and bubbles since the mid nineties until today were financed with north-american consumers money. These revved up the economic engine of the world.

They are leveraged out. Their savings rate was until recently virtually nil. Their debt level was not healthy. Banks became creative to continue lending to keep the ball rolling until hell broke lose.

Now the bottom line question is who is the next group to foot the next economic expansion bill?

China's growth depends on somebody else's expenditures. Europe has another set of problems: demographics, high unemployment, slow recoveries, etc. The rest of Asia?

Geithner's warns of more economic pain ahead for USA, specially in the job market. The most flexible and dynamic job market is going to be dragged down even worse. The average/median salary is going to fall more.

So the natural question to follow would: is the north-american consumer going to save and reduce their leverage or expend to make corporations rich before their jobs are outsourced or the federal government bails the business out?

Interesting questions for lenders, borrowers, and policy makers.

Two-stepping on empty:

American consumers are deleveraging, in other words spending less to reduce their high levels of debt. Their average wage is falling too. 

By most accounts businesses have a lot of excess capacity. Why would they need to invest/spend?

No other country's consumer seems to be ready to step in for american's spending. 

So it is hard to figure out from where the future cash flows for this stock market rally are coming.

On the other end of the spectrum, it is amazing to see how these anti-.... groups are still stuck in 1917. 

One person suggested to me looking at X Movement as a "new way". The first thing one sees in the movement's web-site is a picture of a banner that states: "Abolish Money".

Pol Pot and crew tried this brilliant idea 30-some years ago and starved to death millions of people.

No room for common-sense...or memory.

Open-Recession...

Recently, there was this thread on LinkedIn about an open-source project which lead me to think the following:

Everybody has benefited from OSS in one form or the other. Some others have contributed work.

But the interesting fact is that OSS was born during a period of abundance. How will it cope during global recession?

Do companies will have enough extra budget to continue support? Will individuals have the job security (in terms of income or available time) to contribute?

Hopefully, OSS will not suffer beyond repair for everyone's sake, but it will be an interesting development.

In-Out of the money...

Apparently Porsche acquired a huge chunk of VW in a well engineered derivatives operation that caught off-guard hedge funds worldwide, raising the capitalization of VW well beyond the total market cap of Ibex-35 (the leading stock index in Spain, this was according the local press)

The hedge funds are crying foul: this transaction puts in disrepute German markets. That is odd.The stock market has almost real-time, free information about any major exchange in the world.

What is clear is that if the hedge fund managers had information about Porsche bets, they would not have shorted VW. The derivatives market seems to be too asymmetric. It preys even on the predators.

Free Willy...

Has anyone heard about Canada lately? Not me. Apparently, they are happy, with a sound financial system, although a little bit cold. We have heard about everybody else.

So how come did Canada manage to avoid the storm and not Europe? After all Canada is a lot closer to USA than the EU is.

Some of its banks may be in trouble but given it is part of G8 and its economy is a lot larger than that of Iceland, there is barely any piece of news in all the financial and economics media about Canada.

Ahh, nothing can substitute good judgment.

Somebody in the...

Ah that LinkedIn jargon! I am getting closer to the point of really needing to use it.

But the real reason for posting is the *hope* that some reputed papers have that China's growth would keep the recession away.

How could China do that if it is relying on exports to countries in trouble to grow?

Someday China will be the economic superpower, but how quickly can China raise its per-capita income and draw goods from *somewhere else or even increase its fdi*? Not soon enough to help western bankers save face.

An article on the obvious, indeed.

The World According to Tarp...

It is amazing: to connect our Ipod to a brand new Imac we need to learn black magic (it is well documented on the net), to connect it to an XP laptop, it is a snap.

A well known open-source project just got kicked in the rear because of quality problems.

So, MS' QA/QC outspends everyone in the industry to follow XP with a stinker, it is easier to connect an Ipod to XP than to Imac, and the open-source project does not seem to fall too far behind these two.

And then some americans are wondering if USA lost the "financial" leadership of the world.

After two humongous bubbles in less than a decade apart, and over-leveraged consumers (whose spending accounts for 25% of global GDP) isn't that question superfluous?

Deleveraging...

It is peculiar that in these times of crisis, the spam industry changes from blue pills to credit relief.

Fortunately, we deleveraged during 2003/2005.

Back then it seemed pretty clear that White House's "policy goal" was to keep the consumer spending lost with outsourcing and the bursting of tech bubble by providing cheap credit and using dubious lending practices (I used to work for PriceWaterhouse auditing Banks)

If on top of that setup free market supporters start to play "shock-and-awe" with financial derivatives, the downside became pretty nasty.

Markets can only function with free flow of information. Financial derivatives markets are like a backroom full of smoke. No clear information, if any, about financial instruments with limitless downside.

So no mortgage, no credit card debt, just trying to make an honest buck with hard work :-}

Blue Molasses...

The EU "blue card" is coming.

Simply and politically correct put, it is a good thing but harmless. First, the skilled workers are not coming to Europe in numbers big enough to sustain the policy. Just two British universities are among the top 50 universities (in terms of research and innovation) as The Economist points out year in year out.

That means that to make the measure sustainable, Europe needs to poach those skilled workers from wherever they are (say USA, Australia, China, India) Tough job given the pay scale differences, economic growth differences, job market mobility, etc.

Back to .Net and Visual Studio...

Prototipo; fundamentals, what fundamentals

The VS tool is coming along smoothly but a little bit slow. Phurnace's project has been quite interesting: started with a prototype with an rcp front-end and has turned into a WebSphere process server, web-services thing.

I have to admit that is highly interesting.

In this astonishing summer of news, there was this particular one about onshoring on cnn: an indian company was offshoring to Ohio some call center operations because the lower wages were not enough.

If the process and where economic value is created are not understood, there is little chance to success by trying anything else...

Patent me up, patent me down...

Well, MS and the FSF are at it again. It is a pretty interesting debate.

Having participated in open-source project and used open-source software, I have certainly enjoyed the benefits of both worlds.

I was reading the argument of both legal experts. On the MS side is nothing new. These are our patents and we want to protect our IP.

On the FSF, is where the legal fireworks are because they have/want to prove that software is not patentable. Thus it should be free.

Their argument is that software is a mathematical algorithm (this is my interpretation, and I am not expert in U.S. IP law) and such is made out of numbers and nobody can own numbers.

This argument kind of equates software to natural resources: air, etc. The problem with this argument, I think, is that one can not find Linux, GCC, or Windows floating in the atmosphere or growing in a field. Somebody sat and came up with the algorithm. And it is for this person to decide what it wants to do with it.

Should oil be free too? Could "joe doe" drill where Anadarko has spent thousands of hours of expertise and hefty amounts of money to find oil for free? At least natural resources are easier to spot.

This seems like going the tragedy of the commons route. Not even China is on that road anymore.

Like the lawyers around here say: "es mejor un mal acuerdo que un buen juicio"...

Insuficient Pleople V6 part 2

A couple of days ago, Fortune published an article that was pretty telling: how big tech companies need to grow.

The article argued that these businesses needed to find ways to produce more products , cheaper than they are doing it now, to sell them in less developed countries. But the first question that came to mind was: aren't they (people in less developed countries) already producing those goods?

So, the article left two choices: find a cheaper place to produce those goods, but then how do they buy the goods? The target customer is the white collar worker/business that has certain purchasing power and disposable income (I do not see, say, people from the favelas in Rio worrying too much about getting the latest Cisco router, they have bigger concerns)

So to sell them goods, the article argues to take the jobs away from them.

This point of view assumes that those countries just live from high-tech. Obviously, this is not true, there are an assortment of other industries in a country like Mexico or Chile.

But what would happen in India, on of the emerging super-powers of the future? Where high-tech is one of the major economic forces?

Bricks & mortar, Bricks & Mortar!...

At the start of the summer a famous economist came to Spain in order to speak at a forum of some sort. He praised the current health of Spain's economy and its model (where there is more construction than in Italy, France, and another EU country that I forgot combined)

The problem being is that his argument was: it does not matter that all this construction is for retirees from other European countries. They will need health services once they are here after retiring.

Well, that is if those other EU countries reverse their demographic collapse and have enough young people that make enough money to pay for these retirees.

If one puts the effort of several universities (spanish) to lure chinese students here. Where the local researches are leaving because the "Ramón y Cajal" program is a failure wit the brick and mortar culture one has to wonder what are they thinking?