Work | Selling Expertise on the Internet | WSJ

An interesting article about another way to raise a little $$ via the Internet. I especially like the "Mechanical Turk" www.mturk.com approach.

Tech | Amazing Text Processor | WSJ

Money | Inside the Meltdown | Frontline

For a pretty comprehensive video summary of when/how the wheels started to come off the US/global financial markets, watch the PBS Frontline show from early Feb 2008 at this link. The consequences of choosing moral hazard over systemic risk became evident when Lehman Brothers was allowed to fail. Unfortunately, even a small hole can sink a large ship. Something to keep in mind going forward.

Money | November 2007 Interview with Warren Buffett | CNBC

Very interesting to re-read this November 2007 CNBC interview of Warren Buffett from the near-peak in the equity markets. Most of Warren Buffet's "advice to young people" is more useful than ever. For the near term, I'm expecting thrift to be the winning strategy.

1.  He bought his first share of stock at age 11 and he now regrets that he started too late! 
2.  He bought a small farm at age 14 with savings from delivering newspapers.
3.  He still lives in the same, small 3-bedroom house in midtown Omaha that he bought after he got married 50 years ago.  He says that he has everything he needs in that house.  His house does not have a wall or a fence. 
4.  He drives his own car everywhere and does not have a driver or security people around him. 
5.  He never travels by private jet, although he owns the world's largest private jet company. 
6.  His company, Berkshire Hathaway, owns 63 companies.  He writes only one letter each year to the CEOs of these companies, giving them goals for the year.  He never holds meetings or calls them on a regular basis.  He has given his CEO's only two rule! s. Rule number 1: Do not lose any of your shareholder's money.  Rule number 2: Do not forget rule number 1. 
7.  He does not socialize with the high society crowd.  His pastime after he gets home is to make himself some popcorn and watch television.
8.  Bill Gates, the world's richest man, met him for the first time only 5 years ago.  Bill Gates did not think he had anything in common with Warren Buffet.  So he had scheduled his meeting for only a half hour.  But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.
9.  Warren Buffet does not carry a cell phone, nor have a computer on his desk.

His advice to young people:  'Stay away from credit cards and invest in yourself and remember:
A.  Money doesn't create man, but it is the man who created money. 
B.  Live your life as simple as you are.
C.  Don't do what others say.  Just listen to them, but do what makes you feel good.
D.  Don't go on brand name.  Wear those things in which you feel comfortable. 
E.  Don't waste your money on unnecessary things.  Spend on those who really are in need.
F.  After all, it's your life.  Why give others the chance to rule your life?'

Nutrition | The Iams Diet | Unattributed

The Iams Diet

Don't ask a retiree a dumb question ...

The next time someone asks you a dumb question wouldn't you like to respond like this?

Yesterday I was at my local Wal-Mart buying a large bag of Iams Dog Food for my loyal pet, Abby, the Wonder Dog and was in the checkout line when a woman behind me asked if I had a dog.

What did she think I had, an elephant? So since I'm retired and have little to do, on impulse I told her that no, I didn't have a dog, I was starting the "Iams Diet" again. I added that I probably shouldn't, because I ended up in the hospital last time, but that I'd lost 50 pounds before I awakened in an intensive care ward with tubes coming out of most of my orifices and IVs in both arms.

I told her that it was essentially a perfect diet and that the way that it works is to load your pants pockets with Iams nuggets and simply eat one or two every time you feel hungry. The food is nutritionally complete so it works well and I was going to try it again. (I have to mention here that practically everyone in line was now enthralled with my story.)  Horrified, she asked if I ended up in intensive care because the dog food poisoned me. I told her no, I stepped off a curb to sniff an Irish  Setter's ass and a car hit us both.  I thought the guy behind her was going to have a heart attack, he was laughing so hard. Wal-Mart won't let me shop there anymore. Better watch what you ask retired people. They have all the time in the world to think of crazy things to say.

Money | View on Economy | Blackstone

Blackstone's Steve Schwarzman from today's earnings conference call for the beleaguered private equity shop:

Our view is the economy will continue to deteriorate sharply this quarter and next quarter and be pretty weak second quarter and maybe sort of see stability fourth quarter, and then I think you will have a pretty, and a weak 2010 although I don't think it will keep declining…I think 2011 will show some growth but still be well below the levels of 2006 and 2007. My own view is you may not get back to 2006 and 2007 a long time because we have sort of an emotional and psychic shift going on in America which is back to basics don't live on leverage, live within your means, more humble life styles, less extravagant consumption, savings and all of that sort of stuff.

I believe that a lot of people in America are legitimately scared and have seen their life savings or what they perceived as their net worth largely either wiped out or cut in half. That's going to forge fundamental behavioral differences and that will retard the growth."

Money | US Household Debt to GDP | Econometrics

Who to blame for the current economic mess? Republicans - Democrats - Politicians? Investment or Commercial Bankers? Wall Street or Main Street? We need to look in the mirror, folks. Check-out the trend of US Household Debt as % of GDP. See anything wrong here? I understand that the 100% current ratio was last seen in 1929. Here's that link from an NPR show on 2.27.09.

Money | Renters Lose Edge on Homeowners | WSJ

Eighteen year average of mortgage to payments compared to rents has trended around 125%. Mortgage costs blew through this trend line in 2003, peaked at 175% in 2006-2007 and returned to the trend in 2008. A composite of 79 metro cities in the trend. All real estate is local, of course, but regression to the mean is a powerful force. More correction is in store, I'm sure ... but the very worst may be behind us. One can always hope. Article.

Energy | Dell Warms Up Data Centers | WSJ

An opportunity for corporate energy and IT managers ... check-out this article on Dell running their data centers at up to 78F instead of the usual 10F below normal office temp. Other savings ideas in this news bite. In today's economy, the race goes to the thrifty.

Money | Cost of College | Kedrosky

Economy | New Term - Babygloomers | Daily Telegraph

The Babygloomers - defined as those who are having to support both their own children and their parents - are being stretched to the limit as they also struggle to cover the cost of their own family, which often includes grown up children who cannot to afford to leave home.They have had also had to cope with an increase in their own cost of living as the recession takes hold.

Economy | Job Loss | Time.com

Life | Darwin Award Candidate | DailyMail

A Darwin awards candidate for 2009

Humor | New Logo? | Kedrosky

Learn | Vocabulary | MMK

Here's your vocabulary lesson for today:
Liquidity

When you look at your investments and wet your pants

Fun | Card Tricks | Malone

if you like card tricks, you'll enjoy this video

Humor | Statistics & Gates |

Have you heard the old statisticians' joke about Bill Gates walking into a room of 30 people and raising everyone's average net worth by $1.6-billion?

Money | Help for Homeowners | WSJ

Programs to help-out homeowners who are way behind on their mortgage payments and underwater in terms of loan-to-value haven't been effective. Here's a somber assessment from the WSJ:

"The latest embattled foreclosure-prevention program is Hope for Homeowners, which was approved by Congress last summer and supposed to help 400,000 homeowners. Only 357 people have signed up so far for the voluntary program. The Department of Housing and Urban Development, which is administering the program, acknowledges that it has been encumbered by high fees and narrow eligibility requirements.

Another government program, FHASecure, was intended to help 80,000 homeowners who had fallen behind on their payments after their adjustable interest rates reset. It has helped only 4,100 delinquent borrowers refinance since September 2007 and will stop taking new loan applications as of Wednesday.

The full article is found here.

Travel | David in Thailand '71-'72 | Picasa

Money | Read This Before You Remodel | WSJ

The HGTV/Contractor/Designer/HomeDepot/Mortgagebroker juggernaut drives on. But does it make sense? Viewing your home as a fashion statement will line several folks' pockets but certainly not yours. Check this for a current perspective on what is common sense in the remodeling world.

Life | Action Sport | Vimeo

Bored? here's a new action sport for you ...

Tech | China Internet Users > US Pop in 2009 | Kedrosky

According to some new research from JPMorgan, 2009 will be the year that China Internet users surpass the entire population of the U.S.

Life | What have you changed your mind about | Kedrosky

From Paul Kedrosky's blog

What Have You Changed Your Mind About?

What have you changed your mind about? This year's Edge question is the preceding one, and John Brockman gets answers (many of them interesting and/or unpredictable) from a long list of people, including scientists, economics, psychiatrists, writers, etc.

So, what have I changed my mind about? it is a question that has been gnawing at me a great deal lately, with a general sense that changing my mind on things is more important than ever, and that I'm not doing it often enough. Not, of course, in some whimsical sense -- today I like blue,tomorrow I like red -- but in the sense that the world is saying on many levels that so much of what I thought I knew is wrong. I can hardly keep up with the long list of things that I've changed my mind about recently, so many that I feel a little like Billy Pilgrim, that I've come unstuck in time.

Some examples of things I've changed my mind about in the last year:

• Whether there are institutions that are too big to fail (No)
• Whether phones need keyboards (No)
• Why TV exists (I don't know anymore)
• Whether bond yields can go negative (Yes, obviously)
• The important of ignorance (Vastly underrated)
• Whether economics matters (Maybe)
• Mountain-biking (Not just for wahoos who don't ski)
• The role of contrarianism (Important, but entirely misunderstood too)
• Whether blogs matter (More than I thought they did)
• Whether Twitter is any use (Yes)
• Whether AM radio is a wasteland (Yes, but still matters)
• Large data sets (Way more dangerous than I thought they were)
• Reading books on screen (Totally doable)
• Venture capital (Much closer to unnecessary)
• Hedge funds (I've gone from it being mostly about chance to it being almost entirely about chance)
• Sincerity (Under-rated)
• Market valuation (Historical numbers matter only minimally)
• Technical analysis (It works until it doesn't, but it can work)
• Agnosticism (It's a cop-out. I'm an atheist.)
• Warren Buffett (Smart, but also the ultimate market limit order that will one day be disastrously taken out)
• Babies (I now smile inanely at other people's)
• China recession (Better than 50% chance it happens, up from near zero)
• Vanity Fair (Worth reading for more than the pictures)
• Eschatological leanings (Rational response to universal entropy)
• Current account deficits (Hugely important, but can last far longer under unique circumstances)
• Wholesale funding model (Works until it doesn't)
• Debt (Even more necessary more dangerous than I thought it was)
• 50-year Treasury (Has to happen)
• Lessons from Japan bubble/decline (It is a cop-out to say they didn't try hard enough)
• Marx (Funnier than I thought he was)
• Bonds and bond market (Baffled why I was under-allocated for so long)
• Professional sports (Gone from being a waste of time to a _complete_ waste of time with looming bankruptcies)
• This time it's different (Sometimes it really is different)
• Whether oil can get to $200/$20 again in 12 months (Yes and yes)

I'm sure I'll come with more, but I'd cheerfully have others add theirs.

Photo | The Year in Pictures | Boston.com

Great images, be sure to visit all three of the sites accessible from this link.

Business | Domestic US Auto Industry | Kedrosky

Quote du (Almost) Jour: Auto Industry Stresses

Over the past year, the domestic auto industry has experienced sharply reduced sales and profitability, large indefinite layoffs, and increased market penetration by imports … The shift in consumer preferences towards smaller, more fuel-efficient passenger cars and light trucks … appears to be permanent, and the industry will spend massive amounts of money to retool to produce the motor vehicles that the public now wants.

To improve the overall future prospects for the domestic motor vehicle manufacturers, a quality and price competitive motor vehicle must be produced … If this is not accomplished, the long term outlook for the industry is bleak.

-- Source: THE U.S. AUTOMOBILE INDUSTRY, 1980. REPORT TO THE PRESIDENT FROM THE SECRETARY OF TRANSPORTATION

It's probably necessary to prevent the domestic US auto industry from careening over the cliff and dragging parts suppliers, dealers, and associated business partners with it. However, how we're going to get this dinosaur of manufacturing to change its ways is beyond me. I'm thinking that Chrysler sells-off Jeep and kills-off the rest. GM sells Buick to the Chinese, Saab to the Swedes, Hummer to the Russians, and then just struggles along until the rest crashes and burns. Who needs a $40K Volt? If Ford can restructure fast enough then they may have a chance to survive. Meanwhile the other US auto industry is hurting but capable and makes quality, efficient cars and trucks that Americans want to buy.

Money | Bailout Big Three? Pro vs Con | Kedrosky

The biggest question of the moment ... maybe of the decade. Here's a quick pro vs con blog with a Big Three promo video and lots of feedback. See also the recent articles in the WSJ.

Education | Most College Grads in 25-34 | Biz Week

Well, another sobering statistic. Check out this stat on college grads in the 25-34 demographic:

Money | Real vs Financial Engineering | GE

Immelt of GE announced on Friday the 24th that General Electric Co. is cutting costs, preparing for a new wave of regulation from Washington and embracing manufacturing over financial services as ways out of the economic crisis. I think we've had enough of financial engineering. Time to return to product and system engineering.

Humor | My Sentiments Exactly | Real Life Adventures

Money | Finance Crisis | Schwarzman

Stephen Schwarzman, chairman of Blackstone Group, was part of an impromptu roundtable of roughly 30 finance luminaries hosted by the Yale School of Management and co-sponsored by The Wall Street Journal. Schwarzman kicked off the audience-participation segment with a nearly all-in-one-breath summary of the causes and effects of the credit crisis:

"It's a perfect storm. It started with Congress encouraging lending to lower-income people. You went from subprime loans being 2% of total loans in 2002 to 30% of total loans in 2006. That kind of enormous increase swept into the net people who shouldn't have been borrowing. Those loans were packaged into CDOs rated AAA, which led the investment-banking firms [buying them] to do little to no due diligence, and the securities were distributed throughout the world, where they started defaulting. When they started defaulting, out of bad luck or bad judgment, we implemented fair value accounting….You had wildly different marks for this kind of security, which led to massive write-offs by the commercial banking and investment-banking system. In the face of those losses…you needed to raise new equity…which came from sovereign-wealth funds in part, which then caused political resistance to sovereign-wealth funds, who predictably have withdrawn from putting money into the system….It seemed pretty obvious that would happen. We now find ourselves with a liquidity crisis where fundamentally the cost of money for financial intermediaries [such as investment banks] is significantly in excess of their cost of lending it. So several institutions found themselves in a structurally impossible position. We had a series of bankruptcies, whether Bear Stearns or Lehman, or forced sales like Merrill. Goldman reverted to a banking charter for a lower cost of funds, which today is still not low enough for the business."