...with a colleague who insisted that corporations would soon begin to put their trillion dollar money cushion to work. He was confident that greed would keep them from simply sitting on their wallets.
I doubted his assertion. Here's one big reason why.
And, it wasn't just Citigroup that was within a day or two of running out of money. Bear Sterns and Lehman actually did hit the bottom of the cash barrel, and they are no longer with us today. It wasn't that these companies were bankrupt in the sense of their liabilities exceeding their assets, it's just that they had no cash with which to pay their employees, their creditors or their operating expenses. AIG was saved from a similar fate only by government intervention, but that intervention came at a massive cost--shareholders were forced to turn over 80% of the company's common stock to the government, a price that its former chairman has decried as usurious for what amounted to a temporary loan. Goldman Sachs, Morgan Stanley and others are only here today because of government intervention, though they managed to gain it at a lower, but still steep, cost.
And, it wasn't only financial institutions that were on the brink. Few realize that corporations historically kept insufficient cash on hand to pay their bills as they come due, preferring instead to invest excess liquidity in longer-term, more illiquid and presumably higher yielding investments, and tapping the commercial paper market ("money market") as needed to fund temporary cash shortfalls. However, in the panic of 2008, the commercial paper market unexpectedly seized up almost overnight! Even companies with excellent credit ratings and great balance sheets struggled to borrow money to meet their short term cash needs. And, almost nobody saw this coming collapse of the money markets coming. Consequently, dozens of major corporations, some of which were well-run, quality companies, were only weeks if not just a few days from bankruptcy. Just how close many came is well-documented though not widely understood and believed by the general public.
But one group who acutely understands just how scary things were is the CEO's and CFO's of the affected companies. Many came within hours of losing not only their jobs, but their entire net worth (which is often tied up on the stock of the companies they manage). Since then, many have vowed never to become overly dependent upon the commercial paper market again. Thus, companies have built cash stockpiles to insure that they have access to cash at all times.
This, and not concerns about future growth, is why companies sit on so much cash today, and it's why I'm confident they will continue to do so into the foreseeable future. I just don't think a recovering economy (even if it happens) is going to be enough to sucker these guys into spending down their cash anytime soon. After all, in late 2007 and early 2008, the outlook for the economy was widely viewed as excellent, and yet is still seized up.
Sunday, January 16, 2011
Medical Tests on the Cheap
You can now get most of your medical lab work done on the cheap through on-line testing services, if you order the labs yourself. After all, if all you need to know is your LDL level, for instance, why pay two to three times as much to have your doctor order the test for you?
One reason, I suppose, is insurance. Insurance won't cover lab work that you order yourself, but it does cover the more expensive labs ordered by your physician. Yet another example of the inefficiencies in our healthcare system, I suppose.
But, for those who with high-deductible plans, self-ordered tests for basic things like cholesterol or lipid levels seems like a no-brainer.
One reason, I suppose, is insurance. Insurance won't cover lab work that you order yourself, but it does cover the more expensive labs ordered by your physician. Yet another example of the inefficiencies in our healthcare system, I suppose.
But, for those who with high-deductible plans, self-ordered tests for basic things like cholesterol or lipid levels seems like a no-brainer.
PCWorld:
Google is working towards a Universal Translator, and it already has reasonably effective versions available for your smartphone.
The Singularity is Here?
This week IBM's supercomputer, named Watson, defeated Jeopardy Grand Champions in practice rounds.
While most will no doubt downplay this achievement, just think of what this computer is required to do to win: Not only must it understand the spoken/written word, it must also grasp the subtleties of Jeopardy's "answers". It can only do this by properly deciphering the frequent puns and double entendres inherent in the given "answers". And then it must locate the correct information in its massive database necessary to phrase the proper "question". And finally, it must do all of this faster than expert humans can.
It's quite an achievement, really, and as the link above suggests, one that has much practical significance.
Given that yesterday's supercomputers are today's smart phones, it won't be too long before such computational power is available to anyone with a few thousand bucks to spend.
The singularity may just have begun in the second week of January, 2011.
UPDATE:> NPR has some thoughts on the significance of the Singularity. Michael Anissimov has some thoughts as well.
It remains to be seen whether the advent of artificial general intelligence will be utopian or distopian as far as humans are concerned. But one thing is certain: The world will keep changing, and now at a rate faster than many are prepared psychologically to accept.
While most will no doubt downplay this achievement, just think of what this computer is required to do to win: Not only must it understand the spoken/written word, it must also grasp the subtleties of Jeopardy's "answers". It can only do this by properly deciphering the frequent puns and double entendres inherent in the given "answers". And then it must locate the correct information in its massive database necessary to phrase the proper "question". And finally, it must do all of this faster than expert humans can.
It's quite an achievement, really, and as the link above suggests, one that has much practical significance.
Given that yesterday's supercomputers are today's smart phones, it won't be too long before such computational power is available to anyone with a few thousand bucks to spend.
The singularity may just have begun in the second week of January, 2011.
UPDATE:> NPR has some thoughts on the significance of the Singularity. Michael Anissimov has some thoughts as well.
It remains to be seen whether the advent of artificial general intelligence will be utopian or distopian as far as humans are concerned. But one thing is certain: The world will keep changing, and now at a rate faster than many are prepared psychologically to accept.
Tuesday, January 11, 2011
Wednesday, January 5, 2011
Monday, January 3, 2011
Technology is Subversive
PCMag.com:
We need more developers of peer-to-peer network applications like this one if we expect to avoid a Big Brother scenario in the future.
UPDATE:> Check out bitcoin, a peer-to-peer crypto-currency that's gaining in popularity.
Startup Peep Wireless plans to launch software at the Consumer Electronics Show that will transform smartphones and other connected devices into a peer-to-peer network that will supposedly free users from ever paying a phone bill again.
We need more developers of peer-to-peer network applications like this one if we expect to avoid a Big Brother scenario in the future.
UPDATE:> Check out bitcoin, a peer-to-peer crypto-currency that's gaining in popularity.
Why I No Longer Support the Death Penalty
NPR.org:
And if I'm not mistaken, Texas also executes more people than any other state.
Prosecutors declared a Texas man innocent Monday of a rape and robbery that put him in prison for 30 years, more than any other DNA exoneree in Texas.
***
Now 51, he has spent more time wrongly imprisoned than any DNA exoneree in Texas, which has freed 41 wrongly convicted inmates through DNA since 2001 — more than any other state.
And if I'm not mistaken, Texas also executes more people than any other state.
Don't Let It Happen Here
European nations have begun seizing private pensions to pay government debts. I don't think that American politicians are quite so bold, but they may well be twice as sly. As Robert Prechter has noted time and again, politicians don't need to actually "seize" our pensions and IRAs to gain use of our money. All they need do is to require that a certain percentage (all?) of Americans' pension and IRA money be "invested" in "riskless" US government treasury bonds. Why? Not for politicians' benefit, of course, but to "protect" Americans from "greedy" Wall Street speculators who have turned the stock and bond markets into a crap shoot.
Do this, extend the normal retirement age to 70 or beyond, and dramatically increase early withdrawal penalties, and, voila, our money is now their's. Sound like a crazy idea? Like something that couldn't happen here? Maybe, but isn't the above scenario exactly what politicians have done with the Social Security "trust fund"? Of course it is. Fool me once, shame on you, fool me twice....
Instapundit has some thoughts regarding these European governments' actions:
Sounds a little radical coming from Glenn Reynolds, but hey, lessor crimes have spawned revolutions before.
Do this, extend the normal retirement age to 70 or beyond, and dramatically increase early withdrawal penalties, and, voila, our money is now their's. Sound like a crazy idea? Like something that couldn't happen here? Maybe, but isn't the above scenario exactly what politicians have done with the Social Security "trust fund"? Of course it is. Fool me once, shame on you, fool me twice....
Instapundit has some thoughts regarding these European governments' actions:
IF THIS HAPPENED HERE, I HOPE THAT POLITICIANS WOULD BE SWINGING FROM LAMPPOSTS.
And this time, not metaphorical lampposts, either.
Sounds a little radical coming from Glenn Reynolds, but hey, lessor crimes have spawned revolutions before.
It's in the Genes
The HTR2B variant of a serotonin neurotransmitter receptor in the brain makes Finnish men violent if they drink.
Sunday, January 2, 2011
IRS Agent Steals Your Tax Refund
If IRS reps can do this, it's only a matter of time before one downloads millions of tax returns on a thumb drive and posts them online Wikileaks style.
Maybe Wikileaks really is the end of Big Business/Big Government, as Noam Scheiber thinks.
Maybe Wikileaks really is the end of Big Business/Big Government, as Noam Scheiber thinks.
Is Peer-to-Peer Networking the Future of the Internet?
Some think it's the only way to avoid a Big Brother scenario. Given how fast Wikileaks was taken down, they may be right.
Foreclosure Fiasco
NYTimes:
When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks.
When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.
The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.
Those Amazing Stem Cells
Turning ordinary blood cells into amazing stem cells.
Using embryonic stem cells is becoming less and less necessary everyday, though I personally have no objection to it.
Using embryonic stem cells is becoming less and less necessary everyday, though I personally have no objection to it.
Are TSA Scanners Safe?
Many experts are skeptical that the TSA's new backscatter pornoscanner machines are safe, but even the experts who endorse them are careful to bracket their reassurances with certain caveats: the safety of the machines depends heavily on their being properly maintained, regularly tested, and expertly operated. Whether or not you're comfortable with the intended radiation emissions from the scanners, no one in their right mind would argue that a broken machine that lovingly lingers over your reproductive organs and infuses them with 10,000 or 100,000 times the normal dosage is desirable.
But when Andrew Schneider, AOL's public health correspondent, contacted the TSA to find out what maintenance and testing is in place to ensure the safe operation of the scanners, he discovered that the TSA appears to have no regime at all to ensure that they are functioning within normal parameters.
Read the whole thing.
Is anyone surprised by this?
Wall Street Journal:
Pension costs are driving taxes up:
Read the whole thing.
In some places, raising taxes isn't enough:
When you make promises that you can't keep, you don't. And, people get hurt.
Cities across the nation are raising property taxes, largely citing rising pension and health-care costs for their employees and retirees.
In Pennsylvania, the township of Upper Moreland is bumping up property taxes for residents by 13.6% in 2011. Next door the city of Philadelphia this year increased the tax 9.9%. In New York, Saratoga Springs will collect 4.4% more in property taxes in 2011; Troy will increase taxes by 1.9%.
Property-tax increases aren't unusual, in part because the taxes are among the main sources of local revenue. But officials say more and larger increases are taking hold. "This year we have seen a dramatic increase in our cities and towns having to increase property taxes" for pensions and other expenses, said Jack Garner, executive director of the Pennsylvania League of Cities and Municipalities.
Read the whole thing.
In some places, raising taxes isn't enough:
This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”
When you make promises that you can't keep, you don't. And, people get hurt.
If a Corporation Did This, We'd Put Its CEO in Jail
But, with politicians, cooking the books is par for the course.
Does this mean that state debts and deficits are actually far worse than reported? Nah, couldn't be.
Does this mean that state debts and deficits are actually far worse than reported? Nah, couldn't be.
Hemp:
How it could save the world.
Well, there is an interesting historical correlation between bull markets and prohibition, and bear markets and repeal of prohibition. Given hemp's benefits, and that varieties of it can be grown that don't contain high concentrations of THC, legalization seems likelier than ever.
Well, there is an interesting historical correlation between bull markets and prohibition, and bear markets and repeal of prohibition. Given hemp's benefits, and that varieties of it can be grown that don't contain high concentrations of THC, legalization seems likelier than ever.
Asia's Baby Shortage?
A shortfall of babies in parts of Asia will soon impact the world in unexpected ways. And no, it's not just a problem for China.
Secularism in the West
This Christmas, for perhaps the first time ever, Britain is a majority non-religious nation.
The Law of Accelerating Returns
A small chip will some day sequence your entire genome in minutes. And, dirt cheap!
Saturday, January 1, 2011
Is Wikileaks the End of Big Business?
Noam Scheiber thinks it might be:
Read the whole thing to learn why. I'm not sure he's right, but he raises an intriguing possibility.
When people riff about the impact of Wikileaks, you typically hear how it’s forever changed diplomacy or intelligence-gathering. The more ambitious accounts will mention the implications for journalism, too. All of that’s true and vaguely relevant. But it also misses the deeper point. The Wikileaks revolution isn’t only about airing secrets and transacting information. It’s about dismantling large organizations—from corporations to government bureaucracies. It may well lead to their extinction.
Read the whole thing to learn why. I'm not sure he's right, but he raises an intriguing possibility.
How Cool Would That Be!
PCWorld wonders whether Apple plans on creating a 3D iPhone. No glasses required!
That Apple would pursue this, and soon, makes sense to me. The problem with current no-glasses-required 3D technology is that the viewer must be a certain distance from the 3D display for it to work right. That's a huge problem when it comes to televisions, since not that many people are going to rearrange their whole seating arrangement to accommodate viewing range restrictions. But, hand-held devices, like phones or tablet computers, or even laptops, are naturally viewed from a fixed distance during use, making them perfect candidates for glasses-free 3D technology. Hence, I would't be surprised to see such devices lead the way with 3D, and given Apple's position as a leading manufacturer of these devices, and it's proven ability to innovate, I would't be surprised if it is first to market.
UPDATE:> Apparently IBM agrees:
That Apple would pursue this, and soon, makes sense to me. The problem with current no-glasses-required 3D technology is that the viewer must be a certain distance from the 3D display for it to work right. That's a huge problem when it comes to televisions, since not that many people are going to rearrange their whole seating arrangement to accommodate viewing range restrictions. But, hand-held devices, like phones or tablet computers, or even laptops, are naturally viewed from a fixed distance during use, making them perfect candidates for glasses-free 3D technology. Hence, I would't be surprised to see such devices lead the way with 3D, and given Apple's position as a leading manufacturer of these devices, and it's proven ability to innovate, I would't be surprised if it is first to market.
UPDATE:> Apparently IBM agrees:
By 2015, your mobile phone will project a 3-D image of anyone who calls and your laptop will be powered by kinetic energy. At least that’s what International Business Machines Corp. sees in its crystal ball.
Blackberry Maker Was in Denial About iPhone
AppleInsider:
Yes, imagine.
An alleged former employee of Research in Motion has revealed that RIM was incredulous over the original iPhone when Apple first unveiled the smartphone in January of 2007, according to a new report.
The BlackBerry maker reportedly held multiple "all-hands meetings" the day after the first-generation iPhone was announced, MacNN reports.
According to Shacknews poster Kentor, employees at RIM and Microsoft were "utterly shocked" by the iPhone. RIM was allegedly "in denial" about the iPhone, claiming "it couldn't do what they were demonstrating without an insanely power hungry processor, it must have terrible battery life, etc" Kentor wrote.
"Imagine their surprise when they disassembled an iPhone for the first time and found that the phone was battery with a tiny logic board strapped to it," the post read.
Yes, imagine.
NewScientist...
...remembers some key biomedical advances that took place in 2010, and looks forward to 2011.
Another Reason the Super Rich Favor Higher Tax Rates
They don't pay them while the merely "rich" do:
Access to such minds comes at great cost, a cost that many innovative small businesses simply can't afford to pay. Unable to compete against established companies that pay comparatively little in taxes on their profits, innovators are often eventually forced to sell their ideas and technology to the "big boys." And, that's just how the big boys like it.
I've said it before, and I'll say it again: High tax rates and increased regulation benefit the wealthy establishment. Why do you think so many billionaires are leftists?
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”
Merck & Co Inc., the second-largest drugmaker in the U.S., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering-Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free.
The largest drugmaker, Pfizer Inc., imported more than $30 billion from offshore in connection with its acquisition of Wyeth last year, while taking steps to minimize the tax hit on its publicly reported profit.
***
“Some of the best minds in the country are spent all day, every day, wheedling nickels and dimes out of the tax system,” said H. David Rosenbloom, an attorney at Caplin & Drysdale in Washington, D.C., and director of the international tax program at New York University’s school of law.
Access to such minds comes at great cost, a cost that many innovative small businesses simply can't afford to pay. Unable to compete against established companies that pay comparatively little in taxes on their profits, innovators are often eventually forced to sell their ideas and technology to the "big boys." And, that's just how the big boys like it.
I've said it before, and I'll say it again: High tax rates and increased regulation benefit the wealthy establishment. Why do you think so many billionaires are leftists?
Housing Down Substantially in October
Henry Blogdet:
Full story here.
I'm still expecting nearly across-the-board deflation in coming years, and housing will likely lead the way (as hit already has).
Housing guru Robert Shiller says the decline in October's Case-Shiller house-price index was much worse than expected (over 10% annualized).
He also says that if house prices keep falling this fast, the economy will face "serious reasons to worry" (which, for Professor Shiller, is an apocalyptic statement).
6 of the 20 cities in the index have now hit new lows, below the lows reached in 2009 before the "recovery" in house prices. In several cities, prices are back to where they were 10 years ago.
Full story here.
I'm still expecting nearly across-the-board deflation in coming years, and housing will likely lead the way (as hit already has).
Kurzweil Takes on His Critics
...and wins:
You can find Kurzweil's analysis of his own accuracy, prediction by prediction, here. After reading it, and remembering just how absurd many of these predictions sounded when originally made, no fair critic can argue that Kurzweil's vision of the future hasn't been substantially vindicated. Given this, we should consider carefully what he has to say about the coming decade.
As I discuss in detail below, I made 147 predictions for 2009 in ASM, which I wrote in the 1990s. Of these, 115 (78 percent) are entirely correct as of the end of 2009, and another 12 (8 percent) are ―essentially correct (see below) — a total of 127 predictions (86 percent) are correct or essentially correct. Another 17 (12 percent) are partially correct, and 3 (2 percent) are wrong.
So, it is easy to focus on the few predictions that were incorrect, excluding the majority of predictions —which were accurate — and craft a biased analysis. This selection bias may be combined with a misunderstanding of what the prediction meant in the first place, or ignorance of the current situation, resulting in citing an accurate prediction as inaccurate. For example, one commentator lists only three accurate predictions and cites five that are false, leaving out almost all of the 127 predictions that are accurate or essentially accurate.
Of these false predictions, a number are, in fact, true. The remaining are only a few years away, and I consider them essentially correct, given that these predictions were specified by decades (not years) in ASM.
You can find Kurzweil's analysis of his own accuracy, prediction by prediction, here. After reading it, and remembering just how absurd many of these predictions sounded when originally made, no fair critic can argue that Kurzweil's vision of the future hasn't been substantially vindicated. Given this, we should consider carefully what he has to say about the coming decade.
Skype Adds Video Calling to iPhone
I haven't tried it yet, but will have occasion to do so for business purposes the second week of this month. I'm excited to see how it works.
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