Tag Archives: biz

“Bargains” for idiots

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The New York Times has profiled a site, Swoopo, that holds auctions for expensive items. The auctions often result in very low prices, but in order bidders are charged $.60 for each bid. And those bids really add up.

“In aggregate, consumers trying to obtain these products are overpaying,” said Glen Whitney, a mathematician and a former quantitative analyst at the hedge fund Renaissance Technologies, who was asked to evaluate Swoopo. “Unless you have an edge over other people who are bidding, and you can get them to subsidize your purchase, you shouldn’t do it. It’s a chump’s game.”

Media quote of the day

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Quality journalism is not cheap. The digital revolution has opened many new and inexpensive distribution channels but it has not made content free. We intend to charge for all our news websites.

- Rupert Murdoch, vowing to begin charging for access to News Corporation websites by next year, including the Times of London, The Sun and News of the World.

Yet more unfavorable Goldman press

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This time the story is in New York Magazine, written by Joe Hagan. It is not a flattering portrayal of shrewd but ethical businessmen and is certainly worth your time to read. Goldman certainly does not seem happy with all the attention.  When do a few stories turn into a drumbeat?

“I think this company is essential in terms of the American capital markets,” says [Goldman spokesman and Chief of Staff John] Rogers.

His tone is placid, soothing—until, that is, the subject of American International Group comes up. At this, his eyes widen, his face grows angry, his hands gesture in the air.

“If you didn’t like the policy,” he says of the decision to bail out AIG and pay off its debts to Goldman, “one avenue for pursuing your own interests was to attack Goldman Sachs.”

It’s a sore spot for good reason. The AIG rescue is the incident from which all other Goldman conspiracy theories spring—the original sin, in a sense, of Goldman’s current public tarring. It’s the act that first made the average man on the street sit up and say, “Hey, wait a minute. The secretary of the Treasury, who used to be the Goldman CEO, just spent $85 billion to buy a failing insurance giant that happened to owe his former firm a lot of money. Does that smell right to you?” It also seems to have the legs of a potential scandal, with Neil Barofsky, the inspector general overseeing the Troubled Asset Relief Program, conducting an audit of the buyout.

***

Of the $52 billion paid to AIG’s counterparties, Goldman Sachs was the biggest recipient: $13 billion, the entire balance of its claim. The amount was surprising: Banks like Merrill Lynch that had bought credit-default swaps from failed insurers other than AIG were paid 13 cents on the dollar in deals moderated by New York’s insurance regulator. Eric Dinallo, the former New York State insurance commissioner, who was at the AIG meetings, characterizes the decision this way: AIG’s counterparties, Goldman being the most prominent, “got to collect on an insurance policy without having the loss.”

Over time, it would appear to many that Goldman Sachs had received a backdoor bailout from a Treasury Department run by the firm’s former CEO. Why did Paulson bail out the banks that did business with AIG, critics have demanded ever since, and not Lehman Brothers? Certainly executives at Lehman want to know. (As one former Lehman managing director there puts it, “The consensus is that we were deliberately fucked.”)

Are we beginning the big collapse?

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That is, are we at the cusp of a truly calamitous collapse of the entire economic and social order of the past couple of hundred years. Our economy has developed based, in large part, on the availability of relatively cheap energy in the form of petroleum. Some believe, with good reason, that the days of cheap oil are actually behind us. If cheap oil is over, how can we continue to support our highly decentralized life styles?

One of the best known proponents of this view is Dmitry Orlov, software engineer from Leningrad, who is to some the quintessential doom-and-gloomer. Whether he is right or wrong, he is always interesting to listen to and it is worthwhile to hear him out.

You can watch a talk he gave to the Long Now Foundation, entitled Social Collapse Best Practices.  His website is here and you can watch a more recent talk he gave at the Feasta Conference here. (Warning: The last link is a very slow download. Be patient.)

The future of free

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Malcolm Gladwell, writing in the New Yorker, profiles Chris Anderson, who has a new book out now called Free. A major premise of the book is that “free” will be the future. Of course, there are caveats, but the basic idea is that giving away content or product for free can create huge consumer demand and that demand can be leveraged to make money selling other goods and services that interact in some way with the free item.

This is an interesting read, both to follow Gladwell’s reactions and Anderson’s approach.

Anderson is the editor of Wired and the author of the 2006 best-seller “The Long Tail,” and “Free” is essentially an extended elaboration of Stewart Brand’s famous declaration that “information wants to be free.” The digital age, Anderson argues, is exerting an inexorable downward pressure on the prices of all things “made of ideas.” Anderson does not consider this a passing trend. Rather, he seems to think of it as an iron law: “In the digital realm you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win.” To musicians who believe that their music is being pirated, Anderson is blunt. They should stop complaining, and capitalize on the added exposure that piracy provides by making money through touring, merchandise sales, and “yes, the sale of some of [their] music to people who still want CDs or prefer to buy their music online.”

The last muscle car

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Mark Morford dubs the 2010 Chevrolet Camaro the “last muscle car.” Further, he says good riddance to all muscle cars.

Have you seen this thing? This sexy macho bloated Hot Wheels fantasia dreamgasm of a car-like drunken child’s funbot crayon sketch?

Well, they did. And it’s here. And they don’t. And it’s David Lee Roth (of course). And it’s worth noting because, well, this wild new Camaro will very likely be the last you will ever hear of U.S. automakers vying to be a kickass, world-dominating force in automotive inspiration. It is most certainly the last gasp of that overblown, yet much-beloved myth, affectionately known as the American muscle car.

No? Because it appears to be a vehicle that at least some across the Big Autosphere are still secretly praying, despite the sudden overthrow of — despite the deadly ultimatum for — General Motors, might yet prove to be a savior.

Indeed, it’s a car some hope will maybe, just maybe sell like crazy and restore a tiny bit of faith in big, thick, meaty, rather inane American cars that have no real place in the new millennium, but which for some reason they keep building anyway, presumably because aging frat boys you should never, ever date think they’re totally wickedcool and will therefore be willing to shell out 35 grand to own, unless they won’t.

Am I talking about the ugly-as-a-giant-vacuum-cleaner Chevy Volt? Am I aiming this admittedly overheated verbiage at the ruddy, useless Impala? No, I am not.

I am talking about the brand new, leering, pseudo-masculine 2010 Chevrolet Camaro.

What’s that you say? You had no idea that Chevy was resurrecting this rolling mullet from the mausoleum of the ’70s because, even after sucking up billions in bailout money, GM still doesn’t really have a single fresh and forward-thinking idea, and hence the best they can do is scrape the barrel of macho nostalgia in a desperate attempt to cater to male Boomers who drink too much light beer and think Maxim is the height of masculinity and are still debating which Van Halen vocalist totally ruled?

Just say no (update)

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Why can we not pay bonuses to executives of a business that we now own 90% of? Nationalization would have eliminated this problem.

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

More detail at the Washington Post.

Update: I think TPM sums it up quite well.

Take taxpayer money, host anti-union propaganda

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This is rich (and not the money sense). Citibank, that successful operation that has (so far) taken tens of billions of dollars in taxpayer money, is hosting a conference call to help the anti-Employee Free Choice Act forces stop the legislation. So their position is that they screwed up and deserve a taxpayer bailout, but that rank and file workers make too much as it is, without giving them an effective way to organize.

Nationalize now.