Split Up Yahoo?


Fred Wilson’s a sharp guy and his Yahoo plan is basically to outsource search to Google and dismantle the place into Yahoo’s many valuable components like the stake in  Alibaba.    I’m intrigued by this creative proposal though I can’t see Yahoo doing many of these things.  

Probably the big unknown in the big Microsoft+Yahoo equation is whether Yahoo will be willing to concede the search battle and use Google search and Google monetization.    In the short term this would bring more profit to Yahoo, but long term effects are not clear since they’d be effectively a prisoner to Google who would control a key function of Yahoo’s business.    However  Yang and the Yahoo board would likely see this as a superior situation to ownership by Microsoft.     Google’s stock has been dropping severely but they could still sweeten the pot with other helps, so I’ll be watching for better offers from Microsoft and counters from Google in the coming weeks. 

disclosure:  long on Yahoo

   

The proposed US Defense Budget is an outrage


As a fiscally responsible guy I had to chime in on the proposed US Defense budget which is, in a word, indefensible.     

At $515,000,000,000  this amount is conspicuous for several reasons, and I find it incomprehensible that people who call themselves fiscal conservatives continue to support the insane levels of inappropriate military spending.

One of the biggest reasons the proposed budget is irrational is the very low ROI on military spending.    Unlike infrastructure spending, the military spend does not leave you with more bridges, roads, and buildings.   It’s only justifiable to the extent it *protects value* and protects the national interests.     One need look no further than the Iraq war to see how questionable it is to suggest that spending 500 billion plus there has “protected” much of anything.   

One could probably make a strong case for the WWII military effort as it clearly rescued much of the world from the tyrannical grip of Nazi domination, but note that this spending came *after* the hostile actions.    I think GW would argue that spending now is a preventative measure for much greater spending later if regions like the middle east explode into much greater instability than now.   This is an arguable point, but I’d like to see his ROI calculations on this.     When you are talking about spending hundreds of billions annually you can reshape the entire planet with infrastructure improvements, and it is very hard to see how the military protection advantages would trump the tax, infrastructure, and good will advantages of redirecting military spending to other things or – probably more appropriately – lowering taxes and letting that help the economy and individuals.

I’d sure like to see the type of cost benefit analysis you’d do if the US was run more like a business than a bureaucratic empire, but one of the defects of our two party democracy is that neither party is interested in fiscal responsibility – they both want to spend irresponsibly and recklessly but on different things.    

This amount is more than all other nations combined, and more than half the entire global military budget.   It is true the US has historically born much of the expense of trying to maintain global stability  (for complex reasons), so simply noting this is half all defense spending does not explain enough.  However this amount still is highly questionable because many nations like Japan should be footing their own defense bills.

Note that this budget does not include funding for Iraq and Afghanistan wars.  Much will go for bloated, advanced weapons systems that have little place in a world where most of the threats are from asymetric warfare practiced by fundamentalists with 12th century sensibilities.

It is about time for people who call themselves fiscal conservatives to stop their sheep-like, bleeting support of these huge military budgets and start applying the same (correct) standards they apply to other government spending to the defense budget.