Google is for Smarty Pants


A new study suggests Googling is good for your health.   Mental brainpower health that is.   Researchers measured brain activity in online searchers and noted that it was much higher when people were using search engines.

More about why YOU are smarter for hanging out online so much.  Congratulations!

George Soros on Zakaria GPS


Hedge fund manager George Soros is one of the world’s richest and most successful market watchers (and market manipulators?). Zakaria reports that Soros’ recent plays have netted him over 2 billion. He’s very controversial for his political views though my take is that great business folks can easily separate their politics from their business decisions.

Consuming more than you produce:/ That game is over.

Houses as piggy bank, instead of savings. [BAM! We are seeing this obvious but profound observation coming up a lot]

Misconception: Markets will correct themselves. They won’t. We have reached the end of a bubble cycle started in the 1980s when massive global markets and deregulation frenzy began.

Mortgages as the “detonator” of the nuclear bomb that is the current global crisis. Stock market in capitulation phase that has followed credit problems.

Can’t predict future because it depends on decisions. He says he was wrong in 1998 to predict some sort of climax to the bubble.

“The cost will be greater, the damage will be greater”.

“You need a government that believes in government”

Paulson bailout plan as ill concieved – same kind of financial engineering that got us into the mess. Paulson as behind the curve “all the way” because he buys into market fundamentalism.

The authorities have lost control of the situation.

Soros recommends: Mobilize private capital to buy into distressed banks and lift minimum reserve requirements to free up lending.

Reduce number of foreclosures by renegotiations to sound mortgages that will not exceed 85% of house value. Loss to be absorbed by mortgage owners (banks?). Govt will then guarantee mortgages to 85% value, which would encourages renters to buy. Some losses, short recession.

Soros: I understand the flaws which allows me to profit, but as a citizen I want better regulation. Markets and Govts are flawed. Less regulation, better regulation.

Soros (like Gates and Buffett?)  believes the anti-tax positions are false because supporting infrastructure with taxes is so critical to wealth formation.

Soros said he does have inordinate influence as a rich person on politics but , unlike many other rich folks, does not use it to improve his financial positions.  He thinks market fundamentalism abets power abuses in politics.

China built assets while we built debts.   Tremendous power shift.   But America will remain a leader and could be *the* leader with some changes.

Sequoia’s Slide Show on the Economy


Sequoia’s Advice to startups has been the subject of speculation for the past few days, but now VentureBeat has posted the actual slide show from a recent major meeting where startups were told to prepare for some seriously bad economic stuff and a recession that could last for many, many years.

Sequoia Slide Show

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I was particularly glad to see the slide noting that people have been using home equity as a “piggy bank”.

My current take on the huge Government actions trying resurrect the prosperity economy is subject to change faster than you can say “The Dow’s Down 500”.  However I would like to hear more talk about how the economy got too big for it’s britches and most of us, and certainly the country as a whole, have been living pretty large for no good reason, fueling both economic growth and personal living off of home equity that …. ain’t … here …. no …. more.     We’ll need to work harder and get less for awhile, and perhaps forever as the rest of the world catches up to our levels of prosperity.    Welcome to the new global economy.

Another factor I’m confident about is that the banks are going to act very opportunistically with the new sources of funding, though I’m not sure what form this will take.  Assume, for example, that you run a totally solvent bank and have managed risk appropriately.   Yet you know the feds are about to absorb disproportionate risks in order to get the macro economic juices flowing.    Your best play is to lay low for awhile, waiting for potential free money, lower risks, and most importantly saving up the benefits of your solvency so you can scoop up smaller banks and deals as they become available.    Although I assume there are some safeguards in place I think one of the Fed’s miscalculations right now is that the big bank players *want to play* when in fact the best of them *want to hang out and make a killing* as the insolvencies rip through the system and are removed at taxpayer expense.    This behavior by solvent banks *also* increases uncertainties because nobody currently knows who is good to go and who will be dead later in the month.   I *absolutely* agree with those calling for a massive increase in financial transparency throughout the banking sector – e.g.  requiring banks to place much more itemized information about assets and liabilities online for all to see.   This should be a condition of *doing business with the Federal Government*, which means every bank would be required to do it.   The initial effect would probably be a massive shift in resources toward the healthier banks but this is where the Government, again with total transparency, could balance things out to avoid potential catastrophic failures.

Sequoia to Silicon Valley: Red Ink coming soon to a startup near you.


Sequoia is among the most prestigious and success of the Silicon Valley Venture Capital firms, and today they warned their portfolio of companies that trouble is coming.

Although the “bad days are a comin'” news was close to obvious for most of us I think this announcement will get the attention Valley in a more dramatic way.   Before the meltdown a large majority of startups failed anyway.    Now we are facing the worst economic conditions in decades, so … look out.

Om Malik reports

Hello UK, and welcome to the bail out club…


I’m not seeing enough about the 500 billion pound UK Bailout (that’s $865 Billion US) on US Financial news.

That’s more than our USA bail out despite the fact that our economy dwarfs that of the UK.  Probably a sign that here in the US we are in for massively more bail out spending before the financial bloodbath is over.

The scale of this measure suggests to me what the markets already seemed to know – the situation is worse than we’ve been told.

So, market activity remains jittery and unhappy even though we’ve now got a massive global bailout in progress with the global .5 rate cut combined with 700 billion here and 865 billion there and the large global rate cut.  Gee whiz, pretty soon this could add up to real money.

I’m uncertain about this but I think the only remaining certainty is uncertainty, and that’s … for sure!

Markets refuse to join the Paulson & Bernanke Fan Club


Ouch.  The bailout plan details start to be discussed as Bernanke lays out some of his plans and his take on the crisis.  It also seems like the Government keeps spending and doing even more to shore up our aching economy.

Yet the markets remain unimpressed as the DOW drops another 500 today, much of that in the final minutes of trading.

My intuitive take has always been to question the idea that growth rather than efficiency is the cornerstone of a healthy economy.    One thing that is now clear is that we are seeing the effects of unsustainable economic “growth” in the sense that the Real Estate price increases were unsustainable and they in turn created a huge surge in paper wealth that encouraged people to live above their means and banks to create bizarre speculative financial instruments.

I suspect the markets are recognizing and/or suggesting to us that we are in for years – perhaps even a decade – of economic contraction where the growth we’ve come to expect will no longer fuel our prosperity.

This does not have to be catastrophic.   In fact to the extent folks replace big houses and cars with little ones, take more responsibility for healthy lifestyles, and seek new efficient solutions we could be in for a period where we won’t gain abundance but we might gain some …. wisdom.

AOL and Yahoo star in “Spawn of the Ugly Ducklings”


After Yahoo turned down Microsoft’s offer of over $31 per share there has not been much good news for a troubled Yahoo, with a price now right about *half* what Microsoft offered.   However it does appear that Yahoo will merge with another struggling internet empire:  AOL.    Time Warner’s merger with AOL years ago will probably go down as one of the most misguided corporate marriages in history leading as it did to nothing but heartaches and lowered TW values, but the Yahoo deal actually seems to make a lot of sense to me if Yahoo can get it’s management act in gear.   With AOL Yahoo will control even more valuable internet items such as about half of all the email accounts in the world.     Some reports suggest that Microsoft may have even more interest in a combined Yahoo AOL. In today’s challenged fiscal environment it seems unlikely Yahoo could refuse another MS takeover even at a reduced cost per share.

TechCrunch Reports

Disclosure:  Long on YHOO

Bill Gates on Zakaria GPS


Fareed Zakaria continues his amazing series of interviews on his CNN GPS show with Bill Gates.

Like Warren Buffett, a close friend of Gates, Gates will give away almost all of his wealth over the next decades via the Bill and Melinda Gates Foundation which focuses on global health and education initiatives.

Gates supports “some” inheritance taxes because we are all beneficiaries of the education and stability provided by the US infrastructure.

His preference for foreign development investment seems to be based on the idea that the need is much greater there, the return on the charity giving is much greater, reducing infant mortality wll *decrease* birth rates [this is a profoundly important observation that is well documented but poorly reported – many think helping the poor tends to increase births when this is false]. They talked about the book “The Bottom BIllion”.

On the future of computing and the Internet:

Shape of computers will change.  VIrtual wallpapers, tablet computing.

The whole economy is using software simulation, which makes development less expensive.

China as largest broadband market – probably for the rest of the century.  He seemed to think India was unlikely to catch up to China.

——–

He’s focusing more now on how to create visibility for issues like malaria prevention.

When asked how he’d be remembered – as a software pioneer or philanthropist – Gates didn’t answer but I think the answer is increasingly clear.  Gates more than any other person has brought a new era of Innovative huge scale development work that could turn back the tidal wave of poverty in our generation.  He’s helping to make it not only fashionable, but somewhat obligatory for the rich to pay a lot more attention to those in need.

The Large Hadron Collider/ATLAS at CERN


The Large Hadron Collider/ATLAS at CERN
Originally uploaded by Image Editor

When activated, it is hoped that the collider will produce the elusive Higgs boson — often dubbed the God Particle — the observation of which could confirm the predictions and ‘missing links’ in the Standard Model of physics, and explain how other elementary particles acquire properties such as mass. The verification of the existence of the Higgs boson would be a significant step in the search for a Grand Unified Theory which seeks to unify three of the four fundamental forces: electromagnetism, the strong force, and the weak force. The Higgs boson may also help to explain why the remaining force, gravitation, is so weak compared to the other three forces.

Credit: CERN
[Reciprocal link back The Large Hadron Collider/ATLAS at CERN]

Is Two Million Gigabytes of Data Enough to Uncover the Mystery of the Big Bang?


Here’s a little clip about the Grid Computing facility that nabs and stores the data from the CERN Hadron Collider project.  Having forgotten 99% of my college physics math I still do not understand why it takes such massive power to analyze data from particles so small that, if they were dollars, you could pay off the US national debt with a grain of sand worth of them.