Posts filed under “Corporate Management”
Another edition of our new series: Blog Spotlight.
We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
Second up in our Blogger Spotlight: Michael Shedlock and Mish’s Global Economic Trend Analysis. Mike is one of the editors of The Survival Report, covering stocks and the economy. He also writes for the Daily Reckoning, and co-edits Whiskey & Gunpowder. He also runs stock boards on the Motley Fool, Silicon Investor, and TheMarketTraders. He is an avid photographer, when not writing about stocks or the economy, with over 80 magazine and book covers to his credit.
Today’s focus commentary is called Falling Dominoes and addresses the impact of Housing’s decline on the economy:
The Sentinel is reporting State targeting abusive lenders.
The [Massachusetts] state Division of Banks is cracking down this month on what it sees as abusive business practices by mortgage lenders and brokers.
The agency issued a series of new emergency regulations earlier this month, requiring better documentation from lenders and prohibiting them from pressuring consumers into taking out mortgages they can’t afford or working without their own independent lawyers. It also forced four companies — two of them located Worcester — to close immediately and place all pending mortgages with another, more established lender.
Commissioner of Banks Steven L. Antonakes said in a recent interview that division examiners found a pattern of deceptive business practices by some lenders during their most recent round of company inspections.
"We want to spell out in very plain English to send a message to lenders and brokers that these specific acts, whether they’re very obviously unfair or deceptive, or more subtle, they weren’t going to be tolerated," he said. "And you would put your license at risk by engaging in this kind of activity."
Abusive lending practices can destabilize the entire real-estate market. As an example, he described a hypothetical street containing 10 homes, each worth a certain amount of money.
"If loans were originated for two of those homes, in which the loan was made that the broker knows the consumer has no hope of repaying those loans, very likely the borrower will become delinquent," he said. "In the worst case, the home will be foreclosed upon, and that kind of activity could result in the home being sold for less than its value and before you know it, you have a domino effect."
But the slowdown has also put lenders in a tough position, said Christopher J. Iosua, president of the Mortgage Connection Inc. "When business slows down the way it has in the past six to nine months, new loan originators and those without a strong base of customers do things they probably wouldn’t normally do," he said.
The idea that lenders are doing things they may not have done in "normal conditions" may have some merit for some lenders but when 40% of the loans sold in California before the bust were either stated income loans or pay option arms, I think the idea if more fiction than fact. Anything and everything was done to keep the bubble booming, and that was as I said happening well before the bust.
With every bubble comes fraud. The two go hand in hand and housing is not unique in this respect. We are only beginning to scratch the surface of the fraud that supported this bubble. Lending standards are going to tighten as a result, and will continue to tighten as more and more of the fraudulent activity is exposed. I consider fraud and tightening of lending standards to be two big dominoes that are now falling. Tightening of lending standards was previously discussed in Lending Guidelines / Credit Squeeze and The Blame Game.
Today we start a new series: Blog Spotlight.
We put together a short list of excellent but somewhat overlooked blog that deserves a greater audience. Expect to see a post from a different featured blogger here every Tuesday and Thursday evening, around 7pm.
First up in our Blogger Spotlight: Tim Iacono and The Mess That Greenspan Made. Tim is a software engineer in his mid-forties, living in Southern California. He calls his blog is a "vain attempt to stave off a mid-life crisis, and here’s hoping that it’s going to work."
Today’s focus commentary is called Friends in High Places? and it address the controversey we discussed last week.
Friends in High Places?
Life is always much more fun when there’s a good
conspiracy theory to kick around. When the New York Times starts kicking it
around too, then it can really be
Such is the case with the recent plunge
in the price paid for gasoline by formerly dour consumers leading up to an
election where the party in power is clearly having difficulty wooing the
electorate. It just so happens that the newly appointed Treasury Secretary used
to run the investment bank that controls the world’s most important commodity
index, which seven weeks ago cut the weighting of unleaded gasoline by nearly 75
percent, causing all commodity investments based on this index to sell their
unleaded gasoline futures.
For the same number of buyers, a glut of
sellers means lower prices, and voila! Prices at the pump drop precipitously,
consumer confidence rebounds, and the electorate develops a new spring in their
Or at least, that’s what some would have you believe. . .
What do you think of the new Zune?
That question led to fascinating discussion about Microsoft on Thursday. What they do, how they work, brainstorm, etc. It also covered how Microsoft develops new products (notice I didn’t say innovate).
A few quick thoughts on the Zune: The coolest thing is its owners ability to zap songs back and forth via a Wi-Fi
connection — but those songs expire after "three plays or three days, whichever
comes first," which is kinda poor. The 3 inch screen versus the 2.5 inch on the iPod also looks pretty nice. Other than that, its not a particularly compelling piece of hardware.
Brown? How long til that gets cancelled?
We don’t know the price yet, but I expect it to be in the $249 – 349 range, and a function of how much MSFT is willing to lose/subsidize each unit.
What I found most fascinating about "This Week in Microsoft" were the 3 separate products that leaked out over the past few days:
• The Zune iPod challenger (in classic "steal the other guys thunder" following Apple’s event)
Let’s get a few things straight about Mister Softee. First, forget all the chatter coming from Redmond about innovation. They are now and have always been uttery shameless copycats. They do not innovate; They do not create cool products; They are boring code writing cubicle dwelling drones — and that’s what they should be.
The second thing you need to know about Microsoft: They print money like they were a branch of the U.S. Treasury Department.
That is the bottom line for investors, and the cash ain’t coming from all these other products attempting to recapture lighting in a bottle. Its Windows 1st, Office 2nd, and then a big 4 way tie for SQL, Hardware (mouses etc.) Server SW, and then everything else. All these other products — including Xbox, hotmail, MSN, etc. — are what happens when you have more money than God and still want to be one of the cool kids.
And, they’d probably get just as much criticism if they didn’t make all these attempts at imitating other successful innovators. Otherwise, they would just be a mature company milking their monopoly products until the next paradigm shift came along.
Understand my complaint about Redmond: I don’t begudge them these many attempts to stay relevant and hip, to keep pressing buttons until they find the next thing that works. Hey, after you become one of the most successful firms in the history of Capitalism, it becomes hard to repeat that performance every quarter.
I’m just tired of the bullshit about all their terrific innovations (Spare me the techno-babble about multithreading processors or dynamic ram usage).
To understand how Microsoft got to be the "innovator" it is today, you need to have some background into the psychology of its leadership. My favorite example comes via Robert Cringely
If there is a reason, it has to come from the competitive nature of Bill
Gates as Microsoft’s spiritual and ethical leader. Everything is a competition
to Bill, and every competition has a winner and a loser. Microsoft people have
always been encouraged to see the game, not the consequences, and to win the
game even if winning this way makes no sense.
Let me give an example of this behavior. In the early days of Microsoft, one
of the popular games was to see how late the boys could leave work for the
airport and still make their flights. These weren’t people who were habitually
late, they were playing a game. The eventual winner was Bill Gates, of course,
but to win he had to abandon his car [a new Porsche 911] at the departures curb.
Tht pretty much says it all. They are competitive to a fault — its in their DNA. Its also why they have been such a vast money machine. But please: Spare us the sanctimonious garbage about Microsoft the innovator, and keep the focus on Microsoft the moneymaker.
Here’s some more recent ideas out of the innovation factory: