Crash Explained

HOW A MARKET CRASHES
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Gettin' Winched

+Walter Winchell - bio

+Quotes
Gossip is the art of saying nothing in a way that leaves practically nothing unsaid.

Hollywood is where they shoot too many pictures and not enough actors.

She's been on more laps than a napkin.

The same thing happened today that happened yesterday, only to different people.

Today's gossip is tomorrow's headline.

We must not indulge in unfavorable views of mankind, since by doing it we make bad men believe they are no worse than others, and we teach the good that they are good in vain.

+15 Terms Popularized by Walter Winchell
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Generations

Generations: The History of Amerca's Future, 1584-2069

Be Happy

QUOTES
Success-related happiness is a very short term state.

You have to treat acute suffering before you treat lack of happiness...you put the biggest fire out first.

Neutral (state of the brain), generally speaking, is mildly exploratory, mildly positive...if your basic needs are met and you're satiated, you're going to be mildly curious about your surrounding.

We're too focused on happy...We want the outcome but we don't wish to undergo the process for getting there.

The root to happiness is to be maximally resposive to everything that happens in your life - the good, the bad, the blah - the everything.

Why do we need to be this ideal? No one is perfect.

There are lots of pathologies associated with excessive positive emotion. Mania, for example, is a disease of positive emotion.

Cocaine is unhealthy happy.

People can adapt to environments that are incresingly stressful so that after awhile they can live and survive within those environments.

We can train ourselves to be more present in the moment.

It's a notion that's dying that the brain is set in stone after a certain time.

Stimuli that indicate you're making progress produce positive emotions.

Mindfulness can bring their attention back to the present and help them see the beauty and value of things that are immediately in front of them and that's not trivial.

People are very fragile.

Our nervous systems are tilted to protect us.

There are people that need meds...but they're not everything.

We're starting to see this type of mindfulness practices and contemplative practices being put into the curriculum of K through 12 and it's inevitable now that we're going to start using this type of therapy as a way of developing the mental muscle.

You don't want to limit the options that are available to people who are suffering.

The advantage to the mindfulness training is that it's a non-drug option and because it involves learning it's likely to be more permanent. Also the probability that it's going to produce negative side effects is very low which is something you can't necessarily say about medications.

Play is great.

The Deficit

US Debt [wikipedia.org]

David Leonhardt of The New York Times

America's Sea of Red Ink Was Years in the Making
by David Leonhardt
[The New York Times - Jne.09]

There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.

Mr. Obama — responding to recent signs of skittishness among those lenders — met with 40 members of Congress at the White House on Tuesday and called for the re-enactment of pay-as-you-go rules, requiring Congress to pay for any new programs it passes.

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

How can that be? Some of his proposals, like a plan to put a price on carbon emissions, don’t cost the government any money. Others would be partly offset by proposed tax increases on the affluent and spending cuts. Congressional and White House aides agree that no large new programs, like an expansion of health insurance, are likely to pass unless they are paid for.

Alan Auerbach, an economist at the University of California, Berkeley, and an author of a widely cited study on the dangers of the current deficits, describes the situation like so: “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.”

“And,” he added, “not fixing it is, in a sense, making it worse.”

When challenged about the deficit, Mr. Obama and his advisers generally start talking about health care. “There is no way you can put the nation on a sound fiscal course without wringing inefficiencies out of health care,” Peter Orszag, the White House budget director, told me.

Outside economists agree. The Medicare budget really is the linchpin of deficit reduction. But there are two problems with leaving the discussion there.

First, even if a health overhaul does pass, it may not include the tough measures needed to bring down spending. Ultimately, the only way to do so is to take money from doctors, drug makers and insurers, and it isn’t clear whether Mr. Obama and Congress have the stomach for that fight. So far, they have focused on ideas like preventive care that would do little to cut costs.

Second, even serious health care reform won’t be enough. Obama advisers acknowledge as much. They say that changes to the system would probably have a big effect on health spending starting in five or 10 years. The national debt, however, will grow dangerously large much sooner.

Mr. Orszag says the president is committed to a deficit equal to no more than 3 percent of gross domestic product within five to 10 years. The Congressional Budget Office projects a deficit of at least 4 percent for most of the next decade. Even that may turn out to be optimistic, since the government usually ends up spending more than it says it will. So Mr. Obama isn’t on course to meet his target.

But Congressional Republicans aren’t, either. Judd Gregg recently held up a chart on the Senate floor showing that Mr. Obama would increase the deficit — but failed to mention that much of the increase stemmed from extending Bush policies. In fact, unlike Mr. Obama, Republicans favor extending all the Bush tax cuts, which will send the deficit higher.

Republican leaders in the House, meanwhile, announced a plan last week to cut spending by $75 billion a year. But they made specific suggestions adding up to meager $5 billion. The remaining $70 billion was left vague. “The G.O.P. is not serious about cutting down spending,” the conservative Cato Institute concluded.

What, then, will happen?

“Things will get worse gradually,” Mr. Auerbach predicts, “unless they get worse quickly.” Either a solution will be put off, or foreign lenders, spooked by the rising debt, will send interest rates higher and create a crisis.

The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.

That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.

E-mail: Leonhardt@nytimes.com

COMMENTS
Allocating blame is interesting media churning, but we need a credible game plan...and that is the essence of the President's responsibility. I know you love the guy, but when is the heat going to be applied?

No mention of the defense budget. Don't we all wonder why European countries can afford such generous social benefits? Because we're paying for their defense.
There's a huge chunk of savings to be had if we could just stop playing World Policeman. Of course defense company lobbyists will never let that happen.

I'm pretty certain that any type of 'meaningful' healthcare reform is going to take a lot more than a quick technical fix.
How about starting things off by deprogramming all the physicians out there who have built up some ridiculous sense of entitlement?

Republicans do not want to acknowledge their role over the last decade in creating this fiscal mess. If you look at states with Republican governors and legislatures you would see that they are performing worse than their democratic counterparts as well. Florida, Nevada, California and Georgia lead the nation in bankruptcies, foreclosures and unemployment. And they have one thing in common: Republican governors.

Maybe it's time to start questioning why the US spends more on "defense" than all the other countries of the world COMBINED. Are we really so threatened everywhere, by everyone, that we need over 700 military bases around the world? Are billion dollar bombers really needed to defeat a bunch of guys living in caves (al Qaeda)? Or has "defense" become the biggest welfare program of all, always looking for new enemies to justify its existence?
Maybe if we only had maybe 400 military bases around the world and a few less high tech systems we could afford to provide basic healthcare for all our citizens for free. Just a thought.

Its frequently asked, " When will the foreigners decide to stop funding our debt?". At which point we will be on our own and forced to live with the decisions we have made.
But here's another one: At what point will the next generation say ' I am not funding the baby boomers retirement'? Or 'I am not having my kids pay for someone else's retirement'?

The reason we are fighting wars in three different countries and bailing out billionaires all the while being broke is not because of the right or left; it is because of the right AND left! As long America continues to mindlessly categorize itself politically as either a Republican or Democrat nothing of true substance will change. Bankers will continue getting bailouts, the poor will be the sacrificial lambs of our military while Lockheed and the like rake in record profits, and the rest of us will watch as our government robs us blind by funding the aforementioned.

It was Herbert Hoover who said: "You know, the only trouble with capitalism is capitalists. They're too damn greedy."

I guess Republicans are not the fiscal conservatives they claim to be considering they controlled both houses of Congress most of the Bush years.
__________________________________________

A Conversation About the Growing Fiscal Deficit
QUOTES
NOT to put too nice a word on it, the long-term prospects just look horrendous, just terrible. And we’re going to have to make some major fiscal adjustments so that those projections never come true.

THE very large deficits we’re running in the short run are going to bring the long
run closer to us a lot faster than we had thought.

IF we don’t act very soon, the capital markets are going to make us act.

IT turns out those Clinton era forecasts were just too optimistic.

THERE isn’t much stomach among either members of Congress or, quite frankly, the
American public, I don’t think, for this kind of serious deficit reduction.

BOTH Democrats and Republicans in Congress have rejected relatively small
attempts to raise revenue coming from the White House. And so, Congress seems even less serious about this than the administration does.

THEY were taking little baby steps, and Congress was saying, no, no, no, we like this program too much.

THE real way to reform health care is to put stuff in place that says, you know what, these services you’re providing aren’t actually making people healthier. We’re going to stop paying for them.

WHEN you see Republicans in Congress holding up charts saying that Obama would increase the deficit by this huge amount, what they’re often not saying is that most of the increase in that deficit is in policies that Republicans themselves support.

THE kind of deficit that you see year to year doesn’t fully capture the extent of this problem.

HE (Obama) sort of backed himself into a corner with this whole notion that he will not raise taxes for people making less than $250,000 a year, which is a huge portion of the population, and that’s going to make it very hard to raise taxes in a way that will help pay for these Medicare and Social Security promises.

THE real conundrum we face is, by the time they finally realize that we need to do something about the problem, the time to do something about the problem will have passed. We’ll then be in a crisis, and our options will be limited and the changes we make will be very painful.

I THINK it’s the politics more than the economics that is keeping them from acting on it (the deficit).

WE don’t want to actually have tax increases or large spending cuts now. But start laying the ground work for these things to occur, starting in a few years. There is certainly nothing wrong with that. I think that would actually have a positive effect on the state of the economy right now.

My First Million

Sprouting business card



Kevin Mitnick's business card is a break-out lock picking kit



MY FIRST MILLION

SIMON CALVER
“Three or four years ago, when I spoke to people about LoveFilm.com, they’d look at me in a strange way and wonder what my night-time activities were on the internet!" Simon Calver, boss of DVD rental website LoveFilm.com, explains how he's shaken up the film industry and created a £70m business.

[Quotes]
Brands were in the blood.

The moment you find an issue, fix it...issues in business are not like wine: they don't improve with age.

Do you really understand your customers and why they're using your product?

Grow your resources as your business grows.

If you're a small, nimble, light organization you can actually have a bit of fun!

LoveFilm.com


HIRO HARJANI
When Hiro Harjani stepped off the plane from India, he had no contacts, no cash and zero business experience. So how on earth did he build a global fashion brand with 5,000 international trade accounts, sales of £25m and celebrity endorsements from Lisa Snowden and Helen Mirren?

[Quotes]
There was a hunger and I think that hunger to do, to achieve something is very important.

If I'm going to sell it one store, I might as well sell it in 500 stores or 5,000 stores.

It's not about chasing the buck...everything has to be in balance.

Find a mentor: it'll save you a lot of headaches and mistakes.

Most entrepreneurs don't give up.

You must look after your health. Budding entrepreneurs must look after themselves.

(Re: The credit crisis) The government and bankers are to blame. Go to them (bankers) for a £5k loan and they’ll say, “No, we can’t help you”. But they’ll give billions to subprime people and lose everything in one shot.
And look at the brains of these guys. Instead of helping the individual in the country set up mortgages and businesses, they go and lose in one chunk the wealth of the nation.

The day you decide to stop growing is the time to go.

Aftershock


JAMES MURRAY WELLS
"We're recession proof. You need glasses – and we deliver them cheaper than anyone else. I'm bullish and so are our investors. We've just raised another £2.5m." James Murray Wells, the young entrepreneur behind Glasses Direct, explains why his start up caused chaos on the high street and how he's beating the downturn.

[Quotes]
With the university ecosystem you have all the resources you need: marketing research materials, the computer hardware...

All we were doing was shuffling around data - we'd never even seen the glasses.

I kicked my sister out of her bedroom to make more room for office space.

We'd have a captive audience with our flyers on the train all the way to Bristol International Airport.

On the internet you can see in real time what is happening.

We did anything we could to make people talk about the business.

They (high street sellers) were shocked that we were exposing them...we even had hate mail from opticians.

The industry's beginning to realize that the internet's here to stay and you can't be ostrich-like about it.

Everyone loves giving advice...you can literally go to some big shot and they will support you. They will.

Don't get sentimental about the idea...if it's not good, or proven wrong don't be afraid to abort it.

Look at some of the best businesses out there: Amazon, YouTube, Facebook - these are businesses that came out of garages, university campuses.

The customer is the boss.

Be objective in terms of funding. Your business has a life of its own and you're there to support it as an entrepreneur. We can add to it, we can help it grow, but it will grow and you mustn't reign it back...don't hold back, let your business fly.

We eat credit crunch for breakfast.

Internet businesses can grow a lot more virally than offline ones.

Glasses Direct


WILL KING
"I didn’t have the £2,000 to bottle the first set of oils, so I spent two weeks hand-bottling 9,600. My girlfriend did 500, even her ironing lady did 100!” With sensitive skin and no money, Will King set about competing against Gillette. Hear how the “King of Shaves” took on the industry giants and how he plans to build a £200m-turnover business by 2012.

[Quotes]
It was a question of persistence. Phone persistence. Picking up the phone and convincing the buyer.

It's always hard to see the faults in yourself.

You've just got to get on and do it.

Passion, persistence, working hard, timing and good luck's important.

(On how he got where he is today) 15 years of foundation building and getting unique, differentiated, patented, innovative, cool, funky products aligned and then massing them via a conventional piece of market growth: scaling it, advertising it etc.

You've got to be a bit different. You've got to zag where they zig.

King of Shaves


JAMES CAAN
"I didn’t have a lot of money. I didn’t own a house. And I didn’t have any savings. So I went to the bank and tried to convince them to give me a loan. They turned me down."
He's a serial entrepreneur, a venture capitalist and the multi-millionaire star of Dragons' Den – but even the smooth-talking James Caan had trouble funding his first business. Here the CEO of private equity firm Hamilton Bradshaw talks about start-ups, set-backs and success.

[Quotes]
Instinctively I always knew I wanted to do my own thing.

Because the product - the service - was quite unique, it took off literally from the word "go".

It was all about having the ability to craft your own journey.

I could have gone to my parents (for money) and I didn't because they wouldn't have understood the business.

That word "unsecured" stuck in my mind...basically I got three credit cards and got £30,000.

As an entrepreneur, I think what drives you is fear, although that's the complete opposite of what you see because when you look at successful entrepreneurs, you think what drives them is their confidence, their optimism, etc., but actually deep down inside every entrepreneur I know is driven by the fear of failure.

In business you must never believe it will last forever, you must never get complacent because any business that becomes complacent and thinks it's arrived, is on its way down.

(Re: the economic downturn of '99) For the first time as an entrepreneur I could see the business collapsing, I could see it actually disappearing...1,500 quid (profit) in a year is not amusing.

Business is a very lonely life: sometimes you're faced with making decisions you've never made before.

Everybody you go to has an agenda.

I don't spot successful businesses, I spot successful people.

You only do things if it makes a difference.

Hamilton Bradshaw


SARAH McVITTIE & THOMAS ROBERTS
"We went from earning a big, fat corporate salary to cycling everywhere and living off beans on toast." Motorbike fanatic Sarah McVittie and self-confessed “mobile phone tart” Thomas Roberts tell us why they quit their high-flying City jobs to set up question-and-answer SMS service Texperts – and why they still don't flash the cash.

[Quotes]
His main advice (on starting a business) was just to do it earlier - the earlier the better, in terms of not having mortgages and dependents and children and very high-paying jobs which make it difficult to want to leave that security and that salary behind for something where you really can't tell what's going to happen 6 months down the line or sometimes even one month down the line.

I'm not scared of failing. I'm very passionate about doing something I believe in.

We only had one bowl in the office so we had to take turns using it to eat the salad.

The first person you see is probably the least likely to give you the money.

With the banks, we didn't really understand what their real criteria were - it wasn't about believing in the strength of the business, it was about ticking the right boxes on the forms they had to fill in internally to make it happen, and it was about what questions they needed to answer on the internal form that we never saw...understanding that internal process was key to getting that (funding) to happen in the end.

If anyone listening to this doesn't know what "trading" and "solvent" is go and look it up before you start a business.

"The only wrong decision is no decision" was very good advice.

Another skill is learning to switch off - if you don't do it ever it can really get you down.

They will invest in you because you have real belief and passion (about what you're doing).

You don't need to invent something that's never been done before or come up with a concept that's brand new - the key thing is to do something really well, or slightly differently or just be passionate about it and put more energy into it.

If you try and fail it's not failure, it's just the next step to how you get there.

You're not carrying anybody because everybody's pulling in the same direction.

If you don't enjoy being at work on a daily basis then it's really going to be difficult.

Textperts Chief Sarah McVittie Answers a Call
Forget your 3Gs, WiFis and what-nots for a minute, Textperts does exactly what its name suggests: text any question you can think of to McVittie's army of experts and they'll text you back with the answer, pronto. It will cost you a pound, charged to your mobile bill, and you'll need a mobile with a UK SIM card.

"One thing you learn very quickly is that the information is never worth a quid, but it's the information in the context of where you are that's worth a quid," says the officer's daughter, words quick-marching at the double. "People's information needs are very different when they are out shopping, say, to when they are at home online." [...]

How much nicer, thought McVittie and her colleague Thomas Roberts, if someone had done the grunt work for them. "Part of our jobs as analysts was to locate information, and we found it very frustrating that we would spend all of our time locating information when we could have been doing more interesting work. We couldn't find a service that could deliver it."

The duo secretly commissioned research from poll company NOP to discover whether there was demand for such a service, one that would provide bespoke information for people when they were out and about. And the survey said yes. [...]

Such is the demand to be a Textpert that, to save trawling through stacks of applications, McVittie has set up "The Text Factor" on the company website, a test that roots out the best candidates. Only 1.5pc of applicants pass.

"These are very, very bright, amazing, awesome people," beams McVittie. "And they are quick. We get lots of PhD students, lots of mums who are very well qualified and don't want to commute, want to work from home and have extra income and they can do from 15 minutes to as much as 15 hours a day. And it's incredibly environmentally friendly." [...]

With a user demographic of cash-rich, time-poor 19 to 35 year olds, McVittie says there are big opportunities for Textperts to evolve. She is coy about exactly how but admits one option could be to offer advertisers so-called sponsored links, displayed alongside Textperts' answers.

Well, it's a model that worked on the fixed-line internet. Ask Google.

Acquisition of Textperts to Accelerate 118118 Text Growth
London - Dec.17, 2008
The Number UK Ltd, subsidiary of kgb (www.thekgb.com), and operator of the nation's most contacted number, 118 118, today announced it will acquire Texperts, the UK text information business.

Ten Trillion and Counting

Ten Trillion and Counting

"Let's imagine a scenario where the politicians would love to keep the government going, but they can't because no one will lend us money." -Greg Ip

"I was happy to be fired at the end of November, 2002. I didn't want to be a part of something that I thought was fundamentally wrong." -Paul O'Neill

"We borrowed money from China, to give tax cuts to the best off people in our society and leave our kids paying the bill for a war we chose to fight - that was really unprecedented." -Matt Miller

"One of the largest tax cuts in American history was passed with Dick Cheney casting the deciding vote."

"The prescription drug benefit will go on forever; in the end, it's more expensive than the war in Iraq."

"During his first five years as president, George Bush never vetoed a spending bill."

"Fiscal conservatives in his (George Bush's) own party accused him of being the biggest spender since World War II."

"The future is clouded by one inescapable fact: more Americans are living longer and as they age, the government is obligated by law to spend more and more."

"The national debt will double in 8 years."

"You can get away with over-borrowing and saving nothing for decades, but then when it goes wrong, you're in trouble - big trouble - very quickly, and it's hard to get out of." -Clive Crook

"Meanwhile, in the first 3 months of this year, the US government has borrowed another $493 billion dollars."

Debt and the Bush Years
David Wessel (The Wall Street Journal):
President Bush got a lot of ridicule for saying what everybody should do after 9/11 is go shopping. I'm a little less harsh on that than some people, because I think one of the things that he was saying is we have to lead a normal life; we can't let the terrorists scare us into hiding under our beds.
But in retrospect, it was one of those signals to Americans that you can spend your way out of everything. Go get your credit card, go get another mortgage, and go and spend and spend and spend. There was never any attempt during the Bush presidency to slow that down.
The president declared, for instance, that it was his goal that every American should own a house. Well, every American shouldn't own a house. Some people don't make enough money to pay a mortgage and maintain a house, and they should rent. And they shouldn't be made to feel that there's something un-American about not having a mortgage.
But the pressure to lend and to get a mortgage was so great that we ended up lending to a lot of people who couldn't afford the mortgages. And they couldn't pay them back, and now they lost their house.

Blogging the Stimulus Bill by Steve Coll

ShovelWatch
Tracking the stimulus from bills to building.

The Tyranny of Dead Ideas
From Publishers Weekly:
If Fortune columnist Matt Miller's eerily prophetic book had come out earlier, it could have served as a wakeup call for Wall Street leaders and Washington, D.C. lawmakers before the failure of several venerable financial institutions required government bailouts. The author's prescient observations make a persuasive case for how an American attitude of entitlement and outdated beliefs about government, education, taxes, business, corporate excess and health care threaten our national well-being and our position as a world leader. The author denounces such cherished and longstanding beliefs as Your Company Should Take Care of You, and The Kids Will Earn More than We Do, and examines their historical provenances—for example, he traces the adoption of pensions to the early 20th century, when employers like Proctor and Gamble and G.E. acted as feudal lords offering benefits to recruit and retain employees—strategies that are now strangling these same corporations at the expense of global competitiveness. Rather than a petulant indictment of our political and economic myopia, this book offers a fair-handed critique.

Two Tiers

Hurricane Katrina survivors_Aug. 05
(nationalgeographic.com)


My White Privilege by Naomi Klein
NOW Magazine - Dec. 06
(Excerpt)

I get sent to a ritzy hospital with no patients while poor New Orleans is left to die

I was in New Orleans during the flood with Avi Lewis, my husband, and my friend Andrew Stern. We were driving in a rental car, and we kept getting lost because all the streets were flooded. Andy started thinking he was in a video game, a post-apocalyptic environment, weaving the car around the debris. Then we realized it was five minutes to 6, and 6 o'clock was curfew.

We got into a collision. We spun out and drove right through the stoplight, which wasn't working because there was no electricity. We went through a wrought iron gate and landed in an independent coffee store, kitty-corner to a Starbucks. And someone said, "Did you want to hit the Starbucks?"

The other car was a cop car, and that's how we found out we were in the South. Andy was arrested, Avi was face down on the ground, being warned what happens when you hit a cop in the state of Louisiana.

I was strapped to a gurney in an ambulance, trying to convince the driver to please not take me to a hospital, because I'd been watching the news and seeing these images of what hospitals were like during the flood.

Charity Hospital had no electricity, and incredibly courageous health care workers were trying to keep their patients alive, watching helicopters airlift everybody but them. It's the only hospital that provides emergency services to the poor in New Orleans - or provided. They haven't reopened Charity Hospital, along with many public schools.

I'd seen the awful images and actually gone to one of these clinics where it was like Dante's Inferno, with elderly people falling out of wheelchairs and no one helping them. I was terrified about where they were going to take me.

So I was negotiating with the ambulance driver. I had a concussion and kept slipping in and out of consciousness. "Just drop me off at a corner - you know, I'll walk. No problem."

The next thing I knew, I was at, from what I could tell, a spa. Called the Ochsner Hospital, it's apparently quite a famous private hospital. That's where they decided to take us because we're white. I was in a private room in three minutes flat.

I was cared for by three nurses, a senior doctor and a medical intern. I have never in my life received such attentive care, nor have I seen anyone in my family get such attentive health care. This was in the middle of the largest natural and humanitarian disaster in American history.

The doctors were playing cards in the middle of this hospital, protected by an army of private security who were there, as they said, to keep the junkies out. I couldn't get out because it was past curfew, so after I got a few stitches I tried to interview the staff. I asked my intern, this young guy in his 20s, if he worked the hurricane, and he said, "No, thank god, I wasn't on duty. I actually live in the suburbs."
"Did you go to any of the shelters?" I wasn't trying to be a bitch, I just assumed that someone who'd just learned how to be a doctor would want to help.
He looked at me, confused. It actually hadn't even occurred to him to go to one of the shelters. Just as it hadn't occurred to any of the doctors and nurses in the hospital that, instead of staying in their fortress, dealing with three or four patients, they could be out there.

What we saw with Katrina was an apartheid state where the wealthy unite, where those with credit cards got into cars, drove and checked themselves into motels. This is a two-tier system. They had already accepted the idea that some lives are worth more. And once you do that in your health care system, you are mentally prepared to do that in a major disaster.

It's a heardening of hearts that's required on a daily basis to run a luxury hospital in a city like New Orleans. It's the same heardening of hearts that let people be abandoned on their rooftops by their country.

Yelp.com

Jeremy Stoppelman_co-founder of Yelp.com_nytimes.com


nytimes.com / May 21-08
by Dan Fost
(excerpt)

Yelp is a San Francisco Internet company that enables average folks to write reviews of everything from restaurants to plumbers to parks.

Yelp rarely removes reviews, even when advertisers complain, preferring to let the crowd have its say.

According to Nielsen/NetRatings, 2.5 percent of all Internet users in March went to Yelp.com, and traffic there quadrupled over the last year.

Greg Sterling, of Sterling Market Intelligence, attributes Yelp’s success to its young, urban demographic, as well as to starting in San Francisco and entering other markets gradually, rather than rolling out nationally all at once. Yelp now has community managers in 17 cities. It also introduced some social networking and transparency, allowing users — Yelpers — to post profiles and follow each other’s activities.

Among the biggest targets in Yelp’s sights is the multibillion-dollar Yellow Pages market. “Yellow Pages has always been a pay-to-play environment,” Mr. Stoppelman said. “But now the power has shifted from businesses with money to little guys who perform. The reason is because that’s what’s good for the consumer.”

In other words, consumers who once chose a business because it had the biggest ad in the Yellow Pages are now just as likely to make that choice on the basis of favorable reviews from customers. “Ads aren’t playing that role,” Mr. Stoppelman said. “We’re about getting that information out there.”

Mr. Sterling cites a study from the ad agency McCann-Erickson that showed that local advertising in all media was a $100 billion business in 2007. While the $100 billion total has stayed relatively stable, Mr. Sterling said the Internet’s share was growing rapidly.

Pete Blackshaw, an executive vice president with Nielsen Online Strategic Services, said Yelp had created a site where people’s reputations matter. As on eBay, where buyers and sellers build reputations based on their dealings with others, Yelpers can get a complete view of other reviewers’ activities. “That counts for a lot,” Mr. Blackshaw said. “It keeps the abuse to a minimum.”

Russel Simmons, who is now the company’s chief technical officer, has written more than 100 reviews on Yelp, and Mr. Stoppelman more than 700 reviews.

“We let consumers that have actually patronized the business share their thoughts freely,” Mr. Stoppelman said. “We’re real people. We write real reviews.”

'The Coffee Was Lousy. The Wait Was Long.'

Gawker Comments

Nov.6-08
You know, with more and more of my friends being fired, it's totally increasing my productivity. I'm so petrified of it happening to me, I've been working harder than ever. Anyone else doing that?
@__: If you shoot one horse, don't the rest run faster?
@__: Who fires HR people? The God of Karma?

Why do people still bring personal effects to work? Seems insane in this environment. My desk is spotless and empty - my exit will be the quick rustle of my coat on my way to the bar.
@__: I've got a couple of tons of engineering books and papers. Other than that, just pics of the kids to keep the gun barrel out of my mouth.

Yea, my family in Israel were part if Irgun. In fact, my aunt's parents met in jail! Her parents also happen to be the nicest most benign people I have ever met.
And before people start bugging out, guess what? We did this, too. It's called the American Revolution.
@__: You know, I bet there are a lot of nice and benign Palestinians who are part of or sympathetic to Hamas. But we're trained in America to view them all as "evil."
I wonder what Folke Bernadotte's grandkids might think about your "nice" and "benign" relatives? He was a hero during World War II, negotiating the release of 10,000 Jews from concentration camps -- saving their lives. After the war, he was deputized by the U.N. to forge a cooperative settlment to the exploding situation in Palestine. Of course, Irgun and the other Zionist terror groups wanted no part of a "cooperative" settlement -- they wanted all of the land. So they assassinated Bernadotte.
Such lovely people.
@__: Zioterror doesn't count, much less exist, for Americans.
@__: Exactly. I wonder what would happen if every Palestinian who died at an Israeli checkpoint while trying to get to a hospital received the same coverage in the U.S. media as every launch of a crude rocket from Gaza.
@__: You are really treading on thin ice here. Those rockets were launched every fucking day I was in Israel this year and the media did NOT report it. Stop saying the media is biased towards Israel - IT IS NOT. It is biased towards Palestinians. Visit Israel before you run your mouth.
Aren't there special places you can comment? Like, say, some anti-semetic website? You forgot "Death to Israel" in your little rant.
@__: Please, please, please do not reduce all criticisms of Israel to anti-semitism. __ did not advance an anti-semitic argument. I know you have a vested interest in Israel (family, right?), as do I, and I hate to have to plead, but can we please not go down this path?
@__: denouncing zionist terrorist groups is not the same thing as being anti-semetic and the sooner you figure that the fuck out, the sooner you'll stop coming across as a raving racist every single time this topic comes up.
@__: Shut the fuck up about your commingling of anti-semitism and criticism of Israel. Nobody cares about your emotional connection to the land and that special feeling you get from seeing Jeff Seidel wandering around HaKotel no Friday afternoons. That type of kneejerk bullshit is a bigger obstacle to meaningful dialogue than anti-semitism is. @__: You make some sound points, but to be fair, the checkpoints wouldn't be chokepoints if they weren't targeted by suicide bombers posing as dialysis patients and whatnot. Doesn't make them just, nor does it mean that the media bias isn't a problem, but it is helpful, like my homeboy Rashid Khalidi to consider some of the Palestinian contributions to the problems.
Anyway, fuck you both for dragging me into this.

Nov.20-08
2:06 - Puppy cam perspective makes Shibas look like deliciously browned breakfast sausages in a large, round pan. POPE NOW HUNGRY FOR SAUSAGES.
2:09 - Shibas motionless. The anticipation of motion leads me into a trance like state where I understand the Tao. Motion without motion. Energy without movement. Always ready to move but still, like the clarity of water in a deep pond. Still hungry for breakfast sausages though.
@__: They're all lined up sleeping (again) but I think they left a gap for you to crawl in.

Pink slips are the new black.

You left out the part where one CEO raised his hand and Rahm leapt from his chair, hurled it across the room, kicked the CEO next to him and shouted "Does it look like I'm anywhere near finished spreading your wealth yet?!?".

Nov.22-08
I saw this at 7:00 PM on Friday night - the epicenter of the teenage girl vampire riot. My thoughts on the experience:
1.) If you're a teenage boy, go see this. Girls your age will outnumber you 20:1. Free advice: put on a black hoody and go stand in line for this.
2.) Virtually every scene involving Richard Pattinson arriving or doing something sexy/heroic will elicit a shriek from the audience. If you can't stand that, go when the little 'uns are past curfew.
3.) Suburban/semi-urban parking will actually be quite good, because most of the audience is being dropped off.
4.) The movie is 121 minutes, and you will feel every excruciating second. The book is interminable, and the movie has opted to keep that dynamic. Bring your iPhone/BlackBerry/laptop/cyanide.
5.) Kristen Stewart is the most wooden actress I've ever seen get this much screen time. She has fewer facial expressions than Ben Affleck.
6.) For the menfolk/ladies in search of lipstick: they have a tremendously attractive woman named Ashley Greene playing one of the vampires. Perk up if you hear the name "Alice." She's off-the-charts beautiful.
7.) You know what the star of this movie is? The Volvo C30. The car had me swooning. Perk up if you hear tires.
8.) Drink beforehand. It helped.

Nov.29-08
Nearly 200 Dead
I suppose it depends on how you define terrorism, but 200 dead is a drop in the bloody bucket of India's ongoing Hindu-Muslim-Christian circular firing squad. [...]

Dec.05-08
I go to the same pubic hair combover stylist as Mr. Trump, and I can assure you that there is at least one bill he pays on time every week.
But for serious, this might actually be close to the end of the road for Don. His "borrow-default-sue" scheme has made it impossible for his to do business in Atlantic City. Banks won't loan to him anymore without collateral, and his only collateral is real estate which is now all underwater from previous borrowings/equity lines. Service providers (IT, construction companies, etc.) will only do work on his casinos if they are paid in advance because he's burned so many people with defaults. The Chicago building loan probably came on the heels of the success of the first Apprentice, but that gravy train dried up pretty quickly.
I'm probably full of shit, but I really, really hope I'm right.

Jan.23-09
I have seen the good and the awful side of Six Sigma. In quantifiable verticals, I felt some of the managers and practices might be good medicine for smokestack era companies that have become torpid.
But, in creative, agile, rapid response solutions practices, Six Sigma zombies were the numero uno poison pills in the cocktail.
I had to make an agreement with some of the older consultants that maintained their own client books that if we got hassled and blocked by the Six Sigma koolaid, we would break some kneecaps in the parking lot.

Feb.08-09
Christie's Auction Girls
These ladies will be laughing all the way back to mommy's house when Christie's lays off hundreds of staff this year, largely because... wait for it... all the finance money that was fueling the art boom has dried up.
I wonder if they and their ex-banker friends talk about how many jobs Christie's could have saved if they hadn't given alpha-finance-douche Dick Fuld $20 million worth of guarantees on works from his collection that had to be bought in by the house during last fall's disasterous sales? [...]

Apr.27-09
What I don't understand, though, is why Conde Nast insists on neglecting the only hedge it has against the decline of print. With the resources they have, they should be making loads of money off the web--and putting the rest of us out of business. I get that they don't necessarily *need* to (i hear you, Peter Feld) but if the opportunity is there, why not take it?
@__: Hi- I can shed a little light here. The reason that Conde, and every other magazine co, are effectively absent from online as a cultural force is that they have a problem accepting the narrow (if any) profit margins that online media businesses return. At this point in time, readers won't pay at all and ad agencies will only pay less than they did last year (per individual). As the job of the heads of these companies is to grow profits, not just audience, you really won't see them making the kind of websites that they are capable of until there's real money to be made. numberwrangler
Peter Feld: @__: That is a good analysis. To be fair to Conde Nast, few if any other print publication companies have really solved the web puzzle. They get too obsessed with making print and web "work together" when they don't, and can't - if there's one clear fact about the web audience, it's that they don't want your magazine, and if there's one clear fact about the print audience it's that they aren't interested in your website. Audiences are more stratified by media habits than they are united by common interests.

Gawker Popular

Max Keiser

Interviews on Al Jazeera English
Sept.08

The American Dollar is Dead

American Dollar = Toilet Paper


QUOTES

The Indian people could be the richest people in the world when this crisis is over.

Hank Paulson is a financial terrorist.

These guys will stop at nothing to keep their dirty laundry a secret.

What auditing companies?!?

These guys are wholesale thieving of trillions of dollars.

The US dollar is the only tether between the rest of the world & this criminal syndicate on Wall Street headed up by Hank Paulson.

Hank Paulson is taking the entire US economy into oblivion.

They're not going to stick around in the US when the Americans are going to have their pitchforks ready to go in & take back their country.

Under the Constitution, Hank Paulson qualifies as a tyrant.


Interview by Press TV (transcript)
Sept.20-08
US Dollar 'Backed by Bananas'
"The problems are here but the people who created this nightmare are gone. Cheney has already got his Halliburton corporation headquartered in Dubai. He's already out of the picture. All these crooks are going to be leaving this country. They're not going to stay for all of the rioting there's going to be in America."

Who's Max Keiser?

Kevin Phillips

Interviewed on Bill Moyers Journal
re: The Economic Crisis
Sept.08

Part 1

Part 2

Part 3


QUOTES

This is going to be a big one.

Ordinary Americans don't have much of a role in this.

This is the denouement of a 25-year debt buildup which was undertaken mostly by the financial sector putting themselves on steroids to get bigger & bigger & bigger.

Moyers: You say it's the greatest story never told.

They (the financial sector) are the economy at this point.

The middle class is shrinking.

The financial sector has hijacked the American economy.

Finance has been preferred as the sector that got government support.

The rise of the financial sector is the rise of the debt industry.

Greenspan would do nothing to disturb finance...basically he gave finance what they wanted.

The people who were the arsonists are now racing to show up in fireman hats saying "We're going to solve it."

We're about halfway through.

Finance can bet on anything...they have figured out new ways to gamble.

I think it's (the economic crisis) another variation but on par with the '30s.

I don't think we have a sound economy at all. Not remotely, at this point.

He (Obama) doesn't seem to have anything very specific to say - that's part of the problem.

I'm sick of Washington.

We are on the wrong track.

Couple of decades coming up which are going to be very difficult for Americans.

A lot of people in the financial community that want to get rid of it (Social Security).

A lot of Democrats in the labour movement are very nervous about Obama. They see that the flesh of The Democratic Party carries a lunchbox but the new soul wears a pinstripe suit.

Who's rescuing the laid off worker? Nobody's rescuing them.

You don't rock the boat. You pretend it's a sound economy.

BusinessWeek Magazine - Oct.20, 2008

THE BUSINESS BOOM UNFOLDING DOWN ON THE RUSSIAN FARM by Jason Bush (excerpt)

Farming in the area (ie.Usman, rural district 300 miles south of Moscow), and across Russia's traditional grain belt, is making a comeback. Commodities traders, food processors, shipping outfits, and others are buying up farms, hoping to cash in on high global grain prices. These new investors are pouring billions of dollars into land, then revamping management and technology in operations that span thousands of acres. Today, large agricultural holding companies control some 10% of Russia's farmland, up from 4% in 2003—though in the most productive areas they have more than a quarter of the land, according to the Institute for Agricultural Market Studies in Moscow. "There's huge potential here," says Robert Coleman, a South African who oversees farms in the region for Agro-Invest, a Moscow group that owns 100,000 acres around Usman. "We've invested in big machines, are applying Western ideas, and are getting great results."

It's easy to see why there's so much interest. The U.N. says Russia has some 480,000 square miles of arable land—an area more than twice the size of France. That's 8% of the world's total, much of it highly fertile "black earth." But owing to decades of agricultural mismanagement, Russia accounts for less than 4% of global crop production and is a net food importer.

THE NEW AGE OF FRUGALITY by Steve Hamm (excerpt)

On a shady lane in New Hope, Pa., a quiet revolution in American culture may be taking shape. Here, a family of four lives in a white, colonial-style house in a manner that once would have been considered All-American but more recently has been seen as just plain weird: They're frugal.

Meet Leah Ingram, Bill Behre, and daughters Jane, 13, and Annie, 11. They walk most everywhere, they rarely eat out, they sometimes buy clothing at consignment shops, and they turn the lights off when they leave a room.

Theirs is no hard-luck-in-a-recession story. The Ingram-Behre family is solidly middle-class, fully employed, and not especially threatened by the conniptions gripping Wall Street. Behre, 43, is a dean at the College of New Jersey, while Ingram, 42, is a successful freelance writer and etiquette expert. They have no credit card debt.

That's now. A little more than a year ago, the family was ensnared in America's consume-at-all-costs culture. During the days of soaring home prices and easy credit, they took out a $101,000 home-equity loan on a previous house and spent lavishly on a lifestyle upgrade—going on three cruises in two years and taking the kids on annual pilgrimages to Disney World. "After 9/11 it became patriotic to shop, and we became as patriotic as anybody," laments Behre, sitting in the dining room after a meal of chicken stir-fry—washed down with tap water.

Ingram and Behre are harbingers of a dawning Age of Frugality. People who overconsumed during the past decade are now rejecting extravagant lifestyles. They're spending less, and more wisely. Some are getting their finances in order. Others are fearful of losing their jobs, shocked by investment losses, or hunkering down amid the general uncertainty.

The penny-pinching is already showing up in the numbers; this quarter could mark the first fall in personal consumption in 17 years. And with credit tight and Americans loaded down with $2.6 trillion in personal debt, consumer borrowing dropped in August, the first such contraction since 1991. Menzie D. Chinn, who teaches economics at the University of Wisconsin, figures consumers won't be in a position to spend freely for five years.

Which brings us to what John Maynard Keynes called the paradox of thrift. What's good for the individual, argued the famous economist, can ignite or deepen a recession. But that won't deter the newly thrifty. "I can't help the economy," says Kim Schultz, a resident of hard-hit Avoca, Mich., who with her husband, Jon, owes $40,000 in credit-card debt. "I've got to help myself." On the other hand, this newfound austerity could—emphasis on could—rewire Americans as savers rather than spenders. And that would help put the economy on a sounder footing over the long haul.

COSTCO'S ARTFUL DISCOUNTS by Jena McGregor (excerpt)

At Costco, where more than 29 million households pay $50 to $100 a year to shop, low prices aren't just a nice-to-have. They're a way of life. Not only does Costco's famously frugal CEO James D. Sinegal cap margins at a sacrosanct 14% on branded goods, he's constantly pushing his buyers to find creative ways to lower prices and add value while getting his managers to crank up their efficiency efforts. Besides the buy-in strategy, Costco has been redesigning product packaging to squeeze more bulky goods onto trucks and revamping processes for moving goods through its depots. Even small tweaks to its well-oiled operations can have a big impact. "If that stuff doesn't really turn you on," says Sinegal, "then you're in the wrong business."

Such tactics are keeping customers' shopping carts full—the $72 billion retailer's sales have been one of the only bright spots in today's brutal retail economy. But they've also been pinching profits. As commodities surged over the summer, Sinegal's call to hold the line on pricing helped prompt Costco to warn in July that its fourth-quarter earnings would be "well below" expectations. On Oct. 8, it announced quarterly net income of $398 million, slightly lower than Wall Street's revised expectations.

But to Sinegal, the short-term earnings pain is worth the potential for long-term market share gain. For one, holding prices low is the best way to protect profits: About 75% of Costco's operating earnings come directly from membership fees, and if prices rose too quickly, some members could flee. In addition, the 72-year-old warehouse club veteran knows that in this environment, Costco's reputation for bargain prices and surprise designer goods could inspire a new crop of warehouse chic devotees. "We should shine at a time like this," he says. "We have always believed that great companies build market share in really tough times."

What Sinegal isn't doing is wavering from the basic model that helped him and co-founder Jeffrey Brotman build Costco into a retail phenomenon. The Issaquah (Wash.)-based company's warehouse model relies on selling core items at rock-bottom prices while scooping up excess inventory from high-end brands. The here-today, gone-tomorrow nature of Costco products tends to foster carts full of impulse buys. The average store does $137 million in annual sales, a volume so high that Costco turns its inventory 11.9 times a year, meaning it often sells goods before it technically has to pay its suppliers. Combine that with high-income customers—the average Costco household makes upwards of $75,000—and "what they're doing is really high velocity retailing," says Boston Consulting Group Managing Director Michael Silverstein, who has studied Costco.

Even CEOs who'd rather not find their designer brands discounted in a warehouse are happy to say they shop there. "I think they have a terrific concept," says Eric Wiseman, CEO of VF Corp., which owns the North Face and 7 For All Mankind clothing lines. David Novak, CEO of YUM Brands, says he buys wine and cleaning equipment there. And QVC CEO Michael George is a proud card-carrying member of one of the first Seattle stores. "You don't just go there for bargains," says George. "You go there for the treasure hunt."

Lately, the loot in that treasure chest is getting even more high end. Over the last year, Versace dinnerware, Waterford crystal, and pastel girls' Lilly Pulitzer dresses have all made their way into Costco's stores, either through new direct selling agreements or diversions from distributors. As consumers cut back, Costco is finding more available inventory and fielding more calls from companies hungry to boost slumping sales. "I think their store will probably look like Saks pretty soon," says an executive at one popular high-end fashion brand. "Their ability to sell stuff is staggering."

"In a tough economy, the ability to change your assortment towards products that are selling more is a huge advantage," says Michael Clayman, a former buyer for Costco and the editor of trade publication Warehouse Club Focus. "If the item isn't a value anymore, or isn't generating the sales hurdles, it'll be deleted."

To hedge against price increases, the giant retailer is even taking the unusual step of commissioning its own pumpkin patches. For years, Costco has offered customers a pumpkin pie for $5.99, selling more than a million of the store-baked pies in the three days before Thanksgiving. Despite margins getting whacked by higher prices on canned pumpkin prices, Costco has opted to maintain its price. So this year, Jeffrey Lyons (head of fresh-food buying) began testing a way to get around the food processing companies' high prices, asking some of the farms that grow its melons to cultivate pumpkins. It will experiment with using the pumpkin in some of next year's pies. "It's not beyond us to figure this out," Lyons says. "We won't be held hostage."

Costco has even gotten vendors to redesign product packages to fit more items on a pallet, the wooden platforms it uses to ship and display its goods. Putting cashews into square containers instead of round ones will decrease the number of pallets shipped by 24,000 this year, cutting the number of trucks by 600. By reshaping everything from laundry detergent buckets to milk jugs, Costco has needed 200,000 fewer pallets a year overall.

Sinegal acknowledges that he can't hold back the cost increases forever. Indeed, within the past six months Costco has twice raised the price of its popular rotisserie chickens, by a total of 20%, to $5.99. But he isn't giving in to higher costs without a fight. "The biggest concern to me is that we lose our way and start thinking it doesn't matter if you charge another dime or another dollar or another hundred dollars," he says. "Without those disciplines, we don't have anything."


WINMARK: A BRIGHT SPOT IN DARK TIMES by Jane Porter

Hard times have been pretty good to Rita Cortese. Since 2006, she has owned a Plato's Closet used clothing store in Deptford, N.J. In recent months, Cortese says, business has exploded as people descend on her store to buy or sell castoff shirts, dresses, and jeans. Cortese is so busy she recently built a shed out back to contain her overflowing inventory.

Winmark, the Nasdaq-listed company that sold Cortese her Plato's Closet franchise, is a rarity in a scorched retail landscape: It's growing rapidly and making money. Sales at Plato's Closet outlets open more than a year were up 19.6% in August, vs. 1.7% for the industry as a whole. "I don't wish this economy on anyone," says John Morgan, Winmark's chief executive. "But we're going to make hay while the sun shines."

The company that would become Winmark was born 25 years ago as Play It Again Sports, which sold used hockey sticks, baseball mitts, and so forth. Ten years later the company went public as Grow Biz. But by 2000, it was suffering the usual ills of overexpansion. Enter Morgan, who renamed it Winmark and focused on four franchises: Play It Again Sports, Once Upon A Child (kids' apparel), Music Go Round (used musical instruments), and Plato's Closet (which, like the other franchises, also sells some new items). Today, Winmark has 861 stores nationwide.

Franchisees pay a $20,000 one-time fee, plus 3% to 5% of weekly sales. In return, Winmark provides the business model, training, and marketing. "All the risk falls on the franchisee," says Graeme Rein, research analyst for Bares Capital Management, which owns 14% of the company. "It's on their shoulders to create a profit." Because franchisees pay cash on the spot, they have powerful bargaining leverage. For example, Cortese pays $6.80 for a pair of Hollister jeans and resells them for $18.

Since consumers are going to be hurting for a while, it's a fair bet that Winmark, whose stock has suffered this year along with the rest of the market, will continue to outperform the retail sector. Not that Morgan, who owns a quarter of the company, is standing pat. He's plowing Winmark profits into another franchise operation he expects to do well in hard times—leasing office equipment to credit-parched small businesses. And guess who he's recruiting to run the franchises: managers who've lost their jobs.

ZARA THRIVES BY BREAKING ALL THE RULES by Kerry Capell

ARTEIXO, SPAIN Many U.S. apparel retailers are choking on slow-moving inventories as consumers hold back on spending. But Spain's Inditex, whose Zara chain pioneered cheap chic, is zipping ahead. The $13.8 billion company, which is closing in on Gap for the title of world's biggest clothing retailer, has nearly quadrupled sales, profits, and locations since 2000. This year, Inditex plans to expand by up to 640 stores. "They will weather the storms better than most of their rivals," says Michael Lewis, a supply-management professor at University of Bath's School of Management.

Inditex's secret? Besides selling relatively cheap clothes, which fit the times, the company maintains an iron grip on every link in its supply chain. That enables it to move designs from sketch pad to store rack in as little as two weeks. This "fast fashion" way of doing things has become a model for other apparel chains, such as Los Angeles-based Forever 21, Spain's Mango, and Britain's Topshop, which is set to open in New York next year.

Inditex has spent more than three decades perfecting its strategy. Along the way it has broken almost every rule in retailing. At most clothing companies, the supply chain starts with designers, who plan collections as much as a year in advance. At Inditex, Zara store managers monitor what's selling daily—and with up to 70% of their salaries coming from commission, there's a lot of incentive to get it right. They track everything from current sales trends to merchandise customers want but can't find in stores, then shoot orders to Inditex's 300 designers, who fashion what's needed instantly.

Typically, apparel chains outsource the bulk of production to low-cost countries in Asia. Inditex produces half of its merchandise in factories in Spain, Portugal, and Morocco, keeping the manufacturing of the most fashionable items in-house while buying basics such as T-shirts from shops in Eastern Europe, Africa, and Asia. Wages are higher at Inditex—its factory workers in Spain make an average of $1,650 a month, vs. $206 in China's Guandong Province. But the company saves time and money on shipping. Also, Inditex's plants use just-in-time systems developed in cooperation with logistics experts from Toyota Motor, which gives the company a level of control that would be impossible if it were entirely dependent on outsiders.

In addition, Inditex supplies every market from warehouses in Spain. Even so, it manages to get new merchandise to European stores within 24 hours, and, by flying goods via commercial airliners, to stores in the Americas and Asia in 48 hours or less.

Air shipments cost more than transporting bulk packages on ocean freighters. But Inditex can afford them. The company produces smaller batches of clothing, adding an air of exclusivity that encourages customers to shop often. As a result, the chain doesn't have to slash prices by 50%, as rivals often do, to move mass quantities of out-of-season stock. Since the chain is more attuned to the most current looks, it also can get away with charging more than, say, Gap. "If you produce what the street is already wearing, you minimize fashion risk," notes José Luis Nueno, a marketing professor at IESE Business School in Barcelona.

For rivals hoping to mimic Inditex's results, analyst Luca Solca of Sanford C. Bernstein has a bit of advice: Don't follow the Zara pattern halfheartedly. "The Inditex way is an all-or-nothing proposition that has to be fully embraced to yield results."

READER COMMENTS:

Zara is a interesting case study. Together with Apple, they seem to be redefining the process of delivering consumer products. Both exercise tight control over process and are optimized to meet customer demands rather than mere supply side cost management. The freedom, store managers enjoy at Zara to get the stuff they expect their customers to pick up, and Apple stores that allow customers to walk-in and talk face to face with service people, reasserts that the "human" acting as the bridge between customer and company can still make a difference on customer experience and profits. -Ajay

In the Zara model, who in the supply chain holds the raw materials inventory (fabric, zippers, trims, etc.)? How far in advance to they have to commit to it, and how do they know how much to buy? -mark erickson

I wonder if it is sustainable? As they open even more stores is their supply chain scalable enough to sustain the model and keep their tight processes on track? They certainly know how to run a value chain and make it hum but I have some concern that it may start getting too big to properly manage as they face more constraints. -TR

Thanks very much for your responses to the story. @TR: Yes, the challenge Inditex faces is as it expands further from Spain will it still be able to wield the tight control over its supply chain. I think it is sustainable as long as like-for-like sales are growing--if these fall for say, several consecutive qrts and Inditex's costs rise, it could be difficult. @mark erickson: Inditex owns 100 other companies that handle various parts of its supply chain. So for instance, Zara sources around 40% of its fabric from another Inditex-owned company, Comditel. Fabric is purchased in grey so that it can be dyed in season to react more quickly to trends. Prof. Nueno says Zara commits to 35% of raw material purchases and up to 50% of purchases of finished products once the season has already started. -kerry

Zara has excellent products, but the service in its stores is terrible - long lines at the cash register, the runaround for simple returns, etc. I've stopped shopping there. -Kay

It was about time Inditex entered the US market. Here in Europe we've been studying ZARA strategies as a very good example of SWOT analysis and Competitive Advantage. Thumbs up Inditex, break the american rules ;) -Ermela

Zara has another interesting thing. They spend ZERO on marketing. No advertising, no marketing stunts, nothing. Just good prices and word-of-mouth. -Lucio

Sounds like a standard model for success. Give 'em what they want, don't pick up deadwood, stay lean and flexible, be adaptable and move fast. -Christopher H

Although Zara's clothes are fashionable and very cute, I believe they also keep their costs low by producing low quality clothing. I have bought several items there, only to have them fall apart in a matter of weeks. A friend and I who bought the same sweater weeks before me, were in amazement as our sweaters fell apart in unison week after week, until while travelling in Austria in dead winter, I was forced to buy a new one...Never shop there if you would like your clothes to last for the season...Never... -Former Zara Shopper


A CONTRARIAN'S GUIDE TO UGLY MUNIS by Aaron Pressman
Oppenheimer Funds' Ron Fielding likes to find gems among tax-exempt bonds that others dump—and often winds up scoring big

"They do take on a lot of risk," says Morningstar analyst Greg Carlson. "But they've got a pretty impressive research team, and they've gotten so many calls right over the long term."

Contrarian's Guide


BusinessWeek - Oct.20,2008

Perspective is Everything

(incredimazing.com)

Crash Proof: How to Profit From the Coming Economic Collapse

by Peter D. Schiff & John Downes
amazon.com/Crash-Proof-Economic-Collapse-Sonberg/dp/0470043601/ref=sr_1_1?ie=UTF8&s=books&qid=1224143826&sr=1-1

Peter Schiff on Crash Proof: amazon.com/gp/mpd/permalink/m9NA2D6ADKBP0


PRODUCT DESCRIPTION The economic tipping point for the United States is no longer theoretical. It is a reality today. The country has gone from the world's largest creditor to its greatest debtor; the value of the dollar is sinking; domestic manufacturing is winding down - and these trends don't seem to be slowing. Peter Schiff casts a sharp, clear-sighted eye on these factors and explains what the possible effects may be and how investors can protect themselves. For more than a decade, Schiff has not only observed the U.S. economy, but also helped his clients reposition their portfolios to reflect his outlook. What he sees is a nation facing an economic storm brought on by growing federal, personal, and corporate debt, too-little savings, a declining dollar, and lack of domestic manufacturing.

Crash-Proof is an informed and informative warning of a looming period marked by sizeable tax hikes, loss of retirement benefits, double digit inflation, even - as happened recently in Argentina - the possible collapse of the middle class. However, Schiff does have a survival plan that can provide the protection that readers will need in the coming years.


CUSTOMER REVIEWS Peter Schiff, son of American patriot Irwin Schiff, has written a very useful book that can not only assist you to take the concrete steps necessary for financial survival, but also change your individual psychology toward the storm on the horizon that is rapidly gathering strength. Today, we have the illusion of prosperity, and the sooner we break through that delusional state, the sooner we can prepare for darker days.

At this point, there are so many possible triggers for the Second Great Depression, it's striking that it has not already begun. The sub-prime meltdown may just be such a trigger that brings down the house of cards, once it becomes more clear which entities actually hold all the risk created as part of the Housing Bubble. Wall Street, sub-prime lenders, and the large banks have been ingenious in their ability to push risk onto other parties, but it's not clear if the counter-parties will have the ability to weather the defaults. Thus, the risk may yet reside with the banks, which normally would have been more restricted in the number of loans they could create by more traditional standards. So much debt has been created, and so much risk obfuscated, that it is hard to imagine our present illusion of prosperity can be maintained much longer.

Mr. Schiff breaks through our modern mythology by shattering these illusions, and here is where he shines best. A bear's bear, Mr. Schiff steps down from the towers of the economic elite to provide analogies that can be readily digested by more casual readers. The analogy of the Asians and the American trapped on an island together is apropos, as it reveals much about the true state of international trade. The Dollar Bubble heavily distorts trade in favor of America, which benefits disproportionately from the inflated value of the dollar.

Mr. Schiff also understands very well the entitlement crisis brewing, and aptly names Social Security a Ponzi Scheme. Most people in Generations X and Y understand that we're the bagholders scheduled for the Ponzi Scheme, but many Baby Boomers love to be delusional about this tragic farce, thinking it's a form of savings rather than our government writing worthless IOUs to itself and lying to the American people. They think Gen X "owes" it to them! Ha Ha! The sooner we can end social security, the sooner we can start saving real money with real assets. Until then, we are slaves waiting for generational emancipation.

I remember the first time I heard Mr. Schiff speak on CNBC. The discussion was about inflation, and I couldn't help but notice Mr. Schiff's definition diverged significantly from the definition used by the brainless cheerleaders on CNBC, and for that matter, our government and most of Wall Street. The proper definition of inflation is "debasement" and secondarily, "an increase in the supply of money which causes a rise in prices" (Webster's 1982). Note the difference between these two definitions and the more commonly used definition today, which is simply "a rise in prices."

CNBC would have us believe that money supply doesn't matter when you can fool people into believing that the risks associated with exuberant money creation won't be felt by anyone, or only by parties "most able to bear that risk." How convenient! What the government doesn't want you to know is that the Federal Reserve creates inflation, and both government and the Federal Reserve benefit from this inflation at everyone else's expense. In the history of every mania and crash, rampant money creation is behind the genesis of every one. Usually, it takes a unique form. In this case, it was the Housing Bubble. So, inflation and the Housing Bubble are intimately linked. As many have often pointed out, the Housing Bubble was needed to replace the Nasdaq Bubble that popped in 2000-2002.

Finally, the juicy part - how to survive. Mr. Schiff advocates foreign equities that are sound and pay excellent dividends, which due to the Dollar Bubble, might do very well. So long as there is sufficient domestic demand (abroad) after a currency revaluation, this appears good advice. Although, one has to wonder if the U.S. catches cold, would Asians follow?

Next, buy gold and silver, and mining shares. This is pretty standard advice from the "Gloom and Doom" crowd as we are sometimes named. Lastly, he recommends staying liquid, which generally means reducing debt and keeping assets in a form that can be readily converted from one type to another. He recommends leveraging overvalued home equity in other currencies and storing small amounts of imported goods likely to rise in price, and a few other measures.

The piggy bank on the cover is a nice touch, and the list of books for further reading is most helpful for those who have not already read many of the titles.

A very quick read, easy to understand, and very well put together. I highly recommend this book. -Patrick M. Hussey (Mar.07)

>Andrew Coonce says: Good review. When I first heard about Schiff's book, I read a negative review on Amazon, and, as a result, I almost didn't buy the book. The only reason I got it was because it was part of a 3-for-1 deal at the time. Man, am I glad I did that! I know enough economics and politics to recognize that his reasoning is sound and dead spot on. That's been confirmed by the fact that everthing he predicted in the book is now happening. I'm now a cleint of Europacific Capital, and I've made some pretty sweeping changes in my investments. I've been trying to tell family and friends about the book, and about what's coming, but they pretty much don't listen. I only wish I had read the book a year earlier.................... (Jun.29-08)

This book is nothing more that an overt advertisement for Peter Schiff's brokerage firm Euro Pacific Capital. There are no specific investment recommendations.

Here's the gist: The US dollar will collapse pretty soon. Schiff cites the usual suspects--- large trade deficit, large private and public debt held by foreigners, decimated manufacturing base in USA. 7 out of 10 chapters are a very generic rehash of these arguments. So you should have all of your assets in non-dollar investments (except 10-30% in gold and gold equities.) You should buy dividend paying foreign stocks through Euro Pacific Capital. Countries to consider are Canada, Hong Kong, Singapore, Japan and maybe some other pac rim countries. He particularly likes commodities. That's it. He says, "the stocks of the caliber we've been talking about will probably never need to be sold and will provide a lifetime of increasing income." If these stocks are so stable he could list 10 or 20 examples. Yet, not a single specific stock is mentioned in the book. For that contact Euro Pacific Capital. Did I mention Euro Pacific Capital? -M. Passey (Mar.07)

>a satisfied reader says: I disagree with this reviewers complaint (and SWT's agreement) that

Schiff didn't supply specific recommendations on what stocks to buy. THis book will be in print for years and it would be irresponsible to suggest specific stock buys. Besides,as a licensed stock broker he is actually NOT ALLOWED
to do so unless he knows a person's specific financial situation. His goal was much more global and I think he did a good job. (Mar.07)

>Ron Kokish says: AN unfair review. Not only is it illegal for a licensed broker to make specific stock recommendations in a book, it's unfair to expect it. However, I've been a EuroPac client for two years during which, in spite of hefty 2% commissions the $100,000 I had them invest for me has turned into $153,000. Maybe it's luck. Or, maybe they are actually on to something. (May.07)

>"Fed Up With Liars" says: As of 6/11/07--You want MEAT? Then listen to Bill Gross, bond king at PIMCO--he's specifically saying that a "bond bear market" is occurring in the U.S., and the best moves to make for the future are investing in the Brazilian currency (the real) and investing in foreign bonds that currently carry a double-digit return.

Why Brazilian currency? Brazil is the ONLY country on the planet that is energy self-sufficient, meaning it imports absolutely no oil from outside. In an otherwise darkening future, this means that their money and economy will likely only be side-swiped instead of t-boned.

Why foreign bonds? That's where the Chinese are now spending their huge wads of money--they're no longer buying our bonds hand-over-fist. Without a huge and active buyer for our bonds, what do you think is going to happen to Uncle Sam's spending habits? He's lost his #1 financier.

Rats (even Chinese ones) know when to leave a sinking ship. Bill Gross just happened to bring it to our attention...on CNBC, no less! Some cheerleaders are worth listening to.

I'm ordering this book--not for basing my entire strategy on, but as part of an overall picture of how to protect myself. (Jun.07)

>Bruno says: 1. This is a book, not a magazine column. Any stock recommendation would be out of date soon.

2. HE wrote the book, why wouldn't HE tout HIS brokerage?

3. One man's "no meat" is another man's "easy to understand". (Aug.07)

>M. Beaston says: I've been making a ton of money following Peter's advice. I don't know what planet this bad review came from. Thanks for Crash Proof! (Nov.07)

>P. Smith says: What is this dude smokin'? I searched long and hard to find someone who could make sense of this market for me. That guy is Peter Schiff. I have done every single thing he has suggested and am tremendously grateful I learned about him. I've become an evangelist, of sorts.

The U.S. is one big Enron, people. Make no mistake: The guys at the top have all gotten their money out of US-denominated assets, while telling us "deficits don't matter." Peter is right--get out of the dollar while you still can.

I'd be the first one to say Peter shamelessly touting his company would be obnoxiuos...but I didn't find it to be that way at all. In fact, a few times I wondered if Euro Pac could help me because Peter talks generically about where to buy foreign stocks. (Nov.07)