Saturday, June 19, 2010
Those who laugh at the joker mock themselves. Wit with intellect is powerfully expressive and disarmingly persuasive. We, who are uneducated in rhetoric may be surprised that the comic is also the insightful political observer, but clarity is the tool of effect for both.
Tuesday, May 25, 2010
The flaw is MS's business model and corporate culture--an obsolescent legacy still guided by Gates; Ballmer is simply a manifestation of this. Gates has always been more of a marketer and manipulator. Microsoft's baby was DOS; its poor mother was the OS, which Gates did not own or have rights to (he stole it: CP/M from Gary Kildall). Its rich father was IBM, which Gates contracted to before he had a product.
The resulting personal computer with its open architecture was explosively successful swamping the nascent technological approaches of other start-ups, rapidly eliminating all competition and marginalizing Apple. The ensuing software products were all inferior to other applications: Word was a piece of junk from the beginning, a clutz compared to Wordperfect, for example; Excel was a knockoff of VisiCalc, which paled in comparison to Lotus 1-2-3, all be it both Excel and Lotus were children of VisiCalc. Of course everything out there, gui, mouse, apps was ripped from Xerox PARC.
The difference apparent today is what evolved. Jobs has understood and persisted in the simple tool model; As highly sophisticated as Apple products may be for the user they are simple like a screwdriver or a toaster. And they were directed toward the individual. Gate's approach was opposite: the desktop, which says it all; intended for the massive corporate market as replacement for the preceding computer technologies operated and maintained by engineers in separate cold rooms. The main frames (IBM) and micro-computers (Digital). A computer on every office desk instead. But, the result was greater complexity, because tech support had to become decentralized with company IT guys running around to tens of thousands of stand-alone computers.
What dooms Microsoft is system maintenance. Structurally, it's as if all the cars on the road have only one mechanic for service, MS. Microsoft has followed in the footsteps of General Motors: too big, too complex, redundant and absorbed in a self-serving culture. This worked as long as monopolistic methods smothered innovations. Other ideas, better ideas leak out. Apple's down and up history comes out of a dedication to staying in tune with the individual.
Fundamentally, Apple asks me what I want and need, Microsoft tells me what's good for me. One makes delicious healthy fruit, the other makes pop tarts.
The better question is: Why Does Microsoft Still Have a Market?
Saturday, May 15, 2010
Sunday, February 7, 2010
Friends have been asking me; "How are the banks making money? Nobody seems able to get a loan or a mortgage. But their profits are up and now they're giving out bonuses?"
This got me wondering. And checking around—using some of the 'Move your Money' resources, and public records, quarterly reports, and news about the activities of the top US banks. What did I find? The top banks' principal activity is in trading financial instruments, investing for the bank's portfolio, and underwriting. These business lines show movement in banks' financial reports, and are prominently placed in the financial media reporting. And lending? Lending is flat or off prior years. Deposits too, are flat or off. Bank fees... well, bank fees constitute a large contribution to the bottom line. (Too many younger people don't seem to realize there is no legitimate reason for a properly functioning bank to charge fees when it holds your money.)
None of these activities can be considered as fulfilling the conventional purpose of a commercial bank: taking deposits in and making loans on them, and profiting on the interest rate spread. Yes, this is Finance 101, but I wonder how many people realize it is the fundamental function of banking; that it is what they do, or are supposed to be doing. What are these major banks doing? Well, what do they look like? Investment banks! Of course. It's more fun dealing in financial instruments than taking my deposit of $100 and giving me 2% annual interest, then taking my deposit and lending it to you at 4%. Ever heard of a Harvard MBA yearning for a job at the corner savings bank. WALL STREET.
The reason for separating commercial banking and investment banking is as current now as it was in 1933. It is what made commercial banking boring and secure, and allowed the controlled evolution of finance by investment bankers. Each is a leg upon which the economy stands. You cannot combine the two legs into one fatter leg and contend that this single leg's substance and size is stable, as did Sandy Weill, et. al.; thus the fateful Banking Act of 1999. It took 9 years for Fat Leg to topple. There are no more Wall Street banks. The couple that didn't collapse in bankruptcy or into the arms of BofA became bank holding companies. Thus, they were taken under the great and dark wing of the Federal Reserve. Step up to the window for some $$$. No questions asked for the time being.
So back to the question: how are banks making money. Answer: scamming the economy. Not you. Not me. Everything and everybody, including themselves. Apres mois, le deluge. To understand how banking and finance are best treated check out Paul Volcker, ex-Fed chair and Sheila Bair, current FDIC chair. It ain't complicated either.