Rich Whitey is Running

This is just too good. Although it appears to be simple human error, it appears that Rich Whitey is running for election.

Innate and Constructed

Here's a great graphic showing the true delineation of political thought. 

I Tried, Honest I did

I promised to concentrate on Information Technology in this blog. This, however, is just too good to pass up. If you're one of my frequent reader (singlular intended) then you know my opinion of how our beautiful free market system has morphed into Corporatism. This post from Captain  Zero is one of the most eloquent rants I've read in a long, long while. It's worthy of Thomas Paine.

Shaking Off the Negativity

Or as Donald Sutherland said in "Kelly's Heroes", "Enough with the negative vibes, man!"Okay, so the problem is the business's negative impression of IT as a profession and as an aid (versus a drag) to the business.

Even in the IT departments I've seen with the best relationship with business, there are still pockets of disapproval and disappointment. Here's a very interesting article at Silicon.com on the topic. 

One of the chronic problems I've seen over the years is the the operating business units unwillingness to even pretend to understand or even pretend to want to understand how IT operates. (Someone should write a book about that! Why, yes, I should ...). Another way I could say this is from the business-side perspective, "I am too busy to help you help me. Just solve my problem."


The money statement in the article, to me, is this, "IT is effectively operating as a black box that is not well understood by the business, and which does not itself understand the business." Which does not itself understand the business.

Too many business people look at the world through a straw. Pity, that.

The Hype Cycle

Almost everybody in the IT business is familar with Gartner and Magic Quadrants. Here's another useful visual from Thomas Wailgum at CIO.com. My personal favorite is what you find on the Slope of Enlightenment.

Not Socialism

A recent public opinion poll showed that something like 55 percent of Americans think President Obama is a Socialist. This interesting post from Dan Mitchell begs to differ with the public on this. According to Mitchell, Obama is, in fact, a fascist - in the Mussolini sense of the word.

Granting that the word fascist has some pretty ugly connotations, Mitchell prefers to use the label Corporatist. Funny, that sounds like something I've been saying. I love it when smart people agree with me. Read the whole thing.

The Book

In a previous life time I was a newspaper reporter. Early in my IT career I published a couple of technical articles on database design (back when relational databases were new technology - check your calendars for that date!). At that time I had ambitions of publishing more articles but then the babies started appearing from some magical place. (I never did understand how that happened ... ) Read more really means read more this time.

Crony Capitalism Should Not Be Confused With The Real Thing

From today's Wall Street Journal on the great Freidrich Hayek

"Even when the state tries to steer only part of the economy in the name of the 'public good,' the power of the state corrupts those who wield that power. Hayek pointed out that powerful bureaucracies don't attract angels—they attract people who enjoy running the lives of others. They tend to take care of their friends before taking care of others. And they find increasing that power attractive. Crony capitalism shouldn't be confused with the real thing."

Read the whole thing.

Wow!

It's The Spending

In his seminal work, Parliament of Whores, P.J. O'Rourke had an absolutely brilliant chapter called (if memory serves), "How the F... Can They Spend That Much Money!" This new analysis from The Heritage Foundation lays out a pretty good idea about how much we're going to have to cut spending to get back to zero deficits.

The answer? A lot.

If you're one of my avid reader (ed: yes, I meant reader), then you'll know that I think government spending always crowds out private spending. A strong private economy will not resurface until the government starts to cut back. Here's hoping.

Where Are They Going?

Since I was born and raised in the Detroit area, I found this very interesting. You'll have to scroll to the bottom but it's a pretty good reflection of the state of the economy in the Detroit area.

Interviews Again

I thought it was time to repeat a couple of oldies but goodies. Here are two interviews I did in 2009 regarding IT and staffing. Take a look.

Investing in the IT Staff - with Gino Macarroni

So You Think You Know What a Recruiter Thinks? - with Diane Plymale

The Road to Serfdom - The Comic Book

I had the great pleasure of reading and re-reading Adam Smith's "The Wealth of Nations" many, many years ago. I may be the only person I know who's actually read he philosophical foundation of Capitalism and free markets.

I continue to run into references to the greatness of Hayek's "The Road to Serfdom". Someday I'll have to read it. In the meantime, for us with short attention spans, here's the comic.

Best Drummer Since Ginger Baker?

Maybe not ... but he certainly wins on style points.

More Stubborn Facts

Here are the results of last year's Cash for Clunkers program. I haven't watched it closely but it seems that the federal tax credits for a home purchase expired at the end of May. I know there was a flurry of buying

as that credit expired. Then I read an article that home sales will plummet. I suspect the federal tax credit did the same thing in the housing market as it did in the used car market, just pulled sales from the future.


I suspect the housing market will recover to normal levels soon.

Facts are Stubborn Things

According to one Hillary Clinton, "The rich are not paying their fair share" of taxes. The top five percent of wage earners pay more than 54 percent of income taxes. She seems to bright not to know the truth so I wonder why she said that.

Crowding Out

Crowing out was a term I became familiar with in the 80-81 recession where Paul Volcker saved the future. The tenet is that government spending crowds out private spending. In other words, there are only so many dollars in the world and when the government spends them, they are not there for private enterprise to spend.

It's a simple concept and almost intuitively true. It also doesn't matter if we're talking about dollars taxed today or dollars borrowed against the future. There is a finite pool of capital (current or borrowed against the future) and private enterprise gets the leftovers.

Now, here's evidence that this is also a short-term phenomenon. If other research backs this up, this pretty-much blows Keynesianism out of the water.

The entire study is here.

I'm Starting to Like This Guy

Gov Christie calls S-L columnist thin-skinned for inquiring about his 'confrontational tone'

Four Ways

There is a good argument to be made that the financial regulation changes moving through Congress now are best set aside for a few years. We do not yet know enough to know if we're doing the right thing. Too bad Congressmen and women do not have to take the political equivalent of the Hypocratic Oath - First Do No Harm.

Here's an interesting discussion of the federal government's complicity (if not outright fault) in abetting the Crash of 2008.

Despotic Bureacracy

Here's a very interesting take on a subject I've been reading about since I was a little boy. I particularly like the quote referring to the American Revolution where one of the sparks was that King George had "erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance."

If I can ever find it, I'll post a link to a video I once saw of a 60s-era Ronald Reagan giving a brilliant speech on the same topic.

The Oligarchy

I hear and read more talk about Corporatism these days - but that may be the effect of the observer distorting the evidence. Power Line has an interesting post about a new American Oligarchy. What Power Line is calling the Oligarchy and I call Corporatism, I've also heard called the Washington-Wall Street Nexus.

So, here I risk sounding like a wingnut but it's hard for me to overemphasize how corrosive these structures are to truly free markets and free peoples. Here's hoping that in the near future this topic is discussed more often and openly.

The Kudlow Creed

Even Jonah Goldberg Agrees with Me!

The answer to capitalism is more capitalists.

Confusing Wall Street with Capitalism

At minute 6:50 of this video, they ask the very relevant question: Are Republicans confusing Wall Street with Capitalism. The answer is yes, but then many people do.

Want a VAT, Lose the Income Tax

George Will has been in the pundit business for a long, long time. I think the world according to Obama (and the later Bush years for that matter) is bringing out his best. Will is getting better with age.

There is now a lot of buzz about a Value Added Tax (VAT) similar to those used in Europe and Canada. George has a great take down and then raises the ante: Want a VAT, Ditch the Income Tax.

For a prior admiring post on Will, check this out.

Also, here's one of my previous remarks on the topic.

Battling Lack of IT Understanding

After spending literally decades working to align IT with business, I am slowly coming around to this opinion: The business holds equal responsibility for misalignment with IT.

Yes, it is the director's or CIO's responsibility to align with the business but there are also many senior business managers who show no interest in reaching back across the aisle. Here are some more thoughts on the matter.

Even Ron Paul Agrees With Me

I've stated a few times that what we have in America is not Capitalism but Corporatism. Apparently, now former presidential candidate, Ron Paul agrees with me too.

Here are my previous posts on the topic.

Corporatism Redeux

Corporatism is Self-Defeating

It's Not What You Think

Corporatism is Not Capitalism

What To Do If You Kiss Your Sister

See more funny videos and funny pictures at CollegeHumor.

Bingo!

I've been waiting for a prominent public official to start talking about new types of taxation for the United States. The most likely proposal is going to be a Value Added Tax (VAT) like those used in Europe. I did a research project on Paul Volker in graduate school and I have nothing but respect for the man. This may change as he is now talking about a national sales tax.

It Doesn't Look Like This

Nicole Gelinas has written an excellent post at National Review that describes what a truly free market in finance would look like. Here's the shocker - it doesn't look like what we have in America today. Check it out.

Corporatism Redeux

Just like Gary Becker agrees with me on the Efficient Market Hypothesis, now I see that the inimitable Charles Krauthammer agrees with me on Corporatism as an evil to be avoided. Here's a quote from a recent television appearance (emphasis mine).

"Now, what's troubling here is not that the administration is only trying to get companies to . . . hide the fact that [Obamacare] is going to cost, [that] it's not a free lunch as it has been pretending — but it's the attitude of the Democrats in Washington. It [Washington] takes over businesses: Chrysler, G.M. it takes over student loans, it nationalizes it [the student loan business] without a debate at all. And then there is also this attitude that Chairman Waxman will call on the carpet a corporation CEO to explain its actions as if corporations aren't independent entities who produce a product to make a profit but agents or wards of the government who have to answer for every action.

It's the kind of corporatism you see in Europe."

These guys are getting smarter every day.

Nobody's Arguing for Taking It Back

I once heard a preacher say "Some say Christianity has been tried and failed. I believe that Christianity has been found difficult and not tried."

How does that related to Capitalism? Being of a libertarian bent, I believe in truly free markets. The government in a truly free environment exists to provide three things; the physical security of its citizens, the sanctity of the contract between individuals, and the protection of private property rights. Many say that free markets have failed and I say that truly free markets have been found difficult and not tried.

No government has ever lived to this ideal - maybe the closest was Hong Kong before it was absorbed by China a decade ago. Even so, hobbled Capitalism exists in many places and even a partly free market is still a fabulous economic engine for wealth creation.

Here's an interesting interview with Nobel winning economist Gary Becker who apparently agrees with me (what a smart guy!), "Or look at developing countries," he says. "China, India, Brazil. A billion people have been lifted out of poverty since 1990 because their countries moved toward more market-based economies—a billion people. Nobody's arguing for taking that back."

Free Markets are the Best Way to Prosperity

I've heard of this organization before and watched a couple of their presentations. In general, they're mostly politically correct topics. Swedish physician Hans Rosling, though, has a super-spiffy graphics package combined with some killer data.

My take on this is that free markets (or maybe even just free-er markets) are the best way to prosperity.

Squeak, squeak

I bought a new pair of shoes yesterday; very nice shoes but they have a little bit of a squeak. I hope this goes away with wear but I did a quick search on squeaky shoes and ran into this gem.

Time to Short ABC

I try to limit my remarks to Information Technologies and general finance topics. This, however, is too tempting.

If ABC were sold as a separately traded stock, I would be shorting it now. Christiane Amanpour will be leaving CNN and joining ABC. Unfortunately for me, ABC is part of Disney and Disney is much to broad and diverse to be brought down by this. So, shorting Disney is pointless.

But for ABC, let the ratings slide begin!

Do Regulators Believe in Free Markets?

Here's an article at Conglomerate Blog that raises an interesting question. Do financial market regulators believe in free markets? They discuss it as a reflection of the Efficient Market Hypothesis. In short, in an efficient market, no one player will make extraordinary returns over a long period of time. Only through market manipulation of some sort can exceptional returns over a long time be realized.

Why didn't regulators look at organizations with exceptional returns like, oh, Bernie Madoff, AIG, Fannie Mae, and Freddie Mac. Seeing an exceptional return should be a bright light shining on a suspect practice. The article quotes Ray Ball of the University of Chicago with the money quote, "If regulators had been true believers in efficiency, they would have been considerably more skeptical about some of the consistently high returns being reported by various financial institutions."

And What Will We Do In Our Spare Time?

Why the New Normal Could Kill IT. The money quote is "This new world order calls on CIOs to meet its demands in three explicit ways: '"They will have to make the IT function dramatically more productive, use IT more effectively to meet larger corporate goals, and embrace disruptive technologies that will shape the new economic terrain,"'.

The Perfect Movie Trailer

Dude! Check it out.

This Is It! - The Limits of Expertise

Not that you asked but this is one of the most influential things in my life. (http://www.mediafire.com/?2ngtzjtzgwz) It's an article from The American Scholar by Donald McCloskey that was published in 1988. At the risk of overstating things, I think this is one of the clearest thinking pieces ever published. It's fourteen pages long and well, well worth the read.

There are too many pithy quotes for me to have a single favorite but this one is pretty good. McCloskey relates that the financial advice industry grew out of court decisions holding trust accountants liable if they did not take third party advice. And the quality of that advice? "The effect would have been the same had the courts decided that prudent men should consult Ouija boards or the flights of birds."

Oh, and I'm not rich so I guess I ain't smart neither.

The Technocrat Paradox

Just a moment ago, I mildly upset my boss. As I walked into the office in the morning I passed him and two young ladies in a conference room where we waved me in to introduce them. They are from another business unit and I'd long known them but we've never met in person.

During the introduction he told them that we'd recently set up a new server room (not a data center, just a large wiring closet with communications equipment and some servers in it.) He said to the ladies that "Mick is very excited about it."

My look must have baffled him because the glance in response was obviously displeasure. I told them that I was pleased that we had a facility superior to the prior one. That's all.

For me, being excited about a wiring closet is like being excited about a home furnace. I'm glad my furnace works but I don't show it to new guests when I give them the nickle tour of the home.

What this little incident tells me is that even with the MBA, the years of experience in business, the track record of multiple ERP implementations and other large systems that drive the business, and my participation in our senior management councils, the business still sees us as pure technicians.

IT can make or break a business and I was hired specifically for my business skills. Yet still ... still, I'm viewed as a technician.

Check out this excellent post from Martha Heller for a more on-the-point comment about what she calls The CIO Paradox. In particular, read the comments thread.

Blog Name of the Week - The Federalist Paupers

I've just found this blog and, while I don't yet have an informed opinion, the commentary seems worthwhile. Regardless, they clear have won my Blog Name of the Week award.

Clever, but Wrong

Someone is thinking here.

As If I Needed More Evidence

I posted a while ago about the total self-absorption of the Baby Boom generation (my generation). As if we needed more evidence, CNBC is giving Tom Brokaw a special on the topic. No doubt it will get respectable (for CNBC) ratings - minus me.

Spending as a Percent of GDP

I've long felt that those (particularly what I'll call "no-nothing" conservatives) who carp continuously on the federal deficit are missing the main point. In the press, you continuously hear laments that the federal (or state, or local) deficit is the highest ever recorded.

That may be true but it's not the point. What matters is the level of deficit as a percent of Gross Domestic Product (GDP). If the economy grows then the deficit can also grow. It's almost exactly like a business borrowing money to invest in future growth. As long as the business can service the debt, then borrow away.

Having said that, this graphic is still pretty sobering. The federal government historical spends between 15 and 20 percent of GDP. But in the future? Something has to give here.

Oh, Canada

Ever wonder why Canada's banks didn't threaten to crumble as did the American banks in 2008 and 2009? Check out this article. I say there are three dominant factors: full recourse loans (no walkaways from an underwater mortgage), more prevalent mortgage insurance, and no tax deductability for mortgage interest.

In general, I dislike using the tax code to encourage socially acceptable outcomes and mortgage interest deduction is but one example. The temptation for political shenanigans is just too high for politicians to resist. I've read about similar home mortgage environments in places like Holland and Denmark. The Canadians seem to have done this one right.

Actually, I Like Her but Great Cartoon!

Crowding Out

One of my stronger memories from the 1980-82 recession is the expression "crowding out". At that time the world pre-eminent uber-bear was Henry Kaufman of Salomon Brothers. It was Kaufman who called the bottom of the bear market in August of 1982. For, oh, two years he had been writing that growing government debt was "crowding out" private borrowers and pinching off economic recovery.

I still clearly remember the day in August of 82 when I read in the Wall Street Journal that Kaufman said that the economy was so weak that crowding out was no longer a problem. There was no business demand for money so it didn't matter. The market took off like a shot and never looked back. It was my first lesson in contrarian thinking.

Maybe I'm not the only one who remembers that connection.I've posted before on why I'd seen almost no talk of crowding out. Maybe it's making a comeback now.

Brilliant

I've always found George Will a little stuffy but this speech he gave is simply brilliant. It's 30 minutes well spent.

Ironic, isn't it.

Here's one where the article's headline writer tells you there are things millionaires won't tell you. And then they proceed to tell you. Deft little verbal slight of hand, no?

ERP Flow

Here's a handy graphic if you're trying to communicate with your business colleagues about the impact of ERP systems.

Good for You, Glenn

Or maybe I should show respect and say, "Good for you, Mr. Reynolds." My favorite blogger, the world famous Glenn Reynolds of www.instapundit.com, has been named one of the The Four Horsemen of the Ablogalypse. If you're not a fan of Glenn's then you should be. One day all right-thinking people will agree.

What's the Time to Impact

And now back to the topic of Information Technologies, which is already in progress.

I've found this picture handy and persuasive when discussing disaster recovery and how much time and money should be invested in stabilizing failing systems.

What it tells senior management is that if a major system crashes (or is otherwise unavailable), they have this many days to update their resumes.

What Caused the Collapse

Again, people seem confused about the English language. In 2008 the market did not collapse ... but I digress. This is still an excellent opinion summary of the causes of the bursting market bubble.

It Did Not Collapse

Words mean things. Here's a snip from an Amazon listing for a new book called "The Road from Ruin".

"Instant analysis since the collapse of the financial system in the fall of 2008 has produced no end of ideas about what to do ..." Ahem ... Misters Bishop and Green I would like to comment on yet another stubborn fact. The financial system did not collapse in 2008. Indeed, the financial system did not collapse in 1981, nor 1974, nor even 1929-31. Did it suffer a shock? Absolutely. Did it collapse? Not even close. 

Corporatism Is Self-Defeating - The Great Milton Friedman

Little other commentary is needed. Free markets means free markets and capitalism works best in free markets. I'll say it again: What we have in the United States is not Capitalism, it is Corporatism.

IT Exists for One Reason

I found a blog entry at CIO.com that asserts that, "The sole reason for IT's existence is to manage the flow of data." To be honest, the assertion is kind of underwhelming but it did strike a chord in my brain about outsourcing. (Don't ask why. I stopped trying to understand my own brain years ago. ... just enjoy the ride, Mickey me boy!)
 
The blogger makes the interesting observation that in the early days of electricity there were heads of departments in organizations designated to manage electricity: a Chief Electricity Officer, if you will. Electricity is now a commodity to which we barely pay thought. Someday IT will be a commodity as well.

How Do Meme's Work?

If you follow politics at all, there's been a recent uproar in the blogosphere over a political ad by Carly Fiorina in California where her opponent is portrayed a demonic wolf dressed as a sheep.

Within days, I see this comment, "Something to think about as regulators here and abroad start targeting Google (it's amazing to me how seamlessly Google has replaced Microsoft as the demon sheep of technology companies ..." at Reason Magazine on line.

Wow! This internet thing, and it's power to create memes, might just catch on.

Interesting Facts

As someone once remarked to me, "Facts are stubborn things". Here are some interesting facts regarding the United States economic environment of the last decade.

A Dose of Sanity

This is the best suggestion I've heard in a long time. It's a simple and effective way to reign in excess leverage and risking behavior in the banking system. Manage the reserve requirements.

I'm Just Wondering

It is my affliction to read widely on finance and economics - darting like a waterbug on a lake and seldom dipping under the surface. (Can a person digress in the first sentence of a note? I think I just did.)

In the last few years there have been countless articles discussing how the Boomer generation (my generation) will burden its children with unimaginable social and financial costs as we reach our dotage. It occurred to me this morning that while this is true, it doesn't reflect the truth our children will inherit.

This focus on how the Boomers will afflict our children and grandchildren is, in fact, yet another example of the Boomer generation's absolutely, unblinking fixation on itself. I'm not a social historian but I'm guessing that no other generation in Western history has been so self-absorbed, all throughout its life. I have always been a little ashamed of this.

Maybe it's time for we Boomers to stop worrying about our aging and passing and start worrying about how the world our children will have and provide the best world we can for them. That's what my parents did and it seems right to me.

(On reflection, this is a rather sophomoric thought ... but then it's still early in the morning. Would that I were the philosopher to state the question more profoundly. Uh .... nah!)

Quote of the Week

P.J. O'Rourke is one of my favorite authors. I heartily recommend "Parliament of Whores" if you like to see American legislators ridiculed with great gusto.

O'Rourke has written a book on the great Adam Smith called "On the Wealth of Nations". I'll put it on my Amazon wish list but, in the meantime, the line of the week which comes from O'Rourke's reviewer.

"On occasion, one wishes the Invisible Hand would smack O'Rourke upside the head ..." The review itself is a pretty good read.

Salesforce Again

In August, I commented on the high P/E ratio of Salesforce.com (Symbol CRM). It was $50.50 with a P/E of 104.5. Now, even after a recent decline of over $74 a share, it's down to $64.99 (or up from $50.50, if you will) with a current P/E of 110. I'm keeping an eye on this one and wishing I'd put some money into it in August.

You Make an Excellent Point, Sir

David Malpass is becoming one of my favorite commentators on finance and economics. If you are a follower of economic news and watch networks like CNBC, you'll find yourself adrift in a sea of self-seeking doubletalk. Malpass is a clear thinking man who has a posting at The National Review where he writes about taxes and small business.

In it, he addresses an important issue with the Federal Reserve's current monetary policy of zero interest rates. The question is, what is my incentive to save if my return is zero and how can the money supply grow (and spur lending) if I don't want to save?

Here's the money quote, "The money supply (which includes cash plus the balances of checking and savings accounts) surged after the Lehman bankruptcy in late 2008. But money-supply growth has almost stopped today, meaning there’s no longer much incentive to add to a savings or checking account while the interest rates on them are stuck on zero." Read the whole thing.

The Morality of Freedom

The founders of the United States held a couple of truths to be self-evident that are not commonly discussed today. The first is that the holding of personal property (also knows as property rights) is just as important as something like the right to vote or free speech.

The second is that the ownership of property is, in fact, a moral right. Said differently, theft is wrong because it is immoral for one person to take the property of another. (Why it's immoral is a different discussion.)

Modern libertarian and conservative politicians seldom speak of personal freedoms in moral terms. This was one reason Ronald Reagan was so successful, because he did just that.

Ask the question this way, what gives one agent (a government) the moral right to take property from another agent (you) in the form of a tax? If you have no say in how you are taxed, how is that different than theft?

Libertarians and conservatives would do well to start speaking about the morality of government actions and individual freedoms. This article lends some underpinning to the discussion.

How IT Is Set Up to Fail

Martha Heller is on to something here.

F.A. versus John Maynard, They've Been Going Back and Forth for a Century

I couldn't have said it better myself. Hundreds of writers have spent hundreds of thousands of words trying to say this and not done this well. Check it out.

It's Not What You Think

I am the only person that I know personally who has read Adam Smith's The Wealth of Nations, which is the bible of Capitalism. I contend that what we have in the United States now is not Capitalism but is, instead, Corporatism. Nobel laureate Joseph Stiglitz apparently agrees with me. It's nice to see them come around.

Where Is The Money Going?

The public usually does not understand and often does not follow the gymnastics of the Federal Reserve. Pity. The Fed has more indirect influence over the American economy than any other single institution.

Occasionally I go diving into the money supply movements. What I've just seen is that the multiplier has only crept over 1.0 twice in the last year and has been consistently below 1.0 for most of that time. The most recent number shows that for every dollar the Fed creates, only 85 cents is making it into the economy.

Where is it going? Most likely into bank capital reserves. In other words, banks are either holding it to increase their reserves, cannot find suitable loans to make with it, or both. This is what a buddy of mine calls pushing a rope.