Monday, November 30, 2009

Why I Hate Black Friday

I hate Black Friday. Black Friday is the most ridiculous excuse for bad behavior and reckless spending I have ever heard of. But when your economy relies so heavily on consumer spending, I guess the troops have to rally the spenders. Analytics firm ComScore says Americans spent 3% more this year on Black Friday. Reuters says they spent significantly less than last year. The stock market waits with bated breath to see who was right, hoping passionately that spending was up. Because that tricky Dubai situation really dampened everyone's spirits on Black Friday. Still, it didn't stop idiots from queuing up two days before Black Friday, camping out in the rain and the cold to be first in line when the doors opened. Some people went so far as to actually miss Thanksgiving dinner because they were waiting in line at Wal-Mart. Last year a store worker was trampled to death by desperate Wal-Mart shoppers. I'm going to go out on a limb here and say that there is something seriously wrong with people who spend all of their Thanksgiving holiday queuing up for and fighting over bargains at retail stores. Yes, OK, you save 25% or 50% or 75% on flat screen TVs. Maybe you couldn't afford one without the discount. But the question is - if you have to queue up for two days to 'save' money, maybe you really shouldn't be spending it at all. One woman who was interviewed on TV on Friday said that she had lost her job and that buying food was becoming a real issue. She said this as she queued up at a store to buy crap for Xmas. She can't afford food, but she can afford to buy crap as long as it is on sale. TV stations, advertisers and retailers have teamed up to tempt shopping-addicted Americans to do the Patriotic thing and buy stuff to support the economy. Maybe it works, but it isn't pretty.

Friday, November 27, 2009

Black Thanksgiving

Today, known as Black Friday in America, may go down in history as Black Thanksgiving instead. Some are already dubbing it Black Swan Friday. Yesterday, as the US sat down to turkey and interminable American football games, Dubai imploded. Dubai World, the government-run bubble machine, cannot pay its $60bn debts. It built islands in the ocean, hotels, office buildings, residential palaces - most of which are either unfinished or unoccupied. The fact that it is probably close to bankruptcy comes as no surprise to anyone pays the slightest bit of attention to part of the world. The words "well" and "duh" spring to mind.
But at least we don't have to worry about unemployed Middle Easterners jumping aboard ships and sneaking into US ports courtesy of Dubai World. Because DW also owns DP World, the marine terminal operator that bought 22 major ports in the US. British port and ferry firm P&O sold its leases to manage the ports - including New York, New Jersey, Philadelphia, Baltimore, New Orleans, and Miami - to DPW in 2006. Congress freaked when it found out, citing national security. Then President George Bush tried to veto any blocking of the deal because - well heck, Dubai is our friend. In the meantime DPW sold the ports to the less-than-saintly AIG. What a palaver, eh? But imagine if DPW was bankrupt and still owned some of the most important ports in the US.

Wednesday, November 25, 2009

Helping the 'Lost Generation'

The young adult children of baby boomers, the so-called echo-boomers, are going to suffer the most from the current recession and will also suffer the longest. The Financial Times calls them the 'new lost generation, ' the Associated Press uses 'boomerang kids'.
Whatever they are called, young adults aged between 18 and 29 are in trouble. Jobs are scarce and older Americans are holding on to the ones they have longer. Among 16 to 24 year olds, less than half are currently employed, according to an article by the AP. The FT put unemployment among 20 to 24 year olds in the US at 15.6% last month and for 16 to 19 year-olds it hit 27.6%.
Things are so bad that after college, instead of heading to the big city and their own apartments, they are headed right back home to Mom and Dad. A study released by the Pew Research Center shows that the number of young adults living alone has declined to levels not seen since the recessions of 1982 and 2001. About 20 million people between 18 and 34 live at home with their parents - almost 30% of that age group, said the study.
So what can be done to help the 'lost generation' while it sits in its collective bedroom and applies for job after job? Further education is always an alternative, but it is expensive. And we could end up with a hugely over-educated set of echo-boomers with no actual job skills. Learning a trade is another. But most American trade schools are only offering 'degree programs' where the kids waste a disproportionate amount of time on so-called 'core' courses such as basic math, English and psychology.
Perhaps the answer lies in our business community. Businesses have cut staff to the bone since the credit crisis, and few are looking to hire anytime soon. Why not hire some of the boomerang kids to learn some real job skills? If businesses offered internships - even unpaid - they might just find that their young employees are just what they need going forward. If more young adults could go out to work every day and learn how to interact in a business setting, they would have some much-needed experience upon which to one day base a career. Perhaps the financial services industry could set aside a little bit of money from the bonus pool and start such a program. It would be ground-breaking.

Monday, November 23, 2009

All the News that Fits the Search Engine

I may be one of the few people around the world(the ones that care that is)that was not surprised to see that News Corp is hooking up with Microsoft. When I was at Dow Jones Telerate in the late 1990's there was a rumor flying around that Microsoft was one of the interested buyers for the Dow Jones market data arm. As it happened Bridge Information Systems got DJT for a steal, then demolished it. But when Reuters was struggling and offering itself around the market nearly a decade later the Microsoft rumor again surfaced. But Thomson got the prize that time. After both sales the market data industry sighed with relief and smugly told itself that a technology company couldn't possibly understand the market data business, nor would a Microsoft add any value to the content world. That was then. Even when Reuters sold to Thomson Corp Microsoft did not have a viable search facility. Google was kicking it arse. Now Microsoft has spent gazillions on its Bing search engine and it needs an edge to chip away at Google's market share. Finally technology meets news content. Many have lamented the demise of the printed newspaper, knowing there is still a need for quality journalism out there. But MSFT having exclusive access to News Corp content should only be the beginning. If Bing were the only place I could search for New York times, Wall Street Journal, Financial Times, Thomson Reuters, Bloomberg and Economist articles then Bing it would be for me. MSFT could take control over searches for the financial services industry first then move on to a more generic audience. That is a business model Reuters and Telerate would have killed for.

Friday, November 20, 2009

Let the Mud Flinging Begin

It is no secret that the economy is in a tailspin that is likely to last another year or so, despite what the perky-jerkies at CNBC tell us. Statistics can be tweaked and cherry-picked to highlight the good stuff easily enough (we journalists are great at that), but many people are beginning to look underneath the headlines for the truth. So when Republican senators blamed US Treasury Secretary Timothy Geithner for the mess the country is in and called for his resignation, it was clear that there was a hidden agenda. This is it: Get the American people riled up about losing their jobs and their homes and blame the current administration loudly and often. Then get Sarah Palin to write a book and go on a 'book tour' where she gets 'unfairly' criticized by the lefty loony press and praised to the heavens by Fox News. Then get the UK's Daily Mail to run an hysterical story about floating storage for oil - telling readers that it is the fault of these 'sharks' in the oil business that petrol prices are rising (thereby removing the blame from an economic recovery being the reason). Then cherry-pick all of the worst economic statistics and depress even CNBC. Then head into the 2010 elections with every center-right or right-winged person in America that uses Glenn Beck as their primary news source prepped to vote. Goodbye Democratic majority. Mr. Geithner showed yesterday that he has grown a pair. Now he has to explain to the people just how well his policies are working. Because - to be honest - it is rather difficult to see.

Tuesday, November 17, 2009

Recipe for a Bubble

I used to hate Bubble and Squeak when it was served at my oh-so-mediocre high school cafeteria (both were mediocre in case you were wondering - the school and the cafeteria). The joke then was that inside the Bubble and Squeak was baked a mouse - hence the 'squeak' part.
Today's bubbles - the stock and commodities markets - may be showing signs of a squeak but the media (school lunch ladies)and the Fed (the school principal) are serving up the bubble regardless. Yesterday's lovely surprise squeaker was Meredith Whitney who told a stunned Maria Bartiromo on CNBC that she hadn't been so bearish in a year, then predicted a 'double dip' recession (see my blog dated 05/08/09). The CNBC talking heads spent an hour disputing Meredith and spouting spurious crap to support their uneducated (and unasked for) opinions. Then Fed chairman Ben Bernanke reassured the world that this was no bubble, duly followed by Donald Kohn (vice chairman)and Janet Yellen (San Francisco Fed). The words 'protesting' and 'too much' spring to mind. UBS' head of floor ops Art Cashin popped up on CNBC this morning and said something similar. CNBC might have to jump off of its perma-bull and smell the manure soon.

Monday, November 16, 2009

Crimbo Takes Center Stage

The holidays/Christmas/Hannukkah/Kwanzaa - or Crimbo as the Brits call it - is taking center stage early this year. As the economy crumbles around us and real unemployment probably tops 20%, retailers are desperate for us to start spending. In London the Xmas lights on Oxford Street and Regent Street were already up and lit last weekend. Last Sunday Oxford Street was so full of shoppers that you had to walk in the street. Here at the Cambridge Galleria yesterday I heard Xmas music in all the stores, and saw people walking out of Best Buy with mountains of boxes. The retail spending figures will be eagerly awaited by retailers and investors alike. If they are indeed up from last year, the stock market will no doubt rally in celebration. It seems you cannot dampen those Crimbo spirits. But wait. Goldman Sachs has canceled its Xmas party - again. The embattled bank apparently thought that throwing a glitzy bash might just enrage those taxpayers that bailed it out of last year's mess. And it might also remind them that Goldman Sachs employees are girding themselves for a bumper bonus season. They will have a Holly Jolly regardless of growing unemployment lines elsewhere. At the same time in a display of utter idiocy RBS applied for a liquor license (from 7am) and a permit to hold karaoke parties in its London offices, according to the Telegraph. This came only days after the bank took another 33bn pounds in bailout money from the UK government. I can see its probable logic in holding in-house Xmas parties - so no one could see that the bank was frittering away taxpayer money. But RBS was rumbled before it could party down. Crimbo parties or not, neither bank has learned anything from the economic crisis they helped to cause. That is called wasting a good crisis.

Tuesday, November 10, 2009

The X Factor

I leave London today just as I am getting to know it again through the local media. It takes about a week to get the hang of what each politically-oriented newspaper is trying to say. The bottom line appears to be that the UK is falling apart. Confidence in the government is very low. Binge drinking and the 'dumbing down' of young Britons remain on the rise. The Daily Mail's Quentin Lett is blaming feminist Germaine Greer for today's lager-swilling, sexually active females (never mind that the UK's drinking culture has been ingrained since before Ms. Greer left Cambridge). Some people on TV this morning blame Simon Cowell  for bringing down the tone of British entertainment and sounding the death knell for television everywhere. He voted to let the public decide on who would win the X Factor, another Pop Idol/Britain's Got Talent clone. The public decided that a pair of moronic, spiky-haired twins from Ireland would win. I guess the government has taken as much blame as is possible for the mess the country is in so Simon Cowell is the next best person on the list. One wonders about the quality of education these days when the quiz on GMTV is Q) What do you pour ontop of Christmas pudding? Possible answers: Tea, brandy or milk. The prize is 25,000 pounds. And I may only be a token Brit but everyone knows you don't pour tea or milk on top of Christmas pudding. Perhaps the quiz is meant for 3 year olds so that their parents can afford to send them to university. Then they can learn to spell better than Gordon Brown, who is under fire for getting a few words spelt wrong in a letter of condolence to a fallen soldier's parents.

Saturday, November 7, 2009

Property Lust Follows Bust

I mentioned two days ago that I was amazed by the continuing high property prices in central London. Last night I picked up a copy of the London Lite newspaper - a tube station giveaway - and there was a small article in there confirming my suspicions. The paper says "Home prices up 1,300 (pounds) a day" in Chelsea, Kensington and Notting Hill. This is said to be due to an "extraordinary autumn revival fuelled by hopes of bumper City bonuses". Downstairs from my rented flat (in Kensington) is an estate agent - the cheapest flat in the window is a 'light-filled studio" for 425,000 pounds. Not that I was even considering a pied-a-terre in London, but Holy Cow. My son tells me that Paris prices have barely moved during the crisis - up or down. And now with Sarkozy's government cracking down on financial markets' bonuses, they are unlikely to be bidding up property there in a London-like fashion. So, while I am not a great fan of reigning in bonuses, there is a very human element to doing so. If bonuses are not on the 'too big to flinch at ridiculous prices for flats' side then people don't pay ridiculous prices. This keeps the property market accessible to others who simply want to live in a city centre near work. Commuting two hours each way has become almost the norm in London among younger people. Affordable homes are so far away and yet jobs remain in the centre. This is the opposite of urban planning.

Friday, November 6, 2009

The Cheese Stands Alone

The UK has changed little since I lived here, but Euro-scepticism does seem to have solidified. The UK has never been particularly keen on being part of Europe (witness pounds, not euros) and people today seem to consider the adoption of the Lisbon treaty a stealth bomb maneuver.Wannabe UK Prime Minister David Cameron is raising some European ire with his Conservative party platform to take back power from the EU. The French have called the move "pathetic" and say that the UK is "autistic" in its obsession with taking back power. I have no real problem with Europe or the EU in principle, but I cannot imagine that the EU has a chance to be a world power rivalling the US unless Britain is a part of it. 
The movement toward autonomy is not surprising given the state of the economy here. Many blame immigration (just as they do in the US). It is true that Britain's crazy asylum laws bring in far more immigrants than can be dealt with - or afforded. Others blame the Labour party for failing to reform pretty much everything. Gordon Brown is deeply unpopular. One of my friends, a peace-loving person normally, hates him so much that she mentioned performing acts of a disturbingly violent nature if he were to come into her personal space. I just watched him on TV blathering on about Afghanistan and muust admit that he is probably the most boring politician Britain has had since John Major. But I can't quite figure out why he is so hated, apart from the economy.
The City seems pretty unchanged, if a bit quieter than it used to be. The shops (including Boodles and de Beers at the Royal Exchange) and restaurants are still busy. Bonuses are said to be rising again, so I expect that central London property prices have just about bottomed out. Plus ca change, really.

Thursday, November 5, 2009

Greetings from London

I arrived in London yesterday for my first visit in three years (apart from an overnight stay due to a delayed flight). The sun is (uncharacteristically) shining , making it more pleasant to walk around and see how the place has weathered the recession. People are extremely cautious about spending money, or commiting to it, a PR friend tells me. She says they prefer to wait until the Labour party is sent to Coventry for another 17 years after the next election. Exactly what difference the Tory party or a coalition Tory/Lib Dem government will make to companies is unclear. Presumably they will roll back some of the proposed taxes that will make the City untenable as a place to work and do business. Like 1979, when I first moved to London, the shops are the first evidence of recession. Every third shopfront in the Kensington/Notting Hill/Chiswick route I took yesterday is boarded up. There is a lot of construction in residential areas, however. Perhaps City bonuses were not as bad as the media made them out and City boys bought in-town digs at the lows of the property market. I say 'lows' with a deal of sarcasm. A two-bed, two bath flat in Notting Hill - my old neighborhood - is still going to cost you upwards of 800,000 pounds (around $1.3 million US).
The strangest thing I saw yesterday was the one-year new Westfield shopping mall. It is the largest shopping mall in Europe and I cannot even describe how big it is. It is plunked down smack in the middle of grotty Shepherd's Bush, right behind the tube station and it looms over like a gleaming giant spaceship. Inside are all of the most exclusive British and Italian designers plus a few American shops - the Timberland shopfront looks like they transported a whole Canadian forest to build it. There are champagne bars and comfy seats with wireless connections and sparkly Xmas displays that stretch to 100 foot ceilings. De Beers has a diamond shop (imagine your significant other saying 'I want to marry you, fancy going to Shepard's Bush to pick out a ring?'), and there is the biggest Marks & Spencer's I have ever seen. The whole thing looks like a nouveau-riche Russian's dream come true. And it was busy. On a Wednesday afternoon. My friend tells me that the parking garage is full on any given weekend day. I can only imagine that it is the new gathering place for the unemployed. There were dozens of people using their laptops in the comfy seating areas - looking for jobs perhaps? The climate-controlled space means that you can escape the cold and rain (it is clouding over again right now) and do some web-surfing and people watching at the same time.Very odd indeed give the economic climate.
I'm off to the City now to see a friend and employer of my freelance services. I'm curious what I will find there.