Saturday, January 03, 2009

Support Your Writers!

It pains me to report that unless all of us are willing to find a way to pay for what writers write, many valuable voices will soon go silent. I am not so arrogant as to include myself in this category, but the truth is that this blog, from an economic perspective, is an utter failure. More on that in a bit.

Meanwhile, one of my favorite writers, James Surowieki, has published the following essay on the New Yorker site, which you can access for free: News You Can Lose.

The irony of reading this essay online is that you will be contributing to the process by which writers become unable to sustain themselves by their work.

Now back to me. I am no James Surowieki, in fact I am a nobody by comparison, neither famous nor successful. But my posts have always been available for free. The only potential revenue supporting this blog is that via clicks on the Google AdSense links that appear at the top of each post.

Since the last time I met Google's minimum payment level of $100, this blog has received 28,417 visits, but only 120 clicks on the ad units, which means I have earned $41.37. For those keeping track, that amounts to 14% of one cent that accrues to me every time you visit.

Don't read me wrong. I do not mean to guilt-trip anybody. But it might be worth considering how a blogger's wage compares with the minimum wage the next time you visit this or any other blogsite. Why stop by without clicking?

Isn't it a bit like eating in a restaurant without tipping?

-30-

The NASDAQ and S&P Wipeouts

Yesterday we looked at the Dow-Jones. Today, as part of our 2008: Year in Review series, I want to examine the performance of the NASDAQ, which is heavy with tech companies, and the S&P 500.

The NASDAQ, which includes Google and Apple, two of my personal favorites, had its worst year on record, losing an astonishing 40.5% of its value.

This does not necessarily mean it has hit bottom yet, however. I went back to the dot.bomb era to examine the yearly losses for the period 2000-2.

During that market correction, the NASDAQ listings lost a cumulative 71.6% before rebounding into the tremendous period of growth we witnessed from 2003-07.

The only other significant recession in NASDAQ's history, since its founding in 1971, was 1973-4, when it endured a 49.3% retrenchment.

Now, on to the venerable Standard & Poor's 500 stock index. Standard & Poor's introduced its first stock index in 1923. Prior to 1957, its primary daily stock market index was the "S&P 90," a value weighted index based on 90 stocks.

The S&P 500 index in its present form began on March 4, 1957. For a list of the 500 companies, follow this link.

So, how did the S&P perform in 2008? It suffered its worst one-year drop since 1937 at 38.49%.

-30-

Friday, January 02, 2009

The Only Two

Many people may not realize that the Dow Jones Industrial Average is made up of only 30 large companies.

So, I decided to list those 30 and show how their stocks performed in 2008, as part of an effort to try and understand what is happening to our economy.

The worst performers (no surprise here) were GM and CitiBank, both surviving currently courtesy of government bailout funds.

But 26 others companies on the DJIA also had very bad years. The only two companies to finish in the black last year were McDonald's and WalMart.

I will not even venture to suggest what that may say about our capitalist society, because I'm quite sure you are perfectly capable of drawing your own conclusions.

Below is the percentage performance for the 30 current
companies of the DJIA index for 2008, in ascending order (worst to best).

Company Pct change
General Motors Corp (GM.N) -87.1
Citigroup Inc (C.N) -77.2
Alcoa Inc (AA.N) -69.2
Bank of America Corp (BAC.N) -65.9
American Express Co (AXP.N) -64.3
General Electric Co (GE.N) -56.3
The Boeing Co (BA.N) -51.2
Merck & Co Inc (MRK.N) -47.7
Microsoft Corp (MSFT.O) -45.4
Intel Corp (INTC.O) -45.0
Du Pont (DD.N) -42.6
Caterpillar Inc (CAT.N) -38.4
3M Company (MMM.N) -31.8
AT&T Inc (T.N) -31.4
United Technologies Corp (UTX.N) -30.0
The Walt Disney Co (DIS.N) -29.7
Hewlett-Packard Co (HPQ.N) -28.1
JPMorgan Chase and Co (JPM.N) -27.8
The Coca-Cola Co (KO.N) -26.2
International Business Machines (IBM.N) -22.2
Pfizer Inc (PFE.N) -22.1
Verizon Communications (VZ.N) -22.1
Chevron Corp (CVX.N) -20.7
Kraft Foods Inc (KFT.N) -17.7
Procter & Gamble Co (PG.N) -15.8
Exxon Mobil Corp (XOM.N) -14.8
Home Depot Inc (HD.N) -14.6
Johnson and Johnson (JNJ.N) -10.3
McDonald's Corp (MCD.N) + 5.6
Wal-Mart Stores Inc (WMT.N) +18.0

Thursday, January 01, 2009

Back Home Again

As the rains visit Northern California, fresh green grass springs up on our hills.

This is one of the confusing aspects for migrants living in this region.

Is it spring?

No, it is but a winter bloom. If we had enough sheep or goats on Bernal Hill, these sprouts would quickly be stripped.

But we don't, so the rains and dry periods will alternate, green and brown until (unless we have a drought), the rains win out, for an extended period, and our hills, like Bernal, stay green into the warm seasons.

-30-

Where We Live Now


Every mid-year, the U.S. Census Bureau updates its estimate of the country's population, and includes a breakdown by the four major regions.

Here are those figures as of July 1, 2008:

U.S. Total 304,059,724

Northeast 54,924,779
Midwest 66,561,448
South 111,718,549
West 70,854,948

What is most striking about these totals, to me, is that ~60% of the people now reside in the Sunbelt. This shapes not only our politics, but our economy, which is filled with distortions -- housing bubbles, disparities in the price of gasoline as well as retail goods, uneven Internet access, including broadband & wireless, differing tax policies and civil rights laws, varying levels of social welfare services, and huge differences in good old pure income.

Can anyone manage such a large, sprawling country filled with such persistent internal contradictions? That task falls to our new, young, dynamic President.

May you do well, Mr. Obama. Happy New Year!

-30-

Wednesday, December 31, 2008

Top Domestic Stories of 2008

1. PRESIDENT BARACK OBAMA

The election of Barack Obama as the first African-American President in U.S. history electrified not only the nation but also the world. Obama, his wife Michelle and their two daughters became instant celebrities. He dominated the headlines for over a month after the election by a very public Cabinet selection process.

At the same time, Obama message of sweeping change did not appeal to everybody. Inside the Republican Party, there was sudden phenomenon of Sarah Palin, who epitomized the fear felt by of so many Americans about the terrifying specters of terrorism, depression, global climate change, a flu pandemic, Islamic fundamentalism, a soaring national debt, kidnappings in Mexico, beheadings in the Middle East, the weakening dollar, and on and on.

The prospect of any or all of these as plausible developments over the coming years made many yearn for a simpler time, when homespun wisdom and grit seemed like enough for us to get by, even though it became pretty damn clear that “we aren’t in Kansas anymore, Toto.”

2. THE RECESSION

The irony for Obama is that what should have been a time of hope is instead a time of growing desperation in America. A steep rise in home foreclosures due to the sub-prime mortgage meltdown quickly cascaded into a series of bank failures and near failures, massive corporate takeovers and bankruptcies, and federal government interventions in the form of bailouts of unprecedented size and scope.

By year’s end, the domestic automakers, especially Chrysler and GM, teetered on the edge of collapse, unemployment was rising, and the credit markets were frozen. Gas prices rose to a dizzying high ($4.50/gallon) only to fall to a new low ($1.50/gallon) between July and December in the U.S. Overseas, the U.S. recession set off a global recession, demonstrating with terrible clarity just how interlinked the global economy has become.

The previous “firewalls” that tended to protect domestic economies somewhat from international events are gone, swept away by the rising tide of free trade and rising demand, especially in the emerging middle classes of China, India, Brazil and Eastern Europe.

One man, Bernard Madoff, the former head of the NASDAQ stock exchange, engineered the largest Ponzi scheme in history, ripping off $50 billion from investors, and bringing several European banks to the verge of collapse. Americans cut their holiday spending, prompting rumors that a number of major retail chains would be closing their doors for good early in 2009.

3. CIVIL RIGHTS FOR SAME-SEX COUPLES

Though it never became the national hot-button political issue that it had been back in 2004, in 2008 same-sex marriage emerged as arguably the top civil rights issue in the U.S. The decision in May by the California Supreme Court legalizing same sex marriage set off a boom of over 18,000 marriages in the state until election day, when the state’s voters overturned the legality of gay marriage via the controversial Proposition 8.

By the end of the year, the issue was mired in lawsuits, and the state Attorney General reversed himself and called for Prop. 8 to be overturned. A majority of voters indicated if they had it to do over again, Prop. 8 would have failed by a significant margin. Other states endorsing or considering same sex marriage in 2008 included Massachusetts, Connecticut, and Iowa.

Everywhere, the debate shifted to the moral and legal aspects of preventing same-sex couples from enjoying the same civil rights as everybody else. President–elect Obama’s choice of evangelical preacher Rick Warren to lead a prayer at his Inauguration provoked national protests by gay and straight groups alike. Warren quickly assured America that he “loves gays,” but the controversy illuminated some of the dangerously unstable political fault lines in Obama’s broad political coalition.

4. WEB 2.0: ANOTHER BUBBLE?

As of 2008, there were still only a handful of Internet companies with the scale to compete with Google for online ad revenue, and search market share. When one of them, Microsoft, tried to buy another, Yahoo, Google tried to undermine the deal with a search partnership, Yahoo CEO Jerry Yang rejected the Microsoft offer, Yahoo’s stock collapsed, investor Carl Icahn forced his way onto Yahoo board, Microsoft pressured the Justice Department to charge Google with antitrust violations, Jerry Yang resigned as CEO, Google ended its partnership with Yahoo hours before the Justice Department was to file its lawsuit, and by year’s end, all three companies’ stocks had taken a battering.

An even larger problem was the fate of everyone else trying to build businesses online. The entire wave of Web 2.0 winners – YouTube, MySpace, Facebook, Digg, Twitter, Flickr, etc. – started losing their luster as it became clear they had not developed any sustainable business model. Although venture capital continued to fuel a vibrant sector of startups, the major question looming over these emerging companies was how they would attain the necessary scale to become profitable.

5. U.S. PRINT PUBLISHING INDUSTRY FAILURES

Gannett, the largest U.S. newspaper chain, laid off thousands of employees, the Tribune Company sought bankruptcy protection, The New York Times put its headquarters building for sale, in Detroit the papers cut back home delivery to three days a week.

From Seattle to Miami, newspaper after newspaper announced layoffs, as many of their stocks fell to penny-stock range or were delisted. An unprecedented loss in advertising revenue, as well as the sped up 7/24 news cycle, the rising costs of newsprint and transportation, and competition from Cable TV and the Internet seemingly doomed this once ubiquitous American institution – the local newspaper.

Even the venerable Associated Press faltered by year’s end, freezing salaries and rolling back the fees it charges clients when several large newspapers threatened to quit the cooperative rather than pay the higher fees.

Online news sites fared better than print versions, but by the end of the year, online ad revenues were falling, too, signaling a very dark 2009, indeed, probably with a number of high-profile newspaper bankruptcies and closures.

For a while, magazines seemed to be escaping the fate of newspapers, but as the economy weakened, magazine ad revenue fell steeply, especially for the “newsweeklies” such Time, Newsweek and U.S. News & World Report, all of which were in serious trouble by the end of 2008.

Book publishers may be the next large segment of print to die; at least one large house actually stopped accepting new submissions late in the year, sending the book industry into a collective state of shock for the holidays.

6. WE ARE NOT ALONE

This was not really a domestic story, but the astonishing findings on Mars and the moon by NASA probes established, for the first time ever, that water exists on other planets and that, therefore, the main building block of life is in all likelihood distributed widely throughout the universe.

I'm just sticking this story on my list because I find it strange that more is not being made of this (in my view) revolutionary development. Perhaps we have become so inured to scientific reality in this culture because fictional movies featuring aliens are virtually prosaic offerings at this point. But I, for one, remember when we all thought that life was confined to earth.

No thoughtful scientist would posit that as a reasonable theory, given the astonishing astronomical developments during the year, 2008.

On the Road Again, Again, Again







On the Road Again, Again










Monday, December 29, 2008

On the Road Again















Sunday, December 28, 2008

Year in Review: International Stories

My summary:

1. GLOBAL RECESSION
The U.S. recession triggered global repercussions, as stock markets crashed in England, Europe, India, China, Japan, and throughout the world. In the wealthier countries, there were a series of high-profile bank failures similar to that in the U.S., and central banks had to intervene repeatedly to prop up the faltering financial structures that reached the verge of collapse. One telling report was when late in the ear, the world’s leading automobile manufacturer, Toyota, reported its first loss in 70 years. Meanwhile, in the poorest regions of the world, the situation was much more critical. The economic downturn sparked food riots, military excursions, mass migrations, runaway inflation, refugee camps, and outbreaks of disease. The word no one yet wanted to speak, but on everyone’s mind was “Depression,” which at year’s end seemed not only possible, but probable during 2009.

2. CHINA’S EMERGENCE
China announced its status as a dominant world power by hosting the Olympics for the first time, orchestrating a spectacular opening ceremony and a successful slate of games despite devastating earthquakes in the months proceeding the event; as well as human rights protests in many countries leading up to the games, the murder of an American athlete’s relative on Opening Night, and a scandal regarding the alleged underage girls on China’s gymnastics team. In the end, China beat out the U.S. for the most Gold Medals, which was its stated goal, yielding a deep sense of national pride. China’s moment proved short-lived, however, when the U.S. recession combined with several scandals involving toxic Chinese exports caused its domestic economy to grind toward a halt. In South China, many export factories closed or limped along with vastly reduced production capacity. The central government’s massive holdings of U.S. debt introduced a new layer of vulnerability and instability to the situation. A building boom of unimaginable proportions in Shanghai started to slow, and angry consumers throughout the country demanded more help from the government. One potentially promising development involved a tentative thaw in relations with Taiwan.

3. IRAQ WAR SURGE & IRAN’S RISE
Gen. David Petraeus led a military strategy in Iraq involving paying Iraqis to drive militants out of the country, which in turn drastically reduced suicide bombings, and other terrorist acts in the country. The Iraqi and U.S. governments concluded a new SOFA (Status of Forces Agreement), which authorizes continued U.S. military presence in the country through 2011. Gradually, the makings of civil society seemed to be reappearing in the war-torn Middle Eastern nation. Meanwhile, next door in Iran, tension escalated as the U.S. and Europe demanded a halt to its nuclear arms production program. A central government that by word and action was extremely hostile to the West continued to taunt an edgy Israel toward military engagement, which if successful, would prove disastrous for the entire region. But a new emphasis on diplomacy by the incoming Obama administration held out hope that hostilities could be negotiated down, and Iran’s state sponsorship of terrorism might finally be reduced.

4. PAKISTAN & AFGHANISTAN DETERIORATE – On the other side of Iran, even as the situation in Iraq improved, Afghanistan and Pakistan devolved into chaos. The aftermath of the assassination of Benazir Bhutto late in 2007 cost Pakistan’s President, Pervez Musharraf, the ensuing election. Taliban and al-Qaeda forces concentrated along the lawless border with Afghanistan began an offensive that eventually wrested control from the government of two-thirds of the country. Terrorists then launched a devastating attack on Mumbai, India. The Pakistani military retaliated with renewed military incursions into the Afghan border region and arrests of terrorists involved in the Mumbai attacks. Inside Afghanistan, the Taliban, allied with warlords, opium growers, and the remnants of al-Qaeda, seized most of the country outside of Kabul from the government and coalition forces. Obama promised a new military emphasis on the country, but there were growing signs by the end of the year that the help that might come would be too little and too late. Public Enemy #1 Osama bin-Laden remained at large over seven years after the 9/11 attacks.

5. RESURGENT RUSSIA
Almost overlooked with the drama of events in China, India, Pakistan, Afghanistan, Iraq, and Somalia ,Russia asserted itself dramatically by invading neighboring Georgia and daring the rest of the world to do something about it. Murders of dissident Russians at home and abroad (including a high-profile case in Britain) sent an ominous message that Russia’s experiment with democracy may be over. Soviet destroyers appeared in Cuban ports; Bear bombers went back out on patrol along the East Coast of the U.S.; tanks deployed into Georgia; threats were issued to cut off gas supplies to the Ukraine; anti-West overtures were offered to Iran; threats issued against U.S. missile defense in Europe; and finally, the firing, albeit unsuccessfully, of a new generation of ICBM seemed to signal Russia’s intent to test Obama right of the gate. Clearly, Russia is looking to come on center stage once more.

6. AFRICA IN CRISIS
The year started off with a shocking deterioration in what was considered the most stable of countries – Kenya – as allegations of electoral fraud in the national elections sparked riots across the country that soon turned into ugly mobs bent on ethnic cleansing raging out of control. Off the coast of Somalia, which has not had a central government in over a decade, modern-day pirates routinely hijacked commercial ships for ransom, while the world stood helplessly by, unable to come up withy a suitable military response. Meanwhile, rebels in the Congo, Mali, and Nigeria waged guerrilla war, and in the south, Mugabe's pending downfall added to the continent’s general instability. China's rush to build up infrastructures, and extract Africa’s rich veins of minerals and metals, competed with new American initiatives in North and West Africa, big corporations looking for arable land as well as resources and raw materials, at continued at the expense of democratic reform.