Lotto for the Cure

An idea:

A rich philanthropist (someone like Bill Gates) creates a massive trust fund. The fund continues to re-invest its money to maximize the size of the trust.  The purpose of the trust is to reward the person/company that discovers the cure for some disease.  A "cure" could be defined as a reasonable treatment period followed by lifelong remission for 90% of patients....or whatever would be relatively air tight on defining a real cure.

The goal of the fund would be to give a massive incentive to someone (most likely a company) for curing a disease  rather than providing treatments for diseases.  This incentive would be in addition to whatever patent rights they would get as well.  If the fund got into the hundreds of millions of $$'s, it would serve not only as an incentive to innovate, but also an incentive to be the first to market (and thus, first to claim the prize).

Recession was over more than a year ago? Ignorance really is strength.

The National Bureau of Economic Research says the worst recession since WW II ended June 2009.

If that's true, then the current recession started in July 2009.

Seriously, is anyone buying this?

Newsday Learns An Important Lesson

As pointed out here on the Pulpit, charging people for news is one sure way to get people to stop reading your news. Three months into their own 'pay to read' experiment, Newsday.com has a total of (35) paid subscribers. Yes...THIRTY-FIVE. They paid $4 million to upgrade the site to accept payments, and have made $9,000. Heh. Good riddance. That's the price you pay for not reading the Pulpit Newsday.

Next up: The New York Times.... I'm looking forward to that crash and burn.

Will The Economic Crisis Descend Into Violence?

It sure seems like it might. As the economy gets worse, politics it seems, is getting to be a rough business. American politicians have rarely had to deal with this sort of belligerent constituent rage, and it has appeared on the public stage suddenly and in a widespread fashion.

Nancy Pelosi and others blame these spectacles on conservative special interest groups. And to some extent, she's right. But it appears that all they are doing is tapping into a well of anger and distrust many Americans are obviously feeling.

I don't think the general public nor the politicians have caught onto how deep into an economic crisis we are. And in times of national struggle, such as we find ourselves, everyone must be on their best behavior to avoid widespread civil unrest. We can hardly afford that sort of thing now.

The Death Of (Online) News

Rupert Murdoch announced that all of his News Corp business will being charging for content. Let me be the first to say goodbye to News Corp.

The Financial Times is also floating the same ballon that within the next 12 months "news agencies" (Read: The Financial Times) will begin charging for content as well. At least the FT had a 120 + year run at it. I, personally, am looking forward to watching the prestige and power quickly and quietly drifting away from any news organization who walks this path.

What does all this talk of charging really mean? I think means that news agencies are realizing that the internet bubble of 2000 actually ended. It also means that the current financial crisis is bringing their empires to an abrupt end....and we've just caught a glimpse of the hand they're holding. If they're losing too much money, why not just shut the site down and avoid the embarrassing fade to insignificance? I have a theory....

First, lets take a look at the brief history of news:

1. First there was gossip/rumor
2. Then there was government controlled 'news'
3. Then the free press got in on the game to help form public opinion and foment revolutions...somewhere around the time of the American Revolution (with their pamphlets and all....)
4. Then people started charging pennies for pamphlets to cover their printing costs
5. Weekly/daily newspapers started popping up in populated localities, usually charging enough to cover the business costs
6. Advertising was introduced as a way to "make money" in these newspapers
   
7. Radio came along with no way to charge so the profit/expenses were all covered by advertising (and payola).
   
8. TV came along with the same problem, so the news was given for free (just like radio). It was done at a loss that was made up for by advertising on the 'entertainment' side of the business. This was done because the networks realized the news gave them leverage to use against the government. As a result, TV networks (and to a lesser extent, a few newspapers) gained power as the unelected mouthpiece of a nation, forming public opinion as they wished.
   
9. This bloody internet thing came along (to upset everything) and the established media saw it only as a way to extend their TV/newspaper reach.
10. Magazines and Newspapers get into the game thinking they can charge the same price for their electronic product as their paper product (and it costs almost nothing to distribute). It fails miserably (with few exceptions).
    
11. Everybody is happy with the results until the Great Depression of 2008-?
12. All the established news organizations realize they're going bankrupt because advertisers can't afford to pay the fees anymore. Desperation sets in.
13. People like Murdock float the idea that they'll begin charging everyone for what they used to get for free.

Sounds like a great plan in the midst of a massive global economic depress..err..recession. Day-dreaming of the good the old days won't help the bottom line of News Corp or any of the other faded, fat, greedy news media. If Murdock goes through with his promise, News Corp will quickly be reduced to insignificance.

I predict however that they will quickly change their mind, much like an airline trying to raise airfares by itself, when their page hits drop 99% [On a side note, I can't wait to see the look on a Fox reporter's face when President Obama answers one of the (last) Fox News questions by starting with "You can tell you 15 readers - it is 15 right? or did you guys get a new subscriber in the last week ?- that the reason..."]

But it won't happen, because charging won't happen. Because after all, what mass media is about is power. The power to sway opinion. And it's a power people like Murdock are willing to pay for, even if they have the audacity to try charging you for it.

Rupert and Friends would be smart to remember the Encyclopedia Britannica. Once a proud source of knowledge, for over 200 years, now relegated to a dark, seldom visited corner of the internet/library.

That all happened after this site showed up just 8 years ago: Wikipedia - Much maligned, but still triumphant.

Just wait until you see what the plan is for your kingdom. The free ride might be over, but that doesn't mean people will pay to ride. They might just go back to walking.

Obama's Healthcare Plan

Listening to the sketchy details of the Obama health care plan, I'm feeling like I might have set the bar too low for my September stock market prediction of 6,500. If this plan goes through, and it looks like it will, It will almost certainly cause a large spike in unemployment.

I figure the Wall Street firms are not really that concerned right now, as they assume their health plans are already above the minimums that will be set by the government. However, their short-sightedness won't spare them from the pain. I predict the smaller business will soon realize they can't make it with the added healthcare costs and will begin either closing up shop or dumping employees. Those employees will then be a further drain on taxpayers and business as they collect unemployment and other government benefits, including the new government (Read:Taxpayer) funded healthcare. Who doesn't see the huge funding gap that will be the result of this large unemployment shift? Probably the White House analysts figuring out how much it's going to cost.

So, back to Wall Street. Who's buying their products? Soon no one will be able to afford it unless it's an essential item. For the economy, this will be disastrous.

The DJIA at 6,500 might end up looking like the good old days by 2010.

Washington Nationals Turn Out To Be A Bad Deal For D.C.

Nationals Not Paying Off for D.C.

Duh. Who would have thought building a $700 million stadium was a good idea?

And DC Schools are just as bad as they used to be.

Eight States Hit Historic Highs For Unemployment In May

In May, (8) states set new records for their unemployment rate. In early August, we'll see if more states will be added to the list of new highs in 2009:

California 11.5
Florida 10.2
Georgia 9.7
Nevada 11.3
North Carolina 11.1
Oregon 12.4
Rhode Island 12.1
South Carolina 12.1

Stock Market Prediction: Take Two

Ok, Here goes my second prediction on the stock market. Back in October I predicted the DJIA would fall to 7,500 within 30 days. It did lose 481 points during that period, but wasn't as bad as I had predicted. But I did note that on March 6, 2009, it was only ~100 points from my previously rediculous sounding prediction. I figure my timing is a bit off.

So here's my second go. In the next 90 days (including the 90th day...a larger time frame to account for my inaccuracy) the DJIA will drop to or below 6,500 at least once.

Today's close was: 8,612.13

I guess we'll see on 9/14/2009 or sooner.

Chinese Company to Buy Hummer

Well, I hope they know that Hummers get like 8 MPG. But this is the clearest example that the Chinese are going to cash in their dissolving dollars for real assets.

Americans are going to have a hard time swallowing the idea that to get better, we must sell off the last manufacturing capability we have and become totally dependent on China.

Remember That You Read It

5/27/2009

"WASHINGTON (AP) — More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy.

That assessment came from leading forecasters in a survey by the National Association for Business Economics released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues."

"More than 90 %" Eh? Too bad they didn't list names. I don't know anything about NABE, but I suspect they're about as good as the National Association of Realtors at predicting the economy.

UN Says 'Social Unrest' Is A Possibility; GM Asks For Another $2.6 billion in subsidies

UN chief Ban Ki-moon warned that the economic crisis could lead to widespread social unrest. Is that a threat or a prediction? Hard to tell.

GM asked for $2.6 billion in 'low interest loans" (i.e., subsidies) in order to build Hybrids. Oh, so now you need money to build Hybrids?? This from the company that was going to bring us the all electric Chevy Volt (and the EV-1, which they quietly killed back in the 90's.....smart move!).

How much longer can the US subsidize domestic auto manufactures before someone complains to the WTO? Isn't this what free trade isn't all about? I'm sure the automakers are just the tip of the iceberg...

Obama Gets Tough With American Automakers

By giving them more money. What, is this a joke? He's going to cover their warranty costs for them by making sure everyone knows Uncle Sam has the warranty covered.

If the news wasn't so adamant about telling me that this was "tough love" and that "frustrated Americans" (and just how many Americans were surveyed for that article??) were happy he was getting tough, I might just think Obama just caved in.

And this startled me: "Fiat is prepared to transfer its cutting-edge technology to Chrysler," he said. Fiat? Maybe things have changed since my mom's Fiat X1/9 was built....one would hope.

Depression, Here We Come.....

There's only denial left now, at least, that's how I see it. In the last year, the DJIA has lost 46% of it's value (!) . Citibank has lost 95% of it's value. Bank of America has lost 90%. GE has lost 80%. Ford has lost 70%.

Here are my predictions for the year ahead:

Inflation (thanks to the nearly $3 trillion spending spree) is not far away and will be rampant. The low prices and great 'deals' that are to be had right now are going to end fast as competition diminishes due to manufactures leaving the market (bankruptcy, mainly), and production cutbacks by the ones who survive.

When inflation comes (likely within the next year), the housing market will lock up due to high mortgage rates (remember the 16% rates of the early 1980's? I think we'll be at least that high). The 1% of buyers who can make it through the lending requirements maze with their 20% cash down-payment will find that at a 15+% interest rate, even the 'cheapest' of homes is unaffordable. Many lenders will leave the market all together, as the uncertainty of inflation and judicial modifications of mortgage contracts makes the business just too risky. Homeowners are going to have to get used to staying in their homes for the next 25-30 years. They won't be happy.

Production cutbacks will lead to high unemployment rates. Foreclosures will dominate the real estate market (much more so than today). Pension funds and 401(k)s will be virtually zeroed out. States and local governments will struggle to make ends meet as property values nosedive.

A rise in crime and economic frustration will lead to civil strife. There will likely be riots worldwide as citizens vent their frustrations against the perceived 'elite' who got everyone into this mess (and who's tab we'll all be picking up).

In short, I predict a real depression is in our future. Right now, the economic pundits on CNBC and elsewhere are looking for a bottom to the market. 6 months ago they chortled at the thought of a severe recession. In the next 6 months, they will be using the 'd' word with regularity.

The Chinese Want To Cash In Their Chips

And buy up some distressed real estate. Who can blame them? Their dollars will be massively devalued shortly. Maybe they'll buy up some of our failing banks too (Bank of China anyone?)

Why The Stimulus Bill Won't Work

If the $800 billion stimulus bill passes, which is still debatable, it will have minimum impact at best. Why? Because unlike the 1930's when government spending would go into the pockets of American workers and American companies to build American infrastructure, any stimulus that is initiated by the US government today will almost immediately exit the country and end up in the hands of a foreign country.

For example, think about the Blue Ridge Parkway which was built during the Great Depression as a way of stimulating the economy. American companies were paid to build it, and Americans were paid to do the labor. The money that went to companies was used to purchase equipment and materials. These items were almost certainly manufactured by other American companies. Thus the stimulus money created jobs on the Parkway, and in the equipment manufacturing plant in Detroit, the shovel factory in Atlanta, etc. Those business hired people who got paid and thus kept the stimulus going. Workers purchased goods with their earned money that was almost certainly American made. Thus the stimulus flowed throughout the entire economy.

Now consider what will happen today. A stimulus package to build a bridge. It will be awarded to a foreign national company who will use it to create a few jobs in the US to build the bridge but the bulk of the money will exit the American economy and go back to the home country. The materials will be purchased from the Japanese and the Chinese and maybe the Koreans.

The workers will take their money and buy a Japanese car, or maybe a nice HDTV from China, etc.. Thus their money will help sustain a retail job in the US and then exit the American economy and stimulate the Chinese Japanese Or Korean economy.

Because America produces next to nothing in this country, we cannot spend our way out of this mess like we did in the 1930's.

What the American economy needs is incentive to produce things in this country that will be desired by other Americans and people in other countries. Not more products produced by American companies in China (like Apple's iPod) but true quality, American products produced by American workers

Wow...that almost sounds like a union advertisement. Maybe they were right after all.

Pelosi Says "We Don't Need Republican Support" For The Stimulus Bill

So I assume she's fine with the Democrats taking the blame when it doesn't work? Meanwhile, the public seems to be siding more and more with the Republicans, as support for the bill has slipped 12% in the last 3 weeks. Now only 51% think it's a good idea.

This is a huge gamble for the Democrats that's likely to be a loser. If the economy gets better, they win and the Republicans look stupid. If the economy gets worse, they'll have a tough time making the case that it would have worked if we had just thrown a few more Trillion $'s down the drain.

Why The Auto Bailout Should Die

This is an excellent article from Forbes showing why the automotive bailout is a huge con job.

The Treasury Just Gave Away 1/2 Of Everything Produced In This Country Last Year

Wow. We're now up to $7.7 Trillion??? And to top it all off, much of this money is being given away in secrecy with no oversight.

The TARP program is in danger of becoming the largest financial fraud in history....

Here Come The Crashing Pension Plans

As I noted in my September 18th post, the collapsing pension plan will be the next big new story. Florida announced today that their public employee's pension plan has lost 1/4 of it's value. They say that's "pretty good considering". I bet they're telling the truth on that one too. Many corporate plans are already on the verge of collapse.

I suspect that in the next couple of months, we'll see a few of these pension plans' benefits completely frozen (if not wiped out). The big push will then be a push to fund these plans using taxpayer dollars.

So in essence, these plans represent a huge, unfunded, off-the-books liability for taxpayers that will soon be surfacing.

And you thought it was just going to be $700 billion...