Unbeknownst to Me

Remember, friends, when looking for reliable advice on navigating the tricky waters of these here intertubes, only someone with experience should guide you. Especially if that experience is being scammed. Repeatedly. 27 times. Because if you haven’t been scammed at least 25 times, you don’t know what to look out for. That’s why only a guy who’s been scammed 27 times will be able to tell you which scams really work.

Oh, you wanted a work at home job that isn’t a scam? Well, I don’t think this guy can help you.

Giving you a break from Depression II: Bailout Boogaloo, Apple has justified my continued holding of the stock. They have dropped the NDA on iPhone applications developers, ending one of the two biggest obstacles to iPhone application development. Now, at least, you can talk about the API and how to use it without getting sued.

Now, I’d buy more stock if they’d publish some guidelines on applications and stick to them. Right now they’re being capricious on what they accept and reject, and because this happens at the end of the development process, all your effort is in vain. A centralized App Store with a consistent, predictable set of rules for what is in and out is not necessarily a weakness, but a centralized App Store with capricious and arbitrary rejections of applications can kill all but the largest developers with separate guarantees from Apple from developing for the platform.

Part One is done, Steve. Now do Part Two and see your stock recover.

In contrast with some other Democrats, some of the most “progressive” Demoracts have announced the “No BAILOUTS Act” (overwrought tasteless acronym included, no charge), which on first blush at least deserves serious discussion and a rebuttal by Paulson/Bernanke if they have a reason it can’t work.

It addresses the over-regulation of Sarbanes-Oxley that has made this crisis more acute by eliminating Mark-to-Market accounting rules when there is no meaningful market. So when there is great uncertainty about how many mortgages in a portfolio will default and the prices offered are a fraction of the likely income from simply holding onto the mortgages, you can value them at the likely value of holding the mortgage to maturity. They’re getting in bed with some Republicans and libertarians here. Whoah, Nellie. Bet this is the part other Democrats have the most problems with.

It eliminates “naked” short selling, which doesn’t arouse my ire much but probably is only a fraction of the current issue. Basically this is short selling where you don’t even borrow the stock in the first place to sell it. You can theoretically leave someone else holding the bag, and it’s a dumb idea to begin with.

It has another provision ensuring the “uptick” rule returns, with again a myopic focus on shorts, even though shorts are generally just part of the reaction to an overvalued stock. But it can potentially reduce panic by making people not “pile on” to a declining stock. (Though as an owner of AAPL, I can tell you the broader market does this just fine.)

It also ressurects the “Net Worth Certificate” program, the dodgiest part of the proposal, given that it rather suspiciously ended right after the S&L bailout and 25% of recipients needed further help. But a few variations on this theme (essentially giving government loans based on the worth of the bank, not on the worth of mortgage-backed securities) have been proposed and economists should bash on it for a while to see if it holds water.

Finally, it increases the FDIC insurance rate to $250,000, although the original $100,000 guarantee may have encouraged some of the riskiness that led to the S&L crisis. But that $100,000 insurance limit was made a long time and much inflation ago, so it’s arguably worth far less now than it was then. It might protect banks from runs (*cough* Wachovia/Citibank *cough*), but so many people with that kind of money also have mutual funds that aren’t insured, so I don’t know how it will really react.

This is not to say that I wholeheartedly endorse this plan or even know it’s a superior alternative; but it’s an alternative that doesn’t seem any more laughable on its face than the Paulson Plan, and it deserves to be compared and contrasted for, say, the remainder of this week? If the credit market seizes up before then, then Paulson was probably too late…again.

I’ve seen several variations of this comment:

“I really do think there could have been a better deal,” said Rep. Sheila Jackson-Lee, a Democrat from Texas. “There was no mark in the bill for specifically helping Americans — Mr. and Mrs. Main Street — get out of their mortgage foreclosure crisis.”

Great, so now it’s not just $700 billion to bail out irresponsible Wall Street bankers who make overly risky financial bets assuming that housing prices would rise 20% per year forever, but we’re going to tack on however many billion would be needed to free anybody from having made an overly risky financial bet that their own house would appreciate 20% per year forever. I’m not clear on why either deserves our sympathy.

It’s always sad to be evicted, but believe it or not, the alternative for most people is not Hooverville, it’s called that thing that only the wrong kind of white people and minorities do, renting.

Yes, I’m sorry you’ll have a landlord. Yes, I’m sorry you won’t get a tax break. However, there are people who might otherwise be the Democrats’ natural constituency who are going to be pissed if they are once again denied their own shot at a house one day because they didn’t decide that a negative-amortization loan was a great idea.

Sorry, you bought too much house, and now you want someone else to pay for it so you don’t have to be a dirty plebe who rents.

Democrats, don’t kid yourselves that the primary beneficiaries will be that struggling immigrant family or the historically-oppressed Detroit resident. The primary beneficiaries will be college-educated WASP two-income earners who decided they needed a 5-bedroom 4000 square foot house and a pair of garages for their SUVs to raise little Tyler and Madison. It’s not Mr. and Mrs. Main Street; it’s Mr. and Mrs. Hollybrooke Drive in the Gated Community of Windstone Estates.

If it’s not good for Wall Street Fat Cats™, it’s not good for Johnny and Suzie McMansion, either.

In case you’re wondering, they’ll turn and vote Republican when you’re forced to raise their taxes to pay for it, and you’ll have another eight years of chimp-rule.

It’ll be all your fault for buying alcoholics another round and calling it compassion.

While clearly Wall Street found yesterday’s failure of bailout legislation after a mere week of consideration and a day of debate to be a Bad Thing, I wonder if it’s not a good opportunity. The trend in the Bush administration to pass sweeping legislation under a CRISIS!!!! mentality hasn’t been exactly wonderful. Just like moving a patient with a spinal injury, the impulse to Do Something!!!! can backfire if you don’t really know what to do. Let’s review:

The PATRIOT Act: Passed without most even reading the bill, with off-the shelf Clinton-era wishlists for an expansion of the Justice Department’s abilities to spy on Americans without review from the courts has resulted in exactly zero arrests that have relied on PATRIOT Act laws. It has created one of the least efficient mega-agencies of all time and resulted in local municipalities forming SWAT teams and buying armored personnel carriers. Oh, and it mandates that all copies of the Constitution be used as toilet paper.

Sarbanes-Oxley: Got a little more debate, but again, most people hadn’t even read it, and there are suggestions its provisions have contributed to the current crisis. Growth afterwards has been sluggish; among other things, it prohibits a company from providing free software updates to hardware it sells if it results in new functionality. It’s not exactly a good example of reckless deregulation, to say the least. It is a good example of reckless regulation, passed long after the market had already executed the offending companies that prompted calls for it.

The Emergency Stabilization Act of 2008: It might not even work, and there are alternatives that would put the punishment squarely on the banks who undertook risky securitization and not punish, say, you. Maybe they wouldn’t work either, and none address the ratings agencies that were complicit (much like the accounting companies in the Enron scandal); let’s try something crazy like a another week of hearings and a debate.

Good thing: nobody made trade with furriners their racist whipping boy.

Bad thing: in a debate on foreign policy, international trade didn’t even come up.

My friends, here’s some straight talk: we are soooo fucked.

‘Cuz apparently Phil Schiller has been eating his lunch:

So much for telling his supporters about the Veepstakes winner first. That story posted while this was still on Obama’s site:

Have you seen the ad where a guy with tiger stripe tattoos attempts to get a tattoo shop to take them off, and they tell him it’s impossible, just like they told him before? The guy objects saying, “well, now I’m on my digital phone, so…the call should go better.” He expects swapping out one technology will make everything behave differently than it did previously.

Something similar happened back in the days of the Dot Com boom–and subsequent bust. People imagined that a flawed business model + The Internet would mean the laws of economics could be reversed. It didn’t matter if you had a company providing a service no one was willing to pay for. This was on the Internet, dammit! Hell, a centralized pet food delivery service + The Internet = a good idea! Well, we all know how that turned out.

I suspect, based on a former colleague’s report of a Thailand conference of “social entrepreneurs”, that we’ve achieved Pets.org, or in this case, toilets.org.

As targeted by the Millenium Development Goals, over two billion people suffer disease, water pollution, and economic woes because of inadequate sanitation. And promising solutions in some cultures and economies are inhibited from scaling larger because producing appropriate toilets takes time. Especially if we’re talking millions and millions of locally appropriate toilets!

But this group of entrepreneurs gathered in Thailand this week, sponsored by Ashoka, has a new idea: Start producing the toilet components centrally at a huge scale rather than in scattered places around the world. Then use the web to give local groups in any country access to this single global source, through a single portal or marketplace. The massive global demand channeled through a single web marketplace will justify entrepreneurial investment in the huge volume, high quality, low cost supply side to begin with.

Pets.com, the above-mentioned poster puppet for Dot Com failure, was trying to solve the wrong problem. It assumed that the problem with pet food was that it was too hard to get, so aggregating demand would allow personalized delivery. It turns out there was a perfectly good existing model for delivering dog food. You ship them in a truck to the local grocery store, and people buy them along with their own food. The problem wasn’t on the demand side. As it turns out, there wasn’t really a problem until production was outsourced to countries with insufficient quality control to eke out a few percentage points more efficiency.

Could It Work?

So, let’s consider the problem of toilets. The first question I ask when given a new proposal is, “if this works, will it really solve anything?” There’s a reason to doubt that. Water-borne diseases arise from inadequate clean water supplies, and toilets don’t directly address this problem. Segway inventor Dean Kamen, whose entrepreneurship is of the plain vanilla variety, unmodified by the adjective “social”, does have an innovation that directly addresses this problem.

Now I’m not a water quality expert, and certainly one thing that affects water quality is keeping sewage out of it, and one component of that is to make sure that human waste goes into the sewage system in the first place, so we’ll grant that toilet availability could address one part of the problem. Though as a veteran of the concrete hole-in-the-floor style toilet in Russia, a country not known for water-borne diseases at the time, I’m not sure it’s the largest factor in disease prevention.

That’s a Lotta Water

Another question I ask is, “Is this going to create another, even bigger problem if implemented as specified?” As anyone who tried to get an old-style, flushes-for-sure toilet in recent years in this country knows, the amount of water used to flush toilets is considered a problem. With experts warning of a growing fresh water shortage and developing world water systems already not as robust as their developed counterparts, I wonder if first increasing toilet ownership won’t cause supply issues that outstrip the problems toilets solve.

So, let’s look at the proposal itself.

How Do We Make Money? VOLUME!

Remember, the problem is that “producing [locally] appropriate toilets takes time.” OK. So we have local variations on the toilet. So each culture will demand its own toilet design. That means there is a limited opportunity for standardization. When Henry Ford made the automobile affordable, he did it by standardizing the designs so they could be mass produced on an assembly line, what economists call taking advantage of economies of scale. And as far back as Adam Smith, economists have realized that by doing the same thing over and over in bigger batches, you can produce things more cheaply, be they Smith’s infamous pin factory, Henry Ford’s Model A, or the Standard company’s, well, toilets.

Yet the solution is to “start producing the toilet components centrally at a huge scale rather than in scattered places around the world.” But these toilets aren’t standard, at least not above the cultural level. So where do the economies of scale come from? There are potentially some savings in sharing common supplies (the base components for ceramic or plastics), but again, these savings are limited if there is no standardization.

If the idea is that multiple factories create redundancy, and by eliminating wasteful competition we’ll create savings, then I have to say, that idea has been tried. It was not as successful as initially hoped.

Additionally, by placing the point of production further from the point of consumption, you’re going to increase shipping costs. Now, modern shipping is very efficient from factory to customer port. Where many developing countries have problems, however, are horrific import tariffs, out and out bribery and corruption, theft, and a bad infrastructure once the goods leave the port. All of these serve to make (in some cases, by design) foreign goods vastly more expensive than domestic products. If you’re living on a few dollars a day, a foreign toilet may be simply out of reach.

This all assumes that production goes off without a hitch. But if you centralize production to one facility, you also create a single point of failure. As I indirectly referred to above, the Soviet system was noted for shortages, while basic goods are rarely in shortage in capitalist economies. The price mechanism has something to do with it, but the “wasteful competition” also creates redundancy so a work stoppage, natural disaster, or supply problem in one factory doesn’t mean production of that good completely stops. But in this case many more eggs would be in one, er, toilet bowl.

Now With More Web!

So what’s the magic incantation in this proposal? “The massive global demand channeled through a single web marketplace will justify entrepreneurial investment in the huge volume, high quality, low cost supply side to begin with.” Someone hasn’t been following the story of the One Laptop Per Child (OLPC) project very closely. It turns out, access to computing power is not the primary stumbling block or most pressing need in developing countries. First, they need reliable infrastructure, including, well, clean water supplies. The OLPC has been tough to even give away.

I’m not sure people in developing countries sit around thinking, “You know, buying a toilet is so time consuming, taking away from my busy day of walking several miles for buckets of clean water. If only there were some kind of web site I could log onto, order the toilet, and then be on my way to the next town for my turn at the water pump.”

Disintermediation was a neologism bandied about during the Dot Com boom. The idea was, you could cut out the middle man–the distributor, the guy who used to aggregate demand for certain items–and cut the cost of an item. But no one in this exercise has suggested middlemen are the problem–at least, not the kind of middlemen you can disintermediate via a website. Governments, as always, want their cut, and corrupt governments want even more. And they don’t even aggregate demand!

But as Pets.com proved, even in low-tarrif, low-corruption countries, aggregating demand through a web site only achieves disintermediation savings if distributors cost more than individualized shipping. So unless Lenny at DogFoodRUs adds on more than $10 per bag of dog food, shipping direct to your door isn’t going to be a savings.

Aggregating demand, by itself, is only important if that demand is too diffuse for a distributor to be in business. Dog food demand is ubiquitous. Demands for, say Swedish progressive rock is just a little more spread out. There are professional Swedish progressive rock bands now because the Internet has given them a market for CDs and a vehicle to distribute samples to people who might come a great distance to see them play at a festival in the US.

But toilets–well, as the Japanese say, everyone poops. Demand for it isn’t scattered among a few nerdy white guys. It’s even more ubiquitous than dog food. So a website really is a solution to a problem that doesn’t exist.

Down the Drain

So, what are we left with? We’re left with an idea that may or may not address the problem it purports to solve, that may create problems as bad or worse than the problem it purports to solve, that ignores basic microeconomics, and that even gets its web strategy wrong.

I’m all for innovative solution to developing country problems, but I think this one has a potential to rival Pets.com in the world of misapplied technology.

Unfortunately, not me, a different Sandy Smith who’s a producer in Britain.

And the people horrified were British pensioners who went on cheap holiday to Mexico. Part of the savings was agreeing to be put in a hotel once you arrive and they determine who had room. Trouble was, a few of them, without foreknowledge, got sent to, well, a swingers’ hotel.

EXCLUSIVE:
PENSIONERS TRAPPED
IN SEX-PARTY HELL

- Couples romp in pool - Boozy oral sex games -Swingers play in nude

BRITISH tourists looking for a peaceful fortnight in the sun found themselves trapped in a sleazy resort surrounded by sex-crazed swingers.

Side note: I have a soft spot for tabloids in the British style. That’s perhaps why I don’t get as upset over Fox News as some. Sure it’s right wing, but in the end it’s about the Shock and Horror of the day, and they’ll be just as happy if Obama wins so they can be Shocked and Horrified some more without any of that apologizing and covering up they’ve been doing for the past eight years.

So, on with the show:

Marlene Black, 65, a retired chef from Hull, who was with her daughter Kym Maxwell, said: “I saw two men with a board saying ‘I am a big loser’. A second later I realised they were both starkers.

“Women were by the pool doing things with bananas and the men had their blow-up dolls.

“It was filthy and depraved. I have never seen people as obsessed with sex.”

Marly, baby, don’t front. You were a chef. I’ve read Kitchen Confidential. You’re not fooling anyone. You’re also 65, which makes you a Baby Boomer. It worked the same way over there, like, wow, free love.

What did the chef see?

SORDID: Man licks woman’s breasts as onlookers ogle the ‘Tequilla game’

Shocking. SHOCKING. I am UPSET. I do not have nearly the BMI to be any part of this. And, you know, the committed partner. But even if she were more open-minded, there would be a lot of physical training, and I have a chronic laziness condition.

So where did my Google vanity search get the link? Here:

SHOCKING: Banana game gets more depraved

Watchdog editor Sandy Smith said: “We decided to go out ourselves because we wanted to be sure the couples who complained to us weren’t just a bit prudish.

“But our team was shocked by what they saw and were able to film and they’re young and broadminded.

Yeah, Sandy, I’m sure. Good journalism, that. Dedication despite the hardship of the story. Also, you’re probably as pasty and blobby as I am, right? Let’s be honest here, that’s why you didn’t join in on those reindeer games…though I’d love to see your expense reports.

“We’re glad the firm has offered compensation after Watchdog got involved and said it won’t put ‘allocation on arrival’ guests in the Blue Bay Getaway again.”

Ah, a happy ending…if you know what I mean. Nudge, nudge, wink, wink.