Happy 4th!

I'd like to share the final passage from one of my favorite books, Founding Brothers by Joseph J. Ellis. I'm not sure how many people know the story of the deaths of two of the greatest Americans that ever lived, the 2nd and 3rd Presidents and longtime friends, they died on the same day, the 4th of July, exactly 50 years after the founding of the United States:

On the evening of July 3, 1826, Jefferson fell into a coma. His last discernible words, uttered to the physician and family gathered around the bedside, indicated he was hoping to time his exit in dramatic fashion: "Is it the Fourth?" It was not, but he lingered in a semiconscious condition until shortly after noon on the magic day. The same morning, Adams collapsed in his favorite reading chair. He lapsed into unconsciousness at almost the exact moment Jefferson died. The end came quickly, at about five-thirty that afternoon. He wakened for a brief moment, indicated that nothing more should be done to prolong the inevitable, then, with obvious effort, gave a final salute to his old friend with his last words: "Thomas Jefferson survives," or by another account, "Thomas Jefferson still lives." Whatever the version, he was wrong for the moment but right for the ages.

From time to time, day to day, it's easy to forget that there is something magical about this country. Between beers and hot dogs, take a moment to reflect. Happy 4th!

The Future of Newspapers and "Free"

Malcolm Gladwell's review of Chris Anderson's new book "Free" set off a big blogosphere discussion the past couple days. Which I guess is what you want when you are trying to sell a book. Gladwell didn't write a very favorable review, and Anderson responded today by saying Gladwell didn't understand the book. The majority of Gladwell's review was discussing the newspaper industry and how "free" business model isn't a business model at all.

Many others weighed in with comments here, here, here, here and probably a million others. I don't want to delve into the argument about whether "free" is the future, but I do want to make a point about the newspaper business that I didn't see mentioned in the discussion.

It isn't a big secret that newspapers are struggling, but the wrong root cause is often pointed to. Newspaper readership has been rapidly declining, due in part to the internet and the greatly increased availability of information. However, the big problem is that newspapers are spending lots of money to compete in areas they have no chance at winning. No business can survive if they attempt to compete in markets in which they have inherent disadvantages.

Consider three common sections of any newspaper: Technology, Sports and Arts. The Tech section is competing with a myriad of tech-focused content providers such as CNET, Wired, IGN, etc. The Sports section is competing with ESPN, Sports Illustrated, Rivals, etc. The Arts section competes with Amazon, RottenTomatoes.com, etc. All these competitors are focused on a specific, defined market while a newspaper is trying to provide this information to an undefined readership. There is a reason why there isn't a company out there that makes PCs, cars and clothes...the newspapers are spreading themselves too thin.

If I'm in charge of a newspaper tomorrow, the first thing I would evaluate is where we are providing value. Where is the competetion the thinnest? Think op-ed pages from star pundits and investigative journalism. How many times during the Presidential campaign was the news cycle driven by these two sources? I would then form partnerships with these other content providers that specialize in certain market segments and aggregate that data to a broader population. Finally, I would re-evaluate my advertising models to leverage new technologies: a website that millions of people visit and are registered with has inherent value that needs to be capitalized on.

Sounds simple doesn't it?

Inflation Adjusted S&P 500 Graph

Guess what this graph tells us:

It rhymes with GUY...

Hat Tip: Ritholtz

Canada, Obamanomics and the Right

I normally like David Frum, but I can't help but take issue with this article titled "Canada well-positioned to benefit from Obamanomics":

A decade ago, incomes per capita, even in wealthy Ontario, trailed those of every U.S. state except Mississippi. Obama’s poor economic management offers the opportunity for a stunning reversal of fortunes.

And maybe that’s the issue Prime Minister Harper should be sharpening as he prepares for his ultimate contest against Michael Ignatieff. Ignatieff’s goals as prime minister are hazy and maybe non-existent. Perhaps Harper could counter with one national goal: simple, clear and confident:

Canada will avoid reckless spending, avoid accumulating debt, hold the line on taxes and reduce the burden of government regulation, all to achieve, for the first time in Canadian history, higher average incomes on the Canadian side of the border than the American.

The basic premise is that because of the Obama administration's "staggering" spending, average incomes in Canada will surpass the US for the first time. A few commentators pointed out the absurdity of this, and really, there is no economic basis for that line of thinking considering 80% of Canadian exports go to the US. However, I'd like to take issue with a different portion of the article, the continuous harping on administration spending by right wing pundits.

Frum uses the current projections from the CBO for the Obama Health Care plan to make his point that spending is out of control. Ignoring the fact that those projections are bunk and based on an imcomplete plan, what are the other options? Something needs to be done about health care, 85% percent of the country supports fundamentally changing the health care system. Just like something needed to be done to stabalize the financial system, stimulate the economy and protect our strategic and economic interests in having a strong US based auto industry. This is what happens when political leaders are visionless for 8 years. There are a lot of problems that need fixing all at once.

Let's at least give the administration a year to implement their economic policy before we condemn it. And oh yea, Canada, the example given of an economically responsible country, they have universal health care. If they've figured it out, so can we.

Shelia Bair - A Profile

This was a worthwhile read. She seems like one of the few appointments that Bush got right:

Although she has no formal training as an economist, she has worked on and off as a financial regulator in Washington for nearly two decades. In 2006, George W. Bush appointed her to run the F.D.I.C., the agency that, established during the Depression, insures bank deposits. The position has a five-year term and is usually held by an anonymous bureaucrat, but Bair has forced her way to the center of the debate over the financial crisis.

Lenny Dykstra Isn't Smart

Everyone associated with the Lenny Dykstra interview on HBO Sports from Spring 2008 should be ashamed of themselves. In case you don't know, up until recently, Lenny Dykstra (yes the former baseball player) has been building a name for himself in the business world. Unfortunately, the recession seems to have hit him pretty hard.

Watch this video first, the interview from 2008:


Then watch the one from this year. (Deadspin doesn't let you embed their videos)

A recap of my favorite part:
Goldberg: "What do you say to all those people who say once you were flying high, now you are flat broke?"
Dykstra: "I don't know, man." (pulls out $75 cash from his pocket)
Goldberg: "Ok, so you have $75 in your pocket, that doesn't make you rich."

And really, Cramer just can't win (see the first clip), what an idiot.

House Cleaning

I cleaned up the blog over the weekend, including the following:

• Fixed the line spacing issue
• Increased the font size of the post text
• Fixed the comment posting (it had disappeared)
• Added ShareThis to each blog post (this is very cool, try it out)

I have quite a few bigger posts coming this week. Stay tuned.

Daily Noise Reduction (6/26)

Today's Must Read:
Krugman on Obama and Health Care Reform

Recommended:
The Most Expensive World Real Estate Markets

The Cost of the Upcoming Cap and Trade Bill

Are Mortgage Rates Below 5% Gone for Good?

Why Does Eddie Murphy Still Get to Make Movies?

The GOP is in Trouble

This graph really demonstrates the trouble the GOP is in:

Hat tip: Yglesias

RIP

Daily Noise Reduction (6/23)

Wow, not much out there worth posting today.

Must Read:
A Look at Landmark Train Stations and Their Replacements

Other:
Barry Ritholtz Has Really Soured on Obama

Empathy?

I don't know, its hard for me to feel bad for this lady:

Uhazi is drowning in a sea of debt. And, like millions of other Americans, it is a debt load that she built up slowly over more than two decades of easy credit that made it all too simple to spend. Now she worries she won’t be able to pay it off because of the recession, which has led to a reduction in her salary and an increase in her credit card bills.

Doesn't sound too bad, until you see that the "sea of debt" is actually $60,000. How do you rack up debt like that and not notice?

Explaining Failure to 9th Graders

I enjoyed this 2009 commencement address to 9th graders by Paul Tudor Jones. Read the whole thing here:

...
I’m here with you young men today because your parents wanted me to speak to you about service—that is, serving others and giving back to the broader community for the blessings that you have received in your life. But that is a speech for a later time in your life. Don’t get me wrong, serving others is really, really important. It truly is the secret to happiness in life. I swear to God. Money won’t do it. Fame won’t do it. Nor will sex, drugs, homeruns or high achievement. But now I am getting preachy.
...

Hat Tip: The Cunning Realist

National Home Prices and Unemployment

Interesting data from Calculated Risk:

Hat Tip: Bubble Meter

Daily Noise Reduction (6/22)

Today's Must Read:
The Effect of Lobbying on Health Care Reform

Recommended:
Ritholtz Comments on "Too Big to Fail"

Yglesias on Obama, the Deficit Slayer

A Hidden Provision in TARP

I'm about 6 weeks behind on the Economist right now (hey, I'm a busy guy) and I was catching up over the weekend. I was shocked when I read this line in this April 30th article about job recruitment:

A provision in the Troubled Asset Relief Programme requires companies that receive government funds to hire Americans before foreigners.

Why do we do this to ourselves? This idea that there will be a limited amount of highly skilled jobs going forward just isn't based in reality. We need to attract top tier talent to the US and turning away people who want to be here just isn't smart policy.

Isn't it great how provisions like this just "sneak" in to major legislation?

Iran Update

Following this has been fascinating. One gets the sense that we are watching (or really reading) as a historical event unfolds. As I posted previously, Andrew Sullivan has basically converted his blog to an Iranian Election blog and has been doing an amazing job following the story.

At the same time, one needs to stay in touch with reality, and the likelihood of regime change in Iran is unfortunately quite slim.

Still, something has changed fundamentally on the ground in Iran, and even if Ahmadinejad remains in power, the world's view of Iran is very different now compared with just a week ago.

A Public Health Care Option

There has been a lot of recent discussion and disagreement over a "public" health care option. Some of the Democrats, including the President, want a public health care option that would be similar to the health care plan offered to members of congress. This public plan would be just one plan that people could choose from when selecting their health insurance. As can be imagined, this idea hasn't gone over very well with Republicans. However, the other day some health care executives did a good job of unintentionally making the case for such a plan:

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.

It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.

So just to be clear here, people enroll and pay their health insurance premiums in order to be covered when something goes wrong, but when they get sick, these insurance companies cancel their coverage. This practice must have been going on under the radar and surely couldn't be endorsed by the CEO's of these companies right?

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show "intentional fraud."

The answer from all three executives:

"No."

Wow. A public option would force these insurance companies to treat their customers fairly.

Hat Tip: Kevin Drum

Daily Noise Reduction (6/17)

There were quite a few good articles from yesterday. The must read:
Diaries from People Who Have Quit Driving

Suggested Reading:
Mark Thoma Explains Health Care Rationing

Cramer Calls A Housing Bottom...

Ryan Avent Questions the Filibuster

Daily Noise Reduction (6/16)

Didn't get a chance to post these yesterday.

Must read:
Krugman Explains What Is Going On With Interest Rates

Suggested Reading:
Tyler Cowen Thinks Health Care Reform is Falling Apart

Drum is Not Impressed by the New Financial Regulations

NYC Hyline Park Hater Alert

This was a pretty entertaining read. James Howard Kunstler, an author, lays into Americans and infrastructure planning in this country:

One of Kunstler’s consistent themes is that America has become a nation of juvenile-minded people who live in a fantasyland of cultural distraction and have forgotten how to do real stuff. We’re good at getting creative tattoos and minutely calculating the social implications of our hairdos — but not so good at the hard and relentless work of looking after the foundations of our society. We came into a vast amount societal capital, and like a spoiled trust fund kid sobering up after an epic binge, we’re starting to realize that we’ve burned through the inheritance and are going to have go get a job at Burger King or something.

Your Daily Noise Reduction (6/15)

There is a bug affecting text spacing that I'm trying to fix. Should have that resolved in the next day or two.

In the meantime, here is today's set of links. Today's must read:
Ritholtz on How to Fix Financial TV

Suggested Reading:
Peter Orszag from OMB Comments on Health care

US Home Prices Still Overvalued?

Iran

In case you haven't been following the election in Iran, most reports are calling the "results" a fraud. Very little information other than the total percentage of the votes received by each candidate have been officially reported.

Andrew Sullivan has the best roundup I've seen and has been blogging the election all weekend. The latest news is of disturbing violence towards the protesting students:

I'm getting several reports of a brutal assault on the students of Tehran University. It's part of an attempt to terrify people into not rallying tomorrow.

I'm baaaack

After a much longer than expected hiatus (sorry about that), I'm back with a completely redesigned look. What do you think of it?

Regular posting will begin again today, and look for some new features to be rolled out in the near future. Hopefully some of my regular readers have stuck with me through the long posting drought.

Hiatus

Sorry for the lack of posts, my computer crashed early this week and I'm also putting the finishing touches on my masters thesis. Should be back with a new and improved version of NoEmptyWallets soon...