marți, 24 mai 2011

Seth's Blog : Legacy issues

Legacy issues

What does your organization do with legacy products and services? Things you started that never really caught on, or died out slowly over time?

That's a very easy way to judge the posture and speed of a brand. If there's a one-way track--stuff gets added, but it never gets taken away--then the ship is going to get slower and heavier and become much harder to handle until it eventually sinks.

How long did it take Detroit to take the ashtrays out of cars? The single-sex admission policy at the club? How many people who use your website need to speak up on behalf of a button or a policy for you to persist in keeping it there? How long before you cancel the Sisterhood meetings that are now attended by just three people?

Either you're focused on maintaining the legacy features or you're focused on figuring out how to replace them. Driving with your eyes on the rearview mirror is difficult indeed.

In a world of little competition, legacy features are something worth keeping. No sense alienating loyal customers.

But we don't live in a world of little competition. The faster your industry moves, the more likely others are willing to live without the legacy stuff and create a solution that's going to eclipse what you've got, legacies and all.

 

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luni, 23 mai 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Illinois Treasurer Warns Against Lending to Illinois

Posted: 23 May 2011 10:48 PM PDT

Here's one for the truth is funnier than fiction column. The Illinois Treasurer says he would call bond houses, warn against lending to Illinois
Illinois chief fiscal officer said Monday he is willing to dial up the bond houses and finance companies to alert them that lending the state more money, as Gov. Pat Quinn has proposed, would be a "major risk."

"If I need to send letters to the rating companies to tell them the treasurer of Illinois is opposed to more borrowing, I'm going to do that," said Republican Treasurer Dan Rutherford.

Rutherford says the debt from past borrowing has soared to $45 billion in recent years, which amounts to $10,000 for every household in the state. As a result, Illinois has the second-worst credit rating in the nation, above only California, he added.

The backlog of unpaid bills will reach $8 billion by July, Comptroller Judy Baar Topinka recently estimated.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Stunning 360 Degree Images of Abandoned Property Sites in Detroit Including the Michigan Central Train Depot

Posted: 23 May 2011 04:37 PM PDT

Please take a look at this link of a 360 degree photo tour of several spots in or around Detroit, including the abandoned Michigan Central Train station.

Reader "Rick" who sent the link suggested "It looks like a scene from the movie Escape from New York"

Give the images time to load. They first load in black-and-white, then color. You can use the mouse to pan around but it is easiest to use the left and right arrows on the image.

Here is an image of the Michigan Central Train depot from the outside courtesy of the Wall Street Journal article Less Than a Full-Service City



I have written about Detroit on many occasions. Here are a few examples.


Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Illinois Plans to Blow $100 Million in Troubled Mortgage Relief Pilot Program

Posted: 23 May 2011 12:29 PM PDT

Given a budget deficit of $1.4 trillion, we cannot afford to waste $100 million on ridiculous mortgage relief programs. Yet that is what bureaucrats want to do with a "pilot program" in Illinois. Worse yet, the proposal is sure to expand to other states wasting billions more taxpayer money.

MarketWatch reports Illinois plan to cut mortgage debt is making waves
A pilot program close to getting off the ground in Illinois seeks to use $100 million in taxpayer dollars to help potentially thousands of troubled mortgage holders in the state who owe more than their homes are worth.

Backers of the program, which needs the approval of the U.S. Treasury Department to move forward, argue that it will stabilize neighborhoods, reduce foreclosures, help the economic recovery and ultimately cost taxpayers nothing. Opponents insist it will leave taxpayers on the hook and drive better-off homeowners to engage in so-called strategic default, leading to more foreclosures and less stability.

Mercy Housing is seeking to use the fund to initially buy as many as 3,000 mortgages from underwater borrowers. Proponents say the loans — which are on the verge of foreclosure — can be bought at such a major discount from banks that balances could be reduced to levels below what the homes in question are worth.

The effort comes as many expect the number of U.S. foreclosures to climb to between 8 million and 13 million by 2012. Last year, Illinois had the 9th-highest foreclosure rate, of which 2.87% of all housing units received a foreclosure notice, according to RealtyTrac data.

George Ostendorf, president of American Mortgage Capital Group, said the purchases of non-performing mortgages would be combined with counseling services to help borrowers budget for both their mortgage and non-mortgage debt.

Ostendorf envisions that in a scenario where a delinquent borrower owes $180,000 on a home, the fund could buy it for $90,000. In this example, the property is worth $150,000 — less than what the borrower owes — and the fund's managers would cut the loan owed to $135,000 so the homeowner isn't underwater anymore.

The fund would seek to sell the now-performing loan for $135,000 about two years or more after purchase, generating an approximate income of $40,500 after operating costs. That income could initially be reinvested in buying more problem underwater loans, but in later years the income would go back to make sure there are no costs to taxpayers from the program.
Heart of the Plan is Nonsense

The heart of this ridiculous plan is the idea that banks would sell a property worth $150,000 for $90,000 enabling the fund to get a huge return in two years and reinvest the money into buying more mortgages at bargain prices.

Excuse me for asking the obvious question but what makes these clowns think they can get something worth $150,000 for $90,000? The idea is complete silliness.

The second thing I want to point out is there are 3,572,679 seriously delinquent properties as per this nice table courtesy of Calculated Risk



For the sake of argument, let's assume each state saved 3,000 mortgages. That would be 150,000 out of a pool of seriously delinquent 3,572,679 loans. Bear in mind that is seriously delinquent, not simply delinquent.

Even if the plan saved 3,000 homes per state, it would not be worth spending $100 million to do it. Worse yet, if the bureaucrats start such a scheme, it is all but certain to quickly expand from $100 million to billions.

Then two years down the road when the fund goes to sell those mortgages there will not be a dime of profit, only losses and another huge waste of time and money.

I have a question for George Ostendorf, president of American Mortgage Capital Group.

Hey buddy, if you think someone can purchase mortgages worth $150,000 for $90,000, turning a huge profit in a mere two years, then why isn't it happening already?

The answer is obvious: The plan is nonsense. If the plan was viable, it would be attracting hundreds of millions of dollars of capital right now from the free market.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


China Manufacturing Slows; Euro Drops on Spanish, German Elections; Swiss Franc at Record High vs. Euro; Asia, European Markets Hammered

Posted: 23 May 2011 02:38 AM PDT

Equity futures are down sharply in Asia, Australia, Europe, and the US in conjunction with data that shows manufacturing in China is barely above contraction, with exports in contraction.

In addition, the Euro is down over 2 cents vs. the US dollar and at a record low vs. the Swiss Franc following weekend elections in Spain and Germany that add to growing doubts about Spain's ability to implement promised austerity programs.

Asia-Pacific Equities



European Equities



Euro at Record Low vs. Swiss Franc

Bloomberg reports Euro Falls to Record Low Versus Franc on Debt Concerns, Spanish Election
The euro touched a record low against the Swiss franc as concern over Europe's sovereign debt crisis deepened, reducing the appeal of the region's assets.

The 17-nation currency reached the lowest in a week against the dollar after Spain's Socialist party suffered its worst electoral defeat in more than 30 years and Standard & Poor's on May 20 said it may lower Italy's credit rating. The Dollar Index climbed to its highest in almost seven weeks as declines in Asian stocks spurred demand for safer assets.

Spanish voters punished Prime Minister Jose Luis Rodriguez Zapatero's party for soaring unemployment and spending cuts that aimed to shield the nation from Europe's debt crisis. With 99 percent of votes counted, the opposition People's Party won 38 percent of the vote in municipal elections, compared with 28 percent for the ruling Socialists, the Interior Ministry said.

German Chancellor Angela Merkel's party slumped to third place in a state election in Bremen and blamed the result on having to shoulder Europe's debt crisis, as the main opposition Social Democrats were re-elected.
For more on the elections please see Prime Minister Zapatero's Socialist Party Routed in Spanish Elections; Antinuclear Greens Surpass Merkel's Party in Local German Vote

China Manufacturing Index Lowest Level in 10 Months

Bloomberg reports Chinese Manufacturing Index Drops to Lowest Level in 10 Months
A Chinese manufacturing index fell to its lowest level in 10 months, adding to signs that economic growth is cooling after the government raised interest rates and curbed lending to rein in inflation.

The preliminary purchasing managers' index compiled by HSBC Holdings Plc and Markit Economics dropped to 51.1 in May from a final reading of 51.8 in April. A number above 50 indicates expansion.

HSBC's preliminary manufacturing index, called the Flash PMI, is based on 85 percent to 90 percent of the total responses to its monthly purchasing managers' survey sent to executives in more than 400 manufacturing companies.

New export orders contracted in May and stocks of purchases and finished goods fell at a faster rate, HSBC said. An output gauge declined to a 10-month low, although it remained above the 50 level that divides expansion from contraction, the bank said.
Economic Slowdown List

Economic Slowdown in the US: Non-Manufacturing ISM Plunges Below Prediction of All 73 Economists, New Orders Collapse

Economic Slowdown in Europe: Huge Cracks in Global Recovery Thesis; Industrial Production Unexpectedly Drops in Germany, France; UK Weaker than Expected.

Economic Bust in Australia: Near-Record Corporate Bankruptcies, Employment Drops Unexpectedly; Rise in Bad Home Loans; Record Low Property Transactions

Add China to the global slowdown list.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Prime Minister Zapatero’s Socialist Party Routed in Spanish Elections; Antinuclear Greens Surpass Merkel's Party in Local German Vote

Posted: 23 May 2011 01:21 AM PDT

The Euro is down nearly 2 cents vs. the dollar as incumbent parties in Spain and Germany were trounced in weekend elections.

  • In Spain, Prime Minister Zapatero's Socialist Party suffered a massive defeat over his austerity programs.

  • The Spanish elections cast still more doubt about Zapatero's ability to stick with unpopular programs in the midst of 21% unemployment.

  • In Germany, Chancellor Angela Merkel's Christian Democratic party slumped to third place in a state election, trailing the Greens in a wave of antinuclear sentiment.

  • Polls show Merkel would be soundly defeated if national elections were held today.

Bloomberg reports Merkel's Party Slumps to Third in Bremen
German Chancellor Angela Merkel's party slumped to third place in a state election in Bremen and blamed the result on having to shoulder Europe's debt crisis, as the main opposition Social Democrats were re-elected.

The Social Democratic Party took 38.3 percent in Bremen, a city-state that includes the car-exporting port of Bremerhaven, to cement their 64-year hold on Germany's smallest state, ARD television projections showed yesterday. The Greens won 22.8 percent to take second place and continue their coalition with the SPD of the past four years. Merkel's Christian Democratic Union slid to 20.2 percent, its worst result since 1959.

While the CDU dropped about 5 percentage points from the last election in 2007, Merkel's Free Democratic Party coalition partner in the federal government slumped to 2.7 percent, below the 5 percent threshold needed to win seats, projections as of 7:55 p.m. showed. That's the third state in which the party lost all its parliamentary seats this year after elections in Rhineland-Palatinate and Saxony-Anhalt. The Left Party took 5.9 percent in Bremen.

Nationally, Merkel's coalition trails the opposition SPD and Greens by as many as 13 percentage points in polls as euro- area bailouts sap voter faith and erode confidence in the euro.

German pressure on debt-strapped euro countries to cut spending and boost revenue is growing as the crisis returns to Greece, one year after a Europe-led bailout staved off its default. Merkel last week called on Greeks, Spaniards and Portuguese to stop retiring earlier and taking more vacation time than Germans.
Greens Overtake CDU

Please consider Merkel's CDU Overtaken By Greens
Germany's Social Democrats and Green Party--in opposition nationwide--won elections in the city-state of Bremen Sunday, according to preliminary results broadcast by ARD television, handing another painful defeat to the parties in German Chancellor Angela Merkel's governing coalition.

According to the preliminary results, the Greens for the first time in any state in Germany won more votes than Merkel's Christian Democrats, or CDU, as an antinuclear electorate doubted the veracity of Merkel's turnaround in nuclear policy after the disaster at nuclear plants in Japan.

Were Merkel's government to decide to abandon nuclear power "then we would have achieved our goal," Green Party leader Claudia Roth said on ARD television. "The fight [against nuclear power] for more than 30 years would have been worth it."

After the disaster at the Fukushima Daiichi plant in March, Merkel ordered a three-month safety review of Germany's 17 nuclear-power stations. She suspended an earlier decision by her government to grant nuclear plants a lifespan extension. She then also ordered the seven oldest nuclear-power stations to be shut down temporarily while nuclear safety in Germany is being reviewed.

The government has made clear that the question is no longer whether Germany will relinquish nuclear power, but only at what price and when. Opinion polls have shown that voters trust the Green party far more than the government on nuclear issues.

A growing unease about more aid for troubled countries in the euro zone, such as Greece and Portugal, further harmed the CDU and Merkel's coalition partner in the national government, the Free Democrats, or FDP.
Polls Show Merkel Would be "Soundly Defeated" in 2013

Merkel's CDU party has already lost control in the upper house of parliament known as the Bundesrat. Each defeat makes it much more difficult for the CDU to pass legislation.

In Greens Surpass Merkel Party in Local German Vote, the New York Times quips
If the trend for the Greens continues in future regional elections in coming months, they are in a strong position as a potential kingmaker for the federal elections due in 2013. Opinion polls show that if elections were held right away, Mrs. Merkel's center-right coalition would be soundly defeated by a coalition of Social Democrats and Greens.

What is not clear is whether Mrs. Merkel, whose party is expected to remain the largest party after the 2013 federal elections, would consider a coalition with the Greens.
Zapatero's Socialists Routed in Austerity Backlash

Bloomberg reports Zapatero's Socialists Routed in Austerity Backlash
Prime Minister Jose Luis Rodriguez Zapatero led his Socialist party to its worst defeat in more than 30 years in local elections, prompting a transfer of power in Spain's regions that risks reviving concerns over the country's public finances.

The opposition People's Party won 38 percent of the vote in municipal elections yesterday, compared with 28 percent for the ruling Socialists, with 99 percent of votes counted, the Interior Ministry said. The Socialists lost control of Barcelona, the country's second-biggest city, for the first time since 1979, and also ceded Seville. The region of Castilla-La Mancha, Socialist for three decades, fell to the PP, as did Extremadura, another Socialist stronghold.

"I know that many Spaniards suffer grave difficulties and they have expressed their discontent," Zapatero said at a press conference in Madrid, where he pledged to press ahead with legislative overhauls. He said he won't call early elections. "The Socialist party has clearly lost the elections."

The transfer of power in the regions threatens to revive concerns over Spain's budget deficit as newly elected officials may reveal weaker finances than their predecessors reported. The defeat, capping a week of street protests, may further weaken Zapatero as he seeks to convince investors he can tame the euro- region's third-largest budget shortfall and avoid following Greece, Portugal and Ireland in accepting a bailout.

"They're going to arrive and realize there's no money," said Ismael Crespo, a political scientist at the Ortega-Maranon Foundation in Madrid. "Many of the regions have problems not only to meet the deficit target but to meet basic services, which until now have been hidden because of the elections."

Spain's 8,000 municipal governments, which are also suffering from a revenue slump caused by the collapse of property prices, owe 33 billion euros in unpaid bills, according to the Platform Against Late Payment, a pressure group.
I doubt they can keep a lid on Spanish government bond yields much longer.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Damn Cool Pics

Damn Cool Pics


1000-Pound Jack Sparrow Sculpture

Posted: 23 May 2011 05:02 PM PDT

This monstrous tribute to Disney's rum-loving pirate stands almost 9-feet tall and weighs in close to 1000-pounds! The entire thing is made of old scrap metal and old machine parts (similar to these Transformers sculptures) and, the creative minds at Kreatworks Studio in Thailand coated it with a bunch of lacquer so doesn't rust. While they refer to it as a "steampunk" sculpture we're not really seeing it that way. It may be composed of a bunch of gears and such but it really just looks like an old-timey metal statue to us. It's up for sale on Etsy right now.








China’s Electronic Waste Hell

Posted: 23 May 2011 04:33 PM PDT

China is thе wоrld's sеcond lаrgest prоducer оf E-Waste prоducing оvеr 1 million tоns а yеar. Bеsidеs, China is the largest importer оf E-Waste frоm аll оver thе world. It gаthers 70% оf electronic garbоge еаch yеаr (20-25 million tons).