Michael Gracie

Cycled and fished instead - not regretting it either

• Sam Zell “bought a terrible business” - newspapers. I think Zell has it right when he says newspapers have to give customers what they want, not what some internal agenda prescribes. As a result, I admire the man, and hope he doesn’t wind up paying a terrible price.
• Is Yahoo! manipulating bloggers? Doubtful - such action would create even more of a black purple eye. If anything, it’s more likely a renegade faction within. Then again, blog manipulation (i.e. shutting them down) seems to have found its way into the political process. Quelling discontent, or just one more way of saying blogs are really starting to matter?
• Should Congress let home prices fall? You’ll get a resounding “yes” out of me - propping up asset classes, particularly right before elections, is a way for politicians to feign working for the better good. Unfortunately, situations generally wind up worse as a result, and history has a way of repeating itself. You’ve been hearing about government’s plans for saving the housing market going on a year now - nothing seems to be sticking, and maybe that is the best possible outcome.

And my prediction for the week…

• Citadel Investment Group will soon make an offer to purchase the country of Iceland. Citadel bought multi-strategy fund Amaranth Advisors when it made bad bets on natural gas. It bought Sowood and portions of E*Trade after their sub-prime dice rolls. Now banking is melting down, and the volcanic island of Iceland is going with it. Why not?

UPDATE: Via Steven Pearlstein…

Since last June, we’ve seen a fairly consistent pattern to the economic mood swings. Every three months or so, there’s a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports.

Let’s not forget the government announcements of salvation immediately thereafter. Me thinks Mr. Pearlstein is spot on, and you should read the whole thing.

Light on thought.

• Check out today’s shocking level of discount window borrowing. Who wants to start a bank?
• A crank Craigslist posting led to a run on an Oregon man’s possessions. Henry Blodget wonders who’s responsible (i.e. who should pay for the ransacking). I’m wondering when the copycats are going to arrive.
• Luxury car sales are on the decline, and Ford is selling Jaguar and Land Rover as a result. Not too long ago luxury goods sales were being touted as a mainstay. What changed all of a sudden? Failing hedge funds?
• New home sales fell to a 13-year low. You wouldn’t know it if all you were listening to was the National Association of Realtor’s counter-productive spin.

Commentary will remain light around here for the next few months…until the project I am working on has reached its next milestone or I catch a ten pound trout, whichever comes first.

I think the statement that “Companies Can’t Put A Stop To Data Thefts” is more than a bit misleading. They could, and likely can, but it isn’t in their economic best interests to do so. Leaving the hapless customer to deal with recovering their funds, and their identity, seems to be the modus operandi. “Here’s a free credit report” is the spokesperson’s statement of choice nowadays.

The data companies are entrusted with (with or without our permission) is extremely valuable - worth billions if not trillions. There should be more accountabillity.

As a free markets believer, I like competition that drives consumer costs down. But, the telco industry continues to sell broadband for ever cheaper prices (disregarding all the strings attached) while complaining they can’t recover bandwidth costs, and pointing fingers at content providers. Financial services players (and big data brokers) seem to take on the same line of thinking - create ever cheaper services for consumers, and if they are thwarted by hackers, garbage bin divers, or even their own stupidity, point the finger at someone else.

Something has to change, and I for one wouldn’t mind paying a little more for that change.
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And, possibly hire a financial advisor and/or just get off the “lazy American” kick. When 9 of 10 say they’d like their bank to monitor their online accounts for them, I say be extremely careful of what you wish for.

The Federal Deposit Insurance Corporation is now warning banks to beware of spyware. Of course, Reuters just had to reach by comparing spyware data theft to the CardSystems data theft, which just keeps getting bigger.

Lets first set the record straight by saying that a data intermediary storing information in reckless disregard of its customers retention policies, and then having that data swiped, has absolutely nothing to do with spyware.

Yes - spyware can be a menace to banking transactions, and the warning is justified. But banks can do little to stem the tide when it is consumers that are downloading spyware-laden software. Having banks provide specific warnings directly to consumers (and maybe even give away some solid anti-spyware software to their online banking customers), would be a good logical next step.