Future as it's unfolding

It's the end of the year so I could dare myself to do a little prediction for the next year.
As Charles Dickens used to say about London at the dusk of the Industrial Revolution, "it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us ...". Even the most epic economists don't know where things are going to be between Jan 2009 and Dec 2009.

That being said, I am actually more optimistic now than 6 month ago (before Dow lost 40% of its value). Why? because people in US are waking up and started reflecting on what damage consumerism has done to the nation. This leads to my 1st prediction:

Consumer index will drop while personal savings rate will go above 5% for the first time since 1995. This is considered disaster for the companies, because they can no longer generate revenue by selling things people don't really need. Advertisers would have a hard time persuading people that their life quality is measured by how much they spend and how many material goods they own. This leads to my 2nd prediction:
 
As the people depends less on large corporations and more on their own community, two-party politics will evolve into a balance of multiple forces (liberal, green parties taking more food hold) Republicans moving towards more progressive side and their right-wing conservative force becomes marginalized. This leads to my 3rd prediction:

US troops will withdraw from Iraq. No sensible government will put military adventures ahead of its own solvency. US will instead strengthen its bases in South Korean and Japan to fend off threats from North Korean and China. This leads to my 4th prediction:
 
China will use its economic muscle to form geo-political allies with Russia and South-east Asian countries and Pakistan. It will advance its nature resource claim in the South China sea, which might result in direct conflict with Japan. This leads to my 5th prediction:

China will have a direct trade war with US. EU will benefit by grabbing more market share in China. This will result in re-structuring of the WTO terms. This will turn the tide of globalization backwards. USD will lose its dominating power in world trade. This leads to my 6th prediction:

Major US companies will pull out its China operation due to government regulations and expiration of federal tax credits. This will boost employment in US and hurt profits of the big US corporations. The lower unemployment, shrinking demand for USD overseas and tightened supply from China will compound each other into a storm of inflation in the US. It will further surpress the real consumption in US. That is when I dump my shares of DBA.

So you might wonder what does technology plays there? Shouldn't the great innovation engine create more high margin "service" jobs and "green" jobs?
I don't know. It's really a wild card. I agree US has been the most efficient country when it comes to implementing and capitalizing innovations. But its creative sectors has long been dominated by people specialized in creating "financial product" (like CDO and CDS backed by subprime morgage ) rather than real product. Major pharmaceutical companies haven't deliver any successful new drugs for the last decade. Major IT companies haven't find any new killer applications that create real values for the last decade. With its economic strength weaks, the immigrates that helped them finding the "next big thing" will leave for their own home countries. 

over-dramatization

In general, I agree with many of the premises (like materialism, phony Corporations, brainwashing success coaching, homosexual rights, gun control, real estate bubble) that the movie American Beauty is projecting. However, I have two complaints.
1) The movie touches so many issues without really explore the real reason behind any one of the them.
At the end of the movie, everything falls back to this zen like phony happiness state. So we should just all quit our job and trade weed? A 40 min NHK documentary would have been more informative.
2) The movie betrayed itself (or sold itself for box office success) by adding to much coincidences and dramatization. Maybe that's the only way it could survive Hollywood. Just like Revolutionary Road has to feature two stars from Titanic to draw enough attention.
 

Revolutionary Road

It's a new movie adapted from Ricard Yates 1950's novel.

Here is a wonderful review of the original novel. I am most touched by it because I share the same feeling watching the movie, finding myself mediocre and lacking: no better than anyone I used to look down at.

"

But Revolutionary Road was not what I expected from the reviews.
Yates knows all of the pitfalls of the standard send-up of the middle
class: the main characters in his story are not the usual suburban
types, but people who consider themselves better than the dull people
in their neighborhood; they mock the people that we, as readers, are so
used to mocking, and become our surrogates.

The real theme of
this book is much deeper, and it transcends the era and even the plot
of the book: what do people do when they are intelligent and spirited
enough not to be satisfied with the conformity and blandness of their
surroundings, but lack the drive to ever escape mediocrity, because
they are, fundamentally, much more a part of their environment than
they imagine?

The tragedy of this book is the discovery that you
are, after all, perhaps not as extraordinary as you thought - and that
has sting, because all of us, at some time, have thought that we were a
bit better than the people around us, and most of us have realized with
horror (although the realization doesn't always stick around) that we
aren't as different, as far above them, as we thought. Many of the
moments in this book stick with you because they remind you of those
moments when you came face to face with your own mediocrity, and
challenges you to either be honest with yourself about what you are, or
try sincerely to fulfill the ambitions that you have pursued so
halfheartedly until now.

It's a hard lesson to deal with: I can
tell why this book didn't sell. The writing, by the way, is beautiful;
scene after scene springs effortlessly to life, and you can't tell how
much skill is involved until you go back and read it again.

I
remember reading once that Yates - against the advice of his publishers
- called this book Revolutionary Road because it seemed to him that the
promise of the nation was petering out in the 50s, that the ambition
and hope that had marked its founding had slowly led to a dead-end of
uninspired and uninspiring prosperity (for some people, at least) -
that the end of the revolutionary road had been reached.

This is
overstated, and Yates's vision often seems to me unaccountably dark, as
if he was blind to everything but his thesis. Something about his
outlook is right, though; the problem with the society isn't
necessarily that it's hypocritical or conformist or mediocre, but that
it produces people with such a horrible gap between aspiration and
capacity - it gives them the leisure and intelligence to want a fuller
life while robbing them of the backbone to get it.
 "

The American Dream, May 24, 2000

By	Robert Derenthal "bucherwurm" (California United States) - See all my reviews

A good job, a pretty wife, nice kids, and a home in the suburbs. This
novel, written in 1961, is about a couple that lives this American
Dream. But this pre-yuppie pair leads a life of exquisite monotony. He
hates his white-collar job; she stays home with the kids. One of their
most frequent recreational activities is to visit with another similar
couple, and spend a few hours shaking their heads and complaining about
how unevolved everyone else is. We smile ruefully as we read about
them, thinking how common these folks are. Or have we fallen into a
trap by putting ourselves in the same place by looking down on Frank
and April as they look down on others.

Frank
and April Wheeler look forward to things: a part in a little theater
play, a move to Paris, an affair, a promotion. It would seem, though,
that for them happiness is only in the anticipation of events. The
story's participants also are deeply into playing roles with their
spouses, their co-workers, their friends, and above all with
themselves. There is no one in this book that you want to identify
with. Why? Is it because they are poor, hopelessly lost dullards, or is
it because they represent us in too many unpleasant ways? It's a sad
story, but one that makes you think about your own life, and the
ultimate value of what you have accomplished. While some of our culture
has changed since this book was written (we no longer sit in hospital
waiting rooms smoking cigarettes), its theme is as modern as can be.

art history of photography

This youtube playlist is BBC's 6 episode series "The Genius of Photography"
It rekindled my passion to imagery. The vast possibility of creating images that has a direct impact on the viewer.
I think Photosynth would someday be marked as an art form in the evolution of photography.

photosynth: Seattle spring, summer and autumn

Please follow this link to view it.

MSN space can't embed the iframe link generated by photosynth (kind of an irony).

关于习惯

以前一直骑车上班，经过无数次轻重跌打损伤之后，我一个月没骑车了．这时候，我发现自己已经不是害怕跌倒，而是害怕骑车本身了．
今天给别人做code review, 我开始怀疑自己能否写出满足我所说的要求的code。我可以列一张长长的单子，写满我曾经视为习惯，但现在已经生疏的事（写blog就是其中之一）。
在过去的六个月中，我到底学会了哪些？放弃了哪些？荒废了哪些？
什么是我最需要坚持的习惯？

基督山伯爵

小时候看《基督山伯爵》，最痛快的是看到那些背叛朋友，陷害无辜的小人，获得应得的惩罚。
今天又看《基督山伯爵》，则想：如果艾德蒙有机会选择，他是否愿意成为基督山伯爵，一个为复仇而无情执行计划的人？
命运在他以为自己最幸运的时候为小人所害，囚禁伊夫堡；又在他最绝望的时候，使他重获新生，成为正义的化身。这是一种幸运，还是不幸？或许上帝的字典里，并没有“unfortunate”这个概念。

如何穿透时代

《The man from Earth》触及一个最核心的问题：如果一个人能从远古活到今天，他会怎样生活？
事实上，用历史的眼光去看眼前的一切，就能和长生不老的人一样看透一切。今天的得失，在漫长的人生里，不过是沧海一粟，何足虑兮?

觉得《芙蓉镇》秦书田，能在扫大街的时候跳起华尔兹，就是到了这种境界，做到宠辱不惊，能随时享受生活中的快乐。

being unreasonable

One of the feedback I got from those who reviews me is "need to concede that the world won't go according to his way." Lately, there are quite a few cases proves that true, so I was just about to admit that as my fault. Until I saw the following quote:

“The reasonable man adapts himself the the world; the
unreasonable one persists in trying to adapt the world to himself.
Therefore all progress depends on the unreasonable man.” - George Bernard Shaw

“As soon as we abandon our own reason, and are content to rely upon authority, there is no end to our troubles.” - Bertrand Russell

Anyway, we shouldn't act based on quotes, especially when those quotes are from a play-writer or a philosopher

My 4th Toastmaster Speech: Life of a Bubble

Life of a Bubble: How did the global economic crisis
happen?

Key word: fed reserve, housing bubble, trade
deficit

1 Intro

Today I am going to talk about the life of a bubble. It's not just any bubble, it's the biggest one in the past 70  years if not the biggest one in human history. Most of the data came from US census, and the individual testimonies were excerpted from  the
NPR special report on the credit crisis, originally aired on May 9, 2008

2 Global Pool of Money doubles
from 35 Trillion in 2001 to 70 Trillion 2007

2.1 Poor countrys getting rich

By making TVs and selling oil: China,
India, Saudi Arabia. Made a lot of money and banked it. China, for example, has
over a trillion dollars in its central bank, and there are office buildings in
Beijing filled with math geniuses-real math geniuses-looking for a place to
invest it. And the world was not ready for all this money. There's twice as
much money looking for investments, but there are not twice as many good
investments. So, that global army of investment managers was hungrier and
twitchier than ever before. They all wanted the same thing: a nice low risk
investment that paid some return.

Incidentally the US trade
deficit also doubled from 2001 to 2007
2001      -365.126 billion 

2002      -423.725 billion

2003      -496.915 billion

2004      -607.730 billion

2005      -711.567 billion

2006      -753.283 billion

2007      -700.258 billion

 

 

2.2 Greenspan: Reduce The Fed
Funds Rate: From  6.6% in Jan 2001 to 1%
in July 2003

3 mortgage backed securities:
Mike Francis. During the beginning of the mortgage implosion, I was an
executive director at Morgan Stanley on the residential mortgage trading desk.

3.1 Think how attractive a
mortgage loan is to that 70 trillion dollar pool of money. Remember, they're
desperate to get any kind of interest return. They want to beat that miserable
1 percent interest Greenspan is offering them. And here are these homeowners,
they're paying 5, 7, 9 percent to borrow money from some bank. So what if the
global pool could get in on that action? There are problems. Individual
mortgages are too big a hassle for the global pool of money. They don't want
get mixed up with actual people and their catastrophic health problems or
debilitating divorces, and all the reasons which might stop them from paying
their mortgages.So what Mike and his peers on Wall Street did, was to figure
out how to give the global pool of money all the benefits of a mortgage –
basically higher yield - without the hassle or the risk. So picture the whole
chain. Home buyer gets a mortgage from a broker. The broker sells the mortgage
to a small bank, the small bank sells the mortgage to Mike in a big investment
firm on Wall Street. Then Mike takes a few thousand mortgages he’s bought this
way, he puts them in one big pile. Now he’s got thousands of mortgage checks
coming to him every month. It’s a huge monthly stream of money, which is
expected to come in for the next thirty years, the life of a mortgage. And he
then sells shares of that monthly income to investors. Those shares are called
mortgage backed securities. And the 70 trillion dollar global pool of money
loved them.

4 Drive the need for more
mortgage: lower the bar

And in the beginning, he'd
only buy mortgages that were pretty standard and pretty safe. Mortgages where
people had come up with a down payment and proven they had a steady income and
money in the bank.

And they sold so many
mortgages that there came a point in 2003 where just about
everybody who wanted a mortgage and was qualified
to get one .... had gotten one. But
the pool of money had just gotten started. They wanted more mortgage backed
securities.

So Wall Street had to find
more people to take out mortgages. Which meant lending
to people who never would’ve qualified before.

And so Mike noticed that
every month, the guidelines were getting a little looser.
Something called a stated income, verified asset
loan came out, which meant you didn't
have to provide paycheck stubs and w-2 forms, as they had in the past. You
could simply state your income, as long as you showed that you had money in the
bank.

Mike Garner: The next
guideline lower is just stated income, stated assets. Then you state what you
make and state what’s in your bank account.

They call and make sure
you work where you say you work. Then an accountant has to say for your field
it is possible to make what you said you make. But they don’t say what you
make, just say it’s possible that they could make that.

 

It’s just so funny that
instead of just asking people to prove what they make there’s this theater in place of you
have to find an accountant
sitting right in front of me who could very easily provide a W2, but we’re not
asking for a W2 form, but we do want this accountant to say yeah, what they’re
saying is plausible in some universe.

 

Loan officers would have
an accountant they could call up
and say “Can you write a statement saying a truck driver can make this much
money?” Then the next one, came along, and it was no income, verified assets.
So you don't have to tell the people what you do for a living. All you have to
do is state you have
a certain amount of money in your bank account. And then, the next one, is just
no income, no asset. You don't have to state anything. Just have to have a
credit score and a pulse.

Actually that pulse thing
is also optional. Like the case in Ohio where 23 dead people were approved for mortgages.

5 Housing bubble

 

It's easy to ignore your
gut fear when you are making a fortune in commissions. But Mike had other help in
rationalizing what he was doing.

Technological help. Mike
sat at a desk with six computer screens, connected to millions of dollars worth
of fancy analytic software designed by brilliant Ivy league math geniuses hired
by his firm, which analyzed all the loans in all the pools that he bought and
then sold. And the software, the data ... didn’t seem worried at all:

Mike Francis:

"All the data that we
had to review, to look at, on loans in production that were years old, was
positive. They performed very well. All those factors, when you look at the
pieces and parts. A 90% NINA loan from 3 years ago is performing amazingly
well. Has a little bit of risk. Instead of defaulting 1.5% of the time it
defaults at 3.5% of the time. That’s not so bad. If I’m an investor buying
that, if I get a little bit of return, I’m fine.

"

As we now know, they were
using the wrong data. They looked at the recent history of mortgages and saw
that foreclosure rate is generally below 2 percent. So they figured, absolute
worst-case scenario, the foreclosure rate may go to 8 or 10 or 12 percent. But
the problem with is there were all these new kinds of mortgages, given out to
people who never would have gotten them before. So the historical data was
irrelevant. Some mortgage pools, today, are expected to go beyond 50 percent
foreclosure rates.

 

That explains why the
mortgage backed security seems to perform well at the beginning of the bubble.
Why did it continue to perform will after the initial 3 years?

The answer is home equity
lines of credit, or HELOC.

Through HELOC, the home
owners could take out another loan from the bank, against the value of their
house, which had increased because of the bubble. HELOC became very popular
between 2003 and 2006, partly because they were easy to get; partly because
people needed them to continue making their original mortgage payments.

To pay off their debts,
they went into more debt.

5.1 A big part of this story,
of this whole crisis, is that a lot of really smart people, people who knew
better, fooled themselves with this data. It was the triumph of data over common
sense.

6 The thing that took this
problem and turned it into a crisis was something else that was new, something
called a Collateralized Debt Obligation, CDO

6.1 A mortgage-backed security,
you remember, is a pool of thousands of different mortgages. These are all put
together and divided into different slices. Some of these slices are risky,
some are not. OK, a CDO is a pool of those slices. A pool of pools.

There's another term the
industry uses, no joke, they call these lower-rated tranches toxic waste.
They're so high-risk, they're toxic.

So, a CDO is sort of a
financial alchemy. Jim takes that toxic stuff, these low- rated, high-risk
tranches, puts them all together. Re-tranches them, and presto: he has a CDO
whose top tranche is rated AAA, rock-solid, good as money.

If this seems too good to
be true to you, you're in good company. Guys like billionaire investor Warren
Buffet said the very logic was ridiculous. But back in 2005, 2006, the global
pool of money couldn't get enough of these things.

And the CDO industry was
facing the same pressures everyone else was at every other step of this chain.
To loosen their standards. To make CDOs out of lower and lower rated pools.

7 Bubble burst

The problem was that even
though housing prices were going through the roof, people weren't making any
more money. From 2000 to 2007, the median household income stayed flat. And so
the more prices rose, the more tenuous the whole thing became. No matter how
lax lending standards got, no matter how many exotic mortgage products were
created to shoehorn people into homes they couldn't possibly afford, no matter
what the mortgage machine tried, the people just couldn't swing it. By late
2006, the average home cost nearly four times what the average family made.
Historically it was between two and three times. And mortgage lenders noticed
something that they'd almost never seen before. People would close on a house,
sign all the mortgage papers, and then default on their very first payment. No
loss of a job, no medical emergency, they were underwater before they even
started. And although no one could really hear it, that was probably the moment
when one of the biggest speculative bubbles in American history popped.

 

Once property values
starting going down, it set off a reverse chain reaction, the opposite of what
had been happening in the bubble. As more people defaulted, more houses came on
the market. With no buyers, prices went even further down, and as prices
declined.

7.1 Late 2006. WallStreet stop
buying any mortgage from smaller local banks. Smaller banks borrowed from big
banks (like citi, Wamu) and pay them back when they sold the loan. Now that
they can't find any buyer, the smaller banks default

The way it worked was that
a small bank, like Silver State mortgage, where Mike Garner worked, would
borrow money from a big bank, say Citibank, or Washington Mutual. Silver State
would use this borrowed money to buy up a bunch of loans, and then pay back the
big bank once it sold the pools to Wall Street. Now these smaller banks were
highly leveraged, in most cases 20 to 1. Meaning,
in Silver state’s case, even though it only had 5 million of its own dollars,
it could borrow 20 times that, 100 million, to buy loans with. So in late 2006,
Mike is busily at it, borrowing, buying, selling, paying back, and borrowing
again, when the e-mails started coming:

Mike Garner: We’d get an
e-mail from a street firm, just say Credit Suisse/First Boston. It’d say, after
whatever date, “As of December 29th, we are no longer buying Stated Income with a FICO
less than whatever.” It’d say “There will be no exceptions. Pleas do not call
the pricing desk.” And you just start flipping out. Can't just say you're not
going to buy this with no notice. Well, we're saying it and there's no notice.
Then you start to scramble trying to get this stuff out of the door as soon as
you can.

Alex Blumberg: Because
you’ve already been assembling a bunch of those loans with those characteristics in place
somewhere.

Mike Garner: You've got 20
million sitting there, and you say oh crap, I better get those out the door.
Within a week, you can expect to see the same email from all them. A lot of
time you’ll get two of those the same day. You're scrambling to sell them,
going off sheer relationships. Like okay, I’ve still got 10 million of these. I
know you’re not buying them anymore. But come on ... you can't just leave me
like this. There comes a point where all of them said, we’re not buying
anything.

 

Alex Blumberg: For Mike and his company, that meant that they’d
borrowed tens of millions of dollars to buy loans, that now, they couldn’t
sell. And since they had very little of their own money, (just like the
homebuyers whose mortgages they’d purchased) they had no choice but to default
on their loan. Silver State Mortgage's nearly 600 employees were out of work.
Quite suddenly.

Mike Garner: It was
February 14th the email went out and said “Silver State
Mortgage might be going out of business, but we
think we can work something out so we’d encourage you to come in and work tomorrow
and give us one more day.” The next day, people came in and the e-mail went
out. “Unfortunately we were not able to work anything out. We’re closing our
doors today.” That's how most of these lenders go under. Everybody’s working
thinking everything’s great. Chugging along. All of the sudden, the bank says
you're done. People started grabbing their computers, copy machines, started
rolling them out the door. It was a mess. My thoughts were “Holy crap.
Everyone’s just stealing their stuff.”

Alex Blumberg: That
happened on Feb. 14th?

Mike Garner: Yup. My boss
calls it the valentine’s day massacre.”

8 Credit Crisis

A typical CDO factory owns
a share of 16 million homes. And each of those homes has lots of other owners --people
in other CDO offices around the world--   there are lots of them. You
start to see what a crazy web of confusing interconnections this whole process
is.

Most of AAA rated
mortgage-backed CDO's that the industry created since 2006, are now worth less
than half their value. Some are worth close to zero. But remember to all the
investment managers in the global pool of money who bought them, AAA meant safe
as government bonds. AAA was called a cash equivalent, money in the bank. It's
as if the global pool of money put trillions of dollars in a savings account,
came back one year later, and found out that half was gone.

 

The global pool of money
is avoiding anything with even the slightest hint of risk and that affects
everybody, no matter who you are. It's harder to borrow money to buy a house,
or build a factory, or bring your country boldly into the 21st century. Take
Iceland. A year ago it was easy for them to borrow billions. Now, they're seen
as too risky. Their central bank has to pay more than 15 percent interest get
anyone to loan them money. They could do better putting their national debt on
a credit card. Hungary, Kazakhstan, Turkey, are all in similar situations. You
might have heard about problems in student lending. Companies that needed
credit to survive are shutting down. The US expects more than 1.1 million
bankruptcies this year: twice the 2006 number.

This freezing of credit
all around the world is something new, the world has never seen anything on
this scale. When the crisis hit, last August, central bankers and finance
economists couldn't figure out how bad things might get. There was this
question people would ask: will things get like the 1930s or the 1970s? There
was real fear that, just like in the '30s, hundreds of banks would collapse,
there would be massive unemployment, there was talk of a new Great Depression.

That talk seems to have
faded and there's more talk that the next few years will feel like the 1970s.
There are lots of technical differences between this crisis and Jimmy Carter's
malaise. But for the average person, it could feel the same. It's not an
out-and-out depression. Everything's just kind of crappy. And not just in
housing or banking but for the economy as a whole. It’s barely growing. There
aren't a lot of new businesses, new jobs. Unemployment keeps creeping up. We're
just sort of stuck, in neutral, for a while.

Anyone under 45 probably
doesn't remember that 1970's malaise too well. Anyone under 30 has barely known
a US economy that wasn't growing. Now there's a decent chance we'll all get to
see what life felt like in the '70s, which isn't great.

It's pretty bad, actually,
unless you're comparing it to the 1930’s.

Perfect Storm for Bankers with Government connection: read Goldman Sachs

The Guys From ‘Government Sachs’

Photo illustration by The New York Times

Treasury faces, from left: Steve Shafran (formerly of Goldman),
Kendrick Wilson III (ditto), Henry Paulson Jr. (you guessed it), Edward
Forst (yep) and Neel Kashkari (see a trend?).

By JULIE CRESWELL and BEN WHITE

Published: October 17, 2008

THIS summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings.

Robert Rubin, right, an ex-Goldman co-chairman and a
Treasury secretary in the Clinton administration, promoted Timothy F.
Geithner at Treasury. Mr. Geithner now leads the New York Fed.

From top: Win McNamee/Getty Images; Dennis Brack/Bloomberg News; Jay Mallin/Bloomberg News

Joshua B. Bolten, top, a former Goldman executive, is President Bush’s
chief of staff. Stephen Friedman, a former chairman of Goldman, is
chairman of the New York Fed. This fall, as part of its bailout, the
government put Edward M. Liddy, then a Goldman director, in charge of
A.I.G.

In September, after the government bailed out the American International Group, the faltering insurance giant, for $85 billion, Mr. Paulson helped select a director from Goldman’s own board to lead A.I.G.

And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout
fund, he again recruited someone with a Goldman pedigree, giving the
post to a 35-year-old former investment banker who, before coming to
the Treasury Department, had little background in housing finance.

Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.

The
power and influence that Goldman wields at the nexus of politics and
finance is no accident. Long regarded as the savviest and most admired
firm among the ranks — now decimated — of Wall Street investment banks,
it has a history and culture of encouraging its partners to take
leadership roles in public service.

It is a widely held view
within the bank that no matter how much money you pile up, you are not
a true Goldman star until you make your mark in the political sphere.
While Goldman sees this as little more than giving back to the
financial world, outside executives and analysts wonder about potential
conflicts of interest presented by the firm’s unique perch.

They
note that decisions that Mr. Paulson and other Goldman alumni make at
Treasury directly affect the firm’s own fortunes. They also question
why Goldman, which with other firms may have helped fuel the financial
crisis through the use of exotic securities, has such a strong hand in
trying to resolve the problem.

The very scale of the financial
calamity and the historic government response to it have spawned a host
of other questions about Goldman’s role.

Analysts wonder why
Mr. Paulson hasn’t hired more individuals from other banks to limit the
appearance that the Treasury Department has become a de facto Goldman
division. Others ask whose interests Mr. Paulson and his coterie of
former Goldman executives have in mind: those overseeing tottering
financial services firms, or average homeowners squeezed by the crisis?

Still others question whether Goldman alumni leading the federal
bailout have the breadth and depth of experience needed to tackle
financial problems of such complexity — and whether Mr. Paulson has
cast his net widely enough to ensure that innovative responses are
pursued.

“He’s brought on people who have the same life
experiences and ideologies as he does,” said William K. Black, an
associate professor of law and economics at the University of Missouri and counsel to the Federal Home Loan Bank Board during the savings and loan
crisis of the 1980s. “These people were trained by Paulson, evaluated
by Paulson so their mind-set is not just shaped in generalized group
think — it’s specific Paulson group think.”

Not so fast, say
Goldman’s supporters. They vehemently dismiss suggestions that Mr.
Paulson’s team would elevate Goldman’s interests above those of other
banks, homeowners and taxpayers. Such chatter, they say, is a paranoid
theory peddled, almost always anonymously, by less successful rivals.
Just add black helicopters, they joke.

“There is no conspiracy,” said Donald C. Langevoort, a law professor at Georgetown University.
“Clearly if time were not a problem, you would have a committee of
independent people vetting all of the potential conflicts, responding
to questions whether someone ought to be involved with a particular
aspect or project or not because of relationships with a former firm —
but those things do take time and can’t be imposed in an emergency
situation.”

In fact, Goldman’s admirers say, the firm’s ranks should be praised, not criticized, for taking a leadership role in the crisis.

“There
are people at Goldman Sachs making no money, living at hotels, trying
to save the financial world,” said Jes Staley, the head of JPMorgan Chase’s asset management division. “To indict Goldman Sachs for the people helping out Washington is wrong.”

Goldman
concurs. “We’re proud of our alumni, but frankly, when they work in the
public sector, their presence is more of a negative than a positive for
us in terms of winning business,” said Lucas Van Praag, a spokesman for
Goldman. “There is no mileage for them in giving Goldman Sachs the
corporate equivalent of most-favored-nation status.”

MR. PAULSON himself landed atop Treasury because of a Goldman tie. Joshua B. Bolten, a former Goldman executive and President Bush’s chief of staff, helped recruit him to the post in 2006.

Some
analysts say that given the pressures Mr. Paulson faced creating a SWAT
team to address the financial crisis, it was only natural for him to
turn to his former firm for a capable battery.

And if there is
one thing Goldman has, it is an imposing army of top-of-their-class,
up-before-dawn über-achievers. The most prominent former Goldman banker
now working for Mr. Paulson at Treasury is also perhaps the most
unlikely.

Neel T. Kashkari
arrived in Washington in 2006 after spending two years as a low-level
technology investment banker for Goldman in San Francisco, where he
advised start-up computer security companies. Before joining Goldman,
Mr. Kashkari, who has two engineering degrees in addition to an M.B.A.
from the Wharton School of the University of Pennsylvania, worked on
satellite projects for TRW, the space company that now belongs to
Northrop Grumman.

He was originally appointed to oversee a $700
billion fund that Mr. Paulson orchestrated to buy toxic and complex
bank assets, but the role evolved as his boss decided to invest
taxpayer money directly in troubled financial institutions.

Mr.
Kashkari, who met Mr. Paulson only briefly before going to the Treasury
Department, is also in charge of selecting the staff to run the bailout
program. One of his early picks was Reuben Jeffrey, a former Goldman
executive, to serve as interim chief investment officer.

Mr.
Kashkari is considered highly intelligent and talented. He has also
been Mr. Paulson’s right-hand man — and constant public shadow — during
the financial crisis.

He played a main role in the emergency sale of Bear Stearns
to JPMorgan Chase in March, sitting in a Park Avenue conference room as
details of the acquisition were hammered out. He often exited the room
to funnel information to Mr. Paulson about the progress.

Despite
Mr. Kashkari’s talents in deal-making, there are widespread questions
about whether he has the experience or expertise to manage such a
project.

“Mr. Kashkari may be the most brilliant, talented
person in the United States, but the optics of putting a 35-year-old
Paulson protégé in charge of what, at least at one point, was supposed
to be the most important part of the recovery effort are just very
damaging,” said Michael Greenberger, a University of Maryland law professor and a former senior official with the Commodity Futures Trading Commission.

“The
American people are fed up with Wall Street, and there are plenty of
people around who could have been brought in here to offer broader
judgment on these problems,” Mr. Greenberger added. “All wisdom about
financial matters does not reside on Wall Street.”

Mr. Kashkari
won’t directly manage the bailout fund. More than 200 firms submitted
bids to oversee pieces of the program, and Treasury has winnowed the
list to fewer than 10 and could announce the results as early as this
week. Goldman submitted a bid but offered to provide its services
gratis.

While Mr. Kashkari is playing a prominent public role, other Goldman alumni dominate Mr. Paulson’s inner sanctum.

The
A-team includes Dan Jester, a former strategic officer for Goldman who
has been involved in most of Treasury’s recent initiatives, especially
the government takeover of the mortgage giants Fannie Mae and Freddie Mac. Mr. Jester has also been central to the effort to inject capital into banks, a list that includes Goldman.

Another
central player is Steve Shafran, who grew close to Mr. Paulson in the
1990s while working in Goldman’s private equity business in Asia.
Initially focused on student loan problems, Mr. Shafran quickly became involved in Treasury’s initiative to guarantee money market funds, among other things.

Mr.
Shafran, who retired from Goldman in 2000, had settled with his family
in Ketchum, Idaho, where he joined the city council. Baird Gourlay, the
council president, said he had spoken a couple of times with Mr.
Shafran since he returned to Washington last year.

“He was
initially working on the student loan part of the problem,” Mr. Gourlay
said. “But as things started falling apart, he said Paulson was relying
on him more and more.”

The Treasury Department said Mr. Shafran and the other former Goldman executives were unavailable for comment.

Other
prominent former Goldman executives now at Treasury include Kendrick R.
Wilson III, a seasoned adviser to chief executives of the nation’s
biggest banks. Mr. Wilson, an unpaid adviser, mainly spends his time
working his ample contact list of bank chiefs to apprise them of
possible Treasury plans and gauge reaction.

Another Goldman
veteran, Edward C. Forst, served briefly as an adviser to Mr. Paulson
on setting up the bailout fund but has since left to return to his post
as executive vice president of Harvard.
Robert K. Steel, a former vice chairman at Goldman, was tapped to look
at ways to shore up Fannie Mae and Freddie Mac. Mr. Steel left Treasury
to become chief executive of Wachovia this summer before the government took over the entities.

Treasury
officials acknowledge that former Goldman executives have played an
enormous role in responding to the current crisis. But they also note
that many other top Treasury Department officials with no ties to
Goldman are doing significant work, often without notice. This group
includes David G. Nason, a senior adviser to Mr. Paulson and a former
Securities and Exchange Commission official.

Robert F. Hoyt,
general counsel at Treasury, has also worked around the clock in recent
weeks to make sure the department’s unprecedented moves pass legal
muster. Michele Davis is a Capitol Hill veteran and Treasury policy
director. None of them are Goldmanites.

“Secretary Paulson has
a deep bench of seasoned financial policy experts with varied
experience,” said Jennifer Zuccarelli, a spokeswoman for the Treasury.
“Bringing additional expertise to bear at times like these is clearly
in the taxpayers’ and the U.S. economy’s best interests.”

While
many Wall Streeters have made the trek to Washington, there is no
question that the axis of power at the Treasury Department tilts toward
Goldman. That has led some to assume that the interests of the bank,
and Wall Street more broadly, are the first priority. There is also the
question of whether the department’s actions benefit the personal
finances of the former Goldman executives and their friends.

“To the extent that they have a portfolio or blind trust that holds Goldman Sachs stock, they have conflicts,” said James K. Galbraith, a professor of government and business relations at the University of Texas.
“To the extent that they have ties and alumni loyalty or friendships
with people that are still there, they have potential conflicts.”

Mr.
Paulson, Mr. Kashkari and Mr. Shafran no longer own any Goldman shares.
It is unclear whether Mr. Jester or Mr. Wilson does because, according
to the Treasury Department, they were hired as contractors and are not
required to disclose their financial holdings.

For every
naysayer, meanwhile, there is also a Goldman defender who says the
bank’s alumni are doing what they have done since the days when Sidney
Weinberg ran the bank in the 1930s and urged his bankers to give
generously to charities and volunteer for public service.

“I give
Hank credit for attracting so many talented people. None of these guys
need to do this,” said Barry Volpert, a managing director at Crestview
Partners and a former co-chief operating officer of Goldman’s private
equity business. “They’re not getting paid. They’re killing themselves.
They haven’t seen their families for months. The idea that there’s some
sort of cabal or conflict here is nonsense.”

In fact, say some
Goldman executives, the perception of a conflict of interest has
actually cost them opportunities in the crisis. For instance, Goldman
wasn’t allowed to examine the books of Bear Stearns when regulators
were orchestrating an emergency sale of the faltering investment bank.

THIS summer, as he fought for the survival of Lehman Brothers, Richard S. Fuld Jr.,
its chief executive, made a final plea to regulators to turn his
investment bank into a bank holding company, which would allow it to
receive constant access to federal funding.

Timothy F. Geithner, the president of the Federal Reserve Bank of New York,
told him no, according to a former Lehman executive who requested
anonymity because of continuing investigations of the firm’s demise.
Its options exhausted, Lehman filed for bankruptcy in mid-September.

One week later, Goldman and Morgan Stanley were designated bank holding companies.

“That
was our idea three months ago, and they wouldn’t let us do it,” said a
former senior Lehman executive who requested anonymity because he was
not authorized to comment publicly. “But when Goldman got in trouble,
they did it right away. No one could believe it.”

The New York
Fed, which declined to comment, has become, after Treasury, the
favorite target for Goldman conspiracy theorists. As the most powerful
regional member of the Federal Reserve
system, and based in the nation’s financial capital, it has been a
driving force in efforts to shore up the flailing financial system.

Mr.
Geithner, 47, played a pivotal role in the decision to let Lehman die
and to bail out A.I.G. A 20-year public servant, he has never worked in
the financial sector. Some analysts say that has left him reliant on
Wall Street chiefs to guide his thinking and that Goldman alumni have
figured prominently in his ascent.

After working at the New York
consulting firm Kissinger Associates, Mr. Geithner landed at the
Treasury Department in 1988, eventually catching the eye of Robert E. Rubin,
Goldman’s former co-chairman. Mr. Rubin, who became Treasury secretary
in 1995, kept Mr. Geithner at his side through several international
meltdowns, including the Russian credit crisis in the late 1990s.

Mr. Rubin, now senior counselor at Citigroup, declined to comment.

A
few years later, in 2003, Mr. Geithner was named president of the New
York Fed. Leading the search committee was Pete G. Peterson, the former
head of Lehman Brothers and the senior chairman of the private equity
firm Blackstone. Among those on an outside advisory committee were the
former Fed chairman Paul A. Volcker; the former A.I.G. chief executive Maurice R. Greenberg; and John C. Whitehead, a former co-chairman of Goldman.

The
board of the New York Fed is led by Stephen Friedman, a former chairman
of Goldman. He is a “Class C” director, meaning that he was appointed
by the board to represent the public.

Mr. Friedman, who wears
many hats, including that of chairman of the President’s Foreign
Intelligence Advisory Board, did not return calls for comment.

During
his tenure, Mr. Geithner has turned to Goldman in filling important
positions or to handle special projects. He hired a former Goldman
economist, William C. Dudley, to oversee the New York Fed unit that
buys and sells government securities. He also tapped E. Gerald
Corrigan, a well-regarded Goldman managing director and former New York
Fed president, to reconvene a group to analyze risk on Wall Street.

Some
people say that all of these Goldman ties to the New York Fed are
simply too close for comfort. “It’s grotesque,” said Christopher
Whalen, a managing partner at Institutional Risk Analytics and a critic
of the Fed. “And it’s done without apology.”

A person familiar
with Mr. Geithner’s thinking who was not authorized to speak publicly
said that there was “no secret handshake” between the New York Fed and
Goldman, describing such speculation as a conspiracy theory.

Furthermore, others say, it makes sense that Goldman would have a presence in organizations like the New York Fed.

“This
is a very small, close-knit world. The fact that all of the major
financial services firms, investment banking firms are in New York City
means that when work is to be done, you’re going to be dealing with one
of these guys,” said Mr. Langevoort at Georgetown. “The work of
selecting the head of the New York Fed or a blue-ribbon commission —
any of that sort of work — is going to involve a standard cast of
characters.”

Being inside may not curry special favor anyway,
some people note. Even though Mr. Fuld served on the board of the New
York Fed, his proximity to federal power didn’t spare Lehman from
bankruptcy.

But when bankruptcy loomed for A.I.G. — a collapse
regulators feared would take down the entire financial system — federal
officials found themselves once again turning to someone who had a
Goldman connection. Once the government decided to grant A.I.G., the
largest insurance company, an $85 billion lifeline (which has since
grown to about $122 billion) to prevent a collapse, regulators,
including Mr. Paulson and Mr. Geithner, wanted new executive blood at
the top.

They picked Edward M. Liddy, the former C.E.O. of the insurer Allstate.
Mr. Liddy had been a Goldman director since 2003 — he resigned after
taking the A.I.G. job — and was chairman of the audit committee.
(Another former Goldman executive, Suzanne Nora Johnson, was named to
the A.I.G. board this summer.)

Like many Wall Street firms,
Goldman also had financial ties to A.I.G. It was the insurer’s largest
trading partner, with exposure to $20 billion in credit derivatives,
and could have faced losses had A.I.G. collapsed. Goldman has said
repeatedly that its exposure to A.I.G. was “immaterial” and that the
$20 billion was hedged so completely that it would have insulated the
firm from significant losses.

As the financial crisis has taken
on a more global cast in recent weeks, Mr. Paulson has sat across the
table from former Goldman colleagues, including Robert B. Zoellick, now president of the World Bank;
Mario Draghi, president of the international group of regulators called
the Financial Stability Forum; and Mark J. Carney, the governor of the
Bank of Canada.

BUT Mr. Paulson’s home team is still what draws the most scrutiny.

“Paulson
put Goldman people into these positions at Treasury because these are
the people he knows and there are no constraints on him not to do so,”
Mr. Whalen says. “The appearance of conflict of interest is everywhere,
and that used to be enough. However, we’ve decided to dispense with the
basic principles of checks and balances and our ethical standards in
times of crisis.”

Ultimately, analysts say, the actions of Mr. Paulson and his alumni club may come under more study.“I
suspect the conduct of Goldman Sachs and other bankers in the rescue
will be a background theme, if not a highlighted theme, as Congress
decides how much regulation, how much control and frankly, how punitive
to be with respect to the financial services industry,” said Mr.
Langevoort at Georgetown. “The settling up is going to come in Congress
next spring.”

Why a long recession is good for Microsoft

1) Credit crunch will weed out a lot of startup that provide "free" software/service, because they needs to generate positive cashflow sooner than they had planned.
2) Weak economy will tighten the advertising budgets, therefore hurting Google's cashcow. Google will have to cutback on its investment in challenging MS's desktop applications.
3) Weak economy will push Yahoo over the edge and into MS's arms at a much lower cost than MS was originally planning to pay.
4) MS is sitting on a lot of cash, which is a becoming more and more scare resource. They have more leverage in buying out competition or launching campaigns against its competitors (read Apple).
5) With high unemployment, MS can find the much needed talent they wouldn't have seen on the market during booming years.

Why Corporate American is rotten to the core

A typical US corporation raises its funding by selling a worthless shell to the public through IB. Those banks that died in the last four weeks because they oversold mortgage-backed securities (The word "security" itself is an irony, because there is really nothing secure about those and other "securities").

Since IPO, the management team struggles to make up the "numbers" to show to "the Street". They make up the numbers by investing most the cash flow into marketing (aka advertising) so that people will buy things they don't need; by openning sweatshop all over the world, by privatizing natural resource that belongs to the planet.

What does "the management team" made up of? First there are board of directors (including chairman, president, CEO, big investors, outside directors). They represents the ultramate power. They can oust a CEO with enough votes. Under CEO, there is CFO, COO, CTO/CIO.
CFO is in charge of cooking the book, therefore are paid the most. He controls the budget, therefore has the most direct power. CTO/CIO is only considered a cost for plumbing "the computers".
In some public company, the president, the chairman of BOD, the largest shareholder, the CEO are the same person. Such company is very easy to be ruled as a totalitrian regime.
In other cases, where the CEO is a "professional" excutive, but not a big shareholder. The CEO will focus even more on short-term profit, which is directly linked to his bonus. By the time he screws up the company too much he will leave with a huge pension and severance package.

Examples are:
 
Henry Paulson (Goldman Sachs $600 million)
Robert Nardelli (Home Depot $225 million)
Michael Ovitz (Disney $140 million)
Stephen Hilbert (Conseco $72 million)
Carly Fiorina (HP $42 million)
Gary Forsee (Sprint $40-million-plus)
Charles Prince (Citigroup, $40 million)
Angelo Mozilo (Countrywide, $100 million)
Kerry Killinger (WaMu $20 million)
Martin Sullivan (AIG $47 million)
Stan O'Neal (Merrill Lynch $160 million in stock).

If we do a simple math (which the CFOs loves to do), the severance packages listed above already amounts to $1.486 billion, and that's a very incompletely list.

When the same trend spreads to Europe: Gerard Le Fur (Sanofi Aventis
$9.51 million), we had to laugh at the large
scale of anger among the French public, because that's really just a fraction of Gerard's US counterparts are getting.

If there were a Capitalist Manifesto, those names should be the underwriters.
 
After reading all this, will you still be surprised that we are in a recession? Will you still doubt about Henry Paulson's determination to bail-out the banks including Goldman Sachs with $700 billion of taxpayer money?  

Shit goes downhill

The problem with top-down management is that it exposes the tiniest flaw of the upper management.

For example, when the CEO disrespects SVP and micromanaging them with fear and intimation, the same behavior will be transmitted down the chain of command and magnifies to the whole company scale.
Those very few in the middle management that knows better will suffer both ways and leave as soon as the stock option vested. 

Another example is hypocrisy in performance review and promotion.When the economy is going down, there is less need to motivate the employee with promotion or raise. Everybody expects that. But instead be frank about it, the whole chain of management uses excuses like "lack of cross-team collaboration" (which is implicitly discouraged) to make the review looks like the employee is incompetent. This kind of hypocrisy is just unethical and unprofessional.  

How to demonstrate leadership

Leadership is about doing the right thing (most of the time). But practicing leadership is not enough. Branding yourself as a leader is just as important if not more.
And here is how:

Todo:

Focus: you don't have the right to fail. It impacts your brand.
Confidence: do your homework before any conversation
IQ and expertise gets you in the door. EQ (human quality) makes you success.
Understand your audience (who has different background and point of view)
Straight line may not be the shortest distance.
Most organizations are political instead of logical and rational. Efficiency is not always the goal. People have different goals.
Decision makers act based more on past emotional experiences than logic.
Don't communicate when you are upset
Report talk instead of rapport talk
Use I "believe" instead of I "feel"
Always ask a question within 5 minutes of a meeting: You have to get involved
Cut people off when necessary, otherwise you will never be heard
Hope and Fear are what move people. You need to use BOTH.
Power is good. Always ask for more money and stuff when you can.
It's critical to rise above being a information source and technologist.

______________________________________________________________
Disclaimer:

The content above is based on Atefeh Biazi's keynote speech at Emtech 2008 hosted by MIT Technology Review.
If you want to watch the video, you can skip the first 10 minutes (they recorded 10 minutes of background music before the talk started).

My Comment:

It almost feels like what Chinese culture has taught us needs to be undone.

自由

小时候向我爸要自由，就会得到这样一句：“给你一个碗，一根棍子，你就自由了。”
现在想想还是很有道理的。要人给碗饭吃，就要牺牲一些自由。要自由，就只能出去自寻生路。

How company culture can affect people's vision

Today I saw bunch of engineers from an major desktop software company discussing how their desktop PC is being upgraded to quad-core.

I felt very amused, because I happened to be checking my team's infrastructure capacity. What I notice is that our average production server is 16 times faster than my desktop with 8 times more memory.
And the challenge my team faces is how to migrate our software across hosts without bringing down the service, not how fast any individual machine runs.
To be fair, the performance of an individual host still matters, but it's becoming less relevant when our software can be easily deployed to 100 hosts and scale up 100 times, without waiting for Intel or AMD to add more cores.

As I said some time ago, the failing of Moore's law has given CS people an exciting new frontier. If a company is not facing up to the new reality, its days are counted.

My 3rd Toastmaster speech (Project 3 Get to the Point)

Title of My Speech: How many of you would like to cut down your living expense?
General purpose: inform the audience on ways to cut down living expense
Specific purpose:
After hearing my speech, the audience should have a list of action items that they can followup in their daily life to cut down living expenses.
Illustration on the board:
I draw a pie marked income and split it into two sections expense and saving. Using the pie chart, I illustrated to boost savings, you need to reduce expenses.
I also listed the 3 steps and 5 categories on the side. They serve as the take-home message for the audience as well as my own cheat-sheet.

__________________________________________________________________________________________
Below is the body of my script. I skipped some of them and improvised some on the fly (like the anecdote of Lehman Brother chairman Richard Fuld selling his modern art collections to make extra income.)
__________________________________________________________________________________________


Raise your hand if you think you would like to have more savings and less debt.

OK, I see quite a few of you are interested in the topic. Today I am going to share with you the 3 steps to increase your saving by cutting-back on unnecessary expenditures.

Step 1) Tracking

Use a budget spreadsheet to record how much money you spend on everything, from mortgage/rent payment to groceries. From car insurance to miscellaneous spending. Putting down those records will give you a clear picture of where you money went.

Step 2) Examining

Going through the spreadsheet to determine what is necessary and what is not.

Most people's list can be divided into the following 5 categories.

1. Food and beverage

Make your own coffee in the morning to avoid spending a dollar to two dollars a day on the way to work, which amount to $50 a month. Cooking your own meal and taking your own lunch to work can save you $400 a month. Staying away from vending machines can save you up to $60 a month.

Buy nonperishable groceries like coffee and tea on special, in bulk. Buy generic brand instead of attach to a brand. Look for items on sale. Buy fruit and vegetable in season.

Alcohol can be a major drain on the household economy. No suggestion that you eliminate it altogether, but consider cutting back.

2. Transportation

Fuel is one of the growing expenses on our day to day lives. Limiting the fuel that we use is a priority. Plan your journeys to include everything that you need. Avoid unnecessary repeat trips to the shops and rediscover the joy of walking. Learn how to drive more economically, and make sure that your tires are inflated correctly.  Learn to service your car yourself. Consider exchanging the fuel guzzling vehicle for a more economical model. Moving closer to work can save you commute time and fuel.

3. Utility

Heating and electricity bill can be very high in winter.Turn the thermometer down and wear more clothing at home. Make sure there are no leaks around windows and doors.

Health inspector say washing dishes in cold water is as effective as in hot water, so you can save heating expense by using cold water. If you are using dishwasher, you can safely lower the water heater temperature to 110 to 115 degree and stop the dishwasher before it hits the dry cycle. Shutdown the dishwasher and open the door will let the dishes dry faster.

Switch off whatever you are not using, including lights and computers. Swap your light bulb to energy efficient equivalents can save you 90% of the electricity. Put a brick in your toilet will save you a litre of water per flush.

If you are using high-speed internet, consider sharing the service with a neighbor.
Cut out or downgrade your cable TV. Borrow movies from the library instead of renting.

4. Impulse buy

Before buying a particular item, always ask yourself: Is the item something you want rather than need. If you really need the product, then the purchase can be justified. Be careful of what you put into your shopping cart, make a list before you come to the store, and then committing to the list while shopping. It not only makes your shopping more efficient, but keeps you from overspending.

Don't go grocery shopping while you're hungry. You'll end up thinking everything looks good and buy more than you need. Be careful with membership warehouse stores, researchers show that Costco and Sam's club membership make you buy more than you need.

5. Rent/mortgage payment

If all those small savings are still not enough, consider changing your accommodations. Move to a cheaper area.

Step 3) Budgeting


After examing the 5 categories, decide how much you would spend in each category per month. Minus that from your monthly income, you will find how much you can save each month. Put that money away at the beginning of each month.

If you are short on money at the end of the month, you know you are over-spending and need to adjust the budget next month.

Finally, I would like to close my speech by encouraging everyone to follow the 3 steps. It can make real difference on your own bottom line.

Bailout and Excutive Power

Since the Bush Administration took office in 2000, they have been playing the same trick again and again.

The basic plot is:

Mess up big time,
Use fear and panic to manipulate the media and general public,
Ask for a blank check from congress,
Spend taxpayer money for their own benefit.
 
This weekend, we will see the bailout plan following the same route. The rich and powerful lawmakers sitting in their million-dollar water-front house will vote on whether to use poor tax payers' money to pay for their mortgage and their CEO friend's red-ink. 

5D Mark II

HD video quality is great. Storage card would be a bottleneck if anyone want to use it for serious film production.
But the concept is great, one day Canon will ship a DSLR with built-in hard drive.

Management vs Leadership

Excerpts from this weeks I, Cringely . The Pulpit | PBS


"Management is telling people what to do, which is a vital part of any
industrial economy. Leadership is figuring out what ought to be done
then getting people to do it, which is very different."

"Modern corporations suffer from systemic-level issues that emerge in
top-down hierarchies. Managers are there to control staff and budgets,
not to lead. Although you can make valiant and often successful
attempts to control things and processes, you will never again be able
to control people. We've evolved, basically, and the information age
has had a lot to do with it. So we still "manage" companies the same
way as when we actually operated assembly lines in America--the good
old days! Now, people need leaders, not managers, and that's what a
fractal organization enables.

"Most start-ups are fractal in their nature, especially those that
have exciting visions and get everyone on the same page with collective
purpose, goals, and objectives. Most investors, however, are bought
into the conventional org chart; when the company devolves into
top-down, the turnover begins. That's because of the internal
competition that emerges in top-down organizations. The perception is
that there's only so much room at the top. At each level of management,
the competition increases as cooperation decreases. Thus are created
the ubiquitous "silos" of information that thwart collaboration and
encourage redundant, wasteful business practices.

"Managers are
supposedly promoted because of their ability to outperform others and
not because of an intention to provide inspiration, guidance, and
mentoring to their staff, nor are they openly rewarded for this
behavior, even though it usually produces a healthier bottom line. The
usual way of rewarding based upon meeting financial goals and managing
budgets keeps the focus on short-term financial results only, whereas
continuous improvement leadership by frontline staff creates more
long-term successes.

"When managers don't mentor staff, focusing
only upon numbers and bossing people around, it leads to an illusion of
control, of which there's no such thing. In these situations, they
begin to feel they must continually prove their worthiness and so
defend their territories against possibly brilliant staff working
"beneath" them. This is a systemic issue, not a personality quirk,
though some personalities are more susceptible than others. In most
companies, the idea of climbing over others on your way to the top and
throwing people who get in your way under buses is de rigueur. The
top-down hierarchy was designed to manage industrial-age processes, not
information-age challenges. You didn't want the door guy getting
creative when attaching the door. Nor did he need to collaborate with
the bumper dude. The information age is vastly different. Each scene
we're in presents new circumstances and opportunities.

get lost and find your way back

This is the time of the month when I ask myself. What do I do next?
I have archived what I was planning to do and had a relatively happy life. What I realize is that 99% of the time, I was driven by fear rather than anything else. I am afraid of losing what I have, afraid of changes. What in the world is defining what a perfect life is? Definitely not those TV commercials picturing white-sand beach and a big yacht.

So I am lost.

And I started trying to find my way back. I felt fortunate that I realize my lost situation before strolling too far without an aim.

Below is something I happened to see when I was searching for my way back to the starting point. I am by-no-means endorsing it, especially not for it's commercial promotional purpose. These days you have to be diligent to filter out the commercial from infomercials that is omnipresence.



Five Tips for Your Preferred Future

By Brent Dees, President, Focus Four

Imagine if every morning when you awoke, there was a card table with a
mound of jigsaw puzzle pieces on it. And your job every day was to put
those pieces together to create a finished puzzle. And tomorrow morning
when you awoke, there would be another new mound of pieces to add to
today’s.

Only, you have no idea what the final picture is
supposed to look like, because they didn’t give you the box with the
finished picture on it! How would you proceed? How would you know how
far you had to go to get done? How would you know when you were done?

This is life without a plan, life without a Preferred Future. And the
law of this life is this: “If you don’t know why you’re doing what
you’re doing, you’ll never have enough time to get it done.”

Our personal life and our work are both a series of choices – choices
of activities that we will perform next. The activities that we choose
to perform determine our results. And the choice we have is between a
future or a Preferred Future. If the culmination of the activities we
perform is automatically a future, why not have those activities
culminate in a future we choose to have? In a future we prefer?

If life is like assembling the pieces of a jigsaw puzzle, why not have the final picture be something we’d like it to be?

We can.

And we do that by starting with a goal that’s almost too big to achieve.

When a city needs to lure or retain a sports franchise, they need a
big-dream goal of a new stadium, not an incremental goal like fixing up
the old stadium by adding logos!

There’s no way that a new stadium can be completed in a day, a month,
or even a year. It takes about three years to finish a project of this
size. When it’s first talked about, it’s hard to believe it will ever
happen. But every day another piece of the puzzle is put in place and
eventually the picture on the box becomes a real-live stadium. And the
impossible dream comes true.

Remember, now, that the stadium, even though an almost impossible goal,
is not really the final goal. The ultimate goal is to get a new team in
town (or keep your present one). Even that goal likely has a larger
focus such as keeping your city financially healthy by creating a
positive living environment.

Each of us has goals like these, too. But without action steps or plans, these goals are merely dreams.

Have you ever wanted to earn more money? Have you ever told yourself,
“If I just earn 15% more, I’d be okay?” While this seems a reasonable
and doable goal, it’s actually difficult because your options are
limited. Usually something like “I just need to get a raise!”

If, however, you set a goal to double your income in three years, you
have to start to think differently to achieve that. And you’ll also
have to stop doing something you’re currently doing to reach this
Preferred Future. As you look at the obstacles along the path to this
Preferred Future, you’ll discover that these obstacles are actually the
action steps you’ll need to take to reach your goal.

There are seven areas of your life – each of which needs to have its
own Preferred Future. The first six are: Spiritual (Legacy, purpose),
Physical, Family, Social (friends, community), Intellectual, and
Financial. Once you have achieved balance in these six, you can then
focus on the seventh area of your life, your Career. And when you have
a Preferred Future there, and begin to achieve it, you will discover
that the success in your career is helping you achieve your Preferred
Future in the first six areas of your life.

The secret of achieving your Preferred Future is this: “Focus on your
Preferred Future, but respond to the present.” When you do that, you
automatically identify your highest priorities, for example, and you
will find yourself doing not the easiest thing on your to-do list, nor
even the next thing, but rather the thing that will help you achieve
your goals. Here are the five steps you’ll need to follow to reach your
Preferred Future.

1. Clearly define your Preferred Future. I want to make money is not
   clearly enough defined. I want to double my income so I can pay off my
   debts and retire by age 50 is a clearly defined result. Getting a new
   job is not clearly enough defined – being in charge of the hydraulic
   engineering department is. If you don’t know what the final picture
   looks like, there is no way you can successfully assemble the pieces of
   the puzzle.
   
2. Know why this Preferred Future is important to you. Knowing why the
   result matters to you, will allow you to make decisions and judgments
   along the way that will help you get there sooner. Is that new job
   important to you because of the money, or because of the status in the
   eyes of your peers? If you don’t know why, you might make the wrong
   choice for the wrong reason, and the goal is always to do the right
   thing at the right time for the right reason. You can’t do that if you
   don’t know why your Preferred Future is important to you.
   
3. Identify a small step that will open the door. Just like you can’t
   build a stadium overnight, you can’t reach your Preferred Future
   easily. But every journey has its first step, and each step leads to
   the next. And while all the steps are not the same and some are much
   harder than others, you have to finds a place to start and then begin.
   You journey nowhere without moving your feet.
   
4. Monitor your progress. As you progress, look at what you’re doing.
   Keep a record. Make a daily plan. Make a monthly plan. Make a quarterly
   plan. Make a yearly plan. Make a three-year plan. And take notes.
   Determine what worked and what didn’t. Decide what you would do
   differently and what you would do better. If you don’t keep track of
   where you are, you won’t have any idea of where you’re going.
   
5. Modify your actions based on what you’ve learned. When you have the
   information on what worked and what didn’t, change you action steps
   accordingly. When you know what you’d do better next time, do it. And
   consistently revise your plans. If a sailor doesn’t change course, he
   can never reach his goal. The better the sailor, the more frequently he
   monitors his actions and the more frequently he changes course.

When you focus on your Preferred Future, you are applying the
pre-eminent law of body-building, and of life. That is, what you focus
on gets stronger.

When you create a clearly defined Preferred Future and focus on it
constantly, you will discover that every day you are choosing the most
important puzzle pieces in your life that will best help you to build
your Preferred Future.

# # # #

日本人，他们仿佛搞定了一切。 they got it all figured out

我一直想说，我很羡慕日本人。因为他们有一种对自己的民族和文化的自豪感。但是鉴于中日的历史，我不能冒被人标为汉奸的风险。
今天WSJ上Paul Theroux的访谈录，再贴切不过的表达了我的这种感觉：“日本人对外国人并没有怀疑和不信任，他们只是根本不感兴趣。因为他们已经确信自己有最先进的文明，超越所有其他国家；确信他们的食物，生活方式是最好的。除了地方狭小，他们几乎搞定了一切。”

相比之下，中国人一直为我们的近代史而蒙受耻辱，卧薪尝胆，但仍然无法改变历史或是现实。作为为美国人富强而工作的中国人，我更是没有任何自豪感可言。每天醒来都觉得自己是一只在别人屋檐下偷生的蝼蚁。看奥运会的时候，我觉得自己没有为国家做任何事，不属于体育场里的那些中国观众里面的一员，也没有资格为中国的金牌而骄傲。因为中国并不需要我，我也暂时不需要它。

文字的力量

文字的力量在于把人带到另一个世界。如果世界上有一种可以直通大脑的幻想制造机，那它的接口，一定是文字（而非图像）。
可是由于文字的这种力量，商业社会把它用来控制人的思想和行为（tell me one commercial that doesn't have text），正如集权统治的社会用它来作为“宣传”的武器。

网络和博客在某种程度上重新解放了文字，让平民百姓获得的一定的话语权。但是这种话语权注定被更高分贝的噪声所掩盖。闪烁的广告条的层出不穷的弹出窗口后面，每个人的注意力集中时间都被缩短到刚刚可以说一句“不错”

公司里marketing的人升的最快，因为他们是研究人的心理，并运用文字控制人的行为的专家。公司被marketing department的人操纵，可以带来更多短期利润。但是他们没有预见disruptive technology的远见。因为真正改变世界的智慧，注定来自于想法和大多数人不同的人。他们有勇气和能力逆潮流而证实自己的主见。
这样的人，不能被成熟的大公司里的marketing主导的管理层所认同。

看

发现自己完全没办法理解平路的叛逆。成长的过程，也是对世界妥协的过程。妥协到最后，留下的，就是自己了。
所谓的Situational Leadership, Development Cycle都是与这个世界谈判的方法。你在桌子这边，power and rich在桌子对面，你能留下多少，换回多少，就看能否按照他们的规则play。

MS, Amazon, Google's ecosystems and their conflicts

A decade ago, MS was having conflict with software companies that builds software on windows platform, because there were allegation that MS favors its own application (e.g. IE, Office) over third-party applications.
Since 2 years ago, merchants renting Amazon's e-tailor platform are concerned about Amazon's being both the platform provider and a merchant will give its own stores an unfair advantage over other merchants. That's why Toys R US, Borders left Amazon and started building their own web storefront.
Now, Google's Knol is the target of complaining from content providers like Wikipedia and About.com, because Google might favor its own content website over others in its search engine.

One can see a pattern over all three disputes. A platform company moving into the domain of users of the platform. It's the most natural thing to do for those three companies, because they want to dominate the whole value chain, but those who got squeezed out will complain. It's important for the platform companies to balance its capitalization in the platform user's arena, so that they are not draining their own ecosystem.