As discussed in THE CONTRARIAN TAKE’s September Monetary Watch, as scripted by Bernanke at Jackson Hole, the FOMC, citing deteriorating economic conditions and subdued price inflation, put one of their three QE tools into action.  The FOMC modified its communiqué,  guaranteeing whatever amount of money necessary to stimulate economic growth should economic and/or financial market conditions continue to deteriorate. And for all those who might be concerned about the impact that flood of money will have on prices, the FOMC says not to worry.  True to form, it made crystal clear that price inflation is simply nowhere in sight.  In fact, it is patently too low.  And given all the resource slack in the economy, the Federal Reserve should be able to print all the money it wants.

Here’s the FOMC statement, bold italics are THE CONTRARIAN TAKE:

Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.

Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.

The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.

In the opinion of the THE CONTRARIAN TAKE, Bernanke and the FOMC have played their hand.  If  economic conditions worsen, its checkmate for the Bernanke led FOMC – they have to act.  As discussed in September’s Monetary Watch, the CONTRARIAN TAKE fully expects economic conditions to worsen, perhaps quite soon. And, as Bernanke told us at Jackson Hole, that means another round of asset monetization and/or a cut in the interest rate that the Federal Reserve pays on excess reserves.  And that means the money supply, on THE CONTRARIAN TAKE’s TMS2 metric growing at an already robust 1o.7% rate, is about to get a steroid injection courtesy of the Federal Reserve.

Before ending this brief missive, a word on Ben Bernanke, the economist.  If ever there was a deflation hawk, this man is it.  This is an economist that is absolutely convinced that it was the Federal Reserve and its tight monetary policy before and after the 1929 stock market crash that gave us the Great Depression, that the correct policy response by the Federal Reserve post the stock market crash was to print money and to continue printing money until economic recovery was assured.  As discussed in September’s Monetary Watch, Austrians know the opposite to be true – that it is easy money policies that create artificial booms, that sooner or later those booms require busts, and that fighting busts with more easy money policies only adds insult to injury and creates even bigger busts down the line.

But be that as it may, it is why a Bernanke led Federal Reserve virtually guarantees more monetary inflation.  Bernanke, in his mind, is not about to repeat the supposed mistakes of his predecessors at the Federal Reserve.  Indeed, having been scared to death by the credit implosion of 2008-2009, Bernanke can be expected to move and move fast, with a printing press under each arm when the economy takes another negative turn.

By the looks of it, that move may be only a few bad economic reports away.

Based on the monetary insights of the Austrian school of economics, THE CONTRARIAN TAKE offers up the latest monthly money supply metrics for the U.S., Eurozone and Japan currency blocks.

To see the entire monthly series offering – the latest money supply data for all three currency blocks, with full historical data and chart work, as well as supporting definitions, sources, notes and references – click here on Austrian Money Supply.

For a quick link to money supply definitions, sources, notes and references, click here on Austrian Money Supply Definitions, Sources, Notes and References.

For the logic behind the formulation of Austrian money supply, read Money Supply Metrics, the Austrian Take.

Where We Are

The money supply aggregates based on the Austrian definition of the money supply (TMS) surged in August, with broad TMS2, THE CONTRARIAN TAKE’s preferred money supply metric, up an annualized 9.5%.  The more important year over year growth rate on TMS2 was once again sporting a double digit rate, posting a rate of 10.7% in August, up from July’s 10.3% rate.  This makes the 20th consecutive month that TMS2 has posted double digit year over year growth, a cumulative increase of 19% over those 20 months.  To put those figures into perspective, the run-up to the now infamous housing bubble turn credit implosion turn Great Recession saw a string of 36 months of double digit growth for a cumulative increase of 48%.  So yes, today’s inflationary largesse may be only 40% of that which brought on the Great Recession, but this one’s still in process.

As has been the case throughout 2010, M2, the mainstream’s favorite monetary aggregate, continues to show anemic growth, in July posting a year over year growth of just 2.7%.  As readers of this column are aware, in the opinion of THE CONTRARIAN TAKE, M2 is a grossly misleading measure of the money supply, meaning the gap between the true and the perceived rate of monetary inflation is a hefty 8 percentage points.

Combine this anemic rate of monetary inflation as measured by M2 with the widespread aghast over historically low “core” rates of price inflation as measured by mainstream price level aggregates such as CPI,  PPI and PCE and, contrary to the facts, you can see why deflationary concerns are currently all the rage.

To an Austrian though, inflation is the increase in the supply of money.  One of its consequences, though not nearly the most important, is the lagged impact an increase in the supply of money has on the general level of goods and services prices.  Indeed, far more important are the distortions and dislocations such monetary largesse wrecks on the economy and financial markets – in Austrian terms, the boom turn inevitable bust – the latest one being the housing bubble turn credit implosion turn Great Recession.

So, to the FOMC and mainstream economists and investors alike, deflation remains right around the corner.  To an Austrian, inflation is alive and well.

A Look at TMS2 Internals

In THE CONTRARIAN TAKE’s August Monetary Watch, we had a look at the source of today’s monetary inflation, making the case that it’s the Federal Reserve via the issuance of base money, namely currency plus bank reserves (the bulk of which springs directly from the Federal Reserve’s power to monetize assets by writing checks on itself), that has provided the majority of the monetary largesse over the past 2 years.  Private banks, historically responsible for the lion’s share of inflation via the issuance of uncovered money substitutes (which springs from the ability of those banks to pyramid deposits on top of base money when making loans or purchasing assets), have largely stood aside.

Well, recent trends suggest that while private banks may not yet be ready to reassert their more dominant role in the monetary inflation process, they are certainly beginning to make a contribution.  Uncovered money substitutes increased an annualized 13.4% in August and are now up 8.6% annualized over the last three months and 8.3% over the last twelve.  There relative size in TMS2 is shown below:

Note the recent trend, with uncovered money substitutes rising from a low of 68% of TMS2 in February to August’s 71%.

To repeat, this is not to say that private banks are about to turn on the monetary spigots and let it rip.  Indeed, while bank loan and investment aggregates have seen some life of late, recent trends in the credit aggregates suggest that the growth in uncovered money substitutes is more the result of depositors liquidating time deposits and other term bank deposits in favor of instantly redeemable demand deposits, other checkable deposits and savings accounts.  In Austrian speak, bank creditors are liquidating credit claims, raising cash, then depositing and holding that cash in money substitute form with those same banks.

That said, if in fact these currently risk averse private banks, that sit on top of $1 trillion plus in reserves, are ready to multiply those reserves into credit and deposits, that plus another round of quantitative easing could create one heck of an inflation party, possibly to the tune of trillions of dollars.  Certainly no guarantee, but something clearly worth watching, especially if a deflation wary Federal Reserve is prepared to give the banks a bit of a “push.”  Say, by reducing the rate it pays those banks on their excess reserves?  As discussed below, not mere speculation, but by the Federal Reserve’s own admission something that could very well be at hand.

What’s Next

In a word, QE II.

Let’s begin with Chairman Bernanke’s speech at Jackson Hole on August 27^th:

… the pace of recovery in output and employment has slowed somewhat in recent months, in part because of slower-than-expected growth in consumer spending, as well as continued weakness in residential and nonresidential construction. Despite this recent slowing, however, it is reasonable to expect some pickup in growth in 2011 and in subsequent years… And as the expansion strengthens, firms should become more willing to hire. Inflation should remain subdued for some time, with low risks of either a significant increase or decrease from current levels.

Although what I have just described is, I believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments. The Federal Reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools. Should further action prove necessary, policy options are available to provide additional stimulus…

Indeed, as Chairman Bernanke continually reminds us, the Federal Reserve is compelled to provide that stimulus, for it is not only charged with providing stable prices but with promoting economic growth and full employment.  And as luck would have it, it appears, at least in Bernanke’s mind, that the current setup for that said stimulus couldn’t be better:

First, the FOMC will strongly resist deviations from price stability in the downward direction. Falling into deflation is not a significant risk for the United States at this time, but that is true in part because the public understands that the Federal Reserve will be vigilant and proactive in addressing significant further disinflation. It is worthwhile to note that, if deflation risks were to increase, the benefit-cost tradeoffs of some of our policy tools could become significantly more favorable.

Second, regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery. Consistent with our mandate, the Federal Reserve is committed to promoting growth in employment and reducing resource slack more generally. Because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability.

In other words, if the economy continues to weaken, Bernanke will be a man on a mission.  With price inflation expected to be of no concern, its Katy bar the door – the Federal Reserve will be free to roll out whatever tools necessary to pump the money supply and save the economy.

So, what are those tools?  Back to Bernanke’s Jackson Hole speech:

Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus. I will focus here on three that have been part of recent staff analyses and discussion at FOMC meetings: (1) conducting additional purchases of longer-term securities, (2) modifying the Committee’s communication, and (3) reducing the interest paid on excess reserves.

The first tool – conducting additional purchases of longer-term securities means another round of asset monetization, another round of base money and therefore a guaranteed dollar for dollar expansion in the money supply.

The second tool – modifying the Committee’s communication is simply, when all is said it done, the FOMC telling the market it plans on implementing the first tool – asset monetization – whenever and for however long it deems appropriate.

The third and final tool - reducing the interest paid on excess reserves, that’s the mother load, and “liquidity trap” concerns notwithstanding, perhaps all that is needed to push private banks into liquidating their $1 trillion plus reserve stash and pyramiding up the money supply through a multiple expansion of loans and investments.  You see, if private banks, the same banks that have been hoarding reserves in fear of their solvency (at 25 bps, 15bps over one-month Treasuries and about the same as one-year Treasuries, thank you very much), choose not to impair their liquidity position by making risky loans or purchasing risky assets, or if private borrowers, those same borrowers many of whom are currently up to their necks in debt, choose not to borrow, there’s always that swelling supply of “super safe” U.S. Treasury and agency securities to fill the bill.  For the U.S. government is currently more than willing to be both the borrower and spender of first and last resort.  And what better way to push banks in that direction than to pay little to nothing on excess reserves.

So there’s the QE II playbook.  The only questions remaining are – if and when.

Well, in the opinion of THE CONTRARIAN TAKE, there is no if.  It’s simply a matter of when.  Here’s why…

To an Austrian, easy money and managed interest rates are the source of, not the solution to the things Chairman Bernanke fears most – a weak economy, high rate of unemployment and yes, even deflation.  Such monetary interventions in the economy always and everywhere create artificial booms, bubbles in popular parlance, with their inevitable consequence always and everywhere being busts – credit crises, recessions and depressions.  You see, by artificially lowering interest rates and creating money and credit out of thin air, a central bank, aided and embedded by its too big too fail private bank partners, create economic and financial distortions – malinvestments, which eventually must be liquidated.  And once the central bank ceases its easy money policies, by halting the further issuance of money and money substitutes, or even slowing its rate of increase, the boom soon comes to an end and the bust ensues.  Sooner or later, free market forces prevail.  Sooner or later, the central bank induced boom REQUIRES a bust.

So then, what has Chairman Bernanke given us, so far?  Double digit money supply growth and zero interest rates, right.  He’s given us a boom (an anemic one at that) that at some point MUST give us a bust.  Combine this certainty with the repeal of the Bush tax cuts, the likely crippling impact of Obamacare and Fin Reg, and what seems a never ending parade of intrusive government programs as far as the eye can see, all against a still debt-laden private sector, and it’s easy to see why the economy is in a heap of trouble.

And in time, and by extension, it’s equally easy to see the near certain implementation of Bernanke’s QE II tool set.

Now, while a 10.7% year over year rate of growth in TMS2 is highly inflationary, it is down from the high of 16.5% posted back in November of 2009.  That fact plus the economically debilitating effects of the pending tax increases, as well as the plethora of forthcoming government interventions into the economy, suggest that our current anemic boom could very well be close to turning bust.  And with that, it should go without saying that with Ben Bernanke at the helm of the Federal Reserve, another round of Federal Reserve engineered inflation could be right around the corner.

Based on the monetary insights of the Austrian school of economics, THE CONTRARIAN TAKE offers up the latest monthly money supply metrics for the U.S., Eurozone and Japan currency blocks.

To see the entire monthly series offering – the latest money supply data for all three currency blocks, with full historical data and chart work, as well as supporting definitions, sources, notes and references – click here on Austrian Money Supply.

For a quick link to money supply definitions, sources, notes and references, click here on Austrian Money Supply Definitions, Sources, Notes and References.

For the logic behind the formulation of Austrian money supply, read Money Supply Metrics, the Austrian Take.

Where We Are

The money supply aggregates based on the Austrian definition of the money supply (TMS) slipped in July, with broad TMS2, THE CONTRARIAN TAKE’s preferred money supply metric, down an annualized 2.6%.  However, the more important year over year growth rate on TMS2 was a robust 10.3% in July, down just slightly from June’s 10.6% rate, making this the 19th consecutive month that TMS2 has posted double digit year over year growth.  The last time TMS2 saw this kind of string was during the run-up to the now infamous housing boom-bust, a string that saw 36 consecutive months of double digit growth.  True, not housing bubble worthy, at least not yet, but still a lot of inflation.

As was the case in June, one would not know it by looking at M2.  This mainstream money supply aggregate, the one so closely watched by the deflation “hawks” at the FOMC, but in the opinion of the THE CONTRARIAN TAKE a grossly misleading measure of the money supply, is showing a year over year growth rate of a mere 2%.

To an Austrian, inflation is alive and well.  To the FOMC, mainstream economists and investors alike, deflation is lurking right around the corner.

A Look at TMS2 Internals

Before discussing the prospects for inflation going forward, a look at the TMS2 internals is instructive.

To begin, inflation springs from two basic sources:

The Federal Reserve, via the issuance of currency and covered money substitutes, the combined total popularly termed base money, the bulk of which springs directly from the Federal Reserve’s power to monetize assets by writing checks on itself.

Private banks, via the issuance of uncovered money substitutes, which springs from the ability of those banks to pyramid deposits on top of base money (read create money out of thin air), when making loans or purchasing assets.

With that as background, a look at the chart below quickly reveals who has done the heavy lifting when it comes to inflation; i.e., who’s responsible for that string of double digit growth rates.  Hands down, it’s been the Federal Reserve, as private banking institutions have been generally unwilling to pyramid money substitutes on top of that mountain of base money.

So, with the bulk of the heavy lifting currently in the hands of the Federal Reserve, it should come as no surprise that with the cessation of the Federal Reserve’s asset purchase programs in March, and resultant leveling off of Federal Reserve Credit, money supply growth as measured by TMS2, although still robust, has eased, down from a year over year growth rate of 16.5% in November 2009 to July’s 10.3%.  And to repeat, in the eyes of the FOMC, with their focus on M2, a money supply rate of growth wallowing at a mere 2%.

All that could be changing soon, as it looks like the deflation hawks at the FOMC are about to step up and put a charge into the monetary aggregates.

What’s Next

Let’s begin with the August 10th FOMC press release, bold type THE CONTRARIAN TAKE’s:

Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.  The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

First, the obvious.  While it is true that TMS2 has been decelerating, the fact is TMS2 is still running at double digit growth rates. Simply said, there is a lot of inflation around, supported by a still huge Federal Reserve balance sheet. Yet, citing little signs of inflation, likely supported by that 2% M2 growth rate, it is clear that the FOMC has no idea inflation is this robust.

Second, and as a consequence, the FOMC has decided to not only continue to maintain exceptionally low levels of the federal funds rate for an extended period, but to exit its exit strategy, as it will now keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.

Third, fully aware of the banks unwillingness to extend credit (again read create money), the FOMC ends its press release by assuring the market that when it comes to money it is prepared to do the heavy lifting once more, not only by ending its exit strategy, but employing whatever other policy tools it deems useful to insure the economy gets all the inflation it needs.

What are those policy tools?

As St. Louis Federal Reserve President James Bullard, a supposed hawk and voting FOMC member, laid it out recently – Q.E. II, meaning more asset monetization, before as he says the U.S. slips into a Japanese style deflation.

A position Federal Reserve Chairman Bernanke supports?  You bet.

Perhaps some short-term weakness still in TMS2, but don’t count on it for too long.  A few more disappointing economic reports, perhaps two or three more ugly employment reports, or maybe another credit event, and THE CONTRARIAN TAKE is thinking another round of Federal Reserve engineered inflation is right around the corner.

This time likely starting  from an already robust rate.

Based on the monetary insights of the Austrian school of economics, THE CONTRARIAN TAKE offers up the latest monthly money supply metrics for the U.S., Eurozone and Japan currency blocks.

To see the entire monthly series offering – the latest money supply data for all three currency blocks, with full historical data and chart work, as well as supporting definitions, sources, notes and references – click here on Austrian Money Supply.

For a quick link to money supply definitions, sources, notes and references, click here on Austrian Money Supply Definitions, Sources, Notes and References.

For the logic behind the formulation of Austrian money supply, read Money Supply Metrics, the Austrian Take.

The Austrian take on where we are and what’s next…

Where We Are

The money supply aggregates based on the Austrian definition of the money supply (TMS) surged in June, up 15.6% annualized on narrow TMS1 and 8.4% annualized on the broader TMS2.   Not too shabby.  And although TMS1 is only showing a 2.4% rate of growth year on year, the more important TMS2 metric, the metric THE CONTRARIAN TAKE views as the best overall measure of the money supply in the U.S., is growing at a very robust 10.6 % rate.

In other words, inflation is alive and well.

One would not know it by looking at M2, would they?  This mainstream money supply aggregate, the one so closely watched by the Federal Reserve, mainstream economists and investors alike, but in the opinion of the THE CONTRARIAN TAKE a grossly misleading measure of the money supply, is showing a year over year growth rate of a mere 1.9%.

Having said this, the growth in bothTMS1 and TMS2 has been decelerating of late, reflecting a Federal Reserve balance sheet that has clearly plateaued, particularly since March when the Federal Reserve ended its mortgage asset purchase program.

So then-  yes we have double digit TMS2, but where to from here.

What’s Next

First, lets start with the obvious.  While it is true that the Austrian money supply aggregates have been decelerating, the fact is the all important TMS2 measure is still running at double digit growth rates, and at growth rates still above the median of the last 10 years.  Simply said, there is a lot of inflation around, supported by a still huge Federal Reserve balance sheet.

What’s more, and more importantly, the prospects for even more inflation seem to be growing by the minute.  Indeed, given the Federal Reserve’s preoccupation with the relatively subdued nature of the popular price indices, the persistently high unemployment rate and the continued weakness in housing juxtaposed against the anemic growth in that faulty M2 metric, one could make a strong case that the next big move in TMS will be up.

The reason?

A FOMC worried silly about what all these metrics suggest; namely, brewing deflation, prompting the Federal Reserve to begin expanding its balance sheet in earnest once more.

Witness St. Louis Federal Reserve President James Bullard, a supposed hawk and voting FOMC member, calling for Q.E. II, before as he says the U.S. slips into a Japanese style deflation.

A position Federal Reserve Chairman Bernanke supports, you ask?  You bet.  One only has to read Bernanke’s account of the Japanese experience and what the Bank of Japan should have done about it to be assured that Bernanke is on side with Bullard – lock, stock and barrel.  Here it is in Bernanke’s own words.

Another round of Q.E. and another surge in TMS from its already high level, the CONTRARIAN TAKE surmises, may soon become fact.  You see, deflation hawk extraordinaire Chairman Bernanke and his new accomplice St. Louis President James Bullard will not for long be the only deflation-fearing, inflation-bent members of the FOMC.  Three new Obama-picked, and similarly inflation-bent Federal Reserve Board nominees, all fretting about those very same metrics, are about to be become permanent members of the FOMC – Dr. Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, Dr. Peter Diamond, a professor at the Massachusetts Institute of Technology (MIT) and Sarah Bloom Raskin, commissioner of financial regulation for the state of Maryland.

Perhaps a bit more short-term weakness in TMS to come, but don’t count on it for too long.  At TMS2 10.6% and counting, another round of Federal Reserve engineered inflation is likely to put a charge into the monetary aggregates.

Based on the monetary insights of the Austrian school of economics, THE CONTRARIAN TAKE offers up the latest monthly money supply metrics for the U.S., Eurozone and Japan currency blocks.

To see the entire monthly series offering – the latest money supply data for all three currency blocks, with full historical data and chart work, as well as supporting definitions, sources, notes and references – click here on Austrian Money Supply.

For a quick link to money supply definitions, sources, notes and references, click here on Austrian Money Supply Definitions, Sources, Notes and References.

For the logic behind the formulation of Austrian money supply, read Money Supply Metrics, the Austrian Take.

Image by Lincolnian (Brian) via Flickr

Retirement village? Assisted living? Co-housing? Age-restricted or aging-in-place communities? Inter-generational cooperative? This space has explored many of the growing varieties of housing choices for boomers and elders when the time comes to downsize, rightsize, clear out or economize. Here’s a new one that’s making the news: think global.

Even with (and sometimes because of) today’s grim economy, increasing numbers of Americans are choosing senior housing overseas. Some are returning to former homes in countries with lower costs or better health care, some are finding bargain housing in inexpensive areas where they have friends or a support community.

But many are just making housing in another country life’s last great adventure.

According to Boomers Abroad, an ambitious online community/social network, the number of Americans and Canadians living abroad, already about 7 million, is expected to double and then some within the next 10 years — and you’re invited to join them. The site links to the top five locales listed in the just-released September/October issue of  AARP The Magazine the best of what Mexico, France, Panama, Portugal and Italy have to offer—”castles, palm trees, rain forests, grilled lobster—in their unique and unparalleled retirement experiences. ”

Image by rochelle, et. al. via Flickr

Who actually likes performance reviews?

Gen Y, turns out:

Ms. Reder agrees that employees are usually thirsty for feedback. She has observed that those new to the work force want it most.

“One thing that’s very consistent when we look at generation Y is that they are constantly looking for feedback,” she says. “They want training and development, and performance reviews facilitate that. Employers need to understand this is a need, not a want.”

I’m definitely not Gen Y and have had a formal performance review only twice in my life, both In my $11/hour retail job.

Yup, that’s it. Never at the major daily newspapers where I worked, or the national magazines. Feedback? As if. Mostly snide criticism, sometimes shouted, and, on a few rare occasions, an attaboy from a boss.

In my retail job — the one where I folded T-shirts and swept the floor and earned no commission — their review evaluated 20 categories of behavior and skill, ranking us from a 1 (you suck) to a 5 (you rock.) The highest I got was a 4, once. I knew what I was really good at, and there was no category for it on the form.

I did discover in one of these meetings, and it was valuable feedback, that my managers, most of whom were decades younger than I, found me intimidating and therefore difficult to manage. I told my boss to tell them to boss me as much as they felt necessary. And they did. (Not much, luckily.)

Another manager, at a short-lived start-up, pointed out that I am extremely decisive, a good thing and a useful skill. But that, very true, I don’t suffer fools gladly and won’t tolerate whiners. Not great for someone who, then, was managing younger workers.

But PRs are one-way: “Here’s what we think of you”, typically with little to no interest in hearing that — perhaps — the way you’re behaving at work, certainly when less than optimal, may also reflect the workstyles and budgets of your employer. I got dinged on one retail review for not paying close enough attention to potential shoplifters; this after the number of associates on the floor was so severely cut back we could barely get our jobs done as it was.

I think many of us try our best, but if your manager, as one of mine did, simply refuses to speak to you, it’s not going to create a terrific work environment.

Some think performance reviews need to be killed, now. From The Wall Street Journal:

This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who’s evaluated hates it. It’s a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus.

And yet few people do anything to kill it. Well, it’s time they did.

Don’t get me wrong: Reviewing performance is good; it should happen every day. But employees need evaluations they can believe, not the fraudulent ones they receive. They need evaluations that are dictated by need, not a date on the calendar. They need evaluations that make them strive to improve, not pretend they are perfect.

Sadly, most managers are oblivious to the havoc they wreak with performance reviews. To some extent, they don’t know any better: This is how performance reviews have been done, and this is how they will be done. Period.

Here’s a simple experiment you can try. Ask yourself: How often have you heard a manager say, “Here is what I believe,” followed by, “Now tell me, what do you think?” and actually mean it? Rarely, I bet.

The performance review is the primary tool for reinforcing this sorry state. Performance reviews instill feelings of being dominated.

Do you give them? Get them? Do you think they’re worth doing?

Have you ever learned something helpful (even positive) from one?

Related articles by Zemanta

• Tips to Ace a Performance Review (chicagonow.com)
• It’s time to abolish the employee performance review (psychologytoday.com)
• Performance Reviews Get an ‘Unsatisfactory’ From Experts (theatlantic.com)

Image via Wikipedia

The 97th Tour de France finished yesterday and it was a stellar one, with an epic showdown for the yellow jersey, a celebration of 100 years of cycling in the Pyrenees, the cementing of Mark Cavendish’s deserved rep as the most dominant sprinter on the block and Lance Armstrong’s final (this time he really means it!) kick at the grand tour can.  I confess that I’m kind of at loose ends now. Despite not having been on a bicycle since I was 12, I love the Tour unabashedly and will get up at whatever insanely odd hour is necessary to catch its yearly three-week winding around France (and neighboring countries). Chases! Crashes! Crazy fans! Beautiful scenery! Dudes beating each other with bike wheels!

I’ve tried to explain to non-fans what my fascination with this event is, but maybe describing it as “chess on wheels” was the wrong tactic to pique people’s curiosity.  So, this year, I’ve decided to offer up three job-related lessons that I’ve gleaned from following the 2010 Tour de France instead. The things we can learn from spandex-clad men in funny helmets!

The Peter Principle is alive and well

Since I watched the Tour via live internet feeds this year, I was at the mercy of whatever English broadcast happened to be available on a given day. My preference is for the delightful Versus team of Phil Liggett and Paul Sherwen, but often I was stuck watching the Eurosport feed. And Eurosport means listening to the aural awkwardness of one Sean Kelly. Widely regard as one of the top professional riders of the 80s, Kelly is downright abysmal as a commentator. Immune to the jokes of his fellow Eurosporters and prone to speaking in a flat, affectless monotone that goes on for paragraphs without a pause or breath, whatever the breadth and depth of his cycling knowledge, he just doesn’t have the personality or animation required to provide color commentary. As in the case of excellent workers who are promoted to management as a reward for their efforts but lack the supervisory skills to handle that responsibility, just because you were skilled at a sport, doesn’t  automatically qualify you to call the play-by-play for the viewing or listening audience.

Relatability builds trust

When I heard that Lance Armstrong was coming out of retirement for the 2009 Tour, I couldn’t help but cringe. I’m not a fan and I had gotten used to several happily Lance-free years – no checking in with him before and after each stage, no Bob Roll waxing poetic about his man crush, no clip packages of his greatest moments, etc., etc. I thought 2009 would be a last hurrah; one and done, so to speak. But no, after last year’s third place finish, Armstrong decided to put in an appearance in this year’s Tour. And what an appearance it was. From the beginning, Armstrong was off his storied form. In one memorable stage, he crashed three times. In the end, he finished in 23rd place, almost 40 minutes behind Tour winner Alberto Contador. While personal branding types would roundly condemn Armstrong’s off-peak participation as damaging to his legacy as the preeminent cyclist of his time and one of the all-time greats, it actually bolstered his reputation. Viewers saw not the relentless machine of previous Tours, but an almost 39 year-old man past his physical prime who could no longer keep up with the new generation of elite riders. Lance Armstrong was finally human, obviously fallible and it looked good on him. By letting us see him at less than his best, it made his seven previous victories seem all the more spectacular. They seemed more the product of a phenomenal athlete in his prime than that of a pedal-pushing automaton whose dominance over mere mortals was a foregone conclusion from day one of the race. It worked so well that even I was rooting for Lance to pull out a stage victory this year and exit  the sport with one final burst of glory. Well played, Mr. Armstrong. Perfection is admirable, but a flash of vulnerability is relatable and relatability builds trust or at least convinces coworkers you aren’t a Cylon.

Winning is good, but don’t be gauche about it

Everyone loves a winner (not as much a we love an underdog, but still), but we like to see winning as the triumph of pure talent and individual determination. By contrast, wanting it too much and being willing to do whatever it takes to get it is off-putting. We cling to the belief that we still live and work in a meritocratic environment and will be rewarded accordingly. Enter one Alberto Contador. Three times a Tour winner, he obviously missed this memo. Last year, despite being teammates with Armstrong and ostensibly there to support Armstrong’s quest for an eighth victory, Contador torpedoed Astana team unity by chasing the victory for himself. It paid off, but did nothing for his popularity or reputation as a solid teammate in the process. This year, he was up to his old tricks again – violating Tour etiquette by chasing down one of his own Astana teammates on a breakaway (and robbing him of a stage win) to gain a few precious seconds on tour rival (and fan favorite) Andy Schleck and going on the attack against Schleck while Schleck was in the throes of mechanical difficulty. The latter move earned Contador widespread criticism for unsportsmanlike behavior and led him to offer up a public apology, but the damage was done. Contador earned his third victory and cemented his rep as the kind of guy for whom winning takes precedence above all else and who has no grasp of/no respect for  the unspoken rules governing the Tour and the implied gentlemanly conduct (fisticuffs aside) of its riders. Not exactly the type of colleague you’d trust to have your back  or whose  promotion you’d be keen to celebrate.

Image by AFP/Getty Images via @daylife

I do a sport that results in a lot of broken toes.  What I’ve learned is this: once a toe is broken, it will break more easily in the future until having a broken toe becomes a regular part of life.  This is, I believe,  why God invented sports tape.

Broken hearts are different.  Once a heart gets broken a few times, it builds up a tough shell that stops it from ever breaking again, or at least from breaking into a million pieces again.  That’s the way it is for those of us who actually opened our hearts and our wallets and our lives to getting President Obama elected.  We got our hearts broken over and over and over again.  And now, for many of us, we expect nothing but betrayal.

Of course, like any dysfunctional relationship, there were clues immediately that we should start hardening ourselves to the fantasy that we would finally have an administration that was ours and ours alone, rather than a President that is always sneaking off to cavort with big military and big banks.  But then came Larry Summers and the TARP bailouts and the increase of troops in both Iraq and Afghanistan and so many betrayals that by now, my heart is like stone and there is nothing left for the Obama-ites to do that will hurt me.

Or so I say.  Like any broken-hearted lover, continuously rejected and then courted and then rejected again, I harbor a small piece of hope.  This time he’ll do the right thing.  This time will be different.  This time he’ll appoint Elizabeth Warren to head the consumer advocacy agency that she invented.  But even that little piece of hopefulness buried deep in the recesses of my stony heart knows, deep down, that the chances of this happening are about the same as the chances of a perfectly romantic ending to my life, where my beloved rides up on a white horse and takes me off into a sunset to live happily ever after.

According to an article in today’s New York Times, the Obama Administration has not ruled out appointing Warren, especially given how vocal the support for her is from leading Democrats and some of the press, as well as some labor unions and progressive.  The Obama administration knows what we want.

It is essential to the bill and very, very important that Elizabeth Warren be appointed,” Representative Barney Frank, Democrat of Massachusetts and an architect of the law, said Friday on MSNBC.

But not surprisingly, our arch rival, the banking industry, opposes Professor Warren as too invested in protecting the people rather than being “neutral.”  As if the head of a consumer protection agency should be neutral about how the banks have profited from the immense information asymmetry involved in debt.  In other words, Warren actually believes we ought to know what we’re getting when we take on a mortgage or a credit card instead of continuing to allow a system where you would need an MBA to understand what the hell it means to sign on the dotted line.

According to Roger M. Beverage, head of the Oklahoma Banker’s Association, Oklahoma native Warren is “competent” and “exceptionally bright” but

We just fear what she might come up with.  She’s a partisan and she’s bull-headed and she’s opinionated. And she’s terrific. She’s a great advocate. We just respectfully disagree with her view of the world.”

Already key Democrats, such as Senator Christopher Dodd (CT), the chairman of the banking committee, are warning that they won’t be able to muster the votes necessary for Warren’s nomination.  It is only a matter of time till the Obama administration shrugs and says “What can I do.”

And the heart-broken progressives of this country either continue to excuse our beloved, like any abused spouse, with “He had no choice” and “He couldn’t help it” or, more likely, turn our backs on the Democrats in the upcoming midterm elections and risk losing the only thing like a happy ending we have ever had.

Cannonball is a short film focused on a very specific side effect of The Great Recession: A glut of foreclosed homes in Fresno, California, and tons of empty swimming pools that have attracted legions of the city’s skateboarders. Armed with sump pumps and skate decks, the subjects in Cannonball provide a unique look at the nationwide fallout of the economic crisis. Instead of seeing the country through the eyes of those who have lost so much, we instead see the opportunities these losses have created.

It’s impossible to watch this film and not be reminded of the exploits of the Z-Boys (Tony Alva, Jay Adams, Stacy Peralta, etc.) skate crew, who took great advantage of the Los Angeles drought of the 1970s — as residents were forced to drain their pools — and subsequently invented/pioneered modern skateboarding culture. Produced by the gentlemen at California is a Place (Drea Cooper and Zackary Canepari), Cannonball manages to tackle the tough subject of economic hardship in a compelling (and visually stunning) format. It’s a reminder of how important storytelling can be.

Image by Linda N. via Flickr

Well, it’s true. Women are shoe-obsessed, according to a British study of 3,000 women:

In analyzing the spending of some 3,000 women, a British pollster finds the average female buys seven new pairs of shoes a year, and for a 67-year period. At close to $400 annually — which may even be lowballing when it comes to North American women — the grand lifetime total tops $26,000.

It’s an astounding figure, to be sure. But with no male comparison, critics say it’s yet another example of shoe purchases having become shorthand for female frivolity.

“It really is a very feminist issue,” says Elizabeth Semmelhack, senior curator at the Bata Shoe Museum in Toronto. “Men’s excesses are often seen as somehow positive — ‘He works hard, so of course he should have that Rolex’ — whereas women are constantly belittled for them.”

The new survey, conducted by OnePoll for Gocompare.com, doesn’t address male shoe budgets.

Pollsters do, however, report that a quarter of women rarely divulge their shoe purchases to their partner “as he doesn’t understand their obsession,” and that “predictably, 29 per cent of ladies say shoes are the one thing they can’t resist buying, regardless of whether they can afford them.”

This year, I’ve beat the average — nine (so far.) Two pair of athletic shoes; three pairs of flats; a pair of dressy pumps and three pairs of sandals. That’s not typical for me and seven of those (she whimpered) were on sale. None cost more than $100. It adds up, but the number, for me anyway, is less the issue than their longevity.

I blogged here about the recent loss of our local shoe repairman, Mike, who closed his shop a month ago. I keep my shoes (and clothing) for many years, sometimes decades; a pair of monk-straps and loafers date to 1996 and still — thanks to Mike — look new.

Every women knows that new shoes are are easy place to indulge quickly and painlessly. No calories! You can gain — or lose — 5, 10 or 50 pounds — and still wear gorgeous shoes.

Unlike much of life, new shoes are forgiving. If you’re anything over a size 12, looking for beautiful, well-made clothing, good luck with that. Buying shoes doesn’t demand squeezing into a dressing room, or waiting for one. And, if decently made and cared for, they last, unlike much clothing that stains, tears or can’t be altered.

Men, too, have their sprees.

For my Dad, it was safari jackets and Irish tweed hats (and pipes.) The sweetie has an enormous collection of caps that I know will only expand further — and all those golf games add up to serious coin.

They just don’t fit into a closet.

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Photo by Xhanatos on Flickr

Read the headlines on San Francisco’s Housing Authority, and you may feel like you’ve stumbled upon a history book about Chicago’s public housing.

Gross mismanagement. Rents not collected. Multi-million dollar deficit. Poor upkeep. Serious lawsuits because of negligence. A real mess.

Now, San Francisco is looking to remedy two of those problems - the deficit and the rent collection in one fell swoop. They’ve issued thousands of eviction notices for families living there, letting them know they’ve got to pay up or get out.

The problem is, many residents can’t trust what they’re told they owe. Record keeping has been so bad that many who have paid every month have also gotten eviction notices, or people are being asked to pay much larger sums than they think they owe.

Take Anna Stephens, whose story was told in the San Francisco Chronicle. A single mom with two kids who works as an administrative assistant, she’s paid her rent on time for years. But she got a bill in the mail saying she owes the housing authority $9,750 in back rent. It’s not the first time either. A few years ago, they brought another suit against her after she complained about the security in her building, saying she owed nearly $2,000 in back rent. The suit was later dropped.

Other tenants who are facing hard times say their rent hasn’t been adjusted to their much lower income levels. Others still say paying your rent has never been a big deal in San Francisco’s public housing, so it’s going to be hard to change that idea in tenants minds.

San Francisco is struggling to improve under demands from HUD, not unlike Chicago in the mid-1990s. After years of mismanagement, huge deficits and a large stock of derelict housing, HUD took over CHA in 1996 in an effort to get it back on the right path. Soon after, the Plan for Transformation was gotten underway, knocking down most of the city’s public housing units to make way for mixed-income communities and relocating thousands of families.

In San Francisco, the Housing Authority says it’s not going to throw people out on their ear.

“We realize these are tough economic times,” said Henry Alvarez, the director of SFHA, to the Chronicle. “There is no reason to throw people out on the streets.”

But that’s a difficult message to get through when you send an eviction notice.

One of the first successful ventures to jump on the daily deal scene was Groupon, which launched in November 2008 in Chicago and has since expanded into 65 North American markets and 13 countries including Chile and Brazil. Now considered the largest social commerce site, Groupon, founded by Andrew Mason, sells a “deal of the day” at an average discount of 50%.

Since Groupon’s success, over 100 similar enterprises have launched. But the idea of subscribing to a hundred different e-mail newsletters is daunting. Navigating the e-coupon waters might have been a terrifying feat until Yipit popped on the scene. When Yipit first started in February 2010, they only aggregated about 30 services. Now in July 2010 they aggregate over 90 services in 7 cities, a testament to the growing e-coupon market.

While at Harvard, Yipit founders Jim Moran and Vin Vacanti sold ads for local businesses in their college magazine. After graduation, they both spent time on Wall St before leaving to work for start-ups. In the winter of 2009, Jim noticed that everything was on sale; even high-end restaurants were offering recession deals. So, Jim and Vin decided to start focusing on deals, thinking about what the Yelp reviews of deals or the Facebook graphs of deals might look like. Pretty soon, they had an incredible database and a recommendation algorithm for single sales, restaurants and happy hours. “We were growing steadily,” says Jim, “But we weren’t really blowing everyone away.” Then, following the success of Groupon, “We noticed this incredible trend booming beneath us,” he says, as more and more e-coupon enterprises popped up. To aggregate this herd of businesses, a new, streamlined version of Yipit was born.

To be clear, Yipit doesn’t have their own deals. They are like the Kayak.com of the e-coupon industry, grabbing deals just as their announced. Their system automatically receives deals, and interns and content managers categorize the deals based on user preferences. Yipit customizes your “Deal Perch” by categories such as dining and nightlife, health and beauty, retail and services, activities and adventures and fitness. An algorithm takes the deals and sends unique emails out to users based on their preferences. “We learn about our users and send them customized deals. If you tell us you never want to see a spa deal, you’ll never see a spa deal from us,” says Vin.

Traditional coupons and Sundays spent clipping are a thing of the past. “With all of the deal sites out there today,” Vin says, “It’s financially irresponsible to not take advantage of these deals.”

Since Jim and Vin at Yipit spend their days navigating the e-coupon waters, we asked them which e-coupon sites they liked best. Here is a list of the best ways to save money, (by spending it).

According to Yipit, the biggest national players in the E-Coupon scene are Groupon, LivingSocial and BuyWithMe. Local businesses love Groupon because of its “collective buying power” feature. The daily deal is only released once enough people buy in, creating an incentive to share with friends and family and a set minimum sale for vendors. Groupon literally sells deals in every category such as entertainment, clothing, restaurants, spas and travel. Groupon even offers virtual currency called Groupon Bucks. Earlier this month, Groupon entered into an outsourcing partnership with The McClatchy Company, which owns several major newspapers such as the Kansas City Star, the Miami Herald and the Sacramento Bee. The selected newspapers will offer exclusive and localized Groupon discounts, which is a cute nod to the days of coupon clippings and one more way newspapers can get themselves up to speed in the Internet era.

LivingSocial is the second largest daily deal site, which sells everything from photo classes in Central Park to Brazilian waxes to rock climbing. The experience is more intimate than Groupon since it provides users with free deals if they can get three of their friends to buy the same deal. The third national player, BuyWithMe is an up and coming daily deal site, which provides multiple daily deals per day per city. BuyWithMe reaches a smaller audience and provides an average deal of 50-60% off.

In New York City, Yipit ranks the top 5 deal sites: Village Vines is a membership only site which provides access to a small selection of handpicked restaurants in New York City like Soho’s Kittichai, Public in NoLita and West Harlem’s Dinosaur BBQ. Diners make reservations through Village Vines, paying $10 in advance to secure exclusive pricing which is usually about 30% off at restaurants. BlackboardEats is another restaurant focused deal site offering users redemption codes to prix fixe discounts, tasting events and weekly dinner bargains which are live for one day, good for one month and usually save about 30% off of the total bill or free appetizers and drinks. BBE is edited by food critics and is also located in San Francisco and Los Angeles. RelishNYC offers dining, activities like bike rentals, and entertainment deals in New York with a focus on local businesses and merchants and fewer chains. Lifebooker is an NYC based salon and beauty deals site that users can use to make appointments, helping to reduce wait time.

Lastly, Scoop St offers a variety of marquee New York businesses and experiences. Founders and former Georgetown roommates David Ambrose and Justin Tsang aim to combine the elements of online communities and the power of group buying. Ambrose, an expert in online car forums and Tsang an experienced consumer in Chinese consumer flashbombs called “tuangou,” were called “New York’s Answer to Groupon” by Business Insider. In spring 2010, they held the “Taste of 7th Street Food Festival,” which offered signature dishes to over 1,000 consumers half-off. Since beginning in January 2008, they’ve managed to close an angel round in addition to another round of private investing. They have plans to open up in the Asian market this fall.

In Los Angeles, Yipit recommends Social Buy, a site for general deals like Osmosis powered facials plus social events and celebrity recommendations and endorsements like “Want to stay Fab, Fit, and Fun with Giuliana Rancic? See which deals she recommends!” And AtCost, an L.A. based general deals site with discounts that increase for users who share deals with friends via social networks like Twitter and Facebook.

In San Francisco, Yipit recommends Zozi, which is perfect for the crunchy folk with deals focusing on outdoor activities and adventures, usually daytrips. Zozi’s savings hover around 50%. Bloomspot, which maintains an intimate feel because it’s based around local merchants and businesses, offers 1 or 2 deals per day in luxury goods, services, and hotels for discounts of usually 30-40% off.

In Boston the best local site is Boston Bargains, which offers “wicked” general deals for small businesses with around 50-60% savings.

Based in Seattle, Yipit’s likes Tippr, which offers general deals, focusing on dining and services and an incentive plan with discounts that increase as more users purchase the deal.

In Atlanta, Scoutmob takes the trophy home for it’s mobile initiatives. Launched in January 2010, Scoutmob offers iPhone focused daily deals with an emphasis on restaurants and personal services. In Atlanta, Scoutmob has about 100,000 customers and they just launched their New York marketplace last week, on July 8th, 2010. At the moment, they are on track to launch a market a month.

Scoutmob’s mobile app provides insights on local culture and activities. “It’s similar to Foursquare,” says Scoutmob Co-Founder Michael Tavani, “But the difference is Foursquare users check in at places they already go to, while we are driving users to places they haven’t been to.”

Scoutmob bridges the gap between two of the hottest trends right now, real-time location based mobile apps and daily-deal-e-coupons. “We’re in a red hot space right now,” says Michael, “But there are a lot of people doing it, and there are a lot of poor versions of it.” Michael believes the rest of the competition drops off dramatically beyond Groupon and LivingSocial.

All deals are free for consumers, which is a powerful difference in the e-deals scene. Scoutmob doesn’t accept payment on their site; they receive payment on the backend when the customer checks in at the deal location. Scoutmob makes less revenue than their competitors who manage their pay model with upfront buying but they didn’t want to be a Groupon copycat. They wanted to turn the initiative upside down.

Especially because deals are free, Scoutmob has gone viral. The company doesn’t need to advertise; it relies purely on word of mouth marketing. In just 24 hours, 4,000 people claimed a deal in Atlanta today at a casual Mexican restaurant called Pozole in Atlanta’s Virginia Highlands district. “No one is driving these numbers outside of Groupon,” he says.
Looking forward the online deals market is just getting started. “I think local publishers and established major media companies will come into this market. Anyone with an incumbent audience and local authority will start recommending deals that they’ve structured,” envisions Yipit’s Jim Moran. “And while daily deals are still a desktop experience, expect that the future of the industry will be all about mobile.”

Currently Groupon leads the pack, but the industry is evolving. It’s helpful to think of each e-coupon service and deal site as a small business that sells to consumers just like anyone else. “Similar to online sample sales, which Gilt pioneered, this is not a winner take all market. There’s definitely enough to go around,” says David Ambrose of Scoop St. Speaking of which, this spring Gilt launched a beta version of Gilt City, its own local deals service that currently offers 5 vendors a week in New York. Gilt City offers deals like Rufus Wainwright tickets, golfing in the Hamptons and private blending sessions at City Winery.

Yipit hopes to make the landscape easier for new services to challenge Groupon. By offering to take care of distribution, Yipit forces sites to focus on the quality and not the quantity of the deals. “Yipit is really valuable in this marketplace when you have 100 plus operators. They will definitely help the entire market,” says Justin Tsang of Scoop St, an NYC based daily deals site.

“There’s plenty of room in the deal industry for growth,” says Jim Moran, “The industry will remain fragmented. I don’t think there will be just one player. What was once a former salesman is now an entrepreneur. Let’s say he or she takes $3,000 to kick up a website and if the company can get 100 deals sold a week, that’s about $50,000 – $100,000 a year in revenue.”

And while even Yipit now has some copycats like DailyD and 8Coupons, Vin believes they have the first mover’s advantage. “Our goal right now is to make sure they all succeed,” says Vin. “I think eventually we will look into charging but right now our goal is to focus on the product and watching to make sure all of these new data sites will be successful.”

But Michael Tavani at Scoutmob sees it from a different angle. “I suspect that during some point in the next year, the copycats will drop out because they won’t be growing. And when there are only three or four enterprises, what role do the aggregators play?” He adds, “The magic of this space is creating unique deals.”

It appears that over the next year, we still have a great deal to look forward to in this industry.

Crystal Richards stands with two of her children in front of the Chase Tower in downtown Chicago. Her entire family may be homeless after she is forced to vacate her South Shore apartment Saturday.

Crystal Richards takes care of her six children – 14, 9, 6, 5, 2 and 2 months – and a sick mother. And as of Saturday, she has no home.

Richards is stuck in a dead zone, where clearly someone is at fault, but there’s no one willing to take the blame. Her building, 7263 S. Coles, is quite literally falling apart. Bricks are falling off the front of the South Shore apartment building, not to mention the ceilings are falling in and the electricity is about to cause on fire any minute, she says. The bathtubs won’t drain, so they sit, daily, full of grey water, while families try to wash themselves in the kitchen sink. Mold, insects, pests – you name a problem, they got it.

It’s so bad that the city has deemed it uninhabitable, and Saturday, they will come out to vacate 10 families from the premises. Richards and her neighbors gathered downtown yesterday afternoon, asking for relocation assistance from the party they say is responsible for the building’s profound neglect – Chase Bank.

7263 S. Coles was put into foreclosure in 2008 by Washington Mutual Bank. Soon after, Chase took over Washington Mutual, and thus took on the building as well. They asked the court to appoint a receiver – a company to look after the building, says Arturo Del Angel, community organizer for Metropolitan Tenants Organization.

The receiver, he says, submitted one report to Chase in 2009, saying the building was fine. Finally, in May of this year, the foreclosure was completed. Days after, the order to vacate the building came, and quickly, the building was sold to a company called Oceania LLC.

“The city has said its so unsafe that the tenants can’t stay there,” says Del Angel. “We’re just asking that Chase help tenants find another, safer place to live.”

But Chase says it’s not the responsible party. Tom Kelly, spokesperson for Chase Bank in Chicago, says the bank only owned the building for one month and the receiver was responsible for the building, not them. I tried to contact Millennium Management, the court appointed receiver. They have no website, and the phone number listed for them is a fax line.

Many of the tenants have no place to go and will end up homeless, says Sean Brown, a building resident.

Sean Brown speaks at Thursday's rally.

“We shouldn’t be forced out of our homes because of their negligence,” says Brown. “I’ve been making phone calls for repairs for two years. Nothing was ever done.”

Kelly came out into the street to talk to the protesters, but the conversation sounded like a schoolyard quarrell. “The receiver works for the bank,” said MTO director John Bartlett. “No, they work for the judge,” said Kelly. “Chase is responsible to the tenants who are being put out,” said Bartlett. “Chase is no longer the owner of the building,” said Kelly. Back and forth, they argued.

No one wants the tenants to stay in the building – it’s simply too unsafe. But what the tenants and MTO want is relocation assistance – money given to the tenants to help them find a new home on such short notice.

For Richards, relocation assistance would help her family find a decent place to live. She had just paid her rent when she found out about the order to vacate the building, so there wasn’t any extra money left for a new place, plus security deposit. She says she doesn’t know what she’ll do come Saturday.

“I don’t know where me and my kids are going to get to,” she said. “[The relocation assistance] would help us find a place to live.”

Foreclosures are a problem to building and home owners, ruining their credit and leaving them with nothing. They’re a problem for banks who are dealing with thousands of unpaid loans. They’re a problem for neighborhoods who bear the brunt of the blight and problems they attract. And at 7263 S. Coles, it’s become a huge problem for these tenants, many of whom may become homeless because no one will take responsibility for what’s happened to their building.

The buck has been passed at 7263 S. Coles. Passed on and on and on, until finally, it’s arrived on the doorstep of 10 families. Ten families who paid their rent, and in return, expected a decent place to live.

The city, big banks and corporations are all involved in this mess, and yet, the most vulnerable party – low-income families on Chicago’s South Side – will bear the brunt of what’s happened. It’s they who will have to try to scrape together a security deposit and rent for a new place, find a place for their belongings in the meantime, look for new schools and child care providers for their kids. Ten defenseless families on the margins of society are the ones who carry the burden of the mess we’ve all made.

Meanwhile, yesterday, JPMorgan Chase boasted $4.8 billion in profits, up 76 percent from this time last year.

Walking in the hot sun, protesters shouted, “We bailed you out. You bailed on us.”

It’s not so hard to see their point.

Rather than burden their children with the daunting task of caring for them as they age, some baby boomers may be considering an extreme form of “relief.” Suicide.

Psychiatrist Mark Goulston says he’s been approached by some middle-aged patients who say they’d rather “take a bottle of pills” than inconvenience their children.

Dr. Goulston blames the problem on the impatient nature of “millennials” – the offspring of baby boomers – a trait he says was passed down from the boomers themselves.

Adding to their angst is their own experience of taking care of elderly parents, which sometimes leads to feelings of resentment. Baby boomers don’t want their own children to grow to resent and begrudge them when they get old and feeble.

There’s a video exchange between Goulston and CNN’s Don Lemon that’s worth watching, but won’t lift your spirits much.

Add to this don’t-be-a-burden dilemma — and it IS a dilemma that crosses the mind of everyone over 60 and most folks who have a parent over 60 — the bizarre situation of estate taxes right now and the whole business of dying gets seriously complicated. It was okay last year, when you knew estate taxes were magically going to disappear on January 1, 2010, so the focus was on staying alive until then.

Image via Wikipedia

Here’s a novel educational theory, espoused by an outgoing high-ranking official in British education:

Ms Atkins argued that poor teachers should not be sacked, as schools “need to reflect society”.

She told The Sunday Times: “It’s about learning how to identify good role models. One really good thing about primary school is that every kid learns how to deal with a really —- teacher.”

She continued: “I would not remove every single useless teacher because every grown-up in a workplace needs to learn to deal with the moron who sits four desks down without lamping them and to deal with authority that’s useless.

“I’d like to keep the number low, but if every primary school has one pretty naff teacher, this helps kids realise that even if you know the quality of authority is not good, you have to learn how to play it.”

I see her point. There are few things more demoralizing, after years of hard working studying and prepping and interning for the glamorous world of work than discovering that the “real world” offers some of the stupidest people you’ve ever met — and some of them are your bosses.

Maybe it’s not such a bad idea to learn early of their existence and how to deke around their insanity.

Or — is this woman nuts?

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Image via Wikipedia

I’m afraid that I’m losing my ability to think critically.  See, I sign up for all these right-wing email lists (part of my job as social critic), but today’s missive from Ann Coulter actually made sense.  Well, half of it did.  Does that mean I’m now half stupid?  Maybe, but listen to what the Coulternator is saying:

Dear Fellow Conservative,
“Somehow we just missed that home prices don’t go up forever.”
No, that’s not your idiot brother-in-law explaining how his four home equity loans eventually landed him penniless on a futon in your rec room. It’s the billionaire CEO of JP Morgan, Jamie Dimon.
Dimon was explaining to Congress’s Financial Crisis Inquiry Commission how he and his fellow Magic Men crashed the entire U.S. economy and then turned to taxpayers for a bail out.
Really? So Dimon’s defense to Wall Street’s utter recklessness with other people’s money is to claim that Wall Street doesn’t really understand how the market works? Again: Really?
But no one on the Commission challenged Dimon because, while the Commission’s stated purpose is “to examine the causes of the financial crisis,” its actual purpose is to conceal those causes — especially the federal government’s own central role in creating the housing bubble.
Further proof that the Commission isn’t serious…

See what I mean?  She’s kinda making sense.  Of course, after this the letter devolves into a typical Coulter tirade where our current economic woes are blamed on Obama, the census, and a lack of commitment to Reaganomics.  Saying Reaganomics will save us from the effects of, well, Reaganomics, is the sort of Alice in Wonderland, nothing makes sense that comes out of the Mad Hatter Coulter’s mouth nonsense with which I find it easy to disagree.

Over at the Nation, Robert Reich makes far more sense when he argues that the current Recession and coming Depression is the result of the rising economic inequality created by the Neoliberal policies of Reaganomics in the first place.  In other words, when you stop taxing the rich, take away the ability of workers to represent their interests, drastically cut the social safety net, and deregulate everything with a fetishistic belief that “the market knows best” you create the circumstances the US is in now and was in in 1929.  According to Reich:

in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.

Each of America’s two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.

Get it?  Rising inequality creates economic downturns.  The greedier the rich are the more we all suffer, except of course for the rich.  In fact, the rich are making a killing off the current Recession/Depression Era.  That’s right.  The rich are getting richer.

Millionaires in the U.S. and Canada saw their wealth increase 15 percent in 2009, to a total of 4.6 trillion dollars.”

So given that there is widespread agreement among many of the country’s leading economic experts that rising inequality hurts nearly all of us, why can’t the radical right that Ann Coulter represents get on board and start clamoring for worker representation, rebuilding the social safety net, and taxing the wealthiest among us?

That’s where “class” gets complicated, because although Coulter’s followers are primarily the working and lower-middle class whites who love her brand of vitriol, they are a class of people more interested in protecting their racial privilege with anti-immigrant sentiment and their sexual privilege with traditional marriage rhetoric than in protecting their economic interests.

And that’s too bad.  Because when the likes of Ann Coulter start making half sense to the likes of me, we’re halfway there to a broad-based coalition of Americans who want a distribution of wealth that reflects fairness and opportunity, not selfishness and greed.

Charlie Chaplin, Modern Times. Image via Wikipedia.

Why does The Economist have not only anonymous scribes, but anonymous bloggers? Perhaps so they can be refreshingly honest.

There’s no taint of political correctness, no whiff of sympathy, in the latest offering in the paper magazine by their “Schumpeter blogger” (named for Austrian economist Joseph Schumpeter), who turns out upon investigation to be none other than Mr. Adrian Wooldridge, an Oxonian philosopher who serves as the magazine’s editor on management.

Mr. Woolridge frets about a growing movement in which companies concern themselves with their employees’ mental health:

“The biggest problem with the movement lies in the assumption that promoting psychological wellness is as axiomatically good as encouraging the physical sort,” he writes.

Just when you thought it was safe to assume that wellness was all well and good.

Mr. Woolridge has no quibble with the notion that physical wellness is good for employees–it keeps their backsides out of  hospital beds, no doubt, and planted in their office chairs. But when it comes to mental health, he contends, crazy just might be better for business:

Few would doubt that good physical health makes for good productivity; but it is not self-evident that a positive mental attitude is good for a worker or his output: history shows that misfits have contributed far more to creativity than perky optimists. Besides, curmudgeonliness is arguably a rational way to cope with an imperfect world, rather than a sign of mental maladjustment (or so your occasionally curmudgeonly columnist would like to believe). Companies that chase the will-o’-the-wisp of “positive attitudes” may end up damaging themselves as well as sticking their noses where they have no business.

via The Economist.

Will-o–the-wisp indeed. Had Mr. Woolridge been led to concern about his reputation by something so bold as a byline, he might not have penned this insight into office culture. It may even explain why the one perk we can count on from an American office is bad coffee.

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• Happy people really do work harder (guardian.co.uk)

“Cali” is the blogger behind (NSFW) The Las Vegas Courtesan. A five-year veteran of the escorting business, she has been called “the Washingtonienne of Sin City.” Here, she talks about her life as a 21st century call girl, from the return of financial industry clients, the battle over tipping, and what sex acts men request when they’re down on their luck.

At first the change in the clients and money was a slow one. Las Vegas has always been a roller coaster of a ride in earning money as a sex worker or as a stripper, so at first I didn’t really notice much of a change. The highs got a little lower and the bad nights got a little more frequent. I would say that the bad times really were noticeable in the fall of 2008 when the markets really fell and things really took a turn for the worst. I remember that fall for a few months it seemed like I was just sitting at home waiting for nonexistent calls. I noticed another large dip in the spring of 2009, which is normally the most busy time of the year with the most conventions coming to town during the months of Feb-May. Obama had made a few choice comments in February that year and it started a cascade effect of cancellations of conventions. Normally I would be very busy and making good money, but instead it was like someone closed Las Vegas down to the normal happy conventioneers. Since late 2009 until now I have seen things pick back up ever so slightly, especially this year. Nothing huge or a “back to normal” state, but people seem a little more relaxed about spending money on having a good time. I have also noticed most recently a jump in people who work in the financial industry.. such as bankers, hedge fund managers, investors, etc.

As for the types of clients I meet, that has changed as well. There are a lot more foreign clients, which a lot of times are difficult due to language barriers and what they are accustomed to in their country. Some agencies have raised their fees due to greedy cab drivers who are having an issue making money actually driving, but some have become more lenient with negotiating the company’s fee because clients are working on a tighter budget. They would rather make something than nothing and potentially have a client get mad at the girl. I meet a lot more guys who have been ripped off at the massage parlors, which makes my job a lot more difficult and also I think has had an effect on people wanting to return to Vegas and call an escort. It leaves a bad taste in their mouth (no pun intended) and they are reluctant to call back in the future on their next trip. As far as my income goes, I definitely have had to make some adjustments to what clients think is fair for certain services. Many more people are on set budgets when they call an escort and a lot more negotiating goes on now. What used to be a 15 minute transaction (getting the fee + tip for services) has often turned into a 30 minute or more ordeal. I have also come to the realization of “it’s better to get something than walk away”. You can almost always work something out with people and it’s better to work towards that than waste your time unpaid. Some girls say that I have a gift of patience to deal with people…. glad they see me that way!

I haven’t had any different requests only that people have become a little more simple at what they want to do because they know they can’t afford to splurge. They tend to now keep it a little more easy and quick because they know their budget prevents them from a longer session or adding a dinner date. All in all I think people are doing a slight bit better but have become more aware of their spending and not getting themselves into a credit card black hole like they would have done mid 2005. Las Vegas is still the “roller coaster” it has always been but the averages are picking up a bit more.

[(NSFW) The Las Vegas Courtesan, Twitter]

Emphasis on “relatively.” While the S&P 500 sank 5.4% in June and 11.9% in the quarter, my model slipped only 3.0% and 8.4%, respectively. That was a disappointment, but the model is still up 18.5% in the last year, which is its first.

Looking ahead, I am not shopping for bargains–yet. The Obama administration, whose bewildering incompetence is responsible for this mess, has barely gotten started. It seems likely voters will toss out the Democrats en masse this October, but enough of them will remain (including Barack Obama himself) to do enormous mischief. It will get worse before it gets better.

That said, my model is designed for the long term. And in the long term, Obama will be politically dead.

Here’s how the model finished June:

Gimme shelter ... from Washington

I say that Obama’s incompetence is bewildering because, let’s face it, the guy is smart as a whip. Unfortunately, he doesn’t know beans about business; he doesn’t have a single businessman in his cabinet or among his closest advisers.

So his trillion-dollar economic rescue plan has been a complete failure. When his “cash for clunkers” program was unveiled, auto sales were at a wretched 7.3 million annualized rate. They shot up when subsidized, but have since collapsed to a 7.0 million rate.

Similarly, new-home sales had shriveled to 400 thousand annually. Obama’s subsidy to first-time buyers pumped them up to 450 thousand, but when the subsidies expired sales collapsed to even more depressed levels.

So U.S. stocks, reflecting the outlook for the U.S. economy, are doing miserably. Big-company equities, as represented in this portfolio, sank nearly 6% in June and riskier small and mid-size stocks were down almost 7%. Both of the portfolio’s foreign-stock holdings, representing companies that are beyond Washington’s reach, were slightly ahead during the month. Gold, which is the ultimate “no” vote on economic policy, was the portfolio’s best performer.

This is going to get worse. (See ‘Market’s sound and fury is signifying something … bad.’) So while U.S. stocks are becoming cheaper, they will get cheaper yet. This portfolio’s bondholdings are higher than they would be in a better market, and the gold mutual fund is a stopgap against Washington’s profligacy.

(God is not an investment; it pays no dividend and indeed bears substantial expenses for storage and security. It is a trade. I put it on recently as a hedge against U.S. political risk; namely, amazing incompetence from the White House to Congress. I’ll take it off when that risk retreats to something better than a Venezuela-level threat. Let history record that Al Franken, who wore a gorilla suit in “Trading Places,” is part of a fillibuster-proof Democratic majority in the U.S. Senate, but it won’t be fillibuster-proof after this October’s election.)

So now, when Washington is so radical, is a time for us investors to be conservative. That means keeping plenty of powder dry in bonds, and building a defensive bullwark of commodities (energy and gold) to protect us against inflation.  

Once Obama is a lame duck–which could become clear as early as this October–the outlook for U.S. stocks will improve. Until then, I’m keeping my head down.

Image via Wikipedia

As the $8,000 home buyer tax credit dried up, so did housing sales. The number of people buying a new house dipped to the lowest levels in recorded history after tax credit ended in May, causing many people to worry that the recession will be shaped like a W – a perilous double dip.

What’s the cure for the ailing housing market? One real estate analyst says the answer is counter-intuitive: more foreclosures.

Why? Well, analyst Mark Hanson says foreclosures are what people want to buy. The new home buyers out there want (and perhaps can only afford) a good deal. But lately, pressures on banks to halt foreclosures have curbed the supply of cheap houses. Because we’re in a market where people are iffy about taking a big risk, unless the carrot is big and juicy enough, people aren’t going to bite.

Plus, Hanson says, there’s still a huge shadow market out there – homes where the mortgage isn’t in good standing, but they’re not in foreclosure yet. Hanson says we’ve got to clear through all this bad inventory – both the homes in foreclosure now and the ones yet to be – if we want the market to turn around.

The way he explains it sounds sort of like an old rusty faucet – you’ve got to let the water run orange for awhile before it starts to come out clear.

At our current pace of foreclosure, he says, it will take 101 months to clear through the system – 8 years. But if we doubled our rate of foreclosure to 180,000 a month, he says it till take 42 months, or about 3 and a half years.

Housing activists all over the nation are putting pressure on banks to slow the rate of foreclosure. It’s hard to argue with. Who wants to put more people out of their homes?

But then again, Hanson could be right. If the entire economy is spooked by low housing sales, it means less jobs being created, fewer people spending money. Many of those who are dreading a foreclosure can’t pay their mortgage because they can’t find a job or find one that will pay a decent wage.

Is it better to be without a house in the short term paired with a quicker recovery? Or if Hanson’s right, are we just dragging out the inevitable?