Wednesday, February 25, 2009

Dispositional Forecast – Rising Levels of Global Humility

I’m generally an optimist and so have been trying to keep an eye out for some of the upsides to the giant toilet flush that is today’s global economy. Not a whole lot to work with, but here’s one: I predict, for the foreseeable future, rising levels of global humility.

Humility – that intangible inclination to suspect that one’s successes are caused less by individual actions than by larger forces out there in the universe – is a good thing. And just a tiny little bit (one part per million?) goes a long way. Wouldn’t the world be nicer if we could all unleash a bit of our inner Yoda / Dali Lama and be just one notch less sure that we Have It All Figured Out?

Fortunately, I have reason to believe that the aggregate global humility level moves in direct, inverse proportion to the Dow Jones Industrial Average. And so, as the markets continue to plummet, I predict that that humility will rise to levels not seen since the Great Depression. All populations will be affected, in particular those that have historically been in the very the lowest quadrant of humility – the masters of the universe, financial titan types. So we’ve got that going for us, which (speaking of the Dali Lama) is nice. There’s probably a scientific way to measure individual humility levels – some kind of blood test or airport security-like scanning booth – but a loose, Justice-Potter-Stewart-looking-at-pornography approach (“I know it when I see it”) is usually quite accurate. One quick look at a person’s gait / posture / cock of the eyebrow can tell you how on top of the word he thinks he is.

The scientific explanation for macro-level shifts in humility has to do with internal versus external attribution of, respectively, good times and bad times. When good things happen, we think we’re the cause – the captain of the ship in full command of the seas. What Mollie Ivins said about George W. Bush, that “he was born on third base and thought he hit a triple,” could apply to just about anyone when things are all working out swimmingly. And when bad things happen, it’s crystal clear that bad weather or bad timing or an asshole brother-in-law are somehow to blame. When things go south, we’re just a cork being tossed around in the ocean. And all of this is nothing but natural. It’s the product of our hard wiring, smartly engineered to keep us from crawling back into bed every time the sun comes up in this tumultuous world.

What’s nice about humility is that it opens the door to inquiry and exploration. If you think that larger external forces have led to you where you are, you’re more apt to want to learn about those forces – the plate tectonics that heaved your hemisphere into an area with predictable annual rainfall, which caused big populations to stay put and form farms and then cities, which led to industrialization and specialization, which paved the way for a stable government and higher education and strong currencies – and all the other bricks in the pyramid upon which you found yourself perched upon exiting the womb. Without an awareness of all of those forces, with you yourself being front and center, ground zero of personal accomplishment, there’s no reason to look any further than your own self for an explanation of how you got to where you are. And then, of course, you’ve got to educate the world about the exalted path you took. And really, who wants to hear about all that? I bet, at some point over the course of his long life, Yoda “swung through Chicago and picked up his MBA” (exact words, I swear, used by a lecturer I heard at a continuing legal education seminar, describing his bio), but just chooses to focus on the bigger picture when approached for advice by the Luke Skywalkers of the world. Notwithstanding the fat autobiography advances ladled upon the likes of Jack Welch, Steve Jobs or Donald Trump, it’s usually just a lot more interesting to learn about the world outside than one guy’s individual road to becoming king.


All of that being said, let me now tell you about what I am going to do, and what you should do too, to achieve fame and fortune in the very short term. If you see a trend that is about to snowball, you have to capitalize on it (says Louis Winthorpe III to Coleman in Trading Places, “Pork bellies… I have a hunch something exciting is going to happen in the pork belly market this morning”). Humility clearly being the next blockbuster about to arrive on the scene, I just need to figure out a way to securitize it, slice it and dice it, package it up nicely and sell it on the market. SMUG now trading on the NASDAQ. It’s no more abstract, and probably a lot more sustainable, than a lot of the mortgage-backed products that everyone was clamoring to fold into their 401(k)s until the end of the last year. Humility futures are going to be a good, solid, counter-cyclical product offering a robust return on investment! This is an opportunity you do not want to miss! Supplies are limited! Call now to get in on the ground floor (prospectus and schedule of broker fees provided upon request)!

Sunday, February 22, 2009

Saab Story 2009 – General Motors and Dan Enter into Talks Regarding Fate of Automotive Icon


I thought I was pretty smart late last year when I very skillfully bullied a Saab salesman into a great deal on a shiny new black 9-3. I knew that Saab had sold something like twenty cars in 2008 and figured that, instead of continuing to lease a car like I had done for almost the past decade, I’d buy a new car outright for a scandalously low price. The salesman ultimately buckled, but he also must have somehow forgotten to mention that Saab was on its very last leg and that its owner, General Motors, was about to leave the company as roadkill along the side of the highway.

GM announced last week that its Saab division filed for bankruptcy in Sweden and that, if it can’t find a buyer for the division in the next few months, it is going to let the brand die. Now, I have this nice new car that’s going to be extinct before it hits 10,000 miles, which, of course, left me in a bit of a predicament. I figured my options were to either buy two or three more new Saabs to use for parts once the company is gone or try to sell the car for some small fraction of what I just paid a few months ago. But then I realized that this was all small-minded, inside-the-box thinking and that a much bigger and better solution was staring me right in the face: buy Saab myself. Not the car, the company.

I thought at first I could probably have Saab for free. The division has been losing money almost since GM bought it 20 years ago, and I assume it’s all saddled with debt. GM thinks otherwise. It’s trying to get $500 million for the division. They first approached the Swedish government, the original owner of the company, and, in effect, asked them to buy it back. Understand that GM has completely and utterly destroyed Saab. It ruined the brand so effectively that I have to assume that, for reasons beyond my comprehension, GM had some kind of mandate to kill Saab. GM’s approaching Sweden to see if they were interested in buying Saab back is the corporate equivalent of a teen-ager buying a used car, wrapping it around a telephone pole, and then asking the seller if he wants to buy the wrecked car back for more than he sold it for. Not surprisingly, Sweden told GM to go kneppa dej sjelv (loose translation – “goo fooken derself”).

So $500 million may be optimistic. I’m ready to sit down at the table and talk about some options. If I could talk GM down to, say, $100 million and get them to waive the dealer, courtesy, delivery, registration and transport fees, I think I could probably make that work. I could put the purchase price on my new American Express Gold Card, which supposedly has no spending limit and can be paid down over time. I get points on that card too, so, if nothing else, I should be good on free plane tickets for the next little while. So then what will I do with Saab once I own it? Well, I don’t know. But really, that’s beside the point. If I can make a few bucks for myself and a few selected friends and not leave the company and its employees any worse off than they are now, the whole endeavor will be a success.

Let’s address the second point first – the automotive equivalent of a doctor’s oath to “do no harm.” As mentioned, the Saab brand is about one single heartbeat away from dead. GM managed to very adeptly transform the cars produced by Saab from quirky and distinct to mundane and utterly interchangeable with almost any other mid-sized sedan on the road. Saab used to have a devoted following in the U.S. of over-educated northerners – hippy-types who, by the time they had driven their first Saab into the ground, had gotten a good job and were ready to buy another one. A few recent last ditch efforts at expanding Saab’s market were so desperate as to be downright embarrassing. Witness the “Saabaru” – a Subaru Impreza with no modifications whatsoever other than a Saab logo slapped onto the steering wheel and the front of the grill. Or the 9-7 truck – a Chevy Trailblazer whose brilliant Saab-style innovation consisted of moving the ignition down to the floor in-between the front seats, and that’s it. The new 9-3 (the dream car I so insightfully snatched up) is built on a Chevy Malibu platform and has a weird Frankensteinish hodgepodge of GM and Saab buttons mixed together in the interior. It’s an exercise in bland imagination and group-think design-by-committee. And sales have reflected this. Aside from me and one other guy I saw in a new 9-3 a few weeks ago, no-one is buying these cars. So, in terms of the integrity of the brand itself, there is just nowhere to go but up. The company is about to be put through the bankruptcy wringer, which means that all pensions owed and obligations payable to suppliers will likely be wiped clean. So, no harm there in me having a go at it.

As for having the wherewithal to run a major automotive corporation, well, I got an A- in driver’s ed in high school, I can name the make and model of a car just by looking at its headlights in the dark, and I can talk about core competencies and synergies and shareholder value with the best of them. Pretty impressive resume, I’d say. So I think I could pull off the whole CEO thing. Who knows what the new new thing will be? A more clever tag line? A slightly more exciting design? Some inkling of an effort to make a car that has some single distinguishing feature? Whatever that elusive thing that may sell a few cars is, I figure I have as good a shot as anyone at stumbling upon it. And in the meantime, by taking a very reasonable seven figure salary and continuing to live my modest lifestyle, I should be able to save up enough over the course of a few years to retire comfortably around the age of forty. I’ll need to grow the executive team, of course, and will be accepting applications soon. Positions will include CFO, COO, Chief Marketing Officer and a handful of executive VPs. I’ll be looking to fill these positions with the kind of people who are fun to spend time with in a corporate jet – funny, good story-tellers, know a lot of jokes, work-hard-play-hard types. And I suppose some sort of experience in the auto industry, or any industry, would be good. Send a resume and cover letter if interested. No photos please.

We’ll see how GM’s continued talks go with Sweden. If they don’t work out and no other big automotive player steps up to the plate, keep an eye out for me wearing a stylish Saab leather jacket and hawking my new and improved line of cars. I bet if I buy the company, I can even get them to throw in a free set of floor mats.

Sunday, February 15, 2009

Dude..., Inc. Self-Delusion Mitigation Services


My friend Matt recently told me why he thinks so many CEOs have gotten so out of touch with reality. His theory: they're always surrounded by yes-men and never have a chance to hear anything contrary to what they think. His solution: hire someone to come in and tell them the cold, hard truth about what people are saying. And who would that someone be? Matt himself, an independent Self-Delusion Mitigation Consultant. Brilliant! I loved the idea and immediately signed on to be a member of the team. Then we got to thinking, wait, it's not just CEOs. Just about everyone in the world is self-delusional. Why not make our services available to everyone?

So, we are pleased to announce the creation of our new company - Dude..., Inc. Self-Delusion Mitigation Services. Please click on the following two links to view a detailed brochure about our company and our business card:




Call now for an appointment! Available times are sure to fill up fast.

Wednesday, February 11, 2009

Noise Pollution in Four Parts: Death to the Car Alarm

My first order of business when I am anointed King will be to ban car alarms. Car alarms have evolved to create a kind of noise pollution unprecedented in the history of mankind while, at the same time, serving no purpose whatsoever. Here is my understanding of how we got here and my proposed solution.

When car alarms first showed up on the scene, circa 1980, they just honked the horn and flashed the headlights. There was no auto shut-off feature so, however annoying the noise was, at least, after a while, the car battery would drain and the horn would stop. There would even be a bit of cosmic justice when the car owner came back and couldn’t start his car. Since then, the car alarm sound has evolved into a virtual symphony of noise pollution. The current version, sometimes referred to as the “[Insert name of your school located in bad neighborhood here] fight song,” has four looping verses: European police car; air raid siren; high voltage buzz; and ambulance. This medley has become so well known that it’s even sung, with four groups, as part of a college drinking game. In case you’ve been hiking the Appalachian Trail for the past decade and are not familiar with it, here is a recording:


The Original Car Alarm Creation Story – Old Testament

The original theory of how car alarms would work was something like this: grand theft auto guy attempts to force open door of upstanding citizen’s car; alarm sounds; people within ear-shot stop what they are doing; burglar freezes in tracks; Upstanding Citizen A runs to scene of averted crime, pins stunned burglar to ground while Upstanding Citizen B notifies constable; constable arrives, apprehends subject; subject is incarcerated; all are given keys to city; crime rate plummets; more young families move to town; SAT scores rise; quality of life skyrockets. This scenario played out as planned approximately once in the 29 years that followed. And then, for whatever reason, people seemed to lose interest. I noticed this a few years ago when I was having dinner at an outdoor cafe in Cambridge. It was a nice summer evening and the street was packed with strolling pedestrians. I heard a buzzing, screeching car alarm, getting louder and louder. I looked up and saw that a car was driving slowly down the street with the alarm screaming. Everyone on the street pointed and laughed. “Ha! Check it out! The alarm on that car is going off. Bwah Hah Hah!” For all we knew, the guy driving the car actually was stealing it. Just driving right down a busy street, smiling, waiving at the friendly passers-by on his way to the chop shop. Felt like the end of an era.

Car Alarm Creation Story, Take 2 – New Testament

Why do car alarms still exist so long after it has become clear that people do not pay one single iota of attention to them? Perhaps because of the “better you than me” theory. Adherents to this school of thought believe that if having a car alarm makes stealing their car just a teensy weensy little bit more difficult or risky than stealing the next car over in the parking lot, then Car Thief, having conducted a quick cost / benefit analysis, will opt in favor of boosting the other car instead of their car. The problem with this theory is that it underestimates just how spectacularly easy it is to circumvent a car alarm. Notwithstanding all the revolutionary breakthroughs in car alarm technology, being able to get into a car that is not yours and drive off with it without a key is the car thief equivalent of having a second grade education. It has been years since criminal social Darwinism has eliminated all car thieves who were so grossly incompetent as to set off an alarm. They’ve all moved on to other realms, like getting masters degrees or becoming substitute teachers.

Alternatives

Car alarms as we know them serve no purpose whatsoever, other than to increase the level of global irritation. But isn’t there some technological advancement that can help prevent auto theft? South Africans have a pretty effective system. Their car alarms supplement obnoxious noises with near lethal electric shocks. Come too close to a car that’s not yours and you get laid out by a jolt that is one volt short of what it takes to kill a grown man. Effective in deterring thieves? Absolutely. Compliant with the United States Constitution and the Geneva Convention? Doubtful. Our whole American hang-up about things like “egregious human rights violations” and “capital punishment without a trial” will always stand in the way of a really effective theft deterrence system. Also, you have to be careful what you wish for, since 99.999999992% of car alarm triggerings are caused by the owner of the car. There are some GPS tracking systems like Lo-Jack and OnStar that, at the very least, let you find out where your already-stolen car is. For a monthly fee, a friendly operator from one of those companies can confirm the exact time that your car crossed over into Mexico or the precise spot at the bottom of the reservoir at the old quarry where your car can currently be found. Maybe not the most useful variety of peace-of-mind, but I suppose it helps if you’re the type who requires “closure” and such.

The Solution

I am positive that, with one simple adjustment to property law, car alarms will become, within about a week, a relic of the past. The statutory adjustment – an exception to the general rule that a person may not destroy another’s property – would read something like this: “During such time as a vehicle’s audible theft deterrence system is actively engaged, any individual may make physical contact with such vehicle, provided that any damage resulting from such contact shall not exceed $5,000 per individual.” Translation: anyone who walks by your car while the alarm is going off can do exactly what he naturally wants to do – key your door, slash your tire, crack your taillight. If, after a quick shopping excursion, you were to return to the parking lot to find that your car had been completely demolished, you’d think, “hmm, alarm must have gone off” and then, probably, “hmm, oughta maybe disable that thing.” And just like that, problem solved. Three decades of irritation-by-design irrevocably reversed.

Tuesday, February 3, 2009

Why the Talking E*Trade Babies Have Shaken My Faith in Free Market Economics

Everything was just about right while I was watching the Superbowl last Sunday. I had a cold beer and a juicy burger in front of me, unobstructed views of half a dozen huge flat screen TVs, and the game itself was unfolding as one of the most exciting ever. But something felt strange. Then I figured out what it was. It was those talking babies from the E*Trade ad. Somehow, they had managed to shake my whole faith in free market economics.



Economic theory has evolved slightly in the past few decades to recognize that human beings are human beings. Still, however, a fundamental underpinning of almost all economic thought is the assumption that people are logical, rational actors, defining their goals clearly and determining how most efficiently to achieve them by weighing each morsel of information without bias or emotion. Modern advertising in general, and hip-talking , day-trader-services-hawking babies in particular, are hard to reconcile with the rational actor view. The effectiveness of an ad makes sense relative to rational actors to the extent that the ad presents facts and demonstrates how some service or object is different from, or better than, others. Facts educate rational actors such that their cold calculations become more informed and, in effect, lead to decisions that more efficiently achieve the person's stated goals. But, of course, most modern ads don’t really present any information at all. Just images. And, while that makes sense if what is being sold is itself just an image-enhancer – radical shoes, extreme soda, sexy cologne – the reason for the effectiveness of the ad becomes a lot more murky when the value of the product stems from some other supposed utility. You would think that, when shopping for insurance – about as unsexy, non-image-based a product as you can imagine – a person wouldn’t pay any attention to an ad that wasn’t providing real information about the nature of the coverage. But, enter the talking Aflac duck. His steady march into the most expensive prime time ad spaces are proof positive that something else is going on.

Getting back to the talking E*Trade babies, it's true, they’re funny damn dudes. I’ve always liked the original baby (says into cell phone "yo I'm in the middle of something; can I hit you back later"). C'mon, that's funny. He's a baby. He has a cell phone. He talks. And he sounds a lot cooler than me. When the second baby showed up on the scene during this year’s Superbowl, it was even better. How could you not think an infant who's into Mr. Mister, singing "Broken Wings," is hilarious? How does an infant even come across such a cheesy '80s tune? Whatever happened to Mr. Mister anyway? So that's all fine. Good all-American entertainment.

But stop for a second and remember exactly what it is E*Trade is selling. Day trading services! What you use to buy and sell stock! Stock – the equity ownership interest in a company you have rationally determined will outperform the expectations of all other rational investors in the world! When everyone was so gung-ho about privatizing the country's pension plans, about individuals taking back control over their retirement, places like E*Trade were exactly where they were supposed to turn. Do it yourself. Make your own decisions. Stop subsidizing snobby brokers who like to think that they know more than you about stock just because they have MBAs and have been working in the finance industry for 30 years. Everyone has read at one point or another that Warren Buffet drives a pick-up truck and bases all of his investment decisions on his own self-taught, aw-shucks, common sense wisdom. If you just keep a watchful eye on what products your wife has been bringing home from the corner store, it's just a matter of time before you’ll have your very own un-assuming ten billion dollars.

I cannot think of a more black and white demonstration that human beings are not rational economic beings than the fact that people are switching day trading services because of a baby singing a Mr. Mister tune. The talking baby ads obviously work. And, as every rational actor worshiping economist must surely agree, those who base investment decisions on emotional factors such as, for example, babies singing Mr. Mister tunes, are not acting in their rational best interests and should be removed from the economic decision-making process. In the case of E*Trade, there is a simple way to ferret out these hysterical corrupters of the market. One of the required fields in the on-line subscription application would be "how did you hear about E*Trade?" If a person chose the "from the talking baby Superbowl ad" option, his computer would snap into market corrupter lock-down mode – BUZZ! BUZZ! ALERT! ALERT! FINANCIAL DECISION ABOUT TO BE MADE ON BASIS OF INFANT SINGING MR. MISTER TUNE! BUZZ! ALERT! – and notice would be sent to the SEC and all other appropriate regulatory agencies. Having exposed himself as a slave to emotion, the narrowly averted investor-to-be would obviously be banned from trading stock. But all of the his other economic decisions - whether to buy that additional bobblehead / ringtone / Ginsu knife that cuts through aluminum cans – would have to be questioned as well. All personal economic decision-making power would have to be transferred to some other more rational person whose judgment was not skewed by emotion.

I guess then we would have to figure out who that other person would be. It could be me, I suppose. I know for sure that advertising has no impact on me. I'm able to see 120,000 advertising images every hour (or whatever the current statistic is) without being at all affected; it's just all the other human beings in the world that are so easily manipulated. On the other hand, other people might say the same thing. Advertisers would beg to differ. They would probably do some kind of demonstration where they ask me three questions and then rattle off, within a 0.0000002% margin of error, the kind of breakfast cereal I ate this morning, what brand of shaving cream I use and how many no-whip Frappuccinos I've drunk in the past six weeks.

So then that would mean that we are all capable of being manipulated and that people out there are seizing on that fact to make us spend our dollars in ways they want, while at the same time, thinking we've made the decision ourselves? Well that doesn't seem right. That would mean that the whole market economy might not be democratic and that we’re not actually each in control of our own destiny and that.... Hmm. Just too much to handle. Better just let this one be. At least those babies were funny. There was the one that was singing a Mr. Mister song. Huh huh.