Regulators Napping (Yet Again)

Once again the financial world is rocked by news of fraud, impropriety and deceit and once again the SEC have failed in their role as the police agency for the US markets. This time it's famed trader Bernard Madoff whose lengthy and simple Ponzi scheme has bilked investors large and small of around $50B. Apparently the SEC were tipped about Madoff's actions as early as 1999 but chose to ignore the information and subsequent questions from other investment professionals. Like Enron, Fannie/Freddie, Bear Stearns and a whole host of institutions it was supposed to regulate, the SEC has shown a complete dereliction of duty time and time again. If it wasn't for family memebers turning him in, Mr. Madoff would still be trading today.

This is an organization whose website proudly proclaims:

During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency's top priority, bringing ground breaking cases against a variety of market abuses including hedge fund insider trading, stock options backdating, fraud aimed at senior citizens, municipal securities fraud, and securities scams on the Internet.

Mr. Cox needs to step down immediataly and his organization disbanded and replaced with one that can actually do the job required. Mad Money's Jim Cramer has offered his services, perhaps we should take him up on it?

Time To Brown Bag It?

Recently Amazon decided to address the issue of packaging. Although motivated by a desire to cut down on customer injuries and frustrations as much as to help the environment it was a step in the right direction. However, today a trip to the Apple store to replace my Nike+ sensor (another piece of less than green technology) prompted me to envision a world where packaging was entirely optional. The benefits would be twofold, firstly a reduction in waste and secondly a cost saving for the manufacturer.

For many retailers like Apple it would be a very easy plan to implement and still give the customer choice. At checkout you could elect to either have your purchase put into the box or merely be given the goods with a suitable bag to hold all the bits and bobs. The receipt could be easily marked so as a return without the packaging would be easily facilitated. Immediate gains in both the environment and the pocketbook. Obviously the issue of display and theft would need to be addressed, however, re-usable packaging could be developed which allowed the product to be removed at the register.

Why Do They Hate Us?

Not a post about OBL but a word to the boardrooms of America. The general public consensus regarding the health (or lack there-of) of various corporations so far has been a resounding "let 'em fail." The public's ire is not just confined to the auto industry but a broad range of retailers in general. This should be doubly worrying to the captains of industry who should be asking themselves, why do our customers hate us so much? Sites such as the Consumerist are full of first hand horror stories from the full range of businesses.

Of course there are the standout corporations, the one's that customers do love and would fight to protect (and are the subject of endless books on branding) but they are a tiny minority in a sea of blah. For the others, it seems as if years of treating churn as business as usual is finally coming back to haunt them. Their list of crimes is long but outsourcing technical support, byzantine rules and policies and products that fail to deliver the marketer's promises rate high on the list. The American consumer is completely fed up with their treatment at the hands of these operations which does not bode well for those looking for a bailout to continue in business. The list of teetering companies is long, nevertheless you do not see groups campaigning to keep Gap, Circuit City or Linens n' Things alive. Quite the reverse seems to be true, customers are almost reveling in these corporate failures in a kind of "well they finally got theirs" way.

Although the symptoms are myriad, I think the public perception of a company can be directly traced to the way that company treats their own employees. Outsourcing, benefit cuts and endless rounds of layoffs have all contributed to create soulless organizations whose bottom line may look good on paper but is no stronger than the paper itself. Conversely, companies that are known for their fair treatment of workers are seeming to be able to hold on much better when the times get tough. Perhaps decisions made with the human factor in mind turn out to be better long term strategies. Or maybe it's just Karma?

Thanksgiving with...Yorkshire Pud?

One of the best things about living in a multi-cultural country is the opportunity to mix favorites from many traditions. Thanksgiving's my favorite holiday and I enjoy my turkey with both candied yams and Yorkshire pudding. This British staple seems to fascinate Americans and is incredibly easy to make. So for those who would like to try some at the table this month the Guardian has posted a recipe from the austere crowd at the Royal Society of Chemistry. Now just imagine dropping that into the conversation mid-meal! A dish with a Royal Warrant no less.

One caveat; the Guardian's picture shows pompous little "restuarant" puddings, but as any fule kno, the best ones are exactly as pictured above, in a roasting pan happily cooking alongside the meat and absorbing all the good stuff floating around in the oven.

As they would say in Yorkshire, "aye, that looks grand pet,"

Branding

Today KERA's consistently excellent Think! featured Y&R Chief Insights Officer John Gerzema discussing the "brand bubble" (downloadable mp3 is here). He believes that many renowned brands are over valued in the eyes of the consumer and a brand crash is looming. This seems especially pertinent as cash wary consumers start to truly question the elevated cost associated with a name brand versus a generic.

He also briefly touches on the folly of marketing to a demographic rather than an interest group, citing the case of advertising directed at seniors falling into a trap of assumptions. Be sure to check out his Brand Asset Valuator.

Neil Young - Truth or Cover Up?

Citing an unwillingness to cross IATSE picket lines, Neil Young canceled his show at the Los Angeles Forum, October 30th. Insiders are now asking if the less than stellar 6,000 tickets sold (The Forum seats 17,000) had more to do with the decision?

Bailout? Schmailout!

The mortgage bailout programs being touted by both the public & private sectors are all fine in theory but miss the point in one huge way.

So many of the homes currently under threat of foreclosure were bought by speculators looking to either flip the home or sell out and profit in a year or two. They, and even people who bought a place to call home, can not be expected to have much interest in deals that give them 40 years of low interest to pay for a home that's worth a fraction of it's original value. In areas like California, Florida and Las Vegas most would have to wait decades to see their value return. Even with affordable payments I believe most will do the math and walk away at their earliest opportunity.

Stop The Madness

Recent news has shown that once again, the American people are right & our elected representatives are wrong. The multi-trillion dollar bailout of our financial system has done nothing to alleviate or correct the underlying problems facing our economy & now the financial institutions are calling out for further cash injections. All the while they are using taxpayer's money with little or no transparency or accountability.

Next on the table is a bailout for the US auto industry. What next? Surely the airlines deserve some relief? What about the credit card companies, hotel chains and home builders? The list is endless. During the good years many US companies grew lazy. They built high risk accounting schemes, signed unworkable labor agreements, produced substandard products & paid their executives fat bonuses. These times are gone & it is not the job of the US taxpayer to wipe their noses, pat their bottoms & send them back out to play again.

The auto industry does not have the management structure or R&D pipeline to make our investment sensible. They are years away from producing the type of vehicles already available from Asian plants. They ignored long term trends in the energy markets for short term, easy credit fueled profits. I see no reason why they would be able to compete any more effectively with our money than without.

Update : Apparently CBS agrees with me.

Obama flickr Set

The Obama campaign has uploaded a complete flickr set from Chicago. The photos are brutally honest and capture the evening beautifully from the dour backstage rooms to the triumphant stage call. The comments make interesting reading too as so many congratulations pour in from around the world.

Worth Saving?

The news for the US automakers gets worse and worse. Sales dropped 30% in October and with the continuing crisis on Wall Street, lack of consumer credit, lots full of unwanted vehicles and an approaching tsunami of default auto loans, things don't look like they're getting better anytime soon.

Detroit is continuing to lobby Washington for bailout cash and although President-Elect Obama has offered assistance for the development of fuel efficient vehicles, those funds may be too late to save the industry today. So is it time to give up on the US Big 3 Automakers? Painful as that sounds it may be the best path since, even with large cash injections, Detroit cannot exist in it's current form. A glut of dealers, products no one wants to buy, bad loans and hugely complex and restrictive labor practices are not going to be fixed cheaply or fast and the clock is running out. Both publicly traded brands are currently worth less than their physical infrastructure.

I can envisage a scenario where Tata Motors (Mkt Cap: 81.52B) buys Ford (Mkt Cap: 4.73B) but a combined GM (Mkt Cap: 3.15B) and Chrysler looks to be best left on the curb to be picked over by the parts pullers.

The Bifecta Pt. 2 - Check

In the late 1980s I was working at a studio located in a federal building originally constructed in the early 1960s. My wife (then girlfriend ) was visiting the US for the first time and accompanied me to work one day. She noticed the two identical water fountains side by side outside the bathrooms and commented on the needless redundancy of such a design.

To quote the Grateful Dead once again, "what a long strange trip it's been."

The Bifecta Part One - Check

After a race which nearly required use of the defibrillator paddles on your truly, Lewis Hamilton was crowned Formula One World Champion. After 18 Grands Prix it all came down to the last corner of the last lap of the last race. If a Hollywood script writer had written this he'd have been laughed out of town, proof again that truth is stranger than fiction. Anyway this post is a reference to my June writings.

Read the full race report here. Hope for the Bifecta Part 2 at around 11pm EST tonight.

Not Election, Not Economy!

National Geographic have just released their Best Wild Animal Photographs of 2008 and they are stunning.

1st Horseman Arrives?

Spotted in East Plano. You know you're a redneck over-leveraged when you're selling your $200K Bentley Continental with a piece of day-glo card & a sharpie in a store parking lot.

The Obama Infomercial

Nobody can really predict what we have in store for the next 4 years. But if Obama is elected at least we can be confident that the production values will be high!

Finally...Good News

Madness |MTV Music

MTV has reportedly put all of their video archives online. Whilst I doubt that (there are some huge artist holes) the catalog does include some classics including this one from Madness. What makes it all the more interesting is the location, namely London's Hope & Anchor pub, home to both the burgeoning New Wave & Ska movements. A favorite of the Stiff Records acts it succumbed to Wine Bar (Fern Bar in the US) status but was rescued in the late 90's and re-opened as a music venue.

Interestingly enough it was located across the street from Islington's infamous Skunkz club, home of the hardest of the Skinhead acts where yours truly was the house mixer for awhile!

'Palllin Around

This just in. Hot on the news that Obama has been 'pallin around with even more terrorists comes this unquestionable evidence that Our Own President has been doing the same! Yes, this is President Bush clearly 'pallin with a figure who until July of '08 was still on the US list of known terrorists! We have to thank Palin & the McCain campaign for unearthing this National Scandal and I believe we should appoint a Blue Ribbon committee to investigate just how many other lawmakers are quilty of such Anti-American associations.

Hate To Say I Told You So But...

The good news is that those annoying (and un-secure) pre-approval notices are no longing cluttering up your mail box. The bad news is that just as consumers are having trouble with their mortgage payments, as expected, many are defaulting on their credit cards. The average US credit card customer owes over $8,000 on their card for a total of 2 trillion dollars with around 43% of Americans who actually spend more than they earn each year.

And this is the tip of an iceberg. The 800lb gorilla is car loans, many of which were issued under the same lax oversights as the home sub-primes and were packaged & traded as such. Deliquencies on sub-prime auto loans rose to over 4% in September which is further bad news for the manufacturers & dealers as repossed vehicles (more often than not, SUVs & trucks) find their way back into the marketplace further depressing prices.

I believe the forces against the US auto industry to be too strong for the industry to survive. A bailout may do nothing more than waste taxayers' money by only temporarily staving off the ineviatable. Don't think it can't happen here, years of union/management battles, a lacklustre product line and appalling build quality killed off the auto industry in Britain.

Finally, Good News For McCain

AP reports that Joe The Plumber is backing McCain. This has to be good news for the Republican campaign since there's nothing like an unlicensed tradesman with an IRS lien on his home to turn the endorsement tide away from Obama who only has Colin Powell, a number of prominent Republicans and nearly every major newspaper in this country on his side.

Apparently Mr. Wurzelbacher, was particularly concerned about Obama's commitment to Israel. And being familiar with The Communist Manifesto, he also expressed reservations about Obama's Marxist sympathies. Really, I'm not making this up.

Muslim?

Dear Republican Party, here is a Muslim for you. Quick note; the Crusades ended in the late 13th Century.

Thank you Colin Powell for bringing this brave young man to our attention.