Thursday, December 27, 2007

2008 Financial Meltdown Imminent?

As 2007 comes to a close, I can't help wondering what 2008 has in store for us all from an economic standpoint. Should I make a 2008 economy prediction now? Sure, why not,... the "experts" seem to make plenty of forecasts, prognostications, best-guesses, predictions, or whatever else you may want to call them, so I will release my 2008 Financial Meltdown Prediction now.

The way I see it, the only thing that could prevent a mass collapse of our existing financial system at this point is (as nearly always is the case) a large-scale intervention by the Federal Reserve / Government to create yet another "bubble" in yet another sector of the economy with hopes of a newly inflating bubble saving us from one that is currently popping (i.e., the housing bubble). You wait, and watch, and you will see I am right. It is going to take something large (hopefully not a massive war) to seriously change my forecast.

Some things that point to an imminent and impending financial / economic collapse:
  • In general, the house of cards (debt-masked artificial "growth" and GDP) known as our "economy" is finally nearing a tipping point. Remove consumer-debt-financed "growth" and government deficit-spending from the equation, and I posit that there is ZERO true economic growth (negative in fact; as it has been for years, though heavily disguised).
  • The fact that basically nothing is made here anymore is partly to blame for things. All our money is flowing outward, and at a record pace.
  • Year-over-year real-estate numbers. These are down about 7% nationwide, which results in over $1-Trillion in lost "equity" / paper-value of all homes in the USA. This was a historical record correction, and, I think we are only at the cusp of what is to come.
  • Credit-card late-payments are up FIFTY PERCENT yr-over-yr. People are right on the edge of total collapse. Complete delinquencies are also soaring - accounts that have no hope of ever being paid back.
  • Large companies are showing signs of desperation, borrowing massive amounts of cash from (and losing equity to) foreign investors (like Citigroup's $7.5BillionMiddle-East Abu-Dabi bailout deal, Merrill Lynch's $6.2BB bailout by a Singapore-owned state investment firm, Morgan Stanley selling a 9.9% stake to the Chinese government for emergency financing / bail-out... the list goes on!
  • Rising unemployment, which, mark my words, is going to really take off in early 2008. I would bet a substantial sum that massive, widespread corporate layoffs are going to emerge early in 2008 just after the holidays. This seems to be the only way companies can ever come up with to "increase profitability", since management can not otherwise figure out how to differentiate their business from a competitor's and gain market share or improve products and services to increase profits. And, if there is work that still needs done, don't worry -- they'll just use foreign labor and outsource even more than already.
  • Our "volatile food and energy" inflation is out of control, primarily due to competition for food sources from energy concerns (i.e., ethanol production). It's bad enough energy prices are hitting people's wallets, but it takes pure insanity for a country to compete with its food resources to make fuel (regardless of how much farmers may currently be enjoying this windfall). Don't think it is just corn that is going up. Wheat is up 50%+ in the past year, as are many commodities. And, this has hit grocery bills hard, further pinching the consumer.
What has lead to this?
Housing was a bubble created to bail us out of the technology stocks speculation / bubble before it. People seemed to overwhelmingly believe that, once again, a certain sector of the economy could turn in "growth" indicators month after month, year after year, that were so completely out of line with overall long-term GDP growth that it should have been obvious there was a speculative bubble in motion again. But, even the "experts" (which there seems to be no shortage of), continually preached how this was "different" and sustainable, and so on, spewing forth (abused) statistics to back their opinion of why housing was such a great investment.

Contrary to all the analysis and observations by mainstream "economists", I think there is a very simple method for detecting such over-speculation, hype, "froth" (a Greenspan term), lunacy (my term), and so on when it comes to sectors of the economy / market being on fire. Do you want to know how to detect a bubble, and do so in time to avoid getting caught in a downturn like the one we are currently seeing with housing?

Spotting Bubbles Early...
One way I suggest to get advance insight into the formation, expansion, and impending collapse of "bubbles" is to look at Google-Ads (and other online ad mechanisms) to spot market "hot spots". What am I talking about? Well, any time there is the lure of easy money through speculation, and likely areas of exploitation (and even fraud), like some of the business practices that were driving the housing bubble, you will see over enthusiasm and willingness for individuals and companies to pay a very high per-click price for keyword-specific online advertising.

When I heard from a friend a couple years ago who claimed he was making (his cut) as much as $5, $10, or even $20 per CLICK on website ads for mortgage refinancing, home sales, etc., I knew the market was ready to implode! Those rates would imply that people were spending perhaps as much as $50/click to show an ad on websites! The only reason anyone would be willing to spend such amounts on a gamble that the person clicking would then perhaps actually buy their service / product, is if there was some extremely lucrative opportunity to exploit a short-term bubble and cash-in on the craze that was sweeping the country (adjustable rate loans, no-money-down mortgages, and so on). Their was so much profit potential to be had be selling these "financial vehicles" that people were willing to essentially gamble with Google Ads and the like just to get people to their websites.

I had some money in Nuveen Real Estate Income Fund (Public, AMEX:JRS) ETF at the time, and as soon as I started looking into these insane per-click prices, and read all about the rate of supposed per-day house-price increases in places like Orange County, CA (yep, per day -- I read articles about houses going up faster than what a person could make working in a day), I knew it was time to get out. And, I did. I sold before that particular real estate stock fund peaked, but also before it fell nearly 50% to it's current price. I am quite glad I ditched out in time!

What about Economists and their Forecasts?
This leads me to why I consider most economists useless, since as a group, they are nearly always led down the same path as the rest of the population and are nothing more than reactionary. Sure, a select few saw the bubble for what it was, but somehow market analysts, economists, forecasters, and the like as a whole didn't see the bubble for what it was (or, if they did, they were not the ones getting any air-time on TV). They are reactionary in general, and rarely seem to spot useful trends in time.

This continues now. Today I saw this Dow Jones Reuters report, and excerpt which I quote here:
Total applications for U.S. jobless benefits unexpectedly rose by 1,000 last week, while the number of longer-term unemployed rose to its highest in more than two years, the government said on Thursday.
What immediately gets me is the single word: UNEXPECTEDLY. These economists are out of touch. Who, in their right mind, would not expect unemployment to rise when the housing market is imploding, corporate credit-issues abound, the consumer is tapped-out as a whole, and so on?

Given this level of mainstream economists' ability (to forecast), I don't have much confidence in their ability to see how bad things truly are right now. Or, do they all see it and are just not allowed to say it in the public forum? Sure, there are a few small signs of hope within the economy, but I don't think they outweigh the multitude of issues facing our financial system right now.

Presidential Election 2008
Answer this question: why does anyone want to be President in 2008, and inherit this economic catastrophe-waiting-to-happen? Surely whoever is elected will have to deal with a general economic downturn in 2008, a continued weak housing market (if not downright terrible one), a banking system in distress, and more. I go back to my general line of thinking, which is, there must be some really lucrative and long-lasting benefits to being President for someone to want that position badly enough to spend millions to get it. Reminds me of the insane per-click price for advertisements I mentioned earlier.

People definitely expect to get back a LOT more than they put in, whether those people are the candidates or the people (and companies) backing them. How does this fit into my blog today? Well, I ultimately blame this type of behavior for the looming economic crisis we're facing now. Short-term profit motivation is outweighing common-sense, and the consequences of the quick-money mentality are going to catch up to us all.

Thursday, December 20, 2007

Business Gift Tax Deduction - $25 per person

Don't miss the chance to write off business gifts...
The 2007 business gift deduction is something many business owners will accidentally overlook this time of year. You still have a few days left, and you can give a (small, $25.00 maximum value) tax-deductible yearly business gift to your client contacts and any employees.

I am not an accountant, and can't give legal or tax law advice, but it seems the law for business gifts and taxes is all about making sure you are giving a gift with the intention of receiving some value in return. It makes sense that you would give gifts to clients or prospects in hopes of landing more business in the future, and the IRS will gladly take their cut of any future profits that directly or indirectly arise from this act of kindness you show your business contacts. Likewise, gifts to your employees are deductible (to that $25 limit) since it is assumed your employees will return that much "value" to you for this expression of gratitude for work well done.

Gifts to Contractors, Gifts to Suppliers, etc...
I have not been able to find specific tax law wording regarding contractors you have on staff -- and perhaps other people that help you with your business (e.g., your accountant, lawyer, and perhaps others you feel would return additional business "value" after building a more friendly working arrangement), but it seems logical that you could.

Worst case is you would have to fight for your right (with the IRS) to attempt to minimize costs for your business, over a maximum of $10.00 lost in tax revenue off the $25.00 gift you gave to a supplier in hopes they would perhaps not charge you when you call them with a simple question, etc.

If you save on expenses, your business profit increases, and you pay more tax, right? So, if an act of kindness saved you even a percent or two when negotiating the best-price with your supplier for paper or office supplies or contracted services, it wouldn't take much at all to offset that tiny little gift-expense in terms of taxable profit / income later.

Once again, I am not tax expert, or accountant, but it seems like you could defend this position (logically at least - - god knows logic rarely plays into tax law though). Consult your accountant for details.

This insane, eternal, low, $25.00 limit!
The dark side of this gift tax deduction for businesses is how lame the limit is! Although it is nice that you can write-off some small items that may garner a bit of extra favor with clients and employees, I still find it reprehensible that the IRS has not raised the $25.00 limit in decades! Sure, they want to avoid rampant fraud and abuse and not lose revenue if they can avoid it, but come on guys, how about a $50.00 limit by now (though, I think $100 limit would make more sense, especially if they go back to not increasing with inflation for another decade or more).

I always try to get some little things for clients and employees every year, since it is a write-off. But, TWENTY-FIVE BUCKS!!? This has not changed in DECADES! Talk about a hidden tax increase! (since, no inflation adjustment factors are in place).

You can't buy anything TOO NICE for twenty-five dollars! So, tell your employees, "here you go -- great job!... sorry, I could only get your something simple and cheap. But thank god for those cheap Chinese imports, since it is the only way I could keep up with inflation!" LOL

At the same time, we recently cut capital-gains rates in half for even billionaires, and GWB whines on TV about how the "death tax" (formerly, pre-propaganda times known as an "Estate Tax") needs permanently removed and the capital gains tax cut needs to be permanent. It says something about our tax-law and who benefits from the larger and highly publicized changes to it, when the IRS worries about $7.00 or so tax revenue per gift, that would grow to perhaps $15/gift lost if they doubled the write-off to $50.00 maximum gift deduction, while at the same time we extend the biggest tax cuts in history to the top income brackets.

So, given the priorities of our Congress and Leaders, chances are nearly certain that the 2008 business gift tax deduction and 2009 business gift tax deduction, etc., will remain subject to the same paltry $25.00 limit. But, take what scraps they give you... you never know when they'll decide to take away this little deduction to balance another handout to a more preferred cause.

Note: if you want to read more detailed insight into this topic of giving tax-deductible business gifts, Microsoft Small Business had this article online about giving a business gift and getting a write-off, that goes into much more of the specifics behind the tax-law.
Also, consider a year-end company party...
If you have food expenses for a company party or for office snacks or meals, those expenses could be fully deductible (instead of the normal 50% deductibility for standard meal and entertainment expenses). So, if you want to buy some "good will" near the end of the year, buy lunch for the office staff and/or have snacks available or throw a nice party. It's a no-brainer for raising workforce morale while you get the full benefit of a tax write-off.

Likewise, you may want to take the opportunity to promote your products and services to the public. If your company is providing food to the public for free as part of a promotional campaign, those costs could also be fully deductible / expensed (100% vs. M&E 50% rule)

Saturday, December 15, 2007

WIKI / Mind-Mapping: Overcoming Information Overload

Do you feel buried in information? If so, trust me, you are not alone!

If you are like me, you are probably hoping for, and/or looking for, a way to overcome information overload in your daily life - as it seems the pace at which new data piles up just constantly increases. There has to be a better way, and a technology / software solution, that can be employed to efficiently organize masses of information: personal tidbits, work and business information, miscellaneous facts and notes, multiple documents in varied formats (e.g., Word, PowerPoint, OpenOffice, Acrobat PDFs, Excel Spreadsheets), important hyperlinks / URLs, other file-locations (i.e., essentially FTP site or local file-system hyperlinks), images and so much more.

For years, I have been dealing with this growing problem of information management by trying to employ technology to stay one step ahead of things. I have used a wide array of information storage and retrieval tools and techniques to assist in my pursuit of life-simplification and data-management efficiency, with varied results. Each knowledge management approach has had its pros and cons, and most have worked for a while, but eventually implode under the increasing complexities of growing interdependencies, references, and relationships.

I am once again at an inflection point in my information and idea management undertakings. Though my current system of managing my thoughts, files, and information has worked for a few years, it is starting to collapse under its own weight again. So, I have been vigorously researching the latest and greatest alternatives that exist to help me in my desire to once again gain control of all my data and information.

This time around, I am looking into software and technology that was in a rather nascent form the last time I was "in the market" for such things. In particular, I am looking towards an information management solution that may be best described as:

  1. a "personal WIKI" (or, perhaps workgroup WIKI or corporate WIKI -- a WIKI I can run in-house on my own server or desktop computer). I have played with a few now, and know what works for me well, and what does not. There are some nice open-source personal WIKI software options available now thank goodness, and they have really come a long way in functionality and ease of use over the past few years. I tried a few locally-installed WIKI software products with success during my search.
  2. "personal mind-mapping software" (or, "brainstorming software", thought-mapping software, neural net software. This type of visual information management software was cumbersome (at best) just a few years ago. I am delighted to report that I have found a few modern mind-mappers that have some serious potential. Most implement a very similar paradigm for mind-maps, but at least one, called Personal Brain, implements a completely different neural-network or information-web type approach (not the best description, but trust me, it is different) to visual data-management.
  3. A combination of the two - using a mind-mapping system as a WIKI-overlay or add-on to better manage the complex relationships between information, files, and links. Thankfully, most modern mind-map software supports linking external (or attached) files / URLs into the diagram, so I can easily use one for linking to a WIKI or file-system.
  4. The end result needs to support multiple hierarchical navigation-trees / views of the underlying repository documents and data. This is sometimes referred to as faceted classification or faceted browsing (or faceted [data] browser). I find that accessing data from multiple "angles", or entry points, or ways of thinking is essential for quick retrieval. This also leads to...
  5. Easily Searchable Repository - regardless of what I end up implementing, I need to be able to search notes, documents and other attachments, and the like, quickly and easily. More so, I will go beyond considering a "search" to just be a text-based operation - I want to be able to quickly search / scan visually through navigation diagrams and cues I setup, so I can not only see specific search-results, but also how other information is related to those results.
Let me begin by posting some definitions that may be helpful in understanding these technologies I propose to use for managing and overcoming information overload...

WIKI, as defined by Wikipedia:

A wiki is a kind of computer software that allows users to create, edit, and link web pages easily. Wikis are often used to create collaborative websites and to power community websites. They are being installed by businesses to provide affordable and effective Intranets and for Knowledge Management.

Mind-Mapping, as defined on Wikipedia:

A mind map is a diagram used to represent words, ideas, tasks or other items linked to and arranged radially around a central key word or idea. It is used to generate, visualize, structure and classify ideas, and as an aid in study, organization, problem solving, decision making, and writing.

It is an image-centered diagram that represents semantic or other connections between portions of information. By presenting these connections in a radial, non-linear graphical manner, it encourages a brainstorming approach to any given organizational task, eliminating the hurdle of initially establishing an intrinsically appropriate or relevant conceptual framework to work within.

A mind map is similar to a semantic network or cognitive map but there are no formal restrictions on the kinds of links used.

The elements are arranged intuitively according to the importance of the concepts and they are organized into groupings, branches, or areas. The uniform graphic formulation of the semantic structure of information on the method of gathering knowledge, may aid recall of existing memories.

My Chosen Information-Overload "Cure" Technology
Stay tuned. I have made significant progress over the past couple weeks with installing a multitude of demo software, trial software, and open-source full-version solutions. This has taken a lot of time and effort, as there are plenty of nuances to learn about how each piece of technology and software approaches the problem / objective of best information management solution.

I have currently looked at well over 30 WIKI solutions and 10 mind-mapping solutions. From that, I have boiled down the "potential winners" list to just 2 or 3 WIKI products and 2 brainstorming products.

I will soon be posting a list of these "finalists" along with a more detailed discussion about each one, their features, pros and cons, and why I chose what I did in the end. Then, once I select my absolute ultimate knowledge management system, I plan to post detailed directions on how to install and setup the software, and how to best use the technology / software to conquer information overload.

In the case of some open-source software solutions, the installation and setup can be challenging to technology newbies, so if I go that route, it'll take time to provide really clear steps. Ideally, I'd create a personal-WIKI virtual machine appliance (using VMWare tools to create an easily distributed pre-configured WIKI / Mind-Mapping VMware appliance), but that will only work if I use an open-source operating system and only software that will run on OSS too (which, would eliminate any Windows-only solutions of course). I do not plan to only look at open-source mind-mapping or WIKI solutions - I want to consider products based on their functionality more than anything, though with WIKIs, open-source is pretty much a given (there are tons of good ones for free now!).

Once I post further blogs about mind-mapping and knowledge management solutions, I'll amend this one with links to them for easy access.

Wednesday, December 05, 2007

Find an XBOX 360 65nm "Falcon" System

I have been looking for one of the newest revision Microsoft XBOX 360 systems for a while, now that I heard Microsoft finally updated the components (well, at least the GPU - Graphics Processing Unit) in a new 65nm technology chip in the XBOX360 Falcon Chipset release. The CPU is also supposed to be getting an update to this smaller 65nm chip later in 2008, but the wait is over for me now, since I put off purchasing this game system for a couple years now and the new GPU makes enough of a difference with heat and power-consumption to alleviate any fears of the XBOX 360 system overheating or producing the notorious red-ring of death.

I have been waiting for quite some time for these new "Falcon" 360 machines with the 65nm technology primarily because I wanted to make sure the machine would be reliable and stable, but moreover it uses less power (and, produces less heat of course - which heat, of course, is certainly one of the larger risk factors for electronics-failures). In some other detailed XBOX 360 reviews, I have seen people report that after testing with some device called a "Kill-a-Watt", they are seeing power consumption reduced by nearly 1/3 compared to the original XBOX 360 "Zephyr" based 90nm GPU machines. That's not bad. Certainly, it could be better if they'd expedite the move to ultra-modern 45nm chips (like Intel's latest CPU line), but I don't see that happening anytime soon.

Although reports of the newest revision 65nm XBOX systems have been circulating since something like August, availability had been spotty and the ways to "detect" which units were truly the new Falcon chipset version were haphazard and hit-and-miss at best. There were techniques like looking for two little coils vs. three, and copper-heat-dissipation tubing and different heat-sinks, but recently, what appears to be a nearly foolproof way to find an XBOX 360 Falcon is simply looking for the 175W power-supply information on the box-label.

Basically, the power-supply wattage numbers reflect the fact that the newer 65nm XBOX 360 Falcon chipsets require less power. The older consoles will show 203W instead of the new 175W value on the label that shows the Lot Number, Team, and UPC-symbol. Look for the value in the lower-left corner of the label, just left of the taller product UPC symbol, and you should see a line that reads "~100 - 127Vac, 4.7A, 47-63Hz, 175W". That 175W is the 175 Watt power supply indicator. People everywhere are reporting that this is a sure indicator that you have a new Falcon-based XBOX360 console.

Earlier, the team-number and lot-number (and manufacture date) were being used as a best-guess way to get one of the latest systems, but it wasn't foolproof. But now, with this 175W power-supply indicator, it seemed simple enough, so I went looking. I just found a "TEAM: FDOU" AND "LOT NO: 0743 (LOT 473)" XBOX 360 PRO Console Bundle (had Forza 2 and Ulimate Alliance games - which I could care less about, included), with the new 175W power numbers on the label, at a local WalMart of all places (here in Ohio). I checked the machine out for the Falcon "guts" with a flashlight too (at home), and sure enough, it looks like everyone said it would. Mine shows a manufacture date of late October 2007 also.

So, I fired this unit up right away with Halo 3 (my only immediate "must have" game purchase), which I must say is also quite nice. Even with Halo 3's intense graphics and action scenes to stress the CPU and GPU, the system runs nice and cool and pretty quiet (a BIT louder than the old standard XBOX, but not bad at all). I like the new Wireless controllers - I guess I could have gotten them for the old box, but never wanted to pay for them. Now I just have to wait for some other good-looking games (like Call of Duty 4, Mass Effect, etc) to come down in price.

Sadly, the only downside to this purchase, was that although I jokingly blogged about whether I could make enough money with the Google-Ads shown on my blog to ever pay for the 360 machine, I did have to lay out my own money, lest I would have waited another year or more or the ads to ever pay for it - and I just wasn't patient enough for that! :) Also, the console was not offered at an on sale price or anything (no surprise given the demand), and had I waited til after the holidays, maybe that would have changed. Oh well. Time to play some Halo3 and enjoy this awesome game machine that I did manage to wait two years for!