June | 2009 | The Homa Files

Archive for June, 2009

Raise your hand if you want an appointment with a bad doctor … in a couple of months, that is.

June 30, 2009

Ken’s Take: An interesting irony – current proposals tax company provide health insurance benefits except for union members – and most plans involve paying doctors less – fewer reimbursable services and lower fees. I guess union autoworkers contribute more to society than doctors do.

Begs a couple of rhetorical questions: (1) will lower pay attract better or worse doctors ? (2) would you rather be treated by a good doctor or a bad doctor ? (3) how long are you willing to wait to see a bad doctor.

The shallowness of Washington thinking never ceases to amaze.

* * * * *
Prompted by: IBD, “Alice in Medical Care”, Sowell, June 30, 2009

Politicians may talk about “bringing down the cost of medical care,” but they seldom even attempt to bring down the costs. What they bring down is the price– which is to say, they refuse to pay the costs.

We can even refuse to pay for so many doctors. But that just means that we will have to wait longer to see a doctor– as people do in countries with government-run medical systems.

In Canada, 27 percent of the people who have surgery wait four months or more. In Britain, 38 percent wait that long. But only 5 percent of Americans wait that long for surgery.

Surgery may well cost less in countries with government-run medical systems– if you count only the money cost, and not the time the patients have to endure the ailments that require surgery, or the fact that some conditions become worse, or even fatal, while waiting.

A recent report from the Fraser Institute in Canada shows that patients there wait an average of ten weeks to get an MRI, just to find out what is wrong with them. A lot of bad things can happen in 10 weeks, ranging from suffering to death.

Anybody can refuse to pay any cost. But don’t be surprised if you get less when you pay less. None of this is rocket science. But it does require us to stop and think before jumping on a bandwagon.

Full article:
http://www.realclearpolitics.com/articles/2009/06/30/alice_in_medical_care_97231.html

* * * * *

Posted in Health Care / Medical Insurance | Leave a Comment »

Guaranteed lifetime employment … nice work if you can get it.

June 30, 2009

Ken’s Take: One of the reasons that college costs so much is that faculty salaries are the bulk of the costs, many (most) faculty positions are tenured – guaranteed lifetime employment, and many tenured faculty have throttled back or turned off the ignition completely. Colleges have virtually no way to purge the slackers from the payroll – even in tough economic times.
* * * * *

Excerpted from WSJ, Tenure and Academic Freedom, June June 23, 2009

All over the country, colleges and universities are feeling the financial crunch: Endowments are down, students can’t afford to pay tuition, and some state legislatures are even trimming higher-education budgets.

Unfortunately, thanks to the recent ruling of a judge in Colorado, some college administrators have just lost one way to keep their costs under control.

Under the current system at most colleges, some professors many professors have a job for life – that’s “tenure”. They can technically be fired for gross misbehavior or incompetence. But once they’ve been granted tenure, a university is generally stuck with these teachers. And paying the salaries of tenured professors can add up, especially when a professor may no longer be teaching many classes either because of laziness or lack of student interest in his or her field.

Tenured profs argue thatwithout tenure, they are subject to firing risk if administrator’s or trustee’s dislike for his teaching or research, or for positions taken on public issues. Courts have agreed that “the public interest is advanced more by tenure systems that favor academic freedom over systems that favor flexibility in hiring or firing … by its very nature, tenure promotes a system in which academic freedom is protected.”

But does tenure, as the judge argues, actually protect academic freedom?

To protect academics from arbitrary dismissal, as well as to attract smart people to the profession, schools offered a certain amount of job security.

Some of the courses taught by professors who have sued to protect tenure … are all fields of study (e.g. statistics) that have fairly definitive answers. Faculty members don’t really need the freedom to ask controversial questions in discussing them.

But what about those teachers who are pursuing higher truths? Has tenure really protected their ability to question and research freely? For the most part, no.

The truth is that tenure has served as an instrument of conformity since tenure votes are often glorified popularity contests. Those professors who want tenure and disagree with the prevailing trends in their field — or the political fashions outside of it — know that they must keep their mouths shut for at least the first seven years of their careers.

Harvard professor Harvey Mansfield once famously advised a conservative colleague to wait until he had tenure and only then to “hoist the Jolly Roger.” But few professors are getting around to hoisting the Jolly Roger at all. Either they don’t have a viewpoint that is different from their colleagues, or they’ve decided that if they are going to remain at one place for several decades, they’d rather just get along.

The fact that university professors donated to President Obama’s campaign over John McCain’s by a margin of eight to one is only the tip of the iceberg.

Is tenure to blame for the unanimity of thinking in American universities? It’s hard to tell. But shouldn’t the burden of proof be on the people who want jobs for life?

http://online.wsj.com/article/SB124571593663539265.html#mod=djemEditorialPage

* * * * *

Posted in Education - Academics | Leave a Comment »

Buoyed by low-earners, Obama’s PAI back to zero …

June 29, 2009

Sunday’s Rasmussen tracking poll showed Pres. Obama’s Presidential Approval Index at zero … 32% strongly approved of the job he’s doing as president; 32% strongly disapprove – netting to a zero.

Things get more interesting when you dive down into the numbers. Previously, I posted that virtually all blacks strongly approve; he runs about a 10 point PAI deficit among whites; and he roughly breaks even with all others.

By income, low earners (under $20,000 per year) give him a plus 34 PAI; folks earning $60,000 (about where income taxes kick in these days) to $100,000 give him double digit negatives; he breaks even among the rest.

TakeAway: nation is increasingly split by taxpayers staus – if you don’t pay income taxes (or are so rich that it doesn’t matter). Obama’s likely to be your man.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

* * * * *

Posted in Obama Administration | Leave a Comment »

Buoyed by low-earners, Obama’s PAI back to zero …

June 29, 2009

TakeAway: nation is increasingly split by taxpayers staus – if you don’t pay income taxes (or are so rich that it doesn’t matter). Obama’s likely to be your man.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

* * * * *

Posted in Obama Administration | Leave a Comment »

That thud you hear: the government toxic asset plan … see a pattern ?

June 29, 2009

Ken’s Take: The foreclosure program didn’t slow foreclosures, the stimulus program hasn’t stimulated anything, and the toxic asset program hasn’t bought any toxic assets. Are these guys ever going to be held accountable for their free-spending and ineffective programs?

* * * * *

WSJ, “Wary Banks Hobble Toxic-Asset Plan”, June 29, 2009

The Obama administration’s plan to enable banks to dump troubled assets is facing troubles.

In March, Treasury Secretary Geithner announced a two-pronged plan to offer favorable government financing to entice investors to buy bad loans and toxic securities from banks.
But that initiative — called the Public-Private Investment Program, or PPIP — has lost momentum.

Big banks worried about having to sell at fire-sale prices while small banks feared they would be shut out.

Potential buyers balked at the risk of doing business with the government, concerned that politicians might demonize them for making big profits.

Early this month, the Federal Deposit Insurance Corp. essentially shelved one arm of PPIP — the government-financed buying of bad bank loans.

Mr. Geithner recently said the other part — to facilitate the buying from banks of troubled securities, many backed by real-estate loans — could be scaled back because investors are “reluctant to participate.” This week, the government is expected to name investment firms to manage this securities-buying portion

Full article with lots of detail:
http://online.wsj.com/article/SB124622976702566007.html#mod=testMod

* * * * *

Posted in Financial Models, Obama Administration | Leave a Comment »

That thud you hear: the government toxic asset plan … see a pattern ?

June 29, 2009

* * * * *

WSJ, “Wary Banks Hobble Toxic-Asset Plan”, June 29, 2009

The Obama administration’s plan to enable banks to dump troubled assets is facing troubles.

Big banks worried about having to sell at fire-sale prices while small banks feared they would be shut out.

Potential buyers balked at the risk of doing business with the government, concerned that politicians might demonize them for making big profits.

Early this month, the Federal Deposit Insurance Corp. essentially shelved one arm of PPIP — the government-financed buying of bad bank loans.

Full article with lots of detail:
http://online.wsj.com/article/SB124622976702566007.html#mod=testMod

* * * * *

Posted in Financial Models, Obama Administration | Leave a Comment »

Gov’t Motors agrees to assume legal responsibility for defect-related injuries drivers suffer … well, kinda.

June 29, 2009

Ken’s Take: First, the gov’t tossed contract and bankruptcy laws out the window and screwed the secured creditor (i.e. bondholders) by subordinating their claims beneath unsecured UAW claims.

What I missed was that the gov’t was also tossing product liability claims out, too. For example, if you’re driving a Chrysler car and the engine blows up because of a defect, your family gets zilch from the New Chrysler.

GM was trying to pull the same trick. But, since GM is bigger and folks had time to think about the details of the gov’t orchestrated settlement, a ruckus broke out.

Now, the New GM will altruistically accept responsibility for claims that might arise from Old GM cars that are still on the road. Big of them.

Question: why in the world would anybody buy a bond issued by New Chrysler and New GM, knowing that their security is, well, unsecured.

And, why would anybody take a chance buying a car from those companies. You’ve gotta have a high risk tolerance, for sure.

* * * * *

Excerpted from WSJ, “GM to Take On Future Product-Liability Claims”, June 28, 2009

GM under pressure from state attorneys general, has agreed to assume legal responsibility for injuries drivers suffer from vehicle defects after the auto maker emerges from bankruptcy protection.

The concession means consumers who are injured in car accidents after GM emerges from Chapter 11 protection will be able to bring product-liability claims against the new government-owned auto maker.

Under GM’s original bankruptcy plan, the auto maker planned to leave such liabilities behind after selling its “good” assets to a “New GM” owned by the government. That meant future GM car-accident victims who believed faulty manufacturing caused their injuries would be unable to sue the New GM. Instead, they would have been treated as unsecured creditors, fighting over the remains of GM’s old bankruptcy estate.

In court papers, GM maintained it was not legally-required to take on the claims, saying “federal-preemption” meant the bankruptcy code overrode state laws governing the rights of car-accident victims to sue the new GM. It also noted that Chrysler, which recently emerged from bankruptcy in a deal with Fiat, would not be responsible for such claims.

But the auto maker said it agreed to take on future product-liability claims “to alleviate certain concerns that have been raised on behalf of consumers.”

Full article:
http://online.wsj.com/article/SB124614495545265019.html#mod=testMod

* * * * *

Posted in Autos - Travel, Obama Administration | Leave a Comment »

ABC’s loses on a sure bet … “The Philanthropist” and repeats outdraw the Obama healthcare infomercial (ouch!).

June 26, 2009

Ken’s Take: The mainstream media seems to be ignoring it, but virtually nobody watched the Obama healthcare infomercial on ABC. Hmmm.

Couple of observations:

(1) Maybe, just maybe, Obama yak-yak fatigue is finally setting in

(2) So, ABC took a hit to it’s journalistic reputation without even getting a swell of viewers, That should teach the compliant networks a lesson.

(3) Imagine the ratings if Michael Jackson (may he RIP) had died a day earlier than he did

* * * *

From The Live feed, “ABC’s White House special struggled for viewers”, June 25, 2009

President Obama’s town hall meeting on health care delivered a sickly rating Wednesday evening.

The one-hour ABC News special “Primetime: Questions for the President: Prescription for America” (4.7 million viewers, 1.1 preliminary adults 18-49 rating) had the fewest viewers in the 10 p.m. hour (against NBC’s “The Philanthropist” debut and a repeat of “CSI: NY” on CBS). The special tied some 8 p.m. comedy repeats as the lowest-rated program on a major broadcast network.

The special was shot at the White House and featured the president answering questions about his health care plan. The president’s primary message was that those who like their current insurance will be able to keep it and that taking no action will result in higher health care costs.

The special drew fire from Republican leadership after refusing to allow an official opposition response, or even a paid ad. ABC also interviewed Obama on “Good Morning America” to help promote the special.

ABC points out that “Questions for the President” continued after the local news during late night on “Nightline” (4.3 million) and helped boost the news program to pull more viewers than CBS’ “Late Show” and NBC’s “Tonight Show.”

Source:
http://www.thrfeed.com/2009/06/abcs-white-house-special-struggled-for-viewers.html

* * * * *

Posted in Health Care / Medical Insurance, Obama Administration | Leave a Comment »

ABC’s loses on a sure bet … “The Philanthropist” and repeats outdraw the Obama healthcare infomercial (ouch!).

June 26, 2009

Ken’s Take: The mainstream media seems to be ignoring it, but virtually nobody watched the Obama healthcare infomercial on ABC. Hmmm.

Couple of observations:

(1) Maybe, just maybe, Obama yak-yak fatigue is finally setting in

(2) So, ABC took a hit to it’s journalistic reputation without even getting a swell of viewers, That should teach the compliant networks a lesson.

(3) Imagine the ratings if Michael Jackson (may he RIP) had died a day earlier than he did

* * * *

From The Live feed, “ABC’s White House special struggled for viewers”, June 25, 2009

President Obama’s town hall meeting on health care delivered a sickly rating Wednesday evening.

Source:
http://www.thrfeed.com/2009/06/abcs-white-house-special-struggled-for-viewers.html

* * * * *

Posted in Health Care / Medical Insurance, Obama Administration | Leave a Comment »

The eco-question: paper or plastic ? … not so fast!

June 26, 2009

TakeAway: Studies suggest that much maligned plastic bags aren’t so bad for the environment after all … as long as they get recycled.

* * * * *

Excerpted from WSJ, “ Paper or Plastic? A New Look at the Bag Scourge”, June 12, 2009

When plastic grocery bags were introduced some 30 years ago, they were touted as light, long-lasting and cheap. They caught on so well that hundreds of billions are dispensed each year, creating a modern menace that often winds up nestled in trees, stuck in sewers and drifting in oceans.

Faced with the growing blight, countries from Ireland to China and cities from San Francisco to Washington, D.C., have moved to ban or tax their use. A United Nations official called for outlawing them world-wide.

There is growing evidence that the production, use and disposal of plastic bags put less burden on natural resources than paper bags. Meanwhile, a knock against plastic bags — that they can’t be conveniently recycled — is becoming less persuasive as more cities start accepting plastic bags in curbside recycling programs.

Most American consumers .. go through five or 10 plastic bags each week. More than 90% of Americans reuse their bags at least once … for lining wastebasket, carrying lunches, or from or cleaning up after a dog.

Various studies have examined whether paper or plastic grocery bags are environmentally friendlier. Plastic bags consume less energy and water and produce less pollution, including greenhouse-gas emissions. But, plastic bags are rarely recycled. But plastic bags are recycled at less than one-third the rate of paper bags.

Plastic bags are difficult to recycle for the same reasons they are convenient to use. They are so light they fly out of curbside recycling bins, which often lack lids. If they make it to a recycling plant, the bags tend to wrap themselves around machinery, gumming it up. So, most curbside recycling programs don’t accept them.

U.S. cities that accept the bags in their recycling bins typically ask residents to stuff a lot of bags inside one bag, sausage-like, to make the bags easier for recycling workers to handle. It’s what industry insiders call a “bag of bags.”

Virtually all studies say the environmentally friendliest option is to choose a reusable grocery bag, and to reuse it at least 4 times, regardless of what that bag is made of.

Full article:
http://online.wsj.com/article/SB124473522987806581.html?mod=djemalert

Posted in Environment - Green | Leave a Comment »

The 10 Commandments of Innovation & Entrepreneurship …

June 25, 2009

Ken’s Take: Kawasaki has a track record, so worth listening to. Note especially #1 re: mission statements and #5 re: rolling the DICEE

* * * * *

Knowledge@Wharton, “Ten Commandments from Entrepreneurial ‘Evangelist’ Guy Kawasaki”, June 10, 2009

Guy Kawasaki became the second software “evangelist” at Apple Computer, where his job from 1983 to 1987 was to convince people to create software for the Macintosh. Kawasaki fondly recalls his colleagues at Apple as visionary, driven and “arguably the greatest collection of egomaniacs in the history of California — though the record has subsequently been broken by Google.”

Here are Kawasaki’s “Ten Commandments” for innovation and entrepreneurship:

1. Make meaning, not money. “Most companies founded on the concept of making money pretty much fail … focus on making their product or service mean something beyond the sum of its components “. Nike “turned $2.50 of raw materials into something that stands for efficacy and power and liberation. Apple has done it with the Mac and the iPhone.

2. Make a mantra, not a mission statement. Bland, generic company mission statements — about “delivering superior-quality products and services for our customers and communities through leadership innovation and partnerships” — serve no one … keep it short and define yourself by what you want to mean to consumers. FedEx is about “peace of mind.” To get everyone internally and externally on the same page, explain why your organization exists and how it meets customers’ needs and desires.

3. Jump curves. Innovating is harder than just staying a little bit ahead of competitors on the same curve. “If you’re a daisy-wheel printer company, the goal is not to introduce Helvetica in another point size. The goal is to jump to laser printer”.

4. In product design, “roll the DICEE.” That’s an acronym. “D” is for deep, which to Kawasaki means thinking about features that go beyond the norm. One of his favorite “deep” ideas: Fanning Reef sandals, which have a bottle opener built into the sole. “I” is for intelligence, as seen in the design of Panasonic’s BF-104 flashlight, which uses batteries of three different sizes to accommodate the random mix of extra batteries many people have around the house. “C” is for complete — or being not just a product, but including support and service. The first “E” is for elegance: Beauty matters, according to Kawasaki. The second “E” is for emotive. “Great products generate strong emotions: Think Harley Davidson, Macintosh.”

5. Don’t worry, be “crappy.” This doesn’t mean ship a bad product, but “your innovation can have elements of crappiness to it,” Kawasaki said. Twitter has a litany of flaws, but it is changing people’s habits.

6. Polarize people. Try to be all things to all people and you often ship mediocrity. The boxy Toyota Scion xB looks ugly to some people but very cool to its devotees.

7. Let 100 flowers blossom. You never know where the flowers will emerge, so let them grow. Innovations may attract unexpected and unintended customers. Think of Avon Products’ Skin-so-Soft cream, which became popular as a mosquito repellent. Learn who’s buying your product, ask them why and give them more reasons. “That’s a lot easier than asking people who aren’t interested ‘why not,’ and trying to change their minds.”

8. Churn, baby, churn. Always improve. Listen to customers for ideas. Once the product reaches the hands of customers, it’s time to start listening to their feedback.

9. Niche yourself. Find your place. A product or service does not need to be unique if it delivers extraordinary value to a select group.

10. Follow the 10-20-30 rule when pitching to venture capitalists. That means no more than 10 PowerPoint slides, a limit of 20 minutes for the pitch, and using a 30-point font size in the presentation (to keep it simple). The goal of such pitches isn’t to walk home with a check, it’s to “not be eliminated” from consideration.

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2258

Posted in Entrepreneurship, Mktg - Product & Innovation | Leave a Comment »

ESPN to sports fanatics: Get out your wallet … ESPN to advertisers: Get out your wallet, too.

June 24, 2009

Ken’s Take: It’s no secret that click through response rates to online ads) is miniscule. A current hot topic is whether “engaged” or “attentive” site visitors are more ad responsive. Conventional wisdom says ‘yes’. If true, sites with engaged visitors should be able to command higher ad rates.

Couple that with longstanding wisdom that people take stuff more seriously when they pay for it. and you have a new formula for online profits: generate revenue by charging a subscription fee for site access, and sell advertisers on the notion that they should pay more for an engaged base of exposures.

Might work … if the content is powerful and the base of subscribers is big enough.

* * * * *

Excerpted from Business Week, “ESPN Bets Sports Fanatics Will Pay for Online”, June 4, 2009

ESPN The Magazine, the decade-old print offshoot of Walt Disney (DIS)’s wildly successful cable sports network, is about to begin charging $6.95 a month for access to its Web site.

At a time when many media companies are merely jawboning about demanding fees from online users, this magazine is doubling down on it.

More broadly, such a move by a well-known name will plumb whether a paying customer equals a more enthralled customer—the term in the trade is “engaged”—and a more valuable target for advertisers as well.

ESPN The Magazine is well placed to test these waters. Rabid sports fans have bottomless appetites for sports info and the universe of data, jargon, and inside jokes surrounding it.

“There is an audience that just loves games” and flits on and off sports sites only to grab scores, says ESPN.com Editor-in-Chief Rob King. But others “love the in-between stuff—the predictive stuff that helps them be smarter fans.” They’re the people the company is banking on. It also helps that many like to wager on sports, though ESPN doesn’t say so: When information can be translated into currency, people pay for it. Insider’s most popular features include data, tools, and deep-dig analyses geared to fantasy-league players and other stat geeks, and “Rumor Central,” which gathers and comments on sports tidbits from other media, such as newspapers and local call-in radio shows.

“Why is it, in this business, we are apologetic when asking [consumers] to pay for what we give them online?”

There is a a case that a subscribing customer is more “engaged” and thus more valuable to marketers than one who hops from one free site to another.

But, industry observers warn that it’s not a sure thing that an obsessive fan’s focus on ESPN Insider also means “there is more engagement with advertising.” That’s a debate that ESPN will presumably take up later, should it persuade more readers to pay up online.

Full article:
http://www.businessweek.com/magazine/content/09_24/b4135072008154.htm?chan=magazine+channel_business+views

Posted in Mktg - Internet, Mktg - Online Marketing, Online Marketing | Leave a Comment »

Summer Read: Bold Endeavors

June 24, 2009

Bold Endeavors: How Government Built America, and Why It Must Rebuild It Now by Felix Rohatyn

Background: Rohatyn was an investment banker with Lazard Freres before a second career in public service bailing out NYC from the brink of bankruptcy and serving as Ambassador to France under Clinton.

Central premise: “The nation is falling apart — literally. America’s roads and bridges, schools and hospitals, airports and railways, ports and dams, water lines and air control systems — the country’s entire infrastructure — is rapidly and dangerously deteriorating.

America needs to rebuild its infrastructure. It is a critical national priority, a costly long — term investment, and a visionary enterprise. It is a program that can provide tens of millions of much-needed jobs.

It is an undertaking that can only succeed if it is directed, coordinated, and largely financed by the federal government.

And, contrary to the glib reaction for many contemporary ideological naysayers, large-scale public investments can work, and with remarkable long-term success.”

Consider 10 bold endeavors that were done by the Federal government and had a

Louisiana Purchase (1803) … doubled the size of the country, and put the Port of New Orleans under US control
Erie Canal (1825) … linked the Atlantic Ocean to the Great lakes … established NYC as a major port and center of commerce
Transcontinental Railroad (1869) … enabled coast to coast travel
Land Grant Colleges (1862) … provided greater access to higher education
Homestead Act (1862) … incentivized people to move west and settle the new frontiers
Panama Canal (1914) … shorten travel time from Atlantic to Pacific, economic and security benefits.
Rural Electrification Administration (1936) … brought electric power to sparsely populated rural areas
Reconstruction Finance Corporation (1936) … TARP v.1.0 … provided credit backstops and bailout funds to companies struggling out of the Depression.
G.I. Bill (1944) … provided education benefits, supplemental unemployment benefits to service people returning from WWIIto
interstate Highway System (1956) … provied “go anywhere” coverage for US citizens – in times of peace and war.

Bottom line: The above is about all that you ever need, so save your money

Posted in Financial Services & Crises, Obama Administration | 1 Comment »

The Safeway Rx for rising healthcare costs …

June 23, 2009

TakeAways: Safeway’s keys to containing healthcare costs (1) make sure everybody has some “skin in the game” – i.e. focus on “out of pocket” costs — don’t eliminate them;(2) steep premium discounts for good behavior, e.g. not smoking, weight control; (3) a database of providers and costs so people can shop around. Works for me …

* * * * *

Excerpted from WSJ, “Mr. Burd Goes to Washington Business will pay for government health care”, June 19, 2009

As recently as 2004, Safeway was suffocating under health-care costs growing at 10% a year. The company blew up the company’s existing health-care structure and replaced it with one that embodied market principles — choice, responsibility, competition and price.

Nearly 80% of the 30,000 nonunion Safeway workers who take part in the program rate it good, very good, or excellent.

The Safeway plan has two main parts that work in tandem.

The first involves giving employees a financial stake in the system. Employees have skin in the game. The company deposits $1,000 each year into a “health reimbursement account,” which workers can use to pay for care. The next $1,000 in expenses is the employee’s responsibility. After that, employees pay 20% of costs up to a $4,000 maximum.

Safeway workers these days treat that first $1,000 carefully, since anything beyond it comes out of their pockets. The company is alive with stories of people who no longer visit the emergency room for routine care but instead call around to doctors to ask prices, and swap information with colleagues. Employees go on a Web site, punch in a zip code, and get a list of providers and costs. One discovery was that within 30 minutes of its California headquarters routine colonoscopy prices ranged from $700 to $7,000.

The second part of Safeway’s plan was an embrace of the obvious: Healthy people cost less: 75% of health-care costs are the result of four conditions — cardiovascular disease, cancer, diabetes and obesity. The majority of these are preventable. and, for example,an obese employee can require 10 times the number of doctor visits in a year than someone of healthy weight.

Under Safeway’s voluntary “Healthy Measures” program, employees are tested for smoking, weight, blood pressure and cholesterol. Every area they “pass” results in a reduction in their premium, of as much as $1,560 for a family, a year. Those who fail but prove progress can get refunds.

Today, Safeway’s smoking and obesity rates are roughly 70% the national average.

Full article:
http://online.wsj.com/article/SB124536722522229323.html

Posted in Health Care / Medical Insurance | Leave a Comment »

Netflix – Managing a still-hot business as its time runs out.

June 23, 2009

Summary: Business is booming for Netflix as people stay at home more during the recession. But, online streaming video is certain to overtake mailed DVDs eventually. Netflix is trying to stay ahead of the curve. Good luck.

* * * * *
Excerpted from WSJ, Netflix Boss Plots Life After the DVD, June 23, 2009

Netflix is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year.

But Netflix’s CEO Reed Hastings thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. “As a capitalist, I’d rather have Blockbuster as my primary competitor than all those Internet companies,” Mr. Hastings says. So he is quickly trying to shift Netflix’s business — seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.

Companies across the entertainment and technology landscape are struggling with how to profit from Internet video. There’s still significant risk that Netflix could falter or lose out to another company that figures out how to do it first. And having picked his battle, Netflix may risk missing other growth opportunities: – the company hasn’t yet expanded internationally or mounted a direct challenge to kiosks, such as Coinstar Inc.’s Redbox, that let customers pick up $1-a-night DVD rentals. It is considering expansion opportunities outside the U.S. and has no plans to open kiosks.

One of the biggest hurdles will be persuading Hollywood studios to give Netflix rights to show more and better movies through its Internet service at a time when many studios are protective of their DVD-sales revenues.

The company stumbled in an earlier effort to introduce a set-top box that would bring Internet video service into the living room. Netflix developed the hardware but then abandoned it after executives got cold feet.

Mr. Hastings, the CEO says he is a student of companies such as AOL that tripped up by failing to adapt to technology shifts.

Netflix’s big break came as a different industry leader failed to keep step. In the late ’90s, the home-video business was shifting to DVDs from VHS tapes, offered by rental giants such as Blockbuster Inc. Netflix emerged with warehouses that stocked larger selections of DVDs than Blockbuster’s rental outlets could, mailing them around the country in red envelopes. Netflix charged consumers a flat monthly rate to rent as many DVDs as they liked, eliminating the late fees charged by rental chains.

Blockbuster eventually started its own DVD rent-by-mail service, but scaled it back in late 2007 after consistently losing money on it.

Now, amid gathering signs of the DVD’s decline, the industry is poised to shift again.

Home-video sales, mostly from DVDs, last year dropped to $14.5 billion from $15.9 billion the previous year. Movie rentals remained flat over the period, at about $8.2 billion. The number of DVDs Netflix rents every year — about a half-billion in 2008 — is still growing, and Mr. Hastings predicts the company will still be shipping discs to consumers 20 years from now.

But he expects rental figures to begin to dwindle in four to nine years.

Anticipating the demise of DVDs almost from the beginning, the company’s name didn’t reference discs or mailboxes and the company invested in software formulas to crunch data about its customers’ tastes so it could recommend DVDs to them, a technology that could carry over to an Internet movie service.

In January 2007, Netflix began letting subscribers stream video to their PCs from the company’s Web site, allowing users to watch video almost instantly without keeping permanent copies on their hard drives. The service featured only about 1,000 movies and television shows — about 1% of its DVD selection — but subscribers could use it for no extra charge.

Now more than 20% of Netflix members regularly use the service. The company says new users attracted by streamed movies have helped push its subscriber total up 25% to 10.3 million at the end of March from a year earlier.

The online model has another benefit for Netflix. The company currently pays about 80 cents to post a DVD to a customer’s home and back. Its bandwidth costs for streaming a typical two-hour movie: roughly a nickel.

Netflix’s biggest challenge in getting Hollywood to go along for the ride. Netflix’s selection of more than 100,000 DVD rental titles is made possible by the “first-sale doctrine” of U.S. copyright law, which permits buyers of DVDs to lend them out without studios’ consent.

In Netflix’s early days, its buying team would sometimes purchase DVDs at local Wal-Marts or Best Buys if it couldn’t get copies through studios.

In contrast, to deliver movies and television shows over the Internet, Netflix has to license them from studios. So far, it has gotten only about 12,000 titles, a hodgepodge of older films such as “Diehard,” episodes of popular TV shows including “30 Rock” and a smattering of new releases.

The main reason: Netflix must compete with television subscription services like Time Warner’s HBO, Viacom Showtime and others that gain exclusive rights to show studio movies on cable channels or through on-demand systems. These pay channels have bigger audiences than Netflix and a longer history of securing movie rights. Their lucrative deals can prevent Netflix from getting Internet rights for movies until years after they’re released on DVD.

If Netflix is to expand the titles on its Internet service, it will have to considerably boost its licensing spending, from roughly $100 million last year.

“Netflix has yet to show that it has the resources and profitability to be in the markets where licensing is the business policy.

Hollywood is “clearly conflicted” about the online service’s growth because it could help accelerate the decline of DVDs.

http://online.wsj.com/article/SB124570665631638633.html#mod=testMod

* * * * *

Posted in Digital Media | Leave a Comment »

Goin’ negative … Obama’s PAI drops to minus 2.

June 22, 2009

TakeAway: All major polls show that Obama’s approval rating is still over 50%, but showing significant recent slippage.

For the first time, Obama’s Presidential Approval Index has gone negative. Keep reading …

* * * * *

Rasmussen

Overall, 53% of voters say they at least somewhat approve of the President’s performance so far … 46% at least somewhat disapprove.

But, the Rasmussen Reports daily Presidential Tracking Poll for Sunday showed that 32% of the nation’s voters now Strongly Approve of the way that Barack Obama is performing his role as President … 34% Strongly Disapprove giving Obama a Presidential Approval Index rating of -2.

That’s the President’s lowest rating to date and the first time the Presidential Approval Index has fallen below zero for Obama.

Sorted by self-identified race, Obama’s PAI is plus 80 among blacks, minus 6 among whites, and minus 7 among all others.

By party affiliation, Obama is plus 56 among Dems, minus 50 among GOPs, and minus 6 among independents.

38% say we’re on the right track, 56% say we’re on the wrong track.

These results are consistent with recent Gallup and WSJ polls summarized below.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

Gallup

President Barack Obama’s job approval rating fell to 58% in Gallup Poll Daily tracking from June 16-18 — a new low for Obama in Gallup tracking. In the past couple of weeks, Dem approval has remained unshakable; GOP has fallen by 8 points; Independent support has fallen by a whopping 11 points.

http://www.gallup.com/poll/121028/Obama-Job-Approval-Slips-58-First-Time.aspx

* * * * *

WSJ / NBC

Since Feb., approval is down 4 or 5 points – disapproval is up 8 points – as some “not sure” have become negatively “sure”

Posted in Obama Administration | Leave a Comment »

The simple math of healthcare “reform” …

June 22, 2009

There was sticker shock when the CBO estimated the cost of the proposed healthcare reform package at about $1.6 trillion (over 10 years).

My question: why the shock? In fact, why any surprise at all?

Think about it …

Total healthcare costs are generally reported to be about $2.1 trillion annually.

The U.S. population is just a bit over 300 million … so, per capita healthcare costs are about $7,000 per person (which is consistent with most reports).

It’s generally reported that there are approximately 45 million people in the U.S. without health insurance.

So, it follows arithmetically that it costs about $315 billion annually to cover those folks (45 million times $7,000 per person).

Assuming a quick ramp up of the coverage, that’s $3.15 trillion over 10 years (for simplicity, call it $3 billion).

It’s generally reported that about 1/3 of the 45 million uninsureds are not citizens. At the national average, their healthcare expenses would be 1/3 of the $3 trillion, or $1 trillion.

Policy question: Who’s in favor of paying higher taxes or boosting the national debt to cover this $1 trillion ?

Also, it’s generally reported that about 1/3 of the 45 million uninsureds are healthy young adults who have access to health insurance and earn enough to pay for it, but opt to self-insure. Simple economics – they expect that the insurance will cost them more than their out-of-pocket expenses if they pay their own way. Of course, they’re gambling that they won’t have any catastrophic medical bills – but, that’s their choice.

Policy question: Should other taxpayers have to foot the bill the bill for these opt-outters? I don’t think so.

Policy question: Should the government make them buy insurance? I don’t care – that’s not my problem.

Policy question: Should the opt-otters get health insurance subsidized by other taxpayers? I don’t think so – they can afford to pay the freight – they just choose not to.

So, what’s left is about 15 million uninsureds … with an associated annual cost of about $105 billion … or a little over $1 trillion for 10 years.

Policy question: Should these ininsureds be covered by other taxpayers? Even with a hard heart, it’s easy to say yes.

Note: Many of these uninsureds are simply between jobs. when they find a new job, they’ll have insutance again.

* * * * *

The CBO took a couple of weeks to get 17 million new insureds at a cost of about $1.6 trillion. The above analysis took all of 10 minutes. Hmmmm

Posted in Health Care / Medical Insurance | 1 Comment »

To cut healthcare costs by 40%, Safeway applies the auto insurance model.

June 19, 2009

TakeAway: By providing employees with financial incentives to stop smoking, lose weight, and control cholesterol levels and blood pressure … Safeway has contained healthcare spending over the past couple of years.

The principle: reward good behavior … and don’t subsidize bad behavior.

Ken’s Take: Maybe fat folks should pay higher airfares and health insurance premiums. Hmmm.

* * * * *

Excerpted from WSJ, “How Safeway Is Cutting Health-Care Costs”, June 12, 2009

Effective health-care reform must meet two objectives: 1) It must secure coverage for all Americans, and 2) it must dramatically lower the cost of health care.

At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation’s health-care bill by 40%. The key to achieving these savings is health-care plans that reward healthy behavior.

Safeway’s plan capitalizes on two key insights: (1) 70% of all health-care costs are the direct result of behavior; (2) 74% of all costs are confined to four chronic conditions — cardiovascular disease, cancer, diabetes and obesity … and, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

Safeway has done nothing more than borrow from the well-tested automobile insurance model. For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers. Bad driver premiums are not subsidized by the good driver premiums.

As with most employers, Safeway’s employees pay a portion of their own health care through premiums, co-pays and deductibles. The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member’s behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels. Employees are tested for the four measures cited above and receive premium discounts off a “base level” premium for each test they pass. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families.

At Safeway, we are building a culture of health and fitness.

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation’s direct health-care bill would be $550 billion less than it is today.

Full article:
http://online.wsj.com/article/SB124476804026308603.html#mod=djemEditorialPage

Posted in Health Care / Medical Insurance | Leave a Comment »

Dusting Facebook pages for “friendprints” …

June 18, 2009

Ken’s Take: As I continue to learn about Facebook and other social networking sites, three things strike me: (1) they are great places to share pictures (2) some people don’t have enough to do (note: at least I can claim that I’m doing “research” for marketing strategy classes) (3) people post some pretty indiscriminate stuff – some of which can / will come back to haunt them.

I’m most intrigued by the increased use of “behavioral profiling” and “friendprinting” .

Behavioral profiling mines posted nuggets for ‘triggers’ and ‘patterns’.

For example, all of the free email sites sift through a person’s emails looking for key words that might signal a propensity towards a particular category of products. A guy who constantly shares sports tidbits with friends may coincidentally (?) start seeing a lot of pop-ups for odds & scores sites.

Friendprints are analytical inferences drawn from a person’s posted friends and associations.

For example, if friends are profiled as being grads of good colleges, then it’s a reasonable inference that the person travels with a good crowd. So what? Well, ‘good crowds’ may spend more on certain things and may be more credit worthy. It’s not proof, but provides clues.

What if — for privacy — a person ‘hides’ their friends list. Well, a logical inference is that they’re hiding something. A red flag for credit raters, prospective employers. and friends & family. Hmmmm.

And, as more friends lists get hidden, the marketing value of social networking sites diminishes. Double hmmmm.

Below are highlights from the article on the general topic of privacy in social networking that got me thinking.

* * * * *

From Knowledge@Wharton, “Leaving ‘Friendprints’: How Online Social Networks Are Redefining Privacy and Personal Security”, June 10, 2009

People [say] privacy [is] important to them, yet they engage in behaviors that indicate a remarkable lack of concern.

Privacy thresholds vary by individual and those boundaries are being tested by social networking.

The information people post, when combined with new technologies for gathering and compiling data, can create a fingerprint (or “friendprints” -like pattern of behavior … that can be decoded for both legitimate and illegitimate purposes..

Third-party applications (e.g. think credit scoring systems)can take data outside of the friendly confines of a social networking site and combine it with data from other sources (e.g. inter-site linking) to piece together enough information to “define” a person.

For example, just a person’s name and birth date — routinely found on a Facebook profile — can be a useful starting point for an identity thief.

The line between professional networking on a site such as LinkedIn, and social networking on sites such as Facebook, has become very thin. Many Facebook users might create a more casual persona for themselves on that site than they would on LinkedIn, where they would include nothing but professional information. But both sites can be seen by potential employers and clients

And what about the person you don’t really know who wants to be your friend because you have some friends in common? That new friend may just be mining your social circle for information. As networks grow and more friends of friends (and their friends) are accepted by users, it’s unclear who can be trusted.

“Though it is not difficult to sign up under an alias, it is extraordinarily difficult to change one’s friends and family.”

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2262

Posted in Internet - Soc Networking, Internet Marketing - eCommerce -, Social Media & Networking | Leave a Comment »

Re: Healthcare … How many “uninsured” Americans are there? Answer: Not 47 million.

June 18, 2009

Ken’s Take: This isn’t new news, but it continues to be overlooked in the press and in Presidential speeches. About 1/3 of “uninsureds” aren’t US citizens; about 1/3 are young and gainfully employed who choose to self-insure. That leaves about 15 million who need to be taken care of. Why aren’t “they” more truthful with the numbers?

* * * * *

Excerpted from IBD, “The Phantom Uninsured”, June 16, 2009

Team Obama uses the “46 million uninsured” as a reason to nationalize health care. But the Census Bureau says about a fifth of those aren’t U.S. citizens. In fact, a goodly number are illegal aliens.

According to “Income, Poverty, and Health Insurance Coverage in the United States,” a Census Bureau report published last August, of the 45.6 million persons in the U.S. that did not have health insurance at some point in 2007, 9.7 million, or about 21%, were not U.S. citizens.

Also among the uninsured are 17 million Americans who live in households where the annual income exceeds $50,000; 7 million of those without coverage have incomes of $75,000 a year or more. Many of the uninsured are young and healthy (40% are between ages 18 and 34) and at this point in their lives, particularly in this economy, choose to put their dollars elsewhere

“Why the lack of insurance (among people who own homes and computers)? One clue is that 60% reported being in excellent health or very good health.”

“For many, being uninsured is a transitory state, since most uninsured Americans are only without coverage for a short time.” In fact, a Census Bureau’s Survey of Income and Program Participation, found that only 19 million Americans go without insurance for a full year.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=330042258549199

* * * * *

Posted in Health Care / Medical Insurance | 1 Comment »

Vital Friends: The People You Can’t Afford To Live Without.

June 17, 2009

From the summer reading pile. I do it so you don’t have to …

Vital Friends: The People You Can’t Afford To Live Without, Tom Roth, Gallup Press, 2006

Ken’s Take: Below is all you need to know from the book. The “8 roles of vital friends” were pretty interesting. Which role(s) do you play? Which do each of your vital friends play?

* * * * *

Summary

Each person needs a few very deep friendships to thrive — the magic number seems to be three or four.

What matters most is not the number of friends, but the quality of the friendships.

A vital friend is someone who measurably improve your life. Ask yourself: “if this person were no longer around, would my overall satisfaction with life decrease?”

We expect the other person in a relationship to meet our every need. We expect them to do several things to uphold his or her end of the relationship. We expect them to be able to do it all. Then, we’re disappointed when we discover that they do only a few things very well.

The trick is to focus on those things that our friend does well — the strengths that complement our weaknesses. Focus on the ways that your friends contribute to your life, not on the ways that they disappoint you.

There are eight vital roles that close friends might play. Some may play only one; few play several: none play them all. Ask yourself: what role does this friend play? what role do you play for him / her?

1. Builder
2. Champion
3. Collaborator
4. Companion
5. Connector
6. Energizer
7. Mind Opener
8. Navigator

* * * * *

1. Builder

builders are great motivators,always pushing you towards the finish line. They continually invest in your development and genuinely want you to succeed — even if it means they have to go out on a limb for you. Builders are generous with their time as they help you see your strengths and use them productively. When you want to think about how you can do more of what you already do well, talk to a Builder. Much like the best coaches and managers, these are the friends who lead you to achieve more each day. And great Builders will not compete with you. They figure out how their talents can complement yours. If you need a catalyst for your personal or professional growth, stay close to a Builder.

2. Champion

Champions stand up for you and what you believe in. They are the friends who sing your praises. Every day, this makes a difference in your life. Not only do they praise you in your presence, the Champion also “has your back” — and will stand up for you when you’re not around. They accept you for the person you are, even in the face of resistance. Champions are loyal friends to whom you can share things in confidence. They have a low tolerance for dishonesty. You can count on them to accept what you say, without judging, even when others do not. Champions are your best advocates. When you succeed, they are proud of you, and they share it with others. Champions thrive on your accomplishments and happiness. When he needs someone to promote your cause, look to Champion.

3. Collaborator

A Collaborator is a friend with similar interests — the basis for many great friendships. You might share a passion for sports, hobbies, religion, work, politics, food, Visa, movies, or books. In many cases, you belong to the same groups or share affiliations. When you talk with a Collaborator, you are on familiar ground, and this can serve as the foundation for lasting relationship. Indeed, in those conversations, you often find that you have similar ambitions in life. Looking for someone who can relate to your passions? Find a Collaborator.

4. Companion

A Companion is always there for you, whatever the circumstances. When something big happens in your life — good or bad — this is one of the first people you call. At times, a true companion will even sense where you are headed — your thoughts, feelings, and actions — before you know it yourself. Companions take pride in your relationship and they will sacrifice for your benefit. They are the friends for whom you might literally put your life on the line. If you’re searching for friendship that can last a lifetime, look no further than a Companion.

5. Connector

A Connector is a bridge builder will to get what you want. Connectors get to know you — and then introduce you to others. These are the people you socialize with regularly. Friends who play the role of a Connector are always inviting you to lunch, dinner, drinks, and other gatherings where you can meet new people. This extends your network dramatically and gives you access to newfound resources. When you need something — a job, doctor.. friend, or a date — a Connector points you in the right direction. They seem to know everyone. If you need to get out more or simply want to widen your circle of friends or business associates, a Connector can help.

6. Energizer

Energizers are your fun friends who will always give you a boost. You have more positive moments when you are with these friends. Energizers are quick to pick you up when you are down — and can make a good day great. They are always saying and doing things that make you feel better. Energizers have a remarkable ability to figure out what gets you going. When you’re around these friends, you smile a lot more. You’re more likely to laugh in the presence of an Energizer. If you want to relax and have a good time or need to get out of a rut, call an Energizer.

7. Mind Opener

Mind Openers are the friends who expand your horizons and encourage you to embrace new ideas, opportunities, cultures, and people. They challenge you to think in innovative ways and help you create positive change. Mind Openers know how to ask good questions, and this makes you more receptive to ideas. When you are around a Mind Opener you are unguarded and express opinions aloud, especially controversial ones that you might not be comfortable sharing with other friends. These friends broaden your perspective on life and make you a better person. If you need to challenge the conventional wisdom or shake up the status quote, spend a few hours talking with a Mind Opener.

8. Navigator

Navigators are the friends who give you advice and keep you headed in the right direction. You go to them when you need guidance, and they talk through the pros and cons with you until you find an answer. In a difficult situation, you need a Navigator by your side. They help you see a positive future and keep things grounded in reality. Any time you are at a crossroads and need help making a decision, you can look to a Navigator. They help you know who you are — and who you are not. They are the ideal friends to share your goals and dreams with, and when you do, you’ll continue to learn and grow. When you ask Navigators for direction they help you reach your destination.

* * * * *

Miscellaneous Tidbits

During her teenage years, we spend nearly 1/3 of our time with friends. For the rest of our lives the average time spent with friends is less than 10%.

If your best friend has a very healthy diet, where five times as likely to have a very healthy diet yourself.

Marital satisfaction is 5 times more dependent on the quality of a couple’s friendship than on physical intimacy.

* * * * *

Posted in Organizational Behavior, Relationship Skills | 2 Comments »

Who pays for healthcare insurance? … Brush up on your economics before answering.

June 17, 2009

TakeAway: As healthcare costs increase, companies keep the lid on wages. That’s why takehome pay has been stagnant for so long. It’s basic economics.

* * * * *

Excerpted from WSJ, “Health Reform and Competitiveness”, June 17, 2009

Employers may write the checks to the insurance companies, but workers still pay for the coverage they get from those employers.

Why? Because the total cost of an employee is what matters to businesses, and fringe benefits are as much a part of compensation as cash wages.

When health costs rise, higher insurance premiums aren’t just lopped out of profits. Instead, nonhealth compensation drops to fund the higher premiums. Or wages rise more slowly than they otherwise would. [That’s why wages have been stagnant for so long.]

The White House Council of Economic Advisers notes exactly this point: If medical spending continues to accelerate, take-home pay will continue to stagnate.

The exceptions are heavily unionized businesses like auto makers that have locked themselves in to gold-plated coverage, especially for retirees. They have a harder time adjusting health costs and wages.

* * * * *

It’s certainly true that the U.S. employer-based insurance system can dampen entrepreneurial spirits. There’s the “job lock” phenomenon, in which employees fear leaving a less productive job because they’re afraid to lose their health benefits.

Another problem is that insurance costs more for small groups than the large risk pools that big corporations assemble, meaning that it’s harder to form new businesses that can offer policies.

Full article:
http://online.wsj.com/article/SB124520327436821723.html

Posted in Health Care / Medical Insurance | 1 Comment »

Homeowners are fatter than renters … and other downsides of owning a home.

June 16, 2009

TakeAway: Now that the housing bubble has burst and owned homes have lost their luster as piggybanks, more attention is being placed on the non-financial aspects of owning a home.

The obvious: more chores mean less time for socializing.

The shocker: homeowners are, on average, fatter. Hmmmm.

* * * * *

Excerpted from Knowledge @ Wharton, “You Think Owning a Home Will Make You Happy? Don’t Be Too Sure”, June 10, 2009

For generations, the conventional wisdom is that owning a home is the cornerstone of the American Dream, the foundation for a happy family life and long-term financial security. “On average people like living in zip codes with a higher median housing value so they can live in reflected glory.”

Now, a new research paper challenges that conventional wisdom … while homeowners do experience significant joy, they also face more aggravation, spend less time with friends and are even heavier than renters living in comparable homes.

Past research into the mood of homeowners showed that people felt a sense of pride and comfort in having their name on a deed. But, once the data are controlled for a range of variables, owning a home appears to deliver no more happiness than signing a monthly rent check.

“Our perception that homeowners are better off than renters might be fueled only by casual observations. The conventional wisdom might not hold up so well when you look at the data carefully.”

Obviously, the bursting of the housing bubble has led to a good deal of stress — both financial and psychological.

Even in a period of optimism about housing as a financial investment, homeownership does not necessarily represent the fulfillment of a dream. “Overall, there is little evidence that homeowners are happier by any of the following definitions: life satisfaction, overall mood, overall feeling, general moment-to-moment emotions and affect at home. The average homeowner, however, consistently derives more pain (but no more joy) from a house and home.”

The study focused on the intensity of 10 feelings : Impatient, Competent/Confident, Tense/Stressed, Happy, Depressed/Blue, Interested/Focused, Affectionate/Friendly, Calm/Relaxed, Irritated/Angry … and created a created a net measure of mood.

It is clear that homeowners derive as much pain from their home that is similar in magnitude and significance to the joy they gain from homeownership.

Even after controls are applied for financial insecurity — often cited as the main negative of homeownership — homeowners report more pain associated with their home … it is simply not true that homeowners are happier because they enjoy greater self-esteem and a greater sense of control in their lives.

The average homeowner tends to spend less time on active leisure or with friends, experiences more negative feelings during time spent with friends, derives less joy from love and relationships and is also less likely to enjoy being with people. Average homeowners spend 4% to 6% less time interacting with friends and neighbors

Adding insult to injury, the average homeowner tended to be 12 pounds heavier.

Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2257

Posted in Home Ownership, Real Estate | 1 Comment »

Healthcare “reform” … cost adders are certain … keep your fingers crossed re: the savings

June 16, 2009

Ken’s Take: For sure, 45 million uninsureds will get government coverage. That includes 15 million non-citizens and 15 million healthy young adults who choose to self-insure now, but will be “mandated” into the program. The cost of adding these folks is a certainty.

What’s far less certain is whether any of the pie-in-the-sky cost reductions – most of which have been tried and failed in the past – will generate offsetting savings.

Still, no talk of real structural changes – e.g. free gov’t run Minute Clinics, tort reform. Just “evidence based” veils being thrown over healthcare rationing.

* * * * *

Excerpted from IBD, “Wrong-Way Health Care ‘Reform’ Could Actually Increase Spending”, June 12, 2009

Background

The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental.

The open-ended payment system encourages doctors and hospitals to provide more services — and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use.

Unfortunately, what pleases providers and patients individually hurts the nation as a whole.

That’s the crux of the health care dilemma .

* * * * *

The Issue

No doubt the health program that Congress fashions will counter this reality by including some provisions intended to cut costs (“bundled payments” to hospitals, “evidence-based guidelines,” electronic record keeping).

But, the main aim of health care “reform” now being fashioned in Congress is to provide insurance to most of the 46 million uncovered Americans.

This is popular and seems the moral thing to do. After all, hardly anyone wants to be without insurance.

But the extra coverage might actually worsen the spending problem. How much healthier today’s uninsured would be with that coverage is unclear. They already receive health care — $116 billion worth in 2008.

Some is paid by the uninsured themselves (37%), some by government and charities (26%). The remaining “uncompensated care” is either absorbed by doctors and hospitals or shifted to higher private insurance premiums. Some uninsured would benefit from coverage, but others wouldn’t. Either they’re healthy (40% are between ages 18 and 34) or would receive ineffective care.

The one certain consequence of expanding insurance coverage is that it would raise spending. When people have insurance, they use more health services.

* * * * *

Some Stats

A new report from Obama’s own Council of Economic Advisers shows why controlling health costs is so important. If current spending growth continues, the CEA projects that:

Health spending, which was 5% of gross domestic product in 1960 and is reckoned at almost 18% today, would grow to 34% of GDP by 2040 — a third of the economy.

Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6% of GDP now to 15% in 2040 — roughly equal to three-quarters of present federal spending.

Employer-paid insurance premiums for family coverage, which grew 85% in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=329696969267196

Posted in Health Care / Medical Insurance | Leave a Comment »

What’s next, a tax on each sip of office coffee?

June 15, 2009

Ken’s Take: Taxing every dollar earned by the evil top 1% doesn’t come close to funding the current government spending spree. First, it’ll be tax gimmicks like this; then higher rates – much higher rates – for the 49% of workers who pay income taxes. It’s going to get ugly.

* * * * *

From the WSJ, “The IRS Phones Home”, June 15, 2009

With federal spending in 2009 at 28% of the economy and deficits heading north, Democrats are eyeing tax increases on everything from soft drinks to electricity to health benefits to charitable contributions. The IRS is even contemplating a new tax on the use of business cellphones.

The IRS believes that some percentage of the costs incurred by employees using company-provided wireless devices should count as a “fringe benefit” and thus be subject to taxation. Since workers inevitably end up taking personal calls or emails, the thinking goes, it’s only fair that they pay for the privilege. The IRS suggests that businesses automatically assign 25% of annual phone expenses as a taxable liability.

What’s next? Maybe a per-cup tax on office coffee, or targeting furtive visits to ESPN or Hulu on the office PC? Or maybe taxing use of the company washroom.”

Full article:
http://online.wsj.com/article/SB124501952511913563.html

Posted in Taxes | Leave a Comment »

Ken makes the big time: cited in Wikipedia … what can possibly be better than that?

June 15, 2009

It was pointed out to me (by a Homa Files reader in the U.K.) that my posts have earned the ultimate external validation: cited in Wikipedia as part of George W. Bush’s bio. (Look under “economic policies” and check out footnote 79)

Here’s the link to the article.
http://en.wikipedia.org/wiki/George_W._Bush

After Wiki, all else will pale in comparison

Posted in Ken - Misc. | Leave a Comment »

At the DMV, don’t even think about smiling …

June 12, 2009

Summary: A couple of weeks ago, Kathy ( my wife ) went to the Virginia DMV to get her driver’s license renewed. When she sat down to have her picture taken, the DMV person politely told her to wipe the smile off her face.

No joke. It is a new policy that is being enforced. To find out why, keep reading…

* * * * *

Excerpted from the Washington Post, “As if It Needed to, Virginia Bans Smiles at the DMV”, May 28, 2009

Few places in Virginia are as draining to the soul and as numbing to the buttocks as the branch offices of the Department of Motor Vehicles. And yet, until recently, smiling was still permitted there.

No more. As part of the DMV’s effort to develop super-secure driver’s licenses and foolproof identification cards, the agency has issued a smile ban, directing customers to adopt a “neutral expression” in their portraits, thereby extinguishing whatever happiness comes with finally hearing one’s number called.

The driver’s license photo, it seems, is destined to look like a mug shot.

DMV officials say the smile ban is for a good cause. The agency would like to develop a facial recognition system that could compare customers’ photographs over time to prevent fraud and identity theft.

“The technology works best when the images are similar, so to prepare for the possibility of future security enhancements, we’re asking customers to maintain a neutral expression.”

As for DMV patrons in Virginia, there is further cause for disappointment beyond the anti-smile rule. With the new system, state residents can no longer get their licenses and identification cards on the same day as their visits.

Instead, licenses and identification cards are now processed at a central facility in the southern Virginia city of Danville, then mailed to the customer’s address a few days later. The new cards are loaded with security features, including tactile lettering, secondary photos and anti-tampering measures, and they will be phased in as state residents renew their licenses and ID cards.

Nationwide, 37 motor vehicle agencies use facial recognition technologies.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/27/AR2009052703627_pf.html

Posted in Laws - Very Strange | Leave a Comment »

At the DMV, don’t even think about smiling …

June 12, 2009

No joke. It is a new policy that is being enforced. To find out why, keep reading…

* * * * *

Excerpted from the Washington Post, “As if It Needed to, Virginia Bans Smiles at the DMV”, May 28, 2009

The driver’s license photo, it seems, is destined to look like a mug shot.

“The technology works best when the images are similar, so to prepare for the possibility of future security enhancements, we’re asking customers to maintain a neutral expression.”

Nationwide, 37 motor vehicle agencies use facial recognition technologies.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/27/AR2009052703627_pf.html

Posted in Laws - Very Strange | 1 Comment »

What’s a friend worth? … Not to you, to marketers, that is.

June 11, 2009

Ken’s Take: Part of my summer research, I’m trying to learn more about the the marketing power of search engines (i.e. Google) and social networking sites (e.g. Facebook, LinkedIn). As a proponent of the Customer Lifetime Value methodologies, I’m intrigued by the “value of a (networked) friend”.

Below are highlights from a Business Week article on the subject. Short on answers, but sets up the problem …

* * * * *

Excerpted from Business Week, “Learning, and Profiting, from Online Friendships”, May 21, 2009

Friendships aren’t what they used to be. Practically every hand we shake and every business card we exchange can lead to an invitation, sometimes within minutes, for a “friendship” on LinkedIn or Facebook.

What do these relationships say about us and the people in our networks? Companies armed with rich new data and powerful computers are beginning to explore these questions. They’re finding that digital friendships speak volumes about us as consumers and workers, and decoding the data can lead to profitable insights.

Companies are working fast to figure out how to make money from the wealth of data they’re beginning to have about our online friendships.Calculating the value of these relationships has become a defining challenge for marketers. They’re finding that if our friends buy something, there’s a better-than-average chance we’ll buy it, too. It’s a simple insight but one that could lead to targeted messaging in an age of growing media clutter.

An immense new laboratory of human relations is taking shape. Millions of us are playing, working, flirting, and socializing online. —. The network behavior of 295 million e-mailers and legions of the 200 million Facebook users is producing oceans of data,

A critical finding: “The value of most information has collapsed to zero. The only scarce resource is attention.” This has created what many call the “Attention Economy.”

The easiest way is to get tips from friends. They’re our trusted sources. At least a few of them know us better than any algorithm ever could. Little surprise, then, that the companies most eager to command our attention are studying which friends we listen to.

Statistically, friends tend to behave alike. A couple of years ago researchers at Yahoo found that if someone clicked on an online ad, the people on his or her instant chat buddy list, when served the same ad, were three to four times more likely than average to click on it. It makes sense. Friends share interests.

But it raised lots of questions. Which types of friends have the most meaningful correlations with each other? People have always confided in a small circle of intimates, often only two or three. They’ve also had wider circles of experts for specific advice, whether on cars or cooking. Then there’s a broader circle of acquaintances whose opinions count far less but who can still generate buzz about a new restaurant or senatorial candidate.

By studying patterns of interactions on networks, researchers are working to predict which friends we trust and which we pay attention to in each area of our lives. A research scientist at Facebook, has perhaps the greatest lab in history for studying friendship. He can study social media communications including wall posts, shared photos, pokes, and friend requests among 200 million people.

For all its popularity, Facebook has yet to prove itself as an advertising platform. Visitors, it seems, focus on their friends and pay scant attention to ads. Few click on them, and advertisers pay pennies for page views. Consequently, Facebook, with its estimated revenue of $300 million this year, brings in scarcely a dime a month per member.

An average Facebook user with 500 friends actively follows the news on only 40 of them, communicates with 20, and keeps in close touch with about 10. Those with smaller networks follow even fewer.

What can this teach advertisers? People don’t pay much attention to most of their online friends. By focusing campaigns on people who interact with each other, they’ll likely get better results.

In an industry where the majority of ads go unclicked, even a small boost can make a big difference. In one market test, tailoring offers based on friends’ responses helped lift the average click rate from 0.9% to 2.7%. Although 97.3% of the people surfed past the ads, the click rate still tripled.

All of networked humanity mingles in avast marketplace, trading information, creating alliances, doing favors. We may not think of our connections in such mercantile terms. But for business and individuals alike, the value in online friendship is a central focus.

Full article:
http://www.businessweek.com/magazine/content/09_22/b4133032573293.htm?chan=magazine+channel_in+depth

Posted in Internet - Soc Networking | 1 Comment »

Jumping over the limbo bar …

June 11, 2009

Back on Feb. 16, I suggested a stake in the ground for measuring the success of Team Obama’s stimulus spending –- namely, the 8% to 8.5% unemployment rate that economists were predicting under a “do nothing” scenario.

Well, now that unemployment has blown past 9%, the “saved or created” math is getting pretty creative to say the least … and the shaky argument “it would have been even worse” is taking center stage.

Below is a reprise of the original post.

* * * * *

Obama’s team sets the stimulus bar at limbo level …”,

Obama says the trillion dollar pork-laden, faux stimulative program will “save or create up to 4 million jobs”.

Last week, I pointed out that “up to” provides mucho definitional cover by itself, but that the serious wiggle room comes from “jobs saved” — a comparison against some fabricated “what if” number.

Well, the fabricated “what if” number is already being planted:

Austan Goolsbee, one of Obama’s chief economic advisers, says he’ll consider the effort successful if the worst scenarios don’t come to pass, “if by the end of 2009 we aren’t looking at GDP numbers that are huge negatives, if unemployment rises to the 8% range rather than the 11% that some are predicting.”

I can’t find any non-Obama paid economist saying 11%. Most economists are saying that the unemployment rate will peak in the range of 8 to 8.5% if we do nothing. Apparently, Team Obama is prepared to declare success (i.e. claim millions of jobs saved) is the stimulus plan does about as well as doing nothing. The jobs saved will be calculated against a disaster scenario that they’ll specify, thank you.

In other words, a victory party is guaranteed …

* * * * *
Reference for Goolsbee quote:
http://money.cnn.com/2009/02/13/news/economy/easton_economicteam.fortune/index.htm?postversion=2009021310

Original post:
https://kenhoma.wordpress.com/2009/02/16/obamas-team-sets-the-stimulus-bar-at-limbo-level/

Posted in Economics, Financial Crisis, Obama - Promises Made & Kept, Obama Administration | Leave a Comment »

Brand equity moves to the fast lane … Penske buys Saturn

June 10, 2009

Ken’s Take: I’ve posted a couple of times that I think GM made a huge mistake by failing to capitalize on the early brand success of Saturn … and that Government Motors blundered by ditching the brand instead of using it as the umbrella brand for eco-cars.

It will be interesting to see how well Penske is able to leverage the Saturn brand.

My bet: Saturn will flourish, GM’s stable of passe brands will continue to fade.

* * * * *

Excerpted from Business Week, “Penske to Buy Saturn from GM”, June 5, 2009

Roger Penske , a legendary figure in auto racing, is about to take on a decidedly less racy piece of Detroit. Penske will buy GM’s Saturn brand of passenger cars and SUVs .… The racing legend and car-dealership magnate – who owns 310 retail automotive franchises and 25 collision repair centers — will have other automakers build the vehicles while he handles sales, service, and marketing … the brand that 25 years ago was supposed to transform GM.

GM Chairman Roger Smith first unveiled the Saturn idea in November 1983, describing it as a revolutionary new way to build and sell small cars in America. But the project was slow to develop and the brand did not officially launch until 1990. It featured the well-known tagline: “A different kind of car company.”

GM hoped Saturn would lure younger buyers away from imports with smaller, hipper cars. The new factory in Spring Hill had more flexible work rules than traditional GM plants. But despite the cult-like following that grew up around Saturn, the brand never made money for GM. The factory stopped making Saturns in 2007 .

“This is still a good business and we are going to make it better,” Penske says.

Penske’s auto businesses run the gamut from exclusive distribution of the tiny Smart cars in the U.S. for Daimler-Benz to worldwide car and truck dealerships representing 40 different brands.

Despite boasting one of the most honored sedans on the road today, the Aura, and the highly acclaimed Outlook SUV, Saturn’s overall sales have been falling.

The unit has been a thorn in GM’s side for years. It started out with a bang, created from scratch in the 1980s to compete with Japanese small cars and inject entrepreneurial spirit into a lethargic company. Its cars were sold in upgraded dealerships that fostered a sense of community; thousands of customers would flock each year for a reunion at the Saturn factory in Spring Hill, Tenn.

But GM starved the brand of competitive new products throughout the 1990s. By the time management tried to reinvigorate Saturn with new car designs after 2000, the brand’s image had taken a huge hit.

“When Saturn launched in the 1980s, it was the new, new thing, with the best dealer service and no-haggle pricing that put customers at ease, But in recent years, it has just been another GM division, operating the same as Chevy or Pontiac, with nothing to differentiate it and a marketing message that keeps changing, so that people haven’t been able to get a handle on what the brand is supposed to be.”

Saturn sales are down almost 60% this year, worse than most other brands. Consumer demand has waned, especially since GM made it clear earlier this year that it would sell the brand. At the current pace, fewer than 100,000 Saturns will sell this year. The brand, said Penske, should be able to rebound toward the 200,000 level it enjoyed, on average, during the last five years.

Penske thinks he can change that. “We will be able to bring totally fresh and unique product to Saturn, and we can leverage what is still an excellent dealer network and the fact that we have no legacy costs to worry about”.

As romantic as owning a car company sounds, Penske rattled off more rational reasons for buying the business from GM. He pointed to the fact that some 3.5 million Saturn customers have vehicles on the road today, meaning that he can count on steady demand for parts. Also, Saturn’s more than 300 dealers have modern, up-to-date facilities and sell only Saturn vehicles. “It is incredibly valuable to have an established business like this without all the legacy costs GM had to worry about covering.”

First off, he won’t own any manufacturing plants. All production will be outsourced. Saturn will continue to buy today’s vehicles from GM for at least two years. Penske will talk to other auto manufacturers in Europe and Asia about supplying new products after that. Auto companies have far more manufacturing capacity than they need, so all would be eager to add Saturn’s current sales volume to their factories. “Our success has been with handling the business that is closest to the customer, so I don’t want us to get into our own manufacturing business.”

As Penske looks to replace models … he will solicit designs from that company—or perhaps from a contracted design studio—for a plan that differentiates the vehicle from any the manufacturer is selling under its own name.

Full article:
http://www.businessweek.com/bwdaily/dnflash/content/jun2009/db2009065_956038.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

Posted in Autos - Travel | Leave a Comment »

There is a precedent for Government Motors … AMTRAK

June 9, 2009

Summary: According to Rasmussen. only 26% of Americans applaud the GM bailout. (For reference, 17% favor boycotting GM cars as a form of protest.}

Why the low level of support? Perhaps because folks older than Obama remember a similar experience with Amtrak. Amtrak was supposed to turn a tidy profit, but taxpayers are still sinking billions of dollars into Amtrak—almost 40 years after buying it.

Economist James Langenfeld says the bailout of GM will be an even bigger disaster.

* * * * *

Excerpted from The daily Beast, “Is GM the New Amtrak?”. James Langenfeld, June 5, 2009

Both Congress and the Obama administration apparently believe a bailout is best for GM, and that “what’s good for General Motors” is still good for America. So we taxpayers appear to be on the brink of owning most of GM. Do we know what we are buying, how long we will own it, and what it will really cost? Perhaps we can learn some lessons from another government owned company, the National Rail Passenger Corporation—aka Amtrak. The Amtrak experience raises many issues about the future of GM.

In the 1960s, private railroads wanted to dump their unprofitable intercity passenger service and concentrate on their more-profitable freight service. So in 1971 the U.S. government obliged them by creating Amtrak.

The talk then was all about becoming profitable, but the reality has been anything but. Amtrak is now 38 years old, and shows no sign of moving out of the taxpayer’s house.

The government gives Amtrak about $1.5 billion per year, not including an additional $1.3 billion from the recently passed American Recovery and Reinvestment Act. These figures may seem small compared to the $50 billion recently plowed into GM, but Amtrak subsidies amount to $85,000 a year for each Amtrak employee, or about $35 every time Amtrak sells a ticket.

Bottom line: It costs taxpayers about $1.40 for every $1 of revenue Amtrak takes in.

President Obama and his administration seem to understand that creating another Amtrak is not promising. They speak in one voice about not wanting to run a car company, not planning on micromanaging the company, and selling the government’s stake as soon as possible. All good thoughts, but these same officials cannot provide any timetable for getting out the car business.

Moreover, there are early signs that GM may have many of the same problems that Amtrak has faced and we may very well end up with GMtrak.

http://www.thedailybeast.com/blogs-and-stories/2009-06-05/is-gm-the-new-amtrak/?cid=bs:archive4
Dr. James Langenfeld is a director at the economics consulting firm LECG and teaches at Loyola University Chicago. Previously he was a senior economist at General Motors and an analyst at Amtrak.

Posted in Autos - Travel, Obama Administration | Leave a Comment »

Hmmm … Obama’s PAI goes from plus 10 to zero in a week

June 8, 2009

Last Monday, I posted that Rasmussen – the daily tracking poll that I follow – reported Obama’s PAI (Presidential Approval Index – the difference between likely voters who “strongly approve” and those who “strongly disapprove”) soared to +10,. That is, 34% strongly approved, 24% strongly disapproved. Pundits attributed the gain – up from low single digits – to a Sotomayer “bounce”.

Well, last Friday’s Rasmussen Report pegged Obama’s PAI at zero – 34% strongly approved, 34% strongly disapproved. A huge change.

While the polling data may just be statistical noise, some pundits point to the GM deal – which is only favored by about 1 in 4 people – and, the President’s Mid East tour – which gave Iran the OK for “peaceful” nuclear development and, seemed to some, to throw Israel under the bus.

Over the weekend, Obama’s PAI bounced back a little to +3 – 35% to 32%.

The PAI’s underlying demographics are interesting (and under-reported):

Obama’s PAI is plus 66 among blacks (65% to 4%), plus 13 among “others” (38% to 25%), and minus 8 among whites (29% to 37%).

Obamas’ PAI among Dems is a sky-high plus 54 (64% to 10%), minus 11 among Independents (23% to 34%), and minus 47 among GOPers (10% to 67%).

Rasmussen pegs Obama’s overall approval – the sum of strongly and somewhat approve – at 53%.

Hmmmm …. Key groups to watch: the Independents and “others”

* * * * *

Statistical note: Rasmussen surveys “likely voters”. Polls that broaden the sample to “registered voters” or “all adults” tend to be more favorable to President Obama.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

Posted in Obama Administration | Leave a Comment »

What if Team Obama is wrong about healthcare ?

June 8, 2009

Ken’s Take: I agree that all US citizens should have access to healthcare, and I agree that healthcare spending is out of control. But, I really don’t want DMV-like government workers determining what medical services I get, where I get them, and when I get them (if at all).

Below are headlines from a WSJ piece that questions the fundamental assumptions underlying the Obama plan.

Note that neither the Obama plan nor the WSJ ideas address structural change like free (or low charge) clinics to handle routine medical care, or tort reform to minimize frivolus malpractice claims and the redundant services that they induce.

* * * * *

Excerpted from WSJ, “Obama’s Health Cost Illusion”, June 8, 2009

The President’s main case for reform is rooted in false claims and little evidence.

The main White House argument for health-care reform goes something like this: If we spend now on a hugely expensive new insurance program for the middle class, we can save later by reducing overall U.S. health spending.

What if this particular theory turns out to be a political illusion? What if the speculative cost savings never report for duty, while the federal balance sheet is still swamped with new social obligations that will be impossible to repeal? The only possible outcome will be the nationalization of U.S. health markets, which will mean that almost all care will be rationed by politics.

* * *
Since Medicare was created in 1965, U.S. health spending has risen about 2.7% faster than the economy and on current trend would hit 20% of GDP within a decade.

Now the White House claims the magic key is the dramatic variations in per patient health spending among U.S. regions. Often there is no relationship between spending and the quality of care, according to a vast body of academic research.

But, Richard Cooper, a professor of medicine at the University of Pennsylvania’s Wharton School, has studied regional variation in aggregate health spending, and found that the areas with the highest quality spend the most on medicine.

* * * * *

Obama’s ideas include more health information technology; emphasizing prevention and healthy living; rejiggering reimbursement policies so doctors and hospitals are paid more for quality care; and funding federal research that compares the effectiveness of medical treatments. There is scant evidence that any of them will ever save real money.

* * * * *

According to Team Obama: “Future increases in spending could be moderated if costly new medical services were adopted more selectively in the future than they have been in the past and if the diffusion of existing costly services was slowed.”

But technological change is the most important driver of health spending. Modern medicine can do so much more than it could in the past, but this costs a lot even as it has bought a lot in extending and improving lives. In a 2001 study, the estimated benefits of lower infant mortality and better treatment of heart attacks “have been sufficiently great that they alone are about equal to the entire cost increase for medical care over time.”

* * * * *
A far better alternative is to increase individual responsibility for medical decisions.

In 1965, the average American paid more than half of his health care out of pocket. Spending has since increased sevenfold, but the amount that consumers pay directly hasn’t even doubled. When people aren’t exposed to the true cost of their care — they consume more care.

Roughly half of the real increase in U.S. health spending between 1950 and 1990 is due to Medicare and the spread of third-party, first-dollar insurance.

Increasing cost-sharing would discipline the health spending curve and give it a more rational bent. The U.S. health cost “crisis” is that we spend so much without incentives to weigh the costs against the benefits.

Yet the entire Obama agenda is about increasing political, rather than individual, control of the health markets.

Full article http://online.wsj.com/article/SB124442772329993085.html

Posted in Health Care / Medical Insurance | 1 Comment »

Higher MPGs, More Miles Driven … hmmm

June 5, 2009

Ken’s Take: A couple analyses I did last summer suggested that people drive more when they get higher MPG from their vehicles … largely (or completely) offsetting the efficiency gain.

http://online.wsj.com/article/SB124338431100556717.html?mod=djemalert

Here are a couple of articles citing studies going back to the 19th century that draw the same conclusion.

* * * * *

Excerpted from Heritage Foundation, “Why the Government’s CAFE Standards for Fuel Efficiency Should Be Repealed, not Increased”, July 11, 2001

Clearly, the CAFE program has failed to accomplish its purposes. Consumption has not decreased.

As fuel efficiency improves, consumers have generally increased their driving, offsetting nearly all the gains in fuel efficiency.

Advocates of higher CAFE standards argue that increasing miles per gallon will reduce gas consumption. What they fail to mention is the well-known “rebound effect”–greater energy efficiency leads to greater energy consumption.

As more fuel-efficient vehicle costs less to drive per mile, so vehicle mileage increases.

Since 1970, the United States has made cars almost 50% more efficient; in that period of time, the average number of miles a person drives has doubled.
http://www.heritage.org/Research/EnergyandEnvironment/BG1458.cfm

* * * * *

Interesting Historical Perspective

Excerpted from WSJ: “The rebound effect: Conservation Wastes Energy,” May 17, 2001

Way back in the 19th century, English economist Stanley Jevons embarked on a study of coal and its consumption. He was intrigued by the introduction of James Watt’s new, efficient steam engine, which began replacing older, more energy-hungry engines.

Jevons found that in Scotland (Watt’s native land), coal consumption was initially reduced by one-third. But in the ensuing years of 1830 to 1863, there was a tenfold increase in consumption. Why? The engines were so much cheaper to run that people used them far more than they ever would have before. Greater efficiency had produced more energy use, not less.

The same arguments apply to government-mandated energy efficiencies today.

Since 1970, the U.S. has made cars almost 50% more efficient; in that period of time, the average number of miles a person drives has doubled. Studies show that when consumers buy more energy-efficient air conditioners, they run them longer because it still costs the same amount.

Consumers, in short, spend to the size of their billfolds.

And that is the failing of government-led demand reduction.

There is only one thing that convinces Americans that they should conserve — market prices. Only when gas prices start to pinch will Americans drive less or hunt for smaller cars.
http://www.opinionjournal.com/columnists/kstrassel/?id=95000484

* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Autos - Travel | 3 Comments »

Dear friends networking on cheap phones … works for me.

June 5, 2009

Excerpted from WSJ, “Networking Sites Extend Reach: Handset Makers Ramp Up Ways to Tap Broader Cellphone Market” by Amol Sharma and Jessica E. Vascellaro, May 28, 2009

Social-networking sites like Facebook and MySpace are popular services on high-end cellphones like the iPhone and the BlackBerry. But extending their reach to the broader wireless market has been challenging, because most basic phones tend to have clunky Web browsers and can’t support fancy software. Now, handset makers and wireless carriers are ramping up efforts to tap the mass market.

Manufacturers such as INQ Mobile Ltd. and Samsung Electronics Co. are rolling out midrange cellphones tailored to social-networking software, with some features of smart phones but lower prices. Carriers including AT&T Inc. and Sprint Nextel Corp. are trying to improve access to the services by upgrading browsers on regular cellphones and integrating Web-based applications …they are trying to improve access to the services via the Web, which allows users to perform tasks they can’t perform with text messaging, such as viewing a friend’s profile. Sprint, for example, will soon begin selling the Samsung Exclaim, which will include one-click access to simplified, preloaded software applications for Facebook, MySpace and Twitter. It will sell in the U.S. for less than $100 after a rebate, the company said. AT&T is undertaking a project to overhaul its mobile home page, better integrate search and use an advanced browser…

Social networks, including MySpace and Facebook, are helping wireless carriers tailor their services to mass-market phones…

Edit by TJS

* * * * *

Full Article:
http://online.wsj.com/article/SB124345957503159855.html

* * * * *

Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Internet - Soc Networking, Telecom | Leave a Comment »

What’s private equity without equity? hmmm…

June 4, 2009

When money was cheap and freely available, private equity firms were among the (unregulated) darlings of wall Street. My, how times have changed.

KKR – one of the biggies – was (is) planning an IPO. business overview. So, they provided a public overview last weekend.

CNBC reports:

KKR had an adjusted pre-tax loss of $1.19 billion in 2008 while its assets under management dropped by 11 percent.

The firm still has $15 billion in capital it has yet to invest in deals, but … “Given that private equity can’t get financing for deals of more than $2 billion if they’re lucky, it could be a while until KKR works off all that capital. PE firms exists to raise money for new funds, reap the fees from those funds and quickly deploy and return the capital raised. … It’s fair to say that right now the model isn’t working that well.”

And KKR has mucho unrealized losses from the investments it made during the LBO crazed days of 2005-2007. For example,

“Its deal to acquire First Data in September of 2007 which cost $2.325 billion is now worth almost a billion less at $1.395 billion

The world’s biggest private equity deal, the acquisition of TXU has seen the value of KKR’s equity stake decline by exactly 50 percent from $1.817 billion to $908 million.”

And it all seemed so easy …

Full article:
http://www.cnbc.com/id/31049647

Posted in Financial Crisis, Private Equity | Leave a Comment »

Ken’s take: The fall of GM … 3 critical mistakes.

June 3, 2009

Lots has been reported, and everybody has their point-of-view re: why GM slid from arguably the best run company in the world to bankruptcy.

Ken’s Take: the situation boils down to 3 critical mistakes: (1) making fatal concessions to the UAW in the 1970s (2) cost-cutting brands via shared models (3) failure to leverage the Saturn brand.

Each in turn …

* * * * *

(1) Making fatal concessions to the UAW in the 1970s

The issue: GM signed generous labor deals during the 1970s, including the right to retire after 30 years with full pension and benefits, partly because it believed the contracts would cripple its smaller competitors, Ford and Chrysler. Then along came Honda, Nissan and Toyota, which didn’t have to deal with labor contracts at all. That was the beginning of the agonizing decline.
http://online.wsj.com/article/SB124389995447074461.html

Ken’s Take: It’s popular to castigate the GM management as insular and weak-kneed. But, in the early 1970s, GM had a commanding market share and the Japanese brands were starting to gain traction with serious cars (i.e. stepped up from the early, cheap compact models). The UAW picked GM as its target company in negotiations, got militant and threatened to strike. A strike at that time would’ve given the Japanese brands a clear shot at accelerating their market development efforts. And, at the time, healthcare was relatively inexpensive and pensions were seemingly a long way off. So, management caved – making a largely unretractable and unsustainable deal with the union.

* * * * *

(2) Cost-cutting brands via shared models

The Issue:

While Henry Ford invented mass manufacturing, GM’s long-time president and chairman of the board, Alfred P. Sloan Jr., developed mass marketing: a “car for every purse and purpose,” as he put it in the company’s 1924 annual report. This meant a hierarchy of brands ranging from practical Chevrolets to prestigious Cadillacs. GM’s strategy of offering a multiplicity of brands started to fray in the 1980s. To cut costs, GM began stocking its makes with nearly identical cars. That blurred the differences between brands and made it hard for consumers to tell a Chevy from a Pontiac or a Buick.
http://online.wsj.com/article/SB124390025302374483.html

Ken’s Take: Using multiple brands to niche a market is a common strategy – and one that was very successful for GM over decades. The problem: each brand needs critical mass – enough “scale” to justify the separate overhead structures (think brand-specific plants, separate R&D centers) and to support cost-effective production. As GM lost share to the foreign brands, their scale economies deteriorated – lower sales in aggregate and by brand. Rather than dropping brands, GM tried to cost reduce itself out of the problem – taking product quality risks and marketing tweaked models (with shared components) under different brand names. The result: a blurring of brand images that undermined the niche strategies.

* * * * *

(3) Failure to leverage the Saturn brand

The issue: To confront the rising threat from foreign auto makers, GM in 1985 created an entirely new brand, Saturn, at a cost of several billion dollars. It was set up as a separate car company whose mission was to win back customers who had defected to foreign makes.
http://online.wsj.com/article/SB124390025302374483.html

Ken’s Take: I differ with most pundits on this one. They generally say that introducing Saturn was a blunder and good riddance to the brand. I think Saturn was a brilliant concept that was simply underleveraged. Again, think back in history. GM was trying to develop a radically new brand –- produced in Japanese-like factories (i.e. quality oriented with fewer union constraints), sold through a separate “no haggle” dealer network that promoted product not price, and supported with cult-like marketing (think Harley Davidson). Initially, Saturn was a huge success – remember the much ballyhooed customer picnics at the Tennessee manufacturing plant. But, there wasn’t a second wave of product to sustain momentum. Rather GM started dumping tweaked models into the Saturn line too.

I think Saturn was the platform for GM’s future, but they blew it – homogenizing it back into the GM operations and mindset.

In fact, I’m surprised that the Saturn brand isn’t being retained to market eco-friendly Obamamobiles. I bet the brand name still has some cachet, and a standalone dealer network – experienced in selling product not price — could be route for selling electric cars.

* * * * *

That’s my take …

KEH

Posted in Autos - Travel, Obama Administration | 5 Comments »

Quick: How many members does Facebook have ?

June 2, 2009

Ken’s Take: I finally joined one of the social networking sites -– mostly to see pictures of my granddaughter. I wouldn’t describe myself as hooked – but my interest in the social networking phenomenon is elevated -– so, I’ve been doing some digging. Here’s the first post.

* * * * *

Excerpted from AudioTech Trends, May 2009

Some stats:

Facebook has 125 million members worldwide.

On a typical day, MySpace adds 250,000 members, and draws 4.5 billion page views.

Google purchased YouTube for $1.65 billion.

News Corp bought MySpace for $580 million.

Microsoft purchased just 1.6 percent of Facebook for $240 million.

* * * * *

Social networking sites usually fall into one of five categories:

The egocentric sites, such as MySpace and Facebook, allow a user to create a profile and develop a network of friends. They are also a medium for creating a new identity — or multiple identities — and for the publication of songs, videos, photographs, writing, or other artistic expression.

Community-based networks bring together people of the same race, religion, or nation. They tend to mirror real-world communities. BlackPlanet, for example, is a site for African Americans.

Opportunistic social sites, such as LinkedIn, attract members who want to leverage the Web for business reasons, such as people looking for work, managers seeking job candidates, or free-lance consultants looking for clients.

Passion-centric networks are organized around a hobby or pursuits of some sort, such as people who like dogs or restore antique cars. Almost any hobby or specialty can spawn such a site.

Media-sharing sites, such as YouTube and Flickr, exist so that people can share videos and photos. They are more about the content than about interaction.

Source article:
http://www.trends-magazine.com/trend.php/Trend/1914/Category/42

Posted in Internet - Soc Networking | Leave a Comment »

Fewer people really listen to hip-hop … surprised ?

June 2, 2009

Excerpted from DickMorris.com, “Obama’s War on Talk Radio”, May 25, 2009

The newest data from Arbitron, the company charged with measuring the size of radio audiences, suggests that listenership to hip hop, inner city, and minority radio has been overstated in the past and that the popularity of conservative talk radio has been under-reported.

This conclusion comes from the company’s decision to dispense with the Stone Age way it has been measuring radio audiences – by hand written diaries based on listener memory – with modern machines which automatically record what the person is listening to and for how long.

Arbitron is the company tasked with rating radio listenership. The equivalent of the Neilson television ratings, its measurements of audience share are revered like Scripture by station managers, owners, and advertisers.

Traditionally, Arbitron relied on hand written diaries. Since the diaries were based on memory, they were often faulty. So Arbitron availed itself of new technology in launching its Portable People Meter (PPM) – a cell phone sized unit the listener wears on his or her belt which automatically notes what station they are tuning in and when they switch or stop.

The PPM measurements concluded that hip hop, urban rock, and minority-oriented radio stations reached fewer listeners and for shorter periods of time than the diaries had indicated. It found that talk radio had a larger listenership.

What is really at work here is an effort by the FCC to stack the deck to help … minority stations earn higher advertising revenues than those to which their real market share would entitle them.

New York and New Jersey sued Arbitron alleging discrimination in its choice of the sample charged with wearing the PPMs.

Now the FCC is launching its own investigation. The FCC’s acting Chairman — Michael J. Copps — announced an investigation of Arbitron’s radio measuring technology called the Portable People Meter.

* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Media | 1 Comment »

Your cellphone will keep you connected … with companies trying to sell you something.

June 2, 2009

Summary: The jargon is “mobile marketing” — marketers placing ads, coupons, reminders, and links in and around your cellphone apps. It’s the next wave of innovative marketing and will spread quickly. Why? Because it seems to work.

* * * * *

Excerpted from Business Week, “Pandora: Unleashing Mobile Phone Ads: Kraft, Nike, and others are getting results advertising on Pandora’s mobile music service. Is cell-phone marketing finally taking off?” By Tom Lowry, May 21, 2009

It’s just a matter of time until mobile marketing will take off in the U.S. … for two reasons: Web-surfing smartphones are selling briskly even in a downturn, and applications for those gadgets … are proliferating.

People are spending a lot more time playing games, watching TV, and shopping on their phones. That’s what marketers call engagement, a fancy way of saying people are paying attention. Companies, of course, prize that, so they’re looking for mobile applications that are a good fit for their brands.

Which brings us to Pandora, a nine-year-old, free online service that lets users design “radio stations” based on their musical preferences. Since Pandora launched a mobile edition two years ago, it has signed up 6 million people…That has prompted the likes of Best Buy, Dockers, Target, and Nike to buy ads on Pandora and experiment with what remains a cheap advertising medium

“Marketers, especially consumer brands, have to take mobile seriously now. You have to be where your customer works, lives, and plays.”

Pandora has become a test bed because people who use the service tend to spend a lot of time playing around with it. They are constantly creating stations, rating songs, and scrolling through playlists to find artists they don’t know … on average subscribers use the mobile service about 90 minutes a day (though there are no independent numbers).

Advertisers are trying out Pandora in myriad ways. Sometimes it’s as a direct marketing tool. Domino’s, for example, puts up ads that urge people to call in for a pizza directly from their phones.

Other companies are using coupons. Docker’s offered a 20% discount if visitors went to the brand’s site and entered a promotional code .

Some companies prompt users to watch movie clips where their products are featured prominently.

If one thing has surprised advertisers, it’s how avidly consumers are responding. Target says 27% more people clicked on its ad for the release of Christina Aguilera’s greatest hits CD last fall than on any other mobile Web campaign. The ad urged users to visit a site where they could get a free Aguilera ringtone and buy the album…

Sonos, which sells home music systems, just wrapped up a campaign on Pandora. DeAnna Wassom, Sonos’ senior marketing director, says she has never seen better customer response in her 20 years in the business. The ads asked people to click through to a promotional video. Typically, only 1% to 2% of people click on ads overall. But nearly 5% clicked in this case…and almost 40% of those clicking watched the entire video. During the campaign, nearly twice as many people asked to be put on Sonos’ e-mail list as those signing up on the company’s regular site.

Most brands have no clue how to market on mobile devices. Many try to do too much, including making sites so technologically flashy that they crash phones. The key is to keep it simple … build special mobile sites, because regular ones don’t translate well to supersmall screens.

Edit by TJS

* * * * *

Full Article:
http://www.businessweek.com/magazine/content/09_22/b4133052597112.htm

* * * * *

Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Internet Marketing - eCommerce -, Mobile Marketing, Uncategorized | Leave a Comment »

OK, OK … Obama got a PAI bounce

June 1, 2009

What a difference a week makes. I gleefully report when Obama’s PAI dips into the low single digits.

But, to be even handed, I have to fess up when he builds support.

This weekend, Rasmussen (the only poll I believe in) reports that 36% of the nation’s voters now Strongly Approve of the way that Obama is performing his role as President … 26% Strongly Disapprove … giving Obama a Presidential Approval Index rating of +10 … up from +1 last weekend.

My hunch: the Sotomayer pick solidified Hispanics support. Certainly wasn’t going all in on GM …

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

Posted in Obama Administration | Leave a Comment »

Archive for June, 2009

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

SHARE THIS POST WITH FRIENDS & FAMILY

Search Homa Files Info Site

Follow The Homa Files Blog

Bona Fides

Solid Gold

Categories

Top Posts

Recent Comments

Archives