Positively Grand
Wednesday, June 29, 2005
Tuesday, June 28, 2005
Monday, June 27, 2005
Friday, June 24, 2005
Thursday, June 23, 2005
Wednesday, June 22, 2005
B.L. Ochman's weblog - Internet strategy, marketing, public relations, politics with news and commentary: What's Next Blog Interviews With Successful Bloggers: JD Lasica, Busiest Man in the Blogosphere?
- posted by Ike @ 4:37 PM 0 comments
Scarlett Johansson escapes Cruise’s clutches - Gossip: The Scoop - MSNBC.com
- posted by Ike @ 3:50 PM 0 comments
Tuesday, June 21, 2005
Monday, June 20, 2005
Saturday, June 18, 2005
Friday, June 17, 2005
Phenix Rising: Steven Phenix's Blog: How to convert a PDF into text
- posted by Ike @ 4:48 PM 0 comments
Thursday, June 16, 2005
Wednesday, June 15, 2005
The force behind Gigli
Investors are always scrambling to find out where the “smart money” is going. But it’s also important, whether you’re an investor or a business manager, to know where the stupid money is going.
It’s a well-established phenomenon that’s gone too long without a name: Companies, industries, and even whole sectors have a stupid-money problem when they are suddenly flooded with capital seeking irrational rates of return or with investors whose interests run contrary to those of a normally operating market. Sounds like a nice problem to have? It’s not, because it prompts companies to alter their business models in ways that are not sustainable over the long haul.
Think of the 1970s, when tens of billions of dollars of stupid money flowed from the OPEC countries to the money centre banks in London and New York. From there it was lent to Argentina, Brazil, Mexico, Nigeria, Indonesia, and other developing countries for infrastructure projects such as power plants, bridges, and dams.
But when this episode ended, tens of billions of stupid-money loans could not be repaid by the borrowers without help from the US and other governments. More than one money centre bank teetered on the brink of insolvency.
Or think of the 1980s, when billions of dollars of stupid money flowed into the US real estate market via the savings and loan industry. Large spreads between the interest paid on deposits and that received on mortgages – as well as plentiful capital from the junk bond market – created incentives for S&Ls to shovel money out the door.
Condominiums, country clubs, hotels, offices, and shopping centres with dubious economic value were built. Though some money was made by “flipping” these projects and from fees charged by developers and financial institutions, many billions were lost when the stupid money fled the scene. The savings and loan industry collapsed and with it much of the commercial real estate market. It took nearly a decade for the government to clean up the mess.
Right now, there’s at least one place where the stupid money is sloshing around like San Pellegrino: Hollywood. The problem there is that a large proportion of movies have been financed with money from European tax shelters – which create larger returns for their investors when a project loses money than when it makes money.
According to industry estimates, Germany, the largest source of these funds, provided Hollywood with about $2.3 billion in tax shelter money in 2002, more than 20 per cent of Hollywood’s overall investment budget.
A few industries have adapted to living with stupid money the way certain species of fish have adapted to living near deep-water sulphur chimneys. Hollywood is a perfect example. Rather than focusing on profits from movies, the industry has been prodded by loss-seeking capital into focusing on increasing costs. Studios make money from fees from independent producers based on a percentage of a project’s production, distribution, and marketing costs, rather than by relying exclusively on a film’s revenue. In the fee-based model that has evolved in Hollywood, profits are about as rare as an interview with Robert DeNiro.
What can managers do (short of taking the money and running) to survive the distorting effects of stupid money? For Hollywood, righting the business model would mean changing the way the studios go after their multiple streams of revenue. Rather than produce a handful of $200 million blockbuster movies each year, the studios might do better by focusing on making more, smaller-budget movies.
And where is the stupid money going next? Given its predilection for glamour, glitz, and new ideas, I’d say nanotechnology and the life sciences are ripe for an infestation. These are fields where we’re seeing not only federal funding but also feverish investment by people looking to get in on the next big thing. If it happens, we know how it will go. Stupid money will begin by running after the sector’s Seabiscuits and end up stalking its nags. The smart money will show up again only after the inevitable downturn, the shakeout, and the reform of the business models.
- posted by Ike @ 4:14 PM 0 comments
Monday, June 13, 2005
Friday, June 10, 2005
Thursday, June 09, 2005
Wednesday, June 08, 2005
FOXNews.com - U.S. & World - Double Murder Conviction for Man Who Helped Girlfriend Miscarry
- posted by Ike @ 1:41 PM 0 comments
Tuesday, June 07, 2005
Monday, June 06, 2005
