As many households and small businesses are being turned away by bank loan officers, large corporations are borrowing vast sums of money for next to nothing — simply because they can.

Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.

The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.

{ NY Times | Continue reading }

photo { Elinor Carucci }

We realized recently that a lot of people don’t understand very well what Y Combinator does, so I wrote something explaining that in detail. Since YC has been shaped by the needs of hundreds of early stage startups, this should be interesting not just to potential applicants but to anyone curious about startups, because a portrait of YC is in some ways the complement of a portrait of the average startup.

Y Combinator runs two three-month funding cycles a year, one from January through March and one from June through August. We ask the founders of each startup we fund to move to the Bay Area for the duration of their cycle, during which we work intensively with them to get the company into the best shape possible. Each cycle culminates in an event called Demo Day, at which the startups present to an audience that now includes most of the world’s top startup investors. (…)

If the startup either hasn’t decided what to work on or wants to change their idea, then we talk about what the company should do. That usually means satisfying two constraints: something (1) users would want, that (2) the founders of this startup would be good at building. We have these types of conversations surprisingly often. Startups modify or even replace their ideas much more than outsiders realize.

{ Y Combinator | Continue reading }

illustration { House Industries }

{ How a Trading Algorithm Went Awry | Continue reading | More: May 6 Crash Minute by Minute }

Horses have become so devalued in Dublin they have been swapped for a mobile phone or purchased for as little as €15, an Oireachtas committee was told yesterday.

The Committee on Agriculture, Fisheries and Food was also told welfare problems in the capital included animals being starved, ridden to exhaustion, beaten, slashed, rammed by cars and set alight.

Dublin City Council deputy city manager Philip Maguire said there were only 30 licensed horses in Dublin, mainly carriage horses, but there were hundreds of unidentified horses in the city.

{ Irish Times | Continue reading }

{ Urban legend has it that the hemline is correlated with the economy. In times of decline, the hemline moves towards the floor (decreases), and when the economy is booming, skirts get shorter and the hemline increases. | via Barry Ritholtz | Continue reading }

photo { Arseni Khamzin }

It has always been tough for literary fiction writers to get their work published by the top publishing houses. But the digital revolution that is disrupting the economic model of the book industry is having an outsize impact on the careers of literary writers.

Priced much lower than hardcovers, many e-books generate less income for publishers. And big retailers are buying fewer titles. As a result, the publishers who nurtured generations of America’s top literary-fiction writers are approving fewer book deals and signing fewer new writers. Most of those getting published are receiving smaller advances.

“Advances are down, and there aren’t as many debuts as before,” says Ira Silverberg, a well-known literary agent. “We’re all trying to figure out what the business is as it goes through this digital disruption.”

Much as cheap digital-music downloads have meant that fewer bands can earn a living from record-company deals, fewer literary authors will be able to support themselves as e-books win acceptance, publishers and agents say.

{ Wikipedia | Continue reading }

photo { Tim Geoghegan }

previously { Seth Godin: The new dynamics of book publishing }

Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”,  a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).

Worse still, he seems determined to print trillions of emergency stimulus without commensurate emergency justification to test his Princeton theories, which by the way are as old as the hills.  Keynes ridiculed the “tyranny of the general price level” in the early 1930s, and quite rightly so. Bernanke is reviving a doctrine that was already shown to be bunk eighty years ago.

{ Telegraph | Continue reading }

Structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions.

Who are these wise heads I’m talking about? The most widely quoted figure is Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, who has attracted a lot of attention by insisting that dealing with high unemployment isn’t a Fed responsibility: “Firms have jobs, but can’t find appropriate workers. The workers want to work, but can’t find appropriate jobs,” he asserts, concluding that “It is hard to see how the Fed can do much to cure this problem.”

Now, the Minneapolis Fed is known for its conservative outlook, and claims that unemployment is mainly structural do tend to come from the right of the political spectrum. But some people on the other side of the aisle say similar things. For example, former President Bill Clinton recently told an interviewer that unemployment remained high because “people don’t have the job skills for the jobs that are open.”

Well, I’d respectfully suggest that Mr. Clinton talk to researchers at the Roosevelt Institute and the Economic Policy Institute, both of which have recently released important reports completely debunking claims of a surge in structural unemployment.

After all, what should we be seeing if statements like those of Mr. Kocherlakota or Mr. Clinton were true? The answer is, there should be significant labor shortages somewhere in America — major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers.

None of these things exist. Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category. Only three states, with a combined population not much larger than that of Brooklyn, have unemployment rates below 5 percent.

Oh, and where are these firms that “can’t find appropriate workers”? The National Federation of Independent Business has been surveying small businesses for many years, asking them to name their most important problem; the percentage citing problems with labor quality is now at an all-time low, reflecting the reality that these days even highly skilled workers are desperate for employment.

So all the evidence contradicts the claim that we’re mainly suffering from structural unemployment. Why, then, has this claim become so popular?

Part of the answer is that this is what always happens during periods of high unemployment — in part because pundits and analysts believe that declaring the problem deeply rooted, with no easy answers, makes them sound serious.

{ Paul Krugman/NY Times | Continue reading }

The Fed issued the usual statement at the end of their meeting this week, and Fed watchers poured over the words, looking carefully for any sign of change in Fed policy. The consensus seems to be that the most important change was the statement concerning inflation, the first such change in over a year.

“Measures of inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.”

The next (and only other real) change was:

“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

Translation: inflation may be getting too low, but don’t worry, we are on the job. (…)

Anyway, the Fed seems to be setting us up for another round of quantitative easing. That is Fed speak for buying a few trillion or so dollars of government debt and injecting said cash into the economy. (…)

Recessions are by definition deflationary, but if we go into recession when inflation is already as low as it is, the Fed will be behind the curve. But telling us they are going to start easing because they are worried about a recession is not a good recipe for a positive market reaction.

So? Why not just say that they are worried about the lack of inflation, “at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.” That way they are not fighting a weak economy but rather something that everyone understands, i.e., deflation.

{ John Mauldin | Continue reading | PDF }

The Chaos Theory of Careers (CTC) characterises individuals as complex systems subject to the influence of complex influences and chance events. However, over time patterns emerge in our behaviour that are self-similar but also subject to change. 

Career trajectories / histories / stories are examples of such complex fractal patterns.

Our careers are subject to chance events far more frequently than just about any theory other than CTC and Happenstance Learning Theory would suggest.

Our careers are subject to non linear change — sometimes small steps have profound outcomes, and sometimes changing everything changes nothing.

Our careers are unpredictable, with most people expressing a degree of surprise/delight or disappointment at where they ended up.

Our careers are subject to continual change. Sometimes we experience slow shift (Bright, 2008) that results in us drifting off course without realising it, and sometimes our careers have dramatic (fast shift) changes which completely turn our world upside down.

{ Careers - In Theory | Continue reading }

related { The relationship between pay and job satisfaction: Despite the popular theorizing, results suggest that pay level is only marginally related to satisfaction. }

photo { Arno Rafael Minkkinen }

Pursuit of novelty may be one of fashion’s most durable illusions. The fact is that very little in fashion is new, in any real sense, nor is it truly supposed to be. (“There’s so much striving for newness now that newness feels less new,” as Marc Jacobs told Style.com.) Many of the 175,000 people who work in fashion in New York, in the more than 800 businesses that generate $10 billion in total annual wages and tax revenues of $1.7 billion, could probably confirm Mr. Asfour’s proposition that fashion is at heart a conservative business.

{ Guy Trebay/NY Times | Continue reading }

Japan’s surprise intervention in currency markets has caught some of the world’s largest hedge funds by surprise, with big names suffering sharp reversals as the yen tumbled.

The Japanese currency saw its biggest daily fall this year on Wednesday, dropping more than 3 per cent from a 15-year high of Y82.88 against the dollar after the Japanese ministry of finance said that it had staged an intervention in the market, the first such action by Tokyo in six years.

Three London-based hedge funds suffered on their bullish yen positions, according to people familiar with the funds’ performances. All three funds use computer models to automatically spot and ride market trends, making them vulnerable to unexpected events including surprise action by governments and central banks. Other funds understood to have been hit by the intervention include several large global macro hedge funds and currency trading specialists.

{ Financial Times | Continue reading }

David Larcker and Anastasia Zakolyukina of Stanford’s Graduate School of Business analysed the transcripts of nearly 30,000 conference calls by American chief executives and chief financial officers between 2003 and 2007. They noted each boss’s choice of words, and how he delivered them. They drew on psychological studies that show how people speak differently when they are fibbing, testing whether these “tells” were more common during calls to discuss profits that were later “materially restated”, as the euphemism goes. They published their findings in a paper called “Detecting Deceptive Discussions in Conference Calls”.

Deceptive bosses, it transpires, tend to make more references to general knowledge (“as you know…”), and refer less to shareholder value (perhaps to minimise the risk of a lawsuit, the authors hypothesise). They also use fewer “non-extreme positive emotion words”. That is, instead of describing something as “good”, they call it “fantastic”. The aim is to “sound more persuasive” while talking horsefeathers.

When they are lying, bosses avoid the word “I”, opting instead for the third person. They use fewer “hesitation words”, such as “um” and “er”, suggesting that they may have been coached in their deception.

{ The Economist | Continue reading }

installation { Sebastian Wickeroth, Strategie der Steine 3, Junger Westen, Kunsthalle Recklinghausen, 2007 }

Biologists who study mutualism have long believed that the solution to cheating is to punish cheaters—but a new model suggests that the benefits gained from playing nice might be enough to deter cheating.

{ denim and tweed | Continue reading }

photos { 1. Ron Jude | 2 }

{ “A real piglet that has been taxidermied and inserted with what all piglets probably dream of as babies, a coin storage unit and a cork plug.” | $4,000 | thecheeky.com }

{ America and Europe face the worst jobs crisis since the 1930s and risk “an explosion of social unrest” unless they tread carefully, the International Monetary Fund has warned. | Telegraph | full story }

{ It was just another day at the Gap, the clothing chain, where for many years much of the extraordinary art collection of the company’s founders, Don and Doris Fisher, has been hidden away in these ground-floor rooms. Although the collection includes more than 1,100 works, mostly from the 1960s on, they have been seen by relatively few people: Gap employees, the occasional museum tour group and those in the upper echelons of the art world who have the right connections. News media coverage has always been tightly restricted, and Mr. Fisher, who directed the Gap for more than 40 years until his death at 81 last September, refused to give interviews about his holdings for most of that time. | NY Times | Continue reading }

Although the audio program Auto-Tune is best known for the singing-through-a-fan, robotic vocal style that has dominated pop radio in recent years with stars like Lady Gaga, T-Pain and countless others, Auto-Tune is in fact widely used in the studio and at concerts to make artists’ sound pitch-perfect.

“Quite frankly, [use of Auto-Tune] happens on almost all vocal performances you hear on the radio,” said Marco Alpert, vice president of marketing for Antares Audio Technologies, the company that holds the trademark and patent for Auto-Tune.

The beauty of Auto-Tune, Alpert said, is that instead of an artist having to sing take after take, struggling to get through a song flawlessly, Auto-Tune can clean up small goofs. (…)

Auto-Tune’s invention sprung from a quite unrelated field: prospecting for oil underground using sound waves. Andy Hildebrand, a geophysicist who worked with Exxon, came up with a technique called autocorrelation to interpret these waves. During the 1990s, Hildebrand founded the company that later became Antares, and he applied his tools to voices.

The recording industry pounced on the technology, and the first song credited (or bemoaned) for introducing Auto-Tune to the masses was Cher’s 1998 hit “Believe.”

Although a success with audio engineers, Auto-Tune remained largely out of sight until 2003 when rhythm and blues crooner T-Pain discovered its voice-altering effects.

{ LiveScience | Continue reading }

{ But who exactly bought what? Even Mr Hirst admits, “I’m still finding out.” Dealers acquired some works, but 81% of the buyers were private collectors purchasing directly. | How Damien Hirst grew rich at the expense of his investors | The Economist | full story }

{ The Art Damien Hirst Stole | more | Thanks Tim }

I used to have cello lessons on Saturday morning. I would play a certain piece in front of my teacher and then she would give me a new piece to practice for next week.

Some weeks, I practiced for half an hour the following Sunday, then half an hour on Monday, the same on Tuesday, etc., so that when my next lesson would be up, I would have practiced for a total of three hours (6 days; half an hour each). And I usually would be able to play the piece in front of my teacher reasonably well.

Some weeks, however, I forgot about it altogether. By the time it was Friday, I would realize, “It’s my cello lesson tomorrow and I haven’t practiced at all yet!”

What I would usually do then is think, “I will just practice for three hours in a row now. That’s the same amount of time as half an hour each day for six days, and I am sure I will be fine.” But I never was. It never worked. I would be terrible, and my teacher’s ears would hurt for hours after she sent me away.

I couldn’t understand at the time how that was possible. Three hours is three hours, right?

Of course, as adults, we realize that our brain needs rest in between practice sessions. It needs to recuperate before you can put new information and skills into it, and the periods of “inactivity” are just as important as the practice itself. Practice sessions are much less effective if you don’t have the slow periods in between them.

Now, as an adult examining corporate strategies, I see that firms often fall into the same trap.In order to catch up with competitors, for instance, they enter new markets at double the speed, undertake twice as many acquisitions, or hire double the number of employees. But, unfortunately, it doesn’t work that way. Just like me practicing the cello, organizations need rest and time in between growth spurts to recuperate and digest the effort. Trying twice as hard does not mean you’ll get twice the benefits. There are limits to how fast you can grow, without starting to suffer from it.

We call this “time compression diseconomies” - a term coined by professors Dierickx and Cool from INSEAD.

{ Freek Vermeulen/Harvard Business Review | Continue reading }

…modern career theories (…) importance of personal meaning within career choice.

But what about meaninglessness?

Shouldn’t we be looking at that too? (…)

‘The Four-Roomed Apartment of Change’ is used to capture some of the things that happen to people and organisations when they experience change.

The four rooms represent four frames of mind that an individual may pass through as they encounter a change in their lives. (…)

The room of Contentment. In this room people feel relaxed and free from threat. (…)

When people do begin to perceive change they might  fall down the trapdoor into the Denial room. (…)

When they get there, they will find the room of Confusion. (…)

Eventually, the fog may clear and they will find the ladder which leads to the Renewal room. (…)

What room are you in at the moment?

{ Careers – in Theory | Continue reading }