From El Universal in Mexico: Carstens: crisis en EU es peor que la de 1929. (Translation: Carstens: crisis in the US is worse than 1929.)
El secretario de Hacienda, Agustín Carstens, previó afectaciones en la economía mexicana por la crisis financiera en Estados Unidos, principalmente en exportaciones, remesas y turismo.
Desde su perspectiva, el problema económico en el país vecino es quizá peor que la gran depresión de 1929. Aclaró que en materia macroeconómica la situación mexicana es más sólida, lo que ha permitido enfrentar la incertidumbre financiera.
Translation:
The Secretary of Finance, Agustin Carstens, anticipated the impact of the financial crisis in the US principally in exports, remittances and tourism.
In his perspective, the economic problem in the neighboring country is perhaps worse than the Great Depression of 1929. He clarified that the macroeconomic situation in Mexico is more solid which has helped address the financial uncertainty.
While the "macroeconomic situation" in Mexico is "more solid" (which is fuckin' poo-inducingly scary just to say out loud), the idea that they are not going under the proverbial bus is a joke.
Get a clue, folks!
GD Part II coming up.
As Brahms once told a critic, "Any fool can see that!"
Friday, September 26, 2008
Wednesday, September 24, 2008
Shame
From Bloomberg: Bernanke Signals U.S. Should Pay More for Bad Debt.
Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.
``Accounting rules require banks to value many assets at something close to a very low fire-sale price rather than the hold-to-maturity price,'' Bernanke said in testimony to the Senate Banking Committee today. ``If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.''
Analysts said Bernanke is essentially advocating that government use a pricing model that assumes that the debt will be paid in full over a long period of time. That is different from the mark-to-market model used by investment banks that prices assets at what they are worth on a given day.
Bernanke opposed efforts by banks to lobby regulators to remove mark-to-market pricing in their portfolios. A suspension of such accounting would hurt investor confidence, he said.
``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''
The whole thing is beyond moronic.
Mark-to-market is real. It's as real for Bill Gates as it is for you. What someone else is willing to pay this morning for your crap whether it's your used underwear or Morgan Stanley stock is real. And you'd better believe it!
In any case, banks must mark-to-market so that investors have confidence but the US Treasury doesn't require confidence?
Surely you jest, Professor!
I've never been more ashamed in life as a former academic.
Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.
``Accounting rules require banks to value many assets at something close to a very low fire-sale price rather than the hold-to-maturity price,'' Bernanke said in testimony to the Senate Banking Committee today. ``If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.''
Analysts said Bernanke is essentially advocating that government use a pricing model that assumes that the debt will be paid in full over a long period of time. That is different from the mark-to-market model used by investment banks that prices assets at what they are worth on a given day.
Bernanke opposed efforts by banks to lobby regulators to remove mark-to-market pricing in their portfolios. A suspension of such accounting would hurt investor confidence, he said.
``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''
The whole thing is beyond moronic.
Mark-to-market is real. It's as real for Bill Gates as it is for you. What someone else is willing to pay this morning for your crap whether it's your used underwear or Morgan Stanley stock is real. And you'd better believe it!
In any case, banks must mark-to-market so that investors have confidence but the US Treasury doesn't require confidence?
Surely you jest, Professor!
I've never been more ashamed in life as a former academic.
Dishonorable Dismention
From the Bulwer-Lytton Fiction Contest (him of the "it was a dark and stormy night" fame) which rewards bad prose, an also-has-been:
Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.
Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.
Monday, September 22, 2008
A Big Salute
Nasdaq reports: DHIL opts out of NASDAQ’s Covered Securities List. (Warning: PDF.)
NASDAQ issuer Diamond Hill Investment Group, Inc. (DHIL) has voluntarily opted-out of NASDAQ's list of Covered Securities under the SEC's Emergency Order, effective today, September 22, 2008. Diamond Hill Investment Group, Inc. will not be subject to the restrictions of the Emergency Order.
The EE has never heard of Diamond Hill but he raises his hat instantaneously to the gentlemen.
Sirs, you make veritable pussies out of the Morgan Stanley's and Goldman Sachs' of the world.
May your portfolios overflow with shorts, and consequently may you show these rubes and retards how the game is played!
NASDAQ issuer Diamond Hill Investment Group, Inc. (DHIL) has voluntarily opted-out of NASDAQ's list of Covered Securities under the SEC's Emergency Order, effective today, September 22, 2008. Diamond Hill Investment Group, Inc. will not be subject to the restrictions of the Emergency Order.
The EE has never heard of Diamond Hill but he raises his hat instantaneously to the gentlemen.
Sirs, you make veritable pussies out of the Morgan Stanley's and Goldman Sachs' of the world.
May your portfolios overflow with shorts, and consequently may you show these rubes and retards how the game is played!
Sunday, September 21, 2008
Doffing Caps
From Yahoo! Finance: Last major investment banks change status.
The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks -- Goldman Sachs and Morgan Stanley -- to change their status to bank holding companies.
Gentlemen, a moment if you will. A minute of silence for the passing of the "investment bank" model.
This is not a positive if you will. Their leverage is curtailed; they will be able to acquire all less than marginal banks, and hence they will survive but you do realize that all "marginal" banks just got tossed under the bus, don't you?
Last year, there were 5 investment banks. Tomorrow 0.
It should be reasonably obvious that this is not a "positive" thing.
The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks -- Goldman Sachs and Morgan Stanley -- to change their status to bank holding companies.
Gentlemen, a moment if you will. A minute of silence for the passing of the "investment bank" model.
This is not a positive if you will. Their leverage is curtailed; they will be able to acquire all less than marginal banks, and hence they will survive but you do realize that all "marginal" banks just got tossed under the bus, don't you?
Last year, there were 5 investment banks. Tomorrow 0.
It should be reasonably obvious that this is not a "positive" thing.
Saturday, September 20, 2008
The World Finally Tunes In
From the Washington Post: The Street Doesn't Look So Shiny Anymore.
The title character of my 2007 novel, "Confessions of a Wall Street Shoeshine Boy," was inspired by a real-life shoeshiner who plied his trade among the Guccis and Ferragamos of the financial district. What a view he had! From the very bottom rung of the economic ladder, he watched Wall Street insanity of outlandish proportions: the shady world of unbelievable hedge-fund profits, the supermodel girlfriends, $5,000 bottles of wine, cocaine-fueled trading and partying, the jaw-dropping castles of the new superrich being erected in Greenwich and the Hamptons.
A shoeshine boy who works on the trading floor saw his own, more modest business plummet last week, too. On Monday, as Lehman Brothers expired, he shined only five pairs of shoes instead of the usual 25 to 35. Business didn't get much better as the week wore on.
Few people on the trading floor were inclined to make small talk with menial workers last week, one such worker told me, because 90 percent of the staff had put in full days over the weekend, trying to figure out the latest repercussions for their company. All day, he saw people staring at their monitors in disbelief, pausing only to yell, "What the [expletive]?" or "This is a [expletive]-show." There was none of the usual horseplay or joking around. Instead, people were screaming into their phones and then slamming them down.
Many of the traders who were used to receiving six-figure annual bonuses have started brown-bagging their lunches instead of ordering in sushi or eating out at local restaurants. "Dude, we already passed the recession," one trader explained to the worker. "This is the Depression. Save your money."
One trading-floor denizen described how it happens: Your phone rings, and you're told to report to human resources. You stand up and announce to the people in your row that it's all over. If they like you, they hug you and maybe even applaud. In many cases, they'll be the ones to clean out your desk. Right after you get fired, you're marched out of the building by security. An employee at one of the biggest, best-run firms told a shoeshine boy, "Nobody is safe. I could be out of here tomorrow."
When a financial journalist friend of mine asked a prominent executive how this would all end, he replied, "With riots in the streets."
The title character of my 2007 novel, "Confessions of a Wall Street Shoeshine Boy," was inspired by a real-life shoeshiner who plied his trade among the Guccis and Ferragamos of the financial district. What a view he had! From the very bottom rung of the economic ladder, he watched Wall Street insanity of outlandish proportions: the shady world of unbelievable hedge-fund profits, the supermodel girlfriends, $5,000 bottles of wine, cocaine-fueled trading and partying, the jaw-dropping castles of the new superrich being erected in Greenwich and the Hamptons.
A shoeshine boy who works on the trading floor saw his own, more modest business plummet last week, too. On Monday, as Lehman Brothers expired, he shined only five pairs of shoes instead of the usual 25 to 35. Business didn't get much better as the week wore on.
Few people on the trading floor were inclined to make small talk with menial workers last week, one such worker told me, because 90 percent of the staff had put in full days over the weekend, trying to figure out the latest repercussions for their company. All day, he saw people staring at their monitors in disbelief, pausing only to yell, "What the [expletive]?" or "This is a [expletive]-show." There was none of the usual horseplay or joking around. Instead, people were screaming into their phones and then slamming them down.
Many of the traders who were used to receiving six-figure annual bonuses have started brown-bagging their lunches instead of ordering in sushi or eating out at local restaurants. "Dude, we already passed the recession," one trader explained to the worker. "This is the Depression. Save your money."
One trading-floor denizen described how it happens: Your phone rings, and you're told to report to human resources. You stand up and announce to the people in your row that it's all over. If they like you, they hug you and maybe even applaud. In many cases, they'll be the ones to clean out your desk. Right after you get fired, you're marched out of the building by security. An employee at one of the biggest, best-run firms told a shoeshine boy, "Nobody is safe. I could be out of here tomorrow."
When a financial journalist friend of mine asked a prominent executive how this would all end, he replied, "With riots in the streets."
Thursday, September 18, 2008
Losing it completely...
From the Chicago Tribune: Economist recounts talk with Fed chairman.
Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.
At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.
"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."
Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.
At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.
"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."
Wednesday, September 17, 2008
Night of the Long Knives
From the New York Sun: Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers.
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.
The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.
In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.
This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.
The SEC justified the less stringent capital requirements by arguing it was now able to manage the consolidated entity of the broker dealer and the holding company, which would ensure it could better manage the risk.
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.
The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.
In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.
This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.
The SEC justified the less stringent capital requirements by arguing it was now able to manage the consolidated entity of the broker dealer and the holding company, which would ensure it could better manage the risk.
Nobody Expects the HEGI Liquidation!
From the New York Daily News: Hard economic times hits the High End Girlfriend Index.
The Dow Jones industrial average rebounded a bit Tuesday, but the true index for measuring hard times - the High End Girlfriend Index - was off the charts.
The HEGI is charted by Edward Hayes, a noted lawyer who started as a Bronx homicide prosecutor but has become the go-to guy among the city's moneyed classes when promises are broken.
"Particularly if you happen to be a woman in trouble," Hayes says.
The model for the defense lawyer in Tom Wolfe's "Bonfire of the Vanities," Hayes is an astute observer of social archetypes, including a particular sort of schlub who was invisible to girls in high school but became a magnetic figure thanks to the magic of millions.
"You have a Wall Street guy and he looks like one of the seven dwarfs," Hayes says.
The schlub finds himself with a fabulous girlfriend such as used to brush pasthim as if he were a wall. He will do almost anything to keep her if his magic millions suddenly evaporate, even selling his watch and cuff links.
"The last overhead to go is a really high-end girlfriend," Hayes says. "If you're a short, ugly 40-year-old guy and you're throwing over a high-quality girlfriend, you're desperate."
The absolute economic low comes with a realization that Hayes summarizes in a sentence.
"I can't afford her anymore!"
The Dow Jones industrial average rebounded a bit Tuesday, but the true index for measuring hard times - the High End Girlfriend Index - was off the charts.
The HEGI is charted by Edward Hayes, a noted lawyer who started as a Bronx homicide prosecutor but has become the go-to guy among the city's moneyed classes when promises are broken.
"Particularly if you happen to be a woman in trouble," Hayes says.
The model for the defense lawyer in Tom Wolfe's "Bonfire of the Vanities," Hayes is an astute observer of social archetypes, including a particular sort of schlub who was invisible to girls in high school but became a magnetic figure thanks to the magic of millions.
"You have a Wall Street guy and he looks like one of the seven dwarfs," Hayes says.
The schlub finds himself with a fabulous girlfriend such as used to brush pasthim as if he were a wall. He will do almost anything to keep her if his magic millions suddenly evaporate, even selling his watch and cuff links.
"The last overhead to go is a really high-end girlfriend," Hayes says. "If you're a short, ugly 40-year-old guy and you're throwing over a high-quality girlfriend, you're desperate."
The absolute economic low comes with a realization that Hayes summarizes in a sentence.
"I can't afford her anymore!"
Thursday, September 11, 2008
Don't Cry For Me, Florida!
From the WSJ: Condo Buyers In Florida Seek To Exit Deals.
Condo buyers in hard-hit markets across the country have been scouring their contracts for loopholes and flaws that would allow them to back out. Investors in Florida, where many were looking to flip their condos for a quick profit in a rising market, have been particularly aggressive in using the courts.
During the housing boom, Florida -- like some other areas noted for tourism and retirement living -- attracted hordes of speculators. By some estimates, more than half of all the deposits for Miami condos were put down by people planning to flip them for a profit without living in them, says Jack McCabe, chief executive officer of McCabe Research & Consulting in Deerfield Beach, Fla.
But developers built far more condos than demand could absorb. The glutted Miami market now has close to 50,000 units -- a record four years' worth of inventory -- for sale or under construction. The national condo market, by contrast, has a 12-month inventory, up from 4.7 months in 2005, according to the National Association of Realtors.
Faced with such sobering prospects, many buyers no longer want to close on their properties, as they risk steep losses when they try to sell. In some buildings, as many of 30% of condo buyers are turning to the courts in an effort to cancel their contracts. If unsuccessful, they have to either go ahead and close on a unit they no longer want or walk away and lose their deposits, which are typically between 10% and 20% of the purchase price.
Dora and Umberto Arena, of Hollywood, Fla., are among the thousands of investors who are looking to the courts for relief. When the Arenas bought their deluxe $595,000 condo in Hallandale Beach, developers urged them to move quickly to put down their $120,000 deposit. The planned 283 units at the Ocean Marine Yacht Club in Hallandale Beach sold out in only three weeks when they were offered to the public three years ago.
"We saw this beautiful 48-slip marina in their brochures, and it sounded wonderful to have a place for a boat and to live in that brand new building," says Ms. Arena, 64.
Despite the name, the Ocean Marine Yacht Club has no marina.
I'm sorry, I'm sorry, I just can't resist it.
BWAHAHAHHAHAHHAHAHAHHHHHHHHHHHH!!!
Condo buyers in hard-hit markets across the country have been scouring their contracts for loopholes and flaws that would allow them to back out. Investors in Florida, where many were looking to flip their condos for a quick profit in a rising market, have been particularly aggressive in using the courts.
During the housing boom, Florida -- like some other areas noted for tourism and retirement living -- attracted hordes of speculators. By some estimates, more than half of all the deposits for Miami condos were put down by people planning to flip them for a profit without living in them, says Jack McCabe, chief executive officer of McCabe Research & Consulting in Deerfield Beach, Fla.
But developers built far more condos than demand could absorb. The glutted Miami market now has close to 50,000 units -- a record four years' worth of inventory -- for sale or under construction. The national condo market, by contrast, has a 12-month inventory, up from 4.7 months in 2005, according to the National Association of Realtors.
Faced with such sobering prospects, many buyers no longer want to close on their properties, as they risk steep losses when they try to sell. In some buildings, as many of 30% of condo buyers are turning to the courts in an effort to cancel their contracts. If unsuccessful, they have to either go ahead and close on a unit they no longer want or walk away and lose their deposits, which are typically between 10% and 20% of the purchase price.
Dora and Umberto Arena, of Hollywood, Fla., are among the thousands of investors who are looking to the courts for relief. When the Arenas bought their deluxe $595,000 condo in Hallandale Beach, developers urged them to move quickly to put down their $120,000 deposit. The planned 283 units at the Ocean Marine Yacht Club in Hallandale Beach sold out in only three weeks when they were offered to the public three years ago.
"We saw this beautiful 48-slip marina in their brochures, and it sounded wonderful to have a place for a boat and to live in that brand new building," says Ms. Arena, 64.
Despite the name, the Ocean Marine Yacht Club has no marina.
I'm sorry, I'm sorry, I just can't resist it.
BWAHAHAHHAHAHHAHAHAHHHHHHHHHHHH!!!
Wednesday, September 10, 2008
Bass Ackwards
From the WSJ: Retailers Reprogram Workers In Efficiency Push.
Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.
AnnTaylor Stores Corp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her "performance metrics": average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
Some employees aren't happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.
Current and former employees of the Langhorne store say that within months of the system's installation in May 2007, the culture shifted from collegial to highly competitive. "You could see people stealing sales from other people," says Julie Abrams, a former cashier at the store. Salespeople were "trying to get each other out of the way to get to the client," she says.
This is a classic example of Frédéric Bastiat's "unseen" problem, or as the EE calls it the "physicist's fallacy". Anything that can't be measured must not be worth anything.
The EE would really like to see the ROI on this system. After the cost of all the machines, the cost of the platform and the software, and the labor turnover that is inevitable with such a system whether the additional sales/store justifies such a thing.
The EE bets that it does not.
In fact, if retailers want to get "real", they should start with an intelligent inventory-stocking system. Putting five of each size on the racks does not work. You end up with the small's and the XXXL's and nothing in between. The inventory has to match the demographics, capisce, paisano?
Before it installed the system, AnnTaylor spent a year studying labor efficiencies. It established standards for how long it should take for employees to complete certain tasks: three seconds to greet a shopper; two minutes to help someone trying on clothing; 32 seconds to fold a sweater; and most importantly, five minutes to clinch a sale.
Incidentally, all repeat sales are built on customer loyalty. Giving your customers the bum's rush doesn't exactly endear you to them.
AnnTaylor calls its system the Ann Taylor Labor Allocation System -- Atlas for short. It was developed by RedPrairie Corp., a retail-operations software firm based in Waukesha, Wisc. "We liken the system to an airplane dashboard with 100 different switches and levers and knobs," said AnnTaylor's Mr. Knaul. "When we launched that, we messed with five of them." Giving the system a nickname, Atlas, he said, "was important because it gave a personality to the system, so [employees] hate the system and not us."
Right, because the people are total morons. They will blame the system and not you. Of course. What could be more obvious?
Now you should go twirl the other 95 knobs. Then you should design a system to check whether your knob-twirling is as efficient as can be.
That's a "meta-system" with another 20 knobs. You can call that system ASS (AnnTaylor System System) so that you can blame the system and not you.
Or you could just make clothes that people actually want so that you don't need salespeople.
That would be, like, so radical, dude!
Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.
AnnTaylor Stores Corp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her "performance metrics": average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
Some employees aren't happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.
Current and former employees of the Langhorne store say that within months of the system's installation in May 2007, the culture shifted from collegial to highly competitive. "You could see people stealing sales from other people," says Julie Abrams, a former cashier at the store. Salespeople were "trying to get each other out of the way to get to the client," she says.
This is a classic example of Frédéric Bastiat's "unseen" problem, or as the EE calls it the "physicist's fallacy". Anything that can't be measured must not be worth anything.
The EE would really like to see the ROI on this system. After the cost of all the machines, the cost of the platform and the software, and the labor turnover that is inevitable with such a system whether the additional sales/store justifies such a thing.
The EE bets that it does not.
In fact, if retailers want to get "real", they should start with an intelligent inventory-stocking system. Putting five of each size on the racks does not work. You end up with the small's and the XXXL's and nothing in between. The inventory has to match the demographics, capisce, paisano?
Before it installed the system, AnnTaylor spent a year studying labor efficiencies. It established standards for how long it should take for employees to complete certain tasks: three seconds to greet a shopper; two minutes to help someone trying on clothing; 32 seconds to fold a sweater; and most importantly, five minutes to clinch a sale.
Incidentally, all repeat sales are built on customer loyalty. Giving your customers the bum's rush doesn't exactly endear you to them.
AnnTaylor calls its system the Ann Taylor Labor Allocation System -- Atlas for short. It was developed by RedPrairie Corp., a retail-operations software firm based in Waukesha, Wisc. "We liken the system to an airplane dashboard with 100 different switches and levers and knobs," said AnnTaylor's Mr. Knaul. "When we launched that, we messed with five of them." Giving the system a nickname, Atlas, he said, "was important because it gave a personality to the system, so [employees] hate the system and not us."
Right, because the people are total morons. They will blame the system and not you. Of course. What could be more obvious?
Now you should go twirl the other 95 knobs. Then you should design a system to check whether your knob-twirling is as efficient as can be.
That's a "meta-system" with another 20 knobs. You can call that system ASS (AnnTaylor System System) so that you can blame the system and not you.
Or you could just make clothes that people actually want so that you don't need salespeople.
That would be, like, so radical, dude!
Friday, September 05, 2008
Thursday, September 04, 2008
You're My Trust-Fund Baby, Baby!
From the SF Chronicle: Rights groups faults Wachovia's mortgage aid.
Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.
Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.
If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario.
Not everyone, baby! Just you, and your $3M, and your dreams of real-estate riches.
Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.
Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.
If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario.
Not everyone, baby! Just you, and your $3M, and your dreams of real-estate riches.
Coffee is for Closers!!!
From The Sun in the Inland Empire: Price wars in N. Fontana.
Price wars are being waged in north Fontana's upper middle-class neighborhoods as home builders drop prices, hoping to stave off multimilion-dollar losses.
They're competing against one another, but collectively, their products are going up against bank-owned properties, foreclosures and short sales on homes that were built just two or three years ago around the corner.
Jeff Hill knows all about it. Owner of Dana Point-based J. Hill and Associates, the real estate broker has about 20 short sales that aren't moving because banks and sellers are desperately trying to salvage any value they can.
One of them, a 2,572-square-foot home, lies a half-mile away from the Centex tract and is on the market for about $315,000.
"They've postponed the sale four times," Hill said about the sellers. "We have an offer, and then they go out and do their own appraisal ... and by the time they come back, the buyer finds something else. Meanwhile, the values decline even further."
Sellers should be happy with buyers' offers, Hill feels.
"Everyone saves a lot more money that way, including the lender that's foreclosing," he said. "Buyers walk away when sellers try to counter the offer."
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, 'n the realtor's is shee-it
If you're happy and you know it, walk away (clap clap)
Price wars are being waged in north Fontana's upper middle-class neighborhoods as home builders drop prices, hoping to stave off multimilion-dollar losses.
They're competing against one another, but collectively, their products are going up against bank-owned properties, foreclosures and short sales on homes that were built just two or three years ago around the corner.
Jeff Hill knows all about it. Owner of Dana Point-based J. Hill and Associates, the real estate broker has about 20 short sales that aren't moving because banks and sellers are desperately trying to salvage any value they can.
One of them, a 2,572-square-foot home, lies a half-mile away from the Centex tract and is on the market for about $315,000.
"They've postponed the sale four times," Hill said about the sellers. "We have an offer, and then they go out and do their own appraisal ... and by the time they come back, the buyer finds something else. Meanwhile, the values decline even further."
Sellers should be happy with buyers' offers, Hill feels.
"Everyone saves a lot more money that way, including the lender that's foreclosing," he said. "Buyers walk away when sellers try to counter the offer."
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, 'n the realtor's is shee-it
If you're happy and you know it, walk away (clap clap)
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