Where My Mind has Wandered

A Sublime Morning

Driving to camp this morning it was obvious that the boys were not in a good mood. Elias (7) was quiet, and Ethan (4-1/2) was making sad sounds. He wasn't crying, but he was making enough sound to indicate that he would be crying if he simply had the energy. Conversation wasn't working; it was time to use the stereo.

I started by opening the sun roof and my window to circulate in some fresh morning air. Then I asked "Guys, want to hear There She Goes?" I didn't have The La's in the car, which is Elias's favorite, but Sixpence None The Richer got us by until we dropped Elias off. He seemed to be in a considerably better mood as he left the car. As we moved on to drop off Ethan a few minutes down the road I asked "Ethan, want to hear down at the pawn shop?" A big affirmative from the back seat.

I found the Sublime CD, skipped forward, and stopped at Jailhouse. The reaction from the back seat was immediate: "No, down at the pawn shop." He recognizes the song from the first guitar lick. I skipped one song forward to Pawn Shop, the music started, and his little body subtly grooved to the music. After the 75-second music intro he sang along to the lyrics. Yes, my 4-1/2 year-old's favorite song is Pawn Shop by Sublime.

It wasn't only his mood that picked up. Mine picked up as well. After he got out of the car I skipped forward to Burrito -- a counter intuitively loud and fast homage to staying in bed all day. At a stoplight I realized that all the mirrors in the car were visibly vibrating from the bass in Jailhouse. Garden Grove and What I Got filled the car on the highway and April 29, 1992 (Miami) took me into the parking garage. Driving the kids to camp in the morning is a great start to the day.

Weak dollar will continue to encourage foreign buying

The impact of a weak dollar on M&A activity in the United States isn't a surprise in financial and business circles. Foreign companies now have the opportunity to buy U.S. companies, real estate, and other assets at what amounts to a discount. This may not be news, but judging from conversations I have been having lately it may be news to much of the general public.

When George H. W. Bush entered the White House in 2000 the exchange rate between the dollar and the euro was approximately 1.171. At this rate the dollar was worth 30 percent more against the euro than it was the day the euro was introduced at the end of 1998, which was 0.857. The average rate this month has been 0.643. This means that the current administration has been at the wheel for a 45 percent decline in the value of the dollar against the euro. When Bush entered office the dollar was at an all time high against the euro, and when he leaves it will likely be at an all time low.

In an an article for The International Economy, Lawrence Lindsey, who was the chief economic advisor during Bush's first year in office, said the administration was committed to a strong dollar. He wrote "the benefits of a strong currency for our country far outweigh the costs ... a commitment to a stable, non-inflationary currency, a good business environment and open trade will remain the cornerstones of American economic policy." Apparently things didn't work out as planned. Of course, Bush dumped Lindsey, along with Treasury Secretary Paul O'Neill, so he can't be blamed for the administration's failure to protect the dollar.

Lindsey had some other notable statements during that first year. In a September 2002 interview with the Wall Street Journal he estimated that the Iraq invasion would cost the U.S. $100 to $200 billion. He was practically attacked by the White House, which estimated a total cost of $50 to $60 billion. Donald Rumsfeld, with characteristic grace and sound judgment, called Lindsey's estimate "baloney." The Iraq war has cost $500 billion to date and continues to cost $435 million a day. The Iraq war is one of the Bush-driven factors that has sunk the value of the dollar.

When Americans travelled to Europe during Bush's first term they inevitably commented, upon returning home, about the extraordinary price of a cup of coffee. It typically followed this script: "Can you believe a cup of coffee costs three-dollars? Coffee is more expensive than gas!" Gas cost north of $5US at the time in Europe, but if they didn't rent a car they didn't know that. I can imagine what they are saying now, assuming anyone can still afford to go to Europe. But that point of view is all wrong. A cup of coffee isn't expensive in Europe, it is just really cheap in the U.S., and so are U.S.-owned companies.

To learn more about the present and future of the dollar one source to consider is The International Economy, which has dedicatd to the Spring 2008 issue to the subject. 

View your childhood home with Google Maps.

One of my favorite features on Google Maps is satellite view, which provides a remarkable bird's-eye view of most any address in the United States. Today I found myself looking down at my childhood home, a structure that no longer exists. It was an interesting experience. I wasn't sure what to expect when I typed in the address, and when it first rendered on screen it took me a few seconds to recognize what I was looking at. I didn't expect to see my old house. I expected to see the two modern monstrosities that replaced the 200-year old farmhouse. Instead I found myself looking down at the original house, caught at a moment after the first new house had been built but before my house was torn down to make way for the second one. The photo must have been made late in the year after most of the leaves have fallen off the trees. The contrast between the green of the lawns and the brown of the trees and underbrush creates a confusing landscape.

I've drawn an orange line around the original boundaries of the yard. The smaller house with the red roof is my old house. The larger house with the gray roof is the newer house. The yard is on a hill, so the newer house sits well below the old house, so much so that the roof line of the new house is below the ground floor of the old house.

The new house on the lower part of the lot (left), which has that look that I can best describe as new money Key Largo, doesn't fit at all with the architecture around it. The lots in the neighborhood are generous and the footprints of the houses were typically small which created a lot of privacy. I had an opportunity to visit during this period and the sight of this new structure looming up just below the old patio was a disconcerting change.

Of course the new owners of the original house tore down the strucure and built their new house closer to the house on the lower part of the lot. The Village of Scarsdale forced the new homeowners to retain the original facade and the 200 year-old stone bridge that runs across a small creek in the front yard. The old facade was left in place and a new house was built that with wings to the left and right of the original structure. The wing on the right extends down the hill and creates a new, lower floor. With street view you can look across the bridge and see the original facade, part of the wing on the right, and the roof of the wing on the left (above right, color added). None of this can bee seen with Google's satellite imagery, but it can be viewed with Google's street view feature. For those who are not familiar with it, street view is a feature on Google maps that allows you to see a 360 degree panoramic street-level view of a point on the map. When the service launched in May 2007 only 5 cities had been photographed. A year later the size of the collection is impressive, with imagery available for more than 50 U.S. markets.

Move 20 yards down the street and you can see the three-story right wing which is as large as the original house. Street view is fun to play with and very helpful in a number of situations, from house hunting to finding directions. As a snapshot of a moment in time it gains more meaning, it becomes an interesting visual archive. Google's goal is to provide street views from around the world, which may suggest that adding new views will be a higher priority than updating existing views. If that is the case, neighborhoods already documented may be frozen in time, a visual time capsule of U.S. major metropolitan areas from 2006 to 2008.

What is the path forward for traditional news publications?

I moderated a panel at an AIGA event in Washington, D.C. on June 12 on the subject of in-house interactive design. The presenters included Khoi Vinh, the Design Director for nytimes.com, and Rob Covey, Senior Vice President of Content and Design at National Geographic Digital Media, and Faz Besharatian, the Design Director of Web Strategy and Operations at AARP. All three sites -- aarp.com, nytimes.com, and nationalgeographic.com -- rely on digital advertising as part of their revenue-model. As we discussed how advertising space impacts the design of a site the conversation turned to the changing demands of advertisers and the future of publications.

Advertisers have been looking beyond standard online banner ad units toward interactive ads, video ads, and content integration. With the recent announcement that the print version of U.S. News and Word Report will move from a weekly to a bi-weekly frequency my mind turned to considering just what kind of traditional publications will survive as people continue to consume more news online, and less offline. What will it take to survive, and thrive?

A strong brand is certainly one criteria. According to ComScore The New York Times continues to be the top online news destination, outperforming even Yahoo! News by 10 million unique visitors in May, 2008. Their strong brand has to be an ingredient of that success. I expect another criteria will be the ability to offer advertisers an integrated online, print, and broadcast package. When we (Fleishman-Hillard) developed a program for Rawling's 50th Anniversary of the Gold Glove we partnered with ESPN because they could offer on-air and online integration. Publications like The New York Times, The Economist, Newsweek, U.S. News and World Report, The Wall Street Journal, and TIME don't have that home-grown broadcast element. Time and Newsweek have used collaboration with CNN and MSNBC in an attempt to bridge the gap, but their online readership has not provided any real separation from others in the category. A look at Alexa data suggests that the sites for these publications group together in a narrow band for rank, reach, and page views. Content is still the draw online, and the traditional publications are blessed with quality journalists and the smart ones are adding blogs, video, and social media features as fast as they can. But as an indication of where things are heading, all have had their site traffic recently eclipsed by the huffingtonpost.com. Or consider Amy Poehler's zinger at the TIME 100 gala: "TIME magazine's circulation is around 3.4 million, which is great for a magazine. Just OK for a YouTube video, but great for a magazine."

National Geographic has an interesting model, and it is probably not the first publication one would think of as a long-term digital player. A redesigned site with an emphasis on user-generated and games contributed to a huge spike in traffic over the last few months. The brand is strong, recognized globally, and is supported by a Web site, a cable channel, branded programming PBS and FOX, branded movies, and ten magazines. The ability to integrate content over that diverse portfolio may prove an advantage in keeping advertisers. ESPN may have a similar advantage with their portfolio of espn.com, television, radio, and a magazine.

Much of the consolidation in the newspaper space has involved print-only deals. Judging from the news coming out of the McClatchy Company, an aggressive acquireer of newspapers over the last few years, those deals are not paying off. We might some deals happen across mediums, particularly with some of the stronger players in the distressed space, if the industry can get past the halo effect of the AOL-Time Warner merger.

Unintended Consequences in the Relationship between Food and Energy

I am blogging live this morning during an event in New York City organized by my company, Fleishman-Hillard. A panel of speakers will examine the future of food and nutrition, and the current trends that will impact that future vision. I am also maintaining a twitter feed during the event.

One topic raised by the first speaker is the rise in food prices. Factors such as a rise in global demand, due to increases in population and improvements in the standard of living in many countries, investments in fuel crops, and the impact of oil and gas prices on transportation costs are among the factors that are impacting price.

The clean energy movement has had a frustrating few decades. Investment in and adoption of alternative energy has been slow in the United States. Finally oil and gas prices -- coupled with investment incentives -- led to real growth in alternative fuel production. In the United States some of that investment has gone into corn and soy-based ethanol. The connection between investment in fuel crops and rising food prices has not been quantified, but the thought that food riots in poor countries could be tied to investment in alternative energy in the United States has to be agonizing for clean energy advocates.

This is an issue I have considered in prior posts, but this event is bringing it into much sharper focus. I am also interested in a new series of articles running in the New York Times entitled The Food Chain, Betting on Agriculture. An article from the series this morning looks at the large bets private investors and investment funds are putting into the food chain, going well beyond a more typical portfolio of commodities into food land, storage, and transportation.

Flip This House Spams my Blog

Apparently Flip This House, or someone working on their behalf, has an online strategy. It looks like they are trolling blogs that mention the show and placing an advertisement in the blog's comments.

My post on U.S. monetary policy mentioned the show in what I would think is a neutral to less-than-flattering manner. The producers are looking to recruit "flippers-in-trouble" to appear on a special episode of the show. They would be smart to make every episode of the show follow this format. It is difficult to stomach that the people behind this show would profit from helping to froth the market in the first place and then again by chronicling the implosion on the downside of the market curve. The advertisement masquerading as a comment says the show will offer "expert financial advice" and I'm sure the amateur tycoons getting killed in the real estate downturn need such advice.

This is not my first comment spam. Posts on digital topics, particularly related to search and search marketing, tend to attract online marketers with aggressive goals and little regard for civil behavior. The line between online editorial outreach and spam is very gray and easy to cross-over. Organizations with all the best intentions to get savvy and market digitally can end up becoming spammers if they don't understand what they are buying, hire the right kind of agency, and monitor their work.

What is Podcasting?

Podcasting is not synonymous with online audio. Is not. Is not. Is not. People inevitably fail to grasp the subscription component of a podcast. It should not surprise me that everyone thinks they are the same thing, but it surprises and bothers me. More than it should.

I also find it interesting that vodcast and vidcast have not had their meaning mangled in a similar way. In marketing communications situations you hear everyone talking about podcasts (and not really meaning podcasts) but they glaze over whenever the term vodcast comes up, or any other -cast for that matter. All audio is a podcast and all video is a YouTube video, even if it isn't put on YouTube.

People seem to get blogging but forget about Twitter, that just blows their mind completely. More vacant stares. 

If you do not know what a podcast really is you can read the entry in Wikipedia or you can listen to Ask a  Ninja's take on the subject. Please.

"Jawbone" Pledge Continues to Dog lil' Bush

In meetings this week in Saudi Arabia -- with leaders including Saudi oil minister Ali al-Naimi, Saudi Foreign Minister Saud al-Faisal, and King Abdullah -- President Bush failed to win an increase Saudi oil production. The failure, his second this year, once again raised references in news coverage to statements he made during the 2000 campaign about the need to "jawbone" oil producing nations to persuade them to increase production.

Today's ubiquitous AP story contains this reference:

When Bush first ran for president in 2000, he criticized the Clinton administration for high fuel prices and said the president must "jawbone" oil producing nations and persuade them to drop rates. At that time, oil was nearing $28 a barrel — less than a quarter what it is now.

I have not been able to find an actual quote from the 2000 campaign, but a quick search does show many references in coverage over the past several years. In a September 2004 article, entitled "Bush's Top Ten Flip-Flops", CBSNews.com Chief Political Writer David Paul Kuhn places the statement in the first Republican debate in December 1999.

Mr. Bush was critical of Al Gore in the 2000 campaign for being part of “the administration that's been in charge” while the “price of gasoline has gone steadily upward.” In December 1999, in the first Republican primary debate, Mr. Bush said President Clinton “must jawbone OPEC members to lower prices.”

An AP writer cited the "jawbone" quote in 2006 in article covering the Bush Administrations efforts to reach out to countries rich in oil and gas but accused of authoritarian rule and human rights violations. An AP writer used the line again in an April 2005 story covering a pending meeting between Bush and then Crown-Prince Abdullah at his Crawford, Texas ranch.

In April 2004 John Kerry raised the comment and suggested it represented a failure on Bush's part to keep a campaign promise. Not that Kerry thought it wasn't possible; he instead suggested that Bush was soft on the issue much the way Bush claimed Clinton was. Commenting on a meeting between Bush and Saudi Ambassador Prince Bandar bin Sultan in which it was reported the two discussed increasing production to drive down prices prior to the election (something Bandar denied), Kerry said:

"I'm here today to say if there was no deal, if there was no agreement, then stand up today and jawbone OPEC to lower the price. They could up that production tomorrow. We need to have them answer why they won't do that."

Bush's self-confidence in his persuasive abilities was evident throughout the 2000 campaign. New York times political reporter Katharine Q. Seelye's coverage of Bush in 2000 included some more often-quoted statements:

''I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply... Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot... Ours is a nation that helped Kuwait and the Saudis, and you'd think we'd have the capital necessary to convince them to increase the crude supplies."

According to Seelye, these quotes came from June 28, 2000 news conference after a meeting with participants in a private welfare-to-work program. Bush's self-confidence was obviously over-confidence, he has had no success in his efforts to combat high oil prices with an increase in global oil production. As mush as President Carter's time in office is marked by long gas lines, Bush's tenure will be tied with an increase in oil prices from the $28 a barrel price he criticized the Clinton administration for the the $128 a barrel price today.

Productivity, Speculation, and Monetary Policy

One of the theories behind U.S. monetary policy is that if we make money easier to get (low taxes and low interest rates) people will invest in activity that drives productivity. Business will expand, new business will open, more jobs and economic growth will follow. The problem with this theory is that it is not absolute. Investment does flow into productivity, but investment also flows into speculation. The technology and real estate bubbles are perfect examples. Speculation drives false productivity, where the value of assets rose based upon perceived value versus actual productivity.

While Alan Greenspan and Ben Bernanke were driving down interest rates to avoid inflation HGTV was airing The Big Flip eight times a week. Funny how the word "flip" showed up in both the tech and housing bubbles. Here is how HGTV promotes the show:

Our renovators, Paul Peic and Kye Husbands, are taking on the challenge of fixing and flipping as many houses as they can in just 12 months. Or lose their minds and shirts trying. Paul and Kye are experienced entrepreneurs who will try anything once, but neither one of them has ever flipped houses before. They say it's not a problem. They're convinced they have what it takes not only to be successful... but really, really rich. The investment, the sweat equity and any ups or downs are all theirs. Can it be done? They think so.

HGTV's peers were all in the game, with competing shows including Flip this House and Flip that House. There is a big difference between a VC that can afford to spend $500 million on 10 start-ups in hopes that one ends up worth $5 billion and people putting all of their savings into real estate and tech stocks. Most venture capital firms aren't investing with their own money. Investing is what a VC does for a living, and the good VCs bring assets to the companies they invest in that make those companies better.

The investor who overextends to invest in properties in Southern Florida is working in a completely different environment. Let's say he put $1.5 million down to buy 20 properties for an average price of $500,000. That gives him $10 million in mortgage liability and $100,000 a month in mortgage payments. He is investing his own money. No one property is going to "make it big" and suddenly be worth $50 million to offset losses elsewhere. And if he can't cover the mortgage payments he has to start selling off property, regardless of the market conditions. The is a real scenario. I rented a house from someone in exactly this situation. The day after we went home from our vacation in Disney World the bank foreclosed on all of his properties.

This kind of speculation happened across the country in both larger and smaller scales. I don't have an answer; the solution is not obvious. I'm all for lowering taxes and trimming government spend. And I am not against low interest rates. I do think that when you use terms like "irrational exuberance" and "froth" to describe market conditions perhaps driving down interest rates, on its own, isn't the best course of action. Once again, I'm not in a position to say where those interest rates should be, but our policy makers need to much smarter at avoiding and/or managing bubbles. 

Exhale. Relax. Feel better. Travis Childers wins in Mississippi.

I am an independent, but there is no doubt I loathe the current administration. It disgusts me. The Republican Party needs a good drubbing in the Presidential election if it is going to reform itself and start caring more about good government and fiscal responsibility and less about stuffing friendly pockets with pork and fat contracts, gaming K-Street, and getting jobs for graduates of Regent University.

That is why I take great comfort in the victory of Travis Childers in Mississippi's 1st Congressional district. Running as a pro-life Democrat in a district that elected and returned Trent Lott to the U.S. Senate for 18 years, Childers overcame a textbook attack ad campaign by his opponent Republican Greg Davis. The ads associated the conservative Childers with Nancy Pelosi, Pastor Jeremiah Wright, 9/11, and Barak Obama's comment about bitter voters in Pennsylvania. That Childers won a conservative district despite the usual bag of dirty tricks suggests that the drubbing I am hoping for might just be in the cards.