Geither Plan Explained
Leave on one side the question of whether the Geither plan is a good idea or not. One thing is clearly false in the way it’s being presented: administration officials keep saying that there’s no subsidy involved, that investors would share in the downside. That’s just wrong. Why? Because of the non-recourse loans, which reportedly will finance 85 percent of the asset purchases.
Let me offer a numerical example. Suppose that there’s an asset with an uncertain value: there’s an equal chance that it will be worth either 150 or 50. So the expected value is 100.
But suppose that I can buy this asset with a nonrecourse loan equal to 85 percent of the purchase price. How much would I be willing to pay for the asset?
The answer is, slightly over 130. Why? All I have to put up is 15 percent of the price — 19.5, if the asset costs 130. That’s the most I can lose. On the other hand, if the asset turns out to be worth 150, I gain 20. So it’s a good deal for me.
Notice that the government equity stake doesn’t matter — the calculation is the same whether private investors put up all or only part of the equity. It’s the loan that provides the subsidy.
And in this example it’s a large subsidy — 30 percent.
The only way to argue that the subsidy is small is to claim that there’s very little chance that assets purchased under the scheme will lose as much as 15 percent of their purchase price. Given what’s happened over the past 2 years, is that a reasonable assertion?
Source:NYTimes
FT has a 3 min video explaining the plan.
User Generated Content
The thing I like best about shopping at Amazon are the user comments. They really are good. And I often base purchasing decisions on what the other users say. It got so bad that when I went shopping at Fry’s for some sound equipment I fumbled around until I realized what I was missing was the advice of other shoppers. I did the unfair thing, listened to a bunch of stuff and then went home and bought what I liked and what the others liked, from Amazon.
The gold mine of data Amazon is collecting from its user’s via their reviews has been increasing their bottom line for years’ now. Amazon is very prudent in how it uses this data and provides it to the customer.
Facebook is the other company that is sitting on such a gold mine and will unleash its true potential soon. Here is a piece from Scoble about facebook and Zuckerberg and the phase the business is in.
History of Business Intelligence
A fascinating story from Nic at Microsoft BI
Hat tip:The BI Blog
Business of Excellence
At a well-known five-star hotel, I asked if I could extend my checkout time by two hours. I was told no; the hotel was full. Unless I paid for a half day; then they’d accommodate me.
Huh?
If the hotel was full and needed my room, why would it make a difference if I paid them? And if they did have the ability to extend my checkout, why would they charge me? I spoke with the manager. Same answer.
That was the last time I stayed at that hotel franchise.
Contrast that to my recent experience at the Four Seasons in Dallas, TX, a hotel where I’ve stayed several times.
When I arrived I didn’t have to stand in line to check in; the valet simply handed me the key to my room. Which was set-up exactly as I like it: a yoga mat and an exercise schedule on the bed; a bowl of fruit on the table. And they automatically extended my check out time.
I am a customer for life.
More here from Peter Bregman.
Quantitative Easing
Finally the Fed pushed the much dreaded red button today.
Reminds me of the following words from Bill Fleckenstein:
America is now well down the path of trying to print its way to prosperity. Of course, the reason we are trying to print our way to prosperity is because initially, in the late 1990s, we tried to speculate our way to prosperity via the stock bubble. After that didn’t work, we attempted to borrow our way to prosperity during the real-estate bubble.
Those two bubbles ended in the epic disaster of today. Now the United States and other countries will attempt to print their way to prosperity, which also won’t work.
The analytics behind user interface
In 2008, Amazon brought in $19 billion, of which 70% came from media products, such as books, movies, and music. It’s not an accident that these products also make the best use of the reviews feature.
As we’ve watched Amazon customers make purchases on the site, we can clearly see that promoting the most helpful reviews has increased sales in these categories by 20%.(One out of every five customers decides to complete the purchase because of the strength of the reviews.) From this, we can project it has contributed to Amazon’s top line by $2.7 billion.
This is a case of a simple question – asked in the right way at the right time – that can have a dramatic affect on the success of the organization. Simple, subtle design once again proves it has great magical powers (and, in the right circumstances, very lucrative ones).
More from User Interface Engineering here.
NYSE Equities
44% of NYSE Stocks under $10 is Shocking
Louise Yamada talking to Tom Keene on Bloomberg.
Helvetica
Presentation skills are very necessary to be a good data miner/business intelligence analyst. A good presenter would have attention to detail, including the typeface used in his presentation. Helvetica is the most widely used sans serif typeface and has been a very popular choice of many corporate wordmarks. Below is a cool periodic table of typefaces created by Squidspot and all the typefaces are ranked on popularity (based on several sources of data) and Helvetica is Number One.
Click here for a full resolution image.
leave a comment