26 May 2010

This Week on Bear radio: Are unions really responsible for government overspending?

In this episode we talk about unions, and what responsibility they bear for pushing governments into insolvency. There is also in-depth discussion on market technical indicators, and what they portend for trends in the near term.

Download the sound(right click and save as link) : Download

You can find all the Optimistic Bear shows here: Optimistic Bear

You can find all the Entrepreneurs Northwest shows here: Entrepreneurs Northwest

23 May 2010

Let’s give drug dealers what they want

I have long been an advocate of drug legalization, believing that it not only wastes huge amounts of resources on something that can’t be stopped as well as having a corrosive impact on society, driving otherwise law-abiding people into a world of illegality.

My views on this haven’t changed, but hearing the outcry over the suicide of a youthful Canadian drug smuggler, Samuel Brown, has made me want to distance myself from the broader legalization movements. For one thing, I don’t believe this young man deserves our sympathy. He was a willing participant in an illegal trade, and while I believe in legalization, I have never supported the people who are in this business. If anything, the whole reason I believe in legalization is so that these unscrupulous characters will lose the ability to make as much money as they do, which makes them such menaces to society.

When reading over the numerous internet comments around Mr Brown’s death, I can’t help but notice that a great many of these people (particularly those from Canada), just want to be able to pursue the drug trade, and get rich without the risk of getting caught by those evil American lawmen. All the righteous indignation in Nelson over Samuel’s death makes my blood boil. After all, it is the uncouth monsters who run grow-ops, and ancillary drug-trade industries in BC who are responsible for creating such a brutal environment where young men and women risk their lives in the pursuit of an easy buck.

This just makes me wish all the more fervently for true drug legalization. Then all those holier-than-thou drug-operators in BC (and wherever else they may reside) will find themselves out of business overnight. If the US really wants to have its revenge on the foreign drug producers, filling it’s streets with crime, they should just legalize the goods. Not only would such a move utterly destroy communities like Nelson overnight, but it would likewise undermine demagogues like Evo Morales (the president of Bolivia) without so much as firing a gun.

I don’t believe in legalization because I like drugs. I stand for legalization because I despise the entire drug sub-culture, and the people who pervert society through making easy money off of the illicit trade.

20 May 2010

Blaming the messenger

Wolfgang Schaeuble, the German finance minister, has figured out the reason financial markets are tanking. The problem, of course, is the markets themselves.

I’m convinced the markets are really out of control. That is why we need really
effective regulation, in the sense of creating a properly functioning market

The solution, according to Herr Schaeble, is more extensive regulation, and some kind of transaction tax, which will make it much more costly for evil speculators to disrupt the plans of great nations.

According to this form of logic, I suppose we should start blaming fevers for illnesses rather than the underlying disease. This kind of talk is nothing more than populist claptrap, and not only mis-represents what is happening in the economy (and how markets work), but will very likely lead to policies that will only make things worse.

Transaction taxes, and greater regulation, is a sure-fire way to strangle the financial markets even more, and convince investors and financial institutions to just sit on their cash rather then take any sort of risk.

I'll be the first to admit that markets don't always move in directions that "make sense" at the time. I was baffled for years as to why stocks kept rising when the underlying assets, and economies, were getting weaker. But markets tend to overshoot, and make up for lost time, when they do react. Just where was Wolfgang when markets were irrationally rallying? It speaks volumes that markets only get blamed when prices are in decline.

Quite simple, the global markets aren't going to recover until all the bad debt has been purged from the system. Unfortunately, there have been so many mal-investments made over the last 15 years of credit binging (on everything from empty Chinese mega-malls, to US houses and Greek bonds), that there is a LOT more pain ahead. No amount of scapegoating will change this fact.

What finance ministers ought to really be doing is finding ways to make th liquidation, and dismemberment, of banks and companies as smooth as possible, so that the process of debt write-offs can get itself over as quickly as possible. Let's stop repeating the mistakes Japan has been making for 20 years, by failing to shut down insolvent banks and corporations (or forcing them to mark their assets to market), and continually pumping stimulus into a corpse.

LS: How to succeed as an entrepreneur in Seattle

In this episode of Linked:Seattle radio, we talk about entrepreneurship in Seattle. Seattle is a great town for entrepreneurs. There are a lot of associations, and resources available. Charlotte Wintermann and Ian Lurie share their experiences with starting businesses and answer questions about resources that are available to Seattle entrepreneurs.

You can check out the Linked:Seattle entrepreneur group for further information on resources, and to join in the discussions with other business people.

NOTE: Click here for a list of all the Linked:Seattle radio show recordings. You can also check out my own "Entrepreneurs Northwest" podcast shows (http://bit.ly/epnwfeed).

job search tales: Plan your job search as well as your vacation

In this episode Cindy Pain explains how a little bit of preparation, and research, can go a long way to creating a successful job search. Put at least as much effort planning your strategy for getting a new job as you do in planning a vacation. Cindy also provides insights on interviews: once you've got that interview, the job is already yours, just don't lose it.

You can check out Cindy's career consulting firm at http://www.lhh.com/.

Powered by Podbean.com

NOTE: Please contact Michael if you are interested in being a guest on "Tales from the job search trenches" podcasts. Michael would like to discuss your job search strategy, and brainstorm ways to improve it with you.

19 May 2010

This Week on Bear radio: The Euro end-game, and China as leading indicator

In this episode we discuss the possible end-game of the Euro, the future of interest rates, and examine how eerily the Shanghai stock exchange has been a leading indicator for the US markets in the last few years.

Download the sound(right click and save as link) : Download

You can find all the Optimistic Bear shows here: Optimistic Bear

You can find all the Entrepreneurs Northwest shows here: Entrepreneurs Northwest

15 May 2010

Linked:Seattle radio - Finding a job in Seattle

In this very first Linked:Seattle radio show, Michael speaks with Jordan Shaw and Lesa Keller about looking for jobs in Seattle. We answer calls from job seekers, and share tips that can be useful to all candidates.

NOTE: The Linked:Seattle Career Center is the best place on LinkedIn to find jobs in Seattle and participate in discussions with area recruiters, career coaches, and job candidates. You can also check out Michael Surkan’s "Tales from the job search trenches" podcasts.

12 May 2010

PS: Software goes Hollywood

In this episode, Daniel Stieglitz tells us about how writing software for the media industry has challenges all of its own. Requirements can change on a dime, and projects need to be turned around in a matter of hours. Daniel's firm has managed to deal with this by building flexible applications that are easily customizable (often by the users themselves) through scripting.

You can check out Daniel's software company at http://www.stainlesscode.com/.

Powered by Podbean.com

NOTE: Practical Software is the official podcast for the Software Engineering Productivity group on Linked:In. You can listen to other episodes of Practical Software. Other content for the SEP group is stored in our resource center.

PS: Good software starts with business requirements

In this episde, Tony Nicholls explains how the first step in any successful software engineering project is to have a good understanding of the business requirements.

You can check out Tony's IT consultancy at http://greatideaz.com/.

Powered by Podbean.com

NOTE: Practical Software is the official podcast for the Software Engineering Productivity group on Linked:In. You can listen to other episodes of Practical Software. Other content for the SEP group is stored in our resource center.

This Week on Bear radio: Did the pan-European bail-out news cause the rally?

In this episode, the Optimistic Bear, and guests, ask if this week's market rally was caused by the pan-European bail-out announced over the week-end, and whether the markets have turned the corner. The frequent "coincidence" of market news and stock moves is revealed.

Download the sound(right click and save as link) : Download

You can find all the Optimistic Bear shows here: Optimistic Bear

You can find all the Entrepreneurs Northwest shows here: Entrepreneurs Northwest

11 May 2010

ECS intro podcasts

These are the three introductory podcasts Michael has recorded for use in promoting Effective Communications Services.

Episode 1: Social Networking as a marketing tool

Learn how social networks can be used as an effective tool for all businesses.

Powered by Podbean.com

Episode 2: Creating good content is the cornerstone of marketing on social networks

Michael discusses how the first step in effective social network marketing is to have good content.

Powered by Podbean.com

Episode 3: Social networks provide a new approach to direct marketing

Discover how social networks can be used to conduct highly targeted, and successful, direct marketing campaigns with social networks. Instead of SPAMing, you can use social networks to reach out directly to the people who would be interested in hearing about your business.

Powered by Podbean.com

Michael: The Model Job Seeker

Matt Youngquist wrote a very flattering piece on his career coaching blog, highlighting my podcasting and entrepreneurial efforts. Who'd have thunk that I would be cited as an example for others to emulate?

If nothing else, hearing such kind words certainly buoys my spirits, which can take a drubbing now and again, as I keep slogging away with a lengthy job search.

As a “new media” aficionado and somebody who had always prided himself on proactive thinking and creative problem-solving, he decided the best path to his career future would be to go on offense, rather than defense.

The result? After setting up a simple blog portal, Pomp & Surkanstance, Michael started reaching out to dozens of local entrepreneurs, technology luminaries, and business leaders — not to ask them for a job, but to ask to interview them for a special series of podcasts he had decided to start producing. He branded this project “Entrepreneurs Northwest” and found that his invitations were usually received with open arms...

So if you’re in transition and feeling a bit rudderless at the moment, I’ve got just three words for you. Be like Mike. Go on offense. Create momentum. Find a way to start working on something, even if it’s not a revenue-producing something. As any career coach worth their salt could tell you, the real opportunities aren’t found sitting behind a computer, they’re found out in the market and you find them by talking to lots and lots of people. So conjure up your own project that will facilitate some relevant conversations — and go for it!

You can read the full article on Matt's site.

10 May 2010

The business that succeeds only through failure

ElliottWave International has long been my favourite economic newsletter, producing insights, and viewpoints that are to be found no where else. They called the housing bubble years before the top. They identified the house of cards (and credit) upon which the global financial system was based.

Even more profoundly, EWI has done ground-breaking work in demonstrating that it is group psychology, and the herding instinct, that drives events (and the economy), not the other way around.

Unfortunately, as insightful and prescient as EWI has been over the years, I can't help but notice that their very own newsletter business itself will almost certainly vanish if their predictions hold water. Ironically, the only way EWI will succeed as a going concern is if their call for a deflationary depression, and the collapse of nearly every asset class, is wrong. In a world where virtually every asset has fallen by 90% or more, precious few souls will be interested in paying for investment advice.

Just look at financial news services in the 1930s (a time which EWI frequently refers to for guidance on what to expect in the years ahead). During the great depression, stocks became thinly traded and the average middle class American virtually disavowed investing altogether, focussing on bonds and simple savings for over a generation. If the Dow were to plunge below 1000 again, and remain there for years, a similar phenomena would occur.

Moreover, EWI itself proclaims that investors should be in cash, and stay there for many years. Assuming this advice is correct, there is little reason for anyone to continue paying for new reports when the advice will remain unchanged for years to come.

Here's to hoping that there will still be some new investment advice worth writing about, even if America were to experience a depression to rival the 1930s. Otherwise I will lose the precious voice of independent, and intelligent, thought I have come to look forward to every month.

Yet another threat to the Euro

There has been a great deal of speculation as to whether the Euro might come unglued if one of the member nations were to either be expelled, or leave the currency bloc in its own right. However, it occurs to me that a very real threat to the Euro might come from a completely unexpected quarter: nations who are members of the European Union, but not the Euro currency (like Sweden and the UK).

According to the standard hypothesis, it is merely a matter of time before Germany gets fed up enough with bailing out weaker economies that they decide to sever the weakest link, or that the weakest link (e.g. Greece) might bolt anyway, in order to avail itself of options which which are currently prohibited by the Euro rules . It may be far more palatable on the domestic political front to devalue the currency, or simply default on debt, than to implement strident fiscal austerity measures.

This theory seems pretty compelling, and could very well come to pass. On the other hand, there is a palpable threat to the Euro, from EU member states that never joined the common currency, that has gone virtually unnoticed. In short, it is possible that strains from dealing with Euro currency problems may lead one (or more), of the non-Euro countries to bolt from the European Union altogether.

At first blush this seems crazy. EU nations have such a close economic arrangement, that leaving the free trade zone would have extremely deleterious economic effects. On the other hand, what the desperate measures that Euro nations are exploring, as they struggle to stave off disaster could potentially lead to precisely this kind of almost unthinkable result.

For example, there has been recent talk of Euro member nations forcing an emergency vote in European Union government sessions, using simple majority rule principals, to force even non Euro members to participate in the Euro bailout. If such a thing were ever to happen, and countries like the United Kingdom and Sweden (who never joined the Euro to begin with) were obligated to pay for bailing out the Euro currency, the political backlash could be truly frightening. Considering how luke-warm countries like the UK have always been to the EU, forcing them to participate in bailing out the Euro could push things over the edge.

And just what, pray tell, would happen if the UK were to secede from the EU? It would undoudbtedly spread fear and economic panic far and wide. The Euro would likely be toast overnight. Instead of merely dealing with the calamity of an unravelling Euro currency, the departure of a nation from the EU could undermine more than 60 years of painstakingly crafted European unity. Certainly it is inconcievable that a civil war could break out, with the remaining EU members refusing to allow other members to depart, but the psychological damage would be enormous nonetheless.

Of course, the EU could very well be in jeapardy even if there is no revolt amongst non-Euro nations. The bad blood that will exist upon the departure of any Euro member nation from the currency (which is looking increasingly inevitable) will make running the EU an even more difficult proposition than it already is. After a messy currency divorce, it is hard to envision that the previously married parties will be able to cooperate on a broader EU level.

Perhaps the future of the Euro isn't the only thing we should be worried about.

07 May 2010

The True Lesson from Greek Debt

The deeper lesson in the Greek debt debacle is that welfare states paint themselves into a corner until they reach a tipping point of no return. All democratic, debt-ridden countries are heading for the same fate, and it is too painful and unpopular for governments to take the necessary austerity measures to avoid collapse. Any politicians proposing austerity measures will lose the votes of those who receive the benefits of government largesse. Once the group of people who believe they receive more from government than they pay reaches a majority, collapse is assured.

The political candidate's dilemma is: propose austerity and not get elected, or run on a free lunch campaign, get elected, and perhaps try to slip a little austerity in with the largesse. Even those who propose austerity as candidates tend to take little substantive action against it once they are elected. Note that the worst fate a politician faces by over-spending is getting elected out of office. If austerity policies guarantee such evictions, then largesse in the hope that the consequences will fall on a future government seems to be the best option.

Externally enforced austerity only works temporarily until either a new election, where communist candidates become attractive, or until the uprisings in the street reach a tipping point, forcing the government to declare bankruptcy. Either way, the government debt will ultimately go unpaid, and the currency will be devalued. In short, external bailouts, much like chapter 11 bankruptcy protection and domestic corporate bailouts, merely tax nations that aren't yet quite as bad off and delay the inevitable collapse. By taxing the healthier nations, such bailouts serve to weaken everybody, making it increasingly inevitable that the healthier nations will fall a little sooner than they otherwise would because of their own economic imprudence. The linked currencies of the euro merely guarantee a combined collapse rather than a selective one.

The solution to failing nations is the same as the solution to failing individuals and companies: unassisted, liquidation bankruptcy. It is unpleasant, and that is precisely the point. It needs to be unpleasant and inevitable in order for citizens to be a little less inclined to vote for governments promising a free lunch. Further, we need to let week countries fall in order for them to more quickly get on to the road to recover. It is a road that only starts from the bottom. Does only democracy lead inevitably to collapse, or is it a symptom of every form of government which has forgotten frugality and freedom?

The Freedom to Fail

Among the plethora of freedoms, real and imaginary, touted by politicians and pundits, one fundamental freedom is glaringly missing: the freedom to fail. Governments create welfare programs to save us from personal economic failure, health care to save us from health care failure, business and banking regulations and agency to save us from bank and business failure. Unfortunately, we learn by our mistakes. More importantly, the risk-taking entrepreneurial spirit requires the right to fail completely in addition to the right to windfall profits if it succeeds.

Without the right to fail, we become capricious and stop taking precautions to avoid suffering. Why save money if the government will provide pensions? Why buy health care if the government will provide it? Why be skeptical of bank interest rates that are too good to be true if the government guarantees our savings will be safe from loss? Why save for a rainy day when the government provides steadily growing unemployment insurance? Why cautiously rent when the government rewards us for taking a mortgage?

Unfortunately, when you take away the right to fail, you must also take away the right to succeed. Without the risk of failure, banks and individuals take too many risks and individuals are less inclined to take care of their own needs, increasing the need for heavy taxation. We already tax the poor heavily through monopoly gambling rights for the government and sin taxes on cigarettes and alcohol. The only way to raise taxes is thus on the less poor, by taxing the rich until their income is at a very modest level.

Many things stop happening at such a level. Potential medical students decide to not pursue degrees in medicine. Entrepreneurs decide not to create new, innovative businesses. Pharmaceutical firms decide against researching expensive new drugs. In short, the advance of civilization slows. Everybody focuses, instead, on hiding their income from the taxman and maximizing their government benefits. How many of our decisions are already driven by their tax or benefits implications?

Finally, when innovation has slowed, and new companies are scarce, the government becomes fearful of large existing firms going bankrupt, as new firms will not rise to replace them. They they provide subsidies to the weak companies and tax the successful companies until they also become unprofitable. If the companies no longer face the risk of failure due to taxpayer bailouts, then it is understandable that we then spurn profitability and bonuses.

The only solution is to harald a return of the right to fail. Eliminate chapter 11 and other corporate bailouts. Eliminate all government subsidies and regulation of retirement, health and unemployment. Encourage entrepreneurs to take risks, but allow them to bear the full loss or success of those risks. Inasmuch as we reduce the freedom to fail, we reduce the freedom to succeed.

The mistake that shook the world

With everyone reeling from the stock market gyrations of Thursday May 6th, with the largest intra-day drop ever, we are told that a simple trading mistake was the cause of the dramatic plunge. Someone apparently entered a "b" instead of an "m" when placing a sell order, which resulted in billions of shares being sold rather than just millions.

Now that the mystery is solved we can all breath easier... Hardly!

Trading errors occur all the time, sometimes causing very brief swings in stock indexes. However, these "errors" don't result in any kind of lasting impact, and the gyrations they cause are rather minimal. While it's entirely possible that Thursday's crash was accentuated, or even catalyzed, by human error, it is grossly inacurate to blame the decline on a mistake. In fact, mistakes are far more likely to happen when people are spooked, thus making it inevitable that more glitches would occur than normal when stocks are tanking.

Quite simply, the markets had been getting jittery for a while with the growing sovereign debt problems. Moreover, stocks have rallied so much that their values are already at levels which are hard to justify given the slow nature of the economic recovery seen in the last year. There just wasn't much more room for prices to rally anymore.

Curiously, no one ever makes a big fuss when a trading mistake leads to higher prices. It is only when there is blood in the streets that we look for scapegoats.

If there was indeed a large mistake in some of the orders placed on Thursday then the securities firms, and management bodies, need to rectify the problem and perhaps find ways to help prevent such glitches in the future. But it would be terribly naive to pin the blame for the market crash on an error.

05 May 2010

This Week on Bear radio: is the sovereign debt crisis over?

In this episode, the Optimistic Bear and guests discus sovereign debt. With all the problems in Greece, and Europe, prudent investors are wondering if purchasing bonds of nation states makes sense anymore. Are US T-bills, or German bunds safe?

Download the sound(right click and save as link) : Download

You can find all the Optimistic Bear shows here: Optimistic Bear

You can find all the Entrepreneurs Northwest shows here: Entrepreneurs Northwest