Archive for September, 2008

I Became Lead

Friday, September 26th, 2008

So yesterday, an hour before a schedule meeting to discuss a project, the General Manager in charge of all development told me that I’m charge of this new project and that I’m the lead. Not only that, but he wanted me to go through all the relevant documentation regarding this project and take charge of the meeting.

It was like being hit by a tornado and then struck by lightning.

I used my hour to hastily skim through all the documentation and requirements. Then I came up with a list of relevant and informative questions, a strategy on how I’ll divide the work up between my team-members and I, and started the meeting.

Overall, it was pretty awesome. I have good members on this team, and I’m more than certain than we’ll complete this project with flying colors. Although now that I’m lead, I’m starting to feel their responsibility and trust that they must place on each one of their team-members, I can see how it could be nerve-wrecking at times.

700 Billion Dollar Bailout and Bernanke

Wednesday, September 24th, 2008

I have great respect for the Federal Chairman, Professor Bernanke. I understand the fact that he’s proposing the 700 billion dollar bailout to protect a tool of regulating the economy.

The only reason why I think an economist might even think about bailing out a bank should be for personal profit, or because he honestly believes it’s the best course of action. Hopefully, it’s the not former. Banks are an important part of the tools for economy regulation, you increase the interest rate, it’ll take the money out of the economy because it’s better to save than to spend. You lower the interest rates and it’ll inject money into the economy because spending/investing money makes more sense than saving it. It’s proven to be more effective than fiscal policy, although fiscal policy if applied correctly is still effective.

One of the things that probably contributed to this crisis is the accounting standards and possibly the Sarbanes Oxley Act. Due to the new rules in the account standards and what is considered to be GAAP (Generally Accepted Accounting Principles) securities, depending on the type, is priced at fair market value. Now given the fact that the fair market value of houses are dropping like crazy, these highly valued securities are worth less and less every day. This drop in value is creating a loss on their books, and in accordance with accounting principles, they must record it. This drop in financials is definitely noticeable and causes a panic with the shareholders and prompts and rapid sale of said company’s stocks.

What Chairman Bernanke is proposing is to save the banks by having a huge buyer buy all the undervalued securities, that way, the panic is removed, and the price of the house will go back to it’s original pre-burst value; assets purchased pre-burst won’t be selling for a loss.

It makes sense, but still doesn’t justify a 700 billion dollar blank check that can’t be review or subjected to oversight, that, I simply can’t agree with. What I also can’t agree with is the fact that if housing doesn’t tank when will people like me be able to buy a house? Although I definitely do believe Bernanke is in a tough spot, the economy isn’t as simple as, “1+1 = 2”, it’s more like “n + x + y + z = a”. I think there will be issues in letting the banks fail and issues with not letting the banks fail. If the banks fail, there will be fewer banks on the market, which might lead to an oligopoly. If the banks don’t fail then it can possibly encourage reckless investment, keep housing prices inflated, and etc. Either way, it’s going to be a tough call, but apparently Bernanke believes that former is the worst of the two. Given the fact that he pretty much writes the book on this sort of thing he might be right, and given his position, I hope he is, but only time will tell.

AIG and Banks, Bad Precedent?

Thursday, September 18th, 2008

Economically speaking, I understand why Bernanke might make a move to save banks, due to the fact that banks are critically tied into the economic tool of monetary policy. Not to mention the fact that a lot of companies, business, and the liquidity of the economy can be impacted by a big bank’s disappearance. That said, our government’s move to save a non-bank entity (AIG) on the other-hand, I don’t quite understand. Overall in the scheme of things, although great for saving our economy now, I hope it doesn’t set the precedent that if you get big enough, and you fail, the government will bail you out. If that mentality ever gets established it’ll encourage a lot of corporations to not properly manager their organization and take risks that they shouldn’t be in the first place.

Why Writing Free Apps Make Economical Sense

Monday, September 15th, 2008

The web is becoming more and more populated web applications. We have social networking tools, we have web-based email clients, even web-based Microsoft office, and last but not least, we have a super powerful repository of knowledge (Google).

What do all these web apps have in common? They’re all free.

The great thing about a free web app is that it has the ability to create returning traffic. Just like how returning customers are very valuable to a store, returning traffic is the web equivalent. This fact alone wouldn’t make any economical sense, but after you figure out the marketing implication of a massive amount of returning traffic, that’s a huge amount of possible ad exposure, and that’s where free web apps make their money, off advertisement.

This is why free apps like free public television will continue to make sense. Certainly we’ll have to endure some ads every here and there, but they’re a small price to pay for what we’re getting.