These days there’s no shortage of opinion regarding the size and role of government.

But one thing everyone can agree on; corruption has no place in any government.

In the USA we are lucky in this regard, but many (usually poor) people in developing countries don’t have that luxury.

I’m not talking about the stupidity of an elected official flying to Argentina on taxpayer’s money to visit his soul-mate. I’m talking about people having to pay local officials just to get business permits, drivers licenses, and even having a sick child be admitted to a hospital.

The World Bank has estimated that $1 Trillion are paid in bribes around the world every year.

But what can be done?

Shaffi Mather is a successful young [Indian] entrepreneur, whose goal is fighting the business of corruption in public service, eliminating it one bribe at a time.

And he plans to do it in a totally capitalistic way. It turns out there is a lot of gross margin to be made when you are operating in a $1 Trillion market.

Click On This Image To Watch Shaffi's TED 12 Minute Talk

You can watch Shaffi describe his idea in a 12 minute talk at the TED Conference in Mysore, India which he delivered last month.

In the lecture he begins by describing 298 for Ambulance a for-profit emergency medical service he founded. It operates on a sliding scale payment system that has revolutionized medical transport in Mumbai and Kerala and it is self funded.

That amazing success lends credibility to his even more exciting anti-corruption idea.

If you are like me you will stand up and applaud at the end of the video.

I guarantee it.

Just when it looked like the financial system is coming back under control I discover that the term “Large Sophisticated Investor” is an oxymoron.

When you gamble with the Big Dogs, normal practice is that you have to show your stake and throw some money into the pot before each hand.

All Dogs, But Some Are Big And Some Are Stupid

It’s exactly the same thing in the world of High Finance, but of course we don’t call it gambling, we call it investing. And although the SEC is supposed to have regulations to protect the little guy, the Big Dogs have found many ways around it.

One of the easiest ways for sellers of speculative investments to avoid the regulations is to limit their customers to large sophisticated investors who are called “qualified” simply because they have lots of money. The assumption is that they can do their own ‘due dilligence’ on the investment, and besides we don’t care if they lose all their money.

So far so good, but who are these guys? Well, turns out they are the investment advisors all [we] ‘little guys’ give our money to in hopes these savings will grow in time for [our] retirement. They include among other groups,

• a bank, insurance company, registered investment company (generally speaking, a mutual fund), business development company, or small business investment company;
• an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
• a charitable organization, corporation, or partnership with assets exceeding $5 million;

And how have they done for us, over the past few years? Well, it turns out that in addition to the well-documented carnage in the stock market there is a brand new twist to the story that’s just emerging.

Because some of [our] advisors had lots of money, but not lots of brains they hired the nation’s big investment banks to cook up some extra special investments for them; something called Synthetic CDO’s. The very obliging Big Dogs at the investment banks not only did what they were asked, but they went one better.

After creating these Synthetic CDO’s the Big Dogs went into the market and began selling these same investments short. By selling short they were betting that the investments they had just created would blow up, and they could make money at the expense of their clients.

In other words the Big Dogs stacked the deck, dealt the cards, and then bet against the Stupid Dogs at the table holding those cards. And yes, of course the Stupid Dogs paid the Big Dogs for the priviledge of sitting at their table; these are called fees and commissions.

From the NY Times

Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employees with direct knowledge of the deals … Goldman … peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley …

And while the SEC would have us believe that it was all OK, because the folks who got fleeced were Large Sophisticated Investors, the truth is something else if you were an investor in one of the funds that Bet Against The House and lost.

Oh, and by the way, the Stupid Dogs collected their fees also.

Our suggestion for that Romantic Evening during the Holidays features your iPhone, the (free) Eternal Fire App, and most important, a pack of Johnson & Johnson Reach Ultraclean dental floss.

Floss?

For Perfect Smiles And iPhones

As we’ve reported before, this particular floss serves as the perfect iPhone stand, so you can put your feet up in front of a roaring fire. Speaking of which, just click on the play button below and mix up some eggnog.

Enjoy!

I thought that “The End of The World as We Know It” had already taken place earlier this year. And I was right of course, but for the wrong reason.

Silly me.

“Googled” by Ken Auletta, does describe the end of the world as we know it. But it’s not a financial meltdown, it’s a media meltdown.

And because you can get the book in both Kindle and Audible formats in a matter of seconds, I’m recommending it as a Procrastinator’s Delight for a really last minute Holiday Gift.

Much More Than A Verb

From Publisher’s Weekly:

Two Googles emerge in this savvy profile of the Internet search octopus. The first is the actual company, with its mixture of business acumen and naïve idealism … its brilliant engineering feats and grad-students-at-play company culture; its geek founders, Sergey Brin and Larry Page … The second Google is a monstrous metaphor for all the creative destruction that the Internet has wrought on the crumbling titans of old media, who find themselves desperately wondering how they will make money off of news, music, video and books now that people can Google up all these things without paying a dime …

It’s been a while since I read a great ‘behind-the-scenes’ look at the birth of a technology company. But this is not just any tech company.  Google has in many ways changed our reality. And no, I don’t think I’m exaggerating.

Consider for a second what Google has put at our fingertips, under the seemingly simple term: Search. You can ask virtually any question on virtually any topic and have an answer in a few seconds. You can enter an address in most parts of the US and many parts of Europe and within seconds have a satellite map of the street, and then a view from a car driving down that street. You can, or soon will be able, to search virtually every book that’s ever been written. You can type a page in one language and have it instantly translated into another language.

‘Search’ really is organizing all the world’s information and making it available.

We take it for granted, but the implications of Search are staggering when you think about it. Some have derided Google because ‘all they can do is search’. That misses the point entirely.

Before Google search platforms were not automated. They could never have kept up with the growth in the web. Before Google search results were bought and paid for by advertisers. Google did away with that and made the results as ‘unbiased’ as possible.

[Before I read the book I thought that Google Page Rank was named after an algorithm that ranked a website on how often the pages were referenced. That was partly true, but in fact the 'Page' in the term was just taken from Larry Page's name, since he came up with the algorithm.]

“Googled” gives you the real back-story on Search and Google’s mind-set. Until recently the company pretty much flew under the radar. But that’s changing, and Google are now under tremendous scrutiny around the world by governments and a variety of business interests. This book will help you understand the thinking both at Google and their adversaries on any number of important issues. And these issues effect all of us.

But in fact “Googled” is even more about a change in the media landscape that is unfolding, and will continue to unfold for many years to come. It’s how we get our news, our entertainment, and communicate with other people. Business and cultural models that have been around for a hundred years are collapsing. That’s what’s perhaps the most interesting aspect of the book for me.

In a way the world is choosing up sides, and Googled helps explain the coin toss.

So did you want to Kick or Receive?

Here a world conference, there a world conference.

Whenever one of these big-time global confabs takes place, like COP15, I get the urge to watch “Girl In The Cafe” again. Released a few years ago, it is still strikingly relevant today.

So right now would be a great time to rent, watch or purchase this DVD. After all it takes place in Reykjavík which makes it seem like a Christmas Flick. Plus it’s focused on a world conference with lots of negotiations. So the timing is perfect.

Bill Nighy gives one of his best performances as:

… Lawrence, a 57-year-old Londoner with a successful governmental career and nonexistent social life. One day he stops in a café and meets the mysterious, considerably younger Gina (Kelly Macdonald, Trainspotting). To their mutual amazement, they hit it off and agree to meet again (and yet again). Then he invites her to accompany him to the G8 Summit in Reykjavík, where she upends his carefully ordered world in ways both wonderful and terrible.

Whenever I read about a world conference this film takes me to the back rooms where the real work goes on, and negotiation either succeeds or fails.

Lawrence: We get into the habit of compromising and therefore we are always compromised.

Now that COP15 has just finished up on an ambiguous note, this film provides some insight into what happens at these events. Perhaps not with specific details, but certainly with the process that takes place.

And Bill Nighy gives an incredible performance that you won’t forget.

If nothing else, it might  motivate you to get hold of a Starbucks Red Card (I did).

Give It A 'Shot'

What’s in a word?

If the word is Cloud then the assumption is that it’s newer and better.

Last week Apple bought the music service Lala. Without going into the gory details, Lala’s product allows you to access the music you already purchased from their cloud computers, no matter where you are located.

Talk About Bandwagons

The technology press is gushing over this breakthrough.

…The idea of a limitless jukebox in the sky — or in tech-speak, “in the cloud” — has been around for some time, but [now] it is consuming music executives…

I’m amazed (but not surprised) that they don’t talk about Rhapsody, a music service that’s been doing this for years. Rhapsody provides a subscription music service. But the subscription model was crushed over the past few years by Apple’s iTunes store. Let me say that again: crushed.

Once Crushed, Twice Shy

The subscription model is simple. You pay a monthly ‘subscription’ fee and have access to virtually millions of songs without having to purchase them. We’ve been huge fans of Rhapsody for years and have recommended it on this blog. But it never caught on because Apple came to dominate digital music and they haven’t offered subscriptions.

Oh yeah, there’s another Brand that is doing subscriptions; Microsoft’s Zune.

Another nail in the coffin.

Perhaps with the Lala purchase Apple are re-thinking subscriptions. But of course they are way too smart to call it that.

My guess is that if Apple moves to subscriptions, they will re-Brand it as the iCloud and sell it as a great new idea. It’s an idea whose time may finally have come.

Bob Lefsetz, who writes an influential music industry newsletter, the Lefsetz Letter, acknowledged that some people bristle at the idea of not owning their music, but he compared them to people who once said they would never rent a videotape.

“If you ask anybody today, they’ll tell you, ‘I need to own it.’ But once you have these services, you get to the point of, ‘Why would I own it, because I have access to everything?’ ”

Only one teensy weensy issue for Apple. The iCloud name is already owned by another company.

But this shouldn’t stop Apple from just co-opting the name, just as they did with Cisco who owned the iPhone copyright.

Remember, you heard it here first.

Public Service Announcement. In the meantime, why wait, you can sign up for a Rhapsody subscription now. They’ve also put out an App that allows you to stream music to your iPhone. The difference between this and a streaming service like Pandora is that you have access to your playlists, library and any specific song whenever and wherever you like. Personally I love it.

It’s refreshing when an industry looks to new ways of promoting their products instead of being stuck in the past. And especially when that industry could be the world’s second oldest.

We are talking Perfume.

Common wisdom is that demographics are a problem for the perfume industry, with people today wearing fewer fragrances. So what to do?

From the NY Times:

Meet the perfumer, the fragrance industry’s latest ploy to lure people to the perfume counter. After recruiting designers, then celebrities to distinguish one fragrance from another, the industry has dispelled the aura of secrecy that long surrounded perfumers and tapped the creators to help sell their products.

By promoting the names and personalities of the people who create a particular fragrance the industry is taking on risk in a number of ways. But while transparency is always risky, it resonates with the current demographic.

As part of a 2010 campaign, the Fragrance Foundation is encouraging retailers to hold seminars where perfumers will meet with customers and discuss the inspiration for their fragrances … “The consumer will say: ‘Oh, it was developed by Jane Smith? I love her work.’ And it will be a very normal extension to your purchase” …

I applaud the folks who are taking this risk and having confidence in their customers. I wish more industries would take this approach, e.g. ‘old media’ are you listening?

By the way, if you’d like to read a fascinating book about perfume, and need a Christmas gift suggestion, then I recommend The Emperor of Scent. It not only invites you into the world of perfume creation, but provides an extraordinary evocation of scent on the printed page.

Teensy addendum: The second half of The Emperor of Scent gets a little nerdy around the physics of olfaction. Mass spectrometry and stuff like that.

Praemonitus praemunitus.

Since the Great Recession started in 2008 the Brits have been at the leading edge of economic engineering. For a while it looked like Gordon Brown was going to get a Nobel Prize in economics, but he peaked too soon.

No matter, there’s a second chance for Gordon and it looks promising.  In that popular phrase often used by London newspapers, NotAMystery “can now reveal” Gordon’s plan.

Part one of the plan was leaked several weeks ago, when the Telegraph reported a new government plan to incentivize recycling:

People will accumulate points for the household waste they recycle and be able to use the points to claim up to £130 a year in vouchers from major retailers like Marks & Spencer and Tesco.

In The USA We'd Call It "Bucks For Bags"

Part two of the plan came clear just two days ago with reports that the UK Treasury is preparing to tax bank bonuses:

Alistair Darling is drawing up plans to face down the country’s top bankers by taking the “nuclear option” of a windfall tax on their bumper bonuses as part of measures aimed at the super-rich.

So there you have it. A tax on the bankers who rubbished the world economy used to finance a rubbish cleanup we can believe in.

If only Robin Hood were around to administer the plan.

Better Than Pitchforks?

After all, he was a Brit too.

Note for accuracy: The “Bucks for Bags” program originated with the Tories, but we are confident Gordon can push them off the front pages and capture the moral high ground.

We don’t have many rules in our house, but interestingly two of them come into force during the Holiday Season.

1. No Christmas music shall be played until the day after Thanksgiving.
2. Bob’s favorite Christmas film, “Love Actually” can’t be viewed until December.

Last night Leslie said that’s she’d got her head around the fact that we were into December; so the gloves came off and I fired up the video. There was the opening shot of Bill Nighy singing “If You Really Love Christmas”. Great stuff.

Since “Love Actually” was released in 2003 this will make our 9th. viewing. Without doubt an outstanding Christmas feel-good movie. [Note to parents: it's R rated.]

Christmas Video At It's Best

If you’ve somehow managed to avoid this treasure, here’s a quickie synopsis from Amazon:

With no fewer than eight couples vying for our attention, Love Actually is like the Boston Marathon of romantic comedies, and everybody wins … With Love Actually, [Director Richard] Curtis orchestrates a minor miracle of romantic choreography, guiding a brilliant cast of stars and newcomers as they careen toward love and holiday cheer in London … Curtis wraps his Christmas gift with enough happy endings to sweeten a dozen other movies. — Jeff Shannon

The cast includes lots of my favorites: Hugh Grant, Bill Nighy, Liam Neeson and Emma Thompson. Plus the soundtrack is excellent.

After you finish watching “Love Actually”, make sure to try “Girl In The Cafe” which I think is one of Bill Nighy’s best performances, and the more recent “Last Chance Harvey” with Emma Thompson and Dustin Hoffman.

Luckily we don’t yet have any rules about me adding snowflakes to the blog during Christmas. However I’ve been notified that this may change.

Let it snow, let it snow, let it snow.

This morning there is (for me) one less mystery in the world.

What’s emerged from Rupert Murdoch’s recent complaints about Google Search is the existance of a “First Click Free” deal between News Corp. and Google.

Mr. Murdoch, who is arguably the most powerful person in media today, has been insisting that Google ‘steals’ his content without payment. He’s been threatening to wall off his media properties from Google search results.

This argument about payment for content is getting a lot of attention in the ‘press’, but what interests me more is the fact that Rupert has peeled back his Kimono and given us a glimpse at his free Hors d’œuvre. (How’s that for a mixed metaphor?)

Colonol Rupert With Kimono And Hors D'oeuvre

It’s pretty widely known that while the Wall Street Journal is a subscription-only site, you can access any article by going thru Google first, as long as you know the title of the article. I’ve documented this trick for our readers, but never knew it had such a descriptive name. And obviously it’s the result of a business arrangement between Murdoch’s News Corp. and Google. It’s not the result of Google stealing content.

Now we know officially that the Wall Street Journal has been working with Google to increase traffic on their site by giving away access to the ‘first’ article hoping that readers will sign up for a subscription. But in spite of Murdoch’s threatening to cut off Google and work only with Microsoft nothing of consequence has come to pass.

If you’d like to play the game, copy and past the following line into a Google search box, and then into a Bing search box. From the search results, click on the online.wsj.com link and you’ll get complete access to the article from Google, but only a preview from Bing.

wall street journal Pay-to-Play Probe Turns to Venture Capitalist

As a former long-time subscriber to the WSJ, I’m enjoying the appetizers, but won’t be back until Rupert figures out a decent business model and puts out the whole lunch.