Pensions – Not So Boring Anymore…

In my deep past I wrote a paper for a college economics class.  I recall it was on a solid but boring topic for the time (mid – 70’s), related to pensions and the effect on budgets of mis-forecasting rates of return.  Now this was in an era when interest rates were boring, but soon they would not be so.  In the Seventies the big issue became inflation, or stagflation, which after the ’73 oil shock, started heading towards double digits.  At a time when inflation revolved around 10%, the question was can a pension then earning 9% keep up?

The yield problem, particularly for public sector pensions, has come home to roost in the current era of minimal inflation.  With nominal interest rates near zero, it is hard to achieve a return above 7%.  This is causing political problems for many municipal entities, a problem foreseen several years ago.

Responses have varied, but have come from both the right and left.  With the Tea Party behind him, Wisconsin Governor Scott Walker attacked the unions on collective bargaining rights, going after pay and pensions.  The left has taken up the call, as noted by Democratic advisor David Crane of California in 2010, “I have a special word for my fellow Democrats,” Crane told a public hearing. “One cannot both be a progressive and be opposed to pension reform.”  All this rancor over a bucket of money which has been promised to our public servants (teachers, fire, police, etc.).  But as Crane implied, in the current environment, keeping up with these fixed return obligations is threatening basic services like public schools and social services for the needy, not to mention fire, police, and garbage collection.

All this is being revisited across the country now, as an example New York City faces the prospect of an additional $1.9 billion in annual pension contributions due to a reduction in the assumed rate of return from 8% to 7%.  Its pension contributions currently make up 10% of the total operating budget.

With the majority of American workers now facing retirement with a combination of maybe a 401K yielding 2% and Social Security looking dicey, the public sphere is living in the past.  It is time for them to share the risks of the markets that we all do.  A promise to pay is one thing, a promised return is another.  It is time to put to bed traditional pensions for municipal employees, and the arcane activity of forecasting reasonable returns.

Rob Cannon is a frequent guest contributor at SMBmatters and is a principal at Cannonomics.  He is a virtual CFO for hire.

Related Articles

Google Cloud : Working Together, Working Better

Wondering how with Google Business Apps, all your work gets saved automatically in the cloud? You will have access to your emails, calendars, documents and sites. You will be able to work securely no matter where you are or the device you’re using. This means your employees and everyone you work with can be productive from anywhere, using any of your devices with an Internet connection.

Apple Devices

Google Sync offers two-way synchronization between your Google Apps and your eMail, Calendar and Contacts apps on your iPhone and iPad.  Administrators will be able to choose mobile device management policies that are designed to keep your business information safe and secure. The policies include the ability to be able to remotely wipe data from any lost or stolen devices, requiring a device password, setting the password strength requirements, and best practices for data administrators.

Android Devices

Google applications will typically be pre-installed on most Android devices.  Sign in to your Android phone via your Google Apps username (or email) and password, calendar and contact information will be automatically synced on the go. You can use your Google Talk account to IM or video chat from your phone. Administrators can choose mobile device management policies designed to keep your business information secure as well.

Blackberry Devices

Google Apps supports two-way synchronization between Google Apps and the Email, Calendar and Contacts applications on BlackBerry devices by cooperating with a BlackBerry Enterprise Server. With the Google Apps Connector for BlackBerry Enterprise Server, administrators will be able choose mobile device management policies that are designed to keep your business information secure.

Related Articles

Start Updating! iOS5 Released!

Get started with the iOS 5.1 update today! Apple brings 200+ new features for an even more superb operating system. There are bigger and better ways to communicate, not only through its primary messaging app, but with Twitter, your e-mail, and any other messaging apps of your choice. I’m sure the app market will continue to expand as well in concert with the improvements in iOS5, including new and improved game options.

If you’re a gamer, like me, I can point out a few choice games I play with my “free time” like: Draw Something, Hanging with Friends, Scramble with Friends, Scrabble and many more. These are just a few of their popular games that are still growing in the Apple App Store marketplace, give them a try, tell your friends and compete or play for fun.  Whatever you do just remember to enjoy your new iOS 5 update!

Games aren’t the only new addition.  There are now much better and more effective ways to communicate socially. You have your Twitter, you have your e-mail, Facebook, Tumblr, Google+, Instagram, OovooFaceTime, Skype and plenty more. The market constantly grows with the demands of those social butterflies among us.

If you’re into the media, don’t worry, there’s something for you too.  The App Store has plenty of those apps as well.  YouTube is always there and Spotify is a newer music media player that you can connect and synch with from your Facebook account, share playlists with friends and play it virtually anywhere!

Apple is always surprising consumers with their innovative products and ideas. We look forward to the next big Apple product which should be coming soon!

Related Articles

Tidbits #14 – Hollywood’s Best Kept Secret

Well maybe it’s not the biggest secret…  But no one in the industry would completely admit to it…   For all practical purposes, movies have become a series of two and a half hour long commercials.   Hollywood would argue that ticket sales alone would not cut it – that commercial sponsorship is needed to generate quality content.

In reality product placement in films is roughly a $2BN industry.   Ever since Drew Barrymore enticed the alien out of hiding with Reese’s Pieces (versus Skittles), moviegoers have been bombarded with subliminal, if not overtly obvious commercial messages.   What’s next?  Comic strips?  Hmm…   Now there’s a business idea.   ;-)

What Do Resumes and Infidelity Have in Common?

They can both bring down mighty men…

Some recent examples are worth noting.  Coming in at the top of the list in the Resume Inflation Category – Scott Thompson (above left) was much heralded executive from PayPal, who was recruited to take the top post at Yahoo.  Unfortunately, he had a less than accurate major listed on his CV which got both him and a board member responsible for bringing him in fired.  The sad part – at this stage in Scott’s career, it would not have made any difference whether his undergraduate major was CS or English (he listed computer science only to have the university later make an official statement that it did not offer CS degrees until years after he graduated).  Ouch…

Honorable Mention (Resume Inflation Category) – former Notre Dame head coach for 5 days, George O’Leary, who falsely claimed a graduate degree in education which he never earned…  Again, he was and is a great head coach (currently at UCF, a program that’s on the rise) and that extra bullet would not have added anything to his coaching credentials.

The most recent example in the Infidelity Category – former Arkansas Razorbacks football coach Bobby Petrino.  Full Disclosure: I personally do not like Bobby Petrino (above right).  I didn’t like the way he left Louisville and Atlanta Falcons hanging; how he secretly met with Auburn where his former boss Tuberville was still gainfully employed; etc…  So when he appeared in a press conference looking all banged up and vulnerable, I had to chuckle and order another round for the table…  Genius of a football coach? Yes.  Unscrupulous human being?  Well, yes to that as well…  Rock-star status in Arkansas after registering its first 11-win season after four decades; father of four; affair with a 25 year old intern (who happened to be engaged to another person at the time); then lying to officials in a cover-up attempt.  What was he thinking?

Honorable Mentions (Infidelity Category)  Unfortunately, there are too many to mention in this category, from our beloved Magic Johnson, former CEO of HP Mark Hurd, elite basketball coach Rick Pitino, former CEO of Best Buy Brian Dunn to sports star and mogul Tiger Woods, who became the butt (no pun intended) of all infidelity jokes the last couple of years…

We’ve all made mistakes in our lives (and I get that), but it’s hard to give a hall pass to smart, powerful men who supposedly should know better, but act like they’re invincible and beyond the constraints of the moral compass that guides most of us.

Editor’s Note: The original title and content cast this article in the model of a top ten sports analogy, courtesy of the editors.  However, our contributor felt the import of the article was diminished, and successfully lobbied for his original title to be used.  We saw his point, and also caught the less than accurate description of “Grade Inflation” to describe what is more accurately “Resume Inflation”.

Related Articles

Requiem / Paean for a Dot-Com Darling

It’s a tale that unfolds more than we care to count, but is heart-wrenching to see nonetheless.  We’ve seen it many times: a young star meets with great success early on.  Their ascent is met with many accolades and kudos.  Then, they fall from grace.  Scandal; missteps; a change in public sentiment.  No matter how hard they try, they can’t reverse their fall from the great heights.

Sock puppets and search engines

yahoo pets.comI’m talking, of course, about Yahoo!, the once-revered icon of the late 1990′s dot-com era.  Two young Stanford grad students, Jerry Yang and David Filo, unleashed on the world an indexing service that would help navigate journeys on the increasingly congested “information superhighway.”  In this context, Yahoo! was nothing short of revolutionary.  Even its silly name seemed to capture the slightly irrational, but very fun, mood of the time.  This was when “burn rate” was a proxy for a company’s growth prospects, Herman Miller chairs and foosball tables represented credibility, and Jack Welch could get upstaged by a sock puppet as a company spokesman.

I have fond memories of that era: it’s when I moved to Chicago, fell in love with the woman with whom I just celebrated 11 years of marriage, and arrived at the very satisfying answer to the Frequently Asked Question, “what the hell are you going to do with a History and French degree?”  It’s why I still have a great deal of affection for this Sunnyvale company, even after the Microsoft acquisition debacle, the dustup over Carol Bartz ignominious departure, and the Scott Thompson resume kerfuffle.

Having logged time at two financial services companies, I was obviously a big fan of Yahoo! Finance.  There were two services, however, that capture the era well.

Yahoo! MailWashington University alums will recall standing in line waiting for the sterile “green screen” terminals to check their “Pinemail” in the Olin Library.  I quickly tired of the clunky interface I used to check my email after leaving St. Louis, and abandoned my “@wustl.edu” account for a Yahoo! one.  Granted, I am on the whole underwhelmed by Yahoo! Mail, given their glacial pace of introducing upgrades, and the fact that their integration with Outlook is a joke.   However, my Inbox is an ever-evolving scrapbook, a digital collection of moments I’ve shared with friends, family, and professional connections.  It’s why even though I have a Gmail account I’m still not parting with my Yahoo! account.

Geocities.  Facebook, Twitter, YouTube, and Instagram have found a captive audience in folks looking for exposure – sometimes a little too much, as in the case of the “oversharenting” moms and dads examined in The Wall Street Journal.  It wasn’t always this easy.  I hate pulling out the “in my day” card, but you had to sort of know what you were doing in the late 90′s to publish content.  Geocities was the middle ground between Facebook and WordPress, that offered some primitive drag and drop tools for building and maintaining Websites.  Through Geocities I was able to share pictures with relatives in India, develop a Web portfolio to show hiring managers that a liberal arts grad could write code, and acquire a minor following from folks interested in sound clips from Goodfellas (one of my all-time favorite flicks).   Geocities has unfortunately gone the way of Delicious, Briefcase, and other sunsetted properties.

Holding out for a Hero (or a Good Product)

Ashton Kutcher was recently tapped to play Steve Jobs in an upcoming biopic.  At time of writing, if we were to associate a celebrity with Yahoo!, it would unfortunately be the likes of Lindsay Lohan or some other misstep-prone, washed up train wreck.  I’m holding out hope though.  Few seem to recall that the Apple of today was very much like Yahoo! before Jobs rescued it from the brink in the late 90′s – incidentally, while Yahoo! was riding high.  To win over the hearts and minds of customers and investors, Yahoo! needs to completely reinvent itself like Jobs did with the iPod, as opposed to half-baked, poorly executed attempts at innovation such as Livestand, and now Axis.

I’d like the next chapter of  the Yahoo! story to unfold like the amazing scene in Limitless when Eddie Mora shakes off the cobwebs, gets to work, and starts kicking some serious butt.  It would be nice for Yahoo! to replace “LiLo” with Bradley Cooper as the star with whom they are identified.  As talented as he is, however, I’m not sure Cooper could pull off the Jerry Yang look.  There’s always Eddie Murphy.

Related Articles

The Student Becomes the Master???

SMB Matters Blog:

google motorola mobility merger approved

Google has announced the closing of its acquisition of Motorola Mobility, after a number of global regulators and authorities approved the transaction. As a leading global technology and engineering firm, Motorola built a reputation for quality and innovation, but pressures in its core markets and businesses had long threatened to make this global leader and manufacture into an also-ran in the modern digital economy. Google has earned a strategic coup in tapping the vast and underutilized technological and human resources of [part of] the Motorola family, and is now positioned to make the leap beyond the intangible space it has led into the tangible space Motorola once dominated. We’ll see how well they pull that pivot off. Our Chicago-based tech geeks and business types all hope that this is a promising development for the remains of the old Motorola we knew and loved, and hope that the student-teacher dynamic of this new combination can lead to even more “dynamics” in the marketplace.

Despite the promising nature of this transaction, a number of us find it ironic that the final hurdles and conditions came from China regulators who extracted some concessions from Google on keeping Android open, ostensibly to maintain competition.

Related Articles

Originally posted on TechCrunch:

As we reported would happen yesterday, Google has today announced that it has closed its acquisition of Motorola Mobility, buying the Illinois-based device maker for $40 per share in cash for a total of $12.5 billion.

As widely expected, Sanjay Jha is stepping down as CEO and Dennis Woodside, Google’s former Americas head, will take the helm at Motorola Mobility, which will be operated as a standalone company. The company says the acquisition will help Google “supercharge” the Android ecosystem: while Motorola will be making devices using the platform, it will also remain open.

Page, interestingly, uses his blog post announcing the deal to focus mainly on the mobile aspects of the acquisition — Motorola also has a substantial business as a media hardware vendor, making things like set-top boxes and other equipment and technology to deliver digital video services.

“The phones in our pockets have become supercomputers that…

View original 177 more words

Amazon Web Services

Amazon Web Services logo

Amazon is a diverse company. Its financial reports do not break down its revenues into detailed categories but it’s obvious that it has a vast retailing presence in media, electronics, and general merchandise; and it sells a lot of Kindles, including Kindle Fires that arguably make Amazon one of the more successful competitors against Apple in the tablet market.

There’s another category on its quarterly reports labeled “Other” which hides Amazon Web Services, one of Amazon’s most interesting ventures.

Amazon has built a global network of servers that are highly reliable, massively redundant, and very secure. It makes them available to developers very inexpensively as a cloud computing platform. Amazon has stayed ahead of Google and Microsoft in making cloud servers and cloud storage available to all.

You won’t recognize most of the services offered through AWS but you’ll get an idea of the scope of the operation by looking at Wikipedia’s list of AWS products.

Amazon Web Services - Wikipedia list of AWS products

One of those products, Amazon Simple Storage Service (S3), has gotten much of the attention so far. Basically developers can write a program that stores files in the cloud and use Amazon S3 as the storage space with confidence that the storage will be safe and cheap.

When you use Dropbox, your files are stored on Amazon S3 servers. Amazon S3 is used to store data for Tumblr and Posterous. Backup programs are being built to store backups in Amazon S3. It’s far cheaper and more effective for a growing company to use S3 to hold your files instead of building its own global server network.

Another AWS service, Amazon Elastic Compute Cloud (EC2) provides something that network administrators are still getting their heads around. Basically it allows anyone from an individual to a Fortune 500 company to spin up a virtual server and operate it for a limited time for a specific project, or operate it continuously to run line-of-business programs. Either way, it costs almost nothing.

Last month Amazon made the experience even more friendly with the introduction of theAWS Marketplace, where a variety of business applications can be discovered and deployed with a minimum of expense and difficulty. From GigaOM:

“Nearly every company needs to run document management systems, CRMs, wikis, bug trackers, project management tools and other web-based software. Server applications tend to be tricky to setup and require a non-trivial amount of sys-admin knowledge to run and maintain. The AWS Marketplace encapsulates all that complexity and allows end users to discover, purchase and deploy complete server applications with one click. . . . This significantly lowers the barrier of adoption of cloud computing at the departmental level, making it easier for business units to bypass traditional IT. Why wait weeks to have a server delivered and setup when you can get pretty much the same result by whipping out your credit card and paying $50 a month for a small instance running the app you need now?”

AWS continues to be aimed primarily at enterprise IT departments, IT pros and developers. As an end user or businessperson you’re not going to go lightly over to the AWS Marketplace and spin up a project management system or SQL database. It’s a big and complex platform.

For IT departments, IT pros and developers, though, it changes everything to have so many hard things done automatically, preconfigured, cheap. As more people become familiar with the Amazon tools, it will likely grow exponentially. Microsoft, Google, Rackspace, and others are competing with Amazon to build out their own global networks and offer the same kind of services but Amazon is a rather large step ahead. Amazon may win the loyalty of application vendors, who do not always have the resources to develop for many different platforms; and Amazon may deliver the most customers if its marketplace begins to be widely used by businesses.

Descriptive Camera - Amazon Mechanical Turk

One recent report highlighted the unbelievable variety of things that creative people can do with the AWS platform. One of the AWS services is named “Amazon Mechanical Turk.” Programmers can send requests through Mechanical Turk to human beings who receive a small payment for completing a task that a computer cannot do. There are people around the world who have signed up to get micropayments for quick decisions – choosing the best photograph of a storefront, writing a product description, or identifying a performer on a music CD.

Last month the “Descriptive Camera” turned up on the gadget sites, a project done for an NYU class that demonstrates some of the awesome power that can be unleashed cheaply.

The Descriptive Camera takes a picture and uploads it to Mechanical Turk.

Three minutes later, a little printer spits out a slip of paper with a prose description of what was in the picture.

Sample photo and description:

Descriptive Camera - Amazon Mechanical Turk

That’s an awesome display of technology and outsourcing. Think it’s pointless? Look forward a few years and imagine that your camera automatically gets that kind of metadata and stores it in each image, where your camera already records shutter speed and date and time. You’d have a whole new way to search through your photos, wouldn’t you?

Watch for references to AWS. You’re likely to see it mentioned more and more frequently in the next few years.

Guest Contributor, Bruce Berls. Originally posted at Bruceb.com

LO$T IN TRAN$LATION…

SMB Matters Blog:


US and Chinese film industries - copycat or cooperation?

US and Chinese Film Industries – Copycat or Cooperation?

News this week comes of another unexpected economic milestone in the US-China relationship. A Chinese firm buys AMC Entertainment from Apollo and Carlyle Group to become the largest U.S. theater operator overnight. Via China Daily Mail.

 

AMC Empire 25 (cinema) 234 West 42nd St. New York (Times Square), Manhattan, New York City (Photo credit: Wikipedia)

Following a generation of complaints about United States firms’ frustration at investing in China, this development is surprising for many reasons.  One of the more interesting elements is the fact that the acquiring firm is a private enterprise.  Among the many complaints of U. S. investors seeking access to China has been the role and interference of the state-owned enterprises and the political estate in China, which has made it difficult for foreign investors to take viable stakes in China.  There’s also a parallel issue of longstanding disputes between the U. S. and China on intellectual property and market access (in the film industry, in particular), which makes this almost unthinkable event all the more ironic, given the lack of major progress on those intractable trade issues over the past decades.

 

 

Originally posted on China Daily Mail:

Wang Jianlin

China’s Dalian Wanda Group agreed to acquire AMC Entertainment for $2.6 billion, becoming the biggest theatre operator in the U.S. by revenue.

Ties between the U.S. and Chinese movie industries have warmed after China agreed in February to open its market to more American films, with DreamWorks Animation announcing a landmark deal in the same month to build a production studio in Shanghai.

AMC and Wanda had held off-and-on discussions about a possible deal more than a year ago. Talks grew serious after AMC, the world’s largest operator of IMAX screens, cancelled its plans to go public, according to media reports.

“This acquisition will help make Wanda a truly global cinema owner, with theatres and technology that enhance the movie-going experience for audiences in the world’s two largest movie markets,” Wang Jianlin, chairman and president of Wanda, said in a press release on Monday.

By acquiring AMC…

View original 278 more words

Follow

Get every new post delivered to your Inbox.

Join 53 other followers

%d bloggers like this: