Observe Business

Michael Phelps, the man with the wingspan of a large bird, has been photographed using a bong. It is very likely that he was smoking some marijuana.

Since this is a business blog, I want to discuss the problems the ‘morality clause‘ can cause for endorsements. A morality clause usually says that a contract can be cancelled or have its value reduced if the athlete engages in certain activities. Michael Phelps’ contracts are sure to have a morality clause, and they will be invoked, if not to cancel the contract, then to subtly renegotiate the contract.

The most famous morality clause whopper was for Kobe Bryant, whose famous incident  in Colorado is estimated to have cost him $300 million.

I saw these two very weird ads from AdSense.  You gots to do better, Google!

No Remorse

I saw this interview, more like a three year old’s tantrum, posted on the NYTimes. The former head of the SEC,(also known as the world’s most toothless agency), Arthur Levitt, says everything was A-OK under his watch.

If you had a cancer growing inside of you for two eight years, and your oncologist didn’t detect it, wouldn’t you think the oncologist was remiss? Wouldn’t you sue the oncologist in court?

Bernie Madoff flourished under Levitt’s watch, in addition to all sorts of questionable behavior that led to the big profits made by insiders during the dot-com bubble.

In the interests of fairness, here is an embarassingly laudatory article from the CPA review saying how good Levitt is. Notice it does not talk about any prosecutions the SEC made, or who they caught. It is saying ‘Thanks for the softball game, Mr. Levitt’. 

The SEC should be hated, it should be like a mean junkyard dog running around and biting Wall Street people. That is what a regulator does. It should not be a shill for Wall Street.

Update: Here is a nice article about Bernie Madoff, again from the NYTimes, being called a psychopath. It also says regulators and Bernie were very cozy-cozy.

Geithner is Obama’s choice for Treasury secretary. There are several reasons to reject his appointment, although I think our current rubber stamp, do-nothing Senate will wave him through with the equivalent of a slap on the wrist.

He is in favor of the bailout, not just the current bailout, but the last five bailouts. There have been so many, I have lost track.

He was on the New York Fed Reserve, and it is under his watch that the financial industry ran off the rails. Where is accountability when you need it?

Wall Street loves him, which means that the crooks consider him one of their own-ready to turn on the money spigot. Obama’s treasury secretary should be someone Wall Street detests, someone who will make them howl with anger. I don’t know who, but not lap-dog Geithner.

Geithner is also apt to play with fire. In his confirmation hearing, he is claiming that China is keeping its currency undervalued. The Chinese are very prickly about all sorts of things, and this is one of them. Why would Geithner anger our largest creditor? If confirmed, he is going to have to beg them to continue buying treasuries, plus he is going to hope they don’t start unloading their trillion-dollar cache of treasuries.

Finally, there is this great article that takes Geithner to task over his failure to pay taxes. Now, I understand that people mess up on their taxes. But to earn so much money, to know that it is a complicated situation, and then to blame TurboTax for it, is downright disingenuous.

But, he is sure to be confirmed. Don’t worry, Timmy, just hang in there, smile a lot, say you’re sorry, and soon you will be in charge of our 35 trillion dollar economy. God help us all.

Update:

Here is a post from Larry Dignan at ZDNet saying how a guy who cannot handle TurboTax should not be Treasury Secretary. (1/25/9)

Coke is always introducing new products, and this one is causing some ire. Coke basically takes a lightly carbonated beverage, tosses in a some vitamins (vitamin powder to be exact) and packages it like a medicine (meaning so splashy graphics or cartoon characters). The CSPI, a respected scientific organization, objects and sues them.

The unexplored story here is who else has joined CSPI in suing Coke. Suing large companies like Coke is a lawyer’s dream come true. Coke has so many billions that even the most jaded lawyer starts to get excited.

If you read the article carefully you see that “The other law firms involved in the case are Reese Richman LLP and Whatley Drake & Kallas, LLC.”. These guys are professional litigators, and they are going to squeeze a few hundred million out of Coke. In exchange, Coke will get a “settlement” that prevents anyone else from suing them, and the consumers will get a fifty-cent coupon.

Coke wouldn’t care about CSPI suing them, but when these law firms join the game, then Coke starts to take the suit seriously.

Nissan UK stores car on expensive test track

More photos here courtesy of the Guardian 

This photo is amazing. First, I would like to know why Nissan would build a test track in the U.K. Are UK drivers really that different from Japanese drivers? Nissan and its predecessor, Datsun, did fine for 20 years before building a test track in the UK. Second, it shows us how bad the car industry is, that Nissan thinks it is OK to use a test track, with its very expensive smooth track, as storage. There are three rows of cars in some places and two rows in others. This track has room for more!

Wikipedia says: “In 2005 the overall median age for automobiles was 8.9 years, a significant increase over 1990 when the median age of vehicles in operation in the US was 6.5 years”.  There were 250,851,833 cars in the USA in 2005. 

So the age of a car went from 7 years to 9 from 1990 to 2005, a time that the US economy was doing really well, from the stock market boom to the dot com boom to the real estate boom.

Now that we are in a busted economy, the situation is even more dire for carmakers. Cars have become even more reliable. Even American cars are now worth buying again, with the Chevy Malibu beating the Toyota Camry in some surveys. 

So if the average age went from 7 to 9 years in a booming economy, how much longer do you think people will keep their cars in a bad economy? Much, much longer. My car is ten years old and runs just fine. If it breaks, I would replace the engine or the transmission or whatever instead of laying out $20,000 for a comparable new car.

The carmakers are in for a long, extended, painful downturn, even if the economy starts to recover.

With the emergence of the Internet and now with TV over Mobile, traditional broadcasters have become more irrelevant.

Here is a great post from NY Observer on how to watch the 2009 Presidential Inauguration Online

Storage is the biggest problem most of us face. I have several external drives lying around, containing music, videos, photos, etc. Once every few months I buy yet another drive that is bigger than the sum of all my existing drives, and copy everything onto that drive, and dump that drive at the safe deposit box. 

It’s a mess. I have no idea where anything is; BUT I know that I have everything, and I have a backup. So I have some peace of mind.

If only there was one place where I could continue to dump an unlimited amount of my data, and be sure it was stored safely, and access it quickly and without hassle.

Now, there are many solutions for this type of stuff. Zumodrive is one of them. 

This post is not about whether Zumodrive is great or not. It is about a review of Zumodrive that is so well written, so well illustrated, that you can’t help but start jumping up and down after you read it. Check it out on Mobile Industry Review.

Ralphs's Supermarket Analysis

Ralph’s is a supermarket that is owned by Kroger’s. This company is facing strong competition from Fresh & Easy, which is run by Tesco. It is also fighting off Trader Joe’s. 

I don’t think Ralph’s will survive another five years. It does not have Trader Joe’s focus on private labels and turnover, and it does not have Fresh & Easy’s focus on goods that appeal to the customer and low employee cost. Plus, Ralph’s is stuck with union contracts while its competitors are nonunion. Ralph’s has gone through several bruising strikes that have cost it a lot of money. Ralph’s stores are also very large and probably have a lower sales and profit per square foot than their competitors.

So how can Ralph’s fix itself? I am having a hard time figuring this out. They can push their private label more, but that’s it. Their fish counter is small and not worth much. They are doing OK on the meat and on the produce, but not great. They can cut down on the number of SKU’s, but what would they do with the extra space? Maybe they can open up cafes and try to earn $4 per cup of coffee, but that is tough in this economy. Ralph’s stores are standalone, meaning they are not part of a mall, so they cannot sublease it to another tenant.

It is going to take some imagination to figure this one out.

This is Citibank’s Business Credit Card account website. There are several problems with it: The URL does not explicitly mention Citibank or credit card. The security certificate pops up a warning in Firefox.

But the biggest problem is how it times out. Come on now! This is not some cheap joke-a-day website. Citibank of all people should be able to run a better website.