PlexNex

Pogue Blasts RIM's "Storm"

RIM's attempts -- plural -- to catch up to Apple in the smartphone space have been prima facie pathetic.

The Blackberry Bold was still-born as an iPhone lookalike without the touch-screen. Now Storm lacks WiFi. I mean, what are they smoking up in Waterloo?

We know that the high-profile master of gadget punditry, David Pogue, is a Mac-o-phile, but even still it is remarkable that here he has pulled no punches ...

Says the Pogue ...

I haven’t found a soul who tried this machine who wasn’t appalled, baffled or both. And that’s before they discovered that the Storm doesn’t have Wi-Fi. It can’t get onto the Internet using wireless hot spots, like the iPhone or other BlackBerrys.

... But wait, there's less.

It's been two years now since iPhone launched to define the usable smartphone market segment and it is entirely validating of Steve Jobs' talent that competitors can't get even close this many months along.

Message to RIM: do better.

3 Readings on the Financial Crisis

(1) "Good question, Ma'am" | The Financial Times | 14 Nov 2008

Alan Beattie explains the financial crisis to Her Majesty, The Queen of England, who apparently asked, “If these things were so large, how come everyone missed them?”

One of the best outline sketches of the forces affecting meltdown ...

House buyers took the view that as long as someone was prepared to lend them money, things would be OK. The mortgage lenders reckoned that as long as they could package up the mortgages as newfangled financial derivatives (it’s a long story, Ma’am) and sell them on, that would be fine. The financial institutions surmised that as long as the credit ratings agencies were giving the derivatives their seal of approval, everything would be dandy. The credit ratings agencies thought – actually, it is pretty hard to work out what in God’s name the credit ratings agencies were thinking, except that as long as their rivals were giving these assets the thumbs-up, they had better do so as well.

Two Books ...

(2) Panic: The Story of Modern Financial Insanity | by Michael Lewis | WW Norton

Michael presents Panic as the bookend to his maiden voyage, Liar's Poker, an inside job from his vantage at Solomon Brothers about hubris on Wall Street in the late 1980s'. Panic is among the clearest and most successful journalistic pieces in explaining what the CDO & CDS market participants -- the people -- have been doing, their intentions, their objectives & their attitudes.

As a side-note, read Micheal's funny piece in Conde Nast Portfolio, about the Americans' propensity to take on too much house.

And his other funny piece in the same venue about lunch with Gutfreund ... the man whose career Micheal ended when he published Liar's Poker ... "The End" | Micheal Lewis | Dec 2008

(3) Mr Market Miscalculates: The Bubble Years & Beyond | by James Grant | Axios Press

James Grant is Da Man at Grant's Interest Rate Observer, the wonderfully entertaining and insightful brief on the financial markets.

Review of Mr Market in the FT by John Authers | 23 Nov 2008

Of most interest will be the chapters entitled “Mr Market Buys a House” and “Mortgage Science Projects”. His prescience is alarming. In August 2001, when many were preoccupied by the fall-out from the tech boom and the risk of deflation, he devoted a column warning that US house prices were up 8.8 per cent from a year earlier. “What could explain a bull market in a non-earning asset in a non-inflationary era?” he asked. “Ample credit is the first answer, low interest rates the second. An overly narrow definition of ‘inflation’ is the third.”

He also warned that Fannie Mae and Freddie Mac had extended their lending by more than 12 per cent over the preceding year and that Americans owed 45 per cent of the value of their homes, up from 14 per cent after the war. To end the column, he disparaged comments by Alan Greenspan, then the chairman of the Fed, that rising house prices were “a very important contributor to the American economy”, warned against the “day trading of houses” and said that “the American house market can be described as speculative”. This is exactly what we should have been worrying about in the summer of 2001.

Open-Source the Board

My friend Michael Schrage has an interesting prescription for corporate governance on the FT's Comment page today.

His object is financial corporations, but I believe there is substance here for all corporate stewards and shareholders to take on board (so to speak).

"How to sharpen banks' corporate governance" | The Financial Times | 19 Nov 2008

Well worth your time.

Michael says, in part: 

The most important governance reform in financial services would make risk management the explicit duty of the board. The experience of the past decade shows that non-executive directors cannot rely on representations by management about risk exposure. Companies trading hundreds of billions of dollars’ worth of credit instruments had inadequate risk management systems that were neither understood, challenged nor improved by boardroom review. This suggests that even boards of top-tier financial institutions accepted overwhelmingly almost all management’s risk assessments.

In danger of blowing through my own etiquette risk-parameters I'll interpret Mr Schrage's point, if for nothing other than to save you time.

His points, boiled down, resonate thusly ...

• fire your Board;
• replace them with smarter people (at higher pay), who understand modern financial markets, particularly derivatives, and who are smart & humane enough to not fear the new transparency;
• yes, transparency: tape the Board Meetings;
• make these audio clips available in Quicktime files on the web -- like SEC filings;

The problem with this is that only Warren Buffett, George Soros and Micheal Schrage have enough smarts, common sense and self-effacing humor (read 'humanity') to qualify for this new kind of corporate Board of Directors and still have the meetings be productive, useful & free-flowing exchanges of information rather than rote, scripted legalistic affairs in which everyone is -- despite being maxed out on Corporate Directors' & Officers' Libility Coverage -- covering their assets.

Despite the difficulties noted, I still think this is a great idea. Not because we can clone Schrage; although there is something to that. It's because we've learned so much in the software development realm in the last 20 years about the benefits of sharing through transparency.

It figures such an idea for bank corporate governance would emanate from MIT because MIT is the home of an open couse-ware curriculum and arguably the birthplace of open-source software development. The chief lesson from MIT's sharing modi is that knowledge is more effective when many eyeballs attend any particular problem.

How this would impact Board governance -- and the local and widespread understanding of risk -- is obvious if you think about it for as long as it takes one average home-owner to stare at and comprehend the workings of the ball-cock mechanism governing the water flow of a common ceramic toilet. Open-sourcing the Boardmeeting means we don't need Soros or Buffett or Schrage -- or at least we don't need multiples of them -- to execute.

The new Open-Source Governance can be replicated if only few companies lead the way to show how its done. The transparency would be self-reinforcing and cause best-practices to spread around the world. The total propogation might take less than a year, once the practical conduct and benefits become visible in a few well-publicized audio Board minutes.

In addition to the crew who took the "bail-out" funds, who shall be first to start taking the Board's responsibilities seriously?

Mr Immelt?