Entries Tagged 'News' ↓

So by now I think everyone knows that Microsoft made a “deal” with Yahoo to run search on Yahoo websites.  This is still waiting for regulatory approval, but chances are it will be fine since the two behemoths are not exactly merging and the combined search market of Yahoo and Microsoft is only around 35%. The word from inside Yahoo Search is that they will keep on developing their search engine for now while they wait for the final approval.  No one is fired as of now but most people in search are understandably dejected that their product is essentially being scrapped.  Personally, I think this is a perfect time for the codemonkeys in Yahoo to band together and use their search engine for one last hurrah.

I used to work for a leading shopping comparison engine that has  significantly less traffic than Yahoo, but that is where I learned about how much money a website could potentially make even if it has a miniature slice of the giant internet pie. (At that time the company I worked for had only 0.2% of all search traffic).   The Yahoo search engine supposedly has 20% of the search market, so the codemonkeys that control it really have some serious power.  Here are some of the ways they could “experiment” with the search engine in the next few months for their own profit:

• Change search results for products to websites that pay commissions and embed their own affiliate codes in the links.  By my estimate from my past experience in shopping comparison, these Yahoos only need to sign up as an affiliate for just a few major merchants and leave it running for one day to generate millions.
• Create websites with various content and manually rank them high on the Yahoo search engine.  Drive traffic to these personal websites and get advertising dollars.  This probably would not make money as quickly as tactic one, but it will build up a website very quickly and possibly generate revenue for years to come.

Are these tactics unethical?  I don’t think they are if the search engine still finds results that are relevant to the person making the query. In fact, both Microsoft and Google manually rank many search results for various reasons so it isn’t exactly a democratic process anyway.  The creators of the search engines can and do control what you see on top.  Is it an inappropriate use of company property?  Perhaps, but it may also be beneficial to Yahoo to see the results of the experiment and see if there is a business opportunity there. The worst thing that could happen is that the Yahoos will be fired.

The chances of this actually happening is fairly low since it would require  source and data changes, and releases of software the size  of the Yahoo search engine  would take the coordination of a good sized team of engineers.  When you have to involve so many people in such a project to subvert a giant corporation it is not likely to happen.   However, if they manage to actually do it correctly and let it last for a few months until the Yahoo search algorithms are taken offline then  they will probably all be rich enough to retire.    Anyway, if this happens and Yahoo search employees retire with millions in commissions or advertising money I would ask that they let me write the book on it.  It would be the ultimate Office Space sequel, and it would be hilarious.

Now my  serious comment on this whole deal is  that it is better for the internet as a whole that Yahoo is consolidating its search with Microsoft instead of Google.  If Google owned 85% to 90% of the search market then they will wield even more power than they do now.  With that much market share Google will not have any incentive to improve their product, and they will have way too much power over what internet publishers do.  Even now Google is able to bully website owners into drop certain types of advertising with the threat of banning from their search engine.  Competition is good, and  I was hoping that Yahoo would beat Google for a while since I have been using Yahoo since it was still hosted at akebono.stanford.edu.  Right now I sincerely hope that the Yahoo Search employees do well after this whole deal is over and perhaps start a few new companies here.

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Apparently the Federal Reserve Bank of Boston conducted a study and found that lenders are hesitant to modify loans because it means losing money.  Lets see, if I were promised $10 for something last week, would I run out today  and  ask for $5 for the same thing?  Of course lenders would lose money on loan modifications and they  would not cut their profits if they did not have to!  It really does not take a study to see that lenders would try to delay or avoid loan modifications if they could.

One of the authors of the study says that the $75 billion Obama mortgage plan would have been more effective  if the money was given to borrowers rather than lenders.   That is probably true.  The Obama mortgage plan touted that they would help 3 to 4 million borrowers who are delinquent through modifications.  If you spread  $75 billion out to   3 million borrowers each person would get $25,000.  In some areas that money could probably pay off someone’s entire mortgage debt.  Of course this would be too obvious of a government handout and probably would be even less popular than the current ill conceived plan.  Who would not be pissed off if their financially delinquent neighbors just got a check for $25,000 for the sake of being delinquent?

The current plan gives incentives to servicers and lenders to modify loans, but that incentive is relatively small compared to an interest cut or principal cut on a big loan.   Also, if servicers really wanted to ramp up on loan modifications they would need to hire a lot more staff, and it is not profitable to do so.  Additionally, if a borrower is still paying their debt then there is really no incentive for a lender to change the rates voluntarily.  This new study also echos past data that a large percentage of those who get modification redefault very quickly.     As I have said before, this whole mortgage bailout  is simply prolonging the mess because it sort of give banks a lifeline to delay the processing of bad loans, and borrowers who have no capacity to pay back their loans simply delay their ability to repair their credit.  I am glad that now there is fairly concrete evidence that supports my conclusion.

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I have found that I like the LA Times’ reporting a lot more than the SF Chronicle’s.  Today an article gave some details on Sacramento’s plan on how to balance the state budget, and some of it is truly hilarious.  Here is a short summary.

• State workers’ June paycheck would be paid on July 1st, thus pushing $1.2 billion of expenses into the next fiscal year.  Umm… this saves money how?
• $1.7 billion of school funding would be delayed until the next fiscal year.  Once again, this is another paper fix
• Withhold 10% more taxes from every working Californian starting Jan 1st 2010.  This is essentially an attempt to collect almost $2 billion in taxes in advance.  What prevents people from changing their withholdings and owe the state money even with a 10% increase?
• 3% tax withholding on payments to independent contractors.  This is another gimmick to advance tax payments, but the independent contractors could get the money back if they don’t owe 3%.
• $1 billion proposed money grab on local gasoline tax revenues.  This is already being fought by the League of California Cities with a lawsuit.
• $1.50 per pack extra taxes on cigarettes.  When New York imposed a huge hike of taxes on each pack of cigarettes some New Jerseyan “entrepreneurs” simply bought cigarettes with lower taxes from other states and imported them to New York and made a profit by selling them at the tax inclusive rate.  I’m guessing some Nevadans or Oregonians will be into this business in California now.
• Illegal immigrants in prisons are being sent to immigration to be deported.  They really should have done this years ago.  Isn’t this really common sense?

A lot of these attempts to delay or advance payments really add nothing to the bottom line.  In fact, I think some of them would backfire.  For example, if you usually get a state tax refund now, perhaps it is time to change your withholdings so that you end up owing money at the end of the year because the state is trying to milk more money out of you this year anyway.  Also we all know that the state delayed refund payments for months and months this year so why should they receive your money early?  Chances are this would happen again if they do not change the fundamentals of how they are operating.    If enough people change their withholding strategy then this advance grab of tax dollars would not work at all.  If you calculate your withholdings correctly it is possible to owe just enough to not have to pay a penalty.

I’m kind of annoyed to see that a lot of the original proposed cuts on some social programs are gone and all of these gimmicks are going on.  So they are pushing one month’s salary into the next year, what will they do the next year?  Push the salaries again?  Soon enough state worker’s will be getting their pay budgeted for years into the future.  That’s pretty pointless.

I really do not mind paying taxes if it is being used responsibly, but it does not seem like the government knows how to manage money properly.  Add that to the fact that Californians themselves control the law making proposition system you just get a complete mess.   Of course noone wants to cut education, healthcare, and freebies, and of course noone wants to increase taxes.  So what you have left over is a very dysfunctional state and another reason to hate California.

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Today I read a headline “Echo boomers a lifeline for embattled housing market“.  At first I raised my eyebrow wondering what exactly an “echo boomer” is, and then I read this article and I thought it was hilarious.  Apparently echo boomer is another label for children of the baby boomers.  Haven’t we got enough labels already?

So the gist of the article is that a Harvard study said that  my generation is entering  a stage of peak home consumption and will shore up the housing market.   The problem with this conclusion is that they did not account for how many people in the “echo boom” generation already own homes, and how many already lost homes to foreclosure and cannot recover for seven years.  However, the study did acknowledge that the real income of my generation is much lower than the prior generation so the affordability of homes is much lower.  Additionally, younger workers are suffering more in the midst of high unemployment, so buying a home is even more out of reach due to the lack of jobs.

However, I agree that eventually our generation will be the ones that soak up the excess housing inventory on the market now, but that is almost the same as saying “the sun rises in the east”.    It will take time for homes to be affordable enough for my generation to buy en masse.  Some of my friends have an attitude of, “I am not going to be stupid like my parents and rush into home buying”, and even those who have parents with huge capital gains on their homes believe that it is still too expensive to buy a home at the current valuations.  Also I have seen a trend of frugality as being the “in” thing to do now so many are seeking a deal or just staying put.  Some are just saving money by living with their parents.

Anyway, I wouldn’t say that we as a generation is  a lifeline for the current horrible housing situation, but I think it is a good thing that this crisis is happening now while we are still young. We still have time to figure stuff out,  learn from our parents’ mistakes, and build up our assets.  Unfortunately,  many baby boomers who were most affected by this economic disaster may be running out of time to rebuild.

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The latest news is that the unemployment rate in the Silicon Valley is now at 11.2% and this is the highest unemployment rate on record for our area.  From a survey of my friends and family it seems that everyone is a bit unsettled about their jobs right now.  Here is what I found.

Many of the large tech companies around here already went through rounds of publicized and internally announced layoffs and a good majority has had pay freezes or paycuts starting as early as late last year.  These are all public companies that you probably have heard of.  Basically noone I know in a large company has had a raise this year with the exception of people at Lockheed Martin.  Lockheed is doing fine since is a defense contractor and we are in the midst of war.  The government cut some of their contracts and added others.    The largest organization in California is the state of California itself, and we all know how terrible the state coffers are right now.  Pretty much all public employees I know are  getting paycuts in the form of furloughs and some are being laid off.  Banking is another industry that got hit extremely hard for obvious reasons.  For example, we have a Downey Savings, WaMu, Wachovia, Wells Fargo, and Bank of America all on the same block.  Two of those banks are technically dead.

On the flip side the friends I know that work for smaller corporations still managed to get raises and bonuses this year.  This is not to say that smaller companies are doing better than larger corporations as a whole, but I think that in general smaller companies have less fat to trim than large corporations.  Most startups tend to pay less than large companies, and have a leaner team to operate everything.    For the most part raises are rare this year, and they are also much smaller than previous years.   Many small companies depend on the spending of large corporations so there is really a trickle down effect.   Personally I have no idea if my company is giving out raises, but I am not expecting anything.  I would seriously be happy with a 1% raise just to cover the increase in state taxes.  The hubby got a small 3.75% raise and I am pretty happy about that even though it is smaller than any previous raise.

Anyway, the greater economy is really out of our control, and I am pretty grateful that we still have jobs.  However, I think everyone should try to give themselves a bonus or raise through saving or earning more money.  I have done several things to essentially give ourselves a raise this year such as refinancing our mortgage, renegotiating our rent, and continuing to blog.  Reducing our mortgage and rent is basically saving us 3300 after tax money every year, and that is significant.  My blogging income is also much higher than last year as my articles age and I have a bigger collection of articles.  These changes make me a little less uneasy about the general doom and gloom atmosphere we are in, and I am hopeful that the American economy will recover eventually.

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