Milking the Cow

It’s easy to overlook just how significant human psychology factors into our financial system, or perhaps put a better way, it’s easy to overlook that the entire system is fundamentally based on it… and this helps to explain why the cost of credit is in fact going up and not down despite the Federal Reserve’s historically unprecedented actions (at least they seem historically unprecedented). The globalization of financial markets has indeed created riddle wrapped in a mystery, inside an enigma.

A trillion dollars is a lot of money, but in this age of photoshop wizardry it seems that experts can make just about anyone or anything look good. Lose a trillion? Well, just write it off a little more slowly, or suggest that mark-to-market accounting is not applicable to banks and investment banks. As a matter of fact it may not be. GaveKal’s Anatole Kaletsky points out that “the whole point of a bank is to exchange short-term, liquid liabilities for long-term illiquid assets whose value is hard to gauge. This liquidity and maturity transformation, in fact is the main social function that a banking system provides.”

[From PIMCO – Investment Outlook Bill Gross Mooooooo August 2008]

More on this topic (What's this?)
Anticipating The Rate Hike
Rising Interst Rates Historically A Positive For Equity Returns
You can't really see it on this chart so you'll have to trust me
Read more on Federal Reserve at Wikinvest

When Web Services Turn Off

Michael Totten is one of the more successful independent journalists and in addition to advertising revenue he relies on individual subscriptions in order to cover his travel and equipment costs. I had subscribed to his site last year and it wasn’t until he posted this note today that I realized I had not been seeing his monthly charges on my credit card.

A significant percentage of my travel expense income has come from those of you who signed up for recurring payments through a Blog Patron subscription. Blog Patron, unfortunately, has now closed. That cash flow has stopped up entirely.

[From Michael J. Totten: Help Keep the Dispatches Coming]

Blog Patron actually stopped accepting new signups last January and has since stopped processing transactions altogether. This caused me to think about my experiences with the very first blog hosting service I used many years ago, which after many service interruptions I discontinued in favor of Typepad, but the drop in traffic that resulted from changing domain names required at least 5-6 months of work to recover… and I again experienced that when I left Typepad for my own self hosted WordPress blog.

The lesson is that the services you rely on in a SaaS world matter beyond the feature set and performance concerns, the viability of these service provider should be taken into account because there is no escrow or other contingency that will guarantee you a functioning service component long after the vendor dries up and blows away. In my case the issue was not vendor failure but rather being locked into a domain name, so less severe but still disruptive.