Earnings and the Echo Crisis

Some of the initial earnings reports that I am reading today do not seem to support a strong run-up of the DJIA. I remain concerned that the CIT issue is further indication of stress within the US banking system. There seems to be so many surprises!

The downgrading of Illinois bonds is a source of concern for the state and local budget outlook. This is part of what I call the echo financial crisis. State and city budget cuts will have an impact very close to home for many people!

I understand that there is concern in stemming the rate of foreclosures. There is no question that is also part of an echo crisis. Look for a tough summer.

CIT

The fact that significant US bankruptcies continue after more than 1.5 years of global recession is alarming to me.

Agriculture

As an industry, agriculture is beginning to resemble the auto industry pre 2008.

SCM (Part III)

It is possible that short and super efficient supply chains combined with the extreme financial leverage and complex derivatives markets (or near markets) in the US economy were the main causes of the global financial crisis. The interplay between all of these factors was hard to see pre 2007, however, there was no question that the US economy experienced a speculative bubble leading up to 2007. I wrote about the situation several times on this blog.

A Brilliant Post

Alex I. a Ph.D. student at ETH Zurich who is visiting MIT posted this video:

Customers and Fans

This is a brilliant video. Over the years, I have looked at similar ideas by marketing theorists. This video sums everything up.

I think I will show this to some of the folks in agriculture.

Thanks Alex!

SCM (Part II)

As folks study the causes of the global financial crisis, I think supply chain management will become a popular topic. Perhaps current technology means that supply chains over react to a decline in sales, causing a sharper re-adjustment of GDP growth.

I think the collective behavior of supply chain management systems is partly to blame for the global economic downturn. This is in addition to derivatives and complex, model driven, financial strategies.

Interested readers should do a search of this blog for more posts relating to the effect of supply chain management in relation to the financial crisis.

The Importance of SaaS and Open Office

I can not emphasise enough the importance of Microsoft's announcement about Open Office. There is no question that this change in direction creates an entirely new view of software delivery on a mass scale that far supersedes packaged software instillations.

Software as a Service (SaaS) is the wave of the future. Customers will demand this form of software delivery.

Our new paper on the subject titled "The Open System for Master Production Scheduling: Information Technology for Semantic Connections between Data and Mathematical Models" will appear in the International Journal of Operations Research and Information Systems very soon.

The article deals with a system to make spreadsheets like Excel an interface for SaaS.

In addition, we have another article appearing in the Sept. issue of Cutter IT Journal titled "Intranet Architecture for the Semantic Enterprise."

The MIT Laboratory for Manufacturing and Productivity is on the forefront of SaaS, having begun a research program in 2003 that addresses this important area. We have given several presentations to Microsoft.

Open Office

I notice that Microsoft has announced today that the company plans to offer a web based version of Office. I believe that it will be free.

This is exactly what we predicted. Our three software licenses should fit nicely with an open version of Excel.

I will write more on this topic later.

Market Uplift

There is optimism regarding bank profits. This is helping the market today.

Also, and article in the WSJ during the weekend outlined the favorable impact of a decline in the trade deficit. America seems to be exporting more sophisticated projects like machinery and less consumer goods. This will help GPD if the trend continues.

I think the academic and business work in the area of International Business is starting to see a return. America has many complex, high quality products to export.

Asian Markets Decline

I notice that Asian markets are almost all in the red today. This, combined with another apparent bankruptcy this weekend, means that Wall Street might start out lower.

One thing for sure, American consumption is down, and this means a very slow recovery.

The Cost of Health Care

I think many Americans are in denial regarding the cost of health care, especially for the elderly.

The projected future costs are unbelievable. There are huge government shortfalls projected for Medicare. This is an issue of importance to all Americans.

In the Fall, I will be giving a speech on technology as related to health care. More details to follow.

Excellent Article on Fixed Income Investment

Dan Fuss stated today in Barren's that he feels it will be 4 years until the US reaches the economic peak of 2007. He also mentions that some feel the time could be six years.

It will be a long and slow rebuilding process for the US economy.