Archive for October, 2011

A good friend just sent me the following:

     In a bid to stem taxpayer losses for bad loans guaranteed by federal housing agencies Fanny Mae and Freddy Mac, Senator Bob Corker (R-Tenn.) proposed that borrows be required to make a minimum 5% down payment in order to qualify.  His proposal was rejected 57-42 on a Senate party-line vote because, as Senator Chris Dodd (D-Conn.) explained, “Passage of such a requirement would restrict home ownership to only those who can affort it.”

Seriously, you can’t make this stuff up.

I’d like to know when it was someone’s inalienable right to make a profit on an investment — including home ownership?

People that bought homes in the past realized there was risk involved… and planned for it.

That hasn’t been the case for a while, though.  Which is why the real estate market is so screwed up.

Unfortunately, there’s a reason why home ownership was called, “The American Dream”… because it isn’t for everyone… just the ones that are responsible and work hard…

… and, because this is American, everyone has the opportunity to do that.


It’s, ahem, not pleasant having a financial discussion with your spouse.

And, as we’ve seen very publicly, it’s darn near impossible to have financial discussions between elected U.S. officials.

And to think — we’re all on the same team.

Imagine the difficulty Europe is going to have as they try to figure out EFSF (European Financial Stability Facility)… their version of TARP (Troubled Assets Relief Program)…

… when each country is clearly not on the same team…

… and, in fact, most of them speak different languages!

If I were running for president, I’d promise to fix everything.


How would I do it?

I would mandate natural gas… the energy alternative that we have about 100 years worth in the U.S.

That would allow me to promise — and deliver — everything:

(1)  More money in consumer’s pockets:  Natural gas is cheaper than black oil… by about 1/3 to 2/3rds to consumers.  But anyone that reads this blog knows that the price of energy goes well beyond simply what we spend on energy for our cars… it affects the price of everything.  Lower energy price is the greatest — and most effective — stimulus in the world

(2)  Jobs:  A new/updated infrastructure would be necessary… as would new/updated vehicles.  Someone has to build all that stuff

(3)  More corporate profits:  More jobs and more money in people’s pockets mean more spending.  Cheaper energy also means less input costs.  Economy improves.  Stocks rise… and so does everyone’s 401K plans

(4)  Health:  Pollution is — literally — choking the world… just look at the rise of breathing-related illnesses like asthma over the last few decades… but unlike dirty fossil fuels, natural gas burns clean

(5)  Environment:  No more ugly, toxic oil spills… let’s make the Gulf disaster our last

(6)  Smaller military:  Reducing our dependence on foreign oil means less “geopolitical” conflicts… as in, if we didn’t need oil, how much would we really care about the Middle East?

(7)  More money in Uncle Sam’s pockets without raising taxes:  All those new jobs create tax revenues.  Also would require less spending on entitlement, health, and military programs.  Bottomline is a dramatically improving national bottomline

(8)  Oh, yeah, an extra $1 trillion per year — money that we usually send out of the country each year, mostly to countries that hate us — is kept in America

Now that’s the candidate I would vote for!

Everyone thinks the Occupy Wall Street movement is unfocused.

I believe it’s supposed to be unfocused… as in, after about a decade of things just sucking, everybody just wants to stand up and bitch about something.

Cheers to that, count me in.  I’m angry about a few things:

I believe speculators have taken over the pricing of oil… which, as everyone knows that reads this blog, is the single most important measure to the world economy… and the single most dangerous threat to life as we know it.  At a minimum, why not raise the margin requirements?  Duh.

I’m also furious about bonuses paid to failed banks.  I think once you drive your bank into the ground, all bonuses should be canceled.  Period.  What are you getting a bonus for?  Driving your bank into the ground?  Or, better, after we bail you out and artificially set your cost of funds to near zero, somehow you think you deserve a huge bonus for any bank profits?  Please, really — literally — it’s impossible for you not to make money when your cost of funds are ZERO… and your 6, 7, and 8-figure bonuses are just absolutely offensive.

I’m also angry with Obama… a guy who had the chance to be one of the greatest presidents ever… but he just blew it.  His health plan was supposed to cut costs… but it’s done the opposite.  His jobs bill looks like it was created by someone who has never hired a person in their life.  Why are we still spending a fortune on a war that no one cares about?  Why haven’t we seized the natural gas opportunity?!  Does he realize “wealthy” is a relative term… that “wealthy” in big cities like San Francisco, New York, LA, etc., in no way buys the same quality of life that it does in the rest of the country… not even close?

I’m also angry with Europe… for the misuse of the term “austerity”… it’s being used like it’s some kind of punishmentnot the result of decades of irresponsibility.  I’m angry with those politicians that have let such a negative label become standard… why not have labeled it what it really is?  “Responsibility.”

I’m also angry with our country and California in particular.  Why are there six languages on a voting ballot?  Aren’t we all Americans?  I have no problems with diversity… but there’s only one thing that unites a community — and that is the ability to communicate with each other.  Why can a non-citizen have a baby in the U.S. and that baby is somehow, magically, a citizen, which means we have to support that baby — and the baby’s family — for life?  You know the system is being gamed when non-citizens wait at the border for their water to break!

Why do I pay 2/3rds of my property taxes to horribly underperforming public schools that I can’t send my kid to?  Meanwhile, horribly underperforming teachers get tenure — TENURE — after just a few years on the job?  Please.  The teacher’s union is an example of something noble gone terribly wrong.  To add insult to injury, I pay for all of those big yellow school buses… what, public school parents can’t drive their kids to school like we do?  Don’t tell me they can’t because they have to work:  My wife and I work every bit as hard — dare I say harder.  Give me a break.  To add even more insult, we now are giving our tax dollars — tax dollars that we don’t have enough of — to finance the education of non-citizens over legal U.S. citizens?

Sadly, you can’t make this stuff up.

So I TOTALLY AGREE with the protestors… I’m MAD AS HELL about a lot of things, too… and it’s DEFINITELY TIME TO MAKE SOME CHANGES.

Tomorrow is a hugely anticipated jobs report.

From a stock market perspective — NOT the perspective of someone out of work and desperate to provide for loved ones, which is certainly a tragic situation — the jobs report really doesn’t matter.

Our economy is now highly tuned for about 10% unemployment… meaning, corporations are doing just fine selling to the 90 out of 95 people who are employed (remember that the definition of “full employment” is 5% unemployed).

But are these employed people spending?

Check the price of oil… as long as oil is behaving itself — and it has — then the employed people will have more money in there pockets to save and spend… which means that what drives the market — earnings and outlook — should be ok.

Regarding tomorrow, after the last few weeks of carnage, investors are expecting a mediocre or poor jobs report.  So that’s already factored in.

If the jobs report surprises to the upside, then we should see a big, opening market spike, followed by a sell-off given the run-up over the last few days.  Buy the rumor, sell the news kinda stuff.

In both cases, once the dust settles, we’ll meander higher in anticipation of good earnings and outlook… all contingent on, of course, nothing falling down and breaking in Europe for at least a couple of weeks…

… which, in a couple of weeks, you just know something will fall down and break in Europe.

Steve Jobs passed away this afternoon.

What can you say about a guy that will be remembered in history books for the rest of time?

What I’ve always said about Steve:

He is the only person I know that is everything anyone has ever said about him… all the insanely great, over-the-top stuff… and all the “mercurial” comments, too.

I remember the first time I ever heard Steve speak… he gave a talk at the Stanford Business School… and — honest to God — I was so fired up after listening to him that I was — physically — buzzing… I immediately parked myself in the library and for the next hour or so wrote down everything I could remember about his talk and everything I was thinking and feeling.  I wanted to capture the way I was feeling forever.

To this day, I have never been affect more by a speech in my entire life… it was my first exposure to true, pure, unadulterated charisma.

It wouldn’t be the last, though.

I, somehow, was placed in the second row — dead center stage — sitting exactly behind Ross Perot and Steve’s then recently acknowledged daughter Lisa — during the NeXT Computer unveiling in 1988.  (Thanks, Dan’l!)

Steve killed that day, too.  As he did throughout his entire career, Steve knew how to turn on the magic like no one else.

Years before the NeXT introduction, I came to work with Steve at my old company, T/Maker.

We published a software product of his… and wanted to know what he thought of a tentative name, WriteNow.  He — amazingly — loved the name… which, apparently, was quite a shocker because everyone at NeXT said Steve was going to hate anything we came up with.

Our jubilation turned to horror, though:  That name was taken by not one but two other companies.

We told Steve we couldn’t use the name and he said, “tough, it’s perfect, get it.”

I spent the next three months of my life convincing and cajoling and pleading and negotiating.  And in the end, even though we had no legs to stand on, we got the name… just like Steve knew we would.

During those days Steve was definitely a study in contrasts.  He could be extraordinarily tight-fisted… then turn around and pay designer Paul Rand $100K — a fortune back then — for the NeXT logo… its claim to fame, of course, the small, soft “e” — emphasizing “education” — sitting next to the other three big, stark, cap letters.

And that was worth $100K??

Didn’t matter… as always, image — branding — was everything.

I got in one drag-down, knock-down argument with Steve… so I can say with absolute first-hand knowledge that he could pull strings in you that you didn’t even know you had.

When he finally realized he was barking up the wrong tree, he, somehow, masterfully, nimbly, simply changed the entire cadence of the conversation, making it somehow feel like he wasn’t the biggest jerk in the world, but rather, that we arrived in a good spot and were better off having “discussed the issues.”

Later I came to understand this was just Steve’s way… he would push hard, many times unreasonably, just to see if there was anything else he could learn… and, secretly, even perversely, to see how you would respond.

To this day I haven’t really reconciled how I felt about the episode.  It was incredibly frustrating… but also incredibly thrilling.

Two things, though, became incredibly clear:  (1) you simply could not be anything but at the top of your game around him, because (2) Steve was probably the most difficult person in the world to work with.

No doubt, he did get incredibly great things out of people.

But, unfortunately, that always came at a great price.

When brute force failed, Steve could, reluctantly, switch gears.

Steve had pummeled us in contract negotiations at T/Maker… basically got 98% of everything he wanted… except for one, tiny little thing.  Go figure, that one, tiny little thing reared its ugly head.  Instead of graciously accepting the contractual language, he pulled the, “look, I know what the contract says, but in my heart, this is what I meant for that paragraph to say…”.

Heidi Roizen, my dear friend and partner at T/Maker, and I have laughed about that one for years… he really would — unabashedly — try absolutely every trick in the book to get what he wanted.

One of the best back-handed compliments I have ever received was from Heidi.  We were in the throes of a user interface debate — I think, seriously, arguing about the placement of a single pixel in a small icon — when she wheeled toward me and said, “geez, Royal, you and Steve are the only two guys I know that have infinite energy to argue about the most meaningless things.”

I know she didn’t mean that as a compliment — but I took it as one — and I suspect Steve would have taken it as such, too… his attention to detail was, of course, legendary.

Doesn’t mean he always got it right…

… I’m still upset with him for pushing a round mouse on the world for not one but two versions of the iMac (a mouse is a navigation device, so it’s imperative that you know north-south orientation without looking)…

… or actually thinking cursor keys didn’t have their place in a graphical interface…

… or, as a young chairman of a young computer company, actually calling the employees in the division that produced 99% of his revenues “bozos”…

… but, it did mean he never gave up trying to get it right.

People have always compared Steve to Bill Gates.  As a competitor, I have always said Steve was, by far, more dangerous.  Bill used logic and reason and always did the strategically smart business move — even if it was vicious and ruthless.  But Steve let emotion and ego and, well, craziness guide him… which made him unpredictable… which is far more dangerous.

Crazy like a fox, eh?

I always felt a bit sorry for Steve in those days… for all he had achieved — and even at that early stage, he had achieved a lot — it still felt like he was missing something… I didn’t really see him have any good friends.  Seemed he was very much a victim of his own circumstance.

Of late I’ve heard stories of him vacationing alone in Hawaii… which made me sad… but, more often than not, I’ve heard things that sounded, well, incredibly normal… and those things always put a smile on my face.  I think what was missing from the Steve I knew so many years ago was family… and I am happy he found that later in life.

When Steve was kicked out of Apple, I remember him saying, “I still have 4 or 5 great products in me.”  I always thought that was bravado talking, that he was already wealthy, already guaranteed a spot in the tech hall of fame, and that, ultimately, his grinding, my-way-or-the-highway approach would continue to be his undoing.

But Steve fooled everyone… he got better with age.  Probably his most inspiring lesson of all.

From what I know, Steve’s illness should have taken him years ago.

Only Steve could dictate to death itself.

Steve, not sure I can say this about anyone else… but the world will really be a different place without you.

The market seemed quite disappointed that Apple “only” released an upgraded iPhone 4… rather than a new, spify iPhone 5.

After all, Apple lovers have waited an eternity for the new model… err, I mean a whole 18 months.

I was watching the news yesterday morning… lots of shots in front of the Apple building where the announcement was being held… and on the front of the building some beautiful and simple Apple-styled icons about the event… one in particular caught my eye, a giant “4”… as part of a calendar icon showing the date, October 4th.

It looked weird for some reason.

Now it’s a “duh” moment for me.

I don’t think Apple could have signaled its naming intentions any stronger than scheduling the event on October 4th — as opposed to easily being able to have it on October 5th — and putting a giant “4” right in front of our faces.