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This is part one of a multi-part commentary on the next generation of internet communications. In this article, I will be exploring the problem of the “walled garden” and closed communications systems.

Twitter. Facebook. MySpace. What do all these systems have in common? They all use isolated, closed servers.

Read the rest of this entry »

A French appellate court has upheld a decision prohibiting Apple and telco provider Orange from entering into a five-year exclusive deal.

[From iPhone : la justice confirme la suspension d'exclusivité d'Orange - Economie - Le Monde.fr]

The recent incarnation of the Federal bailout (or rescue, depending on your point of view) of the banking system is yet another representation of the failure of the economic policy of “trickle-down” economics to actually function and only highlights the incestuous nature of Federal regulators, banking executives, and the financial system as a whole.

The concept, of course, sounds simple enough. By providing money to banks, they will, in theory, be more willing to lend that money to others. Of course, they will still be charging interest on those loans, so they will be receiving, essentially, windfall profits. The official line from the government is that the Treasury Department is taking an equity interest in the banks, so the government may actually “turn a profit” on the bailout money.

Of course, the money the government is using to buy that equity share is debt-financed, so the margins necessary will need to be rather large. If the crisis takes a while to end, and bank stocks do not recover in the next year or two, then the margins will need to be even greater to adjust for inflation, which is running a bit hot right now.

Why not turn the concept on its head? Here’s my thought for a bailout:

1. Instead of giving the money to banks, give the money directly to consumers. I have been critical of “economic stimulus” plans in the past, but that is largely because the two previous plans (1) were of paltry sums, (2) were nothing more than vote buying schemes, and (3) were unnecessary for the continued operation of the economy. By putting a substantial amount of money ($5,000 – 8,000) into the hands of consumers, one of a number of outcomes will occur. 
   1. The consumer will buy stuff. This keeps businesses functioning in our consumer economy. While this is also part of the cause of our economic problems, it is a stop-gap measure to help soften the blow.
   2. The consumer will pay off debts. This helps banks and other interested parties worried about their outstanding loans. Again, the overextention of credit and too much consumer debt has been a major contributor, but allowing the credit market to grind to a complete halt is equally bad.
   3. The consumer will save the money in the bank. This outcome will help banks with any liquidity issues. This ensures the consumer will get the value of their money, and that the banks receive an infusing of cash deposits. Besides, they will not owe any substantial interest to their depositors, and the overall cost to the bank will be far less than to the government.
   4. The consumer will save the money in case (“under the mattress”). This is the only bad outcome of my proposal, but the percentage of consumers likely to utilize this option would likely be insignificant. We haven’t had any serious bank runs yet, and FDIC has done an outstanding job in protecting depositors at failed banks.
2. Create/expand Federal loan insurance programs. One of the major problems at the moment is that the global credit markets are “frozen” by a lack of trust. As noted on NPR’s Marketplace this week, Federal deposits are backing up, indicating a breakdown in the system. Like the European governments, the U.S. should move to provide some sort of guarantee for bank loans, particularly to the small businesses everyone is so concerned about.

My solution is certainly more palatable to the average consumer and certainly is more equitable. While banks are the engine that drives the economy, it is consumer spending that powers that engine. 2/3 of our GDP derives from consumers, and that must be our priority.

[Photo Credit: "Stupid Faucet" by flickr user Cayusa.]

The Dow, as of this posting, is below 9000 points. I think it would be in everyone’s best interest if the markets took a day off. I know Columbus day is Monday, but a four-day weekend would do everyone wonders.

On the plus side, there’s a three-day weekend coming.

UPDATE: The Dow ended up losing 679 points today, closing at 8579. Good grief.

Much hoopla has been made over the launch of Washington DC’s new bike sharing program. Often compared to similar programs in Paris and Barcelona, the program is on a path to failure. In fact, I’m predicting that it has six months to live.

Why such doom and gloom? Three simple reasons:

1. Poor distribution of stations
2. Limited number of bicycles
3. An open hostility to bicycles in the District.

Hey Sailor. New in Town?

The target audience for the bike program seems to be resident commuters. The program requires an advance annual subscription of $40 (+ tax). This alone prevents those visiting the city from accessing the system, unlike comparable systems in Europe. While the cost of the program is quite low, the poor implementation of the service does not justify the price.  Bikes are only available for three hours, hardly long enough to appeal to commuters who do not work near the sparsely-distributed stations.  Workers downtown who already take Metro will not likely be persuaded to change, since SmartBike stations are only by Metro.

Water Water Everywhere?

There is also a very poor number and distribution of stations. Compare, for example, a small portion of the system map from Vélib’: with the entire system map for SmartBike:

The bike rentals are restricted to 3-hour intervals. As noted before, the stations are few and far between. This means that a morning commuter could not take a bike from Foggy Bottom to Judiciary Square and reasonably expect to park the bike upon arrival, since each station only appears to have a few extra parking spaces.

No Room to Share

Finally, there is the omnipresent conflict between DC motorists, largely commuters from Virginia and Maryland too dense to be courteous to their two-wheeled brethren and the cyclists too cool to follow the rules of the road. Putting more bikes into the hands of less-experienced riders will only (A) increase the animosity between car and bike, or (B) put more bikes on the sidewalks, in contravention to their prohibition in the central business district. Given the programs onerous user agreement, it is pretty clear that lawyers Clear Channel, the media leviathan that funded the program, has already foreseen the inherent problems with the system and have sought to distance themselves from any liability connected to the program.

Other Pitfalls

I would like to note that I have also ignored another potential pitfall: the maintenance of the bikes. While I doubt they will receive the proper care from their owners (and most definitely not receive the proper care from their riders), there is nothing to base that decision on other than a gut feeling. After a few weeks of being out in the elements, I’ll have a peek at one of the bikes and report back.

Theft of bikes is another concern of mine, despite the measures taken to prevent this. According to an International Herald Tribune article, 3,000 bikes have been stolen from Vélib’, about 15% of the total. I suspect the proportion here to be much, much higher.

In short, the DC bike sharing program is an ill-conceived mess that has sown the seeds of its own destruction. While I am all for the increase of cycling in the city, this program does not do anything to serve the needs of those who come to the city to work. Unless the program expands rapidly, it will only cater to a few hipster condo residents in Dupont and U St as they peddle downtown to their various unpaid internships at NGOs and law firms.

[From Clear Channel Smartbike Washington DC]

Celebrex, the NSAID pain reliever that was vilified in media years ago, is back with a new ad campaign.  It’s been on the air for a while, but I’m finally irritated enough to comment on the ad.

There are three major problems with this ad:

1. The outlines of the drawings are made from disclaimers and warnings.  Nothing says “take this drug” like
2. The overall message of the advert seems to be “don’t blame us.  If you didn’t have such bad joints, you wouldn’t need to take a risky drug in the first place.”
3. The other theme of the advert seems to be “everyone else has side effects, too, so why not take Celebrex?”

I know the major pharmeceuticals are hurting for revenue, but this advert just makes no sense.

PBS’s FRONTLINE program, which always achieves an incredible level of journalism, recently ran a program on healthcare systems around the world. The premise of the program is whether the U.S. could learn anything from other modern, post-industrial, capitalist societies. The answer, of course, is “yes, the U.S. has a lot to learn.”

[From FRONTLINE:sick around the world | PBS]

Colonial Williamsburg has undertaken a new ad campaign to try and attract visitors. “I am Williamsburg.” It’s a very inspirational campaign, making an attempt to connect the visitor to the location.

The problem is, it has been done before.

The city of Amsterdam has already marketed this idea that “I am Amsterdam” for some time. As you can see from the photo above, they have gone to great lengths to market this concept. It is an internationally recognized brand immediately recognizable around the world. The ad firm that stole this idea should be exposed for the plagiarist that it is.

To plan your visit to amsterdam, visit www.iamsterdam.nl. To plan your visit to Williamsburg, well, you can go somewhere else instead. Perhaps Holland; it’s lovely.

I didn’t take a photo of the “I AMsterdam” sculpture, so I had to go find one on flickr.com. Image courtesy show³.