18
Feb 10

Chapter 9 bankruptcies, municipalities, and the Oracle at Mountain View

I ran across a current article from the WSJ highlighting that some municipalities may need to contemplate Chapter 9 bankruptcies:

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk.

Chapter 9 bankruptcy is seldom employed and generally unknown to most of the populace.   It provides very specific protections (from US Courts):

The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.

It  applies only to the following (again, from US Courts):

Only a “municipality” may file for relief under chapter 9. 11 U.S.C. § 109(c). The term “municipality” is defined in the Bankruptcy Code as a “political subdivision or public agency or instrumentality of a State.” 11 U.S.C. § 101(40). The definition is broad enough to include cities, counties, townships, school districts, and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities, and gas authorities.

Most states are experiencing revenue shortfalls, resulting on strain to state budgets.        States in turn are delaying or suspending funding to local municipalities, creating financial crisis on the local level.   Some municipalities have dabbled in the exotic financial instruments that are partly to blame for the Great Recession, and given the anti-incumbent environment and high unemployment, elected leaders would be hesitant to raise taxes.   On the first page of the search results for “Chapter 9 Bankruptcy  on Google News names Las Vegas, Harrisburg, and Sand Diego and Vallejo, California, but there are certainly others.

Google Trends Chapter 9

I’ve highlighted in the past how Google Trends “ a measure of the searching behavior of Google’s users “ can surface sentiment and intentions (previously, here and here).   Now, I’m not saying that the towns listed above are contemplating “Chapter 9   bankruptcy protection after defaulting on municipal bond payments or other financial crisis, but I am saying that enough users from those towns (and states) searched for “Chapter 9  for Google to reveal a significant trend (also note that there is insufficient volume to refine to that state level or for a more discrete time range).   Unless those users were searching for Chapter 9 of the latest Harry Potter book, this may very well mean something.


17
Feb 10

Instant DVD Gratification is worth a Premium

I love me some Redbox.   I’m ashamed to admit that I’m probably a good 5-years behind on movies I want to see.   Buying any DVD (with the exception of kids’ movies) is a waste of money, in my opinion.   I contemplated signing up for Netflix, but I doubt I would utilize the service enough to justify the expense.   Redbox neatly fills that void by allowing me to pick up new releases at my convenience, all for the low price of $1 plus tax.

Redbox (and Netflix) have been so successful that they are threatening the movie studios DVD retail business, so much so that the movie houses have strong-armed both movie renters into providing a 28-day hold on new releases, effectively granting retailers a 1-month monopoly on new releases.   DVD retailers such as Target and Walmart – perhaps trying to save their own revenue – have implemented limits to DVD purchases of the same title (which is how Redbox acquires their inventory).

Do the studios actually think their products are so wonderful that they are worth a ~$10-20 premium   to watch movies immediately at release?   It’s more likely that they are trying to hold on to their On-Demand revenue from cable providers, at a more reasonable ~$3-5.     None of which adequately addresses the threat that their legacy businesses are under from streaming.   In any case, I’ve already waited a year to see the new Star Trek, 3-years to see Superbad, and 5-years to see Wedding Crashers (on broadcast TV no less).   I can wait 30-days.


06
Feb 10

Daily Links for February 3rd through February 5th

All excerpts are quoted from the respective link(s).

  • FORTUNE MAGAZINE – informational images
  • Born Poor? | Santa Fe Reporter – Bowles’ most recent paper, published in the October 2009 issue of Science, was a huge project with 25 collaborators. It examines how wealth is transferred from parents to children in hunter-gatherer societies versus agricultural societies.
    That might seem distant from the busy unemployment offices on Guadalupe Street. But everyone can relate to his chosen subject: inequality. He studies the economic differences between people with the same discipline that Jane Goodall studies chimpanzees or Stephen Hawking studies the cosmos.
  • McSweeney’s Internet Tendency: The Real Timothy McSweeney. – So many years later, when I was conceiving a name for this literary journal, the name Timothy McSweeney's Quarterly Concern occurred to me. It made sense on many levels. I was able to honor my Irish side of the family and also allude to this mysterious man and the sense of possibility and even wonder he'd brought to our suburban home.
  • Has Toyota’s brand perception eroded below that of Hummer? At least one survey thinks so — Autoblog – According to YouGov BrandIndex – which we were admittedly not familiar with until running across this interesting little nugget – Toyota's -17.1 rating on February 3rd put the automaker below more traditional bottom-feeders like Hummer, which scored a -10.7 on the very same day. Just two weeks ago, the very same poll had Toyota up near the top with a positive perception rating of 28. It may not be the most meaningful statistic you'll run across today, but it's an interesting sidebar nonetheless.
  • Free FLV Converter | YouTube Converter | BENDER CONVERTER – Bender Converter is an easy-to-use online application for downloading and converting videos from such services as YouTube, Daily Motion, Vimeo, Wat.tv, Veoh, Vids.MySpace.com, Google Video and many others. You can download video and audio in MP3, AVI, FLV Flash, iPod / iPhone and other popular formats. The service is fast and doesn't require you to register. All that you need is a link to a page with a video and our software.
  • The Dynamite Prize in Economics | MetaFilter – As a reaction towards the financial crisis the Real-World Economics Review will award the Dynamite Prize in Economics to the three economists who contributed most to blowing up the global economy. The Real-World Economic Review is the central organ of the movement for Post-Autistic Economics which is critical about the current mainstream in economics — in particular microeconomics and neoclassical theorists.

    Voting is now open and the nominees are:

  • Mule Design Studio’s Blog: The Failure of Empathy – The people don’t want “tablet computers” with Ubuntu and OpenID (worst name ever for a product attempting broad acceptance). They could honestly give a shit whether it’s a closed or open system. And, let’s be really honest, they probably care as much about DRM as they do about baseball players juicing; by which I mean not very much at all. They want things to work most of the time, and be easy to fix when they don’t. And if the process by which it happens is “magic” they are totally cool with that.
  • The Scoop on Semen – Best. Infographic. Ever.
  • The History of Tipping – Although the addition of a gratuity or tip to a bill is now largely perceived as a gift for good service, the origin of the practice may be traced back to 18th Century English pubs when tipping was considered an essential incentive for better service. These days, many workers rely on tips as a substantial and necessary part of their income. In 2003, tips from U.S. restaurants alone were estimated at a whopping $26 billion. There are many emotional reasons people tip, such as to avoid embarrassment or to feel better about themselves because they know a tip is expected. Employees who provide services may also use tricks of the trade to manipulate these emotions to receive a larger gratuity. Have a look at the history of tipping below.
  • A special report on social networking A world of connections – Online social networks are changing the way people communicate, work and play, and mostly for the better, says Martin Giles[.]
  • How cars can trap consumers in a mortgage mess – Ironically, Americans are becoming financially trapped by the very suburbs they thought would free them. It's not just the social norms — the keeping up with the Joneses, the club memberships and mall-as-entertainment — it's the transport in and out of the suburbs that destroys a family's flexibility. My family can live very lean if we need to, reducing our expenses to as little as $2,000 for a month or two while we wait out a difficult period, even paying our mortgage on time. That suburban family with the safe cul-de-sac and the big back yard for the kids can't do that without a visit from the big flatbed tow truck of repossession — and no way for the children to get to school, no way for mom and dad to buy groceries and go to work. Instead, the mortgage is left unpaid while the payments on everything that can be taken back are made.
  • Looking back, ahead at federal taxing, spending – USATODAY.com – This tax calculator will give you a rough idea of your federal tax bill — and where your tax money went — from 1940 through 2010. Caveats: The calculator is for a taxpayer who files individually, uses the standard deduction instead of itemizing, and has one exemption. The calculator also figures your Social Security and Medicare taxes.

    We've adjusted all figures for inflation, using the consumer price index. Results may be skewed for the very wealthy and the very poor. Upper-income filers are more likely to have income subject to alternative minimum tax, but they are also more likely to have income from capital gains and dividends, which are taxed at lower rates than ordinary income. Lower-income filers can take advantage of the earned income tax credit, which can reduce the tax bill of a single filer.


05
Feb 10

Daily Links for February 3rd through February 5th

All excerpts are quoted from the respective link(s).

  • Free FLV Converter | YouTube Converter | BENDER CONVERTER – Bender Converter is an easy-to-use online application for downloading and converting videos from such services as YouTube, Daily Motion, Vimeo, Wat.tv, Veoh, Vids.MySpace.com, Google Video and many others. You can download video and audio in MP3, AVI, FLV Flash, iPod / iPhone and other popular formats. The service is fast and doesn't require you to register. All that you need is a link to a page with a video and our software.
  • The Dynamite Prize in Economics | MetaFilter – As a reaction towards the financial crisis the Real-World Economics Review will award the Dynamite Prize in Economics to the three economists who contributed most to blowing up the global economy. The Real-World Economic Review is the central organ of the movement for Post-Autistic Economics which is critical about the current mainstream in economics — in particular microeconomics and neoclassical theorists.

    Voting is now open and the nominees are:

  • Mule Design Studio’s Blog: The Failure of Empathy – The people don’t want “tablet computers” with Ubuntu and OpenID (worst name ever for a product attempting broad acceptance). They could honestly give a shit whether it’s a closed or open system. And, let’s be really honest, they probably care as much about DRM as they do about baseball players juicing; by which I mean not very much at all. They want things to work most of the time, and be easy to fix when they don’t. And if the process by which it happens is “magic” they are totally cool with that.
  • The Scoop on Semen – Best. Infographic. Ever.
  • The History of Tipping – Although the addition of a gratuity or tip to a bill is now largely perceived as a gift for good service, the origin of the practice may be traced back to 18th Century English pubs when tipping was considered an essential incentive for better service. These days, many workers rely on tips as a substantial and necessary part of their income. In 2003, tips from U.S. restaurants alone were estimated at a whopping $26 billion. There are many emotional reasons people tip, such as to avoid embarrassment or to feel better about themselves because they know a tip is expected. Employees who provide services may also use tricks of the trade to manipulate these emotions to receive a larger gratuity. Have a look at the history of tipping below.
  • A special report on social networking A world of connections – Online social networks are changing the way people communicate, work and play, and mostly for the better, says Martin Giles[.]
  • How cars can trap consumers in a mortgage mess – Ironically, Americans are becoming financially trapped by the very suburbs they thought would free them. It's not just the social norms — the keeping up with the Joneses, the club memberships and mall-as-entertainment — it's the transport in and out of the suburbs that destroys a family's flexibility. My family can live very lean if we need to, reducing our expenses to as little as $2,000 for a month or two while we wait out a difficult period, even paying our mortgage on time. That suburban family with the safe cul-de-sac and the big back yard for the kids can't do that without a visit from the big flatbed tow truck of repossession — and no way for the children to get to school, no way for mom and dad to buy groceries and go to work. Instead, the mortgage is left unpaid while the payments on everything that can be taken back are made.
  • Looking back, ahead at federal taxing, spending – USATODAY.com – This tax calculator will give you a rough idea of your federal tax bill — and where your tax money went — from 1940 through 2010. Caveats: The calculator is for a taxpayer who files individually, uses the standard deduction instead of itemizing, and has one exemption. The calculator also figures your Social Security and Medicare taxes.

    We've adjusted all figures for inflation, using the consumer price index. Results may be skewed for the very wealthy and the very poor. Upper-income filers are more likely to have income subject to alternative minimum tax, but they are also more likely to have income from capital gains and dividends, which are taxed at lower rates than ordinary income. Lower-income filers can take advantage of the earned income tax credit, which can reduce the tax bill of a single filer.