Wednesday, November 08, 2006


Great Morgan Stanley Report (It's Free!), ad:tech, eBooks in Schools, the Election, CFO Salary Windfall

Morgan Stanley report on Internet advertising. The great eBay vs. newspaper classifieds chart has been updated. It's on page 25, and as startling as ever.

ad:tech is in New York this week, and already the provoking comments and articles have started

The new has a posting about our industry's AWOL status at ad:tech in NYC
Nice to know I'm not the only one who thinks this way... but Randy's heard this complaint from me before. Great, so now there's two of us. Wow... our grassroots movement has doubled.

E-Books in schools; sometimes, it has to go to a vote! Funny, where are the people in the associations who are supposed to make us aware of these kinds of government things? Not a peep out of the book or printing associations about this. This is the first I've heard about anything called "SCORM"
e-book story

Agencies creating content and advertising beyond their typical range

Verizon is in talks with YouTube for video over cell phones. Note that Google just bought YouTube. Also note that the cell phone is a horrible way to view videos... when you're over 50, as I am... and the vision is starting to be affected. But also remember many cell phones are really ear pieces wirelessly linked to PDAs.... and video on PDAs can actually work!

I know people will ask about the election and its effect on the economy. The Senate and House Republicans got what they deserved for bad leadership and a loss of the values that got them elected. They became inside-the-beltway and got used to being in power so much so that they squandered it. Frist was a horrible majority leader who got nothing done. Hastert always seemed lost. It also goes to show that mid-term elections are often the times of greatest change. Remember this, however, and that is that Fed actions are a far bigger determinant of economic conditions than fiscal policy, especially in the short term. The bigger issue is that income and corporate taxes need to be renewed, otherwise they just return to prior levels with no action necessary. Paradoxically, the stock market does very well under Democratic control of Congress. Cynically, the higher degree of regulations on business that emerge from such controls (even Sarbanes-Oxley, which was way overdone) creates barriers the big businesses use to block competitors. Big business loves regulations, especially when they can lobby to have it work against competitors. In the past, this would have been a time to be in outright fear of protectionism. Big business is too connected worldwide and benefitting too much from international operations for the new Congress to do anything that will stop that. Sure, they'll have hearings and press conferences, but U.S. jobs are so dependent on trade that nothing serious will get done in the long run. (Remember, it was Bush43 who pushed for the steel tariffs, which hurt the economy rather significantly at the time). Small business usually does poorly under Democratic control (remember, whichever party runs the House runs the Federal budget; you don't need the Presidency to run the country from a financial perspective). We may have changed parties, but bluster and the photo-op will still be in office. Buy big company stocks. Sell Vistaprint and Staples. (please don't take stock advice from someone who is unlicensed or unqualified to give it, notably yours truly, but this would be the theme, in my mind).

Look at this good economic news, and then try to explain why an incumbent could not run on them (you can't):
•GDP positive for 20 qtrs, averaging +3% (real dollars)
•ISM manufacturing index positive for 54 mo
•ISM non-manufacturing index positive for 56 mo
•Largest employed workforce in history: 145.3 million, +2.4 million in the last year
–Last month +427,000 new jobs in household survey
–BLS corrects itself: has been undercounting by +810,000 jobs
–averaging +79,000 net new businesses per month
•Household wealth $53T, +7% (current dollars)
•Personal income +8.6% (current dollars)
•Corporate profits +18% (current dollars)
•Tax collections
–Corporate +27% (up more than 50% than corporate profits) (current dollars)
–Individual +13% (up more than 50% than personal income) (current dollars)
•Exports +8% (current dollars)
•Conference Board September consumer confidence index 104 vs. 87

Why arent these reported? I still think it's journalistic bias: "the economy can't be doing well if the newspaper I'm working for is laying off people." It's the exact opposite of the Internet boom reporting, where the economic data was as good, and often not as good, but publishing was booming, so it was reported as unprecedented incredible growth when it was not.

One note about tax collections: the Congressional Budget Office has a horrible (that's worse than bad) of forecasting tax collections. Tax cuts increase collections. The CBO is not allowed, by law, to include that assumption in its budgets. Just as Robert Rubin, Clinton's treasury secretary, whose plan to cut the capital gains tax led to a windfall of revenues. Every tax cut produces increased revenues, from Coolidge, to Kennedy, Reagan, post-1996 Clinton, to Bush. How Congress squanders those increased revenues is a different matter. Assuming the tax cuts expire, look for the deficit to increase as the CBO cannot, by law, assume that increased tax rates affect people's economic behavior. Also remember, that Congress inflation-adjusts, and adds additional increases, automatically to its budgets, under its baseline budgeting procedures, a luxury which no business or no family has a similar luxury. Reductions in rates of growth are called "cuts" inside the beltway. This could get out of hand, unexpectedly. Keep an eye out for it.

Again, of all of the Washington officials, Ben Bernanke is the one to watch. If the tax cuts expire, one hopes that the Fed will loosen the money supply to counteract them.

Also remember that demographic trends are more powerful than any Congress. More than 70% of U.S. households now own equities, directly or indirectly. Congress is very much aware of that. The electorate is getting older, and income from savings and investments will become more important than ever. Taxing them away is not in an incumbent's best interests.

Speaking of Sarbanes-Oxley, its byzantine laws have created a windfall of CFO salaries.

Bloomberg news reports " Heidelberger Druckmaschinen AG led declines in the Stoxx 600, sliding 8.1 percent to 33.78 euros. The world's largest printing-machine maker lost the most in five months after reporting worse-than-expected fiscal second-quarter earnings." Yup, that buyback was really important.

Dear fellow Jasper:

In reading your blog, I notice that from time to time the long urls get "slaughtered". In my blog and email, I try to supply both the original link and the tiny url ( It makes it easier upon the reader. And, minimizes breakage.

tiny url is
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