The Lean Start Up - Applied today to Non-Profits

From "The Nearly Cult of the Lean Start Up", by Ben Roony, from the Wall Street Journal's TECH BLOG Europe.

"I really believe that entrepreneurship is the management disipline that deals with situations of high uncertainty." - Eric Ries, Harvard's Entrepreneur in residence.

To hold entrepreneurs accountable we need to rely upon the actual metrics at micro scale. Continuious innovation and testing must be done. This agility is the core ability necessary for contemporary entrepreneurs, and we must have innovation accounting to track their skill level. Change is key, but must be in concert with high quality, profitability, and accountability.

At times Eric Ries’s presentation strayed dangerously close to the messianic, but every time the author of The Lean Start Up headed too far in that direction, he pricked his own bubble.
“I have had some terrible failures,” he told the packed audience of aspirant, and actual, entrepreneurs in central London. “Follow me and you too can have terrible failures.” It is a good line and gets a big laugh.

His self-effacement plays well among the nearly 600 people who turned out on a cold Monday night to hear this young start-up “guru” speak.

His lecture was peppered with highly tweetable quotes: “If our competitor can learn faster than us, then they deserve to win, and we deserve to die”; “The question is not whether something can be built, but should it be built”; “If we’re really honest, most startups represent a colossal waste of time and energy”; “Only failure promotes learning.”

Whether you agree or not with all of that, it does make for easily digestible fare. Nor is Mr. Reis apologetic for making things simple. “If you can’t spread your message…”

Putting on the “black turtleneck”
Aware of the “cult” swipes, in private Mr. Ries is dismissive of what he calls “success theater” or “putting on the “black turtleneck” and is keen to distance himself from the “great man theory of management”. He visibly flinches at the word guru. “I always think of Peter Drucker who said people used guru because charlatan is too long to fit into a headline.”

His theory of entrepreneurial management—and he is Entrepreneur in Residence at Harvard Business School—as espoused in his book published late last year in the U.S., is that entrepreneurs need a new way of measuring value. “I call it innovation accounting—not innovative accounting, that can end you up in jail.”

“I believe that the definition of entrepreneurship is the management discipline that deals with high uncertainty situations, that therefore the unit of progress, the way we measure our success as entrepreneurs, is learning that which is valuable to know.

“I call this validated learning. We should develop practices that optimize that learning, and because there already a management system that is based on learning how to eliminate waste and promote things that are valuable called “lean”, it could not be more obvious that we should take the best such ideas and apply them to this new context with a new definition of value.”

It has to be quantifiable or this is all a waste of time
This idea of value is what Mr. Ries means when he talks about accounting. “It has to be quantifiable or this is all a waste of time,” he says. We can draw a lot of valuable lessons from science. The proof in science is that you have learned how to do experiments that show the right results. The same thing is true for validated learning. If we have learned something interesting, then prove it by building products that are in line with that learning.”

This is the development cycle Mr. Ries calls “build-measure-learn”. Build your product, see how people use it, what do they like, what do they click on, what do they hate, and use that to inform your next decisions.

But in order to know how successful or otherwise you are, you need a system of evaluating value.
“That is accounting. We have all been indoctrinated with thinking that accounting is about tracking money, but money just doesn’t work very well when the numbers are so small, like in an early stage start up. There is no RoI, there is no profitability. Everything is close enough to zero that the accountants don’t care.

If 10 people in a row hate my product, isn’t that telling me something?
“The units of innovation accounting are not the gross numbers. Rather than focus on how much money we make, we might look at what is the percentage of customers who pay. We have to look at other things.

“The nice thing about those metrics is that they are not market-size dependent. If you have 100 customers you can already say what percentage are paying. If it is zero then I can already start to be a bit worried about the model.

“If 10 people in a row hate my product is that statistically significant? It is is not conclusive evidence, but it is certainly telling you something.”

Judging from the size of his audience at the Business Leaders Network event on Monday, the buzz afterwards, and the fact that Mr. Ries has had almost 20 meetings in his brief time in the U.K. and Ireland (including a meeting at 10 Downing Street), he is preaching to a receptive audience.
The Lean Start Up, by Eric Ries, is published by Penguin.

Define Entrepreneurship

"Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled." -Howard Stevenson, Harvard Business School

In other words, Entrepreneurship is the optimistic acceptance of risk regardless of consequences to (other people's) money. Entrepreneurs are confidence men. They build up your trust, offer you a deal that seems too good to be true, and take your 'investment' for all it is worth. The crazy thing is, in modern markets, controlled much more by feelings than facts, if you can convince enough people to trust your opinion, then you make money, regardless of the facts. That doesn't seem fair, does it? But such business is never fair. This is why the French invented the word and why Marxists despise entrepreneurs.

Breakthrough Entrepreneurship by entrepreneur and teacher Jon Burgstone and writer Bill Murphy, Jr.

The world is not fair, but it is we who make it unjust. I love JUSTICE (not Law, that is something different). Justice is how men make the world a fair place. That's why my personal evolution in business has taken a turn toward SOCIAL ENTREPRENEURSHIP, rather than traditional forms. Social Entrepreneurs have other goals besides money.

When we define our values, we can see our goals, and that helps us choose our actions. Right action is difficult in a complex world, and each individual situation requires a unique judgment, but with good values as your compass, you can find your way through the darkness of the forest, around obstacles, across rivers, to your goal. If your only goal is money, then that is all you shall have.

I have pursued justice without regard to money, and I am willing to use other people's resources toward that end. I'm a social entrepreneur, non-profit business proprietor, and I know my values and my goals. Do you?

Why I became an Entrepreneur

I grew up in the 1970's, at a time when the United States promoted it's business models around the world. It was the Cold War Era, and Capitalism was in a death match with Communism. What I didn't know then was that 'Capitalism' wasn't really capitalism and 'Communism' was really Stalinist U.S.S.R.

At that time we had a program called JUNIOR ACHIEVEMENT which was a non-profit (I think) that would come into public schools to teach kids about the fundamentals of capitalism. We made widgets, and then sold them in competition with other schools, and whomever sold the most won. The program sucked, didn't teach us anything, and thus wasted our time, but looking back, I think that was the goal.

I did like the idea of being an inventor, of creating something, and selling it to make a living. Working for other people never appealed to me. In my teens, I stole some bicycle parts, and got caught. My Dad was so disappointed in me that it made me cry, but I was only 14 yrs. old, and could not legally work for money. I was dependent upon my parents for money, so I stole my families lawnmower and other equipment, and put out some fliers to houses within walking distance. Soon I had all the work I could handle.

Unfortunately, I wasn't aware of my sever allergies and hay-fever. It was the summer of '84 and every day I would mow a lawn, then go home and collapse, unable to breath for the next 8 hrs. At that time, I lived in Plano, TX, and the lawns were only 1/4 acre, and I charged only $20, which was a lot in my 14-year old mind. What I didn't realize was that the gas, the equipment, and my time were worth much more, and the 8 hrs. of recovery wasn't added in. I was loosing my life in the hot Texas sun for about $2/hr. It was only profitable with heavy subsidies from my parents, and child labor.

This experience taught me a lot about what it means to work. It taught me that I could pick and choose my customers, and that I should never work for less than I am worth. I vowed never to work for mean people, or make more money for a company than I made for myself.

Later, when I reached working age (16) I got a job at the local grocery store where I had stolen the bicycle parts. They paid me minimum wage ($3.35/hr) part time to bag groceries and collect shopping carts. It sucked, bored me to tears, and I quit after two weeks. I vowed never to do work that insulted my intelligence and had no opportunity for advancement again.

That year I paid $125.00 for a Red Cross Lifeguard Training Class, and even got a job with the big local pool ($6/hr.). It lasted two weeks, and I over slept one Saturday morning, had to walk to work, and was fired. Texas is big and lacks public transport, but my parents made my Driver's License dependent upon my Grades, and there was no way I could meet their expectations, every-time that I came close, they moved the goal-posts. So, I resolved never to work with anyone who broke their word. I then didn't work for two years, because I didn't have transportation.

Eventually I stumbled onto an opportunity with the YMCA, a non-profit. They hired me as a Lifeguard ($10/hr), and paid me to train as a swim-instructor. Then they charged local house-moms $30/child for two-weeks of swim lessons (ten 40-minute sessions). I was in heaven, working 50 hours/week, outside, with hot girls, fun summer. I worked for the YMCA part-time as a weight room attendant through the winter, and as a pool guard and swim instructor for a few years, but eventually I quit to make more money. Little did I know.

At age 19, my Mother wanted to throw me out of the house, and I wanted to go, but without any credit-history or a good paying job, no one would rent me an apartment. My Dad brokered a compromise, so I could stay at home and pay rent, if I was enrolled at the local community college.

At age twenty-one, I still had no car. It seemed impossible to save enough to buy a car that worked while paying school expenses and rent. My parents let me drive their cars, or gave me rides to places, but I wanted to move out of the house, and needed a job that paid more than I spent to save any money. Only problem was, those jobs were too far away from home, and I didn't have a car. My parents surprised me with a 1978 Chevy Monte Carlo ($1200). I had to pay the insurance ($2500/year), but it was mine, freedom. I immediately applied to work at the local pizza delivery store, and started making $20/hr. in tips (unreported income) plus minimum wage. (I ate a lot of free pizza, too)

I spent too much partying with my friends, but I still had money in the bank. I failed out of college, but I kept going back for more punishment, because my friends were there. Eventually I met a girl, and everything went to hell. But I had my rules:

• Choose your customers
• Demand what you are worth
• Do what you love, love what you do, or don't do it
• Never work for someone else unless you gain more than they do
• Don't work with people you can not trust

That's how I became an Entrepreneur.

When Patents Attack: from THIS AMERICAN LIFE

Lawyers kill innovation, and steal the profits.

What is the Goal?

New Models and New Vision bring CONFLICT. What does America look like beyond Capitalism? And how do we get there from here? A-ZWhat is our goal in American Democracy?

In my experience we have to know where we are, first. Then we have to know where we want to go. If we can't agree upon the goal, we are still lost.

New Legal Corporations for Social Entrepreneurs

From the Wall Street Journal 

• RUNNING A BUSINESS
• DECEMBER 12, 2011, 12:42 P.M. ET

By KYLE WESTAWAY

You may have noticed the emerging class of "social entrepreneurs" who are creating companies that seek profit but also are devoted to a social purpose, to create long term, sustainable value.

About the Author

Kyle Westaway is founding partner of Westaway Law in New York, and cofounder of Biographe, a sustainable style brand that employs survivors of the commercial-sex trade. He lectures on social-enterprise law at Harvard Law and Stanford Law, and launched socentlaw, a legal blog for social entrepreneurs.

Social entrepreneurs believe a business can be a part of the solution to some of the world's greatest challenges. It's this kind of thinking that has given rise to such mission-driven companies as Better World Books, TOMS Shoes, D-Light Design and Warby Parker, to name a few.

But, until recently, social entrepreneurs would find themselves in the position of choosing whether to organize either as a for-profit company or a nonprofit organization. The problem was that sometimes a company would be too much of a business to be a nonprofit. Yet, it also might be too mission-driven to be a for-profit.

Fortunately, there are a few innovative legal structures designed for entrepreneurs who are driven as much by mission as money. The cost of using one of these new legal structures will vary depending on lawyer fees, but generally those fees shouldn't exceed more than $10,000 for a start-up with fewer than 10 employees.

Here's an overview:

L3C

Ideal for: companies that want to blend traditional capital with "philanthropic" capital, such as from foundations

Available to start-ups in: Vermont, Michigan, Wyoming, Utah, Illinois, North Carolina, Louisiana, Maine and soon in Rhode Island.

The Low Profit Limited Liability Company is a new class of LLC for mission-driven companies.

An L3C offers the same liability protection and pass-through taxation as an LLC. But it must be organized primarily for a charitable purpose – and secondarily for profit. Unlike a traditional nonprofit, it may distribute its profits to owners.

The L3C is designed to attract both traditional investment and a very specific type of philanthropic money called Program Related Investments (PRI). PRI is capital – in the form of equity or debt – from a foundation to a for-profit company that is doing work in line with the charitable purpose of the foundation.

BENEFIT CORPORATION

Getty Images

Ideal for: companies that want to create a measurable positive impact while and providing greater transparency to the public

Available to start-ups in: Maryland, Vermont, Virginia, New Jersey, Hawaii, California and soon New York

The Benefit Corporation is a new class of corporation with a corporate purpose to create public benefit, a broader fiduciary duty and is transparent about its overall social and environmental performance.

By definition, it must operate for the general public benefit – defined as a material positive impact on society and the environment. Every benefit corporation is required to publish an assessment using an independent, third-party assessment tool. To create a material positive benefit, a benefit corporation operates in a manner that not only creates value for the company's shareholders, but also its community, environment, employees and suppliers.

The structure also calls for a high level of transparency and accountability. Within 120 days after the end of each fiscal year, a benefit corporation is required to publish a "Benefit Report," which states how it performed that year on a social and environmental axis.

FLEXIBLE-PURPOSE CORPORATION

Ideal for: companies seeking to do good on their own terms

Available to start-ups in: California

The Flexible Purpose Corporation a new class of corporation that creates the maximum amount of flexibility for socially/environmentally conscious companies. It is designed for businesses that want to pursue profit along with a special purpose of its own designation.

The structure allows the designation of a special purpose that the company will pursue in addition to profit. For example, a flexible purpose corporation might be a for-profit developer that has a special purpose of building a public park in each of its developments.

This type of corporation must issue an annual report that is available to the public and provides details on the following: the special purpose; the annual objectives that it has set to achieve its special purpose; the metrics used to gauge the success of the special purpose; how it has achieved or fallen short of the stated objectives; and how much money was spent in furtherance of the special purpose. But it does not require any measurement against an independent third-party standard.

The Secret of Oz - Winner, Best Docu of 2010 v.1.09.11

If you wish to understand how to fix the current economic crisis, and create a sustainable economy, you must watch this documentary.

Book Talk: John Palfrey on Intellectual Property Strategy

The cutting edge of Intellectual Property Minds speak to the practical application of the IP Law and strategy. John Palfrey — Henry N. Ess Professor of Law and Vice Dean for Library and Information Resources at Harvard Law School — discusses his new book, Intellectual Property Strategy (MIT Press), which argues for strategies that go beyond the traditional highly restrictive "sword and shield" approach, including Jonathan Zittrain, Lawrence Lessig, Phil Malone, Terry Fisher, and Eric von Hippel.

George Soros and the Open Society

In his Open Society Lectures in 2009, George Soros presently and accurately described the exact nature of our current historical position in a series of philosophical lectures in Budapest, Hungry. I now understand that Soros is not just a great capitalist, a great philanthropist, and a great intellect, he may go into history as one of the 21st century's greatest political philosophers.

I highly recommend this five part lecture series, produced at Central European University, to anyone who is serious about understanding the world we live in. If you are interested in politics, the economy, philosophy, or the best investment for your money, there is something to learn from George Soros. He will no doubt one day be held in the same regard as Andrew Carnegie or the Rockefellers, as one of the most influential people in the fields of economics, philanthropy, and public education.  

Watch the Soros Lecture Series:

1. Reflexivity
2. Markets
3. Open Society - Q&A
4. Capitalism 
5. The Way Ahead - Q&A

In Budapest, presented by Central European University. With Collin McGinn, Philosophy of the Mind.

The Open Society Foundations work to build vibrant and tolerant democracies whose governments are accountable to their citizens. To achieve this mission, the Foundations seek to shape public policies that assure greater fairness in political, legal, and economic systems and safeguard fundamental rights. On a local level, the Open Society Foundations implement a range of initiatives to advance justice, education, public health, and independent media. At the same time, we build alliances across borders and continents on issues such as corruption and freedom of information. The Foundations place a high priority on protecting and improving the lives of people in marginalized communities.

Also see Sacred Economics

Too Big To Fail

Opening the Vault on the Financial Crisis

Sheared by the Shorts:

How Short Sellers Fleece Investors

Friday 30 September 2011

by: Ellen Brown, Truthout | News Analysis

(Photo: Christian Newton / Flickr)

"Unrestrained financial exploitations have been one of the great causes of our present tragic condition." -President Franklin D. Roosevelt, 1933

Why did gold and silver stocks just get hammered, at a time when commodities are considered a safe haven against widespread global uncertainty? The answer, according to Bill Murphy's newsletter LeMetropoleCafe.com, is that the sector has been the target of massive short selling. For some popular precious metal stocks, close to half the trades have been "phantom" sales by short sellers who did not actually own the stock.
 
A bear raid is the practice of targeting a stock or other asset for take-down, either for quick profits or for corporate takeover. Today, the target is commodities, but tomorrow it could be something else. When Lehman Brothers went bankrupt in September 2008, some analysts thought the investment firm's condition was no worse than its competitors'. What brought it down was not undercapitalization, but a massive bear raid on 9/11 of that year, when its stock price dropped by 41 percent in a single day.

The stock market has been plagued by these speculative attacks ever since the four-year industry-wide bear raid called the Great Depression, when the Dow Jones Industrial Average was reduced to 10 percent of its former value. Whenever the market decline slowed, speculators would step in to sell millions of dollars worth of stock they did not own, but had ostensibly borrowed just for purposes of sale, using the device known as the short sale. When done on a large enough scale, short selling can force prices down, allowing assets to be picked up very cheaply.

Another Great Depression is the short seller's dream, as a trader recently admitted on a BBC interview. His candor was unusual, but his attitude is characteristic of a business that is all about making money, regardless of the damage done to real companies contributing real goods and services to the economy.

How the Game Is Played

Here is how the short-selling scheme works: stock prices are set by traders whose job is to match buyers with sellers. Short sellers willing to sell at any price are matched with the lowest buy orders to create a sale. Since stock prices are set according to supply and demand, when sell orders overwhelm buy orders, the price drops. The short sellers then buy the stocks back at the lower price and pocket the difference. Today, speculators have to drop the price only enough to trigger the automatic stop loss orders and margin calls of the big mutual funds and hedge funds. A cascade of sell orders follows, and the price plummets.

Where do the shorts get the shares to sell into the market? As Jim Puplava explained on FinancialSense.com on September 24, 2011, they "borrow" shares from the unwitting true shareholders. When a brokerage firm opens an account for a new customer, it is usually a "margin" account - one that allows the investor to buy stock on margin, or by borrowing against the investor's stock. This is done although most investors never use the margin feature and are unaware that they have that sort of account. The brokers do it because they can "rent" the stock in a margin account for a substantial fee - sometimes as much as 30 percent interest for a stock in short supply. Needless to say, the real shareholders get none of this tidy profit. Worse, they can be seriously harmed by the practice. They bought the stock because they believed in the company and wanted to see its business thrive, not dive. Their shares are being used to bet against their own interests.

There is another problem with short selling: the short seller is allowed to vote the shares at shareholder meetings. To avoid having to reveal what is going on, stock brokers send proxies to the "real" owners as well; but that means there are duplicate proxies floating around. Brokers know that many shareholders won't go to the trouble of voting their shares; and when too many proxies do come in for a particular vote, the totals are just reduced proportionately to "fit." But that means the real votes of real stock owners may be thrown out. Hedge funds may engage in short selling just to vote on particular issues in which they are interested, such as hostile corporate takeovers. Since many shareholders don't send in their proxies, interested short sellers can swing the vote in a direction that hurts the interests of those with a real stake in the corporation.     

Lax Regulation

Some of the damage caused by short selling was blunted by the Securities Act of 1933, which imposed an "uptick" rule and forbade "naked" short selling. But both of these regulations have been circumvented today.

The uptick rule required a stock's price to be higher than its previous sale price before a short sale could be made, preventing a cascade of short sales when stocks were going down. But in July 2007, the uptick rule was repealed.

The regulation against "naked" short selling forbids selling stocks short without either owning or borrowing them. But an exception turned the rule into a sham when a July 2005 SEC ruling allowed the practice by "market makers." A market maker is a bank or brokerage that stands ready to buy and sell a particular stock on a continuous basis at a publicly quoted price. The catch is that market makers are the brokers who actually do most of the buying and selling of stock today. Ninety-five percent of short sales are done by broker-dealers and market makers. Market making is one of those lucrative pursuits of the giant Wall Street banks that now hold a major portion of the country's total banking assets.

One of the more egregious examples of naked short selling was relayed in a story run on FinancialWire in 2005. A man named Robert Simpson purchased all of the outstanding stock of a small company called Global Links Corporation, totaling a little over one million shares. He put all of this stock in his sock drawer, then watched as 60 million of the company's shares traded hands over the next two days. Every outstanding share changed hands nearly 60 times in those two days, although they were safely tucked away in his sock drawer. The incident substantiated allegations that a staggering number of "phantom" shares are being traded around by brokers in naked short sales. Short sellers are expected to cover by buying back the stock and returning it to the pool, but Simpson's 60 million shares were obviously never bought back to cover the phantom sales, since they were never on the market in the first place. Other cases are less easy to track, but the same thing is believed to be going on throughout the market.

Why Is It Allowed?

The role of market makers is supposedly to provide liquidity in the markets, match buyers with sellers, and ensure that there will always be someone to supply stock to buyers or to take stock off sellers' hands. The exception allowing them to engage in naked short selling is justified as being necessary to allow buyers and sellers to execute their orders without having to wait for real counterparties to show up. But if you want potatoes or shoes and your local store runs out, you have to wait for delivery. Why is stock investment different?

It has been argued that a highly liquid stock market is essential to ensure corporate funding and growth. That might be a good argument if the money actually went to the company, but that is not where it goes. The issuing company gets the money only when the stock is sold at an initial public offering (IPO). The stock exchange is a secondary market - investors buying from other stockholders, hoping they can sell the stock for more than they paid for it. In short, it is gambling. Corporations have an easier time raising money through new IPOs if the buyers know they can turn around and sell their stock quickly; but in today's computerized global markets, real buyers should show up quickly enough without letting brokers sell stock they don't actually have to sell.

Short selling is sometimes justified as being necessary to keep a brake on the "irrational exuberance" that might otherwise drive popular stocks into dangerous "bubbles." But if that were a necessary feature of functioning markets, short selling would also be rampant in the markets for cars, television sets and computers, which it obviously isn't. The reason it isn't is that these goods can't be "hypothecated" or duplicated on a computer screen the way stock shares can. Short selling is made possible because the brokers are not dealing with physical things, but are simply moving numbers around on a computer monitor.

Any alleged advantages to a company or asset class from the liquidity afforded by short selling are offset by the serious harm this sleight of hand can do to companies or assets targeted for take-down in bear raids. With the power to engage in naked short sales, market makers have the market wired for demolition at their whim.  

The Need for Collective Action

What can be done to halt this very destructive practice? Ideally, federal regulators would step in with some rules; but as Jim Puplava observes, the regulators seem to be in the pockets of the brokers and are inclined to look the other way. Lawsuits can have an effect, but they take money and time.

In the meantime, Puplava advises investors to call their brokers and ask if their accounts are margin accounts. If so, get the accounts changed, with confirmation in writing. Like the "Move Your Money" campaign for disciplining the Wall Street giants, this maneuver could be a nonviolent form of collective action with significant effects if enough investors joined in. We need some grassroots action to rein in our runaway financial system and the government it controls, and this could be a good place to start. 

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Capitalism's End - From Russian TV's Cross Talk

Imagine an alien comes to earth and asks us "What is Capitalism?", and gets 7-Billion different answers".

Confidence Men - Ron Suskind

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Exclusive - Ron Suskind Extended Interview Pt. 2
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

The Feds Secret Loans, part 2

Bloomberg keeps filing F.O.I.A. requests to find out what the Federal Reserve wants kept secret. Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages.

SECRET Foreign Borrowers

It wasn’t just American finance. Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS, which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

Timeline of Bloomberg's lawsuit against the Fed

- May 21, 2008: Bloomberg files a Freedom of Information Act request. The Fed denies this request

- Nov. 7, 2008: Bloomberg files suit to require disclosure [Bloomberg LP v. Federal Reserve, U.S. District Court, Southern District of New York (Manhattan)].

- Aug. 24, 2009: Judge Loretta Preska rules that the Fed must disclose this information

- Sept. 30, 2009: Fed appeals decision

- Jan. 12, 2010: U.S. Court of Appeals hears oral arguments

- March 19, 2010: Appeals court upholds Preska decision

- May 4, 2010: Fed and Clearing House ask full U.S. Court of Appeals to overturn Preska ruling

- Aug. 23, 2010: Full appeals panel refuses to overturn Preska ruling

- Aug. 27, 2010: Court of Appeals gives Federal Reserve 60 days to decide on taking the case to the Supreme Court

- Oct. 26, 2010: Federal Reserve decides not to join the Clearing House Association in asking the Supreme Court to consider an appeal.

- Feb. 19, 2011: U.S. Solicitor General recommends the Supreme Court reject the Clearing House's appeal.

- March 21, 2011: Supreme Court rejects appeal and orders release of bank loan data

The interactive graphics are wonderful. Check out the story in the Atlantic, too.

From an accounting perspective, the loan programs shrank, excess reserves were retired, and the Fed simultaneously reprinted money to purchase the MBS and Treasury securities. It did not borrow money from commercial banks. Put another way, the money printed to fund the emergency loan programs, and more, was morphed into MBS and Treasury securities and this is clearly shown in a chart of the Fed’s assets: http://www.cumber.com/content/misc/fed.pdf

Think about it. Where would the excess reserves come from that banks held with the Federal Reserve, if the Fed hadn’t originally made the emergency loans or subsequently purchased assets? If Mr. Melloan’s analysis were correct, the excess reserves, which are assets to the private banking system, would have had to come from shrinkage of their assets and deposits, thereby turning required reserves into excess reserves, or by keeping their balance sheets the same size and shifting the composition of their assets by reducing loans and securities and increasing their reserves at the Federal Reserve.

Just before the crisis in August 2007, banks held only $45 billion in total reserves, and $40 billion of that was in the form of required reserves. Clearly, shrinkage of deposits could not have funded the huge increase in excess reserves in the banking system that came with the Fed’s emergency lending programs. What about a shift in the composition of bank assets from loans and securities to deposits at
the Fed? Data show that while bank loans have declined by about $600 billion, securities holdings have increased by about $600 billion. Therefore, the so-called borrowing from commercial banks could not have come from declines in their securities and loans.

So, George Melloan has totally mis-characterized the source of funding for the Federal Reserve’s QE1 and QE2 asset purchases. The Fed first printed high powered money through its emergency lending programs and as those programs were phased out the Fed again purchased agency mortgage-backed securities and Treasuries from the public by printing money, and the proceeds of those purchases show up as customer
deposits in banks, with the offsetting asset being not new loans but excess reserves held at the Fed.

In conclusion, the whole crisis has simply redivided the pie, and shifted debt from private banks to the US public by 'printing' money and thus reducing the value of US currency. This shifts value out of tangible goods while keeping the ratios of wealth steady. As real value bounces back, only those with capital will be in position to buy up resources. As the commoners have no capital, and the governments are in deep debt, the only people with capital will be private banks, owned by the wealthy.

Making Money Out of Market Crash

This is why we fail.

A Roadmap to a Life that Matters - Umair Haque - Harvard Business Review

Looks like even those at the Harvard Business Review are beginning to gain enlightenment.

Now, my little principle might cause those with hand-made suits and beancounterly tendencies to leap out of their chairs and hit me with the tarantallegra jinx. But even the cynics might be willing to admit: given a mysteriously non-recovering "recovery" for a global economy perpetually poised on the brink of perma-crisis, the status quo's out of ideas, out of options, and running out of time.

In an economy dedicated to the pursuit of more, bigger, faster, cheaper, nastier, the greatest hidden cost and unintended consequence is that something vital, enduring, resonant, and animating has gone missing from our lives — and it might just be the biggest thing: meaning in what we do, and why we're here. -

Umair Haque

It is obvious that there are no easy answers, but I suspect that cooperation, courage, and compassion, are becoming survival skills, putting even the scared, cynical competitors with business degrees on the verge of extinction.

A Roadmap to a Life that Matters - Umair Haque - Harvard Business Review

Intelectual Ventures = Patent Troll, Extortionists

Nathan Myhrvold is a genius and a polymath. He made hundreds of millions of dollars as Microsoft's chief technology officer, he's discovered dinosaur fossils, and he recently co-authored a six-volume cookbook that "reveals science-inspired tech­niques for prepar­ing food." Myhrvold has more than 100 patents to his name, and he's cast himself as a man determined to give his fellow inventors their due. In 2000, he founded a company called Intellectual Ventures, which he calls "a company that invests in invention."

Nathan Myhrvold destroys technological innovation and scientific creativity. His corporation, Intellectual Ventures (e.g. Computing Platforce, LLC., or Quan Holdings, Enhanced Software, LLC) buys up thousands of patents, shuffles them through a series of shell-corporations, and uses them to hide what they are doing. Nathan claims he is defending inventors ... so why hide?

In the interview, the Chief Council of I.V. couldn't even tell the producers when they bought a particular patent from Chris Crofford the patent inventor. Thom Ewing said they might likely be independently owned interested parties, i.e. they get a cut of the back-end arrangement for a percentage, e.g. a cut of the lawsuits.

They buy up thousands of patents and sue giant companies like Apple and Google to "monetize" and "Realize the Value" of the intellectual property. In other words they EXTORT MONEY from those who can afford, and give nothing to the inventors.

This American Life and Planet Money uncover the broken nature of our US Patent System, that issues duplicate patents for things like "Thermally Refreshing Bread" (i.e. Toast, 2000).

The patent process actually stifles innovation because they are so broad that everyone must break patents to do everything they want to do on the internet. The lawyers destroy our world.

A mysterious corporation: Oasis Research, 104 East Houston Street, suite 190, Marshal, TX, which has no employees, is a shell that owns many other mysterious corporations such as Bulletproof and Jellyfish, that create legal firewalls between the 'owners' of the patents and the potential legal accountability that is somewhere in the future. Just another beautiful scheme from Texas.

"Litigation is just licensing by other means." - If companies pay, then more patents are filed. Thus all big corporations have amassed large libraries of patents, to defend themselves against lawsuits, via mutually assured destruction. Thus, if you sue us, then we sue you. But only the largest players can amass such arsenals. So "Intellectual Ventures" shake-down most companies saying, 'It sure would be unfortunate if someone sued you. Why not hire IV to protect you from such suits.' 

Civil Lawsuits, thousands of lawsuits, by fake corporations owned by lawyers. Makes me want to shower just thinking about it. But in collecting $2-Billion in 'royalties', is the "Troll On Steroids" - Oasis Research (i.e. Intellectual Ventures) helping inventors collect on patents or just extorting protection money? But unless they achieve $35-Billion over he next 10 years, the venture capitalists behind Intellectual Ventures, will not be happy. That's an unnecessary expense, that will be passed on to the customer, destroying every innovative new competitor in the process.

ACN Investigation

Beware of Multi-Level-Marketing Schemes that use Pyramid Structures to create 'risidual income' without producing a product or service.


ALL multi-level-marketing schemes are unethical by their very nature. They concentrate wealth in the hands of a few, without fairly sharing the effort to generate that wealth. The pyramid model is very popular, but it charges customers a non-competitive premium in order to fund all the middle men up the chain. It is a scheme to motivate network marketing for inferior products at high cost.

Among dubious Multilevel Marketing corporations like AMWAY and ACN, Avon or Marry Kay, are a few good people trying to figure out how to make money. These entrepreneurs are taught how to sell other people's products and services, because they don't have anything else. But beware, the scheme teaches unethical practices, because you treat people as a means to an end, instead of an end in themselves. Any company that asks you to invest YOUR money up front to gain a 'business opportunity' where you will earn 'residual income' without producing a product or service, is a BAD CORPORATION.

I've written this because of a threat to my own industry (Energy Efficiency and Renewable Energy). American Communications Network, Inc., a phone service company, has begun selling people renewable energy appliances. Beware of ACN collecting homeowner's personal financial information to sell them unnecessary products without properly assessing their building safety or energy needs. All ethical photovoltaic businesses do full home energy audits and building safety inspections, then recommend and encourage energy efficiency remodeling on existing real-estate before installing any renewable energy appliances, like solar panels.

As customers should know ACN, Inc. is not a publicly traded corporation, it is a privately held corporation, so it is beyond SEC control. American Communication Network, Inc. doesn't trade on any SEC regulated stock exchange (note the ACN stock symbol is for a different company, Accenture ).

-Michael Russell
http://www.sdsustainablefuture.com

Insanity IS Holding Two Opposing Thought In Your Mind

Watch this video about Goldman Sachs, and learn what an UNSUSTAINABLE BUSINESS looks like.

The Daily Show - Exclusive - William Cohan Extended Interview Pt. 2
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

John Stewart interviews William Cohan author of "Money and Power: How Goldman Sachs came to rule the world" on the Daily Show.

Inflation Is GOOD for the Economy

Holding Inflation below five-percent (5%) actually decreases capital available necessary for a healthy economy, i.e. 100% employment. So, why do central banks all over the world (i.e. The Federal Reserve) have policies that try to hold inflation as close to zero as possible? Because those with capital investments gain from predictable markets (i.e. no innovations) and inflation competes with their return on investment. Ideal inflation should stay in flux between 5%-10% to create markets that have maximum employment and productivity. (Caveat- if your markets are hot and maximized the competition tends to create its own problems, like environmental degradation and corrupt business practices that require government regulation because their solutions are not profitable) If you want to make money - you need to create things, real-property that can be traded for currency. The danger is that only those with capital have the industrial foundation to make stuff efficiently enough to be competitive. The only things that you can create without physical capital, are ideas, and those require sharing to become useful.

From THE REAL NEWS NETWORK interview with Ha-Joon Chang author of "23 Things they don't tell you about Capitalism"

The Primary Dealer Credit Facility = $9-Trillion+

The Primary Dealer Credit Facility - according to CNN Money and ProPublica, the total extent of this UNDISCLOSED Federal Reserve 'Emergency' (no-interest) Loan program between May 2008 & 2009, was $9-Trillion, and although $7-trillion of the PRINCIPAL has been 'repaid', this represents an increase in the money supply of ~$90-T. Meaning the US$ is worth 1/3 less today than in '08. Has your salary, home equity, or the value of investments risen by 33% in the last three years? If so, you are a winner of this game. Also, the Banks gave bonuses as a result of this 'increase' in capital and lend the money to corporations at interest, creating debt of nothing, and that expense is passed on to the consumer as a cost of business. If they had failed to pay back these 'loans' the US Taxpayer would have been responsible, via an increase in US National Debt. (so much for pocket change of the $700-B TARP, and $800-B 'Stimulus')

http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm
http://projects.propublica.org/tables/treasury-facilities-loans

Napoleon Hill Think and Grow Rich Three-Going The Extra Mile

Napoleon Hill - Think And Grow Rich - The Extra Mile = Free Labor

The case for Collaborative Consumption

"Sharing is something you only do with people you trust. To bad you don't trust anyone."
Rachel Botsman (HOT!) challenges you to collaborate.



Are you ready to wake up?

1. Reduce.
2. Reuse.
3. Repair.
4. Re-purpose.
5. Recycle.
6. Redistribute.

"You need the hole, no the drill"

Swap.com

Athiests Vs. Christians

Is it surprising? Atheists give much more than Christians.



Kiva.org
If we can get people to create REAL farms just as they create virtual farms on FaceBook, we can change the world.

Kiva's mission is to connect people, through lending, for the sake of alleviating poverty.

Pendo Luisi, 27 years old, borrowed $175 to open a cafe in Dar es Salaam, Tanzania.

Kiva empowers individuals to lend to an entrepreneur across the globe. By combining microfinance with the internet, Kiva is creating a global community of people connected through lending.

Kiva was born of the following beliefs:

* People are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way.
* The poor are highly motivated and can be very successful when given an opportunity.
* By connecting people we can create relationships beyond financial transactions, and build a global community expressing support and encouragement of one another.

Kiva promotes:

* Dignity: Kiva encourages partnership relationships as opposed to benefactor relationships. Partnership relationships are characterized by mutual dignity and respect.
* Accountability: Loans encourage more accountability than donations where repayment is not expected.
* Transparency: The Kiva website is an open platform where communication can flow freely around the world.

The Search for the 'Purple Squirrel'

For years I've been a proud generalist. Now it seems like the world has finally come around to the point of no return, and the specialists are being forced to change and adapt, taking on more and more tasks, until they become certified in multiple cross-discipline skill sets.

My degree is in Philosophy. The question people always raise is "What job do you get with that?" I often take the time to educate them about my unique perspective. I didn't go to college to get a job, I went to university to complete my education. But most people just don't grok. They think that if you invest $100,000 and four (or more) years in school, you should get a "Return on investment" and that requires a JOB.

Never hire anyone who isn't smarter than you are.

This is an old business quote, that many employers live and die to follow. They only hire people who are reported to be very well trained to provide a specific solution to their particular business problems. They have a need and the employee must solve the problem. But in today's economy, where every problem involves multiple levels of understanding in many fields, the traditional specialists are at a loss. So the employers are looking for 'Purple Squirrels'.

People with cross-discipline training are rare. Who goes to school to be a plumber, and learns how to produce videos? What mechanist was ever taught how to program artificial intelligence. How do you find an electrician with an MBA? But now imagine that you need a computer programmer, an MBA, a video producer, a plumber, and electrician, and a mechanist and you only have the salary for one person. Now you need a generalist.

I'm a generalist, my skills don't limit me to one speciality or another, I know how to think and learn extremely quickly. I like complex systems, I like information, I can see patterns that others don't because I'm naturally curious about very diverse areas of inquiry. Normally, this puts me at a disadvantage, I'm not the 'BEST' at any one skill set, because I've never specialized, but give me a little time and I'll become good at anything.

Because generalists understand the underlying principals of any system or process, they can see the links between otherwise disparate specialties. Give a generalist enough time and they become experts at everything, allowing them to bridge the gaps in communication, and act as hubs of information. This is what is needed in today's business world, because the problems are too complex and interrelated for any one virtuoso. The age of the specialist is over, the age of the Generalist is at hand.

Unfortunately, this is where our systems of education have failed us. Schools and Universities have become so focused upon producing specialists, that they no longer know how to produce generalists. Thus we must suffer a term, while the next generation re-tools. I hope we have that much time left.

Social Enterprise Workshop

Social Enterprise Workshop, November 5th, 2010, Downtown San Diego.

In the past, Entrepreneurs have been called 'opportunists', because they tend to take advantage of asymmetries in the economic environment. Businesses today are expected to take advantage of their customers ignorance, and Corporations are designed to manipulate our economy for their profits. These unjust business practices have become the norm, a cancer within our society, but now the very economy itself is failing due to these unfair and unsustainable practices.

It doesn't have to be this way, we can build prosperous businesses without preying upon our customers or the environment. We can choose to create an ethical, sustainable business model from the ground up. The biggest opportunities for entrepreneurism today is in social businesses, which seek to solve problems above making profits. We are in a time of great change, and only those enterprises that are able to adapt and evolve will survive, and only those that practice fair trade will ultimately succeed. 

Come join a dialog about how to build an ethical business. Learn how to change existing corporations into the kind of socially responsible businesses that are not only sustainable, but produce value for their entire community. 

Where: The Space Bar 

7454 University Avenue

La Mesa, CA 91942-6059

(619) 461-7100

Map: http://maps.google.com/maps?client=safari&oe=UTF-8&ie=UTF8&q=The+Space+Bar+la+mesa&fb=1&gl=us&hq=The+Space+Bar+la+mesa&hnear=San+Diego,+CA&cid=0,0,6501159911118846600&ei=3zAQTOKXDeSxnAfL37jMDQ&ved=0CBMQnwIwAA&ll=32.759237,-117.037117&spn=0.009203,0.013497&t=h&z=16&iwloc=A

Wireless access, bring your laptops.

Michael Russell

of San Diego's SUSTAINABLE FUTURE

http://SDsustainableFuture.com

(619) 573-9560

Greening San Diego Non-Profit Business, what you need to know.

Greening San Diego Non-Profit Business, what you need to know.

Friday, October 15, 2010. 10:00 AM - 12 Noon, at The Red Lotus Society

http://www.sdsustainablefuture.com/events/greening-san-diego-nonprofit

Federal, State, and Local government funding for Energy related issues

Renewable Energy pitfalls and opportunities. 

For Property Owners in San Diego this is a very interesting time.

Be ready for the advent of the new Property Assessed Clean Energy programs and know how to maximize the GREEN Benefits. 

Come learn what you need to be doing to take advantage of government stimulus, incentives, rebates and credits.

Find out how to qualify and apply for programs that save money over the long term by all but eliminating your utility bills.

San Diego's Green Potential:

See what an ideal sustainable business looks like.

Find Answers:

The future of San Diego.

American Recover and Reinvestment Act. 

Green Jobs.

Politics, how you can participate and make positive change.

Private funds for Energy or environmental programs. How to apply, where to get help, what qualifies, etc.

What is 'Net-Metering', and what the new "smart" meters from SDG&E mean?

How can you afford the new renewable energy technology?

How this all applies to local small businesses?

Ask the expert, and join San Diego's Sustainable Future, community progress through cooperative solutions. 

Where: The Red Lotus Society 

540 3rd Avenue

San Diego, CA 92101

(619) 208-3833

redlotussociety.org‎

Map: http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=the+Red+Lotus+Society+on+third+avenue&sll=32.759237,-117.037117&sspn=0.009203,0.013497&gl=us&ie=UTF8&hq=the+Red+Lotus+Society+on+third+avenue&hnear=&ll=32.731552,-117.119064&spn=0.147292,0.21595&t=h&z=12&iwloc=A

Michael Russell

of San Diego's SUSTAINABLE FUTURE

http://SDsustainableFuture.com

(619) 573-9560

Google and Verizon Create Evil Internet

Dear Google,
I just found out what you're doing with those who own our public internet infrastructure. 

Wow, pretty arrogant. But, I guess you at Google are getting pretty rich. It's cool how you want to share the wealth with people like me, who want to start our own ISP. 

Now that you are evil, all I have to do is offer a "Just Internet" service, that delivers all information at the same rate to the people, for the people, and by the people, they will flock, probably even pay me more, to be part of the just society. 

Google users demand that you not get into bed with Verizon, but I think you should do evil. They think you should not sign on to this deal and sell out freedom on the Internet.  

Google's founding motto is 'Don't Be Evil.' This deal is evil. It undermines the open Internet upon which hundreds of millions of people rely. This is good for me. 

Can I sell fast advertising to your customers? So, they will choose my "Just Internet" over your "Evil Internet". It doesn't make a difference how we get online; The People expect that connection to be free of corporate gatekeepers. That's why we use the inter-web not the broadcast media, but if you think its just me, then make me rich.

Join the "Just Internet" and be rich like me.

Open Letter to John Chiang, CA State Controller:

As ever more public sector salaries in California have been revealed (thanks to VOSD) in the $500,000-$1,000,000 range, public outcry has called for Government Transparency.

John Chiang, has wisely offered to publish all Municipal Salaries on the State Controller's web site (thanks to KPBS), so that the public might finally be informed of the huge benefits of public service. But he stops short of publishing ALL PUBLIC SALARIES, PENSIONS, and BENEFITS.

I think it is way past time to publish all Municipal salaries, I've been calling for that sine 1996, but why not publish the STATE Salaries, too? Once people know how lucrative it is to be part of the Public Sector, all those talented business types will come work for the government and fix all the problems.

As a tax paying citizen of the State of CA, I demand that you publish the salaries of the UC Regents, Presidents, Chancellors, and Professors, ALL COMMUNITY COLLEGE ADMINISTRATORS, and ALL LOCAL SCHOOL BOARD Superintendents, too.

In San Diego we have a small pension problem, so you should also publish ALL PUBLIC PENSIONS and BENEFITS PACKAGES TOO!

(Name),
(Date),

Click Here to send your own letter.