Starting a small business in america :-)

Personal story: I was laid off on Thursday from a giant financial firm. Called in early in the morning, our local managers were extremely nice about it, but they had no choice in the cuts.  By 9am that morning, my business partner and I were working for ourselves.

We knew it was coming and had been looking around for options and we’d virtually settled on going out on our own.  By the end of the day on Friday, we had:

  1. Signed a lease for a great space.
  2. Sent in paperwork to organize our firm.
  3. Sent in the appropriate paperwork to the regulator.
  4. Heard from most of our clients that they wanted to go with us.

One of my clients said it was great we were doing this, that the only way we are going to pull ourselves out of this recession is if people like us get out of large lumbering organizations and start doing our own thing.

Will keep you posted intermittently, but I expect the blog to get a little more attention since I work for myself.

Why gold is going to USD 500 an ounce.

There’s been a lot of talk recently about gold, with some gold-bugs suggesting it will reach USD 2000 a troy ounce and others predicting a return to some variation of the gold standard.  I think neither of these scenarios is likely, instead, I expect gold to be USD 500 an ounce within a couple of years.

The price of gold has been rising since the low of 250 reached between 1999 and 2001.  The rise accelerated dramatically between August 2007 and March 2008, when gold jumped from 600 to 1000.  The rise in price from 2001 to 2007 can be explained by rising standards of living and wealth in Asia, particularly India, which is the largest market for gold in the world (approximately 30% of total consumption).  The rise since August 2007 has been due to demand from financial markets, driven entirely by fear.

Demand from end-consumers for jewelry has evaporated, and may even be net negative as people mail in their gold jewelry and receive cash from the producers of late night infomercials.  The price of gold is supported entirely by financial participants who, in the grip of fear, have latched onto it as the last “safe haven”.

At some point the fear will dissipate in one of two ways.  People will become accustomed to a lower standard of living, or we’ll see some economic growth and optimism will return.  In either case, the fear driven demand for gold will evaporate, and just like oil, I expect to see a sharp, spectacular drop in price.  It may be even more vicious, since we can warm our homes and drive ours cars without gold.

There is a sub-species of gold-bug who thinks we will return to the gold standard as governments realize the error of their post-Bretton woods ways and repent.  Another group feels the masses themselves will realize they have been taken for a ride by monetarists and spontaneously switch to using gold for their money (these folks seem to have financed Ron Paul’s campaign).  

The fact is that we have had two generations come of age since the last time gold played any meaningful role as a currency.  Nobody under the age of 50 can remember the mythical perfect time when gold provided the basis for a stable currency and all was right in the world (not that such a time ever existed, during the depression plenty of people believed they’d been “crucified on a cross of gold”).  Fear makes people fall back on the familiar, and  the vast majority of the world’s population thinks of gold-bugs as Davos’s equivalent of the crazy uncle at Thanksgiving. You want to be polite, but you don’t really believe anything he’s saying, when you can understand him at all.

So, where does that leave us.  

As the global economy begins to function again, we’ll see buyers for gold ETFs, customers storing gold bullion in Swiss bank safety deposit boxes and speculators buying up gold futures slowly lose interest and the price begin to fade.  Eventually, at around 350-400 we should see buyers of gold jewelry re-enter the market.  I expect the price will eventually stabilize around 500.  The most dedicated buyer of gold jewelry, the Indian matron, is currently priced out of the market, and her savings are being deposited into banks and used to buy washing machines.

Why are some Indians protesting Slumdog Millionaire.

There’s a class of Indian who has become very comfortable with the fairy-tale that India is populated entirely by well-educated, hyper-intelligent computer engineers, doctors and managers. Slumdog Millionaire is an affront to their egos because it vividly projects the stark reality of life for most Indians in the cities, not the fantasy indulged in by the elite 2% who travel all over the world and would like their friends to imagine India in colorful weddings, the Taj Mahal and gleaming banks of computers.

The reality is that India is deeply fractured along the lines of class, religion and wealth. It’s a place where legal authority is too often used to oppress, and justice is delayed. A country where politicians manipulate public disturbances and pogroms to further their own careers. A society which has been trying to stitch itself together into a cohesive whole, but has nightmarish episodes of tribal violence.

Bombay is filthy and bustling, but within it lie pockets of beauty and serenity. I despair whenever I think of the criminal gangs and mobs who seem to rule the city, but then a random act of kindness or example of civic responsibility from an unexpected quarter makes me hopeful. Like the rest of India, Bombay is more prosperous than it was a few years ago. People coming of age today have bigger dreams than their parents ever did, and a greater likelihood of having them realized. In broad terms, this is true for virtually everyone, and the movie captures this. Jamal works at a BPO, after all, where being muslim is largely unremarkable.

The movie is reasonably accurate in its setting and those bothered by its depiction of India should start working on improving the lot of the most underprivileged amongst them and stop harping on about perceived blows to their over-sized egos. A good place to start would be ensuring every child has access to a quality education at no cost.

Chief Joseph’s dream

Hinmaton-Yalaktit (Nez Perce: Thunder Rolling Down the Mountain) more commonly known as Chief Joseph (March 3, 1840 – September 21, 1904) was chief of the Wal-lam-wat-kain (Wallowa) band of Nez Perce Indians during General Oliver O. Howard’s attempt to forcibly remove his band and the other “non-treaty” Indians to a reservation in Idaho.

What does he have to do with this election?

Barack Obama’s victory means a great deal to African-Americans. But it also has enormous significance to every other group who’s dream of complete inclusion in American society has been advanced. Amongst the many injustices that have stained the legend of America’s rise is the story of its native peoples. Their disposession is not unique in the world’s history, or indeed in that of the Americas. But it is particularly heartbreaking since it was so recent and such a contrast with the ideals professed by newer settlers and their constitution.

On Sunday, I made some calls for the Obama campaign in New York at a phonebank, one of the volunteers at the event was wearing a t-shirt with a picture of Chief Joseph and a quote. I began to choke up, as I always do when I am reminded of his remarkable story. If you haven’t already, you may want to watch the PBS/Ken Burn’s documentary The West, a moving and lyrical account of the American West’s settlement.

Chief Joseph had a simple dream, best expressed in his own words.

Do not misunderstand me, but understand fully with reference to my affection for the land. I never said the land was mine to do with as I choose. The one who has a right to dispose of it is the one who has created it. I claim a right to live on my land and accord you the privilege to return to yours.

What he wanted, for himself and for the people he represented or led were the most basic of rights.

Let me be a free man, free to travel, free to stop, free to work, free to trade where I choose, free to choose my own teachers, free to follow the religion of my fathers, free to talk, think and act for myself — and I will obey every law or submit to the penalty.

Now, I’m well aware that we have not in one fell swoop eradicated all bigotry from this land, it has always existed and in some form will always exist. But I do think one of Chief Joseph’s hopes is closer to realization today than it was yesterday:

Whenever the white man treats the Indian as they treat each other, then we shall have no more wars. We shall be all alike — brothers of one father and mother, with one sky above us and one country around us and one government for all. Then the Great Spirit Chief who rules above will smile upon this land and send rain to wash out the bloody spots made by brothers’ hands upon the face of the earth. For this time the Indian race is waiting and praying. I hope no more groans of wounded men and women will ever go to the ear of the Great Spirit Chief above, and that all people may be one people.

And I hope that in the spirit of reconciliation and advance, President Obama and Senator McCain will work together to further the advance of Native Americans including the substantial population in Senator McCain’s home state. Their’s has been a story of neglect and exploitation, and they hold outgreat hope for change under an Obama administration.

Too many misinterpretations have been made; too many misunderstandings have come up between the white men and the Indians. If the white man wants to live in peace with the Indian he can live in peace. There need be no trouble. Treat all men alike. Give them the same laws. Give them all an even chance to live and grow. All men were made by the same Great Spirit Chief. They are all brothers. The earth is the mother of all people, and all people should have equal rights upon it. You might as well expect all rivers to run backward as that any man who was born a free man should be contented penned up and denied liberty to go where he pleases. If you tie a horse to a stake, do you expect he will grow fat? If you pen an Indian up on a small spot of earth and compel him to stay there, he will not be contented nor will he grow and prosper. I have asked some of the Great White Chiefs where they get their authority to say to the Indian that he shall stay in one place, while he sees white men going where they please. They cannot tell me.

Hinmaton-Yalaktit was an eloquent speaker, and enjoyed the benefit of good translators.

As the republican party and its supporters mull over their defeat, they will be thinking many thoughts. And there is a “nativist” wing of the party that seethes with rage, in my view without reason or cause. They might wish to remember that on October 5, 1877 after suffering far more pain, loss, disposession, disappointment and heartbreak than they can begin to imagine, Chief Joseph had the grace to wish for peace, even if it was an unjust peace, and said:

I know his heart. What he told me before, I have it in my heart. I am tired of fighting. Our Chiefs are killed; Looking Glass is dead, Ta Hool Hool Shute is dead. The old men are all dead. It is the young men who say yes or no. He who led on the young men is dead. It is cold, and we have no blankets; the little children are freezing to death. My people, some of them, have run away to the hills, and have no blankets, no food. No one knows where they are — perhaps freezing to death. I want to have time to look for my children, and see how many of them I can find. Maybe I shall find them among the dead. Hear me, my Chiefs! I am tired; my heart is sick and sad. From where the Sun now stands, I will fight no more forever.

Why you don’t want McCain for a neighbor.

John McCain wrote an op-ed in the Wall Street Journal today with a revealing line:

I have a plan to protect the value of homes and get them rising again by refinancing mortgages so your neighbor won’t default and further drag down the value of your house.

I find it amazing that the first thought to come to McCain when he thinks of his neighbor facing foreclosure is how it affect the price of his own home. I certainly wouldn’t want to have him for a neighbor.

Many Americans are worried about the value of their homes, but when their neighbors face foreclosure I believe they’re thinking of a number of other things before they worry about their own home’s value.

  • We care about our neighbors and don’t want this worst of financial stresses on them and their families.
  • We don’t want our kids to worry about whether their friends on the block are going to move away or go hungry.
  • We don’t want the communities we live in, small or large, and our country to be full of people forced to make desperate decisions.
  • We wish our neighbors the best and want to help them if we can.

Thankfully, most Americans will think about these things first and their home values second. They know that in the long-run retaining strong, livable communities is what will help rebuild the value lost in our homes. I think this appeal to selfishness, is what has destroyed the McCain campaign and turned off most of the electorate. I find it utterly distasteful that the campaign has been pitting Americans against each other with the pro and anti-American rhetoric. The promotion of divisiveness at every level, amongst states, amongst races, amongst age groups, amongst gender, amongst faiths is shameful given the circumstances we are confronting.

The biggest risks I see to our economy are people losing trust in the person on the other side of the table or making desperate decisions out of fear. All business is about trust, and a lot of it has been shattered recently. And I know that in the long-run our prosperity is furthered by helping those hurt by this crisis survive it. Not because it’ll preserve the value of my house tomorrow, but because eventually it will create better opportunities for all of us.

I can’t say it as well as Obama did:

If there’s one thing we’ve learned from this economic crisis, it’s that we are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other’s success because the more Americans prosper, the more America prospers.

There is a piece in McCain’s op-ed I like and I thought I’d point that out too:

I have devoted my life to safeguarding America. Former Secretary of State George Shultz compares diplomacy to tending a garden — if you want to see relationships flourish, you have to tend them. I have done that, by traveling the world and establishing ties with everyone from dissidents to heads of state. There is great need for American leadership in the world, and I understand that only by exercising that leadership with grace and wisdom can we be successful in safeguarding our interests.

and I think there’s something here that the Obama campaign should also pay attention to. The thing that worries me the most about the Obama campaign is the occassional anti-trade, protectionist rhetoric. One of the civilizing acts we engage in every day is the free exchange of an everyday purchase. This works on the global level as well. I know there is a portion of the left that is adamantly against globalization and I don’t deny that there is exploitation of workers and resources in many parts of the world. But in sum, trade is a civilizing influence for the community of countries, and one of the best way to build trust. Trade and capitalism within the institutional context of strong individual rights have done more to lift people out of poverty than all the well-meaning protectionism in the world. I think Obama recognizes that.

On a personal note, I’m a libertarian, because I believe in the justness and dignity of individual liberty. But that does not mean I am a selfish or self-centered person, I just don’t think anyone else has the standing, contextual information or ability to make good decisions on my behalf. But that doesn’t mean I’m selfish and incapable of empathizing with someone else’s pain. And it certainly does not mean I’m blind to the fact that my life will be miserable if a significant portion of the country begins to suffer from deep insecurity.

Obama’s op-ed published in the WSJ is here. I’ll end with another quote:

You can choose hope over fear, unity over division, the promise of change over the power of the status quo. If you give me your vote, we won’t just win this election — together, we will change this country and change the world.

I hope his presidency lives up to our expectations.

Why Obama-Biden will win, and win HUGE (390).

I’ve heard way too much worrying than warranted from friends and colleagues who lean the right way but fear the election will be lost due to hidden racism or just plain stolen. Well here’s why we’ll win and win HUGE (390 electoral votes)!

Here’s why we’ll win (big picture):

  • The mood in the country is to throw the rascals (republicans) out.
  • The republicans made a huge mistake forcing McCain hard right, pairing him with Rove’s underlings, and making him pick Palin. Not to mention changing the message every other day. I feel sorry for McCain, especially since I supported him in 2000, he didn’t deserve this.
  • The Obama campaign is very enthusiastic and extremely well-run. I volunteered for Kerry and that was amateur hour compared to this one.
  • The polls are underestimating two things, young voter turnout (since many pollsters don’t call cellphones) and many of them are using 2004 stats to figure out how many newly registered voters will vote. Newly registered voters are extremely motivated this year, with high percentages having voted early.
  • The army of lawyers and volunteers that has been dispatched by the campaign will protect voters from disenfranchisement.

A few words about how I get to 390:

  • The media’s claimed Pennsylvania, Virginia, Iowa, Colorado, New Mexico and Nevada are battlegrounds to look fair. Anyone who’s looked closely at the polls knows Obama will win big here.
  • Florida and North Carolina will break for Obama, the early voting seems to confirm that, people in Florida are worried abou the bad housing bubble there and their investments, Obama is much clearer on these issues.
  • I think Ohio and West Virginia will break for Obama, economics trumps everything else. Obama and McCain both like clean coal, Fox fails!
  • In Missouri folks will vote with their better selves in mind, and vote against the divisiveness of the McCain-Palin campaign.
  • Georgia has seen record early-voting, and record African-American turnout. This will be a surprise and good riddance to Chambliss who ran those despicable ads against Max Cleland.
  • Montana voted for Bill Clinton and will come home. Go Tester! Go Schweitzer!
  • North Dakota, just to round things out. They’re too close to Canada not to have the good sense to vote for Obama-Biden!

Oh and hey Lou. Here’s why we’ll win Montana

Is Meg Whitman the entrepreneur behind eBay like McCain says?

During last night’s debate, when asked whom he would pick as Treasury secretary, John McCain said he might consider Meg Whitman and said she had turned eBay into a livelihood for 1.3 million people in America. But there are a few things he left out and glossed over…

John McCain said “Meg Whitman was CEO of a company that started with 12 people and is now 1.3 million people in America make their living off eBay.” Whitman is current co-chair of McCain’s national committee, though she originally supported Romeny (she used to work at Bain & Co.). Apparently, she’s also thinking of running for governor of California in 2010.

By most accounts, Whitman is a competent, hardworking executive. The marketing skills and experience she brought to eBay certainly helped the company navigate the tech-wreck successfully.

The thing is, McCain made it sound like she founded eBay and was single-handedly responsible for kick-starting 1.3 million careers, and that’s a bit misleading.

Whitman started at eBay in 1998. By then, eBay had been going for three years and had 500,000 customers, 30 employees, over $100 million in sales, $4.7 million in revenue and was well on its way to becoming one of the bigger e-commerce players. eBay went public the same year Whitman was hired. Other Silicon Valley companies brought in experienced executives from outside the firm to serve as CEO when contemplating a public-offering (in some cases, VCs demanded this).

The person who founded eBay is Pierre Omidyar. He was the creative mind behind eBay’s birth and the entrepreneur whose vision built it into what it is.

By the way, Pierre currently runs Omidyar Network, a philanthropic investment firm and has endowed a microfinance fund at Tufts. He’s also reputed to be a nice guy.

You know what’s coming…

Pierre Omidyar endorsed Barack Obama back in March and it’s worth reading why.

In fact, there are a lot of creative capitalists rooting for Obama. Enjoy the rest of your day!

Oil and tire pressure

The McCain campaign is trying very hard to turn Obama into a laughingstock for suggesting we should all check our tire pressure to improve mileage on our cars, handing out pressure gauges labelled “Obama Energy Plan”.  I think this is the McCain campaign’s version of the “flip-flopper” slur applied to Kerry.  The Obama campaign needs to hit back hard before the Republicans run away with the issue of gas prices.

The TV spot I’d like to see is one that asks when the country changed so much that we began to think it was cool to allow equipment to rust, and stopped taking care of our cars.  The spot should have as a backdrop various shots of car enthusiasts, a Nascar race, a painstakingly maintained classic car.  Obama should come on and talk about the mid-western values he learnt from his grandparents, who lived through the depression and made the most of everything they had, and did not waste anything.  He should stress we don’t need to do anything different to solve the energy crisis, we just need to summon the can-do American spirit and ordinary Americans will respond to the challenge.  He should talk a little bit about how Americans conserved resources to win the first and second World Wars, even though the threat seemed far and distant.  That global warming was a asimilar potential threat, it is possible that our wealth and isolation might protect us from the worst impacts of global warming, but the threat and potential disruption is too grave for us to ignore it.  Then he should come back to reiterate that waste and profligacy are not American values.  Thrift and commonsense are.  The ad could end with a three point plan on how Americans can save gas driving their current cars, checking tire pressure, taking the car in for a tune-up, driving less aggressively.