Just Sell the Damn Cars

There is a reason why 'KISS - Keep it simple, stupid,' is such a memorable command. Sometimes we overthink and sometimes, we just get carried away.

Jonathan Salem Baskin comments in The Dim Bulb blog on why advertising often forgets what it is supposed to do. JL:

Fiat has utterly botched the intro of its quirky but very drivable 500 -- sales are under 50% of plan -- and it's about to fire people and hold a huge group-grope agency review to come up with a new strategy. I have a simpler solution, which I hereby offer up for free: copy VW's Beetle and BMW’s Mini Cooper American launches.

After all, this is car marketing, not rocket science. The Fiat 500 is a weird little vehicle that resembles the Smart Car but looks, feels, and drives like something more than a bucket seat perched on a lawnmower. It should be the perfect car for our cost-conscious moment, not to mention a great inoculation against the inevitable next hike in gas prices.

Spender or Saver? It's Genetic

Maybe Lady Gaga's "Born This Way" was a commentary on our entire civilization.

Well, ok, whether you are a spender or a saver may not be entirely genetic, but it is a dominant influence, which raises a lot of sticky questions about the unemployed and the greedy Wall Street guys and our entire moral, philosophical and political approach to finances.

The Greeks destroying the euro? They can't help it. All those people who took on mortgages they couldnt afford. Ditto. And the people who sold that lousy paper to them and then bundled it into worthless securities they knew were toxic? Ditto, ditto and ditto.

Which leaves us with the final question: what do we do about it? And that takes us to another genetic trait, which is that we are social animals who tend to move in herds that usually help each other out for the good of the group and the ultimate fitness of the species. Which is maybe all the reasoning we could ever want for fixing this mess rather than pointing fingers. JL

Dan Kadlec reports in Time:

Now I get it. We can’t help ourselves. When it comes to spending and saving, we are genetically wired to be what we are, and there isn’t a lot anyone can do about it, according to a study by Stephan Siegel at the University of Washington and Henrik Cronqvist at Claremont McKenna College. The two scholars looked at the money habits of 15,000 sets of Swedish twins and found the same patterns in even those who had lost contact with one another

Tech Transfer? Computer Virus Hits US Pilotless Drone Fleet

The subtitle might well be, "well, what did you expect?" Warfare has become co-evolutionary: terrorism breeds counter-terrorism; submarines generate anti-submarine warfare techniques; stealth technology begets enhanced target identification. In military affairs, as in business, competition has seen an exponential increase in counter-measures thanks artificial intelligence and more powerful technology.

That the most devastating weapon in the US counter-terrorism arsenal, the deadly Predator drones that can identify and eliminate enemies without putting human attackers in danger may now have been hacked. The Stuxnet virus that disabled Iran's nuclear industry served warning that the level of sophistication and effectiveness had increased exponentially. It was only a matter of time before the same sort of intelligence was turned against the US. This will not stop - but the next moves will be of intense interest to anyone concerned about strategy and tactics, whether they wear a uniform or a suit. JL

Noah Schactman reports in Wired:

A computer virus has infected the cockpits of America’s Predator and Reaper drones, logging pilots’ every keystroke as they remotely fly missions over Afghanistan and other warzones.

The virus, first detected nearly two weeks ago by the military’s Host-Based Security System, has not prevented pilots at Creech Air Force Base in Nevada from flying their missions overseas. Nor have there been any confirmed incidents of classified information being lost or sent to an outside source. But the virus has resisted multiple efforts to remove it from Creech’s computers, network security specialists say. And the infection underscores the ongoing security risks in what has become the U.S. military’s most important weapons system.

Managing Growth: Has Suburban Development Become A Ponzi Scheme?

Measures begin to degrade in value as soon as they are announced because anyone affected by them starts to game them to their advantage.

The impact of this has been seen in executive compensation and financial regulation.

Recent studies are suggesting the same has become true of suburban real estate developent. The basic issue is that incentives devised to spur growth have become an end in themselves, with more infrastructure created to serve development evolving into the reason why further developmnet should be encouraged. In a time of economic uncertainty and strained resources, ineffective allocation of limited funds further skews growth away from optimally productive uses.

Businesses face the same challenge. Personal interests masquerading at institutional advantage can lead a company down a blind alley. HP is only the most recent example.

At a time of severe overbuilding in residential and commercial real estate, any new development should be viewed with the same tight managerial focus that other government and business programs now face. JL

Kaid Benfield comments in The Atlantic:

It will not be news to anyone who is reading this that the United States remains in the midst of the deepest economic crisis in my lifetime. (it turns out that you can’t start two major wars while cutting taxes and failing to regulate financial institutions, at least not without paying a steep price. Surprise.) Getting out of this mess and becoming more economically resilient will require a basket of solutions, including a serious look at the way we have been growing our cities and towns

Gogol vs Google: US Supreme Court Considers Copyright Protection for Non-US Musicians, Artists and Authors

It's the dated versus the digital as the US Supreme Court contemplates copyright protection in the US for foreign artists in order to protect US works outside the country. The opposition claims that this will halt the use of works in the public domain, essentially freezing cultural interchanges. They raise the specter of a new class of patent troll, now focused on copyrights, who will aggressively litigate literary references, musical riffs and even palette choices.

Music, theater, art, film and literary interests are split over the potential impact. In music for instance, 'covering' or referencing the work of other musicians, especially popular in contemporary music, could become a minefield of rights battles. Even Supreme Court Chief Justice John Roberts, considered by many the most radically conservative in a century, referred to Jimi Hendrix's electronic rendition of the 'Star Bangled Banner' in his questions to the competing counselors.

As the value of intellectual property becomes more apparent, the battle of the bands on either side will become more intense. JL

Jess Bravin reports in the Wall Street Journal:

Supreme Court justices riffed on artists from Shostakovich to Jimi Hendrix in arguments Wednesday about whether Congress can grant copyrights to works by foreign authors never before protected in the U.S.

The potential stakes are huge, and again pit old industry against new. The publishing and movie industries say that robust enforcement of foreign copyrights in the U.S. is essential to ensuring reciprocal protection of their copyrights overseas. But Google Inc., which has digitized millions of public domain works and placed them online, says its investment could be jeopardized, and public access to important books, music and art impeded, if the government prevails

Rising Chinese Labor Costs To Push 3 Million Jobs Back to the US by 2020

The danger of being the low cost producer is that customer loyalty lies with the cost, not the country of origin or its people.

Just ask anyone in western Pennsylvania or the British Midlands or even, now, China's southern Guangdong Province. Pursuing lowest cost production requires constant assessment and when those ratios change, it's time to move on.

The first inkling that this might be coming to China occurred when fuel costs made shipping costs more of a significant factor than they had been. Then, the law of supply and demand kicked in. So many companies located their facilities in China that Chinese workers started receiving better offers thanks, at first, to their experience and knowledge. But after a while, even experience and knowledge werent that important, the producers just needed bodies. And suddenly, the marginal cost of production in Ohio or Michigan or California began to look pretty good, especially when distance, quality and fear of intellectual property theft were thrown into the equation.

It is not like China's leaders dont get this. They have been talking for years about making the transition from a 'brawn' country to a 'brain' country. They keep track of how many Silicon Valley start-ups were founded by Chinese ex-pats or their children (many, as it turns out, but fewer than those from India, to their evident indignation...)and have stated that they would like to see the next generation of those innovative companies started in China.

But another aspect of this endless cycle is that it starts to move faster and faster. Three million jobs may migrate back to the US in the next ten years. The global economy giveth and then, it taketh. JL

Peter Marsh reports in the Financial Times:

Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of 3m jobs in the US by 2020, according to a study being released on Friday.

The Boston Consulting Group analysis says the new jobs will be generated by a “re-shoring” of manufacturing activity lost to China over the past decade.

Apple's Latest Phone a Dud? Sure, Just Like the iPad Was a Toy

Has Apple created a monster? We are not referring to the latest iPhone but to their customers. To be more specific, that segment of their customer base who sport designer sunglasses and hand-bags and at clubs order expensive champagne the name of which they can not properly pronounce.

Yes, one aspect of Apple's success is that they have entered the entertainment and fashion businesses. And in those industries, what is hot and new had better look, sound and feel both hot and new. One can even imagine at some future product introduction the device being walked down a lighted runway by a bulimic Eastern European model while fashion editors and celebrities sit in judgement as their pictures are snapped.

Much of the bitching about the iPhone 4S is remarkably superficial. The core complaint seems to be that Apple didnt sufficiently titillate and, more to the point, that the owner can not flash it for all the world to see and receive awed gasps in response. But hey, for the latest Most Valuable Brand on Earth, the price of fame and fortune may well be a fickle, demanding customer who wants her technology blingy. Accessorizing with Apple, indeed.

The more strategic point is that Apple may be engineering a shift in its value proposition, repositioning this latest round of products to optimize the underlying power of the technology behind it. In business history, speed kills, by which we mean that runaway growth is the incurable cancer that destroys most companies.

This is a company that gets strategy. It understands that every new product can not be a blockbuster, that there are times when you have to consolidate your gains in order to prepare for the next phase. Apple was initially mocked for the iPad. Who's laughing now, baby?

On top of the pressure it faces to come up with constant innovations, this year's Japanese earthquake and the Chinese rare earth inventory pressure affected global supply chains. Apple could well have been forgiven a year without a new phone. Consider, too, the emotional toll of making a new product announcement as your founder and inspirational leader lays dying. All in all, this week's performance was a tour de force. JL

This article combines reporting by John Sutter at CNN and Stephen Wunker at Forbes:

First, from Sutter at CNN: Usually a cause for techno-euphoria, Apple's iPhone-a-palooza event on Tuesday had an unintended and unlikely effect: It made some corners of the Internet mad. Apple's new CEO was panned by many online as dull compared to Steve Jobs. Does iPhone 4S live up to hype? Many observers seemed underwhelmed by Tuesday's Apple news. Here are five reasons why some people are calling the iPhone 4S announcement a dud (The Rumor Mill, The Wait, The Dull Presentation, The Look, The Name).

Second, from Wunker at Forbes: Apple may not have announced an iPhone 5 today, but it seems hardly to matter. The company’s new Siri “intelligent assistant” melds computing into everyday life in a remarkably novel — and useful — way. A dozen years ago, we in the PDA business (in a former life, I led the smartphone program at Britain’s Psion PLC) heard consumers ask for voice activated organizers, but we never imagined something so far-reaching, intuitive, and…fun. This looks like another mega-hit for Apple.

Are Americans Becoming More Positive About Chinese Products?

Sometimes the good news is that there is less bad news.

That may be the case with American perceptions of Chinese products. Just a couple of years after disastrous quality problems with construction materials, toys and dog food, to name a few particularly notorious examples, surveys are suggesting that the negative reputation may be changing.

The overall numbers are still not exactly buoyant: 24% have a favorable view versus 39% whose attitude is negative, but those are big improvements over the previous surveys. Even in sensitive areas such as food and home health care, it appears that lower prices and acceptable quality will drive consumer choice. The recession in Europe and the US has contributed to that openness, but Americans also seem to trust major corporations to vet outsourced products.

Chinese companies still have a ways to go to break into the global benchmarking ranks. A major contributor to the problem is that Chinese companies are new to global marketing. Their efforts have hindered their ability to shoulder foreign competitors aside. However, at a time when the US Congress is threatening to penalize China for its alleged currency manipulation and politicians routinely accuse China of taking American jobs and technology, any softening of attitudes is welcome to those who believe that global trade is a positive economic force. JL

Advertising Age reports:

Americans are increasingly open to buying Chinese products, according to a survey by The Monogram Group. President Scott Markman spoke with Ad Age about his company's latest survey of Americans' perceptions of Chinese brands.

Ad Age: Your survey this year showed that 24% of Americans believe goods made in China are high quality, up from 16% in 2008. And there was a drop in the percentage of Americans who believe Chinese goods are low quality, down to 39% from 55%. What's behind the shift?

Employees Want Their Own Devices At Work: Resistence is Futile

Let's face it, corporations have trouble letting go. Control just makes them feel better. It's more emotional than rational, but then behavioral economists have warned us that all that random walk stuff is overdone. Markets let their freak flags fly on a daily basis - so why shouldnt employees do the same?

The conflict is reminiscent of a tune from the Broadway musical "Oklahoma!" It was titled 'The Farmer and the Cowboy Should Be Friends." But, alas, they never were. The latter day corporate stand-off usually pits lawyers, cost accountants and risk managers against Gen Xers and Yers who grew up freakin' teething on this stuff, thank you very much, and dont like some gray-haired Boomer in a suit (or Dockers) telling them what to use and how to use it.

The users get the potential liability, both from the legal, comptroller and security apparat, but mandating tech usage has become like requiring boxers versus briefs. A bit overdone, dontcha think. In a world where management ranks have been thinned to save money, efficiency and productivity are the measures that matter. Familiarity and favorability are likely to enhance rather than retard performance. The reverse may have a similarly unfortunate effect. In a world where personal accountability - at least at the lower levels - is the watchword, time to practice what you preach. JL

The Economist reports:

Like many other companies, Unilever is recruiting from a generation whose expectations of technology have been profoundly shaped by Facebook, mobile apps and other innovations. But it isn’t just “digital natives” who are shocked by the state of some of the technology in their workplaces. The rapid spread of tablets and smartphones, and the magnetic attraction of social networks and other online tools such as Twitter, mean that people of all ages have grown accustomed to having powerful yet easy-to-use technologies at their fingertips. Many of them want the same stuff at work too

Why the BRIC Countries Wont Save Europe: And Why Their 'Help' Might Make Things Worse

Be careful what you wish for. If ever there were an appropriate time to wheel out that old caution, this is it.

As everyone knows by now, the Europeans have a serious financial problem. It is affecting global commerce, including the economies of US and China. The basic issue is that they have too much debt and do not have the immediate wherewithal to pay it off. But because their currency is depressed, they are selling lots of stuff to other countries which means they have a positive balance of payments. So, they are capable of paying it off eventually but maybe not in time to save all the banks who sold them the debt, took some for their own and who therefore are sinking under its accumulated weight.

The simple solutions are, per usual, fraught with peril. The problem with the BRICs saving the day is that they dont have that much capital to throw around. And if they did, it might upset the balance of payments which would make the Europeans even less able to pay. Europe is an important market for the BRICs, but not as crucial as other developing markets nor as important as they may be to each other. Europe got itself into this - with the help of its banks. For a lasting solution to work, it is going to have to get itself out. JL

Michael Pettis comments in The Money Game via the Embargo Zone:

Nothing will happen except a few token gestures aimed mostly at generating positive headlines and boosting confidence. Why? Because if Germany, with its superior understanding of the politics of the EU and greater dependence on European demand, while enjoying the benefits of information asymmetry, is not willing to buy Spanish and Italian bonds, it would be pretty foolish for the BRICs to step into the breach, and the BRICs pretty much know this. Their idea of “helping” Europe, I suspect, consists of buying German bonds, not those of Italy and Spain

Chemistry Experiment: Are Household Products a Ticking Health Time Bomb?

Inputs and outcomes. Like so many processes these days, they are complicated and interrelated. Society is making trade-offs between convenience and other variable, in this case, safety. In most cases (privacy, for instance), convenience wins going away. Whether that will be the case with health is another matter. The candy in the photo attached illustrates the conundrum. Most people get the joke - and the implication. Sales of 'green,' 'organic' or 'natural' products are up, way up. This is not a moral statement; it's about personal health and, given the ageing of the dominant Baby Boomer cohort, appearance and longevity.

Corporations are doing what they do; trying to figure out how to wrest the most value out of their products and marketing without endangering anyone...unnecessarily. Their data tells them convenience sells; their lawyers tell them there are limits. They are going to err on the side of pushing boundaries because it has worked in the past and that is how they get paid. When consumers make more decisions based on values than value, the corporations will follow them. But probably not until then. JL

Sloan Barnett reports in Huffington Post:

Would you believe me if I told you even your unborn child has toxins flowing through her blood? It's scary, but true. More than 200 toxic chemicals were identified in the umbilical cord blood of unborn babies in a groundbreaking study by the Environmental Working Group.

Most Americans, including children, have dozens of pesticides and other toxic compounds in their bodies, many of them linked to health threats. A source of many of these toxins? Common, every day, run of the mill consumer products.

Reputational Value: The Questions Steve Jobs' Death Raises for Yahoo and Others

The dog that didnt bark was Sherlock Holmes's most famous clue. But the managers who didnt manage and the boards that didnt oversee them are the contemporary business equivalents.

Steve Jobs' untimely death raises a question for all companies, public and private, about the core meaning of value. That question has to do with the centrality to a business' worth of management, credibility, reputation, leadership and other intangibles.

Jobs demonstrated that management of disparate elements like design, communications, sales and financial performance were inextricably linked by leadership. His reputation eventually gave Apple and its products the benefit of the doubt from which it continues to benefit. It will be up to his successors to cement that legacy but he put the pieces in place.

The opposite appears to be true for companies like Yahoo and HP. They share similar roots in the Bay Area tech hothouse, but the legacy they have been bequeathed is a far sadder one. As the following story points out, yahoo has 686 million users, leading film and news media assets, but is mired in underperforming mediocrity. The common assumption is that the value of its parts is worth far more than the whole - because of the missing management and board governance that could have enhanced the company's reputation and boosted its market value as Jobs did for Apple. HP is also an example of how failed leadership at the senior management and board level have subtracted rather than added value.

While the world mourns Steve Jobs as an individual and a leader, it is worthwhile remembering how his creativity contributed to so many other aspects of value - and how the absence of leadership and vision like his can do the opposite. JL

Michael de la Merced and Evelyn Rusli report in the New York Times:

The chief executive of the Chinese Internet company Alibaba, Jack Ma, has breathed new life into the potential bidding for Yahoo, telling a Stanford University audience that he was “very interested” in the company. With Mr. Ma’s apparent entrance, an increasingly crowded field has lined up to weigh bids for Yahoo. The private equity firm Silver Lake Partners, Microsoft, the News Corporation and other investors and strategic buyers are among the potential bidders.

But the first question for any suitor of Yahoo is: What are you buying, exactly

Job Cuts Increased Dramatically in September

The question bears repeating: why, almost one hundred years after Henry Ford figured out that in order to have a market for your products you have to have workers who can afford your products, are US businesses still focusing on paying executive salaries but not protecting the jobs of their workers?

Perhaps they have just lost faith in the country's ability to prevail against China. Perhaps they just dont care and are grabbing what they can for themselves. Or perhaps they have not connected the dots. But whatever the reason, in an economy traditionally dependent on the consumer for 70% of sales, accelerating layoffs (and funding political candidates who oppose government stimulus) is not a recipe for growth. JL

Joe Weisenthal reports in Business Insider:

Just out from Challenger, the latest survey of job cuts: Employers announced plans to shed 115,730 workers from their payrolls in September, making it the worst job- cut month in over two years. Heavy reductions planned by the military accounted for a large portion of September job cuts, signaling what may lie ahead as the federal government seeks across-the-board cuts in spending.

September job cuts were 126 percent higher than the 51,114 announced in August, according to the latest report on monthly job cuts released Wednesday by global outplacement firm Challenger, Gray & Christmas, Inc. They were 212 percent higher than September 2010, when employers announced just 37,151 job cuts. Last month’s total is the highest since April 2009, when 132,590 job cuts were announced

The Chinese Consumer Rush to Fast Food

While the balance of payments between China and the US continues to be a sore point in the two countries' relations, in at least one sector the traffic is in the other direction: Chinese consumers love American fast food.

In fact, some US chains, YUM Brands' KFC and Pizza Hut among them, are increasingly dependent on the Chinese market for growth and profits. Sales are rising there while in the US, the economic malaise is dampening results.

There are those who chuckle at the notion that the US appears to be most successfully exporting all of its bad habits, but that probably says more about human nature than about evil intent. Nonetheless, the news is a mixed blessing. While no doubt grateful to have created strong markets overseas while the home market falters, the companies will have prepare - as other US companies have - for the day when that advantage disappears and they are fighting the proverbial retail ground war in Asia. JL

Kelly Evans reports in the Wall Street Journal:

One place where China isn't slowing is in its appetite for fast food. Amid growing jitters over the health of the world's second-biggest economy, along comes global restaurant giant Yum Brands with its fiscal third-quarter earnings report due after the closing bell Tuesday.

Yum—owner of restaurant chains including KFC, Taco Bell and Pizza Hut—may seem the quintessential American company. In fact, the biggest chunk of its operating profit now comes from China. Hence, its results offer a timely read on the health of that nation's emerging consumer class. One thing is certain: The Chinese consumer has more of a pulse than the American one these days. Morgan Stanley estimates sales at Yum locations open a year or more in China will be up 12% year on year during the August quarter.

Is Offshoring Code-Writing Creating a Cyber Security Threat?

There are two potential threats, actually. One is the obvious: that foreign intelligence services will undermine the security of mainstream business code in order to gain access to the secrets of those using it. The second is more mundane, but could be just as harmful: that supervision will be less effective and that sloppy code will result.

The view on these threats is not universal. The big software firms are, naturally, offended at the notion that they do not know how to manage or that they would sacrifice security for profit. Industry analysts ignore those self-serving claims but are divided on the degree of seriousness the putative threat presents.

The view here is that without strong systems and a history of managing globally, any operational extension can be degraded. The question here is whether the companies in question have the incentive to invest in prevention or whether they will take a 'management by exception' stance and wait to see if further action is warranted. Either way, corporate security is hopefully, by now, suspicious of anything sourced outside its own boundaries. Emphasis, alas, on the word hopefully. JL

Eddie Walsh comments in The Diplomat:

Big US and European software companies are increasingly developing code for mainstream products overseas, especially in Asia-Pacific. But despite the temptation for cost savings, analysts say bulk off-shoring of code development comes with an inherent risk – it’s simply less secure than on-shore code development. As the US government seeks to reduce software development costs amid looming budget reductions, this raises two important questions: 1) Is the off-shoring of code development a growing national security concern for the United States and 2) If so, does it need to impose new regulations and hold software developers liable for the quality of their code, especially for critical infrastructure products?

Mobile Ad Spending to Surpass $1 Billion This Year

A billion here, a billion there and pretty soon you're talking about real money. That line about government spending from a former US politician pretty much sums up the state of the mobile ad market.

It is clear that mobile ad growth is a bright spot in an otherwise worrisome economy. The technical differences between mobile and other channels are becoming better understood.The challenge continues to be remembering that consumers still watch television, listen to the radio and peruse their PCs. Crafting marketing strategies that build on the multiple platforms and channels available is crucial. Campaigns that are consistent and complementary in which the thematic thrust is mutually supportive across channels will prevail. Those that do not run the risk of confusing and even alienating their customers. Technology adoption cycles are measured in years and sometimes decades. Marketers are still learning what works and what does not. The growth opportunity is apparent, but optimzing it remains the real prize. JL

Ingrid Lunden reports in Paid Content:

Mobile advertising is still a small and young business when you compare it to how much money goes into digital—let alone offline—advertising and marketing campaigns. But there are some clear signs of it growing up fast: eMarketer says the U.S. is on track to have its first year of $1 billion-plus in mobile ad revenues. EMarketer first floated its $1 billion prediction back in April, but now it is revising that number up to $1.23 billion.

What’s driving this fast growth? Increased confidence from advertisers in the medium, for one. But also the fact that these advertisers are getting better scale for their investment: by the end of this year, some 38 percent of all U.S. consumers will be using a smartphone, accessing the mobile internet at least one time each month, says eMarketer

When It Comes to Job Creation, It's Still the Economy, Stupid, Not Regulation

Even when the evidence doesnt support your argument, if you say it often enough people will believe it. Maybe. JL

Bruce Bartlett, an economic advisor to Presidents Reagan and Bush, comments on the problem with the Republican's regulatory finger pointing in the Economix blog:

Republicans have a problem. People are increasingly concerned about unemployment, but Republicans have nothing to offer them. The G.O.P. opposes additional government spending for jobs programs and, in fact, favors big cuts in spending that would be likely to lead to further layoffs at all levels of government.

Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration and there is no reason to believe that more of them will have any today. And the Republicans’ oft-stated concern for the deficit makes tax cuts a hard sell.
These constraints have led Republicans to embrace the idea that government regulation is the principal factor holding back employment.

Has America Become Risk-Averse?

Is it true that we have nothing to fear but fear itself, as Franklin Roosevelt so once cogently said?

Societies that have been dominant for a long time, when faced with serious new challenges, have an unfortunate tendency to try to protect what they have rather than assert themselves.

The British, the French, the Russians and the Chinese at various times in their histories have all followed this path, usually to their detriment. To answer the question accurately, it is important to understand what they fear and why.

To accuse an entire society of fear or risk-aversion is not quite accurate - at least not at first. It is the economic and political leaders who tend to have either the assets or the positions to protect. They are usually able to convince those whom they influence or lead of the rightness of their position. And, at root, what they fear is loss of the familiar and the comfortable.

In the US the 40 years of post-WWII dominance that society enjoyed began to end in the 70s with the economic reemergence of former allies and enemies whose devastation created the opportunity seized by the US. In that conflict the US saved its allies, wrought destruction on its enemies, spent voluminous blood and treasure in doing so and was not wrong to benefit, just fortunate. By the 90s, with the collapse of communism and the growth of China, that economic leveling had become more pronounced.

Along the way convenient foils have always been blamed: the Arabs for their 'unfair' oil embargo, the Japanese for their 'unfair' manufacturing efficiency, the Chinese for their 'unfair' currency manipulation and mercantilism. But from a more objective perspective, they were just doing what economies do; trying to find an advantage and building on it.

If the US is going to emerge from its current malaise (and it would help if Europe, which faces similar problems, could do so as well)it is going to have to get over its fear of loss. We were always living on borrowed time. The people on whose efforts and accumulated wealth the current inhabitants are living risked all: moved to an unfamiliar land, invested in businesses without compensation guarantees, tested new markets. And many prevailed. The riskiest strategy now is to take no risk at all. JL

Robert Samuelson comments in the Washington Post:

Economist Robert Litan of the Kauffman Foundation likes to recall that half of today’s Fortune 500 companies began as start-ups in a recession or a bear stock market. And why not? During a recession, it’s cheaper to hire new workers, rent office space, buy supplies. But Litan suspects the same process may not be working now. In contrast to earlier slumps, when the number of start-ups barely fell, there’s been a steep decline. From 2006 to 2009, start-ups dropped 27 percent.

That’s one cause of weak job creation, which depends heavily on start-ups. “It’s not encouraging,” says Litan. “It looks like more risk aversion.”

A Real Cost of Climate Change: Food Security

Co-evolution. Remember that word. It means that when stuff happens, all living things affected by it change as a result. Terrorists and counter-terrorism tactics. Greek debt defaults and US stock prices. Climate change and food quality. The economic, agricultural and political are deeply intertwined. When one changes, so do the others.

In this particular case, economists are starting to identify measurable increases in food cost and measurable decreases in quality, all due to the impact of climate change and its offshoot, extreme weather. The result is being felt at the supermarket, the brokerage house and the ballot box. Imbalances are eventually righted because they are unsustainable. The immediate question is whether we have already entered into a period of imbalance - or are just about to do so. Either way, businesses and governments will do better to analyze and adjust than to hope it will pass. JL

Paul Epstein reports in The Atlantic:

Climate change is threatening our food supply.

With fuel prices down (not much) we'd like to think the economy will settle down. But volatility in markets, food baskets, and weather are rattling many. Indeed, food, feed, and fuel prices are contributing to the growing political instability across the globe.

A Safe Bet? Walmart to Enter Lottery Business

Well, they sell everything else, why is this a big deal?

Walmart's decision to enter the lottery business reflects two significant business realities: the first is that they may have maxed out the growth of their mega-stores. Opposition has risen to the location of their big box stores, especially in urban neighborhoods which offer the most attractive as-yet-untapped markets remaining for the company.

So Walmart is starting to compete with smaller format neighborhood stores in order to capture more of the consumer's attention and money. That, in itself, is fraught with potential conflict given the often-ethic ownership of such enterprises. But it also signals the company's struggle to reinvigorate growth.

Which leads to the other truth, about which the company has been refreshingly frank: that their core lower-income customer is suffering economically. Walmart never needed to compete on the basis of gimmicks before; it just provided products their customer might need or want at a slightly more affordable price. Entering the lottery business means doing business with local governments, which are also anxious to figure out new sources of revenue since they can not raise taxes due to political opposition.

Lotteries have a whiff of desperation about them, for the purchaser and in this case, for the seller. Getting into this business may be cloaked in the usual rhetoric about giving the customer what they want, but it may well be signalling that the 'everyday low price' strategy has been taken as far as it can go. Walmart's customers are tapped out - in part because those everyday low prices required low wages that do not provide a sustainable base for the company's own customers. JL

Mark Miller reports in Brand Channel:

Walmart has long said that has no interest in the business of selling lottery tickets. But the company is interested in keeping its customers satisfied. So a pilot program is about to get underway this week in Florida, where 27 Walmart stores will test selling tickets in a limited market trial.

Is a Tablet-only 'Daily' Publication Becoming Viable?

The numbers for this risky asset are not yet eye-popping. But given the content carnage that generally surrounds any new technology, it is looking more hopeful than the concept or the sponsor had any right to expect.

We are talking, after all, about News Corp. Aside from the seemingly endless hacking revelations, its MySpace investment disaster (purchase price: $12 billion; sale price $35 million)raised questions about emotion trumping logic, due diligence and management outside of its TV and radio asset base.

But the latest data suggest that tablet popularity, content design and delivery when combined effectively, will suit consumers' interests. The numbers compare favorably with those of other publications, some of far greater renown. The looming question is whether hardware-specific content can gain traction in an evolving market place. But that question may be irrelevant if, in fact, the content providers are learning to adopt the technology as a opportunistic pipeline rather than a threat. JL

Michael Learmouth reports in Advertising Age:

Can you build a general-news publication exclusively for tablets and gain an audience of paying subscribers? That was Rupert Murdoch's gamble seven months ago when he launched The Daily, the first (and still only) "iPad newspaper." It was a $30 million bet on both the tablet as a medium and the public's willingness to pay for news.

Today The Daily has 120,000 active weekly readers, 80,000 of whom are actually paying for the app, according to Publisher Greg Clayman. The bigger number includes 40,000 non-paying readers on a two-week introductory trial period. About 15% of people who sign up for a trial ultimately end up subscribing, he said. "The numbers are telling us people are responding well to original content designed for the platform. Premium content seems to work well on a tablet device."

Wall Street Protests Spread: What They Want and Why They Might Get It

Let's cut to the chase: the reason that the Occupy Wall Street protests appear to be gaining traction is that they share common cause with the US Tea Party movement. Yes, you read that right.

The suppressed anger and frustration that coalesced into a comprehensive 2010 defeat for the Democrats was based on economic insecurity. In the Tea Party case it was mostly older people, many of them retirees who feared for their investment income after the financial crisis. In their view, the politicians - especially Obama - sided with the bankers.

The current protest has the same roots: anger at perceived favoritism for financial services over the needs of common citizens. That the Occupy Wall Street protesters are mostly younger, more liberal and worried about joblessness versus investments as opposed to their Tea Party confreres should be a source of concern for the banking lobby. The reason is that politicians can count. The two movements may be disparate in their motivations but their enemy is identical. That means votes and it may mean lessened influence for financial services interests.

Occupy Wall Street is relatively inarticulate about its aims and objectives - so far. But there is a sense that increased financial regulation could be a unifying proxy for the myriad causes the protesters espouse. The protesters resolve could well fritter away as the weather turns colder and the NY Police remain implacable. But the experience elsewhere - in Cairo, Tunis, Kiev, London, Guangzhou and Lima suggest that these movements are adaptive and are evolving as they learn what works. The NYPD, meanwhile, with their massive budget, their electronic capabilities and their mighty intelligence apparatus, has made the same mistakes that their Egyptian counterparts did. Hardly an edifying example to follow, at least if one wants to prevail.

As the precursor to a Presidential election year, this makes great theater aimed at an unpopular foil. And everyone likes a good show. JL

Andrew Grossman and Jack Nicas report in the Wall Street Journal:

The anti-Wall Street protest in Lower Manhattan entered its third week with hundreds of arrests after the group blocked traffic Saturday on the Brooklyn Bridge, and budding copycat movements across the U.S. continued to stage smaller-scale protests, planning them online on social networking sites.

Protesters held sizable gatherings in Chicago and Los Angeles. In other cities, like San Francisco and Pittsburgh, protests were smaller or existed only in a planning stage. A website, occupytogether.org, lists groups that are offshoots of the New York protest. Activists have begun organizing outside the U.S., including in Prague, Melbourne and Montreal.

Scary: Americans Projected to Spend $7 Billion on Halloween This Year

Frivolous, you say? Maybe not so much. Consumers are tightening their purse strings. Movie tickets now cost $10. If you are taking the entire family - or even shelling out for baby sitter - with food and drink you could blow $100 in one evening without even trying. Sporting events? Would that be just the $250 ticket or do you want to factor in the Seat Licence cost of $5,000? Rock concert tickets? Well, if by some miracle you get one before the scalpers hoover them up you are still looking at an expensive night out.

By contrast, a new Halloween costume can be had for $9.99. Recycled or made up out of your closet is even less. A bag of candy to hand out and you're done. The thinking here is that Americans are pretty clever about figuring out how to entertain themselves on the cheap. And the value of a night's escapism? Priceless. JL

Martha White reports in Time:

Our financial state is pretty scary right now, and we’re all watching our spending pretty closely. So what’s the one thing Americans are willing to shell out for in this economy? Costumes, decorations and entertainment designed to scare us even more.

According to the National Retail Federation, Americans plan to spend $6.9 billion this year for Halloween.

The Economy's Hidden Drag: Consumer Debt

The good news? Consumer debt is down slightly from its peak.

The bad news? That put US consumers approximately where they were just prior to the financial crisis.

70% of the US economy is driven by consumer spending. When the incomes of those consumers have been flat for 30 years and as many as 16% are unemployed, that means the nation's economic engine simply can not rev itself into recovery mode.

The degree of household indebtedness means that consumers are likely to be cautious for the foreseeable future. Which also means that business will not invest its growing cash hoard because it can see no increase in sales and therefore no 'acceptable' return. Which will, of course, mean that income growth and job creation will remain stalled. And so on. In situations like this government usually takes the lead by stimulating the economy through public works projects and related spending. For political reasons having do with the determination by some to see President Obama defeated for reelection, that sort of stimulus has been proscribed this year.

The US consumer's situation has not become more desperate than it is because they are the recipients of the largest wealth transfer in human history. That being the bequest they have and are receiving as their parents, the savers and scrimpers of the Depression generation, die off. But with that debt dragging like a large anchor on a small boat, there will be no movement without some sort of break in the stimulus impasse. JL

Karina Frayter reports in USA Today:

Consumer spending, once the driving force of the U.S. economy, is likely to remain stagnant for years as households struggle to cut debt and build up savings, economists say.

According to a recent study from the BlackRock Investment Institute, the ratio of household debt to personal income (wages and salaries only) remains at a staggering 154%, which is only 7.5 percentage points lower than in pre-recession peak.