Online Advertising - Not Effective Most of the Time
In the comments section of yesterdays post, some phantom blogger profile left a rambling comment that basically said to the effect that a "payday loan" would be a great thing and that the readers here may be interested. This got me to thinking about online ads and spamming in general. Traditional magazines and newspapers have been had ad revenue evaporate for years as advertisers look to do more web based stuff. I do not run ads here because I find them annoying and many ads slow page loading times even with broadband. I hate slow loading pages.
The web based groups will tell the companies that web advertising is excellent, and worth every penny. Perhaps well thought out campaigns and targeted site selection does mean better market reach. But most of the time most of the ads placed on a site are extremely poor matches for the site's content. Check out Housing Panic's page and you will see plenty of ads for mortgage companies promising wonderful refinance opportunities. Like the payday loan spammer here, the ads are being placed on sites that the viewership will never buy the product. Seems like a waste of time and more importantly money for the companies blindly paying for the advertising. Just my 2 cents (now a dime after inflation adjustment).
Slow Down and Think - A Novel Concept
The shear speed of negative events in the financial arena has been staggering. I try to follow things the best I can, but things can move fast! A problem that has been visible to me over the course of the last 6 months has been the almost manic RUSH to do something about various developments. The FED, the Treasury, the US government, and the entire financial sector are always running around like chickens without heads telling anyone that will listen that something will be done quickly. Phrases like "restore confidence", "bring calm", "relieve pressures", and "soothe concerns" are always the motive behind hasty actions. Those phrases betray the true purpose of quick action. Most of the US economy is built on faith and belief, not on any underlying fundamentals. Confidence may well be the US economy's most valuable commodity (sorry AnonG, even more so than gold!). That thin veneer of confidence has started a cascade of crumble that may or may not be able to be stopped.
What usually happens when people panic and try to "do something" is they run with the first reasonable idea they get. This first inspiration is usually proved to be lacking in understanding of the real problem. What is worse is the quick action is almost always useless in addressing the issue at hand. What needs to happen when facing the complex mess that is the current economic meltdown is for everyone to stop and think for a moment. This will be extremely hard for all employees of the government, but it is worth the extra effort. Let's take a look at a few events and proposals that have been rushed into service:
- The Super SIV Conduit- As the mortgage SIV and CDO meltdown started, Treasury boss Hanky Paulson ran out and tried to set up a massive fund among banks to hide losses on these instruments. Without planning and without any real idea how it would work, the member banks balked and eventually the plan was scrapped. This foolish rush job surely must erode any confidence in the Treasury to do anything helpful.
- Hope Now Plan- This scam aims to keep subprime loan resets to the initial low teaser rate for up to five years. Sounds good in a panic, but among the MANY unresolved issues include: 1)loan workouts may prove to be too complicated for brokers to ever figure out how to do them 2)many people just want to get out of the home 3)how this reset freeze can be handles down the chain of securitization. Another example of a quick fix that has no real chance to be effective because nobody took a breathe and stopped to think.
- Stimulus Package- A rush to push some cash into eager consumer hands seems to be almost ready to go. Around $150 Billion Dollars may be mailed out across America to try and forestall a slowdown. Will it help? Who knows? No study has been performed to see if this idea has any application to the current mess. How a country running HUGE deficits and with a falling currency can just mail out big bucks are also concerns. Will $800-$1600 dollars really help an underwater mortgage holder? No way. But it is "doing something"!
- Buyouts, Bailouts, and the Fall of Insurance-Bank of America was strong armed into buying Countrywide Financial. Is this a good move for BAC? Do they really understand the implications of all the REO property that CFC has? If they had time to stop and think, maybe this deal would not go through. Foreign capital has been begged for by most major banks and brokerages in trouble with capital needs. Is selling off US banks to hostile countries and private wealth funds a good idea? The needy are too desperate to even consider the ramifications. ABK and MBI have been exposed as phantom insurance companies, and the bonds they insure must now be repriced to reflect the loss of insurance. Talk has already started to circulate about a government backing for these companies. How much are we talking? Can they really be propped up in a severe credit event that will occur? How about all the derivatives and swaps? Again, the situation calls for a calm analysis about possible scale of commitment, but that cannot be done in a panic to "do something".
The take home point here is that we are in uncharted territory here. Speedy moves and quick promises can be made, but they may prove to be untenable. What is needed is real leadership to take a breathe, think, and come up with a real plan to face the coming unwinding. Unknown amounts of money will be lost. A myriad of companies across the country will no longer exist. A protracted slowdown will occur. These things cannot be stopped. What is needed is cool heads to manage the debacle and then rebuild a stronger more reality based system that will be better off down the road. Sadly, there is no current example that we can hope will be able to do this.
My projection is that over the next year many plans and programs will be rushed out to try and help various issues. Over the year every single plan will be shown to be both ineffective and astronomically expensive. The problem is that once poor policy is in place, it is twice as hard to remove the programs as it was to put them in during a manic panic. Things are going to get worse, and mostly because nobody will SLOW DOWN AND THINK.
Playoff Predictions and Rock Blogging
Two extremely cold weather games this weekend. The hits are going to hurt more in the cold! In the NFC title game I am with Brett and the Packers 27-20 over the valiant Giants. The New England Patriots end the Chargers run on Sunday with a 34-17 win. Tough weather can always throw a wrench into things though!
Metallica's "To Live is to Die". A long song, but I implore you to scan ahead to the 4:45-6:30 minute mark and focus on the truly moving acoustic section of the piece. Simply stunning guitar work!
Just so it is not all hard rock all the time, check out Samuel Barber's "Adagio for Strings". My favorite orchestra piece!
Another nice piece "Libera Me" made popular in the film "Interview with the Vampire":
Have a good night.