Ivory Terminal

Correction and Update (16:15, November 25):  Tom from Data Robotics wrote to correct me about DroboShare’s OSX compatibility. I had been told by a member of my local MUG that DroboShare was not compatible with OSX. This is obviously not the case, and I have forwarded Tom’s reply to my local list (however, a quick search through the macrumors archives shows this used to be a problem). I now have a Drobo on the way, and am going to try it out attached to one of my routers before moving on to the DroboShare. I think this will be the second or third one in the ivoryterminal group (but the first that is not formatted in NTFS or FAT).  Tom also makes a great point about the difficulty/impossibility of RAID 5 migration.  I was completely bested here, and have learned a lesson about complaining about things at 2:00AM after staring at a computer monitor for the previous 18 hours…

Thank you for correcting me Tom! I look forward to putting your product to work.

Lately, the consumer tech circles have been in love with the Drobo. It seems like a perfectly fine device, but the $500.00 price tag for the empty unit shocks me, considering it would be significantly cheaper to purchase a barebones server for the task of backup and stuff it full of drives.

The Drobo uses a proprietary “non-RAID” storage system, that will allow you to add (and remove?) drives as you begin to run out of space, allowing the design to save you some money on incremental storage costs.

Sentence deleted to stop spreading false information.  Please see correction.

At this point, my backup system includes internal RAID backup (will not help if someone steals my workstation), external drives onsite (will not help in natural disaster) and external (non-accessable) drives offsite, that are not backed up as frequently as I like.

What I would really like is a hot-swappable drive cluster that would accommodate drives in the Mac Pro sled that could ideally be stored at the opposite end of the house or offsite. This would allow me to set up some drives as a back up solution, but use other drives in an enclose when all of the bays in my workstation are being used. I find it shocking that no one makes one at any cost. I never thought I would say this, but four internal drives are not enough. The 1.5TB HDDs available right now are not trustworthy, and I am hitting a wall at ~1TB of internal space (300GB system drive, 640GB data drive, 1TB mirror backup). I cannot grow without sacrificing speed, stability, or redundancy, and in this spoiled age of computing, I should not have to give up anything. I have a less-than-OEM-endorsed 2xeSATA extender on the way, but that is hardly going to solve the distance or sled compatibility desires. I would like to go about my computing day without having to touch a screwdriver.

I need to find a backup solution that will meet my increasingly paranoid requirements but still be usable on the consumer level (Sun ZFS systems are not exactly in the budget) and work with OSX. Hopefully there is a market for something like this and a vendor will oblige in the near future. Either that or I am going to have to stop working with audio…

In the mean time, it looks like this is the winner. Any ideas?

The latest coming out of Citi, “we will not sell Smith Barney”.  So far, based on the fun game, “What Pandit says and what Pandit does”, that means that SB will probably be sold by Monday, or they tried to offload it to raise capital but there was not a buyer.  I would say that quote raises the probability of my musing earlier this week.

The company is fairly obviously in the some big trouble, but even so, sub-$4 share prices could be a buying opportunity.  Here we go, off into another weekend of secret meetings, shotgun mergers, confused reporting, and hard to swallow announcements on Monday.

Update (3:24PM):  I bought in.  I figure the firm has better than even odds of getting through the weekend.  Bailout terms could wipe out shareholders, but I see a buyout/merger more likely, and Citi has more than enough swaps to get a fight started…

When I began graduate school this fall, I decided to follow my school and departmental guidelines, and throw piles of money at Microsoft, outfitting my computers with Office 2007, and in one case, Vista (others are still being attempted).

Office 2007 fascinates me. I have only been using it for two months, and sparingly at that since my courses are surveys, but I cannot wrap my head around the “ribbons” (and occasionally ponder wrapping them around my neck). I range from expert user at previous versions of Excel to reluctant tolerator of Word when I am not allowed to install something else, but all in all, I can accomplish almost any office task in the suite simply and quickly. But, sit me in front of Office 2007, and I find myself entering search terms like, “Excel 2007 copy/size charts” and, “Word 2007 section page numbers”. At one point, I even thought to myself, “wouldn’t Clippy be nice to have”, a waking nightmare that made me realize just how bad things are today.

These changes to my workflow compounded into a larger critique of MS Office, leading me to consider my past and current likes/dislikes in the suite, and the relevance of new competitors to Microsoft’s other cash cow.

Microsoft’s standing is being attacked on both the single user and networked environment fronts (by Open Office and Google Docs, respectively). The reason that these two are gaining ground is simple; they are less expensive. Before, the paid competition never found a population motivated enough to seek out alternatives, and the Lotus and Corel market shares do not seem to be in a state of flux. To the single user, many features of Open Office 3.0 are more familiar than the exotic menus of Office 2007, and for their networked peers, the simplicity and group editing abilities of Google Docs are generations ahead of the Office Live. Costing fractions of previous commercial offerings, disgruntled users are now willing to look at the new packages, and many like what they discover.

However, there is not likely to be an exodus from Office, and here is why: The two free competitors are each great on one front, and horribly lacking on the other. Real-time collaboration in Open Office is an impossibility. Google Docs becomes unable to accommodate demanding users, and the programs are inferior for anything but real-time editing, not to mention that an internet connection is required to access the files.

I am certainly not the first to propose this, but I think the two new competitors should merge, or each should work hard towards addressing their bilateral shortcomings. A desktop Open Office suite with the networking ability of Google Docs would be unstoppable. Imagine the ability to have users seamlessly collaborate across operating systems and oceans, with a low subscription cost model per user. This would be a potential revenue opportunity for Sun, and could familiarize millions of users with the basics of OpenSolaris. On the Google side, the Docs could be built out and integrated to Chrome (which needs to come out for non-Windows platforms), coupling a browser and an office suite getting Google most of the way towards a “cloud-based” operating system. The best case scenario for the end user would be a three-way build-out between Google, Microsoft, and Sun, offering a host of options at various price levels.

I expect online collaboration for office suites to mature greatly over the next twelve months, even being accelerated by the troubled economy. Cuts in business travel and expenses will likely lead to an increased interest in video-conferencing, collaborative work environments, and low-cost or no-cost software solutions. I look forward to taking advantage of these improvements.

(Happily written in AquaMacs Emacs and OpenOffice 3.0 for Macintosh)

Update (5:45PM, November 21, 2008):  Slashdot had a piece today about EtherPad, a very promising online collaboration app.  Linking something like this to OOo would be unstoppable.  It is still very rough, and they are intending to monetize it, but it is worth a look.

I think that the answer is Smith Barney. Would this be a good idea? Absolutely not, but these are the same decision makers that announce they are laying off 50,000+ largely through sales and attrition, and then mention that they are going to wait to decide about forgoing bonuses for top executives until next year, prompting an immediate public slap from the NY AG.

I think that attrition numbers are going to be much smaller than anticipated based on historical records, since there is nowhere else to go for so many bankers and other employees this year. They do not seem to want to chop 50,000 heads with layoffs, and need to raise capital instead of increasing costs, so that leaves a sale. In my experience, despite what comes out from their press releases, Smith Barney already runs as a separate entity outside of the headquarters, the division as a whole has been enraged with Pandit et al, and it would likely fetch a gigantic sum, even in this depressed market.

The only other divisions of that size are credit cards (who would buy?), the investment bank (who would buy?/destroys the Citi integration model), and the European/Asian system (if they sell either of these their supposed desire for an international company is obvious BS). They cannot get rid of anything with a large deposit base, because their capital ratios would fall to levels where they would need even more bailout money.

This leaves Smith Barney, which in many embarrassing instances actually competes with other divisions of Citi, in spite of continuous claims of integration. In many cases, the entire vertical businesses of Smith Barney and Citi are still separate, which would make for a clean break.

Dare Citi sell its brightest star?

InTrade’s sister site, tradesports.com is ceasing operations. It will be interesting to see if InTrade continues to function as normal.
Maybe they can create a market betting on their future. More to come…

~posted on a mobile device

More than a week after the 2008 elections, I am still clicking “refresh” on fivethirtyeight.com like a rat getting stimulants. It now appears that Mark Begich is pulling ahead of Ted Stevens in the Alaska Senate race! I did not see this news from any other feeds today, and it is so nice to know that the 538 crew is keeping tabs on all of this.

I have been hoping for this outcome because it would shut down Palin’s opportunity to carry her political momentum to Washington, where she could prepare to do some real damage. I will be mildly (and insincerely) disappointed if Begich pulls through, because I will be unable to see if I was right or wrong about whether Palin would nominate herself to the post.

Congratulations to Alaska for actually finding some of their missing votes, and fighting back against what seemed to be downright fraud. Nice knowing you, Ted…  Thanks for Sean Quinn and the Internets for making it possible to keep up with all of this from so far away!

In an e-mail to a colleague today, I found and replaced “fail” with “fAIG”.  It is only one letter off, and 75% right would be a salvation for these folks.  You can read endless copy by people more qualified than myself regarding AIG and the bailout in general, but very few seem to be associating the AIG funds with failing companies.  If AIG is on the other end of default swaps, and companies keep failing because they do not have access to credit, we may well enter a downward spiral.  The management at AIG should be told in clear words to pack their things by the 79.9% stake-owner.

The arrogance of the management suggesting that they are going to quickly repay their ~$150B “loan” is almost comical.  Who in the market would move that kind of money towards the pariah at anything resembling “favorable” terms?  Buffet’s stake in Goldman would seem like the bargain of the century in comparison.

It will be interesting to see how much more money must be shuffled to AIG in the coming months as more weaker companies call it a day, and each bankruptcy announcement sends them to the money tree for a shocking multiple of the equity value of the defunct firm in good times.  If this keeps happening, the regulations on CDS’s are going to come so hard and fast that the remaining contracts might actually be worth something as financial collector’s items.

I spent yesterday studying for an exam after voting instead of watching the election returns, and it turns out it is just as well. One day after, there are a few observations that are worth noting:

Intrade and the IEM both had the election appropriately priced. 2008 will be an important data point for both of them regarding their future relevance.

FiveThirtyEight predicted the race with resounding accuracy. They will end up being about a tenth of a percent off in the popular vote count, and they have yet to miss a state that has been called. This is a huge victory for the quants. It also indicates that there was not a statistically significant Bradley effect, and relatively evenly distributed undecideds (maybe the morons really did flip coins). I have a feeling that Nate Silver and Sean Quinn will deservedly be making bank as Democratic pollsters in future elections. I will be looking forward to seeing what they have to say (and announce) in the coming weeks.

The United States turned an important corner by electing a minority leader who will hopefully turn a new generation onto politics. However, largely overshadowing this day for me, California, the state of my birth, likely passed a constitutional amendment to ban gay marriage, which was ruled by the state Supreme Court as legal. I view this as an insult, and embarrassment, and a further confirmation that the US needs to seriously reconsider how we treat organized religion. Two other states also adopted amendments to restrict civil rights yesterday, although I was not holding out any hope for either of them.

I believe that the Mormon church organizations should have their activity related to Proposition 8 investigated to confirm or deny improper behavior for a tax-exempt organization. I believe that it would be easy to find illegal actions by these organizations violating the regulations related to their status. While they are looking into it, maybe someone should propose amendments to the Utah constitution regarding polygamy and child marriage because “a law is not enough”.

McCain ran a campaign and gave a concession speech so eloquent for a neo-conservative (platform) team that it may well be confirmation that the movement is dead. So much for the “permanent majority”. I admired McCain’s refusal to fight dirty, and although his campaign lowered the bar quite a bit, the candidate himself was pure class. I cannot help but wonder how much of a better situation the United States would have been in today if he had managed to surpass Bush in the primary, leading to a McCain/Gore faceoff.

Sadly, it looks at though Ted “if it looks expensive, add it to the cabin” Stevens appears to have won re-election after a seven-count felony conviction, giving Palin an opening to get into Washington as I mentioned previously. I would have liked to see her political future squashed on all fronts yesterday, but I suppose her aspirations for a 2012 presidential run will actually be damaging to the GOP so we will call it a net draw.

In Minnesota, Al Franken fell about 500 votes short of an upset, and we will now wait a couple of weeks to have this confirmed. I felt that a comedian would be appropriate in the senate, and could turn out to bring a relative seriousness to the chamber.

All in all, it was an unconventional day for US politics of this millennium. The election is not going to be contested in court, the winner of the popular vote won the presidency, and the election was conceded the same day as voting. There was hardly a peep about voter fraud, voting machines crashing, the knights templar controlling the election, and so on. It will be nice to return to the precedent that elections are ultimately decided in the voting booth instead of the court (although I currently feel differently about propositions…).

Today, several interesting bits of news have surfaced. All of the last-minute claims, exposes, parting shots, and polls are coming to light. There have been a few that I felt were worth noting, some serious, some in jest, but all likely lost in the noise that is the last few hours of this presidential race.

First, the Bradley effect is explored by David Stromberg.  This piece is mentioned on Mark Thoma’s excellent “Economist’s View” blog, where he thanks Nate Silver (FiveThirtyEight.com) for passing it along. If those two are both looking at something, it is worth your time. The result of the analysis is pretty ominous, and I hope that the relatively small sample size means that the results are exaggerated. It would be truly embarrassing to find that racism is still a significant and unpredictable issue at the polls in the US in 2008.

Next is a Reuters article exploring a prank call to Sarah Palin. Supposedly originating from French President Nicolas Sarkozy regarding a hunting trip, Palin eagerly agrees to a baby seal hunt, and even goes on to mention that she would be a careful shot, in reference to current VP Cheney’s unfortunate incident. This seems to be par for the course for Palin. I would like to think that most of the other candidates running for national office would immediately question a French seal-hunt…

The New York Times political coverage is already moving towards past tenses, with several retrospective pieces about the last couple years of campaigning, and a final article detailing the last campaign pushes, “mostly on GOP turf”. Many of the interactive graphics are worth spending some time with, and the photo coverage is second to none.

Finally, John Mauldin, a guest on Barry Ritholtz’s fantastic “The Big Picture” site (redesigned with more organized content), gives a welcome to the incoming “Janitor in Chief”. Examining some economic fundamentals without all of the spin reveals data quite appropriate for the Halloween publishing date.

All in all, the last day this year seems relatively unexciting so far. I am going to do my best to avoid all of the news streams tomorrow and actually get some work done, but in the end, the flood of data will be pretty hard to ignore. My nerd layer will likely dedicate a monitor each to the sites listed above, and maybe even a TV feed.  

I spent a lot of time this week going back and forth with people about nuances of the bailout plan, and I expressed concern about credit-risk put on agent banks when loan syndicates do not immediately fund called debt obligations. I am the first to admit that most banks are deservedly in the situation they are in now (and often thanks to their shareholders, but that is for another topic), but I am worried that repeated delays in syndicate fundings are putting far more stress on the agent banks than realized.

When someone requests a funding from a predetermined credit line, the agent bank is responsible for sending the borrower full funds immediately, and then collects funds from the syndicate. In 2008, many companies with credit lines requested full and immediate fundings from these “loans of last resort”, a practice that is far from common. For various reasons (capital shortage, default risk, reserve levels) many members of the syndicate dragged their feet to fund certain obligations. There were even syndicate members who bought positions of revolving loans that they assumed would never fund, and did not even have the capital on hand to meet their debt obligations when called. In all of these cases, the agent banks were required to either temporarily or permanently meet these obligations, and then dispatch the lawyers to collect.

Compared to the credit crisis and bailout numbers as a whole, this is a small problem, but it is still one that likely totals in the billions. It will also make banks less willing to agent these loans, and make companies less willing to secure the lines (and pay the fees) to keep them open if they do not believe they will be funded quickly and completely when called. I am worried that the bailout funds may be used to satisfy these obligations, getting the ultimate investors off of the hook for their shares, and encouraging a moral hazard situation for the funds. It would be tragic to see large numbers of boutique funds go under because of funding obligations, but I feel that the funds which made a business model out of buying presumptively permanently unfunded debt shares and collecting the fees should be forced to change their tactics or close their doors.

At this time, agent banks are changing credit card interest rates to institutional investors to take loan positions that minimize funding risk, a sign that they have been badly burned by the practice. These rates only prevent small funds from joining syndicates, and once again, the lending risk will be consolidated among the same banks that already have pressing capital problems. I feel that the government should be doing everything in its power to make these markets attractive to both the agent banks and the potential syndicate members, so the risk can once again be diluted enough that even a large default would not be catastrophic. Many of these loans, even the distressed and junior portions, are likely more solvent than subprime mortgage tranches, and they are vastly easier to identify and rate.

It has been disappointing to see that the bailout is only being used to combat surface-level problems, since the underlying issues are much more complex. I cannot wonder if this is the case because the bailout (at least the $700B part) has become a point of public outrage. It is impossible to explain the layers of these markets to a generally uninterested public, but none of these matters are as simple as they seem on the surface. Bear was saved because of counterparty risk, the shares jumped not because the $2/share valuation was inadequate, but because they were being fought over by the bond-holders and CDS-holders (two markets far larger than Bear’s equity), and AIG likely required further government funds to pay out the Lehman CDS obligations.

When all of the dust settles, it is going to be abundantly clear that deregulation caused many of these problems, but it is not clear that excessive regulation will fix the markets or prevent these mistakes from happening again. I hope that one outcome of this readjustment will be that the American equity market will begin to develop more patience, like their Japanese counterparts, where several quarters or years of losses will be tolerated to make products like the Prius. Think about how much better off GM or Ford would be if they were able to undertake projects that lost money for a decade in order to master new technologies, and their shareholders were not only comfortable but supportive of this behavior. It would certainly not solve all of problems we are in now, but the short-sightedness of American investors in both good and bad times is something that can and should be massively improved.