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Sorry I haven't been posting much.  I'm in such a funk over this bailout.  It's like our politicians are trying deliberately to screw up the country before they hand the reins over to the next guy. Lots of stupid investors buy up pools of crappy mortgage loans and then can't get rid of them, so we pass a bill full of pork that gives tax breaks to companies that import rum or make archery sets for kids.  If that doesn't set off your logic alarm, then we're only half a step away from Brawndo - It's got what plants crave! In short, yeah we really are that gullible.

What's really got me down is that I'm losing faith in the process altogether, and all my hopes that were pinned on Obama are pretty much dying.  When either Obama or McCain take office in January, it's not going to matter much what sort of plans they laid in place for the economy while they were running.  Plans will have to be torn down and rebuilt from scratch.  There won't be a whole lot of choice involved.  Essential programs are essential programs and we're going to have to find new ways to fund things we probably can't do without.

To me, that was the most interesting question of the first debate.  I'm paraphrasing, but the debate moderator asked both Obama and McCain what they wouldn't be able to afford in their economic plans going forward.  If I were Obama, I would have leveled with the American people and told them about the magnitude of this folly.  I was looking for a candidate who would do that.  Instead, not only did Obama not level with us, but his vote was indicative of someone who didn't want to stick his neck out to tell institutions that make crappy investments that it's not the government's role to bail them out when they're left holding the bag.

It all comes down to this: We're being held hostage.  Financial institutions can play it loose and have us pick up the tab when it comes due.  The bailout should offend anyone who pays their bills responsibly, or who believes that we ought not to reward failure at the expense of the successful.  Financial institutions can't just take the money out of your bank account - that would be too brazen.  Instead, they'll use their lobbying power to, in effect, enact a tax on you.  (They do that by making the government give them money and the government responds by raising taxes and/or cutting out the services you need.)  They'll also rob you of your wealth by ensuring that anything you've managed to save doesn't have the purchasing power it once did.  (If the dollar lost half its value overnight, tomorrow it would cost you double what it cost you to live today.  If it costs the ultra-rich twice as much to live, it's no big deal for them, but it completely screws you.)

This is why when the Obama campaign called me last week to ask me for more money (on top of the multiple $50 gifts I've been sending them over the past 18 months or so), I told them I was done giving.  Senator Obama voted for the bailout.  And that's a betrayal of trust.  He doesn't represent the middle class.  No one really does.  He'll still get my vote, but that doesn't mean anything in a blue state.  The one silver lining will be that I won't have my health benefits taxed as income, but that probably won't matter much given how much taxes will have to go up to pay for this mess.

Taggers are Assholes

I want to get a picture of this.  It's blurry because on most days, my train whizzes by it at 60 MPH.

One of the things I love about the leg of my commute that runs through Nassau and Queens is that many of the old brick buildings still have advertisements painted on them.  You can see ads for department stores with the original phone numbers on them - JA6-XXXX if the store was in JAmaica, MA7-XXXX if the store was on the Miracle Mile in MAnhasset, etc.  It brings back memories, especially if the store no longer exists.

Federated Department stores phased out the Abraham & Strauss brand in the mid-90s.  But I could still see one of the store's ads painted on a building on my way into the city every day.  That is, I could have seen it up until recently, when some asshole tagger decided to mark up the ad, destroying a piece of history in the process.  That's what the blurry photo above depicts.

It makes me really angry when people fail to appreciate the history around them and deliberately destroy it.  I hope this jerk gets electrocuted on the train tracks like that tagger in "Beat Street."

Financial Mess

I'm just so frustrated with the financial mess our country is in.  I look to the future and wonder whether retirement will ever be an option for someone like me.  And I wonder about my business, how it will be affected and how I'll continue to provide for my family with such an unstable economy - one in which many people are losing confidence.  It's scary to think about. I've been doing my best to follow what's going on.  And I just can't believe that something like this can happen.  To my mind, several truths are emerging:

1. George W. Bush's legacy, when we all look back on his presidency, will be the looting of America's wealth and redistributing it to the wealthy.  (To paraphrase Chris Rock, not the merely rich, but the wealthy.)
2. Even the basic pillars of the rescue plans are flawed.  I'll get into this in a minute.
3. Both Congress and the Bush administration were asleep at the switch.
4. The impact on our lives, I believe, will be a lot more significant than your typical American believes it will be.  This isn't something where you can shrug your shoulders and say "What can you do?"

I'll circle back around with respect to the Bush legacy.  We'll get there.  Let's talk about the other three points first.

This economic situation wasn't sprung on us overnight.  Former Fed Chair Alan Greenspan warned us that Freddie Mac and Fannie Mae needed to be reeled in over four years ago.  Say what you want about Greenspan - he might be an evil bastard, but he's a smart evil bastard.  Ben Bernanke is an intellectual midget compared to this guy, and he ought to be taking his cues from Greenspan instead of ignoring them.  We had our warnings.  And we did nothing.

It shouldn't take a genius to understand that if government gets involved in private enterprise, bad things can happen.  Our government's stellar credit allowed the government-sponsored Freddie and Fannie to borrow at unbelievably low rates.  The spread between what they were able to borrow at and what they were able to do with the money was astronomical.  It could have never happened in the private sector.  The notion that this situation wouldn't be exploited, by Freddie and Fannie and the institutions they did business with, is absurd.

That these institutions are so large that their failure could mean the entire economy grinds to a halt is another situation we never should have been in.  It also doesn't take a genius to see that if the failure of a company like AIG would destroy the economy, then AIG has remarkable leverage.  They can take ludicrous risks, like insuring a ridiculous amount of bad debt - hey, the government won't allow us to go under because they'd be in as much trouble as we would be...

That's why all American taxpayers should feel as if they've been taken hostage.  Either bail out companies like AIG for their stupidity, or watch the economy flush itself down the toilet and be in the same boat.

Now, let's talk about the magnitude of the problem here.  $700 billion is the number President Bush would like to see stick in our heads.  Truth be told, the economic impact is much greater than that.

Bailing out Freddie and Fannie added the potential of the $5 trillion those two collectively underwrote in mortgages to our national debt obligations.  As of June or so, that national debt was already at $9.5 trillion.  Folks, the government can't borrow like this without it affecting the lives of Americans significantly.  There's been talk of T-bills losing their AAA rating because of a lack of confidence that our government can meet its debt obligations.  That means that when the government needs to borrow in order to cover the deficit, it will be more expensive to do so.

What does that mean?  It means inflation, so it's going to cost more to afford our standard of living.  In the event that your credit is good enough to secure a loan for a home or a car, you'll pay a higher interest rate than you might have in the past.  Everything is going to get more expensive.

Especially fuel.  When it comes to the oil market, values are expressed in American dollars because of our currency's long-standing reputation for being stable.  (There are other reasons I'd rather not get into right now.)  When dollars aren't worth as much anymore, the price of fuel jumps.  Earlier this week, we saw a one-day jump in the price of oil that was unprecedented - $25 in a single day.  Oil went from around $90 a barrel to $115.  (This sent me scrambling to the auto parts store for a locking gas cap and to the pump for a fillup before prices went up.  Granted, I didn't see a huge increase in gas prices right away, but considering the lame excuses fuel companies have used to justify huge price increases, a jump in crude of $25 in a single day seemed like a legit excuse for boosting prices up into the $5/gallon range.  So I acted on it.)

Back to the economic impact for a second...  Before we even get to bailing out AIG and other financial institutions, we've already added a huge amount to our already-huge national debt tab.  Now we're going to add $700 billion to that amount in direct layouts of money we don't have to prop up financial institutions that ought to go out of business.  And here are the preconditions, as specified by President Bush in his address last night, in his words:

1. "It would remove the risk posed by the troubled assets, including mortgage-backed securities, now clogging the financial system. This would free banks to resume the flow of credit to American families and businesses."
2. "Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars."
3. "It should establish a bipartisan board to oversee the plan's implementation, and it should be enacted as soon as possible."

With regard to point #1, there is no such thing as the removal of risk in situations like this.  Mortgage-backed securities contain some element of bad debt, which will need to be paid when the bill comes due.  You can mitigate the risk somewhat by giving financial institutions time to figure out what they think these securities are really worth, but you can't remove the risk.

Point #2 is ridiculous.  Taxpayers can't be protected.  Already, they're going to bear the burden of this bad debt.  They're going to continue to be screwed as mortgage-backed securities are valued and purchased over time at pennies on the dollar.  The financial institutions have been running off with the money for the past several years during the housing boom.  They'll continue to do so when they eventually invest in securities that are likely to be highly undervalued.  The notion of protecting the taxpayer is ludicrous.

As for executive compensation, that's just something that will make us feel better without having any real impact.  After all, when you're talking about tens of trillions of dollars, what's $40 million in deferred compensation in comparison to that?  It's less than a drop in the bucket.

Point #3 is silly, as well.  The Bush Administration and Congress both share the responsibility (to varying degrees) for this mess we're in.  Bipartisan oversight of the plan just means it will take longer to implement while the economy continues to hemmorhage.

This brings me back to Bush's legacy.  Already, he's known for starting wars over oil.  He's known for turning a budget surplus under the Clinton administration into the largest deficit of all time, and this current crisis just adds to it.  As our cost of living increases, and the profits of the wholesale shift in value across the economy continues to benefit the ultra-rich, we're increasing the size of the widening chasm between the haves and the have-nots.

What does this mean for you?  Continued debt slavery, the notion that no matter how hard you work, you won't be able to get out from under the debt you've accumulated just trying to make a living.  Saving for retirement is just another joke - By the time you get around to using the money you're putting aside, it won't be worth as much as it should be because of inflation and the devaluing of the dollar.

Looks bleak, doesn't it?

Ad Network Gripes

Some of my latest ad network gripes...

1. Remarkably stupid-sounding names - I know all the good domain names are taken, but can ad networks refrain from adopting monikers that sound like something Wham-O, Inc. rejected as a potential product name for the Frisbee?
2. Not-so-thinly-veiled conflicts - Don't think that it escaped my notice that you have creative services, media planning and research in house.  You can call yourself an "ad network," but it's not likely going to throw me off the scent and make me stop thinking of you as "competition."
3. Bragging about Uniques - Great.  You have 10 million unique users.  So does every other network.  In these days of non-exclusive inventory and ad-hoc networks, bragging about unique users is like bragging about owning a refrigerator.  While it's true that media planners need to understand they're not wasting their time talking to a network that can't deliver reach, networks ought not to turn presentations into a you-know-what wagging contests.
4. Not Knowing How It Works - We want to know whether your geotargeting is based on IP addresses or registration information.  We want to know whether your behavioral targeting works based on actual identified behavior or on a lookalike basis.  We want to know how your contextual relevance engine makes decisions.  It's okay for us to be ignorant going into the meeting.  That's why we're asking you these questions.  It's not okay for you to be ignorant going into the meeting.
5. "Borrowing" Clients - We love the "badge slides" in presentations that show all the great brands you consider to be "clients."  Let's get this straight, though.  If Life Savers tells its ad agency to buy some web advertising, and the agency turns around and buys 10 million impressions on an ad network, and that ad network sources some of its inventory from the Right Media exchange, and then some of that inventory comes from your network, that doesn't make Life Savers your "client."  We know that if we called the Life Savers brand manager and asked, she probably wouldn't know who you are.  (The same is probably true for their ad agency, for that matter.)
6. Brand Protection via Elimination of Affiliates - We love it when ad networks give us a site list and then say "You can eliminate up to 20% of the affiliates that are objectionable to your brand."  Why 20%?  A piece of objectionable content can come from anywhere.  How about this?  I'm going to fill a water glass with highly radioactive Plutonium-239.  You can eliminate 20% of the radioactive material before you chug it.  Feel reassured?  Me neither.
7. Abuse of the phrase "The leading [X]" - It's completely meaningless to be "leading" in a category where no one will admit to following.  "Leading" could mean you're tops in uniques, or it could mean you were the first in a particular category, or it could just mean that a bunch of people really, really like you.
8. "We Need an NDA" - Please, people.  You're an ad network.  You're not protecting nuclear secrets.  You will not be irreparably harmed if an agency finds out that SomethingAwful.com is a network affiliate.  You won't require injunctive relief if we find out that you're on Adify like everybody else.  And we're pretty sure we could have guessed that your "proprietary optimization technology" is a bunch of overcaffeinated Ukrainian college students looking at ad serving reports all day.
9. "Can We Run a Test to See What Your Click-Through Would Be?" - Yes, but I likely won't pay for it.  Many of our clients couldn't care less what their CTR is and they're more interested in seeing the results from a brand perspective.
10. Unwarranted Escalation - Yes, you can meet with the president of the company if you would rather do that than meet with the people making day-to-day decisions on which networks to buy.  That meeting will consist of us shaking hands and me saying, "You really should set up a meeting with the media supervisors who oversee the accounts you're interested in."