Friday, April 30, 2010

Friday Night

Just saw Darrell Hammond at San Jose's Improv. He was good, but not great. Most of his stuff is recycled, but it's mainly impersonations, so his routine never gets old. Hammond's Arnold Schwarzenegger impression is probably one of his best, and I also enjoyed his Bill Clinton and Jesse Jackson impersonations. Hammond thanked Bill Clinton for his house during the routine, and he doesn't seem to think too highly of the South (where he's from), Panda Express, or Hillary Clinton.

Jim Breuer, also an SNL alumnus, is still the best stand-up comic I've ever seen live.

Thursday, April 29, 2010

Government Workers and Pensions

In today's WSJ (April 29, 2010), Gary Shilling delivers the lowdown on government pensions:

Years ago, there was an informal "social contract"—public employees generally received lower wages than private-sector workers, and in return they got earlier retirement and generous pensions, allowing them to catch up. That arrangement has long since gone by the boards. The result is a remarkable trend. State and local government employees for years have received pay increases in excess of inflation, and BLS figures show they now have wages that are 34% higher on average than in the private sector.

To me, it's even more simple. It is foolish to spend lots of money on unproductive people, because each dollar that goes to someone who isn't working is a dollar taken away from someone who wants to work or is currently working. Typically, working and non-retired people contribute more to the economy because they spend more money on purchases such as homes, cars, appliances, and miscellaneous items, including items for their children.

Also, if retired people--whether Joe the Plumber or Joe the Police Officer--continue to make large purchases, they would actually hurt younger, newer couples by raising demand and prices. For example, if a retired person has a large pension and decides to buy a second home, s/he takes the home off the market for a first-time homebuyer who now has to look elsewhere for a home or try to compete with someone who has a stable pension and who has had decades to built up assets.

In a world where products and money are not infinite, each dollar makes a difference, whether positive or negative.

Wednesday, April 28, 2010

Pension Promises Bankrupting California?

Interesting article (April 12, 2010, Sac Bee, Phillip Reese) on public pensions and their effect on California cities and counties:

"The old joke is that General Motors is just a health insurance company that makes cars on the side," San Luis Obispo County Supervisor Adam Hill said during a pension presentation at a recent board meeting. "My concern is that the county government is becoming a pension provider that provides government services on the side."

The legacy of Gray Davis: blackouts and unsustainable pension promises?

Tuesday, April 27, 2010

Economy is Linked in Strange Ways

Until this year, I had been a loyal Wall Street Journal subscriber. I usually paid less than $200 for an annual subscription, but last year, the WSJ decided to increase the price to over $300/yr. I balked. For a while, I received only the local paper. The WSJ would call me once a month--usually very early in the morning--to try to get me to renew, but the sales rep wouldn't budge on the price.

After a few months, I grew tired of the local paper and signed with the New York Times, but just its Sunday edition. Some time thereafter, the WSJ sent me a renewal request with a price I was willing to pay. Apparently, if you wait 180 days between WSJ subscriptions, the WSJ finally offers you its "old" or "original" price, which--last time I checked--is less than $200. By this time, however, I thoroughly enjoyed the New York Times, especially its "Modern Love" Sunday pieces, and was unwilling to go back to the WSJ.

Why should anyone care about my newspaper habits? Because even small consumer habits, in the aggregate, create ripple effects. When I was receiving the weekday WSJ, I would go to Panera Bread (PNRA) for coffee and a cobblestone pastry every weekday. But once I stopped receiving the weekday paper, I skipped my Panera Bread morning outing. That eliminates over a thousand dollars from Panera's annual revenue, and they did nothing to lose my business--the Dow Jones & Company (NWSA), owner of the WSJ, caused me to change my morning habits with its strange marketing strategies. Now, with a much longer and more informative Sunday paper, I spend more time on the weekend at my local coffeeshop, which is usually Peet's Coffee (PEET). Dow Jones & Company basically transferred some of my money from Panera Bread to Peet's Coffee and Tea. Yet, no one at the WSJ intended Panera to lose my business and Peet's Coffee to gain it.

What is the point of this story? Basically, the economy is extremely difficult to manage because of the potential for unintended results. When the government tries to fix the economy, it, too, creates unintended consequences. Right now, we don't know the exact nature of those consequences, but at some point, we will be able to study how the stimulus package created unintended winners and losers. I agree that Congress should limit leverage on Wall Street. At the same time, Americans are losing sight of the big picture when it comes to federal spending. For example, the portion of the federal budget dedicated to defense spending continues to increase. It is now 23% of the entire federal budget. TARP, which many Americans bitterly protested, was only 4% of the 2009 federal budget. The ever-increasing defense budget has more than just financial consequences. Over 4,200 American soldiers have died in Iraq. Over 30,000 American soldiers have been injured in Iraq. Yet, many Americans, encouraged by mass media, pay more attention to "tea parties," golfer Tiger Woods' personal life, sports, and reality television. And so it goes.

Monday, April 26, 2010

Excessive Government Pay?

The best part is the S.F. deputy police chief saying he's helped reduce the deficit because of the taxes he paid on his half million dollars salary. (Rachel Gordon, April 26, 2010, SF Chronicle)

Oh, the arrogance and self-dealing.

Sunday, April 25, 2010

Usain Bolt

[Update: link no longer works. Sigh.] 

Usain Bolt will never cease to amaze me: 4x100 relay. Guess which runner he is.

Fun Tips

Here is a list of good commencement speeches and funny films:

Commencement Speeches

1. Will Ferrell's 2003 Harvard commencement speech. See if you can spot Al Franken in the audience.

2. Steve Jobs' 2005 commencement speech at Stanford University.

3. Ellen DeGeneres' 2009 commencement speech at Tulane University.

I was too lazy to add all the links, but you can find the speeches on YouTube.

Funny Films and Shows

1. The I.T. Crowd, Seasons 1 and 2

2. Adam's Apples, a Danish film

3. Wedding Crashers

4. My Cousin Vinny

Friday, April 23, 2010

Cary Grant and Grace Kelly

Just saw To Catch a Thief. Not one of Hitchcock's usual suspense films--it was very funny and had wonderfully comedic banter:

Francie: Money handles most people.

John: Do you honestly believe that?

Francie: I've proved it.

John: You're a singular girl.

Francie: Is that good or bad?

John: Oh, it's good, it's quite good. You know what you want. You go out after it and nothing stops you from getting it.

Francie: You make it sound corny.

John: Oh no, you're a jackpot of admirable character traits.

Francie: I already knew that.

John: Yes, I will say you do things with dispatch. No wasted preliminaries. Not only did I enjoy that kiss last night, I was awed by the efficiency behind it.

Francie: Well, I'm a great believer of getting down to essentials.

It's much better in the spoken word than on paper.

Thursday, April 22, 2010

The Average Lawyer's Creed?

Isaiah 59:4 "No one calls for justice; no one pleads his case with integrity. They rely on empty arguments and speak lies; they conceive trouble and give birth to evil."

Update: a friend says that the above quote should apply to politicians, not lawyers.

Wednesday, April 21, 2010

Gender Gap

From NYT, April 18, 2010, Sunday Business, page 8:

Women account for just 6 percent of the chief executives of the top 100 tech companies, and 22 percent of the software engineers at tech companies over all, according to the National Center for Women and Information Technology. And among venture capitalists, the population of financiers who control the purse strings for a majority of tech start-ups, just 14 percent are women.


Tuesday, April 20, 2010

Malanga on California's Government Unions

Steven Malanga on California's government unions, including the teachers' union: (City Journal, Spring 2010, "The Beholden State")

You wouldn't think that a public school teacher could possibly be an enemy of private enterprise and fiscal responsibility, but the rank-and-file don't usually dictate policy to their union bosses. Also, political discourse has become so hostile, no large entity seems to be fighting over the middle ground, where common sense resides.

Monday, April 19, 2010

Shameless Self-Promotion

Recently, I was featured in some publications. I wanted to put the links in one place, and this blog seemed like a good place. So, without further ado, if you are interested in SCU lawyers and what it's like to coach youth basketball, you might like the following links: [current as of 1/2011]

Describing himself as philosophically Jeffersonian, Matthew [Rafat] is passionate about economics. It is not the theories or the personalities that draw him. It is the issues: "What concerns me now is that so many people in the U.S. seem to have lost their capacity for long term planning, delayed gratification, and sacrifice for future generations. At the end of the day, capitalistic systems rely on a fragile balance of supply and demand; thus, they only work if most people are honest, reasonable, and prudent, and they work best when economic transactions are transparent."

Friday, April 16, 2010

San Jose's Tea Party

San Jose had a Tea Party rally yesterday. There were many interesting signs from adherents and opponents. One teenager carried a sign stating, "Future Tax Slave." Someone else carried a sign proclaiming that "a village in Kenya is missing an idiot." Another interesting one-liner: "Save trees--stop printing money."

Meanwhile, Tea Party opponents mocked all the sign-carrying with (what else?) their own signs: "THIS IS A SIGN"; "THREE LETTER SIGN"; and "Don't Spread on Me," with a picture of a sliced bagel.

I did not see anyone carrying any guns. Everyone I noticed was polite, and many people were arguing respectfully with each other.

Thursday, April 15, 2010

Civilian Courts Successfully Handle Terrorists

Next time someone tries to tell you that giving terrorists due process of law isn't feasible, remind him or her that "U.S. courts have, in fact, handled hundreds of terrorism-related cases since 9/11. Of the 828 defendants indicted in the United States on terrorism-related charges, 593 have been processed through the civilian court system, according to NYU Law's Highlights From the Terrorist Trial Report Card... Of the 593 defendants, 523 have been 88.2 percent conviction rate." (Bob Kemper, Washington Lawyer, March 2010)

Tuesday, April 13, 2010

Brocade Shareholder Meeting (2010)

I attended Brocade's shareholder meeting on April 12, 2010. The company offered shareholders coffee, tea, water, and some of the best chocolate chip cookies I've ever tasted. 

At the front of the room were Tyler Wall, Dave House, Mike Klayko, and Richard Deranleau. This year, more Board members appeared in person, so the meeting seemed more fully attended. CEO Klayko delivered an oral presentation accompanied by a slideshow. Below are the main points from his presentation: 

• Network traffic continues to increase. 

• The amount of digital data is already massive--if printed in hard copy, it would form a line from Earth to Pluto and back twenty times. 

• There are over 8,000 laws on data regulation, which is an excellent situation for storage and storage area networking companies. For example, by law, financial companies need to maintain several copies of all emails sent. 

• People are afraid of the word, "delete," and will err on the side of keeping everything. 

• By 2015, consumers are expected to own 15+ billion networking devices. 

• Qzone is the Facebook of China and reaches more users than Facebook. [More consumers will be storing, publishing, and accessing information online not just in the United States, but worldwide.] 

• Cloud computing appears to be a sustainable trend. (CRM) is a good fit for Brocade, and CRM also uses Brocade technology. 

• 60 to 70% of business costs typically revolve around employees, which is why corporations laid off so many employees last year; however, the workload continues to grow, and at some point, companies must re-hire employees to keep up with demand. 

• Brocade offers "unmatched simplicity, investment protection, non-stop networking, and optimization." 

After the presentation, it occurred to me that Brocade had delivered an excellent presentation about the overall marketplace but not about its own company. For example, there was no information showing how Brocade would be able to effectively compete with larger players such as Cisco (CSCO). The presentation didn't have information about Brocade's market share; specifics about Brocade's competitive advantages; new products; new streams of revenue; cost reductions, or anything else that would impact earnings per share. 

I remarked that I thought the presentation was great, and I felt like running out and buying shares in the major players in the data business--such as IBM, HP, and Cisco. In short, I didn't see why I should buy Brocade over Cisco or other technology companies that handle data. I also compared Brocade to the independent coffeeshop on the corner with Starbucks/Cisco opening franchises left and right. How did Brocade plan on competing with Cisco? 

CEO Klayko said that such comments had been made to him for the past ten years. He said that Cisco has been a "ten year conversation," and "we're still here." He then generally mentioned Brocade's "expanding product portfolio," and then briefly differentiated Brocade from Cisco by saying that Cisco believes in "vertical integration" while Brocade believes in "horizontal integration." 

Another shareholder asked about Foundry Networks, a previous Brocade acquisition. He said that Brocade had a good product line, but sales and marketing needed improvements. He appeared to have information about sales in Europe, and he indicated that Cisco was hammering Brocade overseas. "Nobody knows about you," he remarked. CEO Klayko responded by saying that he agreed that Brocade needed better branding, and part of the failure was because Brocade was a Business-to-Business (BtoB) company, not a consumer company. He agreed that Brocade needed to build on sales, but also said that half of Brocade's business already comes from outside the United States. 

And just like that, the meeting was over. I introduced myself to the shareholder who mentioned European sales, and he told me that Brocade dominated the storage area networking space. Brocade apparently has 75% market share compared to Cisco's 17%. Somehow, this gentleman realized how to sell Brocade more adeptly than the company's CEO. 

Brocade seems to have positioned itself as the alternative to Cisco, which is a horrible sales pitch. Pepsi doesn't walk around saying, "Try us when you're tired of Coke." And if someone ever told Pepsi's CEO that she should market Pepsi as a cheaper, more simple version of Coke, she would probably open a Montgomery Burns style trapdoor while hissing, "Release the hounds." 

Incredibly, Brocade's marketing strategy seems to be based on the idea that Cisco ought to have a competitor, so why shouldn't it be Brocade? Brocade's management and Board of Directors really ought to talk to RedHat and other Linux-based operating systems purveyors. Ask them how that type of sales pitch worked against the Cisco of software, Microsoft (MSFT). 

How could a company be so clueless when it comes to basic marketing strategy, especially in an increasingly global environment? Well, I lost interest in Brocade stock after last year's annual meeting. (You can read my long-winded rationale HERE if you're interested.) I sold my shares, thinking that a potential buyout wasn't enough justification for holding onto Brocade shares. Now, it's quite possible that someone will eventually buy Brocade. About two years ago, Brocade removed its "poison pill" provision, basically alerting the world that it was open to a takeover. (Also, maybe Carl Icahn will show up. He did make some money on Yahoo, didn't he?) 

Also, I like CEO Klayko--he's down-to-earth, diligent, not arrogant, and clearly a good guy. Yet, despite all of its good points, Brocade must realize that Wall Street will never give it any respect until it tries to position itself as a leader in the industry. No one wants to buy products from a company that positions itself as Cisco-lite and talks about its major competitor in respectful, almost hushed, tones. (Contrast Brocade's comments about Cisco with's CEO's comments about its competitor, Oracle. Slight difference, no?) 

If Brocade wants its stock price to increase, it needs to grow some cojones and improve diversity in the upper ranks. Right now, Brocade runs like a company that doesn't mind being in second place. Absent some major changes, Brocade will continue to be the nerd at the high school while Cisco struts around as the cool kid. Thus, Brocade can talk all it wants about how much better its products are from a techie standpoint, but at the end of the day, it's Cisco--with its massive cash, effective marketing, more aggressive management, and better management diversity--that will get the beautiful fans. If I had to give Brocade's CEO a pep talk, here's what I would tell him: 

I don't want you to be the guy in the PG-13 movie everyone's really hoping makes it happen. I want you to be like the guy in the rated R movie, you know, the guy you're not sure whether or not you like yet. You're not sure where he's coming from, okay? You're a bad man. You're a bad man, Mikey. You're a bad man. You're a bad man. 

Mr. Klayko: I'm really hoping you can make Brocade into the bad man on the block. You're so money, but you don't even know it. 

Disclosure: I bought more BRCD shares after the meeting, but only because I expect IBM to buy out Brocade at some point.

Saturday, April 3, 2010

Finally, a Good Lawyer Joke

From the awesome show, Community, comparing being a doctor to being a lawyer:

Well, anybody could be a lawyer. You can even represent yourself. You can't do surgery on yourself. It's illegal. You'd get arrested. And then you'd get a free lawyer.

A great show, but Hulu only has two episodes posted. Bonus: Chevy Chase is fantastic on the show.