Category: Business

Corporate news from all over

Invasion of the Home Snatchers

Seth Anderson0 comment

Life's short enough to remain optimistic
Life’s short enough to remain optimistic.

I rented The Big Short recently (via Netflix), so I’ve been researching some of what was written about the mortgage fraud, including this great article by Matt Taibi about how the banks churned out so many mortgages they didn’t have time to actually hold the deeds before re-selling:

If you’re foreclosing on somebody’s house, you are required by law to have a collection of paperwork showing the journey of that mortgage note from the moment of issuance to the present. You should see the originating lender (a firm like Countrywide) selling the loan to the next entity in the chain (perhaps Goldman Sachs) to the next (maybe JP Morgan), with the actual note being transferred each time. But in fact, almost no bank currently foreclosing on homeowners has a reliable record of who owns the loan; in some cases, they have even intentionally shredded the actual mortgage notes. That’s where the robo-signers come in. To create the appearance of paperwork where none exists, the banks drag in these pimply entry-level types — an infamous example is GMAC’s notorious robo-signer Jeffrey Stephan, who appears online looking like an age-advanced photo of Beavis or Butt-Head — and get them to sign thousands of documents a month attesting to the banks’ proper ownership of the mortgages.

This isn’t some rare goof-up by a low-level cubicle slave: Virtually every case of foreclosure in this country involves some form of screwed-up paperwork. “I would say it’s pretty close to 100 percent,” says Kowalski. An attorney for Jacksonville Area Legal Aid tells me that out of the hundreds of cases she has handled, fewer than five involved no phony paperwork. “The fraud is the norm,” she says.

Kowalski’s current case before Judge Soud is a perfect example. The Jacksonville couple he represents are being sued for delinquent payments, but the case against them has already been dismissed once before. The first time around, the plaintiff, Bank of New York Mellon, wrote in Paragraph 8 that “plaintiff owns and holds the note” on the house belonging to the couple. But in Paragraph 3 of the same complaint, the bank reported that the note was “lost or destroyed,” while in Paragraph 4 it attests that “plaintiff cannot reasonably obtain possession of the promissory note because its whereabouts cannot be determined.”

The bank, in other words, tried to claim on paper, in court, that it both lost the note and had it, at the same time. Moreover, it claimed that it had included a copy of the note in the file, which it did — the only problem being that the note (a) was not properly endorsed, and (b) was payable not to Bank of New York but to someone else, a company called Novastar.

(click here to continue reading Invasion of the Home Snatchers | Rolling Stone.)

Protecting Bank of America
Protecting Bank of America

Still amazed that we as a nation did not storm Wall Street with pitchforks and throw a bunch of bankers on a boat headed right for Somalia or somewhere similar. And in fact, now that a few years have passed, collateralized debt obligations (CDOs) are back, and the cycle of fraud continues.

The 2008 financial crisis gave a few credit products a bad reputation. Like collateralized debt obligations, known as CDOs. Or credit-default swaps. But now, a marriage of the two terms (using leverage, of course) is making a comeback — it’s just being called something else. Goldman Sachs Group Inc. is joining other banks in peddling something they’re referring to as a “bespoke tranche opportunity.”

That’s essentially a CDO backed by single-name credit-default swaps, customized based on investors’ wishes. The pools of derivatives are cut into varying slices of risk that are sold to investors such as hedge funds. The derivatives are similar to a product that became popular during the last credit boom and exacerbated losses when markets seized up. Demand for this sort of exotica is returning now and there’s no real surprise why. Everyone is searching for yield after more than six years of near-zero interest rates from the Federal Reserve, not to mention stimulus efforts by central banks in Japan and Europe. The transactions offer the potential for higher returns than buying a typical corporate bond, especially if an investor focuses on first-loss slices or uses borrowed money, or both. Obviously, the downside may be much greater, too. Michael DuVally, a spokesman for Goldman Sachs in New York, declined to comment.

(click here to continue reading Goldman Sachs Hawks CDOs Tainted by Credit Crisis Under New Name – Bloomberg.)

U Pick Parts
U Pick Parts

Sub-prime auto loans are the next big thing, but some bankers whine that The Big Short might be interfering with their con…

Auto loans made to risky borrowers and then bundled into bonds sold to investors have been making headlines for years, with some voicing concerns over an apparent resemblance between the so-called subprime auto market and the subprime housing market that sparked the 2008 financial crisis and ensuing recession.

Indeed, the parallels may not have been lost on investors either. In a note published on Wednesday, Morgan Stanley analysts led by Jeen Ng wonder whether last year’s debut of The Big Short—the film version of the Michael Lewis book published in 2010—has played a role in sparking fresh worries over the asset class.

(click here to continue reading Morgan Stanley: People Might Be Worried About Subprime Auto Bonds Because of the ‘Big Short’ Movie – Bloomberg.)

as Gawker writer Hannah Gold puts it:

The memo reads:

“However, concerns about growing recessionary risks – and perhaps even the popularity of the recent movie The Big Short – have motivated investors to investigate any potential source of weakness. Consumer sectors that involve large initial outlays, such as housing and autos, provide a natural place to start. Combine that with recent headlines from Fitch suggesting that delinquencies in some sectors of the auto ABS market have reached 20- year highs, and you get a target sector for investors’ concerns.

Those concerns are not without merit, at least as far as delinquencies are concerned. It is interesting to highlight that as the housing market continues to heal from its post-crisis depths, mortgage delinquencies have been on a steady decline while auto delinquencies have been going in the opposite direction.”

Or maybe potential investors are suspicious of auto loans because…they’re actual villains. Critics of the auto ABS have been pointing out parallels between the subprime auto market and the subprime housing market for years. Hopefully this story has a slightly less disastrous ending.

(click here to continue reading Morgan Stanley Analyst Fears the Movie The Big Short Has Discouraged Investors From Buying Risky Auto Loans.)

Great. Just in time for a wave of deregulation if Hillary Clinton wins in 2016, or worse, Donald Trump, or even worse, Ted Cruz…

How Vermont Got Big Food Companies To Label GMOs

Seth Anderson0 comment

Non GMO Project
Non GMO Project

If you hadn’t heard, Vermont recently passed a GMO labeling law, and Congress, since it is so dysfunctional, could not muster a response. Thus Vermont’s law will become the de facto law of the nation, at least for a while…

You’ll soon know whether many of the packaged foods you buy contain ingredients derived from genetically modified plants, such as soybeans and corn.

Over the past week or so, big companies including General Mills, Mars and Kellogg have announced plans to label such products – even though they still don’t think it’s a good idea.

The reason, in a word, is Vermont. The tiny state has boxed big food companies into a corner. Two years ago, the state passed legislation requiring mandatory labeling.

The Grocery Manufacturers Association has fought back against the law, both in court and in Congress, but so far it’s been unsuccessful.

Last week, as we reported, Congress failed to pass an industry-supported measure that would have created a voluntary national standard for labeling — and also would have preempted Vermont’s law. Which means for now, food industry giants still face a July 1 deadline to comply with the state’s labeling mandate.

And since food companies can’t create different packaging just for Vermont, it appears that the tiniest of states has created a labeling standard that will go into effect nationwide.

This statement, from General Mills’ Jeff Harmening, sums it up:

“Vermont state law requires us to start labeling certain grocery store food packages that contain GMO ingredients or face significant fines,” Harmening wrote on the General Mills blogs.

“We can’t label our products for only one state without significantly driving up costs for our consumers and we simply will not do that,” explains Harmening.

So, as a result: “Consumers all over the U.S. will soon begin seeing words legislated by the state of Vermont on the labels of many of their favorite General Mills products,” he concludes.

Chocolate giant Mars struck a similar tone in its announcement: “To comply with [the Vermont] law, Mars is introducing clear, on-pack labeling on our products that contain GM ingredients nationwide,” the company statement says.

(click here to continue reading How Little Vermont Got Big Food Companies To Label GMOs : The Salt : NPR.)

All Your Bonnie Plants Come from Non-GMO Seeds, and All Your Base are Belong to Us
All Your Bonnie Plants Come from Non-GMO Seeds, and All Your Base are Belong to Us

For the record, I’m ok with the Vermont labeling law. I don’t know if genetically modified food is good or bad, but truthfully, nobody really does. The American government’s regulatory agencies are permanently tilted towards the interests of corporations, always, and nearly without exception; the FDA cannot be trusted to protect the health of consumers. Do we really know if gene splicing pesticide resistance into apples or wheat is going to alter our bodies? The corporations pinky-swear GMOs won’t have long-term effects on cancer rates and other health-related concerns, and maybe they are right.

But maybe they are not.

Last spring, the cancer research arm of the World Health Organization declared glyphosate, the most commonly used herbicide on GMO crops, to be a probable carcinogen. And just last month, the FDA announced it would begin testing food products sold in the U.S. for glyphosate residue.

State legislators across the nation introduced 101 bills last year pertaining to GMOs. Of the 15 that passed, four had to do with labeling, according to the National Conference of State Legislatures. A bill introduced by Illinois state Sen. David Koehler, D-Peoria, requiring disclosure of genetically engineered ingredients stalled in committee.

More than 90 percent of corn and soybeans grown in Illinois is genetically modified, said Adam Nielsen, director of national legislation for the Illinois Farm Bureau.

…

The GMO crop movement took off in 1996, when Monsanto Co. introduced Roundup Ready soybean seeds, genetically modified to resist Monsanto’s glyphosate-based herbicide. Similarly marketed cotton, canola, corn and sugar beet seeds soon followed.

For farmers, glyphosate represented a safer, cheaper, more effective way of controlling weeds, thwarting pests and growing crops, Moose said. It’s since become the standard in large-scale agriculture.

The general public and the scientific community don’t tend to agree when it comes to GMO safety, according to a 2015 Pew Research Center survey conducted before the World Health Organization finding. Most consumers surveyed, 57 percent, said they considered GMOs to be generally unsafe to eat, whereas 88 percent of scientists surveyed, all of them connected to the American Association for the Advancement of Science, said GMOs were generally safe.

Genetically modified crops don’t present a health risk, but the herbicides used on them are “a big problem,” said Dr. Philip Landrigan, dean for global health at the Mount Sinai School of Medicine in New York City and an expert on environmental health concerns and children.

As GMO crops have become more common over the years, weeds have become resistant to glyphosate, which has led to heavier use of the herbicide, he said.

Landrigan is among scientists and health experts calling on the EPA to “urgently review the safety risk of glyphosate” and says it’s time for GMO labeling. “Not because I think genetic rearrangement is bad, but because I think consumers have a right to know what they’re eating,” he said.

(click here to continue reading GMO labeling debate puts food industry on defensive – Chicago Tribune.)

The agribusinesses are not being banned from using GMO products, only being required to be transparent if they are. Does this mean General Mills has to change their packaging? Yep. So what? They can’t be complaining about the extra ink required, only that they are being forced to alter their packaging by dictate of the people. Boo hoo. Packaging changes all the time anyway, I don’t see the harm in adding a few words to a package.

Airlines Reap Record Profits, and Passengers Get Peanuts

Seth Anderson0 comment

Luggage Cars ORD
Luggage Cars ORD

There are real consequences to corporations constantly consolidating, and becoming de facto monopolies in particular markets. Cable/internet companies are one such example, and so are airlines. Most routes are served by one or two airlines, so there isn’t a push towards lowering ticket prices to capture market share. Instead, the airlines just give executives big bonuses…

Helped by falling oil prices, airlines are reporting record profits, but for many passengers this sudden bonanza has meant little more than extra bags of free peanuts and pretzels.

The four biggest domestic carriers — American Airlines, Southwest Airlines, Delta Air Lines and United Airlines — together earned about $22 billion in profits last year, a stunning turnaround after a decade of losses, bankruptcies and cutbacks. A big reason for this is the plunging price of jet fuel, which now costs only a third of what it did just two years ago.

But that windfall is only slowly finding its way down the aisles. Days after reporting record profits, for instance, two of the nation’s biggest airlines brought back free snacks in coach.

United said it would begin serving complimentary stroopwafels, which it described as “Dutch-made toasted waffle treats,” and American said it would offer free meals in economy class on flights between Dallas and Hawaii, and free snacks on all domestic flights.

Airfares, however, have remained stubbornly high.

(click here to continue reading Airlines Reap Record Profits, and Passengers Get Peanuts – The New York Times.)

Chicago At Night, Number 553
Chicago At Night, Number 553

Super Bowl Ads Are Boring

Seth Anderson0 comment

Vintage Asahi Beer Ad (Ramen Takeya)
Vintage Asahi Beer Ad (Ramen Takeya)

Once a year, non-sports fans are encouraged to watch the Super Bowl despite not caring a whit who is playing. The reason? The advertising is supposed to be of elevated quality. 

For instance, one of the most famous Super Bowl ads is the Apple Computer 1984 ad announcing the Macintosh:

Billy Jeans
Billy Jeans

John Ellis Bush! Bush is allegedly going to show his brother’s supportive ad during Super Bowl L:

Former President George W. Bush has cut a TV ad for the super PAC supporting his brother, marking the former president’s most public political activity in the campaign to date.

(click here to continue reading Exclusive: George W. Bush cuts television ad backing his brother – POLITICO.)

Great Price's (sic)
Great Price’s (sic)

Having sat through many boring football games to watch the ads, I’m not falling for it again. I’m not convinced that simply because something is expensive, it is good. The decline of Hollywood as a conduit of interesting films could arguably be dated from the time that box office numbers became the metric of whether a given movie was any good. Plot, character development, those became less important than having great special effects, and thus most films made today are superhero films, animated dross, or similar genres.

One Eye to Rule Them

One Eye to Rule Them

CBS already has the 2016 Super Bowl Commercials website up, so if there is something really interesting shown, you can go and spend your time watching beer, auto, pharmaceutical corporations trying to sell you their products. I wouldn’t say that advertising can never be clever, just that the typical target for Super Bowl ads seems to be 14 year old boys: the commercials are populated with fast cars, women with “child-bearing hips”, and puerile and jejune scenarios. Many ads seem solely as crass attempts at creating a “viral” sensation, or at least stirring up controversy. Alcohol, sugary sodas, packaged snacks, fast food, cars, software, electronics, probably some insurance company; am I missing anything by resisting their pitches? Doubtful.

If you are a football fan, by all means, watch the culmination of the season. For the rest of us, go for a walk or something.

Parenthetically, I’m amused that the NFL is not using the Roman numeral for 50, “L”, but only for this year.

You don’t have to brush up on your Roman numerals because it’s not going to be Super Bowl L for a few reasons. At the top of the list: Nobody wants to be associated with a loser. Especially the NFL.

“Some would ask, ‘The letter L, what does that associate with?'” NFL spokesman Brian McCarthy says.

The answer, of course, is “Losing.”

Football is a game of X’s and O’s. But it’s also long been one of I’s and V’s, as virtually the only institution in our society that incorporates Roman numerals. Roughly a decade ago, the NFL first began examining what “Super Bowl L” looked like on social media, on mobile devices and on merchandise like T-shirts and caps. The short answer? It didn’t look good.

Using the number 50 was found to be much more appealing than an L, on many levels, from the negativity associated with losing to the aesthetic challenges posed by using the letter. So this year, and this year only, the Super Bowl will use more traditional numbering.

“The genesis is with Super Bowl XL 10 years ago,” McCarthy says. “We spent some time looking at what a block L would look like on its own, and [NFL Creative Services] said, ‘It could be a problem from a creative and design element that the letter L, on its own, without an I after it, looks unusual within the design world.'”

(click here to continue reading What the L? Why the NFL Sacked Roman Numerals for Super Bowl 50 | Rolling Stone.)

Amazon Stores: Why We Should Be Afraid

Seth Anderson0 comment

Amazon.com Delivery Truck
Amazon.com Delivery Truck

Slightly more on the upcoming Amazon.com invasion in your neighborhood…

Indeed, many of the reasons Amazon may be interested in brick-and-mortar stores have little to do with books, specifically. Shipping from a store instead of a warehouse or giving customers the ability to buy online and pick up in store or return items to a store could help Amazon trim its fulfillment costs, which amounted to 13% of sales in 2015 versus 12% in 2014.

Counterintuitively, having physical stores could help Amazon become more profitable. Shipping costs are variable costs for e-commerce players, meaning they rise along with sales. Brick-and-mortar stores, on the other hand, have fixed costs such as labor, rent and utilities and can gain leverage by boosting sales on top of them.

(click here to continue reading Amazon Stores: Why All Retailers Should Be Afraid – WSJ.)

Amazon Brick and Mortar Location
Amazon Brick and Mortar Location

One wonders if the timing of this rumor at all coincides with Amazon.com reporting quarterly results not in line with Wall Street estimates…

Amazon recorded it largest ever quarterly profit over the holiday quarter but missed Wall Street’s estimates by a wide margin, sending its share price into a tailspin.

Shares in the world’s largest online retailer plunged 12% on Thursday after it announced a net profit of $482m for the three months ending 31 December – up from $214m a year earlier. The company notched up $35.75bn in sales in last year’s final three months.

It was the first time Amazon has reported three consecutive profitable quarters since 2012, but the gain was less than analysts had been expecting. Analysts, however, were expecting $36bn in sales and net income of $754m.

(click here to continue reading Amazon shares plunge after missing holiday quarter estimates | Technology | The Guardian.)

Amazon Plans Hundreds of Brick-and-Mortar Bookstores

Seth Anderson0 comment

Amazon - The Original Store
Amazon – The Original Brick and Mortar Store

A rumor, but a rumor from a well-placed source. Would you go to a bookstore run by Amazon? I could see picking up a package perhaps (a drop-ship location for when you are not available at your home, or whatever).

After dipping its toes into brick-and-mortar retail last year by opening its first physical bookstore, Amazon.com Inc. could be diving into the deep end.

The Seattle company plans as many as 400 bookstores, Sandeep Mathrani, chief executive of large mall operator General Growth Properties Inc., said on an earnings call with analysts Tuesday.

“You’ve got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400,” said Mr. Mathrani in response to a question about mall traffic.

That compares to the 640 stores Barnes & Noble Inc. operates and the 255 locations Books-A-Million Inc. said it had as of last summer. Both companies spent years building out their retail operations. In addition to its one bookstore, Amazon already has a presence in Westfield Corp. malls, where it has set up permanent kiosks selling devices, cases and branded apparel.

It wasn’t immediately clear how Mr. Mathrani got Amazon’s figure, but he could have potentially spoken with Amazon’s real-estate executives about their plans. A spokesman for Amazon declined to comment and a GGP spokesman had no immediate comment.

(click here to continue reading Amazon Plans Hundreds of Brick-and-Mortar Bookstores, Mall CEO Says – WSJ.)

Amazon Prime and The Pope
Amazon Prime and The Pope

Homes Near Whole Foods Stores Appreciate Faster

Seth Anderson0 comment

Save Ten Percent with Pippin
Save Ten Percent with Pippin…

The real estate website Zillow has published a book which analyzes home values based on certain factors, such as the proximity to a Whole Foods, or Starbucks, etc. In a shocking coincidence, there are 2 Whole Foods within a mile of me (and three more slightly more than a mile away), there are 2 Trader Joe’s about a mile away, and a mind-boggling 44 ((!!) Starbucks within 1 mile of me, all per Google Maps. Perhaps there is a synergistic effect on property values, and a wealthy businessman from Shanghai will offer to purchase my place sight unseen for way, way above market value enabling me to retire to a private island in the Caribbean to work on my screenplay, or something. Do you know any wealthy industrialists with a desire to own a loft?

Your local grocery market has a lot to do with what happens in your local housing market, according to a new analysis by Zillow featured in the paperback edition of Zillow Talk: Rewriting the Rules of Real Estate (Grand Central Publishing, Jan. 26).

Specifically, Zillow found that homes grow more rapidly in value if they are closer to a Trader Joe’s or Whole Foodsi. Between 1997 and 2014, homes near the two grocery chains were consistently worth more than the median U.S. home. By the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country.

“Like Starbucks, the stores have become an amenity in their own right – a signal to the home-buying public that the neighborhood they’re located in is desirable, perhaps up-and-coming, and definitely improving,” said Zillow Group Chief Economist Stan Humphries. “Like a self-fulfilling prophecy, the stores may actually drive home prices. Even if they open in neighborhoods where home prices have lagged those in the wider city, they start to outperform the city overall once the stores arrive.”

…

“The grocery store phenomenon is about more than groceries,” said Rascoff. “It says something about the way people want to live – in the type of neighborhood favored by the generations buying homes now. Today’s homebuyers seek things in neighborhoods that weren’t even in real estate agents’ vocabularies a generation ago: walkability, community, new urbanism – and maybe we should add words like sustainable seafood and organic pears.”

Zillow analyzed the values of millions of homes near dozens of Trader Joe’s and Whole Foods to conclude that grocery stores and home values are definitely related.

According to the Zillow analysisii, the median home within a mile of a future Whole Foods store appreciates more slowly than other homes in the same city before the store opens. In the months before the stores open, the trend reverses and flips, so that after the stores’ opening dates, homes near Whole Foods appreciate more quickly than other area homes.

…

The analysis clearly shows that homes near the stores appreciate more quickly than homes in the city as a whole. That means the two brands are very good at choosing locations that will appreciate faster in the future, or are actually spurring home appreciation growth – or some combination of the two.

(click here to continue reading Homes Near Trader Joe’s, Whole Foods Stores Appreciate Faster – Jan 25, 2016.)

Soho House Developer Plans Another Hotel for Fulton Market

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Urban Melodrama
Urban Melodrama

And the real estate hits keep coming…

The red-hot West Loop/Fulton Market District’s hospitality scene is showing no signs of slowing down as Shapack Development is set to unveil a Morris Adjmi-designed 11-story hotel proposal at the northwest corner of Lake and Green Street. Fresh off the success of their acclaimed 40-room Soho House, the Chicago-based developer is upping the ante with a 165- to 171-room project just one block south at 832-850 W. Lake, a site currently occupied by a low-rise meat packing business and parking lot. According to a conversation with Crain’s, developer Jeff Shapack confirmed the new development will include ground floor retail and dining, parking on the second floor, office space on the third and fourth floors, and hotel rooms up to the building’s 11th level rooftop deck. The hotel operator has not been announced, but with both the nearby Ace and Nobu hotels also in the pipeline to meet the area’s surging demand for hip lodging, a boutique brand would be a good guess for Lake and Green as well.

(click here to continue reading Soho House Developer Plans Another Hotel for Fulton Market – Hotel Boom Town – Curbed Chicago.)

This location is slightly outside of the new Fulton Market Historic District boundaries, I wonder if that was planned.

Fulton Market District
Fulton Market District

Ten Posts A Day

Seth Anderson0 comment

Tweet!
Tweet!

I tweeted a joke the other day:

and while I never did fulfill my desire to scarf down a bag of Cheetos and/or a bag of Flaming Hot Cheetos, I did decide that maybe I should challenge myself to write ten blog posts. In the dark ages, before Twitter and Facebook, before the corporate media began to emulate the blog model, et al, I did post a hell of a lot more content here. Ten posts was not a particular daily metric I tried to achieve, I was happy with five posts, but ten happened every once and a while. Now, to be honest, I’m not a long-winded person, so it isn’t like I typically write five hundred or a thousand words of my own per post, I’m more of a blogger of the Kottke school, pointing you to read something interesting somewhere else, while liberally quoting from the original source.  

I did other things yesterday too, but I didn’t post my tenth post until 7:30 PM. If blogging was a job, each day of work would typically be a long day.

Pippen Peruses the Newspaper
Pippen Peruses the Newspaper

According to Erica Berger, insisting upon ten posts a day means more click-bait articles, more shallow articles, less actual journalism will be practiced.

Every journalism student knows they are supposed to shine a spotlight on the issues that matter.   It’s a sad truth that some of our greatest reporters have had to bail out in search of a saner or more impactful job.   But it’s hard to do that when your boss wants you to churn out 10 posts a day. And when journalists are expected to maintain an active social-media presence and share their thoughts on every fresh twist in the 24-hour news cycle, it’s difficult to find the time to identify the stories that truly need telling.

(click here to continue reading The next generation of journalism students have no idea what they’re getting into – Quartz.)

Luckily, I don’t have that kind of pressure, other than self-imposed, so don’t expect to see any listicles posted here.

Gilead Gouging Prices of Hepatitis C and H.I.V. Drugs

Seth Anderson0 comment

Cut Rate Liquors and Real Drugs
Cut Rate Liquors and Real Drugs. 

Have we reached a tipping point for drug pricing yet? Seems close, at least, to a public consensus that pharmaceutical companies cannot set prices so high they shock the conscience. We have to weigh public health against private profits.

The attorney general of Massachusetts said on Wednesday that she had opened an inquiry into whether Gilead Sciences had violated state consumer protection laws by charging too much for its hepatitis C drugs.

The notification, which was contained in a letter to the company from the attorney general, Maura Healey, is the latest challenge to the practices of Gilead, which has become the largest and most profitable biotechnology company by dominating the market for drugs used to treat both H.I.V. and hepatitis C.

On Tuesday, the AIDS Healthcare Foundation, a nonprofit organization that treats patients with H.I.V. and AIDS, filed a lawsuit seeking to invalidate patents covering the new version of Gilead’s mainstay H.I.V. drug, tenofovir. The lawsuit also says that Gilead, to maximize product life span but to the detriment of patients, delayed the introduction of the new, safer version of tenofovir until the old version was about to lose patent protection.

The hepatitis C drugs, Sovaldi and Harvoni, are widely considered breakthroughs — curing most patients in 12 weeks with few side effects. But Sovaldi has a list price of $1,000 per daily pill, or $84,000 for 12 weeks, and Harvoni costs $94,500. Those prices, and the great demand for the drugs, have strained the budgets of state Medicaid programs and prison systems, forcing many of them to restrict treatment to those most seriously ill.

In her letter to Gilead’s chief executive, John C. Martin, Ms. Healey said her office was examining whether Gilead’s pricing would be an “unfair trade practice,” in violation of Massachusetts law.

“Because Gilead’s drugs offer a cure for a serious and life-threatening infectious disease, pricing the treatment in a manner that effectively allows H.C.V. to continue spreading through vulnerable populations, as opposed to eradicating the disease altogether, results in massive public harm,” she wrote, referring to the hepatitis C virus by its initials.

…

One motivation for Ms. Healey’s letter was a class-action lawsuit filed against Massachusetts’ Department of Correction asking for more inmates to be treated for hepatitis C. Ms. Healey’s letter said that treating everyone at the list price of Sovaldi would “easily exceed our entire budget for prisoner health care.”

(click here to continue reading Gilead Faces Fights Over Hepatitis C and H.I.V. Drugs – The New York Times]

More to come on this topic, I assume…

Electric concrete to melt snow faster

Seth Anderson0 comment

Intensely Secular
Intensely Secular (snow plow)

Speaking of infrastructure improvements:

Dr. Chris Tuan, a professor of civil engineering at the University of Nebraska-Lincoln, and his team of researchers have developed a concrete mixture prototype that melts away falling snow and ice by conducting electricity.  

Steel rods beneath the concrete’s surface connect to electrodes, which connect to a 120-volt AC power source.

Carbon byproducts from coal mining and steel shavings from industrial waste make up only 20 percent of the otherwise typical concrete mixture, but the conductivity is strong enough to clear the surface. 

…

Still, it’s not cheap: Tuan’s concrete runs $300 per cubic yard, compared to $120 per cubic yard of regular concrete.

But the typical salt and de-icing chemicals used on streets can corrode concrete and lead to potholes. Tuan said this makes his conductive concrete an even more attractive option, with a greater upfront price tag offsetting later maintenance and operating costs.

“Bridges always freeze up first, because they’re exposed to the elements on top and bottom,” Tuan told UNL Today. “It’s not cost-effective to build entire roadways using conducive concrete, but you can use it at certain locations where you always get ice or have potholes.”

“Statistics indicate that 10 to 15 percent of all roadway accidents are directly related to weather conditions,” Tuan explains in his 2008 analysis of the bridge study. “This percentage alone represents thousands of human injuries and deaths and millions of dollars in property damage annually … The conductive concrete deicing technology is readily available for implementation at accident-prone areas such as bridge overpasses, exit ramps, airport runways, street intersections, sidewalks and driveways.” 

(click here to continue reading Electric concrete to melt snow faster – Business Insider.)

Cold Winter Streets
Cold Winter Streets

also, there are environmental advantages to using less de-icing materials:

Conductive concrete can alleviate environmental damage by reducing the amount of salt and chemicals dispersed on roads and sidewalks after storms. Melting snow and ice carries deicing chemicals into local waterways and nearby soils, which in turn can slow plant growth and attract animals into dangerous roadways.   

Cool. Err, well, interesting…

Scary
Scary snow plow.

Towers Watson-Willis Merger: Battle to Save a Dubious Deal

Seth Anderson0 comment

Willis Towers Tower

Willis Towers Tower…

I still hope they take my advice and rename the Sears Tower so that the sign reads Willis Towers Tower…

Making The Same Mistakes
Making The Same Mistakes

A marriage of convenience isn’t necessarily bad—it just lacks the excitement of a true match.

Towers Watson & Co. may have reached that point in life where its peers have paired off and the clock is ticking. Its investors are being sweet-talked into going along.

The cash portion of the proposed cash-and-shares merger offer from insurance broker Willis Group Holdings PLC was more than doubled Thursday to $10 per share, ahead of delayed shareholder votes for both companies on Friday.

That helps to close the valuation gap that made this deal look poor for investors in Towers Watson, a benefits and human resources firm, and prompted proxy voting firms ISS and Glass Lewis to advise against it.

The trouble in this supposed merger of equals has always been that Towers Watson’s investors get less in Willis stock and cash than their own shares are worth.

(click here to continue reading Towers Watson-Willis Merger: Battle to Save a Dubious Deal – WSJ.)

A Matter of Degree
A Matter of Degree

Willis Tower Is A Pale Reflection
Willis Tower Is A Pale Reflection

Willis Over Union Station
Willis Over Union Station

Lego Willis Tower
Lego Willis Tower

Is Chivalry Dead? - Ilford Delta 3200
Is Chivalry Dead? – Ilford Delta 3200

In Front of Willis Tower
In Front of Willis Tower

It Makes Perfect Sense
It Makes Perfect Sense

Nothing Ever Stays The Same -platinum version
Nothing Ever Stays The Same -platinum version

The Uberization of Money

Seth Anderson0 comment

Of course it buys happiness
Of course it buys happiness…

I hadn’t considered this angle, but it seems as if this will be an interesting development in the near-future. As an aside, I had to go to my bank recently to get a check reissued, and needed to get my form letter notarized by a banker. The banker had to stamp the document, and then scribble a handwritten record of it in some ancient log book. I joked with the guy that this procedure probably hadn’t changed in 200 years, he smirked agreement. Amusingly, there was an advertisement on the banker’s desk touting their smartphone payment options. Yet the notarization process was slow, and analog.  Ripe for change, just like financial transactions. Have you ever looked at a mortgage document for instance? Pages and pages of crap that nobody reads, or comprehends. Anyway…

Over the next decade, the familiar 20th-century modes of banking and investing will give way to something very different. We are on the verge of the Uberization of finance, which will bring multiple new opportunities but also a range of new risks.

The ubiquitous ride-sharing company uses a simple device—the smartphone—to connect people who want rides with people who want to drive them. Uber is a high-tech middleman that is making the intermediaries of the past obsolete. The financial world is one of the most mediated industries on the planet, and that is precisely what is about to change. Uberization also means using vast amounts of data to make those connections feasible.…

Technology is one source of this shift, but so is legislation. The JOBS Act of 2012 contained a seemingly innocuous provision making it easier for startups to raise money from investors previously deemed too poor to dabble in such ventures. At the end of October, the Securities and Exchange Commission finally approved the rules, which will go into full effect early next year. As a result, any company or person with an idea can solicit and raise up to $1 million without most of the onerous regulatory and reporting requirements of the past.

So what lies ahead? Retail banking is the one area of the financial world that has undergone tremendous change over the past decade. Bank tellers are now scarce, and many consumers use smartphones for payments and deposits. It also has become much easier to trade shares online.

But core services such as lending money, raising capital and investing for clients still depend on a firm to act as a conduit—and as a choke point. With many promising startups already launched and with venture capital funding new ones every day, here’s a glimpse of what we can expect in the years ahead.

…

Loans to large companies are up over the past decade, but lending to small business has contracted, from more than $700 billion in 2008 to less than $600 billion today, according to the Small Business Administration. As for the Silicon Valley ecosystem of venture capital, it certainly doles out funds to dreamers, but it excludes many types of businesses, especially brick-and-mortar ones.

All of this explains why new funding ventures have received such a boost from the JOBS Act. Kickstarter is the most familiar, with Indiegogo close behind. These crowdfunding platforms let almost anyone announce an idea and solicit money for it, usually in chunks of $1,000 or less. No established venture-capital firm or large bank would dole out such small amounts. Their overhead alone, for due diligence and compliance, would mean steep losses on investments that size.

But the new crowdfunding sites remove those layers, and for now they have few of the regulatory burdens or scrutiny. It is the Wild West of fundraising. The most recent success was Oculus Rift, a maker of virtual reality headsets that raised $2.4 million on Kickstarter and then was bought by Facebook a little more than a year later for $2 billion.

The big hitch? A Kickstarter contribution is a donation. When people fund projects on the site, it is out of passion for the product, not any hope for a financial return.

The next wave of crowdfunding, through sites such as SeedInvest and Fundable, will offer equity ownership to those who throw money into the ring. This new model could upend the insular world of venture capital and business loans while at the same time providing new opportunities for small investors. As for a would-be innovator, if you can post an idea online, raise a million dollars for it and (most important) choose how much equity you want to part with at what valuation, why go through the gauntlet of a commercial loan application or make the rounds at the VC firms on Sand Hill Road?

The result is likely to be billions of dollars of new funding, which would spur lots of good ideas—and lots of bad ones, too. The prospect of unconventional new funding sources has already prompted comparisons to 1999, when millions of individual investors joined the IPO craze only to see their shares of Pets.com become worthless. Such risks are very real, but either way, much more money will be in motion.

(click here to continue reading The Uberization of Money – WSJ.)

After Hour Deposits
After Hour Deposits

I better start polishing up our business plans so we can tap into some of this pending sweet, sweet funding…

Carly Fiorina Was a Terrible CEO

Seth Anderson0 comment

Square Pegs
Square Pegs

Speaking of Carly Fiorina and her disastrous regime at HP (and Lucent), here is a good overview of some of the details I only vaguely remembered…

Jeffrey Sonnenfeld, senior associate dean of Leadership Studies and Lester Crown Professor of Practice Management at the Yale School of Management, writes, in part:

Here are the facts: In the five years that Fiorina was at Hewlett-Packard, the company lost over half its value. It’s true that many tech companies had trouble during this period of the Internet bubble collapse, some falling in value as much as 27 percent; but HP under Fiorina fell 55 percent. During those years, stocks in companies like Apple and Dell rose. Google went public, and Facebook was launched. The S&P 500 yardstick on major U.S. firms showed only a 7 percent drop. Plenty good was happening in U.S. industry and in technology.

It was Fiorina’s failed leadership that brought her company down. After an unsuccessful attempt to catch up to IBM’s growth in IT services by buying PricewaterhouseCooper’s consulting business (PwC, ironically, ended up going to IBM instead), she abruptly abandoned the strategic goal of expanding IT services and consulting and moved into heavy metal. At a time that devices had become a low margin commodity business, Fiorina bought for $25 billion the dying Compaq computer company, which was composed of other failed businesses. Unsurprisingly, the Compaq deal never generated the profits Fiorina hoped for, and HP’s stock price fell by half. The only stock pop under Fiorina’s reign was the 7 percent jump the moment she was fired following a unanimous board vote. After the firing, HP shuttered or sold virtually all Fiorina had bought.

During the debate, Fiorina countered that she wasn’t a failure because she doubled revenues. That’s an empty measurement. What good is doubling revenue by acquiring a huge company if you’re not making any profit from it? The goals of business are to raise profits, increase employment and add value. During Fiorina’s tenure, thanks to the Compaq deal, profits fell, employees were laid off and value plummeted. Fiorina was paid over $100 million for this accomplishment.

At the time, most industry analysts, HP shareholders, HP employees and even some HP board members resisted the Compaq deal. (Fiorina prevailed in the proxy battle, with 51.4 percent, partly thanks to ethically questionable tactics, but that’s another story.) But rather than listen to the concerns of her opponents, she ridiculed them, equating dissent with disloyalty. As we saw during the debate when she attacked me, rather than listen to or learn from critics, Fiorina disparages them. She did so regularly to platoons of her own top lieutenants and even her board of directors—until they fired her.

These facts have been documented, both with quotes from her own board members and leadership team and with raw numbers in such revered publications as Forbes, Fortune, Business Week, the New York Times, the Wall Street Journal and leading tech industry journals. I also have extensive first-hand knowledge of this situation, having spoken at length with two of Fiorina’s successors, past and present HP board members, fellow CEOs and scores of HP employees—including many of her own top lieutenants who contacted me directly, such as her head of employee relations.

And I have to point out the obvious: If the board was wrong, the employees wrong, and the shareholders wrong—as Fiorina maintains—why in 10 years has she never been offered another public company to run?

(click here to continue reading Carly Fiorina 2016: Why I Still Think Carly Fiorina Was a Terrible CEO – POLITICO Magazine.)

Calumet 5-6969
Calumet 5-6969

and on the topic of Lucent:

Yet her celebrated tenure at Lucent has been clouded by what happened two years after she left in 1999. The once-highflying business worth more than $250 billion at its peak nearly collapsed in the face of an accounting scandal and the telecommunications bust. The company laid off 50,000 employees in 2001 alone. Today the company, after merging with Alcatel of France, is worth only about $10 billion.

Lucent, like some its rivals, artificially burnished its financial performance through vendor financing — lending money to customers so they could buy its products. In 2004, the company settled charges brought by the Securities and Exchange Commission that accused it of perpetrating a $1.1 billion accounting fraud.

“It’s unlikely she would have been considered for the HP job once it became clear that Lucent’s success had more to do with loose credit terms and creative accounting than any reinvention of the company as the Second Coming of Cisco,” Rakesh Khurana, a Harvard professor who studied Mrs. Fiorina’s tenure, said in “Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard,” a book by the financial journalist Peter Burrows.

…

Still, Scott Woolley of Fortune magazine wrote a deeply reported story in 2010 during Ms. Fiorina’s unsuccessful Senate campaign in California that detailed a questionable deal she championed. Mr. Woolley focused on a vendor-financed transaction with a small company, PathNet, a sale that was valued at as much as $2.1 billion, though PathNet had only $1.6 million in annual revenue. It later filed for bankruptcy.

And Ms. Endlich Heffernan’s book connects Mrs. Fiorina to two other failures while she was at Lucent. In one, Mrs. Fiorina was assigned to run Lucent’s consumer products business. Perhaps that division was always destined for failure — it included Lucent’s handset business just as the world was pivoting to mobile communications. But Mrs. Fiorina orchestrated a joint venture with the Dutch electronics giant Philips Electronics that turned out to be a mess, one that she later told The Wall Street Journal was the biggest mistake of her career.

Then there was Lucent’s 1999 acquisition of Ascend Communications for more than $22 billion. That deal may go down in history as one of the worst. Again, however, Mrs. Fiorina wasn’t in charge at Lucent. Was she consulted on the transaction? Yes. But she didn’t try to object to it.

(click here to continue reading The Influence of Fiorina at Lucent, in Hindsight – The New York Times.)

Carly Fiorina, HP, Compaq and My Favorite Parenthetical Statement

Seth Anderson0 comment

Cafe Bernard Loading Zone

Contained in this article about how poorly Carly FIorina ran HP is the following parenthetical statement, one of my favorite asides in a news article, maybe ever…

The centerpiece of those deals was the company’s $24.2 billion merger with Compaq Computer, which divided the HP board and greatly increased the company’s work force, size and breadth of products.

The deal was so personal to Mrs. Fiorina that she referred to HP as “Héloïse” and Compaq as “Abélard,” a pair whose romantic letters became treasures of medieval French literature, which she studied at Stanford. (Abélard was eventually castrated after fights with Héloïse’s family, a detail Compaq executives were unaware of at the time.)

But the merger, which was announced just before the Sept. 11, 2001, terrorist attacks and amid the dot-com downturn, also led to painful consolidation, cost cutting and layoffs that later haunted Mrs. Fiorina’s Senate race.

(click here to continue reading As Profile Rises, Carly Fiorina Aims to Redefine Record as a C.E.O. – The New York Times.)

Ha! I’m not sure who is Astrolabe in this metaphor, btw.

Compaq logo old.svg
“Compaq logo old” by Original uploader was Koman90 at en.wikipedia – Transferred from en.wikipedia; transfer was stated to be made by User:koman90.. Licensed under Public Domain via Commons.

 

Abelard and Heloise

If college has been a long time ago for you too, here is context:

Peter Abelard (1079 – 21 April 1142) was a medieval French scholastic philosopher, theologian and preeminent logician. He was also a composer. His affair with and love for Héloïse d’Argenteuil has become legendary. The Chambers Biographical Dictionary describes him as “the keenest thinker and boldest theologian of the 12th Century”

(click here to continue reading Peter Abelard – Wikipedia, the free encyclopedia.)

Héloïse (1090?/1100? – 16 May 1164) was a French nun, writer, scholar, and abbess, best known for her love affair and correspondence with Peter Abélard.

…

In his Historia Calamitatum, an autobiographical piece written around 1132, Abélard tells the story of his seduction of Héloïse, whom he met when in 1115 he himself, like Fulbert, became a canon in Paris.

It is unclear how old Heloise was at this time. She is described as an adolescentula (young girl), and so it is often assumed that she was about seventeen at the time, having been born in 1100-1. More recently, however, Constant Mews (and subsequently David Constant) have suggested that the age of seventeen is a seventeenth-century fabrication with no supporting contemporary evidence, and that she was probably as old as 27 at the time. The main piece of evidence for this is that in a later letter, Peter the Venerable writes to Heloise that he remembers her when he was a young man and she was a woman; this, they suggest, implies that Heloise was at least as old and possibly older than Peter. Given that Peter was born in 1092, it would mean that Heloise would have been nearer 27 at the time of the affair. They suggest that this makes more sense of Abelard’s later comment that he sought to seduce Heloise because she was the most famous woman in France for her studies – because, as they suggest, she would have been unlikely to have acquired this reputation by the age of 17. More tentatively, the extent of Heloise’s accomplishment in Greek and Hebrew, and her mature response to the relationship, might indicate someone older than 17.

Abelard tells how he convinced Fulbert to let him move into his house, telling Fulbert that he could not afford to live in his current house while studying, and offering to tutor Heloise in return. Abelard tells of their subsequent illicit relationship, which they continued until Héloïse became pregnant. Abelard moved Heloise away from Fulbert and sent her to his own sister in Brittany, where Heloise gave birth to a boy, whom she called Astrolabe. It is almost unknown what happened to Astrolabe in later life. He is never mentioned by Heloise in her letters to Abelard, and Abelard’s only reference to him outside the Historia Calamitatum is in the verses of advice addressed to him, and thought to have been written about 1135. His death-day is recorded in the necrology of the Paraclete as 29 or 30 October, but no year is given. He is mentioned only once in a later letter, when Peter the Venerable writes to Heloise: “I will gladly do my best to obtain a prebend in one of the great churches for your Astrolabe, who is also ours for your sake”.

Abelard agreed to marry Heloise to conciliate Fulbert, although on the condition that the marriage should be kept secret so as not to damage Abélard’s career; Heloise was initially reticent to agree to the secret marriage, but was eventually persuaded by Abelard. Heloise returned from Brittany, and the couple were secretly married in Paris.

Fulbert, however, began to spread news of the marriage, in order to punish Abelard for the damage done to his reputation. Heloise attempted to deny this, but this ongoing situation eventually caused Abélard to place Heloise for her own safety in the convent of Argenteuil, where Heloise had been brought up. Fulbert and his friends, however, believed that Abelard had simply found a way of getting rid of Heloise, by making her a nun. So, to punish Abelard, a group of Fulbert’s friends broke into Abelard’s room one night and castrated him.

After castration, filled with shame at his situation, Abélard became a monk in the Abbey of St Denis in Paris. At the convent in Argenteuil, Héloïse took the habit at Abelard’s insistence and much against her own wishes. She eventually became prioress there, but she and the other nuns were turned out in 1129 when the convent was taken over by the Abbey of St Denis. At this point Abélard arranged for them to enter the Oratory of the Paraclete, a deserted building near Nogent-sur-Seine in Champagne which had been established by Abelard himself in 1122 (though he had subsequently moved to become Abbot of Saint-Gildas-de-Rhuys in Lower Brittany). Héloïse became abbess of the new community of nuns there.

(click here to continue reading Héloïse (abbess) – Wikipedia, the free encyclopedia.)