Category Archives: rants

Another Headline from the Land of D’oh! Financial Crisis of 2008 avoidable

According to this recent BBC article, which summarized a report from the US Financial Crisis Inquiry Commission, Regulators, politicians and bankers were to blame for the 2008 US financial meltdown. Well, duh!

From page 17 of the report:

The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.

The only thing the report, and article, got wrong was that the cause of the crisis is the same fundamental cause of the financial crises for the last 30 years. Simply put, it was greed.

  • Greed (by the lenders and the regulators, who wanted to believe the market was strong) led to the tide of toxic mortgages
  • Greed led to reckless actions by executives
  • Greed led to households taking on too much debt
  • Greed led to fundamental breaches in accountability

And while the report may be correct when it states that to pin this crisis on mortal flaws like greed and hubris would be simplistic because it was the failure to account for human weakness that is
relevant to this crisis, the reality is that, despite the repeated financial crises of the past 30 years, federal regulators have yet to put checks in place for greed. And until regulators recognize that they have to be looking for greed whenever markets rise too fast (because that’s what produces unsustainable evaluations and toxic assets) and actually do so, their hubris is going to allow these crises to happen again and again. The boom and bust will repeat until the economy just can’t take it anymore and future historians discuss the fall of the great American Empire along side the fall of the great Roman Empire.

Does Verizon Have Its Head in the Clouds?

As we all know, Verizon recently acquired the right to offer iPhones on its network, a status symbol that mobile providers the world over have been vying for as they wait for the initial exclusivity agreements to expire. As the first provider given permission by the world’s fifth largest mobile phone manufacturer (Globe and Mail) to challenge AT&T in the United States, it is probably a little bit smug right now as it waits for its February 10th launch date. But is that any reason to leave its head in the clouds?

Needless to say I was a little shocked to hear that Verizon is paying $1.4 Billion for Terremark Worldwide, a provider of cloud computing services. While it’s true that Terremark runs 13 global data centres, and data centres are valuable, 13 data centres are not $1.4 Billion valuable. Trust me. I can build you ten modular and scalable Green Data Centers for 1/10th of that with a lot more computing power than you might think you’d get for that price by going with high-density low-power 64-core servers from IBM or SUN which, by the way, cost less than 100K each, even maxed out on memory. You can easily fit 8 of those on a 20u rack. That’s the equivalent of 256 dual core servers on a single rack. Fill 8 racks with servers and 4 racks with SANs (Storage Area Networks) and you have a data centre — that fits in a small room — with the equivalent of 2,000 machines of processing power, that only costs you about 10 Million. I know Terremark also offers services and has a market cap of about 945M, but a 35% premium for something you can build yourself in a few months? I just don’t get it!

When it Comes To Transportation, North America is Getting Further Behind by the Day

Why? Because, if you ask a random North American what the fastest mode of travel is, he will say “plane” and when you ask him what the slowest mode of travel is, he will say “train”. And now that “safety regulations” require an average traveller to be at an airport at least 90 minutes before takeoff, if not two hours, when you add that to time on the tarmac and waiting for luggage at the other end, an average trip is at least two to three hours longer than flying time.

In comparison, you can get on the train, sit down, be moving in ten minutes, get off, and go. And if the train moved as fast as a plane, it would be faster. Much, much faster. And there’s no reason that it shouldn’t be. China has High Speed Rail (HSR) that travels at speeds up to 270 mph (the Maglev line in Shanghai, while the Harmony Express goes 250 mph). And now China is spending 745M US on domestic HSR expansion to build 19,000 miles of railway over the next five years.

And China is not alone in High Speed Rail. Japan has been doing it for years and Taiwan is also a big supporter. And it is not just Asia. HSR is also big in Europe. Germany has at least 10 lines that go 250 km/h or higher and HSR is spreading across Europe.

And now there is talk about a HSR line between Beijing and London that would go through Paris, Berlin, Warsaw, Kiev, St Petersburg, Moscow, Yekaterinburg, Astana, Irkutsk, Ulan Bator, and Khabarovsk and get passengers to their destination in a mere 19 hours.

Just imagine what HSR could do in the US. At 250 mph, Bangor (Maine) to Los Angeles (California) would only take 11 hours. If these lines could do people or cargo, there would be no need for internal air travel, or for inter-regional truck transport. After all, flying time (which requires at least 1 connection) is 8 hours and adding in airport wait times, it’s much more than 11 hours.

But the US, like Canada (who probably can’t afford it since only a few cities have enough population to make it worth while), won’t even think about it. As a result, Europe and Asia are going to get an edge while North America falls further behind.

Another Article from the Land of D’oh – Jobs and Traffic Jams are Linked

A recent article over on the NYT blogs pointed out the stubborn link between jobs and traffic jams and noted that when the average national unemployment rate reached its lowest point (of 4.6% in 2006), the hours that commuters spent in traffic were 13% less than when the average national unemployment rate was close to its highest point (of 9.3% in 2009).

Why wouldn’t this make sense? The more people working, the more people trying to get to the same business centres at about the same time. The more cars trying to get through the same choke points in traffic flows, the slower traffic is going to go. As long as the personal vehicle is primary mode of transportation, obviously there’s going to be a big connection between employment rate and traffic jams. You don’t need a study to confirm this. Just some common sense (and, if you want to verify your common sense, a mathematical model).