Profits for the rich, losses for the poor

We now live in a time where capitalism rules when markets go up, and socialism rules when markets go down. The greedy enjoy all the profits when times are good, and when something goes wrong, we all have to chip in to pay the bills.

These theories and practices of economic organization are used like investment strategies. Capitalism is the main investment, socialism is the hedge.

This is why left and right politics don't have much difference any more.

The economic crisis is great for internet business

The internet provides two important values. Those values are the main reason for it's existence in the first place, and are something that will help make internet even more important to people during the current economic downturn.

1. Cost-efficient solutions, products and services for nearly every business model out there

2. Connects people

"Who's afraid of the big bad wolf"

This song was the anthem of Great Depression, and it was featured in the Disney film "The Three Little Pigs" in 1933. Disney in those days was to entertainment what Pixar is today; THE innovation-in-entertainment company. Movie tickets during the depression were cheap, people were miserable and out work, so they had time to go to movies. They needed something that would cheer them up, and preferrably cheap. Disney pictures were perfect for that. And the company thrived through the long depression, and is today one the biggest media companies in the world. And they own Pixar.

Internet is great for entertainment. It is not only innovative but cheap alternative for everything about music, films, casual games, virtual worlds, you name it. Companies like Stardoll.com are in the perfect position to provide low-cost entertainment to people at a time when they need to cut down costs on many things, and still/therefore want to have fun.

Power of other people

It has been suggested in many studies that people's psychological state is more about self-preservation and community-driven during recessions. When things go bad to everyone, we are literally in it together. People bond easier if they have something in common, and peer support plays a lot bigger role during hard times. And when there is demand for peer support, people become more important to each other.

Creating new ways of being in touch with other people, and finding new people is obviously also one of internet's greatest strenghts. Internet is all about connecting people all around the world. I personally find this a beautiful and a meaningful thing that has much more value than can be measured in money. People do have the power if they are connected to each other. They can teach each others many things, make democratized news travel quickly, share feelings, share art, gather to talk about politics, and so on.

What else is good

Internet has also one great advantage right now: it has already had a dot-com bust 8 years ago. Internet companies have had to take a good long look at the mirror, and take all the air out of it's ego and balance sheets. The crazy years are over, and the current companies are more lean and mean than before.

Innovation in technology has been going forward full steam all these years, and there is no end in sight. The only obstacle is our own imagination. Starting a web business is cheaper than before, people can run their services in Amazon's or Google's machines, VC money is scarce (less competition), more freelance coders to join your project.

What else do you need?

UNICEF Finland, typography print

"Be a mom for a moment."

www.unicef.fi

Stock market prices = Economy?

It seems to me that when people talk about how good or bad the economy is, they really mean Dow Jones. Stock values. This is like taking blood pressure to measure eye sight.

Haven't people really discovered already that markets can be extremely erratic and volatile? What do they think the stock market bubbles are? Did the 14,165 record Dow in October 2007 really represent the healthiest economy USA ever had?

So why are everyone looking at stock values when they are trying to fix the economy? My guess is that because that is where the recession effects first hit for those in charge; people with enough money to invest in the stock market. This includes politicians. Now they are trying to make stock values go higher again. Why? Shouldn't the markets try to rebalance itself after the bubble? Why should the stock prices be at the same level than during the bubble market conditions?

So what is the right meter to follow? Well, I think that a healthy economy is a sustainable one. One with good immune system. One where markets are forced to follow fundamentals. This would mean balanced government budgets, balanced import/export, high savings rates, low government debt and low inflation.

This would also mean no more crazy stock market booms. But do we really need them? Now that we've seen where they lead?

Change?

Dot-Com Bubble

Bush & Greenspan methods fighting against recession:

- Increased deficit spending

- Loosening of monetary policy, significantly lowering feds funds rates

Housing Bubble

Obama & Bernanke methods fighting against recession:
- Increased deficit spending

- Loosening of monetary policy, significantly lowering feds funds rates

Albert Einstein's famous definition of insanity is as follows: Doing the same thing over and over again and expecting different results.

Jaiku is now open source

Jyri Engeström wrote a blog post about open sourcing Jaiku. This is interesting news, since Twitter is right now the hottest thing going in the web, and Jaiku is the second best microblogging platform available.

Jaiku resides now in Google Cloud. Anyone can now set up and run their own JaikuEngine instance on Google App Engine. Hopefully the developer community takes it as their own and starts to develop Jaiku like crazy. There's certainly a lot of stuff they could do to make it even better and more diverse. And I wouldn't be surprised if some startups find a new way to use microblogging as part of their offering. My own Ghobee could be one of them.

Good stuff.

UNICEF campaign - Guerilla kick off

Let´s wake up those motherly instincts.

Imagine you see blue abandoned baby strollers. You see them on the way to your work, and then you hear some crying coming out of them. Would you take a look that everything is ok?

Watch this video

Inside the strollers is a sign that says (loosely translated):

"Thank you for caring, we hope there is more people like you.
Be a mom for a moment, UNICEF.
www.unicef.fi/aiti"

Campaign: Ole hetken äiti - Be a mom for a moment
Client: UNICEF Finland
Agency: Taivas

Wanted: FLASH Coder

We are looking for an entrepreneur-spirited, hard-working on genius Flash Guru in our newest startup, Magazize.

Job Inquiries:
Adele Enersen, adele.enersen (at) gmail.com

Depression is a scam

Some people made mistakes. Some people made huge mistakes. And now the economy is in the shitter. These people not only remain unaccountable for their mistakes, but they get rewarded with hundreds of billions of dollars worth of bailout money, that is taken from taxpayers pockets.

That, ladies and gentlemen, is a scam.

Cloud panel

A great panel about Cloud Computing, all the major cloud companies represented:

I am certain at this point that cloud computing is the next great enabler of future internet innovation.

Techcrunch are full of shit?

This is a quick one. I just heard from a reliable source, that Techcrunch are full of shit. 

Mobile short film: Mankind is no island

One of my collegues show this short film today. Very inspiring.

This touching, shot on a mobile phone -movie has won both the 'People's Choice' and 'Best Film' category at the NY Tropfest short film festival 2008.



I think we should sometimes do something non-commercial film "art" with Lasse.

Ad placement gone wrong, Finnair

News is all about Buffalo plane crash, and Finnair ad says: "Happy surprise for valentines day!"

Oh dear. (Thanks Johannes.)

All work and no play, but a NEW campaign for Arla is out there!

Arla Power Cow is Arla's brand for dairy products for children. Unlike their competitors, Power Cow does not use traditional media like TV. Nice Challenge, me likes!

(In my opinion, there's enough annoying bright and noisy "Hey kids, you wan´t this yammy-stuff"-commercial in TV anyway.)


Last year campaign was about a dance contest. This year the name of the game is Music Video. We wanted to give even more space for kids creativity. We have a new song and new product: cheese.



We have also Power Cow room in Habbo. It's nice to read comments in there. Some kids remember last year dance contest, and others are already expecting this new competition. Some likes products, some don't. It's nice to be honest in advertising. "Here is this product, but you make up your mind what you really think about it. "



Here you can see the campaign site:
http://www.powercow.fi/

Is it really 'worst since Great Depression'?

(from Examiner)

Stimulating the bubble

I think we all agree that what this economic crisis is product of, was a bubble. If we try to "stimulate the economy" to the level of consumption and nominal stock market values, doesn't that stimulate the bubble instead?

Bill Hicks on Letterman, finally

I have to post this video for cultural value, and as a good deed from David Letterman. 

The legendary comedian Bill Hicks recorded this bit in 1993 for Late Night with David Letterman, and it was the first bit ever to cut completely out of the program because of the nature of the material, which CBS at the time thought to be offending and not suitable for the viewing public. This devastated Hicks and his fans. He never got the recognition he deserved in his life time. Bill Hicks died in 1995.

Internet really made Bill Hicks a posthumous star and a hero to many. I remember getting some mp3:s from my friends and laughing my ass off to his routines, which were quite anarchic and philosophic at the same time. A true alternative for comedy. He validated many peoples sense of reason and view of the world.

Anyway, Letterman decided to put this video on air finally, so here it is:

"The world is like a ride at an amusement park. And when you choose to go on it, you think it's real because that's how powerful our minds are. And the ride goes up and down and round and round. It has thrills and chills and it's very brightly coloured and it's very loud and it's fun, for a while. Some people have been on the ride for a long time, and they begin to question: Is this real, or is this just a ride? And other people have remembered, and they come back to us, they say, 'Hey – don't worry, don't be afraid ever, because this is just a ride ...' And we ... kill those people. Ha ha, 'Shut him up. We have a lot invested in this ride. Shut him up. Look at my furrows of worry. Look at my big bank account and my family. This just has to be real.' It's just a ride. But we always kill those good guys who try and tell us that, you ever notice that? And let the demons run amok. But it doesn't matter, because – it's just a ride. And we can change it anytime we want. It's only a choice. No effort, no work, no job, no savings and money. A choice, right now, between fear and love. The eyes of fear want you to put bigger locks on your doors, buy guns, close yourself off. The eyes of love instead see all of us as one. Here's what we can do to change the world, right now, to a better ride. Take all that money we spend on weapons and defenses each year and instead spend it feeding and clothing and educating the poor of the world, which it would pay for many times over, not one human being excluded, and we could explore space, together, both inner and outer, forever, in peace." -- Bill Hicks

Story of Stardoll.com - a co-founder's story, Part Four

I was at that point an avid user of finnish website called Mikseri.net, which allows people to share their own music and discuss softwares and hardwares. As I liked how it felt to use, I contacted its founder and manager Arto Aaltonen on IRC (not the gallery) and briefly presented our little thing called Liisa's Paperdolls. As a very entrepreneur-spirited guy, he got excited and was like "yeah let's do it". Together we created a new site, which included basic social networking features and made into a bit more professional looking, logos and all. Arto was really fast at coding the site. I realized only later on, being more around with other coders, how fast he actually was. I'm really happy to have started my internet career with him, because that way I understand what kind of work attitude and end result is possible. At times they can be really lazy and managers are wondering why projects are stalling, while their coders are surfing the net and not doing anything.

Fifth lesson: Hire people who work hard as well. Do not recruit rockstar coders, or anyone with huge ego.

Company was founded by the three of us, Liisa, Arto and me, money was getting in, site kept growing like crazy. To get where we were going with product dev, we needed a Flash coder. We talked with few, but they all decided they wanted to stay at their cozy jobs, rather than doing some fantasy startup company about paperdolls. We started to think about having venture capital money in the company, in order to develop the things we wanted. Enter Danny Rimer.

Danny is a general partner at Index Ventures, one of the best VC companies in the world. We had decided to start looking for venture capital money just one week before out of the blue he contacted me and said he liked the website and wanted to talk about it. I didn't know anything about how everything works regarding venture capital company involvement. At this point I contacted Taneli Tikka, who at that time was the CEO of our hosting company, and who I knew had a lot of VC experience. We met and had an interesting talk. He had many good advice about our company, service and he helped understand more about venture capital. And kudos for also understanding how valuable the site was for girls online. I also met Aapo Kyrölä, the other co-founder of Habbo Hotel. I presented the site to him, and we mainly talked about negotiating with VC:s. We were a lot smaller than Habbo at that time, but were still competitors in 50% of their target market. I highly respect his attitude towards us, in spite of us being competitors. Finland is a small country and we should help each other out like that more often.

to be continued..

Internet industry vs. electric industry

I have always had extra big admiration for Amazon founder and CEO Jeff Bezos. In this video he explains how the dot-com boom and bust is often compared to the Gold Rush, but that its more like the early days of the electric industry. 

An inspiring video.

Can government create wealth?

If I could ask Obama to read just one book, I'd make it Henry Hazlitt's "Economics in One Lesson". The lesson itself is as follows:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

The book then looks at common beliefs within economics and applies this lesson to them, pointing out simple fallibilities in these beliefs. Hazlitt shows time and again with very simple and understandable reasoning how government does more overall harm in the economic system by helping certain groups by taking away from other groups.

Obama is dead set on stimulating the economy. It is widely accepted that government can and should do this. This is Keynesian ideology to the max. It is as stupid as believing that you can cure a patient's cancer by making a blood transfer from right hand to left hand. No additional overall value is produced by taking money from some people and giving it to other people. It is just moving the money around. Which, in USA:s case, they don't have.

Government can't create wealth. Only private sector can create wealth. But people's trust in politicians and bureaucrats has never been as strong and blind as today.

Bad sign

Here is interesting graph. This is probably good to keep in mind in the future. It's exactly like Jim Rogers said: when 29-year old people in the financial sector are driving Maseratis, something is terribly wrong.

Online shop for Finnish goods!

If you are finnish person living in somewhere else, or otherwise brainwashed to enjoy our nordic goods, you´ll eventually miss finnish products like crazy.

Especially real rye bread, salmiakki (salty licorice), sauna products scented with birch and tar, and of course latest issues of finnish journals.

But now there is a solution! Hurraa! Suomikauppa.fi is the world largest online shop for Finnish goods!

Goodbye Bush : Veet

Clever!!! Via: Brand Strategy - blog

Monetary politics

Central banks are independent institutions without any tangible government (people) control. The are not accountable by any authority. Therefore monetary policy is undemocratic. We can vote any other sort of politician, except the monetary politicians - the most important ones. No other institution in the world has so much power and so little obligations and accountibility. The complete untouchable.

If you are going to centrally control the economy, rather than giving the control to free market (democratic economy), then at least give the people the right to vote on it, and educate them on how their economic system works.

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

—Thomas Jefferson, 1802
the third President of the United States (1801- 1809).

Anatomy of a Bubble

1. Investing (in any asset class) goes mainstream and ordinary people think that they can get rich effortlessly

2. This can go on as long as everybody has the same disillusion, and supply of the particular asset is smaller than demand

3. Bubble bursts when supply gets bigger than demand and forces prices to decline, causing the demand go even lower, and eventually turning into a loop

Central banks are in the position to create bubbles, because their credit to banks and governments can be cheaper than if commercial banks lent money to each other. It is a centrally controlled mechanism for agreeing prices for credit. 

Artificially cheap credit --> less risk for banks to lend money to companies and individuals --> companies and individuals invest more --> go back to nr. 1

Half of LAMP is from Finland

Finnish people have sometimes problems taking credit from what they have done. So I'm going to brag a little bit.

How many realize that half of the open source software bundle LAMP is finnish: operating system Linux and database management system MySQL. Remaining being Apache and PHP. LAMP is used everywhere in the world, and is behind most stuff on internet.

Päivän neljäs kalapuikko

Sorry folk´s, I just have blog this one in finnish. This blogging about finnish fish stick-riot in school. If you really need to know, you may try google translation. :D

Tapahtui eilen:
Keskellä kaikkien masentavien uutisten ja yt-neuvottelujen, yksi uutinen kaikessa surkuhupaisuudessaan piristi päivää.

Ei siksi, että olisi jotenkin hauskaa että kuriton koulupoika käyttäytyy huonosti, ja koulu joutuu turvautumaan poliiseihin, vaan siksi, että yhden yksilön itsekkyys saa älyttömät mittasuhteet, kun mediassa kaikki näyttää kiteytyvän yhteen pieneen kalapuikkoon. Oikaisuyritykset rapeista kalapaloista vain lisäsivät vettä myllyyn.

Eipä sillä, lapasista lähti myös vitsinä perustettu neljäs kalapuikko-ryhmä, jonka tehtävänä oli pohtia parin kaverin kesken mikä on se viimeinen kalapuikko joka katkaisee kamelin selän. Allekirjoittanutkin paneroutui kalapuikkojen syvimpään olemukseen sellaisella antaumuksella, että aviomies vaihtoi huonetta kun myöhäis-illan pimeinä tunteina esa pakarisen klassikko muuttui muotoon "Lentävä kalapuikko".

Vielä tänäänkin kalapala-baliikki on rapeaa asiayhteydestään irroitettuna. Kalapuikko-metaforat saavat hymyilemään. Ehkä jonain päivänä kielletyn hedelmän sijaan meillä on se neljäs kalapuikko. Eilen onnistuin jo käyttämään neljättä kalapuikkoa lauseessa. Tänään olen onnellinen kuin neljännen kalapuikon saanut koulupoika.

Ehkä me kaikki kaipaamme juuri nyt elämäämme sitä mahdotonta neljättä kalapuikkoa, ja sille asialle on parempi nauraa yhdessä, kuin itkeä yksin omaa kalapuikottomuuttaan.

LEGO for Adults....WTF?

via: Frederiksamuel.com

I swear..

...If I suddenly lose my job in this economy-schmeconomy situation, I will apply into this one:

"Britney Spears 2.0 Media Manager"

(Well, no, I didn't went to Harvard, but I've seen Love Story few times, does it count?)

If I don´t have to do this, I know the right person to be the one: It´s Chris Crocker

Causes and effects of fuel hedging

China Eastern Airlines, one of the country's largest carriers, said it faces a "significant loss" for 2008 after fuel price hedges turned bad to the tune of 6.2 billion yuan ($906 million) (from Associated Press).

I think that this is very interesting phenomena, and suspect that this was going on rampant in 2008. Wikipedia explains what fuel hedging is: 

"A fuel hedge contract commits an airline to paying a pre-determined price for future jet fuel purchases. Airlines enter into such contracts as a bet that future jet fuel prices will be higher than current prices or to reduce the turbulence of confronting future expenses of unknown size. If the price of jet fuel falls and the airline hedged for a higher price, the airline will be forced to pay an above-market rate for jet fuel."

So airlines have bought a lot of fuel (--> oil) in 2008 when the prices were skyrocketing, basically paying a much higher price than they would have if they just bought at whatever market prices were after the spike. This makes me believe that the price collapse in oil from 145$ to 42$ (price today, January 12th, 2009) is partly due to this. When massive amounts of hedging contracts were made, the effect was that future demand decreased the same amount. "We have already bought all our jet fuel for the next 1,5 years, we don't need anymore".

Now the overall demand, and I mean how much oil is really consumed, hasn't declined much. What has declined is output, because of the fear that during worldwide economic crisis, everyone has to drive a lot less. And I happen to disagree with this. I will not believe that people have really started to use and buy less fuel, globally. That is just a gut feeling.

So what are the effects of fuel hedging in 2008, other than decline in prices? I suspect that prices will go back up. I think that commodities bull run isn't over yet. I'm with Jim Rogers on this one. When stocks and bonds lose their value, the most valuable thing are real things. People will always be in need of food and energy and raw materials. And investment in productive capacity just isn't happening. I mean, who wants to become a farmer, hands up? Or who is investing in a coal mine or lead mine? At times like these?

Long: commodities. Short: 30-year bonds.

A great speech

This is something I just want to share with everyone:

 

New place for my music

Check out my music in Facebook

I have uploaded my music to several online services, such as mikseri.net, last.fm, myspace.com and soundcloud.com. I still haven't found a place which would serve the need to publish one's own music online well enough. 

I'd be happy with a site that would let me upload the music in any form I like, and have a really simple and easy to use artist page with all my music. And nothing else. Built to serve just one purpose really really well. The finnish Mikseri.net is probably the closest to this ideal, but it has lots of other stuff as well, like social networking functionality. Which are really great and I use them, but kind of blur and complicate the sort of idea for service that I'm after.

Let's see how this Facebook Page thingy works for me. Please feel free to add yourselves as fans. 

If you ever need a Hotel Room in Finland....

Ok, I´m not the first, but I've to say, I just love this idea.

Hotel Room

Gongratulations guys!

What is terrorism?

This is a comment on Martin Varsavsky's blog entry "What is wrong with Israel´s strategy to fight terrorism"

What’s different in launching a rocket from Gaza to Israel, and launching a missile from a Israeli helicopter to Gaza? Why is the first example terrorism, while the latter is not? 

There is an element of propaganda that the handle terrorist is attached to people whose military activities are described somehow more immoral than one’s own. Armies are usually not thought to commit terrorist acts, even though by definition that is exactly what they do. 

I think that what usually is described as terrorism is a way of warfare that results from inability to have a real military force with which to defend or attack. In this sense, terrorism is the last resort when you have nothing else left. 

If you go one step further beyond problem of recruiting (which is a marketing problem), you should ask why these people are doing this stuff in the first place, and see if something can be done. Always solve the cause, not the effect.

"Don't feed the depression" campaign

Advertising agency Bob Helsinki has launched a "Don't feed the depression" campaign in Finland. They say that a depression is mostly a psychological phenomenon, and that people shouldn't cut in spending.

The household saving rates in Finland has dropped for 6 consecutive years, and was -3.76% in 2007. It means that we consume more than we earn money. Is that a psychological fact, or is it a real life economic fact?

I think it is almost irresponsible to advice people to spend money they don't have. When we as people have spent too much, and borrowed too much, the cure is then to start saving again and pay back the debt. 

The boom is the disease, the bust is the cure.

Other side of the Moon

President-elect Barack Obama is pushing forward a $775 billion stimulus package. $300B of that is going to low- and middle-income earners as tax cuts. That's great, isn't it? US economy is getting more money into the system at a time of historical economic downturn.

But wait. That is just half of the deal. The other half is this: $775B is taken from someplace else. That "someplace" is going to be $775B poorer. At a time of historical economic downturn, mind you. So where does the money come from? There are three places a government a get this money:

1. Taxes
2. Federal Reserve
3. Borrowing

There could be a fourth place and that is surplus in government budget, but that also is a result from taking it first from some of these places. And USA infamously has the massive deficit. So scratch that.

1. Taxes

Well, they are giving tax cuts as earlier mentioned, so this probably isn't going the be the method. And if they would, they would first tax the people, and the same money back. As ridiculous this sounds, it is basically how everything works. But it isn't done in the US. It's just not IN these days.

2. Federal Reserve

This is the government's most reliable weapon in it's arsenal. There is no way the Fed - at least under Bernanke's control - would ever refuse to loan money to the government. Even at extremely low interest rate. Wow, free money! Well why doesn't the government just ask the Fed to create $50 trillion and loan it, so we can get everything done at once; end the crisis, zero unemployment, huge space program on way and pave the freeways with pure gold? It's free money isn't it? And if you believe John Maynard Keynes (like most modern economists), it will create at least triple that amount of income in the economy, in stages. Excuse me while I briefly am the party pooper and say: in your dreams, baby.

What this method of obtaining cash can and will do is create inflation. Period. If you create more money than there are goods available, that is the only result. Are there more goods produced in USA? No. That is why they don't create that $50 trillion every day. Even Bernanke knows that.

Inflation makes everyone's purchasing power diminish. If they give everyone $400 tax cut, and they have to print that money, the effect is that goods cost more money and you lose the same $400 that way. This is just taking blood from the right hand and putting it into the left hand. Do you in effect have more blood in your veins? If you believe what you read in the newspapers everyday, then that is reasonable logic to you.

3. Borrowing

This the people understand a bit better. Government can borrow this money from banks, individuals and other governments. But as you know, this money has to be paid back. If you as an individual borrow money from a bank, is your overall economy that much stronger? Of course not. You haven't received any free money. Well, there are people who do loan money and never think about paying it back, just thinking that they got rich, wohoo! That is part of the problem why we are in this mess in the first place. 

In any effect, borrowing is what the US government will also try to do to obtain this money. I say "try" because it is increasingly difficult for them to persuade banks, individuals and other governments to loan money to US, because US is exactly that guy who keeps loaning money and never pays it back. Especially when the crisis that got started in America has now spread across the world, the would-be lenders have to tighten their belts and think twice who they loan money to. There are economists that think that this is going to be a huge problem.

Borrowing money will not create real wealth, unless you invest it really wisely to produce new wealth. If you just spend it on consumption, that money goes to China/etc. whoever manufactured the goods the people bought.

Conclusion

The media is fervently avoiding any sort of analysis or even mentioning the other half of the deal. Extremely rarely I see anyone in mainstream media talking about where the money is coming from and what are the effects of that. I mean, I could be totally wrong about what I have said about different ways of getting money and what are the result from them, but I think no one can deny that there is the other side of the Moon, and that it has as much real life effects than the visible side.

"Can the US economy afford a Keynesian stimulus?"

Here is a great blog entry from Willem Buiter. This is the level of depth in analysis the media should offer right now, rather than just describing the color of a gunshot wound.