About Me 0106: December 2010

Thursday, December 30, 2010

Making Money With Options

Paying for Android apps is easier for AT&T users as the operator is adding carrier billing for its Android device owners. Users who find an app they like in Android Market will have the option of having the software purchase tacked on to their monthly bill, rather than go through Google Checkout. The update brings a much needed payment alternative to Android Market and hopefully points the way to carrier billing support from all carriers soon.

Right now, a lot of people don’t buy apps from Android Market because they’re limited to Google Checkout. Besides being flaky for some users, Google Checkout requires new users to enter in their credit card information. It’s a step that turns people off and has been hurting paid downloads on Android Market compared to iTunes, where many users already have their credit card on file with Apple.

What people really want is to just add purchases to their carrier bill. A new Strategy Analytics survey found that 38 percent of consumers prefer carrier billing more than pre-registered accounts like iTunes and PayPal, which are tied for 31 percent. Credit or debit card entry is favored by 22 percent of users.

This is important for Android and its ecosystem of developers. Options like PayPal are also welcome but the easiest thing to do for a consumer is just tack it on to their bill. T-Mobile has previously supported this and Sprint announced last year that it would, though it hasn’t followed through. Verizon Wireless supports carrier billing for app downloads in its VCast App store but there’s no word when it will be come to Android Market. Google’s Eric Chu said Google will continue to partner with more carriers on carrier billing so hopefully we’ll see Sprint and Verizon at some point soon.

Overall, it’s another sign that Google is making significant efforts to address some of the problems in Android Market. Recently, Google overhauled the look of the Android Market, making it easier for people to browse content using more categories and additional tools such as finding related apps. For developers, Google has upped the size of apps to 50MB, reduced the refund window to 15 minutes and earlier this year, opened up sales overseas to more countries. There’s still more to be done. I’ve asked about that promised online Android Market storefront. But gradually, Google is getting the picture. Android developers need to be able to make money and giving them tools to do that will help the entire ecosystem flourish. Mobile ads and in-app purchases are important monetization pieces but paid downloads are key for many developers looking for a return on their work. Expanded carrier billing could be an essential piece in helping Android developers close the revenue gap on their iOS counterparts.

Related research from GigaOM Pro (subscription req’d):

Why Google Launched App Inventor

Is Amazon the New Self-Publish Kingpin?

Why Carriers Still Hold the Key to Handset Sales

Counterfeiting is an arm’s race to nowhere. An endless struggle, with both sides trying to out-wit the other. While treasuries all around the world try to find new ways to make counterfeiters sweat, and ultimately unable to make fake money, the counterfeiters in the world just need to figure out how those individuals are making new money, and copy it. There have been plenty of options in the past, like watermarks, ink that never dries, holograms, and colors that can’t be copied. But, they’ve all been figured out in one way or another. But now, thanks to thin-film transistors, it may be almost impossible for counterfeiters to get the job done.

The new technology, which is still being fleshed out, is designed to literally wrap around paper money. The thin-film transistors are made out of gold, organic molecules, and aluminum oxide. The transistors are then set into a patterned mask, and laid on top of the money. How would merchants be able to tell if it’s the real deal? Once the film is in place, there would be about 100 different organic and invisible transistors on each side of the paper note. Thanks to a small 3 volt current, the note would seem to turn “on and off.”

So instead of having to use a special marker, a person would just pass the bill over a sensor, and if it manages to generate the required voltage, the bill is real, and they can buy whatever it is they intended on purchasing. There’s no doubt that this seems like a huge step to fight counterfeiting, but let’s face it: it’s necessary. Will it solve the problem? We can probably hope it does for a long time, but it’s probably not a permanent fix.

[via TG Daily]

Windows Phone Marketplace hits 5000 Apps and is Cracked

There's been good news and bad for Microsoft this week. The good news is that the number of apps available in the new Windows Phone marketplace has been growing steadily since October and has now passed the 5000 mark. ...

News - Queen Elizabeth Welcomes First Great-Grandchild! - Moms ...

Peter Phillips' wife Autumn gave birth to a baby girl Wednesday.

Fox News Channel's Kimberly Guilfoyle: Ignore CPAC boycotters ...

Former first lady of San Francisco tells groups boycotting February convention to participate if they want to be heard.

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Tuesday, December 28, 2010

People Making Money Net

Inflation is running at a reported 5.1% in China, a figure most believe is on the low side. Nonetheless, China has been loath to hike rates out of fear of more "hot money" flowing in. Something had to give, and it did. The markets forced China's hand.

Please consider China Increases Rates to Counter Highest Inflation in Two Years

China raised interest rates for the second time since mid-October to counter the fastest inflation in more than two years and more moves may follow.

The benchmark one-year lending rate will rise by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, effective today, the People’s Bank of China said in a one-sentence statement on its website late yesterday.

Premier Wen Jiabao is seeking to slow gains in property values and consumer prices that are making it harder for families to buy homes and pay for food. Bank lending and a wider-than-forecast November trade surplus have pumped more cash into an economy already awash with money.

China is tightening after a record expansion of credit to counter the effects of the world financial crisis. The broadest measure of money supply, M2, has surged by 55 percent over the past two years and outstanding yuan-denominated loans have climbed 60 percent to 47.4 trillion.

Residence-related costs, including charges for water, electricity and rent, jumped 5.8 percent last month from a year earlier, the most in more than two years, and consumer goods prices rose 5.9 percent, the biggest gain since August 2008, according to statistics bureau data.

Policy makers are concerned that raising interest rates could “encourage hot money inflows,” Paul Cavey, a Hong Kong- based economist at Macquarie Securities Ltd. said. “Raising interest rates has far more implications” than ordering lenders to set aside more of their deposits as reserves, as it may affect the ability of local governments and companies to pay their debts.

State Council researcher Ba Shusong told state television yesterday that the government will step up regulation of capital inflows, without specifying measures that will be taken.

The Ministry of Commerce is stepping up supervision of foreign investment in real estate to crack down on speculation after a 48 percent jump in overseas fund inflows to the industry in the first 11 months of the year, spokesman Yao Jian said on Dec. 15. Policy makers may also allow faster gains in the yuan to help curb inflation from higher prices of imported commodities, according to analysts’ forecasts.

China Overheating

China was number 5 on my list of Ten Economic and Investment Themes for 2011

5. China Overheats, Multiple Rate Hikes Coming

China, everyone's favorite promised land, has a hard landing. China will grow at perhaps 5-6% but that is nowhere near as much as China wants, or the world expects. Tightening in China will crack its property bubble and more importantly pressure commodities. The longer China holds off in tightening, the harder the landing.

Capital Controls Coming

Initially, rate hikes will encourage more "hot money" inflows into China. In hopes of preventing those inflows, China has announced more capital controls. It will be interesting to see precisely what those controls will look like.

Currency Sterilization Needed

One thing China should do is sterilize speculative hot money and balance of trade inflows via domestic government bond issuance, hoping to curb money supply growth.

However, it is not as simple as that, because in a fractional-reserve credit system, a net increase in lending itself increases money supply.

Clearly the Chinese central bank is behind the curve. Will China simply restrict lending? Would it even work?

I do not know about the former, but the latter would eventually force a hard landing if China gets serious enough. Actually, there are so many problems that I think a hard landing is coming regardless, and the longer China dallies, the harder it will be.

In the meantime, these paltry rate hikes by China of .25 points each pale in comparison to increases in reported consumer price increases.

Enormous Property Bubbles Including Vacant Cities

It is not "consumer price inflation" that is the big problem. Asset inflation, especially property speculation is rampant.

In case you missed it please consider The ghost towns of China: Amazing satellite images show cities meant to be home to millions lying deserted

Speculation will continue until China gets serious or until the pool of greater fools buying property at absurd prices dries up.

China’s Army of Graduates Struggles for Jobs

Exacerbating China's myriad of problems, an Army of Graduates Struggles for Jobs

In 1998, when Jiang Zemin, then the president, announced plans to bolster higher education, Chinese universities and colleges produced 830,000 graduates a year. Last May, that number was more than six million and rising.

It is a remarkable achievement, yet for a government fixated on stability such figures are also a cause for concern. The economy, despite its robust growth, does not generate enough good professional jobs to absorb the influx of highly educated young adults. And many of them bear the inflated expectations of their parents, who emptied their bank accounts to buy them the good life that a higher education is presumed to guarantee.

“College essentially provided them with nothing,” said Zhang Ming, a political scientist and vocal critic of China’s education system. “For many young graduates, it’s all about survival. If there was ever an economic crisis, they could be a source of instability.”

In a kind of cruel reversal, China’s old migrant class — uneducated villagers who flocked to factory towns to make goods for export — are now in high demand, with spot labor shortages and tighter government oversight driving up blue-collar wages.

But the supply of those trained in accounting, finance and computer programming now seems limitless, and their value has plunged. Between 2003 and 2009, the average starting salary for migrant laborers grew by nearly 80 percent; during the same period, starting pay for college graduates stayed the same, although their wages actually decreased if inflation is taken into account.

Chinese sociologists have come up with a new term for educated young people who move in search of work like Ms. Liu: the ant tribe. It is a reference to their immense numbers — at least 100,000 in Beijing alone — and to the fact that they often settle into crowded neighborhoods, toiling for wages that would give even low-paid factory workers pause.

“Like ants, they gather in colonies, sometimes underground in basements, and work long and hard,” said Zhou Xiaozheng, a sociology professor at Renmin University in Beijing.

Odds for social unrest will mount if China's growth slows. Yet, because of short-term overheating concerns on top of long-term peak oil issues there is no way China can keep growing at the current pace.

Eight Problems Facing China

Hot money inflows
Huge property bubble
Massive increases in money supply, much of it property speculation and building of unneeded capacity
Currency manipulation charges from the US and potential trade wars
Unsterilized trade imbalances fuel inflation
Slowing Europe
Dearth of Jobs for new graduates
Potential social unrest

Case For Hard Landing

Risks are enormously skewed to the downside, so much so that the odds China avoids a hard landing are not good. China is far more exposed to a slowdown in Europe than the US and the popping of China's property bubble will extract a huge toll.

Those plowing into commodities, foreign currencies, and equities (especially foreign equities), fail to consider those risks.

Moreover, given that much of China's growth is overheating and malinvestment, it is not even clear the Renminbi is undervalued.

For a look at India, please consider Food, Fuel Inflation Hits India; Primary Price Index Up 15%, Credit Expansion Up 23%

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

The usual suspects always make the structural argument because they just don’t believe in fiscal policy and the normal means of stimulating investment and consumption. And I think it’s important to understand the fate to which that consigns 15 million unemployed Americans.

The unemployed are far more likely to go without health insurance, especially now that the COBRA subsidy has lapsed, making it harder for unemployed workers to maintain their old employer-based health coverage. Being uninsured puts people at far greater risk for unnecessary deaths. The unemployed have less money to spend on basic necessities. A new paper from the National Bureau of Economic Research shows that unemployed workers frequently cut back on healthy foods like fruits and vegetables, leading to poorer diets and, eventually, bigger health problems. Recent studies show a linkage between unemployment and suicide; during this past recession, calls to suicide hotlines have jumped along with the unemployment rate.

Not everything pulls in this direction; recessions correlate with fewer car accidents, presumably because there are less cars on the road at peak drive-time hours; and higher wages can result in greater consumption of cigarettes, which makes sense, as cigarettes have become taxed so heavily that they practically have become a luxury good. But in a general sense, the impoverished lifestyle is a more dangerous lifestyle. They call it the safety net for a reason, because with unemployment comes far less safety.

So the folks claiming that unemployment is structural and we just have to wait for the business cycle to turn around are essentially allowing millions of people to get sicker, more suicidal and in general more at risk. That’s inexcusable when something can be done to ameliorate the situation. Yet that’s where we are.

UPDATE: Bob Herbert always has good thoughts related to this issue, and he does again today.

Thursday, December 30, 2010

Tuesday, December 28, 2010

Thursday, December 23, 2010

Wednesday, December 8, 2010

Tuesday, December 7, 2010