There is a protest today in Los Angeles against the construction of a new Wal-mart in Chinatown. The store would be part of a mixed use development near a transit station on a lot that has sat vacant for some time.
I am no fan of Wal-mart. Among other things, I wish that those who attempt to bring a class action suit against Wal-mart pay discrimination had prevailed in the Supreme Court case of Wal-mart vs Dukes. Nevertheless, it also concerns me that Los Angeles has had essentially no job growth in two decades, and that urban redevelopment is very difficult to do here. According to the leading scholar on the economics of Wal-mart, Emek Besker,Wal-mart creates more jobs than it destroys(BTW, I don't think Emek is a particular fan of Wal-mart either). It also allows households to buy goods at low prices. On balance, I think the construction of the Wal-mart in Chinatown will be good for that particular neighborhood and the city.
One of the arguments advanced against Wal-mart is that it hurts small business. I particularly hear this from fellow liberals, who love to extol the virtue of small business. Yet, according to Kelly Edminston at the KC Fed, job quality is much worse at small business than large firms. The average wage at a small firm (< 100 workers)was $15.69 an hour in 2004; for large firms (>500 workers) it was $27.05. Moreover, small businesses paid 1/4 of their labor force less than $8 per hour; for large businesses it was 3 percent of their labor force.
...it is still is a small fraction of the city, let alone the metropolitan area. According to the census, zip codes 90012, 90013, 90014, 90015, 90017, 90021 and 90071 grew between 2000 and 2010 from 82,000 to 97,000, a gain of 18 percent. This compares with a gain of less than three percent for the city.
Nevertheless, the residential share of downtown remains only 2.6 percent.
Fed members claim to care equally about the employment and inflation sides of their mandate, yet the unemployment rate has been at least 2 percentage points above the FOMC's estimated natural unemployment rate for nearly 4 straight years while inflation has scarcely wandered more than a half percentage point away from target since late 2009. Fed members claim that the 2% target is not a ceiling, but inflation has been below 2% much more often than it has been above it over the past 4 years, inflation is projected to be at most 2% in 2013 and 2014, and inflation is projected to be substantiallybelow 2% in 2012. In other words, the Fed is actively pursuing a policy of disinflation despite the fact that annual inflation is roughly at target while unemployment is well above its structural rate. That is, the Fed has gone from merely failing at its job toaggressively failing at its job.
Second, it is difficult to pin blame for this on anyone other than Chairman Ben Bernanke. The June policy vote ran 11-1, suggesting that Mr Bernanke is not getting the most expansionary policy for which he can find a majority. One is forced to conclude that this is the policy, and by extension the recovery, that Mr Bernanke wants.
All of this is particularly discouraging given that Bernanke's own magnificent scholarly work calls for the Fed to be more aggressive at the zero-bound, if necessary. Lawrence Ball perhaps has some insights into what is going on:
"There is no doubt that Ben Bernanke's views on zero-bound policy have changed over time. Once, he called for targets for long-term interest rates a "policy I personally prefer"; later, he "agreed 100%" with opposition to that policy. Bernanke once advocated a 3-4% inflation target for Japan; as Fed chair, he says "that's not a direction we're interested in pursuing."...he no longer argues that a central bank can easily overcome the zero-bound problem "if the will to do so exists."
At one level, the primary reason for these changes is also clear: Bernanke was influenced by the work of the Fed staff...
...The puzzle about this history is why Bernanke so quickly and completely dropped his previous views and adopted those of Fed Staff. We cannot be sure, but social psychology suggests two possible factors: groupthink and Bernanke's shy personality."
I am a big fan of Bernanke's scholarly work, and as a result was thrilled when he was appointed Fed Chair. My understanding, however, is that he hasn't a whiff of arrogance about him, a characteristic that makes him a wonderful scholar and, from all I can tell, a wonderful human being. But Chairman Bernanke really is the smartest guy in the room, and it would be nice if he remembered that. If the views he (along with Mark Gertler) developed over many years informed monetary policy, we would all be better off.
If you buy a real book, you get the Kindle version for a nominal cost beyond the real book. This would encourage people to continue to buy real books, while at the same time allowing people not to lug them around while travelling. Given that the marginal cost of an e-book is near zero, this should be a profitable strategy. The margin on the real book remains, and a small margin is added for the e-book. The bundling should encourage more sales. The losses are from those who currently buy both versions, but I am guessing such buyers are small in number.
No charge, Jeff Bezos. And you're welcome. [Update: my friend Frank Yellin tells me this idea is often expressed in Kindle forums.]
The United States is sufficiently rich that all people should have decent housing they can afford. Decent means sanitary, safe, and, if not spacious, not overcrowded either. This housing should be available such that when households pay for it, they have money left over for other things, like food and education.
In Los Angeles, this is not the case. Absent housing assistance, a renter at the 25th percentile of the income distribution must pay more than 45 percent of income in order to rent a unit at the 25th percentile of the rent distribution.
The vast majority of those eligible for housing assistance do not get it, because housing is not an entitlement, and budgets for housing assistance are, in the overall scheme of things, small.
Yet we can do far better in Los Angeles than we do. For starters, even though we are the second largest and second densest metropolitan area in the United States, the impediments to building dense housing here are enormous. I just judged a case competition for our RMPIRE executive program here at USC, and was impressed at the creativity of a team that wanted to use a particular lot's floor area ratio allowance of 6 to build densely packed units on a site no more than one mile from downtown Los Angeles. The residential use would require a zoning change, however, and many judges felt that getting such zoning approved would be next to impossible. It depresses me to say so, but I happen to agree with them.
But there is another problem as well. While I have little doubt that allowing denser housing would lower rents in LA, it still wouldn't solve the problem--there would still be a "gap" between the present value of rents lower income households could afford to pay and the cost of building units. This gap would need to be filled by government financing.
And so we come to the next problem--when we build "affordable housing" here, we do so in a remarkably inefficient fashion. Government financing rarely comes from a single source, but rather comes in layers of financing from various local, state, and federal agencies. Each slice of financing involves fees that go to consultants who arrange for the financing. All of this adds to the amount of time and expense that are required to get financing, which ultimately pushes up the cost of bringing a project to market. At the same time, communities require "affordable" units to have design amenities and, worse, covered parking. This can drive the cost of production of an affordable unit to $400,000 and more.
Meanwhile, the median sales price of a house in Los Angeles County is $287,000. See the problem here? To provide "affordable housing," it would actually be cheaper to purchase the median priced home (hardly a bad house) than it would be to build something new. But of course, there are many people who gain when $400,000 is spent to bring an affordable unit to market--just not taxpayers or low income users of houses.
Chris Mayer points out that 90 percent of underwater borrowers are current on their mortgages. A broad principal write-down program would surely change this.
THE CONFLUENCE OF OPEN EDITING POLICIES AND A DELUGE OF VOLUNTARY CONTRIBUTIONS HAVE HELPED JIMMY WALES IMMENSELY IN HIS VISION TO MAKE KNOWLEDGE FREE TO ALL. NEXT STOP – HELPING GOVERNMENTS?
When Jimbo ‘Jimmy’ Wales, co-founder Wikipedia, first got back to my office communicating that he was eager to talk, I hadn’t yet conveyed to him that I considered him a cult entrepreneur par excellence. It’s not that I quite agree with Wikipedia’s editorial policies (on which Wales’ personally holds little or titular control) – far from it, I perhaps would be their harshest critic – but the social promise that the model has fulfilled till now and holds for the future is reason enough to catapult this sincerest 45-year-old American into my topmost list of legendary innovator entrepreneurs.
When Brin and Page took their dorm room data mining experiment beyond the confines of Stanford, the world learned to associate search with Google. And when Jimmy Wales brought in his bold venture enabled by ‘open editing’ in 2001, free information in the Internet space about any company, individual, event, entity et al rapidly started becoming synonymous with Wikipedia, and the world of encyclopedias shrunk by hitherto unimaginable proportions. Type a search key on Google today, and you will, with rare exceptions, encounter a Wikipedia article on the term right up there in the rankings. And that is really a testimony to the kind of power it holds among the Internet audience as a reference tool.
Wikipedia, which derives its name from the word ‘wiki’ (a website whose content can be edited through a simplified mark up language or a rich text editor), was anti-establishment at its very core, and one would not be surprised at the same, if one were to closely examine the credentials of Jimmy Wales himself. Disdain for what passes off as convention and a passionate search for freedom have been part and parcel of Jimmy’s character, whose initial schooling happened in a oneroom schoolhouse, which was run by his mother and grandmother. His most pleasant memory of that time is the Montessori influence on the school, which meant that he could spend a lot of time studying anything he felt like. And perhaps his most unpleasant memory was how bureaucrats and high school inspectors used to constantly interfere in the school’s functioning.
His most recent war against the establishment is one where he was joined by most of the prominent websites of the world – the war against the SOPA (Stop Online Piracy Act) and the PIPA (Protect IP Act), Acts which could expand the US government’s power to curb copyright infringement and piracy and act against websites that are dealing in counterfeit goods – critics mention these Acts are just another way to gain ill-thought control over the net; Wales tells us that these Acts are “fundamentally flawed”. Wales has firmly protested against the attempts by the industry, particularly the movie making industry, to back such legislations through all means possible. He famously proclaimed to Hollywood recently that it was doomed and not because of piracy, but because of a growing trend of collaborative story telling and filmmaking. He told us, “The solution to problems of piracy cannot lie with any form of censorship. It’s really as simple as that. Any law which makes it possible to shut down or significantly damage (through withdrawal of access to markets) a website without due process of law must be opposed.”
He also laments the recent attempts by the Indian government to act against online firms in particular, “The IT industry in India is maturing to the point that the next great consumer Internet start-ups – the next Google, the next Facebook, the next Wikipedia - could come from India. All of this is destroyed, utterly destroyed, if India imposes censorship on the web.”
I consider Jimmy Wales, like most iconic entrepreneurs in business history, as a genius, albeit one with a very unconventional perspective towards life. After completing college, Jimmy went on to attend the finance PhD programs at both Indiana and Alabama, but did not write the dissertations in either, because he was ‘bored’! However, he did make a lot of money in the market through very intelligent speculations on forex and interest rate fluctuations. Then he took his life-changing decision to quit the financial realm and become an internet entrepreneur with Bomis (acronym for Bitter Old Men In Suits), a website targeted towards males and featuring user-generated webrings around popular search terms among that target audience.
Jimmy’s passion for freedom has pretty much guided his perspectives and actions throughout his life. He was deeply influenced by noted author Ayn Rand and her philosophy of objectivity, individualism and capitalism. He closely identifies himself with Howard Roarke, the main protagonist of The Fountainhead (arguably Rand’s most popular work), an architect who embodies these very philosophies, in particular the value of having great ideas and pursuing them to fruition.
Using the funding from Bomis, Jimmy moved on to the web encyclopaedia project he was most passionate about, with Nupedia. In this version, articles were supposed to be written by experts and each article was to undergo an exhaustive peer review process to ensure that credibility was at par with encyclopaedias. But seeing how slow the process was, Wales and Larry Sanger (editor- in-chief of Nupedia) jumped upon the idea of making the whole project a ‘wiki’ called Wikipedia and enabling independent editors to contribute to articles as they were being written.
Wikipedia was launched on January 15, 2001. Volunteers jumped on the wiki bandwagon almost immediately – though not a quarter as high as the numbers one sees now. Yet, the improvement in quantity over Nupedia was dramatic. While Nupedia approved 21 articles in its first year, Wikipedia had completed 18,000 plus! Of course, Sanger later opposed the change in focus by Wales towards Wikipedia and its rather simplistic editorial policy – due to which Sanger ultimately quit. This was quite similar to the turf war at Apple between Steve Jobs and Steve Wozniak (whose interview with my office was covered in my previous editorial), leading to Wozniak leaving Apple. The difference here being that I actually consider Jimmy Wales the Wozniak of the duo. And that’s because of the uncanny similarity in one particularly sparkling attitude. While Woz wished to give away Apple’s computers for free (an idea which Jobs opposed), Jimmy Wales has always wanted to give away Wikipedia’s knowledge for free – and has succeeded like nobody else ever could. If Jobs was the autocratic head of Apple, Wales is the epitome of community decision making, where leave critical policies, Wikipedia is more or less managed everyday by thousands of independent volunteers who are not even paid by Wikipedia.
With Wales’ vision, Wikipedia has become the exemplar of Jimmy’s vision to bring “the sum of all human knowledge” free of cost to every human in the world. Wales professes a belief in decentralisation of knowledge, which was the guiding philosophy of the Wikipedia project. “I always do the most interesting thing I can find to do,” says Wales to us. And Wikipedia has been one massively interesting thing to do.
Today, Nupedia is extinct, but Wikipedia is no pushover in the numbers game by any stretch of imagination. With over 100,000 active editors globally as reported in the annual report for 2010-11, the Wikimedia Foundation (which officially runs Wikipedia) received funding of around $23 million that year. By the end of 2010, 3.5 million articles had been published on the English version of Wikipedia (currently over 3.9 million in English & 21 million in total for all 282 language versions), and the site got its 1 billionth edit during the year. On a trailing three month average basis, around 13.9% of global internet users access Wikipedia. org as per statistics from Alexa.com. In comparison, the figure for Google (the number 1 site in terms of web traffic) is 49.77% and for Youtube is 32.69%. But compare the paid staff of Wikipedia, which is around 139 people as on date in comparison to Google, which had 32,467 employees by the end of 2011, and you get the real perspective.
There are inherent contradictions in the model, but one beats the rest by a huge margin. Nupedia was supposed to base itself on advertising, but Wales has shunned advertising for Wikipedia. Wales has stood by his stand that advertising would not allow the content on the site to stay neutral and the current mode of targeted advertising is a violation of the privacy rights of an individual. He asserts to us, “I see no problems with our revenue model. People have been asking that question for years, and we continue to be more and more successful with it.”
Clearly, one can argue that advertising on the website would increase the revenue base phenomenally and expand the possibilities for the site, especially ramping up an in-house team to counter- balance the thousands of volunteer editors across the world, whose credentials are quite hard to ascertain. Definitely, credibility of data and bias remain an issue even without following an online advertising-based model – issues which Wikipedia itself accepts officially – and the freedom provided to these contributors has to be consistently guarded against misuse.
But to be honest, the bigger promise for Wales – and perhaps various nations – in the future is Wikiversity, a project similar to Wikipedia set up by the Wikimedia Foundation. Wikiversity offers structured teaching in various subjects and topics “to foster learning”. While countries like India are struggling in spreading the reach of university learning centres due to the costs involved in setting up technology and learning networks through vast geographic expanses, Wikiversity offers a readymade university-like learning platform on the Internet; and the best part is that it is all provided free of cost. In other words, governments could use Wales’ Wikiversity platform completely free of cost to teach university subjects through the Internet – and even formally certify the students undertaking such distributed learning post formal tests. Imagine the potential such an idea holds in increasing literacy rates and in reducing poverty globally. And for this very Wikiversity concept, if not for Wikipedia itself (for which Jimmy has been praised ad nauseum), I consider Wales one of the world’s leading social entrepreneurs, in the same league as the contemporary persona of Bill Gates.
“The original vision statement for Wikipedia still sustains me, ‘Imagine a world in which every single person on the planet is given free access to the sum of all human knowledge’.” When Wales mentions this, it teaches me again how passion has almost nothing to do with making money. He’s my new benchmark in the world of cult entrepreneurs – gentlemen, let’s give a hand to Jimmy Wales; he’s making a bigger difference than many nations.
People talk a lot about information overload, but I think the worst problem we have in information management today is memory overload -- the inability of the human brain to retain all the important information we run into in our careers. There's more stuff we need to remember than you can possibly hold in your head. The more successful you are, the more information you need to remember -- and the worse the problem becomes.
I think what we need is a context engine, an app that helps you recall the context around any bit of information in your life. Unlike a search engine, a context engine indexes just the information in your life, and supplements your own memory. "How do I know this person?" "What's the agenda for my next meeting?" "Who sent me that article last year, and where the heck is the article?" A context engine will help you answer these questions quickly, anytime and anywhere you need the information.
The product that I'm working on, Zekira, is a first generation context engine. In this post I'll discuss the need for a context engine, how it would work, and our status with Zekira. I'll also give some information on how you can help, if you're interested.
The trouble with information overload
Information overload is a hot topic with a long history. The term was coined in the 1960s, and popularized in 1970 by Alvin Toffler's book Future Shock, according to an excellent article in Wikipedia (link). But the idea goes back further. Xerox implies that it invented information sharing through the development of the photocopier in the mid-1900s (link), And there have apparently been complaints about too much information for as long as we've had writing. The Bible complains about the proliferation of books, the Romans worried about it, and so did the ancient Chinese. Once Gutenberg got going with movable type, the complaints increased (link).
Information overload is a popular subject online. The Wall Street Journal said Google returned 2.92 million hits for it in 2009; the same search today returns 3.76 million, an increase of about 770 references per day.
Prominent authorities opinig on the hazards of information overload include the New York Times (link), Wired (link), and none other than the big consultancy McKinsey, which says it is "killing productivity...and making us unhappy" (link).
The critics of information overload complain that it bombards people with so much data that they are stunned into stupidity. They become low-grade data zombies, incapable of making intelligent decisions.
The answer, we're told, is to take in less information. The experts tell us to delete e-mails and limit our exposure to information online so that we can reserve time for thinking deep thoughts and forming long-term memories.
Okay. It makes sense that we should set aside time to think. But I believe distraction isn't a function of how much information you bring in, it's a function of how much self-discipline you lack. There's always something you can distract yourself with; if it's not e-mail it'll be Angry Birds. You could have the same problem if you had five e-mails a day or five hundred.
I think blaming "information overload" for the problem of distracted people is like blaming "water overload" for the problem of drowning. The fact is, modern society runs on the flow of information. The more information you can handle, the more productive you'll be, and the further you'll go in your career. Given the way the economy works, telling people to limit their information flow is a little like telling them to make themselves stupid. Instead, I think, we should be increasing our ability to manage that information, so we can be more productive.
The real problem is memory overload
Once you step back from demonizing information itself, it's easier to identify the problems that we have in dealing with so much information. I think the biggest problem in information management today is the limitation of human memory.
Think about how you remember things. It's usually through associations -- I saw it in the newspaper when I was at that cafe, I read it in that article on The Register while I was riding the bus, etc. When people have more information to remember than their brains can hold onto, those chains of association start to break down. You remember the fact that you once knew something, but can't recall the information itself.
As I talk with busy knowledge workers -- the type of people who manage the most information -- I hear stories about half-remembered information all the time. You'll see a person and know that you've met them, but can't recall the details about how you know them or what you discussed with them. Or a topic will come up and you'll remember that you read something important about it, but you won't recall where you saw it or how you could find that information again.
Often you know the information is stored somewhere on a computer or smartphone or website, but you have no way to look for it in the moment you need it. Even if you remember to look up the information later, it's usually extremely hard to find, and you can't take the time to do it.
The more successful you become in your career, the more information you have, and the more overloaded your memory gets. Of course it eventually overflows. The problem is so ubiquitous that most of us don't even think of it as a problem; it's just a feature of life. We shrug it off as a "senior moment" and uneasily move on.
But it has nothing to do with age; it's a function of experience. Take all the information held by a mid-career professional and stuff it into a 20-year-old's head and he or she will have the same problems.
When you add up all those "senior moments" across all the people they happen to, they constitute a huge loss in productivity among the busiest and most pivotal people in the economy. The only reason we tolerate this situation is because we assume there's nothing we can do about it.
But I think we can. The combination of mobile technology, low-cost computer storage, and web services makes it possible to build what I call a context engine -- an app designed specifically to help you recall the information in your life, and all the context around it.
You'll use a context engine to quickly recall: -All the details of your relationship with someone -- how you met them, messages and documents you've exchanged, and meetings you've been in together. -The backstory to a meeting, including the messages that led up to it, attendees, notes and pictures you took during the meeting, and followup messages afterward. -A tweet or Facebook post or e-mail you saw months ago mentioning a great new restaurant that you want to try. -That report sent to you five years ago by some guy you met at a half-remembered conference in Boston.
How the context engine will work
A context engine needs to do three things with your information: Collect, connect, and communicate.
1. Collect. To build a map of all your information, the context engine needs to gather it from all the places where your information is stored. That means, first, scanning the hard drives and other storage devices connected to your personal computer. E-mails, contacts, and meeting records all need to be extracted from whatever messaging and calendar system you use. For most mid-career professionals, that means digging into old Microsoft Outlook archives, called PST files. Other documents -- especially presentations and word processing files -- need to be sucked in as well, along with the most ubiquitous file format in business and academics, the PDF.
But you can't stop with the PC. The context engine needs to reach out to your web apps, to extract things like gMail messages, tweets, and Facebook posts and contacts. And the information on your smartphone needs to be included, everything from contacts to text messages to pictures.
This process should be automatic and comprehensive. Everything should be indexed. You shouldn't be asked to choose which files you want to remember, because you can't know in advance what you'll need.
2. Connect. Once all that information has been collected, it must be organized. That means indexing it not just by keywords, the way we would for a traditional web search, but by all of its attributes, including date, time, location, type of content, and so on.
This is a key difference between a web search engine and a context engine. In web searches, we look almost exclusively for keywords, and we use the wisdom of crowds to determine which matches are most important. That works great for searches of publicly-available content, but it breaks down when searching your personal archive. You may not remember the right keyword for a document or message, and the wisdom of crowds is much less useful for ranking results, because everyone's context is unique. Instead, a context engine needs to offer many search paths through the archive, so people can search using whatever bits of information they do remember about a topic.
The context engine should also present information to you in a way that lets you jump between bits of related data. Say you're looking for the record of a lunch meeting. You might be looking for it because you want to find the name of the person you met with, or some messages you exchanged with that person. Or maybe you just want the name of the restaurant so you can eat there again. All of that information needs to be cued up so you can jump to it easily. Again, the goal is to help you re-create those half-remembered chains of association.
Many of the products that in the past have tried to organize personal information (such as Google Desktop) have mimicked the keyword-centric searching we do on the web. Web search is so ubiquitous that we're all a bit like the man with the proverbial hammer -- every problem looks like a nail. But I think personal context requires a radically different structure to the database and UI. It's not about searching for things, it's about navigating through your context.
3. Communicate. You don't know when you'll need to remember something, so the context engine needs to be available on your mobile devices. In particular, I think a context engine is a killer app for tablets in business. Imagine always having your entire information history at your fingertips in every meeting and every conversation. How much more productive could you be if you had a perfect memory all day long?
I can't tell you how many people in Silicon Valley have told me sheepishly that they don't know what to do with their iPads at work. They generally love them at home, where they access entertainment and informational content. But at the office, particularly in meetings, they tend to turn into tools for covertly checking messages and browsing when the meeting gets slow. Please don't misunderstand, I know there are many things you can do with an iPad. But I'm reporting what I hear from a lot of iPad users.
Far be it from me to judge the way others fill their time, but I think the context engine would give you a good business reason to carry your tablet all day.
That means the database needs to be hosted in the cloud, which creates all sorts of important security challenges. Having your extended memory hacked is utterly unacceptable.
Building the context engine
As you know if you've been following my earlier updates, the startup that I'm working on, Zekira, is building a context engine. The company consists of four engineers plus myself, and we've been working on it for more than a year. Zekira is the fulfillment of a dream for us. One of us, Rudi Diezmann, has been working on personal search products since the 1980s. Others of us first thought about this problem when we were working at Palm almost ten years ago. We were looking at user problems a PDA or smartphone could solve, beyond helping you manage your calendar and contacts. There was a group of customers who responded very strongly to any product that could help them recall information and the context around it.
But only recently have mobile computers and wireless networks become powerful enough to let you build a full-function context engine.
The first version of Zekira is in early beta. It runs on Macs and PCs, and right now it indexes information found on your computer and any storage attached to it. Our goal is to take Zekira mobile, and to add web data sources, as soon as possible. But we did the first version on personal computers so we could get started testing the database and search capability. Besides, there are a lot of people with old Outlook and Office archives who would be happy to turn a context engine loose on them.
Zekira gives you a little search window that you can leave up on the screen, or minimize:
After you do a search, your results appear in this window:
The four stacks in the center show you all the items that matched your current search. In this case, we're seeing things related to Tom Shannon, including documents that he wrote or that mention his name, messages you've exchanged with him, and his contact record. Click on any of those items and you'll see information related to them.
The tabs on the left are filters that let you narrow the search. Currently they let you search by time/date (the filter shown), name, word, document type, and folder:
You can combine multiple filters to do complex layered searches. The filters are extensible, and we plan to add additional search tools in the future.
We're doing a crowdfunding campaign for Zekira on the funding website Indiegogo. If you don't know how crowdfunding works, people can make small financial contributions to a project and receive benefits in return, such as a discounted copy of the program when it's finished. Supporters of Zekira can also get access to the beta version of the program, and listing as a sponsor in the about box of the finished app.
Corporate sponsors of Zekira can get advertising here on Mobile Opportunity, a unique offer since I don't generally accept ads (except for one tiny Google ad that gets me access to Google's excellent traffic monitoring tools). The advertising sponsorship offer is a great way for a company that has a little bit of advertising budget left at the end of the quarter to help itself, and also help support a great product. The ad offer is limited to three companies, and is first-come, first served.
If you'd like to learn more about Zekira, you can visit our crowdfunding site here, and our website here. And here's a video of Zekira in action:
If you have feedback and suggestions for Zekira, I'd welcome your comments. And if you like the idea, please help spread the word about our crowdfunding campaign. The more support we get, the faster we can move on the project.
No matter what you think of Zekira, I hope you'll agree that the time is right for a context engine. With that and an info pad, I'd be one very happy camper.
In his review of the LA Phil's Don Giovanni, he writes, "silence greeted Mozart’s winking quotation of his own “Nozze di Figaro” during the final scene. It was an opera in-joke in search of an opera audience."
At the performance I attended, the audience giggled at the reference. Perhaps New Yorkers can't imagine that the city that attracted Schoenberg, Mann and Faulkner can have a subtle sense of humor.
Alex Lazo had a nice story in this morning's LA Times about the absence of housing supply in Southern California. One person he interviewed was frustrated because he could not find anything he wanted at $525,000. As he pointed out, he is a "middle-class" guy.
This underlines a problem with California. Even after the crash, large swaths of the state (not just Malibu) have expensive houses.
Let us think about what a middle-class household can afford. The median income for a family of four in California is about $70,000. Once upon a time (i.e., before around 2002), the "front-end" ratio for a mortgage borrower was supposed to be no more than 28 percent of gross income. The front-end ratio is the ratio of principal, interest, property taxes and insurance to gross income. If one assumes that a borrower can get a 30-year mortgage at a 3.75% rate, pays 1.1% of property value in property taxes, and an insurance premium of 0.2% per year, AND assumes that the borrower has a 20 percent down payment, a household earning $70,000 per year can afford a $250,000 house. So the value of a "middle-class" house is $250K. This is a long way from $525,000.
Recent news reports suggest current borrowers are still having some difficulties getting a HARP 2.0 refinancing. This is too bad, because HARP 2.0 can potentially help a lot in getting many people out from under their troubles.
Consider someone who is 20 percent underwater on her house. If she moves from a six percent loan to a 3.5 percent loan (today's rate on Zillow), and if house prices go up by only one percent per year (something that I think likely will happen in most markets, for reasons I stated a week or so ago) and if the borrower keeps her payment constant, she will be right-side-up in around four years. If she remains in the six percent mortgage, however, she won't be right-side up for about nine years.
Note the HARP 2.0 is not rewarding "bad behavior." It is program for people who are current on their payments but who are also upside down. Many people can look at four years and see a tunnel's end--I am not sure that is true about nine years.
Of course, refinancing will not solve the Vegas-Phoenix-Inland Empire problem, where many borrowers are 30 percent underwater and more. But for a whole lot of the country, HARP 2 could be a game changer.
I was listening to an industry type give a speech on the woes facing California, and heard him state that a "Stanford study" show that while 10 million people had migrated here since 1985, only 150,000 people more paid taxes. This made absolutely no sense to me, so when I got home, I did a little Googling, and found an ob-ed from Michael Boskin and John Cogan that said:
From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.
The 150,000 number made no sense to me, so I went to the IRS SOI tax stats page to see what was up. The data there go back to 1997, and in any event, I am not sure what year the authors mean by "mid-1980s."
So here are the data (download the spreadsheets and go to line 94 for 1997 and 108 for 2009)--from 1997 until 2009, the number of individual tax returns with taxable income in California fell from 10.8 million to 10.3 million, suggesting that California was a land attracting non-taxpayers. But the number of individual tax returns with taxable income nationally fell from 98.5 million in 1997 to 91.0 million in 2009, or by more in percentage terms than California. The reasons for these declines are the rise of the Earned Income Tax Credit (which is good) and a reduction in incomes at the bottom of the income distribution (which is bad).
I do need to figure out where to get data from the middle 1980s, but going back to the late 90s seems more relevant at this point. In any event, context matters.
