Old video with Malcolm Gladwell

I found this great video with Malcolm where he discuss the notion of spaghetti sauce tastes - its very interlinked with Blink.

Visit from Google

We had a visitor in todays class, the Norwegian CEO of Google came to class and we had a discussion about how Google managed their international business. It was very very interesting and I asked a question about how they perceive a lot of the critisism that they have taken - foremost in the Swedish press - about their alleged cannibalization on news sources. I got an answer that said that the reason why they often are accused of that is because they often choose to link their news back to the original source. The example that Jan (the CEO of Google Norway) came up with, was that if VG (a Norwegian tabloid) write about some obscure occurrance in Northern Norway, then Google News often generates a lead to the original story, often depicted in a local newspaper. Hence, many of the smaller news providers around in Norway has increased the traffic to their web pages to their websites. I cannot judge if this is "fair" or "not fair", but I use Google News all the time, and I think its a great tool.

Breakthrough with Google

We have finally been able to get a break through with Google and it feels fantastic. Im heading out to get some food with Laura, Filipe and Rafa, and then Im heading home to Slemdal to finish off the Exhibit. Hopefully, Ill be able to finish off the hand-in in "Negotiations". Saw a documentary about Ebbe Carlsson on SVT yesterday - it was good.

The final count down

Its now friday night and tomorrrow - hopefully - we can start finish off the case on Google and start our collaboration on the new case in Management control systems. When I say "we" I mean the group.. well, it feels weird to soon end the program... now its off to bed.

Looking at Google with fresh eyes.

So, tomorrow is labour day here in Scandinavia, its approximately 00.50 in the night (and its officially labour day). I have now finished preparing for a case discussion tomorrow about Google, which is a very hard case to "crack" so tomorrow ill meet up with my group mates and discuss. Me and Laura also received some very good feedback on our hand-in with Apple.. which felt really nice. Soon off to bed.

Connect through e-mail

Its quite funny, sometimes i receive e-mail regarding this site, often from Asia and the Baltics about the MBA program here in Norway and about Copenhagen Business School.. Well, this is the first time i receive "commercial" email; this time it was about the top 50 applications for MBA students from Apple Inc and their iPhone. I dont own an iPhone and wont do so in the near future either - but, anyways, here is the link... Its now less than 2 months until the program is over. It feels funny and weird, and very nice.

Our solution

Well, Laura and I decided to post our "solution" to the Apple case (Apple Inc., 2008, 9-708-408, HBS) we had with Dr Mark Kriger.. The "solution" encompass models from Schein, Kriger (a developed co-alignment model), Malcolm Gladwell, and VRIO framework by Barney. We get the grades tomorrow, if its good then ill post it.. if not, well.. then please write a nice comment and you would make me and Laura very happy.

One thing that I find amazing is that so many people from the US are visiting my blog. I wonder why.. but its great.

As Kalle said earlier last week: "Turning Apple into a family business would mean a heck of a lot more Jobs"

Out of diaspora

I came back from Stockholm to Oslo, and that felt weird yesterday.. Only three and a half more weeks of actual classes - well, I have to verify that with someone in school, but I think that is the case. Its a lot of mixed emotions, of course.. but most of all, im so tired.. I can most definitely say that I nerver - never - expected the amount of work to gradually increase in this way that it has. Egil was up until five writing on the hand-in while we could sleep, respect to that.

Friday, thank you very much

Ok, so this insane week is coming to an end, and will be followed by yet another insane week of studies. Im currently working on a hand-in in corporate finance about dividend policy, and it will hopefully be done in a couple of hours. I havent had time to look through the news in several days (besides that i noticed that Apple did better than everyone thought). So, what happened today:

• Came to school, we had a corporate meeting
• The corporate meeting got cancelled
• I slept on a couple of office chairs, put together in a row in the class room (this was the second time i did this, this week - i slept for almost 45 minutes)
• After that; corporate finance

Now, all i want is to get this done, and send it off to Geir.

What a day for a daydream

Got out of bed at 7.20 today.. managed to check my email and had approximately 3 hours of sleep.. well, its most definitely not sufficient, which means that I am completely wasted at the moment. Im currently in class, going through a hedging strategy. I cannot say that I am actually contributing, sitting like a vegetable in the MBA-trenches..

Well, we are having a hand-in in Corporate Finance (about div. policy) and a hand-in in leadership on monday. Ill see if i can post the things that I and Laura did on the Apple case.

3:58 AM

... and its a new record for me.. it was a long long time ago since I studied like this.. now, im tired.. oh so tired. Cant wait to go to Stockholm this weekend.

I have found life

Well, the workload continues to increase at a weird, slow, ever increasing rate. It is truly weird how much you can actually take in and produce in 24 hours. I have finished listening to the Tipping Point by earlier mentioned Malcolm Gladwell, which was good but nowhere near Outliers or Blink (even though Outliers was more interesting). Tipping Point takes up concepts like word of mouth theory and social epidemics.. I incorporated that information in tomorrows presentation on Apple Inc., so well see how that goes. Im now going to listen to Snowball, the story about Warren Buffet. It will be interesting to see how easy it is to get through, its on over 30 CDs!

The tech sector

I am currently doing some number crunching of Apples numbers, going back as late as 1981. We are having a fairly new case on the retail tech giant which is very very interesting. I have been a very loud Mac supporter for several years (the only reason why I didnt get new Mac was because of compatability problems and price differentiation strategy that I of course didnt like).

WSJ also reports that Google managed to increase their sales.. which is impressive. Apparently, the growth of sales is stagnating.. well, there is something that wouldnt come as a surprise since we currently are in a horrible recession. Now, its off to bed.

At eleven!

Ok, so time is now running by like usual, and it feels quite "ok". I received a link from Laura with some interesting videos with Niall Ferguson. He has especially one speech about the current financial crisis which is interesting, but the take on the US election was quite dull (i only managed until 6.57 or something like that). You find the link here.

Extra, extra, read all about it!

I just read on Swedish Statistical Page SCB that the Swedish consumer prices only were 1,9% on a full year basis. This is very interesting since stabilizing the rate of inflation will cause the Swedish currency to be fairly non-volatile as well as well as keeping interest rates (and the cost of capital) low. On the other hand, it could be seen as a double edged sword since low inflation could turn into deflation and Sweden would turn into Japan. I dont think that this actually could happen, but.. you never know. It would be nice if the Swedish society could ride out the storm and increase savings and see a gradual adjustment of the balance sheets and keep the cost of interest down. Read the report from SCB here, from what I have read on Swedish newspapers the information is more or less only paraphrased from this material. It is also fair to say that SCB does not spend their money in the Excel graph department...

Reflection on times passed

Since my blog has been "down" for a couple of days - due to easter and passover, I feel I have to comment on the recent events in the world economy that might affect all of us. Before easter, we saw a G20 meeting in London where rioters attacked a couple of bank offices and one person died. I guess this was very sad mostly because lives where lost and the fact that grown up people shouldnt smash windows that does not belong to them. Anyway, another issue, far more important than these two issues was the fact that no real steps were taken to tackle the the ongoing financial crisis (read more here from Brookings institute). Of course, we heard a lot of talk but no official plans were laid out that stipulated collaborative action against the ongoing lack of liquidity, demand and financial turmoil (even though some 750 bn USD where going to be allocated to the IMF - read the official statement here). I recently read it through, and it has some nice plans and words, not much else.

Some might say "well, they met, a new Nato chief was elected and all was good.. so we are good, right?". Well, no.. not really in my opinion. What we might see is that a few states (such as the US) are taking huge measures to counter the growing resession (I no longer think we are seeing a DEpression). These countries lower their interest rates and increase their quantitative easing (i.e. print more money) and buy bonds. If only a handful of states does this and if not everyone is on the wagon, we might see drainage from these progressive countries, and the effects of increased liquidity is diminished and we remain in a state similar to status quo. It is therefore absolutely vital that the G20 now collaborate and strike together and fast towards the evil of less liquidity. This reasoning is in line with some kind of Keynes theory, who had a thesis that more or less said (this is a great article):
"When times are good, save. When times are bad, spend"
...and this usually works fine - if you are a tightly knit and entirely closed economy with little or no leakages. The last time I took a look at the world economy and the worlds financial markets, it was like an imprenetable global web of nodes, interactions and trades. Could therefore one single actor, like the US government carry the burdon of all our greed and lust for cash? No, we all have to pitch in.

The reasoning is therefore that we all have to spend now, and spend like crazy to scare of the demons called recession, deflation and job scarcity. Hopefully we will see increased efficiency, products that the public actually want to buy and better and more efficient financial markets, where we are not reliant on a few to provide us with so much (I think of big banks). We simply have to lower the systemic risk, i.e. the statement "too big to fail" and face the fact that nothing in the future can be too big to fail and trying to get to that position should be punished, both by regulatory measures and by the stock market. How, in practice, this should happen - i do not know.

Even though its easy to think "lack of liquid markets does not affect me", it does. It is the common man that pays - not high flying CEOs of multinational corporations.

Easter break is now over...

... and I am heading back to the salt mine (even though passover continues)... oops, sorry, I meant to write school. Over the last week and a half, I have been in Stockholm and relaxed.. It has been an absolute treat even though I found it hard to wind down after the massive work load that we had over the last three weeks of school. We also received some grades in Organizational Design, where we wrote a theoretical paper about IBM, which was very well received. Hmmm, what am I going to do today? Well, might go to IKEA and get a new duvet and a pillow. And then Im off to Oslo again.. for the last "leg" of the MBA program. I have to say that it feels quite weird to soon be ready for the job market again, and see this journey come to an end.. after working towards a goal for several years.. and then.. see it through, it feels weird. Well, thats it.

Some reading that I have gone through over the last 10 days:

• Krugman (Article 1, Article 2)
• The Economist (Article 1, Aticle 2)
• Harvard Business Review (Article 1, Article 2)
• HBR Classic! (Must read)

Finally.

Finally, it is now officially easter/passover depending on your choice of religion. I am also free from school which feels absolutely fantastic. I am going to leave for Stockholm and I am definitely not going to do anythingi that isnt necessary.. I feel that I need a hot shower, a couple of beers and some nice chicken salad, prepared with some light sauce.

I have also been online and tried to read up on Gladwell and the New Yorker, seems like a very read-worthy piece of material.. Along with the Economist and HBR i guess. I have found a great article written by David Remnick, the editor of chief of the New Yorker... It is called "Kid Dynamite Blows Up", a very interesting piece on Mike Tyson and the world which he saw when he got out of jail back in 1997. Very interesting!

Enjoy the video!

Half-way through the week

I have now managed to get some really heavy assignment done.. Its around two o clock in the night.. And Im off to bed. I have listened to an audiobook called Blink by Malcolm Gladwell.. Im listening to Outliers as I go to school every morning. I like his voice, and its interesting to listen to very specific topics that he has chosen. I am not familiar with the New Yorker Magazine, other than I remember a guy at Brandeis who constantly read it.. Well, Gladwell is good. And Im off to bed.. soon holidays.

Not again..

Well, its now 2.59 and Im off to bed.. Im tired, but im looking forward to the holidays - they are soon coming up.. im tired.

Let's go to Holland

Well, it is now 2.35 on sunday evening and Im now shutting down my shop for the day. I have spent the last .. what is it.. 6 hours with writing an econ paper on Chile's economy. My findings so far:

• Debt/GDP=4%!!! (insanely low, the same ratio for the US is 70%)
• Chile currently produces more than 1/3 of the world total output of copper
• Chile currently has a Sovereign Wealth Fund, disconnected to the political governance, with a total net worth of 12% of national GDP

My conclusion: Could we see some dutch disease? Im not sure, but it's always a risk with countries rich of natural resources. Now, Im off to bed. It also looks like Rick Wagoner is being forced away from GM, not one minute too soon.

Hectic days..

Unfortunately, I have not really had time to sit down and ponder on my blog for the last couple of days. It has simply been to much in school, where the average sleep per day reaches somewhere around 4-5 hours. I guess this has something to do with the fact that I did take some actual time off when I was in Sweden two weeks ago, but.. well, you have to be free from school/work sometimes. What else, in Sweden, a large debate about remuneration levels might cause on the main political figures in Sweden to leave her position and in the "real" world Obama released his budget.

I think that there is some kind of hidden agenda here from "Big Ben" (a nick name i dont really like) and that is to position the US where they will see increased inflation. This is of course a scenario that the main lenders do NOT want, what would happen if China suddenly realized that their (huge) US assets suddenly started shrinking by 10-15% per cen per annum due to inflation? Then you might say that the investments that they made, the boosting of the US currency to keep up Chinese exports, was a bad bad bet. To me, it seems as though the Chinese are going to pay for their "mistake" or tampering with the market... It seems as though this is something that everyone knows, but do not want to talk about. Inlfation in USD is - to me - the remedy here, whether we like it or not. The Euro-zone? Well, deflation here we come!

Paul Krugman has written a piece about the US banks which is an interesting read. He also talks about the Swedish rescue plan in the beginning of the 1990's which I experiences first hand - even though I was a child. I like that Krugman supposes that the level of analytical brain power is somewhat limited in the US banks. On one hand, can someone who is the root of the problem, fix it? I think it has more to about culture than actual possibility to see the problem.. and from my limited experience, I find that a much harder issue to deal with than competence. (Related article: Obama on economic recovery)

Soon 30 individual hits from the US

Since I installed the "Flag-meter" on my page, it seems as if I have received nearly 30 individual hits from the US. I think this is absolutely amazing. I have not really had a clue about the amount of hits that I have received, but I could never imagine that it was this many! (and I am of course very very happy that people find my blog)

Well, since this seems to be case, I wonder what the US readers think of my "analysis" of the US election. See the posting here (Blog Retrospective: The American Election). It would be excellent to hear what some natives think about the perception that you can get through electronic channels.

Tonight Im at home working on a hand-in with Filipe and the other group members on Skype. Im pretty sure it will be a long long night.

Our demand for financial news.

One thing that I find very interesting with the ongoing financial crisis is the seemingly constant, and increaseing, demand for news concerning the financial "melt down". Every day we are bombarded with the "newest updates" on what has happened, and certainly so here in the Scandi-area. What I get frustrated about is the lack of actual analysis that comes from different Scandi newspapers, such as Swedish DN and SvD.

Let me give you a very concrete example of irrational exuberance that strikes news desks at this hour: Nothing is happening, market forces develop over time - the only thing we can do is wait and hope that large governmental offices do what they must to salvage the financial system (so we can pay our bills and transfer money in a safe and sound way). Suddenly, the financial crisis seems uninteresting and highly complicated. It is just too much "noise" in the engine to actully understand - hence; we write about bonuses and the system about variable pay. Our demand for news - in any direction - causes the suppliers (journalists and traditional media) to write about fund managers and managers who have received substantial bonuses, and that this is horrible, wrong and nearly punishable by death. Well, lets tie someone to the cross and call an angry mob. I am not so sure that we are doing a good thing by denying good people a variable pay. If payment systems are developed in a good way, that are tied to a sound strategy and you manage to control your employees in a good manner (through a balanced scorecard of some sort), then where is the corporate risk of excessive risk taking? and value damaging behavior?

The root of this problem has to be somewhere else. If Lehman Brother's was a fantastic and sound franchise, then why did it tank? Didn't they have a quant department themselves that could look at the probable risk? or was there a culture of greed and lust for excessive risk - that no one wanted to talk about - that was the cause of failure? If this was a bet, I would place mine on the latter. And this, analyzing data, going back and forth and talking to people, and analyzing variable pay agreement is hard, difficult to get ahold of and tiresome. And in my opinion, it does not make good news.

Hank Greenberg was the CEO of AIG for almost 40 years and built AIG into one of the most impressive insurance franchises in the world. Now, after some clumsy management - the corporation is dead (See the clip on the top of this post). Interesting to see that the financial stimulus plan for the EU is going absolutely nowhere and it is quite a sight to look at Lehman's homepage.. talk about meltdown with big "M". (My classmate Anja sent me this article about AIG - interesting read).

Here are some other very interesting movie-clips with Hank Greenberg (Clip 1, Clip 2)

Saturday night - 02:21

I am now off to bed after sitting with a nice hand-in in corporate finance about leasing. I have never - ever - worked with leasing at my old jobs.. I remember in school that it was one of my least favourite things to do calculations about.. Anyway, it has been a not so memorable evening. I am still very surprised by the amount of people coming to my blog from outside Scandinavia, six hits from the US in two days. Really cool.

Lost in the financial supermarket

It seems as if we have seen an interesting turn of events this week, Bernanke has green-lighted that the FED will buy bonds for USD 300 million, thereby increasing the amount of money in the US economy. Im sure that this will mean inflation, and with inflation .. lower debt in terms of purhcasing power (since salaries will increase).. and slowly erode the Debt/Equity ratio that many corporations and households see.

In Europe, we cannot see this quick response since we have to coordinate everything.. hope we can see some response, since some reports say that the Euro-zone is showing signs of Deflation, a horrible scenario that possibly could toss the EU into a zombie-like Japanesque state - Who would want that?

So, what does this stimulus package mean.. even though I actually am a trained economist, in some sense, i believe that the stimulus is good in the short term. Why you may ask? Well, the current economic system in both the EU and the US is in absolute shambles, it was on a brink of collapse. By this is I mean that we were inches away from seeing our ordinary debit cards malfunctioning, unable to pay bills through information systems and of course not being able to fund anything without 100% cash. This scenario is now, slowly being averted by taking out new loans (debt) and printing more money (a.k.a. Quantitaive measures). Of course, we are having huge debt/equity ratios, that is we are curing the pain with more future pain, but at the same time bringing out the old inflation monster from the closet and letting it eat up pensions, salaries and debt. The debt will also be a future problem or pain to cure, once markets start functioning again.. (hopefully soon). What do I mean when I say functioning? A slow recovery toward real positive GDP growth in what used to known as the "developed" world.

I therefore highlight some of the issues that I find most interesting when comparing the EU and the US:
US: Excellent education system - the best in the world, homogenous market - same language, willingness to move
EU: Larger than the US market, culturally diverse - could pose as both a threat and a possible gold mine for coming up with new ideas, becoming more integrated.

I am becoming more and more positive towards the possible signs of a slow and painful recovery, but... well, I would want to see some more hard evidence. The auto manufacturers problems are not over (Even though German VW managed to get a profit for 2008).

In school, we have started a new course that is called "Management Control System" with a professor named Norman Sheehan. So far, it looks absolutely excellent... In the class, we had some lecturing together with a couple of shorter cases that we "solved" in class. Very rewarding style of teaching.

More great material from Frontline

A new program from Frontline is coming up which seems to be great. It is called "Ten trillion and counting" and will revolve around what the US economy needs to do in order to change the amount of debt that they have. It premiers 2009.03.24 and I will definetly watch.

For those who are interested, I found this great explanation of what a CDO is on the Portfolio website. I have long thought about doing a graphical-layman-explanation of what a C.D.O is, but I have not just had the time.. Anyway.. here it is, and its much prettier than anything that I would have been able to do in Powerpoint. (Portfolio Website, C.D.O explanation)

Bernanke @ CBS 60 minutes

Here are three links to the interview with Ben Bernanke, that aired on CBS 2009.03.15.

Part 1/3, Part 2/3, Part 3/3

Variable is not variable

I have had a wonderful week in Stockholm, but tomorrow evening in going back to Oslo for the fourth leg of the MBA. A couple of my friends have also gotten back from Mannheim which will be very interesting to hear about. Well, what have happened over the last week? Well, the Nikkei index in Japan hit a 26 year low. What is going to happen with the Japanese economy? their two-tier work force seems to be very split, where the "low-class-easy-to-get-rid-off" part seems to be hit big by a negative trade balance and struggling auto-manufacturers.

In Sweden, the international bank SEB raised the fixed portion of the salary of the top management and lowered their variable part (and then reversed the salary again!). Well, to me this signals one thing: The variable part was not variable - and seen as given and absolute. Variable payment, such as stock options, is not bad - when its used in the correct way: as an incentive for management to take actions and responsibility so that the corporation grows in a manner that is best suited for their owners. This could be done in loads of ways, such as weighing the stock towards an index and look at the perfomance vis-a-vis other bank stocks in Northern Europe... for example and see if SEB manages to beat the competition. There could be loads of ways to see this through, but.. well, all that their current actions signals seems to be a corporation out of touch and with incredibly stupid media advisors. Horrible.

First spring vacation..

I am currently in Stockholm and I am definitely enjoying myself. It feels absolutely fantastic to get some time off. Traveling back sunday!

03:11

... and Im off to bed.

02:56

... and I am still awake, working..

02:21

Well, its in the middle of the night. Tomorrow we finish up our third leg of the MBA.. Im so grateful cause im so tired.

Very busy

We have been very very busy over the last couple of days and two weeks. I have, together with the group, handed in several papers over the last couple of days.. I don't really know how I feel, it feels like im back to last autumn where we sat until very late and reviewed papers on strategy and IT. Im currently listening to a Pet Shop Boys version of Dusty Springfield's "In Private" - its good, and Im tired - oh so tired. (At the same time, rumours on Volvo Cars say that Chinese Geely might buy them, and AIG made it to Guniess Book of World Records witht highest loss ever recorded in mankind - now thats quality management)

Consumer confidence in Scandinavia

It now seems that a lot of data is coming in from how Q4 2008 was. It seems as if the consumer confidence has hit a record low (Bloomberg). At the same time, the Swedish chief of the central bank, Stefan Ingves, assume that the Swedish economy will see an increase in GDP in the beginning of 2010 (DI).

I must say that I see a large differences between how the consumers feel in the EU and Scandi. Some issues that I believe will impact the Swedish economy in 2009 - which I believe will force the Swedish economy to see a long recession (unfortunately).

(1) Risk of inflation - the low interest rate allows consumers to borrow more on future income. More monetary funds are inserted in the economic system. If (more a question of when) the interest increases, in order to cap the price increases and lower the demand for money, the central bank will increase interest rates rather rapidly (to prevent what happened in 2004, 2005 and 2006).
(2) Consumer gearing - A variable that is very much interrelated with (1). When the interest rate goes up, and the demand for return-for-risk goes up, the Swedish consumers will have to cut down their consumption to manage to repay their coupon payments.
(3) Jobb losses in the service sector - Sweden has not yet seen large job losses in the same way as the US. Of course, the Swedish economy is in a better shape than that of the US; but the economy will be affected. Old business models will die (SAAB for example) which will force down the demand for labor, and in the end - services.

(This situaiton would mean a stagflation) Who are then the winners? The people who are sitting on stablie assets (whichever these are, Swedish krona not included) and people who can afford to pay their debt coupons! These will probably see their large debt positions get eaten up by inflation and sail into the future, with less debt and smaller debt burdens for studies. The loosers? everyone else and people who will get squeezed out from the housing sector.

It's not over, until it is over - well, it IS over

It now seems as though the Swedish car manufacturer SAAB is finally heading into a restructuring phase - very similar to what in the US is called Chapter 11. The Swedish government is currently arguing a couple of loans. The public perception of the upper management of SAAB is in my opinion something to laugh about. The mismanaged Swedish "world famous SAAB" is soon dead.

Read a good article about it here - in Swedish.

Witness to a game-changer

This is the finest piece of article that I have read so far about the financial melt-down, it is called "Wall Street lays another easter egg" by Niall Ferguson.

Well, no-one who hasnt been living under a rock since september 2008 can say that they have not been shaken up by the things around you. Information coming from the most inner sanctum of the worl economy says that we have been overspending, over-leveaging and buying stuff that we simply havent had collateral for. Well, this statement can definitly been said about the U.S. A normal family, living in the suburbs with "normal" jobs.. of course you take out yet anohter mortgage in order to send your kids to college/b-school/unvisity (whatever!) but ordinary consumption? Well, this has certainly been the case, but what about the Nordic countries.

Well, when I say Nordic I should say Scandinavia - see what happened to Iceland. Talk about emulating the behavior of American consumers and doubling that. What I get so confused about is that no-one stopped for a minute and asked themselves "where does this newly found wealth come from?". Well, certainly not from organic growth, taking away the effects of gearing - the US economy has only grown 1 % per annum during the last administration (according to Krugman) and this can certainly be said about Iceland too. Well, a burger at one of the ordinary restaurants in Reykavik, that will be SEK 200. What?! What is in this burger, Iceland-pony?

I cannot say that I feel any pain for the Icelandic people - what I see is that I see a total game-changer, a new order that we cannot yet define. And this new way of capitalism, is in the end going to affect all of us. In what way then? Well, lower access to capital - a focus on organic growth and less financial alchemy. Many of the hedge funds operating in Scandinavia has had this as their primer objective, pay out the cash - give this "wealth" to the owners since the owners have better use for it than the company, since they are only "sitting on it". Well, now - in retrospect, how wrong they were. However, less access to capital will definitely change the P/E market in Scandinavia. Less access to capital will mean that it will be harder to find positive NPVs out there, skill of running businesses and finding opportunities will definitely become harder and more scarce. The cost of capital is going up and so is the demand for returns. As we live with the forces of market capitalism, we cannot change the way people think about life, wealth and jobs (and I dont think it is wise to re-define the modern world).

However, what I believe this financial melt-down will do is that we in a couple of years will see new domains of power emerge from the ashes of those that once were. Should the Swedish government allow SAAB to go into bankruptcy? Of course (in hindsight, the Swedish ship yards?). Is there any value in retaining something that needs financial medicine every quarter? Of course not. From the ashes of the old corporations, new one will rise. Profitable businesses, and those companies that will survive this year of judgement will re-emerge as the powerhouses of tomorrow. What do I base this on? Well, I base this on the fact that the latter half of the last century was one of the most prominent times of the history of humanity. Krugman derives the wealth from the fact that we had a different game-changer back then, the 2nd world war. I disagree (even though my access to facts is limited), I believe that what we saw back then - disregarding the cold war - was a new way of comradery, the construction of the EU, the emergence of new technologies and a commitment of consumption that touched every soul in the "western world".

This may sound naive, but what I hope is that the rest of world, eventually will get on the wagon and see the potential in disruption. After all, in the old testament, g#d found it appropriate to rest on the 7th day - and I think we just have to understand that so will consumption during 2009, either if its financed with debt or with equity since the stakes of our future foundation of wealth are so high.

To sum up what it is i mean with this posting: In 10 years we will see that the demand for goods and services will be rising and in the long run we are all dead. This also means that a lot of old - earlier functioning - business models will die.

(Good links on this topic: Krugman 1, Krugman 2, Becker-Posner Blog, Roubini 1, Ferguson 1, Ferguson 2, Roubini and Mishkin on Charlie Rose, Washington Post)

Murder on the financial dance floor

I found a couple of articles that highlights the financial distress in the UAE. It seems as if a lot of expats are seeing a really though time paying for their debt, and if they don't? well, then they will end up in jail.

What is the evidence of this? well, apparently.. when the expats leave Dubai (according to some statistics, 1 500 expats leave the city every day) they tend to leave their car (luxury/standard) vehicle in the long-term parking lot outside the airport. The police then auction off the cars on a montly basis. When will the crisis end? Not soon.(NY Times, The Financial Times)

As if these numbers aren't scare, the officials in Dubai denied an Israeli tennis player access to their annual ladies tennis tournament. Well, now that is a sign of really bad sports. (NY Times)

Link from US PBS

I recently saw this great great program dealing with the financial crisis on US PBS. Its made by Frontline and is called "Inside the meltdown". Have a look and watch the show. Great production!

Interesting article from Krugman

Paul Krugman published this fascinating article in the NY Times. It is very very interesting and gives you a very sharp analysis of how the worlds largest economy currently is functioning. Hope this mess ends soon.

The coldest winter in 20 years

It seems as though this winter is the coldest winter in 20 years here in Norway.. I have therefore bought winter shoes as well as a new "parka-coat". I am very happy because the sale has started which meant that i got a good price.. So, bring on the cold! Im finally prepared.

I have also decided that I will go to Mannheim Business School to study some international marketing which Dr Sabine Keuster is teaching. It seems to a very interesting and everthing seems be in order for my participation.

Kalle also sent me a link with a great song; "sex on fire" by Kings of Leon, which is an awesome song.

Week coming to an end

This week has so far been very hectic and then im not counting the birthday. It has been a lot of school work and hand ins for a subject called "Value Based Decision Making" which more or less comprise of micro, game theory and quantitative valuation techniques. It is very interesting, and this week we built a simulation model in Excel. I do not know how well our team performed with the task, but I do have a positive gut feeling.

What else, yeah - tonight im off to a bar in Oslo city and tomorrow im going to go look at some stores for a paper im going to write about service marketing. I also slept more than 9 hours this night, which was a true blessing.

New class in corporate finance

On my birthday, we now started the new class in corporate finance. We are now going through the theorem by Modigliani and Miller. I have of course seen these propositions before, and if feels like I have worked with them a lot.. its just, I cant kick the fact that I still find the theory very very interesting. It also feels great to get a re-fresher in regards to the theory.. As I write, it seems like the world is "drowning" in rescue packages.

My birthday is today

... and the economic gloom continues and stocks can always loose an additional 50 %. Cheers!

Horrible news from the US

Apparently, the unemployment stats from the US are grim, in January alone they lost a total of 598 000 jobs in the US.. confirming the largest economical contraction in decades. When it will end? not tomorrow, thats one thing for sure (NY Times).

Great marketing article

I recently read a great service marketing article called "Marketing intangible products and product intangibles" by Theodore Levitt. It was published in the Harvard Business Review in 1981!

The basics in his article stems from the fact that all companies are service producers - which is a statement that many can sign off on (Honda doesnt produce cars, they produce units that enable travel?!??). Well, this is sort of the core of the article, that what makes marketing different is whether the output is intangible or tangible - here the argumentation stops (a car, is a car = tangible). And this causes problems for marketing... more on this topic later.

Case on Starbucks

We are currently reading a case on a former employer of mine, Starbucks. I used to work at Starbucks when I was 19 - which is now more or less 10 years ago. I remember it quite well. I worked at the cafe close to Liverpool St Station in London, not Old Broad Street - the other one.

Well, now Starbucks are closing several stores and selling their newly purchased corporate Jet. Well, what can you say.. a bit irrational exuberance from Mr Howard Schultz perhaps?

- When will this worldwide corporate melt down end? Now?

Two excellent quotes

Yesterday, Öystein Fjeldstad quoted this line:
"You don't have to have been a horse to be a good jockey"

- Arrigo Sacchi

Another great quote - for the same price...
"Public opinion is no substitute for thought"

- Warren Buffett

Grading my Dell.

I have now used my Dell for a couple of hours and here is what i think about it. The computer is a Dell Inspiron 1525.

• Screen: 5/5 (great, good view and clear)
• Overall size of computer: 3/5 (too big)
• Weight: 3/5 (see above)
• Price: 5/5
• Speed and storage: 4/5

Overall, a good purchase.. i think, but dont use it for work/travel.. its way to big for that.

Sunday evening.

Well, I had a great time in Stockholm. Managed to pick up my Dell computer which is very fast.. Its quite big though, which is not good... but then.. I got what I paid for. I didnt whish to have a very nice and small computer, because of the price tag.. but as for now.. it strikes me as a good computer for the purpose of listening to music and watching media (pictures and movies). I also saw a movie this weekend called "city of ember" which also stroke me as good.

Well, lets see.. on the agenda for the week is a hand-in in value based decision making and some articles for tomorrows class. Ill better go through them asap. In the news.. Ingemar Johansson - former heavy weight champion of the world - has now passed away. I found this compilation of fights on youtube, with a horrible version of the Swedish national anthem in the background. Unfortunately Ingemar spent his last years in life battling the damages that he received during his fighting years, yet another reason to ban universal health care... why should the health care system take care of people that deliberatly interact in a sport where they receive punches to the head? anyone? how do you cope with this issue? Hard nut to crack (Washington Post, Int'nl Herald Tribune, Times Online)