Daylight Robbery

In the Valley we are used to large sums of money being made and lost seemingly overnight, so it takes quite a lot to make us sit up and take notice. However, when one bloke manages to burn through $50 billion, even we have to pay attention and doff our caps.

You really have to be pretty impressed with what Madoff (pronounced "made off", as in "made off with a huge wad of other people's money") accomplished. I mean, do you know how hard he, personally, had to work to dump that much? To put this in context, at the end of 2007, the Bill and Melinda Gates Foundation had investments worth around $38 billion. In order to house the necessary staff to handle things like investment management and funds disbursement, these guys are building a downtown Seattle campus on 12 acre lot. Big. Scale. Stuff.

Contrast this with Madoff. Seems this scam operation was run out of one floor of Madoff's New York office building, underneath the two floors dedicated to his other business of market trading. The same article goes on to say that the auditor who had been signing off the accounts is already under investigation. This highly complex task was, it seems, entrusted to an operation comprising one partner, who is in his seventies and living in Florida, and who employs one accountant and a secretary. That's it. Please contrast this with the audit we are currently doing at my company, a Silicon Valley start-up, where we've had a team of 4 variously on site for weeks at a time for a business that's almost 4 orders of magnitude smaller.

While public companies have to live under the broad and heavy yoke of Sarbanes Oxley, the fact that a $50 billion hedge fund can get away instead with using the sort of operation that would struggle to handle the accounts of your local sweet shop, it is clear that something is fundamentally broken at the base of the regulatory framework.

This jerk gets $50 billion free-and-clear to play with while real companies, producing real products (albeit largely crappy ones) like GM and Chrysler, can't even get a civil word, let alone a hand-out, from the very legislators that allowed this whole situation to fester for years unchecked? Fire the bloody lot of them, country-wide, and start again. And by "them" I mean Congress.

Madoff is a complete and utter scam artist, running an obviously illegal pyramid scheme. Congress is a collection of weak and venal politicians who can see no further than their next boondoggle, narrow self-interest,special interest payoff or electoral contest. Against them, it's hard not to prefer Madoff, minor failings like iceberg-scale embezzlement aside.

Picture Competition

So just what is going on in this picture, and why should anyone care?

Answer in a couple of days.

Abandonment

Just a plug for a fascinating site: Artificial Owl. It's a pictorial record of abandoned man-made items or locations, anything from aeroplanes to atolls.

There's a great selection of aircraft pictures, including the one above which just begs the question of how on earth things ended up this way? Either it was a very unfortunate (or highly skilled) landing, or just an amazing construction project by someone with a bizarre sense of humor.

Definitely worth going through the Chernobyl images showing the abandoned town of Prypiat, stuck, unfortunately for it and it's residents, on the doorstep of the reactor site, and deserted now for 22 years.

Where To Live In Silicon Valley?

People moving into Silicon Valley are faced with a tricky initial choice: where-o-where should we hang our hats?

In common with any large conurbation, there are a myriad array of discrete towns or communities to choose from, and, matching this, an equally large set of criteria to be applied if you are having to decide where to live. Are the schools more important than, say, the anticipated commute? Is access to a park a key requirement? Are there three Starbuck's within spitting distance? (Actually, the last one barely warrants even a passing thought since that rule would easily be met even if you were moving to the wilds of Alaska.)

The San Jose Mercury News today offered another way of looking at this: how many poor people do you want to encounter, on average, when strolling over for your daily caffeine fix? In the print edition, the Mercury News looks at poverty levels around the Valley using data that was derived from the 05-07 U.S. census.

In the South Bay, the only area mapped in this way, San Jose comes in at last place with 10.2% of the population below the poverty level. At the other end of the scale, Los Altos tops out with a quite remarkable 2.1%. (And that's remarkable because I have no idea where in Los Altos that 2.1% are living, given the prevailing property prices, even in today's market. Must be in the garden sheds of the large and plush grounds surrounding the mansions in the hills.)

Starting from Palo Alto in the north and going down to Gilroy in the south, three cities in Santa Clara County show up as having less than 5% of the population below the poverty line: Los Altos, Los Gatos and Saratoga. On the other side of the ledger, three cities are at 9% or higher: Gilroy, Santa Clara and San Jose.

Does any of this really say much about the quality of daily life for residents in these cities? Not to me, but in all fairness we are hardly the standard issue nuclear family & so may not be the best of judges. Personally, I either like to live a long way from anyone - pretty much as we do now - or in the middle of a city larger than any of those listed above; San Francisco, for example, would fit the bill quite nicely. And as they say in real estate, the three most important factors to assess with any property purchase are location, location and location. After all, the wrong sort of neighbours in Los Altos can likely be just as annoying as those you might find in San Jose; they might just drive a nicer car, is all.

Busy Week

Not sure how much posting will get done this week as Silicon Valley heads into the final stretch before the Christmas break. We still have a lot of business to close, and less & less time now in which to do it.

Therefore, "here's a test card and some music" as they used to say on the BBC when there was no programming on (remember those days?) in order to keep you occupied in the meantime.

OK, then ... pelicans flying over some flamingos, all delivered in absolute silence. Happy now?

Deliverance Cottage

This cabin is in some woods close to our house. Story goes that some bloke bought the parcel of land promising to build him & his missus a cabin getaway. However, once he proudly showed her the early results of his handiwork she threw a bit of a wobbly, quite understandably vowing never to go near the place.

I'll have to go back and capture it on a nice misty morning and maybe try one or two other things because the above doesn't do the whole spookiness/rustic hovel thing proper justice. (And only using a Canon point-and-shoot, just before sunset and in a densely wooded area didn't help much either.)

Handy, though, to have an additional bolt hole in these challenging times, even allowing for the fact that there's no vehiclular access, just an old logging path. It's also worth bearing in mind that the water supply seems to be drawn from a spring that only runs towards the end of the winter and any electricity you may feel in need of is via a very old and now rusted portable generator. Oh, and he never quite got round to putting any windows in, either.

Cue the banjos ....

You're Doing It Wrong

Do yourself a favour and look at the rest of this gallery. I find it very cheering to see just how badly others manage to screw up!

Thank you, Jalopnik, I needed a good laugh in these most trying of times.

Bank Of The Mafia

According to the BBC, luckless business owners in Italy are having to seek alternate sources of funding in order to keep going in these credit-constrained days. In short, when Banko di Highstreet fails you, turn instead to the Banko di Cosa Nostra.

In the radio version of the story, the reporter cited the case of a business owner who went to his local bank to request a loan of 50,000 Euros in order to continue to operate. The bank told him it would take 5 to 6 months to gain approval, terms that if he could accept would of course mean that he would not need a loan in the first place. Instead, he went to the Mafia. Next day, someone showed up with 50,000 Euros in a black plastic bin liner, and he signed up for a very reasonable 4.5% interest rate.

Now you know what's coming next, right? This is all fine so long as you make the payments and hence keep those large, young men, in their nice suits and flash cars, all smiley and happy. Alas, he could not perform, repeatedly borrowing more and more to try and stay afloat until he had outgoings of 160,000 Euros per month just servicing the debts.

Unfortunately, the BBC didn't close this story out by saying what happened next but you can bet whatever it is you value highly that he didn't just declare bankruptcy and walk away into the Italian sunset. Indeed, I doubt he's walking anywhere at all, any time soon....

Right now banks might be a royal pain in the rear end, but at least it's not a terminal condition.

Valley Hillbillies

Thanks muchly to Jalopnik for this one but, as you can see, this part of California 'aint all Lambos and multi-million McMansions. However, seems on Black Friday even the coast-dwelling proletariat feels the need to go East and buy a bright, shiny new bauble to decorate their nests with. But how to transport it back home on Highway 17 afterwards? Hmm, tricky. Well, how about we just stick it on the back seat and rely on a single bungy cord to stop it either a) flying forwards and hitting us on the back of the head, or b) flying out the back to be smacked-into by whatever happens to be behind us at the time? Hell, yeah!

Just to be clear, Highway 17 is one of the worst roads in the Bay Rea, if not the entire state. It's windy, hilly, prone to very bad weather and almost always traffic clogged, being the main route between the coast and Silicon Valley. During the morning and evening commutes, it's not uncommon to come around a corner to find the two lanes of traffic at a dead stop, thereby generating a rash of rear-end accidents on an all-too-predictable schedule. It only takes one truck lumbering up the 5 mile-long hill towards the Summit to turn a two lane road into a one laner, with the added fun of people stuck behind said mobile-chicane trying kamikaze lane-changing maneuvers in order to try and overtake. "But what makes you such an expert?" you may ask. Simple. I drive it everyday.

From Bad To Worse

Not Many Customers This Month Then, George?

Fresh from the rumour mill, it seems that one Silicon Valley equipment manufacturer is predicting sales in one division will come in at 25% of what was originally predicted. Yes, you read that right, a 75% miss. Another rumour is that a major semiconductor manufacturer came within $20m of running out of cash, and that's in a business doing close to $5 billion world-wide on an annual basis. Meanwhile, companies across the globe are making cuts in both production capacity (semiconductors to name but one) and ongoing operating expenses as the calender 4Q plays out. (Oh, and as the big three U.S. auto makers head to Washington again to try for bailout round 2, GM is spreading the love to their dealer networks by allegedly refusing to make incentive payment unless they take more inventory ... which they can't anyway sell but it makes GM look, well, slightly less worse I suppose.)

In short, the January reporting season is going to be extremely ugly as retail companies give-up and fold now the Christmas bubble has popped, and industrial companies report the quarter in which they felt the worst impacts of the worldwide slowdown. And it is worth noting here that Wall Street today is only operating on the basis of reports reflecting the early signs of slowdown, the full economic impacts of which have yet to be fully felt.

2009 could yet be a record-breaking year, but not the good kind ....