Monday, May 25, 2009

Productivity Schmoductivity

You know how politicians love to talk about how the US worker is the most productive in the world?

That's based on GDP / hours worked.

So the US Worker has produced more GDP per hour than any other country by a safe margin.
http://www.nationmaster.com/graph/eco_ove_pro_ppp-economy-overall-productivity-ppp
(Ok. Except for Luxemberg. Actually, Ireland has been pretty high too lately. Both are tax havens, so a lot of foreign companies with virtually no workers dump $$$ there, which distorts the "productivity" number.)

US productivity kept growing and growing. Greenspan attributed it to technology - improving worker efficiency.

I think the truth is, a lot of it was the growth of the Financial sector. In 1973 it made up 16% of Corporate profits.
The recent peak put it at 30%. I think it made up something like nearly 20% of GDP at one point (I can't find the exact number).

So, with Financials of all sorts (banks, insurance, investment banks, brokers) all in the toilet, what happens to that big clump of GDP?
It was a fantasy. And Financial "productivity" was absurdly high. Very few employees per $ earned.
So with that collapse, productivity will go way down. Republicans are already saying it's because people aren't working as hard and they're going on welfare and all that. But it's the banks. (And housing distorted things too - towards the end. Though housing is more labor intensive, of course).

PKrugman about the growth of Financials way back in '07. The huge strength on growth and the "miracle of the American Worker" was basically propaganda.

Because so many hours (e.g. Wal*Mart) are off the books and US workers put in so many extra hours that the Bureau of Labor statistics don't record (illegal alien hours add to GDP but don't count in the BLS Productivity number).

On top of that, high medical costs actually add to the productivity number! Hospital GDP is still GDP!

Productivity-wise, we're closer to France than anyone wants to admit.

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Wednesday, May 13, 2009

Solar Sucks

Everyone knows photovoltaic solar panels suck. They're inefficient, expensive and impractical. They indirectly increase green house gases and energy usage by diverting money that should go to insulation and other conservation improvements.
All for a teeny tiny teeny little few watts.

I had hope for solar water heating though. It is much more efficient than photovoltaic solar electricty. But...

Turns out even solar hot water sucks. From all the propaganda and junk about getting water up to 160F or higher (even here - Portland fall days ), I thought maybe solar "thermal" (that's what they call it, Solar Thermal) would be a reasonable idea.

Nope.

It costs about $2100 to get a panel (which weighs 200 lbs and measures 4x10') that will produce 10,000 btu on a cloudy day (40,000 on a nice summer warm summer day).
10,000 BTU

For reference, in gas terms, 100,000 BTU = 1 Therm.
NW Nat sells one therm of natural gas for $1.29

So TEN DAYS (regular portland cloudy days) of production from a $10,000 of panels would produce about $1.29 of equivalent gas water heating.
Or about $50/year, rounding up a little for furnace inefficiency. Wow. $50/10,000 = half a percent return. Actually not even that. The panels don't last forever...

Some different calculations get it up to 2%. Still sucks. After incentives? Maybe.
The whole thing just sucks.
And, I haven't even figured in the cost of the storage tank & heat exchanger system and other plumbing.

It's mind boggling that PV is so popular and even lower efficiency.

Of course, energy costs could go up. Also, that 3-4% return isn't real because (at best) that solar thermal system will last 30 years.
Your roof won't last that long. Also maintenance costs will eat into it. You're never going to recoup your costs anything like your costs.

Sucks.
I was really hopeful we could use Solar to reduce energy expenses. Insulation gives far far better return (even wall insulation).

ALL THAT SAID: With Federal Credits and Energy Trust money, maybe you can make a profit on the solar Thermal systems.
50% BETC (or RETC) tax credit - uncapped now, I think - even for residential.
About 15% from the Energy Trust straight cash incentive (taxed)
+30% Federal Tax credit.
You've got enough of your costs covered so you will eventually possibly do OK.

It's a better deal for businesses, because they get to depreciate the full cost of the system.
That's worth about another 32%, so you are over 100%.

Free Panels! And you get to feel good about yourself because the $10,000 in incentives (you paid for with taxes) is buying you $50 worth of warm water every year.
Take that OPEC.
It's just not time for Solar yet.
It's time for efficiency and conservation. Not as hip, but much smarter.

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Tuesday, May 12, 2009

Why is Microsoft Selling Bonds for the First Time?

Microsoft recently announced they are issuing billions in bonds, and this is the first time they have ever sold bonds. They plan to use the money they raise for stock buy backs.

I'm convinced for MSFT borrowing money with bonds is a dividend reduction without calling it one.

Some Theory:
Whether you finance your company with bonds or stock doesn't change your company's profitability except for interest and taxes.
Otherwise, the results are mathematically identical.

Also, in theory, if you buy back stock, that should have no impact on your stock price. The cash used by the company for the buyback is company equity.
Spend equity to buy equity. There are fewer shares, but the company is smaller.

So... MSFT issues bonds. In the short term, they trade interest for dividend payments since the stock they buy back no longer gets paid dividends.
(and there's a tax break because interest payments are deductible and dividend payments are not).
And the existing shareholders (in theory) shouldn't see any improvement in their share price.
BUT: They own a bigger share of the company and get only the same amount paid as a dividend.

To take an extreme case, if MSFT borrowed money to buy everyone's shares except For Bill Gates' shares, Gates would get exactly the same dividend he gets now.
Even though he would own the whole company.

In the short term, like I said -- a wash (in theory). The dividends are offset by interest payments and the tax break. So the company doesn't really retain more money.
In fact, it probably chooses to start paying back bonds as profits improve. In the end, the bonds are gone. Paid down. Called. Now there would be fewer shares, and dividends are the same in $/share, but smaller in proportion to the ownership share.
(Each share represents a bigger part of the company, but only gets the same old dividend payment.)

What I don't know:
Why doesn't MSFT just use some of their cash hoard for the buybacks? Their debt does pay pretty low interest, so maybe they just have a better return on their cash already. But they sure have a lot of cash.

A lot of companies believe their stock is worth more than the market thinks it is. They believe in momentum and doldrums and stuff like that. Maybe they believe a few billion thrust into the market to buy back their shares will give it a temporary pop that other investors may see and they just might jump back on board. That would really raise the stock price.

Maybe there's other stuff going on? Companies buy back stock to redeem options. They could have a dozen other reasons for wanting a buyback or issuing debt.

This is just my thought.

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Wednesday, May 06, 2009

Photography for Selling houses or Renting apartments

I rent apartments. I've had a fair bit of experience posting with architectural photography for the purpose of marketing.

My approach is simple, but I think produces very useful results.

The most critical tool I've found is a WIDE lens. I use a Canon compact (S70) with a 28mm equivalent. I've recently added a wide-angle adapter to make a 21mm equivalent. It adds some blur but FOR THE WEB that's OK.

If you're using a compact camera and not an SLR, a cheapo tripod is also very very useful.

In my mind, the keys are:
Use only natural light whenever possible. Turn off your lights and turn off your strobe (sorry strobist). You're not capturing action so a 1/2 or 1 second exposure is just the thing.
(Set your lens to 5.6 or 8 aperture for the best sharpness).

Personally, I've found a lower camera angle works best for most rooms. It emphasizes the size of the room and the wood floors.

With my camera, I find overexposing by about 2/3rds stop gives the best results.

PHOTOSHOP:
I prefer to shoot Raw because it gives me a bit more latitude for the photoshop manipulations I almost always do:
1. Use the Exposure slider till the room looks Bright. Brightness is almost always a better marketing tool than moody. There are exceptions, but that's what I've found. Go for as bright as you can without blowing out detail.
Flashes and "accent lighting" make for hot spots. That's one reason I prefer natural light.

2. Since I'm using a wide lens, the distort>Image correction tool is fantastic. Get rid of that barrel distortion and do some vertical perspective correction.

3. SLEAZY: Don't do this.
In PS4 there's a nifty tool for "context aware" resizing. You can make rooms look bigger without distorting the objects in them.
For a small bathroom...
But really. Don't do it. It's unethical.

Examples at livingislands.com and bestportlandrentals.com

OH. If you know how to do quicktime panoramas, for nice rooms with some architectural detail, that can just be an amazing thing to add to a website.

IMPORTANT: MAKE YOUR PICTURES BIG.
By big, I mean about 800 - 850 pixels wide. It boggles my mind that so many professionals post 400x300. POST BIG PICS.

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