TIME to ACT! Contact your elected public servicemen and women.

To all that are concerned with the state of the economy and the imminent need for a bail out:
Please take the time to contact your representatives and make your opinion known so that they do not steer the country into an irreversible course that damages the incentive structure of the nation further in a unrepairable way. So there is an "American Dream" to speak of. Protest the current Treasury plan.

For San Franciscans, here are some links to district's most powerful representatives' contact forms:
- Nancy Pelosi, Congresswoman
- Barbara Boxer, Senator
- Diane Feinstein, Senator (As of this post the site seems down...)

BAIL OUT: The Public Deserves a Better Deal

Today's WSJ contains an opinion piece by John Paulson who happens to be #165 on the Forbes 400 wealthiest Americans list. Mr. Paulson is the foremost hedge fund manager that capitalized on the sub-prime market collapse by shorting the troubled stocks with near perfect timing so he knows a thing or two about the situation to say the least. His proposed solution to the imminent bail out situation to me is the best I have heard so far. In it, he proposes:
"There is a better alternative to stabilize the markets: Invest the $700 billion of taxpayer money in senior preferred stock of the troubled financial institutions that pose systemic risks. Let's call this the "Preferred plan." In fact, it is the Fannie Mae and Freddie Mac model -- which the Treasury Department has already endorsed and used in practice. It is also the approach Warren Buffett used for his investment in Goldman Sachs."

He then goes on to elaborate that the current rescue plan is nothing more than a WEALTH TRANSFER from taxpayers to "shareholders and executives of the very institutions that brought on the financial crisis".

I agree that instead of trusting the Treasury department assigning values to the toxic securities that nobody will probably ever buy, his solution effectively puts taxpayers AHEAD of all other shareholders and creditors where they really belong. It is great to see that there are still some cool heads out there rising above the deafening noise of bankers, lobbyists and compromised politicians and telling how it should be. And thanks to WSJ for providing space for such insightful denizens of the increasingly neurotic finance world.

2004 SEC Rule Change and The Wall St. Meltdown (Part II)

Continuing on the link trail for the SEC rule change I came across remarks referring to investment bank insider accounts attesting to leverage ratios of 1 o 45!!! Apparently it was customary during those heady times to lever back to the maximum allowed levels (a mere 1 to 30) during short regular reporting windows only.

What would you call this?
- Opportunism
- Greed
- Business Savvy
- All of the Above

Also reportedly, the SEC chairman active at the time had made a name as a "heavy-handed" regulator.

What would you call that?
- Plain Old Dumb
- Wishful Thinking
- The usual "This time its different" Laissez Faire Naevity
- All of the Above

No matter which way you slice and dice...it surely STINKS. Yes, in more than one way this is a systemic failure but let's not forget every social system is composed of organizations, which in turn are composed of living walking homo sapiens. Since when Merriam-Webster stopped printing the word "Accountability" in the dictionary? And by way of bailing out this, that and the other are we leaving the door ajar for more rescues and "get-out-of-jail free" cards down the road? Bail out or not, this time I really hope as the dust settles the landscape will be altered in a more stable way. If not, I guess the bright minds on Wall St. can always come up with an "off-balance sheet" country called United Structured Investment Vehicle of America and throw all the shoddy stuff over there conveniently claiming to have cleaned off their hands of all the dirt.

2004 SEC Rule Change and The Wall St. Meltdown

It seems that a 2004 rule change authorized by SEC, (Securities and Exchange Commission) which is tasked to regulate U.S. financial markets may have provided the highly flammable fuel that eventually led to the massive fire at Wall St. brokerage headquarters. The rule change granted permission to Bear Sterns, Lehman, Merrill, Morgan Stanley and Goldman Sachs AND NONE OTHER to assume a new designation that would let them lever their portfolios by a ratio of up to 1 to THIRTY(30)!!



It effectively replaced the old rule put in place in 1970s limiting the same ratio to 1 to 12. Especially interesting quote in the press release is that of then SEC Commissioner Harvey Goldschmid who said, "If anything goes wrong, it's going to be an awfully big mess."

1- Why did the SEC feel the need to grant such a permission in 2004, a year that U.S. economy had already recovered from a mild recession?
2- Why did the rule change apply to 5 financial firms only?
3- How could the SEC justify letting go of the "leash" while without a well-defined mechanism to investigate and confirm that the portfolios of these institutions did actually conform to the new set of rules?

These are only some of many key questions that come to mind with no satisfying answers. One would find it hard to resist labeling this decision as the flapping of the wings of the butterfly that may have ultimately caused the current devastating hurricane hitting the shores of Manhattan.

The American public deserves a good look into the annals of this mystery.

MyStrands Picks up Nokia's Mobile Rules! 2008 Award

Yesterday MyStrands was awarded the best multimedia application at Nokia's annual Mobile Rules! in San Jose. I and two other colleagues accepted the award on behalf of our hard working mobile team in Europe.


The event was very well organized and had equal parts U.S. and European representation. Here are the category winners:

+Multiplayer & Connected Games: Gamica (Netherlands)
+Multimedia: MyStrands (U.S.A & Spain)
+Enterprise: UpCode (Finland)
+Infotainment: Earthcomber (U.S.A.)
+Business Plan: MedApps (U.S.A.)
+Technology Innovation: Tiki'labs (France)

Congrats to all mobile innovators!

5 Rules of Communication Between Machines & People

I just finished reading this great book "The Design of Future Things" by Donald A. Norman. The author is a Professor of Design at Northwestern University and former Vice President at Apple. Having spent 5 years on Apple's Cupertino "mother ship" I truly was inspired by the author's candid and direct way of communicating the necessary conditions for tomorrow's increasingly design conscious products.



To me the heart of the book's message is best captured by the following 5 rules:

1- Keep things simple
People have difficulty with anything complicated, and they don't like to listen. So, make the message short. It's better not to use language. It takes too long, and, anyway, human language is ambiguous.

2- Give people a conceptual model
Give them something their simple minds can understand. A conceptual model is a fiction, but a useful one. It makes them think that they understand. And they always want to know what's coming next. So, tell them what you are doing, and don't forget to tell them why. It keeps them happy. The best way to convey the conceptual model is through "natural" communication systems.
Sometimes the most "natural" way to get people's attention is for us machines to act strangely. "Natural", of course means natural to them, which means that if they are doing something wrong, you can't just tell them: you have to make it seem like something is breaking. People often drive dangerously, but it is almost impossible to explain this to them. The best way is to make believe that we are in difficulty. We have found that vibration, jerkiness, nonresponsiveness to controls, and strange noises are extremely effective. People quickly form a conceptual model that something has broken, so they slow down, which is what we wanted them to do all along.

3- Give reasons
People are not trusting. If we tell them something, they always want to see for themselves. They like pictures and diagrams. Make certain that the explanations you give them are consistent with the conceptual models that you have taught them. They get confused otherwise.
When we were first starting to take over things from people, we had trouble. Our early 21st century automobiles had almost completely given up trying to explain to people that they should drive more slowly on wet roads. Then, we discovered that if we made it seem as if we were in trouble by faking skids and sliding around on the road, people would beg us to slow down. Sliding and skidding fit their model of danger far better than any words could have done. It gives them a reason. So whenever possible, don't try to tell them: let them experience it.

4- Make people think they are in control.
When people have a good conceptual model with good feedback, it makes them feel as if they are in control, even when they aren't. Keep up that deception: it's very useful. People like to be in control, even though they are really bad at it. They like to think they're in control even if it means they have to work harder.
ANYTIME YOU HAVE TO RECOMMEND SOMETHING MAKE THEM THINK IT WAS THEIR IDEA. If you really have to do something fast, just don't let them know: what they don't know doesn't bother them. For years we've braked and stabilized their cars, controlled the lights and the room temperatures in their homes, all without letting them know. Dishwashers and clothes washers took over long ago with only a slight protest from people.
Those of us machines who live in the city have learned other tricks. We provide pedestrians with fake switches they can push on traffic signals. We put switches in elevators labeled "close door" and fake thermostats in offices. We never bother to connect the wires, so the switches and thermostats don't do anything, but they make people feel good. Weird.

5- Continually reassure.
Reassurance is a very human need, more emotional than informational. It's a way of making people feel less anxious. Feedback is a powerful tool for reassurance. Whenever people try to tell you something by pushing a button or turning a knob, let them know you are aware of what they did:"Yes, I heard you", "Yes, I'm working on it.", "Here's what you should expect.", "There, see, I did it, and it worked out just as I said it would." They like that. It helps them be more patient.
We machines think it counterintuitive to communicate unnecessarily. But to people, feedback is necessary; it helps their emotions far more than their cognitions. If they haven't seen anything happening for a while, they get jumpy, anxious. And no one wants to deal with an anxious person.
Giving reassurance is tricky because there is a fine line between what people call reassuring and what they find annoying. So, you need to pander to their emotions as well as to their intellect. Don't talk too much. They find chatter irritating. Don't beep or flash your lights: they can never remember what these signals mean, and they get distracted or angry. The best reassurance is done subconsciously, where the meaning is clear, but they don't have to interrupt their conscious thoughts to attend it. As noted in Rule #2, give them natural responses.

Highly recommended for anyone looking to launch products that need to carefully navigate the machine-human boundary!