CDO: Wicked Invention That Got Bankers in Trouble

The Subprime Financial Crisis Explained Simply Part 1 @ Yahoo! Video

Have you heard of CDO? Hardly anybody knows CDO unless a seasoned investor.
But if you read articles on business lately, you may stumble upon this word. CDO stands for collateralized debt obligation. It's a very tricky invention that allows bankers to make money off of bad loans. A CDO package is created by packaging high risk loans — mortgages given to people with low income and bad credit — and good loans together into a high interest investment package so that banks can sell the CDO package to gullible investors or another bank. This way, banks can get rid of risky baggage off their books and make money at the same time.

CDO's are supposed to guarantee earnings even if some of the loans go bad. But in the past year, most of the mortgages that make up CDO's went default. Malfunctioning CDO's are the main reason why many big banks have crumbled.

Here's a nice presentation of CDO by portfolio.com.

What's a C.D.O.? Business Interactive Features - Diagrams - Illustrations

My Take on the Financial Bubble: Energy Cold War

I've been hearing news about subprime mortgage crisis and skyrocketing gas price. I knew critical events were happening when I heard Aloha airline going broke and people losing their jobs and homes. But honestly, it wasn't until a few weeks ago that I realized how serious the situation was. In the last few days, major financial institutions like Lehman Bros, Merrill Lynch, Washington Mutual and AIG have hopelessly failed. Now, the government is rolling out a whopping $700 billion bailout plan to save the financial market.

Being a regular joe, it's not like I can fly to Washington and have a say about the $700B bailout plan. Maybe the bailout will save us from going further into economic crisis.

What's the cause of this financial bubble? Some say it's the subprime lending. Frankly, I don't see a problem with lending money to low-income people with credit problems. People should all get equal opportunities in buying new homes whether they have good credit or not.

I think the housing bubble began to surface when crude oil price started to rise. Rising gas price resulted in rise in food prices, too. Climbing costs of living was too much for people to handle, so they couldn't pay their mortgages any more. That's how this housing bubble started.

Who's to blame for price of oil? @ Yahoo! Video

The more I think about it, the clearer things become. It was all about the oil, or more generally, the energy resources.

As the world population increases, the natural resources become more and more scarce. Among the most precious natural resources is the fossil fuel such as oil and natural gas. In fact, the world events are moving around the context of energy resources. The recent Russian-Georgian conflict, Iran standoff, Iraq war and Afghanistan war were all motivated by the need for control of energy resources.

Now, nations are beginning to weaponize their natural resources. Russia has long since seized oil and natural gas companies under government control. And the recent Russian conflict with Georgia was believed to be motivated by Russian interests in the underground natural gas pipeline through the conflict territory.

The soaring gas price across the globe may be the work of natural resource weaponization. OPEC kept tight control of oil supply and drove up the price of crude oil across the globe to the United States. The majority of OPEC members are Arab nations. Maybe the Arabs were so threatened by the establishment of Americanized liberal democratic nation in their midst that they covertly designed a counter attack of soaring oil price and delivered it to the US, thus dealing a fatal blow to the US economy.

The world is now entering a new era of cold war, and this war revolves around one goal. That goal is to capture the most of ever so scarce sources of energy.

Who's to Blame for Economic Downfall?

When a natural disaster strikes, we have no one to blame but God or Mother Nature. Yet, when the economy goes bad, there surely is someone to blame because economy is totally a human affair. Now that the US economy is freefalling and possibly heading for the second Great Depression, many bright minds are asking themselves: How did the economy arrive at this mess? Who's responsible for this economic downfall?

Who Killed the Economy? @ Yahoo! Video

An ongoing poll by Portpolio.com allows people to play a blame game in which they pick the culprit "who's most responsible for the current economic crisis." More than 20,000 people have participated in this poll. Some of the candidates are as follows:

Alan Greenspan

Former Chairman of Federal Reserve, Alan Greenspan was once revered by everyone in Academia as economic genius, but now no one seems to hesitate pointing finger at him as the chief culprit of US economic doom. Overly supportive of easing lending standards and keeping low-interest rates too long, he's in part responsible for the current subprime debacle.

All the time, his low-rate, cheap-money mantra fooled low-income people with second-rate credit into believing that he was looking out for them, but all along, he was kissing up to greedy mortgage lenders, creating financial monsters doomed to self-destruction.

Now, we've seen continous collapses of financial institutions: American Home Mortgage, Countrywide Financial, Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, AIG and Washington Mutual. It all started with overly deregulated policies of Alan Greenspan. Talk about free market. It led to market failure.

President Bush

Mr. President must have got bad grades in Economics in college. Or, is it simply that he was ill-advised by his advisors? Obviously, his priorities were not on U.S. Economy, but rather on War against Terrorism. His mind was so occupied with wars in Iraq and Afghanistan and with threats from the so-called axis of evil — Iran and North Korea — that he failed to notice the early signs of failing domestic economy. He kept using the same stimulus gimmicks and rate cuts to keep the economy alive and the Republicans in power. Now that the economy is crashing, his 700 billion dollar rescue plan may be too late, too costly for already suffering people.

Moody's and S&P

These ratings agencies gave too rosy credit ratings for shaky financial companies. Their misleading ratings for failing investment bankers have left the market unprepared for the coming turmoil. When it all came, it was too late for many investors and bankers. People put too much faith in these ratings agencies. And now we suffer.

Hedge Funds

Those who invest in hedge funds are a select group of greedy wealthy investors who engage in short selling of risky investments for quick and big money. Their short selling activities have resulted in roller coaster ride of the stock market. Those reckless hedge fund managers wanted quick profits and made all the odd, risky investments that, when the market began to crumble, had dire effects on the financial market. The recent crackdown on short selling in Wall Street should give a good lesson to those greedy risk-takers.

Angelo Mozilo

Cofounder of Countrywide Financial and IndyMac, he let Countrywide hand out mortgages like play money. Countrywide, like many other mortgage lenders, doled out easy money to subprime home buyers without income or job verification. But by 2007 Countrywide was struggling with rising rates. Countrywide's collapse and subsequent bailout by Bank of America was a prelude to the current financial market meltdown.

OPEC

Some don't seem able to make connection between soaring oil price and the current financial crisis. My understanding is that high oil price has caused several airline bankruptcies, inflation and rising costs of living. The soaring gas price and inflation have put so much burden on people that they couldn't pay their mortgages any more. That's how the housing bubble started. People blame OPEC for keeping oil supply tight and driving oil price high. But I disagree. I believe the high gas price is the result of speculatory investing. Who are the real conspirators, Arab nations plotting against infidels or greedy Wall Street speculators? Anyway, it's time to invest in the development of alternative energy resources.

Fannie and Freddie

These government-subsidized, publically traded mortgage companies made too many bad loans on home mortgages with taxpayer's money. When the real estate values slid, their poor management has caused loss of consumer confidence in the housing market and caused their stock prices to hit the bottom. Government bailout of these companies would only cost taxpayers plenty money.

National Association of Realtors

This group of crooks ripped millions of home buyers with fraudulent real estate appraisals and relentlessly put out misleading positive outlooks on the real estate market even as it began to plummet. If they had been honest with home buyers, people wouldn't have bought those townhouses in Naples, Florida or Phoenix and later go default on bad loans.

China

When we get trouble, we blame it on our trade partner. But if you think about it, which country in the world has the greatest demand for the globe's natural resources and caused oil price to skyrocket? Not only that, China continues to give US trade deficit and keeps piling in our dollars. All this weakened our economy and contributed to the current crisis. China must stop exporting poisoned food. It's time we find a new trade partner who knows what moral and ethics truly mean. How about India, Mexico or Brazil?

After all, I believe everyone is both a participant and a victim of this economic debacle that stemmed from greed. And we all have to share the pain for a long time.

Forbes: How To Build A Killer Small Business Web Site

Forbes published an introductory article on building a small business web site. It gives some good tips such as:

• Provide detailed information on your products and service. Create a good catalog with an easy-to-use search function. Let people know what you are specialized in.
  
• When choosing a domain name for your site, go with direct names that are easy to remember.
• Design your site with easy navigation in mind.
• Establish credibility with your business personnel's background, accomplishments and head shots.
• Respectable client list and glowing testimonials can be smart marketing tools.
• Use graphics and Flash sparingly and only go for the highest quality.
  

That's not so hard to figure out on our own. But this article also gives insight on Search Engine Optimization. As you know, people use Google or Yahoo! Search to find what they want everyday. So making your site show up at the top of the search results can be critical of your business success. Search Engine Optimization techniques given by this article include:

• Select 50 to 100 keywords most relevant to your products, services and target audience and stuff your web pages with as many of them as reasonably possible. Go to Google AdWords to see which keywords are related to each other.
• Also include Zip code, city and region with your keywords.
• Placement on online local business directory can be helpful. Suggestion includes Yahoo! Local, Yelp.com, Craig's List and Insiderpages.
• Attach meta tags that include your top 20 keywords in order of importance.
  

Occasionally test your site design with tools like Web Trax or Offermatica.com . These tools measure click throughs.

Blogger Tips

There are some free blog editors available on the Internet. I like Post2Blog that's a free program you can use to edit and post blogs.

You can post your blog by emailing Blogger. This way, you can use the superior HTML editing feature of your email service or application. You can set the email address of your blog by logging in Blogger and going to Settings > Email. Here's a howto on that. When you post your blog by email, put #end at the end of your email to avoid ad shown at the bottom of your post.

You can also add RSS feed of your blog to browser bookmarks, email client or your personalized portal such as MyYahoo!, iGoogle, MyMSN or MyAOL. RSS feeds give you updates of your favorite site right to your application or homepage. In your browser, click on the RSS icon at the top to subscribe to the feed.

If you want to draw traffic to your blog, why not add buttons for Yahoo! Buzz, Mixx, Digg or Reddit?

• Grab Buzz buttons for your blog
  


• Mixx Buttons & Badges


• Integrate Digg buttons


• reddit.com: reddit buttons

Video clips: Economy and Election

Economist Shiller talks about the current problems affecting the US economy. He suggests some solutions such as improving risk management infrastructure and house equity insurance. He speaks in difficult economic lingo but I think it's worth watching because he's a renowned economist.

Robert Shiller on Solutions for the U.S. Economy @ Yahoo! Video

Here's another interesting Tech Ticker clip. Suddenly, the presidential candidates' wealth takes center stage. Does it really matter how rich the candidates are? You decide with your vote. They seem to be bashing McCain and his wife for their excessive wealth.

The Presidential Race and the Economy @ Yahoo! Video

Now this funny video is by one of Sarah Palin impersonators. Republican VP candidate Sarah Palin is quite popular recently and giving Republican camp some boost. Hope you find it funny.

See more Gina Gershon videos at Funny or Die

Blogging for money

As a business student, I tend to look at things from business perspective. So as a new blogger, I began wondering whether it was possible to make money by blogging. I warn you I am not an expert on this. Let's say I am just brainstorming about blogging business.

Blogging is a type of journalism, specifically freelance journalism. You don't write for news media company but you post your uncensored writings to your blog site on the Internet.

Traditional journalism businesses like newspapers, radio and TV have most of their revenue generated from advertisement. To demand higher price for advertisement, they need to have bigger readership, audience or viewership. In order to have larger audience, they need good contents to attract more people. So, logically good contents is critical in generating more revenue for journalism business through advertising.

Now we live in Internet era. Internet is changing our daily life and also the business world. Internet had serious impact on traditional journalism business, especially newspapers. Nearly every newspaper company across America has lost more than half its revenue recently. Guess where people get their news from instead of reading newspapers. Of course, on the Internet.

People read news from major online News sites like Bloomberg and Wall Street Journal online. But besides major News sites, people also get news and latest buzz from blogs. Since Blog is a new type of journalism on the Internet, it also make sense to apply revenue generating mechanism of traditional journalism to Blog. That is to make money from blogs through advertising. In case you didn't know, online advertising is the most profitable business on the Internet. The richest Internet company Google makes most of its money from online advertising. Google does it by placing a little banner or column of text ads across all over the Internet. This ad system by Google is called AdSense.

So if you want to make some money off your blog, you would probably want to place some ads on your blog, such as AdSense. Every time people click on the ad, you make a few cents - I don't know how much exactly. You can click on the ads on your blog, but that's illegal and called click fraud.

However, if you want to make good money through ads on your blog, you need to draw a considerable number of people to your site. To make that happen, you should have good contents for your blog just like traditional journalism. Sure, you don't have to write trustworthy news like those on the newspaper. It can be celebrity gossip, political rants or anything interesting.

Even if you have good contents, you won't make money if nobody knows about your blog. You have to make your blog known. One way to do it is through Search Engine Optimization. What SEO means essentially is to make your site appear among the top search results from Google or Yahoo! Another way to make your blog known is to have your blog article voted in social news sites such as Digg or Yahoo! Buzz. I won't go deep into SEO or Yahoo! Buzz since I am not an expert on this.

So to make it short, I think it's possible to make money from blogging if you keep publishing good contents on your blog to keep your readers interested. Also you should know how to make your blog popular and draw traffic to your blog.

Free and Commercial Office Suite Alternatives

Modern computing can hardly be done without office suites, that is, word processor, spreadsheet, presentation etc. The market for office suites today is dominated by Microsoft Office. The problem is its too expensive and so resource-hungry that it can't run on old computers. For Linux enthusiasts like me, the main disadvantages of Microsoft Office are its inability to run on Linux or any other open-source operating system.

So I began searching for alternative Office software I can use instead of the evil product from Microsoft. Here we go.

1. OpenOffice.org

Undeniably the best free office suite, OpenOffice.org is an open-source office suite that well integrates each office components such as Writer, Calc and Impress. It is freely available for download for Windows, Mac and Linux.

2. IBM Lotus Symphony

After unpopular Lotus SmartSuite, Lotus has shifted its focus on developing a new office suite based on OpenOffice.org technology. The interface looks a lot clean and attractive. You should give it a try.

3. Hancom Office

Best office suite for users of Asian languages, Hancom Office is developed by Korean software company, Haansoft. With good support for Chinese, Japanese and Korean languages, Hancom Office also processes English language well, of course. But its awkward English user interface may intimidate English speakers.

4. Thinkfree office

Another product from Haansoft, Thinkfree Office is made with Java. That means it can run on Windows, Mac and Linux without a problem. However, since it runs on top of Java, it may not run so effectively. There is also Web version of Thinkfree Office that you can access and use with your Web browser such as Mozilla Firefox. This means Thinkfree has a potential to become a big player in the coming Internet-oriented computing era.

5. Lotus Smartsuite

This is a very fine product that deserves attention. Now nobody seems to use it and it's being forgotten. It shouldn't be, but sadly it's true. You can still try it. It is sold very cheap on the Internet. Its major flaw is that it doesn't seem to support Unicode although it claims it does.

6. WordPerfect Suite

Still surviving office suite for niche users like lawyers and professionals, WordPerfect Suite also has good functionality. Its main strength is its wordprocessor WordPerfect.

7. Microsoft Office

You are forced to use it simply because everybody else uses Microsoft Office and hands you documents in its proprietary format. What a sad reality. Of course, you don't have to use it, let alone buy it. Use OpenOffice.org instead. Just tell your friends and colleagues to use OpenOffice.org or Lotus Symphony. Petition your school and government to use OpenOffice.org. Take action, please.



In summary, my clear choice is OpenOffice.org. I should master OpenOffice.org and make a transition from other office programs to OpenOffice.org.