20120727-073454.jpgGood morning

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The headlines:

  1. Facebook’s first results.Link: slam duhnk.

    The first earnings report from the big FB showed slower sales gain (than ever before) and narrower profit margins (than the pre-listing report).

    The share price has since dropped to $23.75, down from that initial $42 or whatever.

    The increase in revenue was more than offset by the increase in marketing and staff expenses, resulting in a loss per share of 8 cents (or a total loss of $157 million overall).

    And this after close-partner Zynga reported its disappointing results the day before yesterday.

    It never rains…

  2. UK begins a criminal investigation into Libor.Link: but what was the Barclays one?

    The UK’s Serious Fraud Office* has opened a criminal investigation into the Libor collusion story (for the full background, read about it here and here). Senior politicians called for the probe**, and the Serious Fraud Office has been given a budget for the investigation.

    Apparently, the SFO has been refusing to get involved for some time, despite requests from the UK Financial Services Authorities and the Americans in general. According to one random law professor***, this is because “In America, economic crime is something that’s regarded as desperately serious. In this country, it is regarded as a problem”.

    It seems that the UK has now changed its mind.

    According to the CFO spokesguy, the priority is seeing if they can prosecute, and if they can, then they will “start going hell for leather” by “setting up a formal investigation team”.

    Given that official response, I agree with random law professor: these people are not serious.

    *They’re seriously serious.

    **They’re also seriously serious.

    ***Never heard of the guy. And kept forgetting how to spell the name. So I stopped.

  3. China’s cities get stimulative.Link: the investment “woo”.

    Wooing investors is an art. As is economic stimulus.

    The Chinese cities are trying to do both by setting up large infrastructure projects, getting banks to finance them, and generally creating jobs and ripple effects.

    The question to be asked is: how many airports does one city need?

    And then I am reminded of the fact that part of the response to the Great Depression (or the World War – I forget which), was to employ the unemployed by getting them to dig trenches and then fill them up again.

    The point was not the outcome but the occupation. People get paid. They then have money to spend on food. Which means more income for grocery stores, delivery vans, the milkman, and the farmers. Which then means more income for the car companies, the manufacturers, and the producers of fertilizer. Which means more jobs in manufacturing. Which means that the trench-diggers can go find new jobs that pay more.

    Keynesian economics in a paragraph: cure unemployment by constantly stimulating aggregate demand.

    My Austrian economic outlook begs me to ask the question though: is that not like attempting to cure sleep by constantly injecting yourself with cocaine? Sure – you get productive. But at some point, you get counter-productive. And you should probably get some sleep. But that’s an entire other argument.

  4. Amazon’s falling profits.Link: long-term investment.

    A 96% drop in net income to almost 1 cent of earnings per share. Which doesn’t sound like a lot, until you compare it to the awkward facebook story in 1 above.

    The reason being cited for the loss is “expanding warehouses” to better serve demand. That, and research and development expenses.

    In theory, this will all come out in a future wash as heightened profits.

    In practice, nothing remains the same. And they will still have to be researching and developing in order to compete with the Apples and the Samsungs on the e-reader front.

    We shall see.

  5. Apple and Samsung to take the smartphone war to a jury.Link: insanity.

    I understand that there is a patent infringement issue. It’s complex with all kinds of technological stories about coding and design.

    And they’re going to bring this to a randomly-selected group of 12 Americans in California? The ones that aren’t clever enough to get themselves excused from jury duty for business constraints?

    I’m just not sure how anyone that’s not an expert in the field of patent law and/or information technology is going to be able to deliver a reasonable verdict.

    In some ways, they may as well flip an emotional coin.

That’s all for now.

Have a good day.