In which: Alan Greenspan gets vocal, I discuss deregulating the child labor market, Apple announces a return to America, and the SEC has a problem with social media not being social enough.

Good morning

The headlines:

  1. Greenspan speaks out.Link: no painless solution.

    I have a deep and meaningful distrust of the Greenspan and his temple of deregulation.

    We live in a world of free market advocates – and sometimes I agree and sometimes I don’t. Because what everyone forgets is that “free markets” implies things that we haven’t quite considered.

    For example: a labour market that restricts child labour is NOT a free market. So if you push the principle out, then you have to allow the employment of able-bodied children. After all, especially in developing countries, minimum working ages of 16/18 effectively halves economic potential by removing half of the potential working population. And we must be clear: many children are able-bodied with small fingers, which makes for better stitching. And size and maturity allows for ease of physical and psychological intimidation.

    Fortunately, now that the developed countries are all about services and not-at-all-about manufacturing, the children are relatively safe (I don’t see anyone fighting for the deregulation of the child labour market). But Greenspan was the guy saying that the US shouldn’t regulate derivatives. And here we are.

    Mr Greenspan is now weighing in on America’s fiscal crisis:

    “…the one thing I can be reasonably certain of is we won’t get through this whole issue without some pain.”

    And blaming both the Republicans and the Democrats for the spending surge.

    Sounds like redemption…

  2. Apple returns to the US.Link: manufacturing macs.

    Tim Cook has announced that a small section of mac manufacturing is going to be returning to the US from next year. And something about investing $100 million to this end.

    The official spin is Apple’s responsibility to create jobs in the US. I maintain that the sceptical view that there is no such thing unless there is a payoff. And I’m going to return to a point that I made some time ago about the risk of Apple becoming reliant on Foxconn for its manufacture and assembly process: once that relationship is entrenched, Foxconn has the upper-negotiating hand. Because when you are on the scale of an Apple-type technological supply chain, you cannot just “go elsewhere”.

    Which suggests that the trend will be a healthy growth in Foxconn’s margins and a steady decline in Apple’s. And that’s exactly what we saw in Apple and Foxconn’s Q3 results.

    And it’s a source of comfort that Apple is making changes.

    For the longer versions of the above prediction, I refer you to this post and this podcast.

  3. Social media issues.Link: it’s definitely insider-trading. Not.

    Reed Hastings, the Netflix CEO, posted something in July on his facebook account about some recent Netflix success (they exceeded 1 billion viewing hours in June).

    He and his company are now facing a SEC civil claim for “selectively disclosing” said information. Because the facebook post wasn’t accompanied by a section 8-K filing with the SEC.

    The SEC is not serious. “Selective disclosure” rules are there to prevent executives selectively disclosing material not-yet-public information to favoured investors and analysts. And to catch people like Raj Rajaratnam of Goldman Sachs insider-trading fame.

    Can we seriously argue that, in this day and age, a facebook post to your public following is not a public announcement? Let’s just be clear: if you had a vested interest/investment in Netflix, you’d be following Mr Hastings on Facebook and on Twitter. So you’d know. And if you weren’t following them on Facebook/Twitter, then clearly you’re not interested enough.

    PS: I get almost all of my news through twitter these days. It’s much faster than BBC or Sky. If anything, anyone not accompanying a section 8-K filing with a tweet should be charged with “selective disclosure”.


That’s all for now.

Have a good day.