Today is the perfect day to be writing about government debt, the last installment in my series on debt. We have just seen in the most dramatic fashion why the US is such a great country. As I pointed out in my election day post, there will be some voices that will focus primarily on the constraints that Obama will face as president and most of those will point to government debt (and the cost of the Iraq war and the bailout of the financial sector). So do we also have a governmnent debt cris...

Today is the perfect day to be writing about government debt, the last installment in my series on debt. We have just seen in the most dramatic fashion why the US is such a great country. As I pointed out in my election day post, there will be some voices that will focus primarily on the constraints that Obama will face as president and most of those will point to government debt (and the cost of the Iraq war and the bailout of the financial sector). So do we also have a governmnent debt cris...

And now for the third installment in my mini-series on debt. Up today: financial sector debt. If you thought that the charts on household debt and corporate debt were eye popping, then you better put on some dark shades before you continue reading. As I pointed out in a previous post on the demise of Lehman, leverage in the financial sector has vastly amplified risk. Lehman clearly is not alone here. The following chart shows the growth of debt in the financial sector together with the growth...

And now for the third installment in my mini-series on debt. Up today: financial sector debt. If you thought that the charts on household debt and corporate debt were eye popping, then you better put on some dark shades before you continue reading. As I pointed out in a previous post on the demise of Lehman, leverage in the financial sector has vastly amplified risk. Lehman clearly is not alone here. The following chart shows the growth of debt in the financial sector together with the growth...

Yesterday, I looked at household debt where it is clear that households took on too much debt. What about corporations? Credit was readily available and there was a lot of private equity activity. It is well-known that the net result was a big upswing in corporate debt starting in 2002. Again we can take a look at the Flow of Funds data from the Federal Reserve to see this. The following chart is in current dollars (so not adjusted for inflation) and shows corporate debt and profit before tax...

Yesterday, I looked at household debt where it is clear that households took on too much debt. What about corporations? Credit was readily available and there was a lot of private equity activity. It is well-known that the net result was a big upswing in corporate debt starting in 2002. Again we can take a look at the Flow of Funds data from the Federal Reserve to see this. The following chart is in current dollars (so not adjusted for inflation) and shows corporate debt and profit before tax...

I am taking today off from my mini-series on debt because of something that I believe will turn out to be important. Google announced this week that they would become a provider of authentication under a scheme based on OpenID. While there are several modifications to the OpenID standard, one of them is crucial. In Google’s scheme endusers use their gmail address instead of a URL to identify themselves to accepting sites. I believe that this is a crucial step towards widespread consumer adopt...

I am taking today off from my mini-series on debt because of something that I believe will turn out to be important. Google announced this week that they would become a provider of authentication under a scheme based on OpenID. While there are several modifications to the OpenID standard, one of them is crucial. In Google’s scheme endusers use their gmail address instead of a URL to identify themselves to accepting sites. I believe that this is a crucial step towards widespread consumer adopt...

This has been a big week in cloud computing. Most importantly, Amazon removed the “Beta” label from EC2 and is now offering an SLA for EC2. This is essential for businesses that want to move core systems onto EC2. As I have stated before, though, EC2 is not really a cloud platform in and of itself, rather a highly advanced server provisioning infrastructure. Amazon also took several steps towards moving closer to a true cloud platform. In particular, they have added support for load balancing...

This has been a big week in cloud computing. Most importantly, Amazon removed the “Beta” label from EC2 and is now offering an SLA for EC2. This is essential for businesses that want to move core systems onto EC2. As I have stated before, though, EC2 is not really a cloud platform in and of itself, rather a highly advanced server provisioning infrastructure. Amazon also took several steps towards moving closer to a true cloud platform. In particular, they have added support for load balancing...

A couple of years ago, I was telling a friend and neighbor (who was working at the New York Fed at the time), that I was concerned about the mountains of debt that were being used in buyouts. My friend was looking into hedge fund leverage for Timothy Geithner and agreed that someone ought to do the same for PE funds, but I don’t think anything ever came of it. My big concern back then was the appearance of a deal structure that struck me as having the wrong incentives. I was also worried that...

A couple of years ago, I was telling a friend and neighbor (who was working at the New York Fed at the time), that I was concerned about the mountains of debt that were being used in buyouts. My friend was looking into hedge fund leverage for Timothy Geithner and agreed that someone ought to do the same for PE funds, but I don’t think anything ever came of it. My big concern back then was the appearance of a deal structure that struck me as having the wrong incentives. I was also worried that...

A little while ago during Web 2.0 in New York, I expressed my sense of deja vu about being at a large Internet conference while the markets were imploding. If anything, this sense has deepened over the last couple of weeks. Not so much because there has been more volatility in the markets than ever before, but because there is such a wide range of attitudes among startups about the depth of this crisis and what it means for them. During the dotcom collapse there was a surprising number of ent...

A little while ago during Web 2.0 in New York, I expressed my sense of deja vu about being at a large Internet conference while the markets were imploding. If anything, this sense has deepened over the last couple of weeks. Not so much because there has been more volatility in the markets than ever before, but because there is such a wide range of attitudes among startups about the depth of this crisis and what it means for them. During the dotcom collapse there was a surprising number of ent...

In thinking about the possible extent of the current economic crisis, I have been focused on understanding the role of debt. I first started looking at household debt. The Federal Reserve publishes statistics called the “Flow of Funds” which track sources and uses of capital in the economy over time. The following chart shows household debt, broken down into consumer debt (credit cards) and home mortgages, starting in 1966. The chart shows an eye-popping explosion in debt from a few hundred b...

In thinking about the possible extent of the current economic crisis, I have been focused on understanding the role of debt. I first started looking at household debt. The Federal Reserve publishes statistics called the “Flow of Funds” which track sources and uses of capital in the economy over time. The following chart shows household debt, broken down into consumer debt (credit cards) and home mortgages, starting in 1966. The chart shows an eye-popping explosion in debt from a few hundred b...

This morning Susan and I took the kids along to vote. The polling place for us is just up the street at the kids’ elementary school (they are off for the day). At first, the kids were protesting wildly as they had settled in under blankets for a morning of cartoons and realized that is was chilly outside – it was before 7am. But when we got there they were so excited to go into the voting booth with us, pull the switches for the candidates and then the big lever to actually cast the vote. On ...

This morning Susan and I took the kids along to vote. The polling place for us is just up the street at the kids’ elementary school (they are off for the day). At first, the kids were protesting wildly as they had settled in under blankets for a morning of cartoons and realized that is was chilly outside – it was before 7am. But when we got there they were so excited to go into the voting booth with us, pull the switches for the candidates and then the big lever to actually cast the vote. On ...

Yesterday, Microsoft announced the Azure Services Platform, which is their entry into the cloud computing market. I have spent quite a bit of time reading through the materials, starting with Microsoft’s press release which is full of buzzwords, but otherwise about as uninformative as could be. In usual Microsoft fashion, they have thrown the kitchen sink into the announcement trying to tie together .NET services, with Live Services, with loads of other services that have gone through multipl...

Yesterday, Microsoft announced the Azure Services Platform, which is their entry into the cloud computing market. I have spent quite a bit of time reading through the materials, starting with Microsoft’s press release which is full of buzzwords, but otherwise about as uninformative as could be. In usual Microsoft fashion, they have thrown the kitchen sink into the announcement trying to tie together .NET services, with Live Services, with loads of other services that have gone through multipl...