Finance Matters

Archive for March 17th, 2010

As you’ll recall, the Seattle P-I was forced to shut down its print edition last year after all other attempts to stop the bleeding failed.  In doing so, it fired 88% of its newsroom, shrinking from 165 to 20.

Good news, though.  A year later, seattlepi.com is going strong, with 40 million pageviews a month.  We doubt it’s profitable yet (20 newsroom folks probably means an overall staff of at least 40), but it’s certainly closer.

SEATTLE (AP) — The online-only successor to the Seattle Post-Intelligencer is celebrating its first birthday.

Seattlepi.com began on the Web on March 18, 2009, a day after the 146-year-old P-I published its last edition on newsprint. Its owner, New York-based Hearst Corp., had been losing money on the newspaper for years, and the Web-only version is designed to change that.

Seattlepi.com says it now receives an average of 40 million page views per month.

The Web site is holding a birthday party Thursday night with music, cheap beer and free cupcakes at a venue in Seattle’s Belltown district. Proceeds from the $5 cover charge will go to 826 Seattle, a nonprofit writing center for kids.

(This version CORRECTS name of writing center to 826 Seattle, not 836.)

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See Also:

• Seattle P-I Refugees Create Seattle P-I Rival
• New Seattle P-I Shows The Future of Newspapers
• Seattle Post-Intelligencer Goes Web-Only

(This post appeared at The Economic Collapse.)

Up until now, the United States has operated under a “fractional reserve” banking system.  Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.  But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says ”impose costs and distortions on the banking system”. At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve’s own website….

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system?  Not that we are operating with sound money now, but is the solution to have no restrictions at all?  Of course not.

What in the world is Bernanke thinking?

But of course he is Time Magazine’s “Person Of The Year”, so shouldn’t we all just shut up and trust his expertise?

Hardly.

The truth is that Bernanke is making a mess of the U.S. financial system.

Fortunately there are a few members of Congress that realize this.  One of them is Republican Congressman Ron Paul from Texas.  He has created a firestorm by introducing legislation that would subject the Federal Reserve to a comprehensive audit for the first time since it was created.  Ron Paul understands that creating money out of thin air is only going to create massive problems.  The following is an excerpt from Ron Paul’s remarks to Federal Reserve Chairman Ben Bernanke at a recent Congressional hearing….

“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.”

The truth is that the financial system that we have created makes inflation inevitable.  The U.S. dollar has lost more than 95 percent of the value that it had when the Federal Reserve was created.  During this decade the value of the dollar will decline a whole lot more.

That doesn’t sound like a very good investment.

But that is what happens when you give bankers power to make money up out of thin air.

And things are only going to get worse.

Especially if Bernanke gets his way and reserve requirements are eliminated entirely.

The U.S. economy is a giant mess already, and we have got a guy at the controls who simply does not have a clue.

It’s going to be a rough ride.

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See Also:

• Fed Presidents Desperately Spinning: Please Don’t Think We’re Taking Away The Punch Bowl Any Time Soon
• What On Earth Is The Fed Doing? They Should Wait Another Two Years Before Tightening
• Caught In The Race Of His Political Life, John McCain Says Paulson And Bernanke Misled Him On TARP

Litigation between ConnectU and its former lawyers at Quinn Emanuel was providing a glimmer of hope for everyone (and that’s pretty much everyone) hoping to get a peek at Facebook’s potential stock price value.

The background: ConnectU accused Facebook founder Mark Zuckerberg of basing Facebook on ideas he stole from them when working with the ConnectU founders and filed suit in 2004. The resulting 2007 settlement, largely based on Facebook stock, was valued at $65 million.

Quinn was working under a 20% contingency fee agreement, The New York Law Journal reported, that was based on a the settlement amount and ConnectU now says the valuation from the time of settlement was too high. Quinn wants $13 million (based on a $36 Facebook share price), but ConnectU is now saying the settlement is worth much less than $65,000,000, as the shares should have been priced as low as $7.75.

Quinn and ConnectU are currently in arbitration, and ConnectU wanted to obtain Facebook’s private share price data to help prove its case.  The arbitration panel issued subpoenas to Facebook, its financial advisor and Microsoft, which invested $240 million in Facbook in 2007.

Those parties refused to provide the documents, and ConnectU filed a motion to compel. Last week, a New York state court judge denied the request, noting they were non-parties to the arbitration.

While this back and forth is exciting, arbitrations are not public and thus, even if the information had been turned over, there’s a great chance we would have never seen it anyway.

Read the NYLJ’s full report here.

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See Also:

• Facebook Won’t IPO For Another 36 Months
• Facebook CEO Mark Zuckerberg Needs To Address The Hacking Incidents
• At Last — The Full Story Of How Facebook Was Founded

If you’re still around, you’re probably feeling punchy and belligerent, in which case you’ll enjoy Michael Moore on Dylan Ratigan’s show slamming Democrats over the wussy healthcare bill and the wussy financial reform bill. His response to Chris Dodd’s claim that nobody wants to punish Wall Street: “Are you sh#%ing me!?” That happens right around the 3:30 mark.

Note: for some the video isn’t working, in which case you should check it out at this link.

Visit msnbc.com for breaking news, world news, and news about the economy

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See Also:

• Senator Corker Says He Made A Specific "Hotel California" Provision In Dodd’s New Bill For Goldman Sachs
• A Bureaucracy Bubble: Check Out Chris Dodd’s 9 New Federal Agencies
• Chris Dodd’s Financial Reform Bill Is A Road Map Leading Directly Into The Next Crisis

Foursquare’s SXSW push has paid off. The company just tweeted that it gained 100,000 new users in the last ten days.

That suggests that Foursquare has around 600,000 users now. (The NYT reported Foursquare has 500,000 users on Monday.)

The trick for Foursquare is hanging on to these new users. People that signed up in Austin, Texas at SXSW might find there is less utility to the service when they get home.

Another fun stat from Foursquare: three days ago it tweeted that it had 347,000 check-ins on Saturday.

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See Also:

• AOL Screwed Up Covering SXSW Because Of Its Old Media Mentality
• Hey, Foursquare, Stop Auto-Tweeting Badges!
• Gowalla Investor Chris Sacca Says Foursquare Only Looks Hot On Twitter Because It’s Filled With Spam