Brain Food: Three New Offerings

Over the last two weeks, three new educational items of interest have popped up on the radar. There are new video tutorials from Dave Honl and JoeyL, and John Harrington has evolved his Best Business Practices book into a magnum opus, 500+ page second edition.

More on all three, and which ones may or may not be for you, inside.
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Best Biz 2.0

Harrington's new edition of his book is far more than your typical update. He basically recast the book to reflect the changing landscape of the business of photography. Also included is a first-person walk-thru of a full I.R.S. audit.

That's right, John took one for the team. And thanks to him you now have a pretty detailed version of exactly what to expect when they come knocking. (Kinda the financial equivalent of a cavity search.)

And, of course, you get a Harrington-esque game plan for wading in and riding it out. (John, for the record I hope this was just happenstance. Because if you asked for the audit just to write about it, you are insane.)

There's lot more new stuff, too. The book is half-again bigger than the first edition, which was already no slouch.

John and I are not always in agreement on how we approach things from a monetary/business point of view. But do not let that fool you. If you are a pro shooter (or are considering becoming one) you should absolutely buy this book. I have updated the review of the first edition with a second-edition topper and more details, here.

Thanks, John, for the tremendous effort you clearly put into this major update. It's 523 pages of CYA for less than $25.00. This book is a must-have for any working -- or prospective -- pro.



Dave Honl's Light Fare

Next up is a 2-DVD set from David Honl, who designed the entire line of HonlPhoto snoots, grids, gobs, speed straps, etc.

Watching this, I almost got the impression I was watching a photo-version of HGTV. Dave has friends in Hollywood, which really helps when it comes to putting together a DVD set.

And like HGTV, it is not so much a hard-nosed tutorial as it is a roadmap/confidence builder, allowing you to be a voyeur as they work. Essentially, it's a low-pressure, learn-by-watching romp through a series of small-flash shoots. Dave uses his line of light modifiers (along with some other items) but gets full credit for not turning the video into an infomercial.

Through the video you hang out with Dave and (Babylon 5 star) Claudia Christian as they bounce from small-flash shoot to small-flash shoot. They even do a food segment -- cooking, shooting and eating with USA Today shooter Bert Hanashiro.

The focus is more light placement and light shaping than nuts-and-bolts, f/stop-naming exposure balance techniques. And he is assuming some familiarity with the process. Most of his shoots use three speedlights (his go-to setup) and various small light shapers.

Much like I do, Dave shoots from the hip in manual mode with respect to exact metering, etc. Basically you will follow as he starts off with an ambient exposure, knocks it down, and builds it back up with light. It is a tried-and-true formula, and he works it well. The takeaway is not so much the exact process as a general confidence builder on how quick and easy this gets to be with a little practice. And he does go back and diagram each shoot as he finishes it.

The pace is quick, bouncing from shoot to shoot, with the exception of a 20-min talk-and-shoot with Christian and fellow Babylon 5 co-star Bill Mumy. I am not much of a TV watcher, so the 15-min talk before the shoot was kinda lost on me. But Dave then did a nice job of knocking down a very bright ambient room only to build it back up with sculpted light.

Here's a quick preview:



David Honl LIGHT is a two-DVD set that will play as a video on your computer or in your regular DVD player. It is $39.95 and available in many photo retailers, or on the web, here.



JoeyL's Full Mind Dump


First of all, don't let the bombast and photo rap songs fool you. It's all a branding head fake. Joey Lawrence is one of the smartest, most focused, centered and talented people I have ever met. And the fact that he is all of this at 19 years old just pisses me off.

When I first sat down with "Sessions with JoeyL," I sort of expected a higher-volume version of the Photoshop and shooting tutorial he released last year. What it turned out to be completely surprised me. It is a full rundown of his workflow, thinking, shooting methods, pre-planning, lighting, post-production -- everything.

A little perspective: Most people would have gotten a pretty swelled head to get the assignment to shoot the Twilight movie poster stills. He did it as an 18-yr-old. And even then, he primarily saw it as a way to finance his trip to the Ethiopian hinterlands.

That trip is a vehicle for the Sessions videos, as Joey uses it as an example for lots of various tutorials about everything that surrounds his shooting process. But there is lots more, too.

The sessions are broken into five categories: Lighting theory, photo shoots, business, travel and Photoshop.

In lighting theory, he has separate lessons on vision, basic and advanced techniques, tools and modifiers. His light is fairly simple when it comes down to it -- it is just a part of a holistic approach to building interesting photos. And he treats it as such. And frankly, thinking of light as only one of many good tools and qualities with which you make pictures is a good thing.

In the next session, takes you along on five different shoots -- a magazine shoot, an advertising shoot, two bands and a model test. Lots in here -- lighting, subject interaction, theory, etc. It is all very fluid, and for the most part uses big lights.

In the business section he goes at length into his business practices (which, BTW, differ somewhat from those of John Harrington, above) and also includes examples of how he builds trust both with his clients and his subjects.

The latter is a thread all through the sessions. Seriously, can you imagine the pressure of working on some of his shoots -- for some of his clients -- as a teenager? Honestly, I would think it is quite a handicap in the eyes of many of the people around him. He just assumes that he will have to work a little harder -- and faster -- to gain their trust on set.

In travel, he uses the Ethiopia trip to walk through how he approaches travel, gear, logistics, finding a guide, getting off the beaten path, etc.

Lastly, the Photoshop section is not as layer-blending specific as was his first tutorial video. He mixes general and specific techniques, including how he got his luminous tonal ranges from the Ethiopia photos. (I assumed that was a Phase One thing, and was very pleased to see that it was more of a post-processing technique.)

The sub-sections in Photoshop are: Compositing, using color curves, swapping skies, using blending modes, black and white conversions, tonal colorizing and fixing blown highlights.

Here is a very short preview, which honestly does not begin to cover the depth of the 4-hour sessions:



Ready for the catch? (There's always a catch.)

It is expensive. It is $300 (actually, $250 until November 1st, and further reduced to $200 if you have purchased his previous tutorial.)

That is a lot of money. And the $300 question is, of course, is it worth it?

Here's the thing. I can't tell you that. Well, scratch that -- I can tell you this: Whether these sessions are worth the money depend entirely on what you will do with them.

If you are just looking for 4 hours of "teach me how to be JoeyL" entertainment, I will say that there are a lot of things that you can do with half a day and $300 that will be more entertaining.

But if you truly take what he is trying to teach you to heart -- and use it to try to close the gap between what you are doing and what he is doing -- then it is cheap.

To his credit, my constant feeling during the entire series was that he appears to be holding nothing back. What you see is what you get. It is a full and sincere attempt to help people to see how he thinks and works, and to aspire to that level.

And I will also say that I am about 100% sure that he will not be blowing the proceeds of this video on liquor and women, as would many a 19-year-old I have known. For those of you who can afford it, I would consider it not only an investment in yourself as a photographer but also an investment in a future project for a young man who is trying to make an impact in the world before he is old enough legally drink.

Sessions With JoeyL is available as a data download or as a data DVD ROM. It runs only on your computer in a browser format and will not play in a standard DVD player on your TV. More info, including how to purchase, is here.

[UPDATE: JL just added a promo code for the readers of this site (no commission or anything like that coming to me) to extend the discount, which was set to expire just a few days after this post. Use the code "SESSIONSSPECIAL03636" (no quotes) when ordering to get the discount.]

A Filthy Language Primer, Courtesy Chase Jarvis

At first glance, this appears merely to be a very cool behind-the-scenes look at the high-speed flash shooting Chase did last month in New Zealand. Lotsa high-tech flash talk, impossible sequences, killer pics -- yadda, yadda, yadda.

But the real takeaway here is of the etymological variety.

To wit, the adjective "sick." Which, of course, means "good." (Back in my day we went with the much less confusing "bad" when we meant "good.")

But what if something is really sick. As in, sicker than sick? That calls for the word, "filthy."

And if it is filthier than filthy, then of course you'll want to go with, "nasty."

More, including resulting pix, diagrams, and the obligatory lively discussion in the comments, at Chez Chase. I am heading over to read it now, as I sit down for lunch with a slice of filthy, nasty pizza. Which is prolly gonna make me feel sick…

-30-

Over 65 And Needing A Job; Interview Tips For Everyone

Over 65, out of work and desperate for a job? So are record numbers of people who thought they would be retired but now find they cannot afford to.

Please consider 65 and Up and Looking for Work.

It is well known that during the nation’s gale-force recession, many older Americans who dreamed of retirement continued to work, often because their 401(k)’s had plunged in value.

In fact, there are more Americans 65 and older in the job market today than at any time in history, 6.6 million, compared with 4.1 million in 2001.

Less well known, though, is that nearly half a million workers 65 and older want to work but cannot find a job — more than five times the level early this decade and this group’s highest unemployment level since the Great Depression.

The expectation once was to pay off your 30-year mortgage before you retired, or come close. Instead, the level of indebtedness among older Americans has risen faster than in any other age group, partly because so many obtained second mortgages to take money out of their homes.

The unemployment rate for older Americans is still much better than for others — 6.7 percent compared with 9.8 percent in the general population. But 6.7 percent is more than double the level of two years ago — and far higher than the minuscule 1.9 percent rate early this decade.

And unemployed older workers stay out of work longer — 36.5 weeks on average, 40 percent longer than for the unemployed in general.

“I often get told that I’m overqualified,” said Barbara Brooks, 71, who retired in 2003 after 30 years as an administrative assistant at the University of California, Los Angeles. She said being told that is code language for “you’re too old.” But Ms. Brooks said she wanted to work — and needed to — citing her monthly mortgage of $1,500, which eats up half her monthly pension.

65 and Over Unemployment Rate Highest In History



Tables Turned, Former Hirers Can’t Get Hired

Inquiring minds are reading Tables Turned, Former Hirers Can’t Get Hired

NANCY FINK is a career coach for Maryland’s department of labor, running seminars for the most skilled unemployed workers.

For 17 years, she has counseled professionals, business managers, engineers, accountants, scientists — people who are mature, middle-aged, highly motivated, well-educated, well-spoken. But in all that time, she’s never seen so many of the jobless with such impressive skills as this last year. “Last week I had seven lawyers in this room,” she said. “I’ve had lots of folks from TV and The Baltimore Sun. This week I’ve got five human resources directors — I’ve never had that.”

They ask questions young workers don’t. David Kozlowski, 52, a systems vice president laid off in June, wanted to know how far back to go when an interviewer inquires about his work experience in information technology. “I’ve had 30 years in I.T.,” he said.

During a discussion on cover letters, Ms. Fink wondered if the human resources directors in the room had any thoughts. “It can make a big difference,” said Hal Hamil Jr., 56, unemployed since August, but before then, a senior vice president of PNC Bank making $130,000 a year. Mr. Hamil said that last March he posted three openings for tellers paying $10 an hour and got 1,008 applications. “I hired two of them because of their cover letters,” he said.

Ms. Fink warned: “You could find yourself being interviewed by a millennial. As a boomer, you’re thinking that could be my kid. Your instinct is to use their first name. Don’t. They could have an M.B.A. from Wharton. It should be Ms. or Mr.”

They discussed how to respond when an interviewer asked them to describe a weakness.

“Can you say ‘I don’t have a weakness,’ ” Ms. James, the contractor said. “‘I’m just even-keeled’?”

“No, no,” Ms. Fink said, “you need a weakness that’s not really a weakness — they want to see you dance around the question.”

After the seminar, Ms. Fink said a lot of what she does is therapy — helping worried people feel less isolated.

Her boss, Stephen Gallison, who directs the program for skilled workers known as the Professional Outplacement Assistance Center, said that in the past people typically found jobs within five months, but in this economy that’s not a reliable gauge. Asked if he saw any hopeful signs, he said: “No. Nothing. Not yet.”

Interview Tips From The Article

• Attach a cover letter to your resume.
• Be prepared to mention a weakness.
• Be prepared to answer the question "Tell me about yourself."
• Send a thank you letter after the interview.
• Don't use first names even if the person hiring is half your age and looks like your son or daughter. They could have an M.B.A. from Wharton.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

How The Citi-Grinch Stole Christmas (and Why It's a Good Thing)

Emails are pouring in over Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble.

Here is one from "HG" who writes

Hey Mish,

We have a 7 figure net worth, no mortgage debt (we do own our own home), pay credit debt in full each month, and have credit scores of 726 and 702 respectively. We are 56 and 53 years old.

Just got the Citi 29.99 credit card rate increase notice. It's not limited to those who carry a balance like the folks who carry 25k in debt.

Needless to say, I'm cutting it up on principle, but not closing it so that my credit limits don't go down.

Enjoy your posts and look forward to reading them going forward.

HG

Matters of Principle

Want to take it out on Citigroup? If so, then do what "HG" did.

If you have a Citibank credit card just stop using the Citicard to deny Citigroup every cent you can.

It is high time for people to stop buying junk they do not need with money they do not have. Citi's actions help.

Citibank Sends Out 2 Million Letters

Here is an Email from "MJ" who writes

Hi Mish,

I got a Citibank letter last week raising my interest rate to 29.99% from 7.99%. I have a 780 credit score and pay my account off every month. My limit was $18,200. I never made a late payment to Citibank (or anyone else).

When I called them to either maintain my current terms or opt-out, the rep told me she had been getting nothing but complaint calls all day. She said Citibank had sent out 2 million such letters. I was given one choice: accept the new terms or have my account canceled upon its expiration of 12/31/09. I told them to cancel the account.

The “hail Mary” you describe is even larger than you imagined.

MJ

I am hearing many stories about ridiculous rates but this one takes the cake.

First Premier Banks Offers Card With 79.9 Percent Rate

Please consider No, You're Reading That Right

Gordon Hageman couldn’t believe the credit card offer he got in the mail.

"My first thought, it was a mistake," Hageman said.

The wine distributor called the number on the offer, gave them the offer code and verified his information. Sure enough, it was right: the pre-approved credit card came with a 79.9 percent APR.

Yes, 79.9 percent.

The offer is for a Premier card from First Premier Bank, which is based in South Dakota. On its Web site, First Premier says it is the country's 10th largest issuer of Visa and MasterCard credit cards. The site also says it "focuses on individuals who have less than perfect credit but are actually still creditworthy."

According to information on the South Dakota Legislative Web site, there is "no maximum or usury restriction." In other words, the individual bank can set its own interest rate limits.

Several calls made to First Premier for a comment were not returned.

Banks Scream To Be Regulated

If ever there were screams of "Please Regulate Me" these actions by First Premier and Citigroup must be at the top of the list.

Stories like these are piling in from everywhere all over the internet. Yet, it is the Citigroup stories that seem to be jacked up more frequently without reason.

I just checked my United Plus Chase Credit Card and it is 13.15%. I don't carry a balance, except by accident (a bill comes in while on extended vacation). I think 13.15% is high.

29.99% across the board actions is absurd. It is also begging Congress for rate caps.

Some have Emailed me telling me this is nothing but greed. Others said this is nothing but preemptive action by banks to raise rates before new credit card protection laws go into effect.

I am sure there is a lot preemptive action happening. However, Citi's mass sending of 2 million letters, Citi's canceling of Gas-Linked cards and Citi's jacking of rates for virtually no reason on some accounts suggests other problems.

Email From A Collections Specialist

Inquiring minds will wish to consider the following email from "MM" who works in the financial industry. "MM" has a collections background. This Email is also in regards to Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble.

"MM" writes:

Hello Mish

I wanted to clarify Karl Denninger's comments regarding Citigroup's 10% defaults on their credit cards.

I work in the financial industry, and have a heavy collections background. 'Defaults' is a loosely used term. For example, when my company says it has x% defaults, it is in reference to the number of loans. Karl seems to be assuming 10% is measured against fees, or what other people call revenue. This is not an accurate way of measuring true losses.

Here is a practical example to illustrate my point. At my company, if we give out 3 $100 loans and charge $10 per loan, we generate $30 in fees or revenue; However, we still have to get the $300 back we lent.

If one of those loans defaults, that is a 33% default rate, but the practical impact to revenue is a loss of $270.

So, while the default rate is 33%; the loss is $270. [Correction on one account it would be $70 - Mish] Karl is assuming the 10% of defaults is measured against revenue. It could just as easily be calculated against the principal. You have to check their annual report and go through their math, because default is not universally calculated the same way.

Thus, that 10% default could be exponentially much larger than Karl is characterizing. In fact, I would be willing to bet it is, because I have a friend who worked in the credit card industry for 15 years, and he was telling me his company uses the term default the same way we do.

MM

Credit Card Panic

The actions by Citigroup smack of panic. That panic is likely to backfire.

Those who have other cards can simply stop using their Citicard as "HG" did. Even those without other cards may simply tell Citigroup to go to hell by stop using the card.

Those in real trouble probably do not care and have no intent to pay anyway.

Add that all up and what you have is a scenario in which Citibank (and anyone else following the same misguided rate-jacking policy) is going to drive good business away while keeping the bad business.

How The Grinch Stole Christmas

Think these rate-jacking actions are going to spur sales at Christmas? I don't. Rising unemployment does not help one bit either.

Many people will look at those jacked-up rates and not buy. Some will not even have a choice because of slashed limits and canceled cards.

This Christmas is setup to be worse than last because of reduced credit lines, canceled cards, and rates that amount to usury. Last year was one of the worst in retail Christmas seasons in history.

Citigroup has no idea what it is doing. It would already be history had it not been for taxpayer bailouts. Yet....

It's A Good Thing

• To the extent that these jacked-up rates cause people to stop buying, it's a good thing.
  
• To the extent that canceled cards cause people to stop buying, it's a good thing.
• To the extent that these actions cause people tell greedy banks where to go, it's a good thing.
• To the extent that these actions cause people just give up, stop paying ridiculous rates, and declare bankruptcy, it's a good thing.

Thank You Citi-Grinch.

The same thanks go to every other bank that jacked up rates. The odds are this will be the final incentive for many to get out of the debt slavery trap they are in. The more people that cut up their cards and tell banks to go to hell, the better off we will all be, and that's a good thing.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Ray Flash vs. Orbis vs. AlienBees ABR800 Review, Pt. 1

Ring light has, for me, gone from a curiosity to what I consider to be an essential part of my lighting kit. I do not always use it when lighting people, but I always bring it. And I frequently end up using it -- but rarely as a main or only light.

In this first of a two-part series comparing ring flashes, we'll be taking a look at the two direct competitors in the bunch: The Ray Flash and Orbis ring flash adapters. The ABR-800, in all of its different iterations, will get its own post next week.

As most of you already know, the Ray Flash and Orbis are not actually ring flashes but rather are passive light modifiers that convert your existing speedlight into a ring flash. This process has advantages and disadvantages, and there are also relative strengths and weaknesses between the two.

The straight dope, inside.
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A Little Background

I have been planning this post for awhile, as one of a pile of "evergreen" type posts that I keep tucked away for a rainy day. In the interim, Dave Honl and Bert Hanashiro over at SportsShooter came up with a video of their own comparing the three.

It's fantastic in that it shows the relative size and ergonomics of each. It sucked (yeah, bros, I'm calling you out) in that it did not really get very deeply into the most important facet: What does the light look from each like in an apples-to-apples comparison?

I kid -- mostly.

But long story short, Dave and Bert's video is a good 4-minute primer on seeing how they each work. So if you have not seen that video yet, I would suggest watching that first. You know, to save me some typin'. (Note: They used a Zeus, which is the ABR800 equivalent in a pack-and-head configuration. Same difference.)

It is here. I'll wait.
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Leading Off: The Ray Flash

The Ray Flash mounts to your camera with the flash attached on the hot shoe. The camera, flash and Ray Flash all become one unit.

At first, you'll worry that it puts too much pressure on your shoe-mount flash foot. That has never been a real issue, tho. And it does flex a little and takes some getting used to in general. But the latter is true for any ring flash.



Here is how it mounts, which should be pretty self explanatory.

And if you have trouble holding these guys, the studio versions will only feel clunkier and heavier. This is as light as it gets. There is a physical learning curve to dealing with these, but it is worth the effort.

The Ray Flash is available here (or at many other camera stores around the world) for $199.95.


…followed by: The Orbis

The Orbis Ring Flash Adapter, which also sells for $199.00, is similar to the Ray Flash in that it channels your speedlight's output into a ring of light. But the similarities end there.

The Orbis mounts from under your lens, with the flash stuck up inside it. Normally you would connect it to your camera with an off-camera TTL cord (not included, but something many DSLR shooters already own.)

Your choices until now have been to hand-hold it or to use a light stand, both of which have advantages. But it could not fuse with the camera to make a single unit like the Ray Flash.

That changes with the upcoming release of the Orbis Arm, shown below:


I have played with a production model and have found it to be built like a tank -- a very lightweight tank, thankfully.

It is thick, rigid, powder-coated aluminum. And the two, double-screwed L-brackets are solid as a rock. I would note that, like the Ray Flash, there is some flex involved in the end. But that comes from the Orbis' connection to the flash head, and is in no way related to the Orbis Arm.

I have found it to be adjustable to any camera/lens combo. (I marked mine w/Sharpie to assemble it exactly to the right distance every time.) And it folds into a "spooned L" shape that fits into your bag without taking up any appreciable room. Nice design.


Stepping into The Ring

So, there are the basics for each one. From here on, it is Orbis against Ray Flash -- and may the best ring light win.

Which one will you like best? That depends. Because as similar as they are, they stack up totally differently depending on how you prioritize their features and qualities. So let's get to Round One.


Light Efficiency

Winner: Ray Flash

Here is an apples-to-apples comparison. Everything is the same except for the adapter used to mod the light.

On the left is Orbis. On the right, Ray Flash. Neither are optimal because I left them flat and split the difference on the exposure.

Some tests were, IMO, subjective. This one wasn't. If you are working with closed down apertures, low ISO, or outside, give the Ray Flash a good look.

But even with the increased efficiency, neither of these are overpower-the-sun machines. For that, you'll want an ABR800. You can fill with the speedlight models, but you cannot dominate the sun outdoors in full daylight.

That said, the vast majority of the time you will be working with these kinds of lights in moderate and/or controlled ambient light levels. And they both are more than sufficient for indoor use.

Exposure-wise, it is also worth noting here that both will pass through the TTL information -- it is just your normal flash after all -- and can be used with high-speed focal plane sync for wide aperture work. Gels are also a breeze to use with either. Just gel the flash as you normally would.


Universal Fit

Winner: Orbis

Again, no contest. The Orbis fits most every camera/speedlight combo (except for big honkers like Vivitar 285's.)

The Ray Flash is camera and flash specific. You need a different model number for variances in camera depth (prosumer or pro-sized body) and flash. And brand.

If you shoot with the same model camera(s) and flash(es) all of the time, this is a non-issue. Otherwise it is something to consider.

As a small consolation, I have found that I can mount an SB-800 on a D3 with the Ray Flash model meant for the SB-800 and D300. But it is a little off center on the vertical axis.


Run and Gun

Winner: Ray Flash

First, it comes ready to rock without the added bracket. And even considering the bracket on the Orbis, the Ray Flash is a more compact, self-contained setup.

If you are working in a pack of photogs, the Ray Flash is going to be a little tighter and more compact. This follows through to packability, too. The Ray Flash is thinner and smaller, but inherently "L-shaped". And FWIW, I have found that I can usually work that "L" around a corner somehow in a bag.

But that size efficiency comes back to bite you when it comes to …


Quality of Light

Winner: Orbis

Okay, this is one of those "IMO" types of things, as quality of light is subjective.

But the physics add up. The Orbis, being bigger and less efficient, also appears to be softer and more even in it's light distribution. This is a design point, and Ray Flash just went for more compactness and efficiency.

But being subjective, let's go to the example pics so you can judge for yourself.


Here is the Ray Flash pic. And these are both as apples-to-apples as I could make them. Just one ring light and a gray wall. And Dasha, of course.

It makes since that, since the Ray Flash is smaller it is going to produce a little harder light quality. Just physics. But, you get efficiency and compactness back in return.

It is my opinion that there is also some "lensing" going on in the Ray Flash, which means that you are going to get a bit of vignetting if you shoot wide with it. It is more efficient, in part, because it is somewhat of a "zoomed" ring flash.

This is something that is not very apparent in these two comparison photos, which were shot with a portrait length lens. But you can see it in a wide-angle lens shot, as in this example.


And here's the Orbis, in the same conditions as the shot above.

Right off of the bat I get a little softer shadow on the wall, which is obviously the result of a bigger lighting surface area. But in addition, the light is less "lensed" in the design of the Orbis, so it is also more evenly distributed around the circle. (Again, this will mostly come into play with shorter focal length shots.)

The Orbis is a softer, more even light. And thus, a little more flattering. And as I said, that comes back to bite you on the butt when it comes to lighting efficiency. You choose the factors that are more important to you.


Both are Better as Fill

Actually, let me be more clear: Any ring light is better at fill. So while the Orbis may win out on single-light quality, I do have to say that I rarely use ring lights this way.


Take this picture of Dasha, done at the same time with the Orbis.

In this setup, the Orbis is acting as a fill to a gridded SB-800 coming in from camera right high. This is where I think the Orbis, the Ray Flash and just about any other ring light (or adapter) shines.

Using a ring for what is essentially contrast control is where the fun is, because the ring actually allows you to be more edgy with the design of your key light and take more chances. I see it as being sorta like "layer blending" in Photoshop. Except for you do it in camera.


Because some will ask, here is the setup shot for the photo above. I just popped out of the ring (it was on a stand) and shot from above.

You can see how simple this is, but the result looks very sharp. And, depending on the fill level of the ring and the angle of the key, can give you a thousand different final looks.

The splash of light on the background also hides the effect of the ring light back there if the key light doesn't reach that far back. Which would be the case in this setup, probably.
__________


So there you have my best effort at a comparison between the two main, speedlight ring adapter contenders. It should be noted that there are some others, too, which are essentially cheap knockoffs of one of the above designs.

But a warning to those who would save a few bucks: Just because someone's ring light platic mold might have "fallen off of the truck" does not mean they went out and coughed up the bucks for the best internal optics materials.

In fact, if they were going for low price, they almost certainly did not spend that money. I have had reports of several tests of the various cheaper "Ebay ringflash adapters," and have heard stories so varied on color consistency (um, not) and hideous efficiency (including one report of a six-stop light loss) that I am not even gonna go there.

Look, if you want a super cheap ring light, just DIY your own from one of many different designs here and elsewhere. Save your marginal dollars for another flash.

Next week, get ready to go into full retina burning mode with the 320 watt-second AlienBees ABR 800 monobloc ring flash. We'll be doing comparisons there too -- same conditions as above, so you can compare all three. And with its various included and a la carte attachments, the ABR is a pretty variable light source in its own right.

Comments? Questions? Hit us below.


Next: Ray Flash vs. Orbis vs. ABR800 Pt. 2

PocketWizard Wraps Up Canon RF Noise Problem

If you have purchased (or are considering purchasing) one of the new PocketWizard TT5/TT1 remotes for the Canon system, keep reading.

If not, save the electrons ...
__________



Surprised by not only the magnitude but the variable nature of radio frequency interference put out by some of the Canon flashes, PocketWizard has addressed the Canon flash RF issues with the release of the AC5 RF Soft Shield.

It's basically an RF-blocking cloth shield which muffles the Canon flash noise and allows the TTL/HS sync-capable remote units to do their thing. It was a Canon-specific design problem, and there were reports of signifcant levels of interference from some Canon flash owners.

Today's news is that PW is going a step further and making the AC5 shields available for free.

It was a rough hand to get dealt, from an engineering/design standpoint. But kudos to PocketWizard for doing the right thing and making them available gratis. The offer goes live today, and runs through Jan 31, 2010.

Future units are reportedly going to include the AC5's in the box according to Mark Wallace at Snap Factory, for whom we also have to thank for the range demonstration video shown above.

Sign-up page for your free AC5 is here. And check out Mark's post for more specific info on range and reliability.

California Treasurer Spanks Legislature Over Pension Reform And Reckless Spending

Inquiring minds are listening to California Treasurer Bill Lockyer who testified at an informational hearing on budget reform on October 22, 2009.



The highlight of his rant is about pension reform.

"It’s impossible for this legislature to reform the pension system, and if we don’t, we bankrupt the state. And I don’t think anybody can do it here, because of who elected you. You’re just captive of the current environment and I don’t see any way out."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Will Stimulus Take Hold?

Timothy R. Homan, writing for Bloomberg says GDP Probably Grew as Stimulus Took Hold

The economy in the U.S. probably grew in the third quarter at the fastest pace in two years as government stimulus helped bring an end to the worst recession since the 1930s, economists said before reports this week.

The world’s largest economy grew at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News. Other reports may show sales of new homes and orders for long-lasting goods increased.

Americans flocked to auto showrooms and real-estate offices last quarter to take advantage of government programs such as “cash-for-clunkers” and tax credits for first-time homebuyers. Growing demand caused stockpiles to keep falling, which will prompt companies to rev up assembly lines and help sustain the recovery into 2010 even as unemployment climbs.

“The recovery is off to a decent but unspectacular start,” said Joe Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “While another large drawdown in inventories will be a drag on third-quarter growth, it sets the stage for a longer and stronger upturn in manufacturing.”

Consumer spending last quarter probably jumped at a 3.1 percent annual rate from the previous three months, the biggest gain since the first quarter of 2007, the GDP report is also projected to show.

September readings on household purchases, due from the Commerce Department on Oct. 30, may show the quarter ended on a soft note after the Obama administration’s car incentive expired the month before. Spending probably fell 0.5 percent last month as car sales slowed after jumping 1.3 percent in August, the biggest gain since 2001.

The so-called cash-for-clunkers program offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The plan boosted sales by about 700,000 vehicles, according to a Transportation Department estimate.

Homebuyer Credit

The administration’s $787 billion stimulus package, signed into law in February, included an $8,000 tax credit for first- time homebuyers that expires at the end of November.

Take Hold Of What?

If the government gave everyone $4,500 I am sure we would see a fine increase in spending. However, I am equally sure nothing would "take hold" except that the dollar would go into a free-fall, which of course is the opposite of take hold.

Cash for clunkers ended, pushing demand forward. Now what?

Uncle Sam Adds 5% to Prices of Homes

Goldman Sachs says Uncle Sam Adds 5% to Prices of Homes.

Uncle Sam’s interventions in the housing market have pushed home prices 5% higher on a national average than they would have been otherwise, Goldman Sachs estimates in a report released late Friday.

The government over the past year has slowed the pace of foreclosures through moratoria and the drive to modify mortgage terms to keep more borrowers in their homes. It also has pumped up demand for housing by giving tax credits to many first-time home buyers and by driving down mortgage interest rates. As a result, home prices in some areas have risen in recent months, particularly for homes that appeal to investors and first-time buyers. Bidding wars for the more attractive bank-owned homes have become common.

But these artificial props won’t last forever and may have created a false bottom in the market. “The risk of renewed home-price declines remains significant,” Goldman economist Alec Phillips writes in the report, “and our working assumption is a further 5% to 10% decline by mid-2010.”

False Bottom Indeed

I am and have been in the "false bottom" camp (even calling for a false bottom in advance). The fact remains, homes are still not affordable and inventories are high, yet artificially low. How can that be? Easy. There is a huge amount of shadow inventory as noted in Zombie Subdivisions and "Pig In The Python" Shadow Inventory.

That shadow inventory is poised to come out of the woodwork in the next decline as the pool of early fools dries up. Granted, there are way more bargains than three years ago when there were no bargains at all, but most are jumping the gun and this insane $8,000 tax credit is not helping anything in the long run.

Unfortunately, the tax credit is temporarily inflating home prices that are still out of line with wage and job growth. Once the stimulus ends, prices will resume deflating. Moreover, even if the stimulus does not end, prices will resume deflating (it will just take longer).

Shrinking Pool Of Greater Fools

Once everyone who wants a house and can afford a house has one, price appreciation will stall or go into reverse. The difference between now and 2006 is people are not buying 3 houses and a vacation home. Nor are lenders willing to finance three houses and a vacation home. Nor are lenders willing to do liar loans, pay option ARMs or other toxic financing. Thus, the pool of greater fools is far smaller than in 2006.

UK Stimulus Dies On Vine

Across the Atlantic, things are not looking so hot in the UK. Please consider BOE More Likely to Expand Bond Purchases After GDP Slump.

Britain’s failure to escape the worst recession since World War II may force the Bank of England to increase its bond-purchase plan next month, economists said.

Seven months after Governor Mervyn King’s central bank started a 175 billion-pound ($286 billion) program to rescue the economy, the Office for National Statistics said yesterday gross domestic product unexpectedly shrank 0.4 percent in the third quarter. None of the 33 economists surveyed by Bloomberg predicted a contraction.

The GDP figures “reopen a serious possibility that the Monetary Policy Committee increases its QE target,” said Philip Shaw, chief economist at Investec Securities in London, in a note titled “Champagne Corks Go Back Into Bottles.”

“It seems to me inconceivable that the recession is deepening and the housing market is recovering,” said Steven Bell, chief economist at London-based hedge fund GLC Ltd. and a former U.K. Treasury official. “The last refuge of the failed forecaster is to challenge the statistics, but that’s what I’m left with.”

Illusion of Stimulus

Here is a snip worth rereading from U.S. Faces Second Lost Decade "Because" of Misguided Stimulus written by my friend "HB"

I know Romer best for her misinterpretation of what happened in 1937-38. She believes that the fallback into full-scale depression from 'depression light' (as evidenced by unemployment in 1938 almost returning to the highest levels of the depression trough 32/33) is proof that it was a mistake to tighten policy (fiscal and monetary) too early.

In other words, according to her, if the Fed had continued pumping as furiously as possible, then everything would have been alright.

In reality, the entire inflationary mini-boomlet-within-the-depression was simply an illusion. 'GDP growth' that is bought with monetary pumping and feckless fiscal spending only misdirects and ultimately consumes even more scarce capital.

Fiscal stimulus may temporarily give the impression of a recovery, but it is not a genuine recovery. It makes things worse. The moment the pumping is abandoned, the true state of affairs is simply unmasked. That is what happened in 37/38 - a slight tightening of monetary policy revealed the fact that the mini-boomlet was as unsound as its predecessor boom in the years prior to the '29 crash.

It would not have been possible to hide this reality forever. There is nothing, absolutely nothing, that government intervention can achieve in terms of 'fixing' the economy. The choice was in either abandoning the unsound policy and the unsound investments it produced, or careen toward a complete destruction of the currency system.

Once again, I stand amazed at how people can look at this, and look at Japan, and look at the housing bubble/bust sequence, and still believe that monetary pumping and deficit spending are viable tools of economic policy when a bust occurs. It really boggles the mind, reminding me of Einstein's definition of insanity, 'doing the same thing over and over again and expecting a different result'.

Champagne Corks To Go Back Into Bottles

The hard reality of an "L" shaped recovery or a string of "WWs" looms large, leading indicators be damned. Please see A Look at ECRI's Recession Predicting Track Record for details.

Any celebrating in the US (or Canada, or China, or Australia, or anywhere else) is simply premature.

In the coming months, expect to see more comments like “The last refuge of the failed forecaster is to challenge the statistics, but that’s what I’m left with.”

By the way, that is how the term "stagflation" came about. Under misguided Keynesian logic it was impossible to have a recession and inflation at the same time. We all know how that worked out.

In the US and globally we are in uncharted territory. Odds are we will see many things we have never seen before as stimulus after stimulus fails to produce desired results. Actual results, as in the examples above may very well be unbelievable to all the Keynesian and Monetarist clowns.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

PhD's In Distress and the Unsustainable Cost of Education

In response to How Being The Slightest Bit Overqualified Can Cost You A Job I received several interesting Emails.

Here is an Email from "PhD In Distress" about overqualified candidates fresh out of college with nowhere to go, competing for jobs that essentially do not exist.

"PhD In Distress" writes:

Dear Mish,

I very much enjoyed your article today “How Being The Slightest Bit Overqualified Can Cost You A Job”. Although it seemed you and those giving comments seemed to focus on the overqualification of experienced workers, I would like to bring the plight of overqualified students (particularly PhD students) to your attention. I say this as a PhD science student myself.

In case you are not familiar, the “typical” PhD undergoes the following path: BS (usually adding significant debt) then PhD (most programs I know of skip masters level and pay about $20000/year and take 5-7 years) then postdoctoral experience (essentially you do the same work as your PhD for an additional 2-3 years in a different lab except you only make $35000/year) then you can attempt to get a job in either academia, industry or government. I should also mention that student loans can be put on hold while in a PhD program but not during a postdoc.

The postdoctoral experience has not been traditionally necessary for my field to get a job in industry and I am attempting to do so sans postdoc as I have no academic inclinations.

The problem that I see is that when I look for a job using keywords in my field is that I get one of two postings:

1) BS required, MS preferred (making up about 60% of postings)
2) PhD with 5+ years experience (making up 20% of postings and sometimes academic experience such as postdoc won’t even count)

This means that I am overqualified for over half the positions that are posted. Even worse, most of the positions for my level require experiences that I cannot even obtain after my PhD.

My plight is no company in this economy will spend money on an entry level, unproven PhD that will need 2+ years training before he/she is adding significant value to the company.

That leaves me and many others with the only option being a postdoc. However, there has been a glut of postdocs building since the 90s. More and more students are chasing fewer and fewer academic positions (which require a postdoc).

Many of them simply give up and start looking for industrial positions. This has not gone unnoticed by industry and has resulted in more and more companies requiring experience for what should be entry level positions.

The great recession has only exacerbated the problem and now I know of people on their third or fourth postdoc (mostly looking for academic experience but still well into their 30s and making $35000 with a PhD). This makes it even harder for recent grads just to get their first postdoc. Again, why would a professor hire a new grad when he/she can get someone with 3+ years experience and pay them the same?

So here I am highly educated with no place for a job. I’m overqualified and overspecialized for 60% of the work yet simultaneously underqualified for the other 40%. Moreover, there seems to be no way to rectify the situation.

Therefore, it should come as no surprise that more and more domestic (US) students have begun to realize what a raw deal a science PhD has become. This is reflected in lower numbers of domestic PhD students over the past couple decades. Though this is particularly bad for the US in the long run as foreign science PhD’s increasingly return home to work in available and relatively well paying jobs.

I feel particularly bad for the spike of new students entering a PhD program now to avoid the recession. If we will have structurally high unemployment for a decade (for which you have made a compelling case) then we will have 2 more “generations” of PhDs in an increasingly bleak situation. Even if the economy improves it would take massive growth just to get through the backlog of experienced postdocs and laid off scientists seeking positions.

In either case, my approaching graduation has made me more aware and thoughtful of my situation and thought your article was timely and informative. Keep up the great work spreading the word about real recovery through sound money and policy!

Just in case you would like to share this, please do not use my name or initials. Science is a very small and intellectually inbred community and not very open to criticism.

Thank you again,

PhD In Distress

Plight of the PhD

Thanks to "PhD In Distress" for explaining the sorry plight of those seeking higher degrees. When hiring does start, it will likely be with those having a fresh degree than those who had been seeking employment for years.

These two posts should put a solid kibosh to the Obama Administration's notion that education is the key to success and all we have to do is give people more training.

If corporations are not hiring, all the education in the world will not do any good. In fact, as these posts show, it can be a detriment.

As I have stated before "If everyone has a PhD, then PhD's will be driving trucks, mowing grass, and greeting at Walmart".

Here is the lotto-like process described in “How Being The Slightest Bit Overqualified Can Cost You A Job”.

• 500 résumés came in for an administrative assistant for a trucking company
• 61 were selected out of the first 271 for review
• The rest were not even looked at
• Highly overqualified candidates were weeded out on the first pass
• Slightly overqualified candidates were weeded out in the second pass
• 8 were selected for a one hour interview
• 2 were invited back for a second one hour interview
• 1 said she would try and grab a fly ball at a stadium ballpark in response to a random question, the other would not

When it came down to the final two candidates, the lucky lotto winner was the candidate willing to grab a fly ball.

Escalating Costs Out Of Line

The cost of a US education seems enormously out of whack for what it provides. Currently all that education buys you is a chance to enter a lottery for the few jobs available where "To land a job you have to be the perfect candidate, near the top of the stack of résumés, neither underqualified nor the slightest bit overqualified and you have to be willing to grab at a fly ball"

With an education, you are forced to play Résumé Lotto hoping to be on the top of the stack, hoping for an interview, hoping for second interview, then hoping for an offer.

However, without an education you will most likely be fighting for trade jobs, retail jobs, or government jobs.

The education system has clearly broken down.

College Price Comparison Flashback

In 1971-1976 I attended the University of Illinois graduating with a B.S. in Civil Engineering.

I financed my way through college working at the Danville, Illinois Holiday IGA grocery store in the summer, and by playing poker on weekends against farmers in Cayuga Indiana and various other places. A big night was making $100 as that was a whole week's wages at the grocery store.

Tuition was $250 a semester, and the U of I was one of the best engineering schools in the country. Tuition was something like $400 a semester my final year.

University of Illinois Tuition is now in excess of $6,000 a semester.

Whole chickens on sale, and a loss leader at that were $.21 lb. You can sometimes find them on sale for $.49 lb. You can easily find them for $.69 lb on sale.

Since 1971, chicken prices on sale have approximately tripled, the minimum wage has roughly quadrupled and the cost of tuition at the University of Illinois has gone up by a factor of 24.

Something is out of whack and it is not chicken prices or the minimum wage. Currently, I do not think I could finance myself through college playing poker on weekends against farmers in Cayuga Indiana, nor do I think anyone else could either.

With the cost of education up 24 times (and that is tuition only, not room and board) the trend in education costs is simply not sustainable.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Capmark Financial, a Top-Tier Commercial Real Estate Lender, Seeks Bankruptcy

Commercial real estate continues to show signs of extreme stress. Please consider Capmark Said Ready to File for Bankruptcy.

Capmark Financial Group Inc., one of the nation's largest commercial-real-estate lenders, plans to file for bankruptcy as soon as this weekend, a person familiar with the situation said.

The much-expected move underscores the deep problems in the business-property market. After suffering from the collapse in residential mortgages, U.S. banks face steep losses from commercial real-estate loans. Capmark has originated more than $10 billion in commercial real-estate loans, according to Moody's Investors Service.

It also represents a blow to the company's private-equity owners. In 2006, a group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners acquired the lender GMAC LLC's commercial-real estate business and renamed it Capmark. As of March 31, the investor group owned about 75% of the company, with GMAC and its employees owning the balance.

The Horsham, Pa., company recently reported a $1.6 billion second-quarter loss and warned it might be forced to seek Chapter 11 bankruptcy protection. KKR has already written down its investment in Capmark to zero.

Adding to Capmark's pressures, the Federal Deposit Insurance Corp. had notified the company that it must raise capital and boost liquidity at its Utah bank, which has roughly $10 billion in assets.

Capmark Financial Pours $600 Million into its Ailing Bank

Inquiring minds are reading Bank Watch: Capmark Financial Pours $600 Million into its Ailing Bank

Capmark Bank, the wholly-owned Utah industrial bank subsidiary of Capmark Financial Group Inc., agreed to a cease and desist order with each of the Federal Deposit Insurance Corp. (FDIC) and the Utah Department of Financial Institutions. The orders require Capmark Bank to maintain a Tier 1 leverage ratio of at least 8% and a Total Risk-Based Capital ratio of at least 10%.

Capmark Bank reported $11.1 billion in assets as of June 30 and net loss of $261.3 million.

Capmark Bank’s nonperforming loans and foreclosed property assets increased by nearly $240 million from the first quarter to the second quarter and now totals nearly $631 million. About 78% of those assets are related to commercial real estate.

State Arbitrage Game Gone Mad

Joe Weisenthal writing for the Business Insider was on top of this story back in September. Please consider Commercial Real Estate May Kill "Well-Capitalized" Capmark Bank.

Capmark Financial Group, one of the largest commercial real estate lenders in the US, said this week that it was seeing huge default rates and that it could be headed for bankruptcy.

It's the latest in a string of decently-sized, non-Wall Street banks that appear headed for the dustbin of history (or into Sheila Bair's loving embrace)

What caught our eye in Bloomberg's report Capmark Distress May Signal Bank Failures Topping 100 was this paragraph:

Capmark’s holdings include a banking unit based in Salt Lake City with $11.1 billion in assets and a “well- capitalized” ranking from its regulators, according to the bank’s Web site. Deposits stood at $8.4 billion on June 30, according to the company’s quarterly statement.

Two things stand out:

Regulators described it as "well-capitalized," which means that they were totally behind the curve.

Capmark is based in Pennsylvania, but capitalized in Utah, making it one of several banks to have set up in the state for regulatory arbitrage purposes. If we're going to eliminate multiple Federal regulators, we might as well get rid of states, too, since shopping around for favorable states may be just as big of a deal as shopping around to be regulated by the Office of Thrift Supervision.

Capmark Bank was not in the first 100 banks to fail but it appears to be a rock solid bet for the next 100.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble

Citigroup is in serious trouble. It's easy to tell by what they are doing.

Inquiring minds note that Citi Abruptly Shutting Down Gas-Linked Credit Cards.

Citi (C) is abruptly shutting down credit cards linked to gas station partners.

The bank is offering few details:

The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.

The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.

In a followup article the Business Insider notes ....

Citi Jacks Credit Card Rates To 29.99% On Unsuspecting Customers.

Yesterday, we reported on how scores of people across the country had found their gas station-linked credit cards from Citibank had been canceled.

One reader, Rachel, emailed us and explained her frustration.

I received two letters by mail from Citibank yesterday. One said that because I always paid my account on time and that I was such a great customer they were increasing my credit limit. The next letter I opened stated that Citibank was raising my interest rate from the current 18.99% to 29.99%.

My husband and I have good credit and are making a genuine effort to get out of debt by purchasing next to nothing on credit.

While I am ashamed to admit this to you we owe $25,000 to Citibank, our choices at this time are very limited. I have made some calculations and in order to pay the balance before they forcibly close my account, my husband and I must make payments of $1400 per month, this is a substantial increase from the minimum balances they require of $665 per month. I have not opted to pay Citibank the 29.99% interest. ...

Now admittedly having a $25,000 balance is a sign of a problem. On the other hand, the account seems to be in good standing, so let's dig further.

Citigroup Pressure Builds

Karl Denninger gets straight to the heart of the matter in Hisssss (Citibank Overpressure Warning?)

Citibank's average yield year-to-date (consumer and plastic) was about 12%. But they're suffering 10% defaults, making their true margin about 2%. That's still a positive number.... if it's accurate.

This spread, of course, has a lot to do with previously-issued fixed-rate 12.99% cards (they and everyone else had a lot) that were handed out like candy to everyone and their brother, frequently with $10,000, $20,000 or even $50,000 credit lines.

Huge numbers of small business owners - especially sole proprietors - use these cards as a means of financing operations. They relied on that 10 or 12% interest rate, and most of them have huge balances outstanding.

I have since confirmed that this letter is not just going to people who have had credit "challenges". Indeed, this appears to be a blanket change on the part of Citibank. I now have multiple copies from people who assert that they have 750+ FICOs and have never missed a payment on this or any other obligation - the "paragon" of so-called "responsible" credit use. All of the letters are identical.

The problem should be obvious - for someone with one of the 12.99% cards that is now 30%, this is a radical change that more than doubles monthly interest expense. Of those who have sent me copies of this letter and disclosed their previous rate, none were over 20%, meaning that these changes represent 50% or greater interest rate increases. If you're anywhere near the edge of being unable to pay, this will shove you off the bridge and into the deep, shark-infested water of bankruptcy.

Perhaps what we're really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!

This sort of "terms change", which is an effective declaration of default even against those who haven't defaulted (see above; the same 30% rate is being applied to defaulted and non-defaulted accounts!), will drive two consumer behaviors that could ultimately destroy Citibank's credit card business and perhaps the bank as a whole:

1. Those who can transfer balances out somewhere else and/or pay them off will immediately do so. Nobody is going to pay a 30% interest rate and an imposition of default rates on non-defaulted balances willingly and on purpose unless they have no other choice.

2. A significant number of people, on receipt of this notice and understanding what it means (a declaration that non-defaulted accounts are being charged the same penalty rate as a defaulted account!) will immediately go out and charge up the entire unused balance on their card and then intentionally default.

In short, this looks to me like a "Hail Mary" pass. So long as this remains a Citibank-only story my interpretation is that Citibank is in a lot worse financial shape than is being let on - perhaps poor enough that they're at risk of imploding anyway, "too big to fail" or not.

In case you missed it, please take a look at Karl's post from yesterday Recovery? How, Given THIS? where he showed some nice Citigroup statistics and an actual "jack letter" from Citigroup to its customers.

Here is the key paragraph in all of these articles.

Perhaps what we're really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!

Ding! Ding! Ding!

We have a winner. Citigroup needs money, and needs money badly. Moreover, there is no reason to believe this is all credit card related. In fact, there is every reason to believe Citigroup (and other banks) are in trouble on multiple fronts.

Citigroup's Shadow Assets

Citigroup is still stuck in $800 billion in off-balance-sheet SIVs of highly questionable value. That's exactly why it's Not Practical To Tell The Truth.

The Financial Accounting Standards Board postponed a measure, opposed by Citigroup Inc. and the securities industry, forcing banks to bring off-balance-sheet assets such as mortgages and credit-card receivables back onto their books.

FASB, the Norwalk, Connecticut-based panel that sets U.S. accounting standards, voted 5-0 today to delay the rule change until fiscal years starting after Nov. 15, 2009. The board needs to give financial institutions more time to prepare for the switch, FASB member Thomas Linsmeier said at a board meeting.

"We need to get a new standard into effect," Linsmeier said, though "it's not practical" to begin requiring companies to put assets underlying securitizations onto their books this year.

Enquiring minds may wish to consider Citigroup's $1.1 Trillion in Mysterious Shadow Assets.

If Citigroup is looking for an award, it can take the blue ribbon for greed, arrogance, and stupidity in the off balance sheet category. There are plenty of other categories and more blue ribbons will be awarded. Nominations are being taken now.

At the time I penned that, Citigroup's shadow assets were $1.1 trillion. They are now down to a mere $800 billion or so.

Note that the FASB voted to postpone mark-to-market until Nov. 15, 2009. That time is approaching, but have no fear. The FASB has postponed mark-to-market rules once again.

The reason is obvious: It's Still Not Practical To Tell The Truth.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

U.S. Faces Second Lost Decade "Because" of Misguided Stimulus

Japan has gone through two lost decades, in and out of deflation, with nothing to show for it but increasing debt to GDP and a stock market still 70% below its peak.

Now, Richard Koo of Nomura Research Institute Ltd. says U.S. Risks Japan-Like ‘Lost Decade’ on Stimulus Exit.

U.S. officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute Ltd.

“This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”

Koo’s comments echo the view of economists including Nobel laureate Paul Krugman, who warn that the U.S.’s likely return to growth in the second half of 2009 doesn’t mean a sustained recovery is assured. The Obama administration aims to rein in a record $1.4 trillion budget deficit as growth returns, seeking to safeguard the value of a declining dollar.

“If you learn your lesson from the Japanese experience, you don’t remove your fiscal stimulus until private sector de- leveraging is over,” Koo, 55, chief economist at the research arm of Japan’s biggest brokerage, said in an interview at his Tokyo office last week. “When we see the private sector coming to borrow again, I’ll be the loudest person on earth arguing for fiscal reform. That’s the exit.”

Koo calculates that the bursting of Japan’s asset bubble in 1990 erased 1,500 trillion yen ($16 trillion) in wealth, equivalent to three times the size of the economy. Companies focused on repaying debt rather than undertaking new projects, causing demand to plummet and triggering a cycle in which cash flows fell, asset prices dropped and balance sheets deteriorated.

This time it’s the U.S. consumer that’s inundated with debt. Household debt soared more than 10 percent each year from 2002 to 2005, when the economy expanded an average of 2.75 percent.

“We have zero interest rates and still nothing’s happening,” Koo said. Businesses and households don’t want to borrow money even at zero rates; they’re too busy rebuilding savings and paying off debt, he said.

“We had these false starts,” Koo said. “The economy would begin to improve and then we’d say ‘oh my god, the budget deficit is too large.’ Then we’d cut fiscal stimulus and collapse again. We went through this zigzag for 15 years.”

Real Lesson of Japan's Lost Decades

Neither Koo nor Krugman have learned a thing about the Real Lesson of Japan's Lost Decades.

The real lesson is no matter how much money you throw around, economies cannot recover until noncollectable debts are written off. That is why you have “zero interest rates and still nothing’s happening.”

The moment fiscal stimulus stops economies are virtually guaranteed to relapse until the core problem is resolved. The problem is Asset Bubbles, Malinvestments, and debts that cannot possibly be collected.

Bailing out the banks did nothing to fix these problems. Consumers are still saddled in debt, in underwater mortgages, with no job. Moreover, there is no driver for jobs given rampant overcapacity in nearly every sector.

Banks do not want to lend in this kind of environment so they don't. Businesses do not want to expand in this kind of environment so they don't. Meanwhile the Obama administration is making matters worse by increasing taxes on small businesses and proposing everyone pay for health insurance, with businesses forced to offer a plan or pony up part of the cost.

This too is giving small businesses an incentive not to hire. Housing prices are too high yet the Administration and Congress are hell bent on propping up prices. The solution is to let prices fall until they are affordable.

The irony is after all the bitching we have heard and all the "Affordable Housing Plans" out of Congress, we have a golden opportunity for affordable housing and no one wants it.

This proves beyond a shadow of a doubt that "affordable housing" was nothing but a scam for the Fannie Mae, Freddie Mac Congressional slush fund all along.

Creative Destruction

Please consider some excerpts from Creative Destruction

Two Lost Decades



The Japanese Stock Market is about 25% of what it was close to 20 years ago! Yes, I know, the US is not Japan, that deflation can't happen here, etc, etc. Of course deflation did happen here, so the question now is how long it lasts.

The five month, 50% rebound in the S&P 500 was certainly spectacular. However, the more important question is where to from here?

Take a look at Japan's "Two Lost Decades" for clues.

Creative destruction in conjunction with global wage arbitrage, changing demographics, downsizing boomers fearing retirement, changing social attitudes towards debt in every economic age group, and massive debt leverage is an extremely powerful set of forces.

Bear in mind, that set of forces will not play out over days, weeks, or months. A Schumpeterian Depression will take years, perhaps even decades to play out.

The chart shows that over the last two decades, Japan had four rallies of 50% or greater, yet two decades later the Nikkei is 75% off its peak.

Is it impossible for that to happen here?

Christina Romer on Impact of Stimulus on GDP

Christina Romer, on the Obama Administration Council of Economic Advisers talks about Lessons from the Great Depression for Economic Recovery in 2009.

She is another one with totally hopeless views about the lessons of Japan. The above link points to a 11 page PDF filled with complete nonsense about the lessons of Japan.

How "Something For Nothing" Ideas Become Policy

Romer is a true believer in the free lunch theory of economics, that one can spend one's way out of a problem of too much debt.

Logically it cannot be done. Inquiring minds might be interested in How "Something For Nothing" Ideas Become Policy

Illusions of Stimulus

My friend "HB" has the following thoughts I wish to share.

I know Romer best for her misinterpretation of what happened in 1937-38. She believes that the fallback into full-scale depression from 'depression light' (as evidenced by unemployment in 1938 almost returning to the highest levels of the depression trough 32/33) is proof that it was a mistake to tighten policy (fiscal and monetary) too early.

In other words, according to her, if the Fed had continued pumping as furiously as possible, then everything would have been alright.

In reality, the entire inflationary mini-boomlet-within-the-depression was simply an illusion. 'GDP growth' that is bought with monetary pumping and feckless fiscal spending only misdirects and ultimately consumes even more scarce capital.

Fiscal stimulus may temporarily give the impression of a recovery, but it is not a genuine recovery. It makes things worse. The moment the pumping is abandoned, the true state of affairs is simply unmasked. That is what happened in 37/38 - a slight tightening of monetary policy revealed the fact that the mini-boomlet was as unsound as its predecessor boom in the years prior to the '29 crash.

It would not have been possible to hide this reality forever. There is nothing, absolutely nothing, that government intervention can achieve in terms of 'fixing' the economy. The choice was in either abandoning the unsound policy and the unsound investments it produced, or careen toward a complete destruction of the currency system.

Once again, I stand amazed at how people can look at this, and look at Japan, and look at the housing bubble/bust sequence, and still believe that monetary pumping and deficit spending are viable tools of economic policy when a bust occurs. It really boggles the mind, reminding me of Einstein's definition of insanity, 'doing the same thing over and over again and expecting a different result'.

Japan's Public Debt Nightmare

Japan' public debt is 170 percent of GDP, the highest in the G20. Increased debt is all that has been accomplished by Keynesian silliness and Monetarist nonsense.

Over 10 years ago, the advice from Greenspan and the Fed to Japan was to write off the debts so that a recovery could begin. Japan did not do so and now has a dramatically escalating government debt to GDP problem, virtually guaranteed to blow sky high.

Death of Muddle Through

If you have not yet done so please consider Death of Muddle Through

Japanese Disease

John Mauldin: Some readers wrote this week telling me I am far too worried about a rising government deficit. Right now we are at roughly 42% of debt to GDP. In 1989, at the start of the lost decades, Japan had a debt-to-GDP ratio of 51%. Now it is at 178%, and the world has not come to an end for them. In fact, they are running massive government deficits today and plan to do so for a long time. Why, I am asked, can’t we be like Japan?

In 1989, private Japanese debt (businesses and consumers) was at a debt-to-GDP ratio of 212%. Now it is at 110%. And the total of both government and private debt is roughly the same (within 5%) of where it was 20 years ago. Along with running large trade surpluses, private debt has been exchanged for government debt. Savings have fallen from the mid-teens to about 2% today, as the country is rapidly aging and now using its savings to live on. And how much has all that government spending helped the country?

John Mauldin Quoting Hoisington: For all intents and purposes, Japan has had no growth for almost two decades. Their nominal GDP is where it was 17 years ago, and the number of employed people is at 20-years-ago levels. An aging population has masked their unemployment problems, as older citizens retire. Their savings went to government debt. Taxes were raised numerous times. Since government deficit spending has no long-term multiplier effect, growth has been nonexistent. (By the way, that research about multiplier effects has also been done by Christina Romer, the chairman of the current President’s Council of Economic Advisors, and further explored by European economists. There is general agreement on these facts.)

Japan Rethinks A Dam

The irony is Christina Romer does not even recommend what she knows to be true, assuming that Hoisington has summarized her position on multipliers accurately.

Now, Krugman, Romer, and others are all espousing the same tactics that got Japan in deep, deep trouble, except the "lesson" supposedly is Japan did not spend enough even as Japan rethinks its own policy.

Please consider Japan Rethinks a Dam, and a Town Protests.

The clatter of construction machinery still fills this forested mountain gorge, where legions of men in hard hats busily pour concrete, clear hillsides and erect a huge, unfinished bridge whose concrete supports tower over the valley floor like crucifixes in an immense graveyard.

It seems an apt analogy. Japan’s new government has suspended the $5.2 billion Yamba Dam being built here and turned this valley four hours north of Tokyo into a symbolic final resting place for the nation’s postwar order, which relied on colossal public works spending.

The Democratic Party government of Prime Minister Yukio Hatoyama has chosen this dam as the first of 48 national government-financed dams that it wants to scrap, worth tens of billions of dollars.

Japan had around 60 large dams under construction in 2005, making it the world’s fourth largest dam-building nation, according to The International Journal on Hydropower and Dams, despite having a land area smaller than California’s.

Decades of pouring concrete have been widely blamed in Japan for cluttering rural areas with needless dams and roads to nowhere. They have also saddled the country with the developed world’s largest national debt — nearly twice its $5 trillion economy. Mr. Hatoyama’s party has vowed to replace Japan’s postwar “construction state” and the jobs it created with something closer to a European-style social welfare system.

That my friends is exactly what public work stimulus projects do on average. Now Obama wants to gut public schools, rewire them, and make them energy efficient. At what cost? At what benefit?

Expect other infrastructure projects as well. Some may be useful, many won't. The money has to come from somewhere and that somewhere is higher taxes, a cheapening of the US dollar, or both.

Such infrastructure projects did not work in Japan and they will not work here.

Yen Poised To Blow Up

Fiscal stimulus failed in Japan, it will fail here as well. When it fails, expect to see more calls for more "stimulus".

Japan has already reached the boiling point. The Yen is poised to blow up as Japanese savers in an aging population need to live off their savings instead of saving more at 0% interest rates.

Cause and Effect

Final analysis shows the U.S. Faces Second Lost Decade "Because" of Misguided Stimulus, not as a result of pulling stimulus too early as Koo, Krugman, and Romer suggest.

If that sounds wrong then just take a look at how we got here: Hoping to end the recession of 2001-2002, the Fed slashed interest rates, held them too low, too long, we had the mother of all housing/credit booms and the global economy crashed.

The US has nothing to show for all that stimulus other than a wrecked economy, massive debt that needs to be written off, and extremely wealthy parasite bankers bailed out by consumers after contributing to these problems.

Koo, Krugman, and Romer think more spending and more debt will solve the problem although Japan has proven without a doubt that such attempts are economic madness.

What got the world out of the great depression certainly was not insane monetary stimulus but rather WWII. War destroyed the productive capacity of much of the world, and with US productive capacity completely untouched and with returning soldiers ready to start families, the US led the world out of depression.

Let's hope it does not come to war again to solve these problems.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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