Monthly Archives: July 2008

Poor Phorm

Google and others have had great success with online advertising, while the provision of the mere “pipes” of the internet has become an increasingly competitive, commoditised business. So, it is no surprise that some ISPs have felt they have missed out on the real success of the internet and are keen to join the party.

The holy grail of advertising is to be able to precisely tailor ads to a behavioural profile of their intended target.  ISPs have one enormous advantage when it comes to profiling web-surfing habits: the one node of the internet that users cannot bypass is their way in, their ISP. Companies such as Phorm, NebuAd and FrontPorch have developed technologies to exploit this advantage and have tempted a number of ISPs to install their systems with the promise of a slice of the advertising action.

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NAB takes $830 million hit

nab, the largest of Australia’s banks saw its share price fall by almost 14% today after they announced an A$830 million (US$795 million) provision on mortgage-backed CDOs (“collateralised debt obligations”).

It has been estimated that the US sub-prime mortgage crisis has resulted in over US$450 billion in write-downs to date and, earlier this year, the IMF suggested that the figure could rise to almost US$1 trillion. Up until now, Australian bank balance sheets had appeared fairly clean compared to their global peers, and they had avoided the large write-downs that have become common-place elsewhere over the last year. So what happened at nab?

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This evening I caught up for a chat and a couple of beers with Dan Walsh, the technologist behind the scenes of the Australian social news site Kwoff.

For those not familiar with social news sites, the idea is that users submit links to interesting news articles (or blog posts, funny photos, videos or anything else that tickles their fancy) and then other users can vote for the stories they enjoyed reading. The most popular stories then float to the top where they are easily found by visitors to the site. This is a classic example of the Web 2.0 technique of crowd-sourcing.

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Update on Sydney Petrol Prices

A little while ago I wrote about the relationship between crude oil prices and the price Sydney motorists are paying for petrol at the pump. The Australian Automobile Association (AAA) has now released their price data for June and, not surprisingly, prices continued to track moves implied by rising crude oil prices. The simple regression model suggested that average prices would be up 8 cents/litre. The AAA data shows a rise of 10 cents/litre in the average Sydney price.

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Spam and Social Networks

Social networks have been growing at an extraordinary rate over the last couple of years. The big contest has been between Facebook and MySpace and recently Facebook was reported to have caught up with its older rival. These two social networking giants aim to be walled gardens where users can chat, exchange photos, share music, take quizzes and (more bizarrely) turn each other into virtual vampires.

A more minimalist approach is the microblog. Twitter pioneered the idea of the microblog, asking its users the question “what are you doing”, a question to be answered in 140 characters or less. You are also able to “follow” other twitter users, tracking their posts (or “tweets”) and they may choose to follow you back. Twitter has been growing rapidly over the last year (see chart below) and recently exceeded two million registered users and countless other sites are now following hot on their heels, including jaiku, pownce, and kwippy.

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The Garnaut Report and “Tit-for-Tat”

For those outside Australia, the Garnaut Climate Change Review is our equivalent of the Stern Review and last week a draft report was released. In this report, a nation’s decision as to how to act in the face of climate change is compared to the prisoner’s dilemma:

Effective international action is necessary if the risks of dangerous climate change are to be held to acceptable levels, but deeply problematic. International cooperation is essential for a solution to a global problem. However, such a solution requires the resolution of a genuine prisoners’ dilemma. Each country benefits from a national point of view if it does less of the mitigation itself, and others do more. If all countries act on this basis, without forethought and cooperation, there will be no resolution of the dilemma.

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The Gradual Demise of the Compact Disc

The Australian Recording Industry Association (ARIA), after taking a look at sales for the first half of 2008, has run crying poor to the Herald Sun. While they have not yet released these figures to the public, they presumably continue the trend evident in published figures for 2006 and 2007.

Australian Music Sales

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The Axe Falls at Moody’s

A month ago, I blogged about news of a bug in a Moody’s structured credit ratings model. The story was originally broken by the Financial Times and now they are reporting that Moody’s is sacking their global head of structured finance, Noel Kirnon. Moody’s have also taken the unusual step of sending a letter to all of their customers outlining the findings of an independent review conducted by the law firm Sullivan & Cromwell. Also this review concluded that employees of Moody’s did not change their rating methodology to hide the model error, a suggestion made in the original Financial Times reports, it was concluded that a monitoring committee “engaged in conduct contrary to Moody’s Code of Professional Conduct”.

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The Price of Carbon for Petrol

Commenting on my petrol prices post, Mark Lauer suggested that excise on petrol should in fact be increased to deal with negative externalities:

Personally I think we should be increasing the excise. It represents the many negative externalities that car use in our society creates: carbon emissions, use of space for (larger) roads; materials, construction and maintenance of (larger) roads; particulate pollution; deaths and injuries from road accidents, and so on, all of which scale with mileage and hence fuel use. And our understanding of all these factors is moving in the direction of increased disutility. Hence the charges should be increased.

I’ve been thinking about petrol and carbon emissions a bit over the last few weeks, so this is as good a prompt as any to put down my thoughts here on the Mule. I should also point out that I have Mark to thank for the back of the envelope calculation that I’ll discuss here.

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