An article by John Gittelsohn in the Orange County Register brings news that Lamborghini Orange County–which typically sold 10% of the world’s annual production of Lamborghinis and counted NBA stars Kobe Bryant and Dennis Rodman as clients–has shut its doors.

The dealer won’t say why. Lamborghini put a brave face on the shutdown, saying it was the result of bad financial decisions by the dealer and that “the economy is not the reason for Lamborghini Orange County’s financial situation.”

Well, that’s a relief. For a minute there I was worried that the contracting economy, falling stocks, rising foreclosures, the credit crunch, margin calls, environmentalism, layoffs and sudden consumer aversion to over-priced status goods would put a crimp on sales of $200,000 cars that get eight to 13 miles a gallon.

Just to make sure, I did some checking with Autodata. It shows Lamborghini has sold 657 cars this year, down 15% from 771 cars a year earlier. October was even worse, down 65% from last October.

Other supercars aren’t faring so well either. Ferrari sales are down 2.6%, while Porsche’s car sales are down more than 30%.

I’m hopeful, however. The economy may be in the tank, but basketball season is just getting started.

In other wealth news this week:
SEX, LIES, & VIDEOTAPE
Germany’s richest woman, Susanne Klatten, was blackmailed by a former boyfriend who threatened to publish racy photos and videos of Ms. Klatten.

News reports say the man, identified as “Mr. S,” demanded $51 million for photos and videos of a “meeting” he and Ms. Klatten had in a Munich hotel room. The shots were taken by an accomplice, who filmed from an adjacent room. Ms. Klatten is married with three children. Police arrested “Mr. S” in Austria and extradicted him to Germany.

LE ROLLS ROYCE
Luxury-brand mash-ups continue despite the flagging economy. Rolls Royce this week unveiled the “Hermes Rolls Royce” specially designed by Hermes for the George V hotel in Paris (three luxury brands in one car!).

The hotel’s in-house artistic director oversaw the design, choosing anthracite and titanium for the exterior and a “deep rose leaf gray” for the leather interior. The steering wheel and passenger consoles are finished in Hermès Taurillon Plume calfskin. The best part is the interior roof, which features 800 lights–in honor of “the city of lights.”

MISERABLE MILLIONAIRES

The Spectrem Millionaire Index–which measures the financial mood of those with $1 million or more in investible assets–hit a record low in October of a negative 24, compared with the negative nine of August.

:: Source: Wall Street Journal

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We report the medical records of 3 consecutive patients, with this anomaly, undergone surgical treatment of bicuspid aortic valve pathology and ascending aorta aneurysm under profound hypothermia and selective cerebral perfusion (SCP) through the right axillary artery.

Bicuspid aortic valve affects about 2% of the population and is associated with connective tissue disorder that predisposes to thoracic aorta dilatation and increased risk of aortic dissection and rupture (1). Therefore, the surgery of a pathologic bicuspid aortic valve implies the treatment of ascending aorta and/or arch.

We describe the outcomes of 3 consecutive patients seen with these anomalies treated with the same surgical technique at Cardiac Surgery Unit of Polo Pontino between March and April 2008.

:: Source: Biotechnology BioMed

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Trade goes to the heart of China’s main reservations about the election of Mr. Obama, a concern shared by the groups like the Washington-based US-China Business Council that urged the president-elect’s team to “get it right” in setting policy related to business with Beijing. Even before Mr. Obama’s election, outgoing U.S. administration officials as well as Chinese leaders have said they fear that trade protectionist philosophy is getting a boost pretty much everywhere as the global economy flirts with recession.

On the campaign trail, Mr. Obama argued China’s currency exchange rate is manipulated, meaning the yuan is artificially weak against the U.S. dollar. The currency is one possible explanation for the trade imbalance, since a weak yuan would make Chinese products cheap in the U.S. and U.S. exports expensive in China. He also pledged to renegotiate U.S. trade deals, a stand that has prompted many Chinese academics to brace for a more hard-knuckled approach from Mr. Obama and the Democratic controlled congress on China’s currency, product safety, and other issues.

Source: Wall Street Journal

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In remarks to a conference in Israel, Federal Reserve Bank of Richmond President Jeffrey Lacker said the “disparate” government responses to potential failures at major firms created uncertainty and “may have made it difficult for market participants to forecast whether and in what form official support would be forthcoming for a given counterparty.”

Lacker

“Shifts in expectations regarding official intervention may have added volatility to financial asset markets that were already roiled by an increasingly uncertain growth outlook,” Mr. Lacker said at a conference at Hebrew University of Jerusalem, according to his prepared text released by the Richmond Fed.

The comments by Mr. Lacker, one of the most outspoken central bank officials, are among the few critiques by current Fed policy makers to the government’s response to the financial crisis. In June, Mr. Lacker raised related concerns about the Fed’s lending practices.

Many investors and Wall Street executives have sharply criticized the U.S. response — spearheaded by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke — for sending mixed signals during the crisis about which firms might get taxpayer support to prevent their failure. The Fed stepped forward with $30 billion in March to prevent the bankruptcy of Bear Stearns Cos. and facilitate its sale to J.P. Morgan Chase & Co. Six months later in September, however, it declined to offer support to prevent the failure of Lehman Brothers Holdings Inc. Fed officials believe Lehman’s circumstances wouldn’t have allowed for a similar rescue.

The rescue of insurer American International Group Inc. just after Lehman’s failure added to criticism. Now, after Congress passed a $700 billion financial-sector bailout last month, banks are lining up to receive capital infusions from the Treasury.

Mr. Lacker, in a speech broadly about financial conditions and the economic outlook, said overall economic activity “seems poised to contract” and would make households and businesses less creditworthy by eating into their income and revenue. He suggested the financial-market turmoil’s effect on spending — through lower credit availability — was only one part of today’s problem.

“We have to give serious consideration to the idea that this episode of credit and financial market turmoil is part of the economy’s natural response to the sharp decline in the underlying fundamentals in housing finance,” Mr. Lacker said. “My sense is that the deterioration of economic conditions is playing a more prominent role in the tightening of credit terms right now than the direct effects of financial market turbulence.”

But Mr. Lacker said an economic recovery sometime in 2009 is a “reasonable expectation” because the Fed’s interest-rate target has come down to 1%; the major shocks that dampened economic activity — such as high energy prices — are subsiding; and the drag from the housing sector “seems likely to lessen in the next year.”

- Sudeep Reddy

Source: Wall Street Journal

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“The U.S. will go through several years where the size of the Treasury debt held by Americans increases,” says Brad Setser, an economist at the Council on Foreign relations, who tracks this kind of data. Why? Americans are going to start to save again, he figures, and they’re no longer willing to buy risky assets, making Treasurys look increasingly attractive.

He has collected some recent data to back up his contention. In October, he calculates, foreign central bank holdings of Treasurys declined to 37.4% of marketable Treasurys, down from 40.8% in August.

The Chinese bank held $750 billion in Treasury in October, or 13.3%, he estimates, compared to $700 billion in August, or 14.3%. That’s a decline of 1 percentage point in about three months.

Mr. Setser has long warned that the U.S. is too dependent on foreign borrowers, who gain political power along with their economic holdings. Whether China or any lender would ever use that power is debatable, of course. If Beijing sold selling enough dollars to drive down the price of the greenback, it would devalue the rest of its vast holdings.

Harvard economist Lawrence Summers calls economic relations between Washington and Beijing the “financial balance of terror.”

Here are Mr. Setser’s estimates:

October, 2008
Marketable treasurys — $5.66 trillion
Foreign central bank holdings — $2.12 trillion
China — $750 billion
Japan –$595 billion
Oil Exporters — $190 billion
Brazil – $140 billion

August, 2008
Marketable treasurys — $4.88 trillion
Foreign central bank holdings — $1.99 trillion
China — $700 Billion
Japan — $586 billion
Oil exporters — $180 billion
Brazil — $146 billion

–Bob Davis

Source: Wall Street Journal

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…a sea of dead franchise fish stinking up the franchise world for many years to come in the near future.

Why?

Tens of thousands are exiting companies due to tough economic conditions. They have poor job prospects. They have access to half a million dollars and more in liquidity. They are considering small business ownership as their next move.

Whatever their prior experience, none has ever done pre investment due diligence on any small business investment, and none has ever done pre investment due diligence on franchise investment. Despite their education and experience, they are fish out of water.

You should read every word Solomon has to say. And then make sure your spouse does the same. Then give the article to any family member or friend you’d hit up to save your sorry future ass by throwing good  money after bad.

• This advice goes double for those poor pathetic souls stuck in franchising now.

There are three types of franchisees and all of them are in a certain % of denial:

1. the smug profitable ones (so the future is the same as the past? okay…),
2. the ones just scraping by (can’t make ROI in good times but in bad times…?) and
3. the ones bleed internally and anally.

No sane individual should invest or renew in any franchise heading into these worldwide recessionary times.

Richard’s advice stands on its own.

:: Source: the Franchise Fool

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The senior manager we were working with was acquainted with the basic concepts of process change and explained that he had been trying to promote a better understanding of the benefits of an enterprise approach to process improvement but had met with little success. “We have been looking at sub-subprocesses and trying to improve them. We’ve gotten some good results, but I now realize that, while we know something about smaller sub-processes, we have no idea how our larger, major processes work together.”

We generally urge companies to create business process architectures in order to understand their core processes. Companies who have developed these process architectures are in a much better position to make decisions about outsourcing and acquisitions, as well as when and how to make major changes in their business models. When everyone understands the company’s major processes, then any major change is easier to describe, plan and implement. On the other hand, if a change is required and there is not a common understanding of exactly what is involved, then everyone is much more likely to make mistakes in the process of communicating the problem and planning for the transition.

This same manager believed that his company needed to launch a major effort to understand its processes - quickly - before it lost control. He went on to say that he planned to purchase a modeling tool and assemble a team of people to model, not only the process to be outsourced, but all the other major processes that interfaced with that process.

At this point, we suggested taking a step back to think about the problem a little more carefully. Yes, it would be nice to understand all the processes in the company in quite a bit of detail, but it really wasn’t required at this point. For one thing, it would take time to model all the processes, and for another, his people were new to modeling which meant they would have to learn to use the tools - too much risk associated with getting it right in the time allotted.

After some discussion, we arrived at the high-level process diagram shown in Figure 1. In essence, the manager thought of the company as made up of four major processes. One was being outsourced, and the other three would remain under company management. Obviously, these are major processes - like manufacturing, sales, and new product development - and there are lots of interactions between these major processes. Figure 1 only represents a subset of the important flows between these processes.

We suggested that they didn’t need to model the process to be outsourced. The outsource vendor was, presumably, going to redesign the process in order to achieve the savings they had committed to delivering. We suggested a better course of action would be to define and control the inputs and outputs to the outsourced process - provide the outsource vendor with the inputs required to achieve the results they had agreed upon. Beyond that, they really didn’t need to know how the outsource vendor managed the process.

In the long run, the company would probably want to model and understand its major processes in a more precise way, but in the short run, we suggested, they should be more concerned about what inputs or outputs would make a difference. Would the outsource vendor reduce what they charged if any of the inputs arrived more quickly or in a different form? Similarly, would any of the company’s remaining processes become more efficient or effective if the outsource vendor could provide inputs in a different manner or format? If they needed precision, they should focus on the business rules that defined how they would evaluate specific inputs and outputs. Similarly, they should consider how they currently measured the existing flows, what managers monitored those measures, and what those managers did when any given flow failed to meet the established criteria.

When we develop a company’s business process architecture we invariably do it top-down. We begin by defining the company’s major value chains, products, and customers. Then, we drill down, one layer at a time. Next, we develop a diagram very like the one in Figure 1. Finally, we proceed to decompose each of the process boxes to identify sub-processes, and continue until we understand all the major relationships. Given, however, that time was limited and that decisions needed to be made, we suggested the company stick with the diagram in Figure 1 and try to learn as much as they could, at exactly that level of decomposition.

We assembled a team of senior managers to discuss the problem and working with the diagram in Figure 1 we defined the inputs to the process to be outsourced and we discussed the outputs that were, in turn, inputs to other processes. We defined rules for key decisions and discussed measures and the managers responsible for taking corrective action if the flows were off target. At some points, we identified sub-processes within the existing three company processes that generated or received outputs, but we focused primarily on the flows themselves, on their nature, quality and quantity, on problems the company had with the existing flows, and on what differences would result in any change in any of those flows.

We identified two inputs that would make a difference in price and efficiency. They were both generated by Major Process A, and we decided that the next process effort at the company should focus on defining the sub-processes of Major Process A and then on drilling down into the specific sub-processes associated with those two inputs to see how they could be improved.

The point here is simple. It would not have been practical for the company to have launched into a major process architecture initiative when they were already committed to outsourcing a specific process. In hindsight, they would have been better off had they done that several months ago but, at this point, there wasn’t time to do it. Luckily, they didn’t need to do it. They could approach the problem, top-down, identify the major processes that interfaced with the process to be outsourced, and then focus on the inputs and outputs to define the process and its relationships with other key processes. This was enough information to help define the outsourcing contract, and it provided the company with a systematic way to move forward as they undertook more process modeling in the months ahead.

Modeling is not an end in itself. It’s difficult to do right and it takes time. The trick, for business people trying to understand and improve processes, is to do the minimum modeling necessary to gain the understanding required to make good decisions.

Till next time,

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Kulldorff’s spatial scan statistic and its software implementation - SaTScan - are widely used for detecting and evaluating geographic clusters. However, two issues make using the method and interpreting its results non-trivial: (1) the method lacks cartographic support for understanding the clusters in geographic context and (2) results from the method are sensitive to parameter choices related to cluster scaling (abbreviated as scaling parameters), but the method provides no direct support for making these choices. We employ both established and novel geovisual analytics methods to address these issues and to enhance the interpretation of SaTScan results. We demonstrate our geovisual analytics approach in a case study analysis of cervical cancer mortality in the U.S.

Results:

We address the first issue by providing an interactive visual interface to support the interpretation of SaTScan results. Our research to address the second issue prompted a broader discussion about the sensitivity of SaTScan results to parameter choices. Sensitivity has two components: (1) the method can identify clusters that, while being statistically significant, have heterogeneous contents that are composed of both high-risk and low-risk locations and (2) the method can identify clusters that are unstable in location and size as the spatial scan scaling parameter is varied. To investigate cluster result stability, we conducted multiple SaTScan runs with systematically selected parameters.

The results, when scanning a large spatial dataset (e.g., U.S. data aggregated by county), demonstrate that no single spatial scan scaling value is known to be optimal to identify clusters that exist at different scales; instead, multiple scans that vary the parameters are necessary. We introduce a novel method of measuring and visualizing reliability that facilitates identification of homogeneous clusters that are stable across analysis scales. Finally, we propose a logical approach to proceed through the analysis of SaTScan results.

Conclusions:

The geovisual analytics approach described in this paper facilitates the interpretation of spatial cluster detection methods by providing cartographic representation of SaTScan results and by providing visualization methods and tools that support selection of SaTScan parameters. Our methods distinguish between heterogeneous and homogeneous clusters and assess the stability of clusters across analytic scales.MethodWe analyzed the cervical cancer mortality data for the United States aggregated by county between 2000 and 2004. We ran SaTScan on the dataset fifty times with different parameter choices.

Our geovisual analytics approach couples SaTScan with our visual analytic platform, allowing users to interactively explore and compare SaTScan results produced by different parameter choices. The Standardized Mortality Ratio and reliability scores are visualized for all the counties to identify stable, homogeneous clusters. We evaluated our analysis result by comparing it to that produced by other independent techniques including the Empirical Bayes Smoothing and Kafadar spatial smoother methods. The geovisual analytics approach introduced here is developed and implemented in our Java-based Visual Inquiry Toolkit.

:: Source: Biotechnology BioMed

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As recession looms elsewhere, all eyes are fixed on China and its enviable growth rates of over 10 percent. But is it clear that China, while better insulated that many, will not escape the credit crunch. We are already getting anecdotal evidence of harder times, and the figures are showing a slowing of growth – as Richard Spencer in the Telegraph notes:

“Year-on-year growth for the third quarter was 9pc, down from 10.6pc in the first quarter and 10.1pc in the second, and a marked change from the stellar rates that had begun to be regarded as normal in recent years.

These rates had also led to hopes that China’s growth would keep the world economy moving, despite the credit crunch in the West.

Exporting manufacturers, caught by the collapse in consumer confidence in the United States and Europe, and property developers, suffering from a bursting price bubble of their own, all show signs of economic stress.

However, domestic consumption and investment, the latter a mainstay of growth, are also affected.
…The authorities are now signalling that their tightening of monetary policy will be reversed, with a cut in interest rates last week and signs that they are directly intervening in the stock markets, which have also been in freefall.

…There was good news on the inflation front, however, with the consumer price index for September down to 4.6pc from 4.9pc, allowing room for a more expansionist policy.”

And what about future growth? Forbes reports:

“UBS Securities downgraded its economic growth projection for China for 2008 to 9.6 pct and the 2009 forecast to 8.0 pct, citing the prospect of a deeper and longer recession in the US than previously expected and much weaker global growth.

UBS…had previously forecast China’s GDP to grow 10.0 pct this year and by 8.8 pct in 2009”.

As thousands of textiles and toy firms (though most likely the smaller, and less efficient ones) are reported to be shutting down due to a combination of rising costs and falling exports, the government is now acting to boost the market, as noted in the Guardian:

“China today [October 21] raised export tax rebates on toys, textiles and more than 3,000 other products as it attempts to mitigate the impact of the global slowdown.

…Stephen Green, head of China research at Standard Chartered, told Bloomberg that export growth could tumble from 22% in the first nine months of this year to “zero or even negative growth” in 2009.

…The head of the country’s economic planning agency pledged that it could maintain that rate as he visited Australia today.

“Of course, due to the upturn of economic turbulence outside China there is some slowdown to our growth rate, but I think the growth rate of China’s economy will still be at 9%,” Zhang Ping, the chairman of the national development and reform commission, told reporters.

He cited strong domestic demand, adding that only 1.2% of China’s growth last year came from exports.

But other economists predict that GDP growth could fall to 7% or 8% next year.

…In a statement, the Ministry of Finance said the rebate for toys would be raised from 11% to 14% as of November 1. The rebate on clothing and textiles would rise from 13% to 14%, following an earlier hike.

In all, 3,486 types of products – about one-quarter of exports – will be covered.”

So, while growth is slowing, many in the west (and in China) will look to the domestic market for opportunities as people tighten their belts overseas. But such moves will have to be made thoughtfully, as the already intensive competition will…intensify, and as some sectors and regions will offer more hope than others.

See news sources:

China 2008 GDP growth forecast cut to 9.6 pct; 2009 to 8.0 pct – UBS
Forbes – NY,USA
BEIJING (XFN-ASIA) – UBS Securities downgraded its economic growth projection for China for 2008 to 9.6 pct and the 2009 forecast to 8.0 pct, …

China’s growth rates fall below 10pc for first time in five years
Telegraph.co.uk – United Kingdom
China’s growth rates have fallen to single digits for the first time in five years in a further indication that the country is being hit by the global …

China acts to help struggling manufacturing firms
guardian.co.uk – UK
China today raised export tax rebates on toys, textiles and more than 3000 other products as it attempts to mitigate the impact of the global slowdown. …

Textile Firms Getting Government Bailouts
Caijing
Heavily indebted companies in one of China’’s major textile manufacturing regions are slated for rescue, at any cost.

Panic, Shutdowns Spread in Toy Industry
The collapse of industry leader Smart Union was the latest sign that an export slowdown is crippling Chinese toymakers.

:: Source: China Business Services

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Ketogenic diets are an effective healthy way of losing weight since they promote a non-atherogenic lipid profile, lower blood pressure and decrease resistance to insulin with an improvement in blood levels of glucose and insulin. On the other hand, Mediterranean diet is well known to be one of the healthiest diets, being the basic ingredients of such diet the olive oil, red wine and vegetables. In Spain the fish is an important component of such diet. The objective of this study was to determine the dietary effects of a protein ketogenic diet rich in olive oil, salad, fish and red wine.

Methods:

A prospective study was carried out in 31 obese subjects (22 male and 19 female) with the inclusion criteria whose body mass index and age was 36.46 +/- 2.22 and 38.48+/-2.27, respectively. This Ketogenic diet was called "Spanish Ketogenic Mediterranean Diet" (SKMD) due to the incorporation of virgin olive oil as the principal source of fat ([greater than or equal to]30ml/day), moderate red wine intake (200-400ml/day), green vegetables and salads as the main source of carbohydrates and fish as the main source of proteins. It was an unlimited calorie diet. Statistical differences between the parameters studied before and after the administration of the "Spanish Ketogenic Mediterranean diet" (week 0 and 12) were analyzed by paired Student’s t test.

Results:

There was an extremely significant (p0.0001) reduction in body weight (108.62 kg-> 94.48 kg), body mass index (36.46 kg/m2->31.76 kg/m2), systolic blood pressure (125.71 mmHg->109.05 mmHg), diastolic blood pressure (84.52 mmHg-> 75.24 mmHg), total cholesterol (208.24 mg/dl->186.62 mg/dl), triacylglicerols (218.67 mg/dl->113.90 mg/dl) and glucose (109.81 mg/dl-> 93.33 mg/dl). There was a significant (p=0.0167) reduction in LDLc (114.52 mg/dl->105.95 mg/dl) and an extremely significant increase in HDLc (50.10 mg/dl->54.57 mg/dl). The most affected parameter was the triacylglicerols (47.91% of reduction).

Conclusions:

The SKMD is safe, an effective way of losing weight, promoting non-atherogenic lipid profiles, lowering blood pressure and improving fasting blood glucose levels. Future research should include a larger sample size, a longer term use and a comparison with other ketogenic diets.

:: Source: Biotechnology BioMed

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