Reasons Unbeknownst

If my blog seems slower lately there is a good reason. I migrated from a dedicated quad-core server to a free WordPress.com account and finally to BlueHost.com ($7/month). The following is a quick look at the pros and cons for people in the same boat.

WordPress.com
Pros:

• Free (myblog.wordpress.com).
• Allows use of a custom domain (optional – $10 a year).
• Allows post import from existing blogs using the import/export tool (see caveats below).

Cons:

• Very limited use of custom templates and plugins. If you have a real WordPress install you’ll need to make some sacrifices.
• Import tool is slow and confirmation is delayed.
• Slow at times, no tech support.

Hosted Shared Servers (BlueHost, DreamHost, etc.) list of more
Pros:

• Allows a full installation of WordPress and other blogs / content management systems.
• Much better control of the server, typically with something like CPanel or Webmin.
• Ability to create multiple databases.
• Use of custom domain (myblog.com).
• Mail account support (me@myblog.com)

Cons:

• Cost $7-$10 a month. That’s well worth it in my opinion given the limitations of free solutions.
• With BlueHost I experience occasional slow downs because I’m using a shared server.
• Might be confusing if you’re not comfortable working with databases and WordPress config files

Migration Tips:
Do NOT rely on the export tool that comes with the default WordPress install. I backed up using the export tool as well as the WordPress Backup Plugin. It’s a good thing too because the export didn’t work right and I would have lost most of my blog if I didn’t have a backup of the backup.

BlueHost limits your ability to name databases. I ran into the problem where my wp_config file needed to be changed a little bit so WordPress could see my restored DB considering its new, BlueHost compatible, name.

I used the WP Backup Plugin tool but the import didn’t work. It dumps a big SQL file which you can import directly into a new DB using the tools provided in CPanel. You’ll then need to install WordPress after you’ve created a new DB and tweak the config to connect to the DB. At that point you’ll be up and running but you’ll need your WordPress API Key to get some of the plugins up and running again.

“Pushing on a string” is a phrase used to describe the Fed’s problem but I think pulling on a noodle is apt because if you pull too hard the noodle breaks. If you have even a passing interest in money you have to be spellbound by the fiscal shenanigans afoot in the global financial markets these days. I was watching CNBC India last night and at one point the host of the show was nearly in tears.

The Fed just made an emergency 75bp (3/4%) Fed funds rate cut. To give you some idea of how unusual that is consider that the last time it happened was after 9/11. Gold is all over the place. Down just like most other commodities until the rate cut and it’s now hovering around 890.

I have no idea what gold is going to do. Based on that last little panic I think the golden goose is going to get thrown out with the bathwater if things get hairy again, and I think they will. People aren’t going to be concerned with the inadequacies of the Fed when their retirement is evaporating and they’re afraid that GLD might fold. If everybody actually had gold stashed in their houses then I doubt prices would be off as much but they trade it just like wheat… which I assume most people don’t hide under their mattresses.

The Fed just applied a band-aid to a stab wound. Deep in my bones/soul I know this is going to get worse based on the degree of dysfunction in housing and mortgage backed securities but the world hasn’t seen anything like this in 70+ years so it’s hard to know where things go from here.

Predictions (take with a large grain of NaCl):
Gold: Based on yesterday I’m convinced deflation leads to the death of gold. Some people make good arguments that it can act as a deflation hedge but I don’t see it happening when investors think of gold less as an alternate currency and more like a hunk of useless yellow metal. In other words I think gold tanks in the next month or two (I’m selling tomorrow) as the Fed’s band-aids start to fall off. In the longer term I think it will rally as Bernanke pulls out the stops to prevent credit destruction.

Bonds: Follow the Fed’s lead (or maybe the other way around) to zero. Just like Japan as bottom caller / knife catchers realize that it actually is different this time. I heard someone jokingly predict the American carry trade meaning people borrow dollars at 1% or so and use the money to borrow better yielding currencies.

Insurance: The Fed will bail out Ambac, etc. because if they go down, it all goes down. This will probably work a lot like the FDIC except for muni-bonds and the like instead of consumer deposits.

Real Estate: If the Fed cuts rates to zero the monthly payment on a 500k home is something like $1380 a month. So in theory super low rates could help the foreclosure epidemic. Problems – The FFR doesn’t affect long rates, upon which many mortgages are based. Also, people can’t refinance if they owe more than their house is worth. That includes a LOT of people. Lastly, risk premiums are through the roof, mirroring defaults. It’s hard to get a loan when prices are dropping. If you’re smart enough posses the means to buy a home right now you’re probably also smart enough to know better than to buy a home right now.

The egg heads at Davos are predicting 30% price drops nationally. That sounds about right but that would wipe out Trillions of dollars of wealth which would eviscerate the economy, which would then feed on itself as more homeowners with exploding rates reset through 2011. The only thing that can save housing is a morally hazardous gung ho bail out of people who bought houses in the last 6 years. That would decimate the dollar but Ben appears to be OK with that.

Tech: Bernanke astutely pointed out the other day that US manufacturing has collapsed in part due to rising productivity. Robots kill… jobs. More specifically IT enabled automation. Our economy is having a hard time retraining workers to take advantage of the new jobs that are out there. This is my explanation for a growing wealth divide currently blamed mainly on ill conceived tax cuts.

Inflation vs. Deflation: Short term I think we’ll see deflation. But Bernanke will take more drastic measures as things unwind because, unlike the BOJ, we simply can’t afford deflation. Why? Because the average American is so indebted that deflation would mean the end of the entire financial system we know and love.

Optimism: We’re getting closer to the point where nobody knows what happens next, even the people who could predict things up to this point. If we have a depression I don’t think we’ll see people starving and living in the forrest. Productivity is so much higher now than in the 30′s that a serious push by America’s brains coupled with modern IT would make a collapse a bit more comfortable. The problem is debt. We’re so indebted that a new system could be the only way forward. Maybe that’s a good thing.

Apple stock is off 7% today after releasing another batch of products… I mean “Revolutionary, life altering, lifestyle enhancement devices” at the Mac-World expo. Don’t get me wrong, I love Mac gear, I just happen to think their stock is going to have a rough time going forward.

Why the shellacking? The problem with Apple is that they’ve hit what I call “The good enough limit”. They’re running out of reasons to charge top dollar for their pretty gadgets so they add video screens to Ipod Nanos, flatten laptops, etc. In fact it’s gotten so bad that they’re willing to sacrifice the performance of their products to make them more aesthetically pleasing. In practical terms the MacBook Air is useful because it’s lighter. But that’s where the improvements end. Pretty much everything else was sacrificed to make the Heroin-Sheik look possible.

Computer makers are no doubt terrified that some day the bottom of the barrel PC will be so ridiculously fast that upgrading a PC will feel a lot like buying a newer Ferrari so you can get to the grocery store faster. Better flash based hard drives will eventually solve this problem and I doubt they’re looking forward to it. Hence the $1000 fee for an upgrade to a smaller flash based hard drive for the new Air-Books.

This is called creative destruction and it’s the reason creating products that kick ass and don’t break is dangerous. When the .03 inch thick MacBook-Helium is released for $4000 next year along side the $200 EeePC with Wimax, Macs will start to have the same appeal as unnecessarily large SUVs. In other words, a way to show the world just how important completely impractical material possessions are to you.

The MacBook Air and Kate Moss are both inarguably beautiful but they’re also one crash diet away from complete disaster. Mac is an alternative to Windows for people who haven’t figured out Linux yet. Price cuts are their last option.

Click here for photo info.

Republicans:
Giuliani – This looks like a death sentence. Even Ron Paul beat him.
Huckabee – Massive support from evangelicals probably won’t work outside of Iowa. Skeletons congregating in his closet.
Romney – Considering the amount of money he spent he should have done much better. But his good hair could be the difference.
McCain – He’s going to have another meltdown, too unpredictable to make a good nominee.
Thompson – He could possibly win if his heart was in it. Feels like he’s doing this as a favor for a friend.
Paul – Beat Giuliani, 4% out of 3rd behind a weak 1 & 2. Could do better in New Hampshire, a libertarian friendly state.

Democrats:
Obama – Smart, personable, represents change. Would have good advisers. Untested.
Edwards – Anti-establishment populist, hair is a little too well groomed. Obama beats him unless he slips up.
Clinton – Change is the theme of ’08. Clinton represents anything but change. Smart but Obama tends to out debate her.

Prediction for New Hampshire:
Romney, Huckabee, McCain, Paul, Thompson
Obama, Edwards, Clinton

Photo by pete etchells on Flickr