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Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985.  Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand (which is now part of PricewaterhouseCoopers).  She attended the University of Michigan and Wayne State University.

  • Net neutrality: Speak out now, for or against...

    [View: utility/ :550:0] Video of John Oliver on Last Week Tonight, [warning regarding language] via YouTube If you want a painless way to learn about the ostensibly boring (but important) topic of "Net Neutrality," then listen to the John Oliver piece. Unfortunately, you have to be willing to endure a lot of bad language. Basically, phone/cable companies (specifically, Comcast , Verizon and AT&T ) want to end the practice of equal access to internet bandwidth. They want to implement a two-tier system that would allow big phone and cable companies premium access, and slower access for the rest of us. The Slate article linked below does a summary of some of the salient points of the issue: " Traditionally, with a few exceptions, the cable and phone companies have not blocked particular websites or discriminated in favor or against any of them. For the past decade, the FCC has made it clear it would punish a cable or phone company for deviating from providing 'neutral' access. In January, the FCC lost an important court decision, which said that the FCC does not have the authority to stop phone or cable companies from discriminating against websites or creating “'ast' and 'slow lanes' on the Internet—unless the FCC chooses to act under a particular part of the law known as Title II. Rather than act under Title II, FCC Chairman Tom Wheeler has proposed a rule that would permit the phone and cable companies to engage in discrimination, subject to fairly useless conditions. The FCC has received tens of thousands of citizen comments and stern letters from open Internet supporters in the Senate and Congress. The president—who repeatedly promised that he would ensure neutral access to the Internet without paid-for fast lanes—has provided almost no support for Wheeler, with the White House issuing distancing press statements. The chairman’s two fellow Democratic commissioners critiqued his plan publicly. " Oliver provided additional perspective regarding some of the operational tidbits regarding the big phone/cable companies. And almost everyone has agreed with him. But on the other side of the issue--in favor of the two-tier system are: Comcast, Verizon and AT&T politicians and citizens who oppose "anything Obama is for" the FCC chairman, Tom Wheeler, and Jon Healey, who wrote an opinion piece this week in the Los Angeles Times that has some internet traction Healey makes the point that Oliver is mainly a comedian, and should not be taken seriously. He also says, " The real question is what's the best way to preserve the Internet as an open platform for innovation and content, without interference from the cable and phone companies that dominate the market for broadband connections ." He mentions that many conservative and liberal observers oppose the FCC messing with the current open situation. These are not really arguments that support his opposition to Oliver's position. Nevertheless, the headline seems to be opposed. Since this is an issue which will have a major effect on everyone who uses the internet, it is probably important to have an opinion and to take advantage of a unique opportunity to state your opinion at the highest level. In case you want to actually comment where your comments will count, contact the FCC yourself at this website: Source: " John Oliver’s Hilarious Net Neutrality Piece Speaks the Truth...and nothing but ," by Marvin Ammori, Slate, June 6, 2014. " John Oliver finds humor in net neutrality, but loses the facts ," by Jon Healey, The Los Angeles Times Opinion , June 5, 2014. F ollow up: What arguments can you make IN FAVOR OF a change in the law to allow two-tiers of internet band width? Weigh those arguments against strengthening protections to keep the internet open. According to the Slate article, what are the more nuanced Business Law issues that are part of the net neutrality issue?
  • Tiny Hachette publishing is taking on Amazon

    image from the prnewswire Michael Pietsch (rhymes with "beach"), the CEO of the Hachette Book Group, is in a battle with Amazon over pricing and availability issues regarding manipulation of the market for books. All of the other book publishers are waiting to see what happens. Other publishers have been afraid to take a stand against Amazon, because of Amazon's tremendous clout. Amazon has huge volume and it is willing to sacrifice profits in pursuit of market share. Not every publisher can afford to pursue that strategy. But Pietsch seems willing to get the issues on the table in order to not lose everything in the long run. Unfortunately, because Amazon and Hachette have signed confidentiality agreements, the nitty-gritty details of their dispute remain secret. Nevertheless, other publishers guess that Amazon is trying to sell Hachette e-books at bargain prices, and Hachette is trying to maintain their profit margins. One tactic that Amazon is using to prevail in this fight is to deliver this message to potential customers wanting to buy a Hachette title: Image from Amazon...when they are trying to delay shipping your book, whether they have it or not... This is a risky strategy for Amazon, because delays tend to annoy customers. Amazon's "branding" includes being customer-friendly, so any delay tactic might tarnish their image. Nevertheless, it also thwarts sales of Hachette titles--especially for those customers who are loyal to Amazon via their Amazon Prime relationship, or those who have an Amazon gift card to spend. Other customers take the bait and switch to another title recommended by Amazon when they are on a Hachette author's pages. The "currently unavailable" strategy is also used by Amazon in dealing with independent, single-book-inventory booksellers (who know they have delivered inventory to Amazon's warehouses). Even if the titles are somewhere in Amazon's inventory, Amazon can put these low volume items on the back burner without tarnishing their reputation for delivery within two days...if they say the title is "currently unavailable." The roots of this dispute go back to before the 2012 Justice Department anti-trust lawsuit against book publishers. Five publishers were found to have conspired to raise e-book prices. They'd banded together to try to maintain their profits in the face of the Amazon undercutting of prices. [See: " Can eBooks get past the price-fixing scandal? "] The settlement included a two-year period where Amazon was allowed to discount e-book prices. That agreement has expired, and now Hachette is stepping up and bargaining on principle. Pietsch insists that books are a special kind of product and cannot be treated like some of the other mass-produced items sold by Amazon. A major Hachette author, James Patterson, supports Pietsch and has said, " Amazon also, as you know, wants to control bookselling, book buying, and even book publishing, and that is a national tragedy. ” Other booksellers may want Hachette to win, but like scared schoolchildren in the face of a bully, they are standing quietly on the sidelines, fearful of the retaliation that has already been directed at Hachette. Meanwhile, some customers are upset by Amazon's policies. " If Amazon thinks I don't care about its silence, it's wrong. I take it personally that the company doesn't think it owes me even a half-baked explanation for why I can't buy some books from it, " complained Jack Shafer, writing for Reuters .In addition, some legal observers think that Amazon is risking government anti-trust action. Who will "win" in the long run? Source: " Hachette Chief Leads Book Publishers in Amazon Fight " by Jonathan Mahler, the New York Times, June 1, 2014. " Amazon Absorbing Price Fight Punches ," by David Carr, the New York Times, June 1, 2014. F ollow up: Read the articles and previous post linked above. In hindsight, do you think that the anti-trust suit brought against the publishers in 2012 may have had the unintended consequence of creating a better environment for an Amazon monopoly? Give your reasons. What do some established authors think are the risks of this stand-off? How might this affect sales? What are the marketing and potential sales issues for Amazon, and for the publishing industry as a whole?
  • Apple bites Beats: will it get its groove back?

    Image above of The Beats by Dr Dre headphones cradling the Apple logo , signifying the new merger Jimmy Iovine has agreed to sell Beats Electronics to Apple Inc . for $3 billion. Beats Electronics, the maker of Beats by Dr. Dre premium headphones, currently has a contract with Hewlett Packard to integrate Beats hardware with their machines. (The HP contract will not be renewed when it runs out in 2015.) Apple seems to be buying a company that brings to the table some attitudes and features that Apple lacks. "Human curation" (rather than algorithms) drive the music selection of Beats' streaming music services. The Beats headphones couldn't be more unlike the Apple ear buds--they deliver sound quality far superior to what the tiny ear buds even attempt to offer. But Jimmy Iovine does share the key quality of showmanship coupled with "reality distortion" that Steve Jobs used to create a memorable business story. One claim that Jimmy Iovine makes about Beats is that it it built its $500 million business over three years while spending "zero dollars" on marketing--just by using their ability to "harness the media." They can talk all they want. It will still be a treat to see what products evolve from this partnership. Source: " A New Irreverent Spirit at Apple " by Vindu Goel, the New York Times BITS, May 29, 2014. F ollow up: Have you listened to music using Beats Electronics headphones? What are the pros and cons, compared to Apple ear buds? Compare and contrast this new acquisition by Apple with Beats Electronics' partnership with Hewlett Packard.
  • How much would a Made-In-America iPhone cost?

    Ironically, the image above is from the Moto X, which can be made in America for approximately the cost of making it overseas. "How much would an iPhone cost if it were entirely made in the U.S.?" This question was posed on a recent Marketplace radio-cast. The supporting data had already been analyzed by IHS Technology . The bottom line? A 100% American-made iPhone would cost around $2,000...compared to the $650 - $850 retail cost of the iPhone on the market today. It turns out the the increased price is partly due to labor costs and partly due to supply-chain issues for component parts. Labor in the U.S. is two to three times the cost of labor in China, where the phones are currently manufactured. But access to the needed parts is a larger factor. Whole "villages" have evolved around iPhone manufacture in China (for example, Shenzen) . Component parts are nearby and few logistics problems exist to keep the assembly lines for iPhones moving. In addition, labor costs for the manufacture of component parts--the most expensive of which is the display-- are also a factor . Source: " How much would an all-American iPhone cost? " by Stacey Vanek Smith, Marketplace, American Public Media, May 20, 2014. F ollow up: Does it matter to you where the iPhone is made? Is maintaining production facilities and production jobs in the USA a value to you? List your reasons. Read the link regarding the Moto X as well. One point in that article is that customization is possible with the Moto X. What do the authors of that article see as the pros and cons of American production for that phone? What percentage mark-up, from cost to retail, is IHS assuming in arriving at the $2,000 retail estimate?
  • Success: structure trumps overwhelm and struggle

    Image from Have a goal? Almost every business situation and every career path is about setting goals and achieving them. But what does research show us makes the difference between someone who meets their goals and someone who doesn't? According to Tony Stubblebine , the CEO of Lift (a goal-setting app), here are some results: " Th e number one driver of whether a habit change is a success or not is how big the initial goal is. Everyone, if they're consistent, will eventually achieve something massive. But the people that end up failing are the people trying to achieve overnight success. " In other words: set small goals to get to your ultimate ai m step-by-step. " The structure matters. People put all of this effort into optimization and research, but honestly everything we see about success rate says that the most important thing is to structure your goals so you can be consistent. " In other words, only pick intermediate goal steps that you KNOW you can achieve on a schedule. One example cited is setting the goal "Go to the gym" rather than "Work out for 60 minutes on the elliptical machine." Getting a four-year college degree is an example of institutionalized structure that creates opportunities for success. One reason that it works is that a 120 semester-unit degree is broken down into semesters containing 3-5 classes. Still challenging, of course--but manageable. No one is expecting anyone to complete all 120 units at once. The goal-achieving system described by Stubblebine highlights programming reminders into your phone or creating some other unavoidable trigger that will inspire consistency. This is where the app comes in handy. By the way, the tagline of Lift is "Succeed at Everything." Source: " WHY SUCCESSFUL HABITS ARE ABOUT STRUCTURE, NOT EFFORT, " by Drake Baer, , May, 2014. F ollow up: Check out this app: Lift . What will be your first goal and what are the steps you will take to achieve it? List three long range goals that someone you know aspires to. Act as a consultant to that person. What small-step actions would you recommend that will lead to success in each of those goals?
  • Twitter stock plunges...for a good reason

    image from Twitter stock is in "free fall" according to the New York Times . Stock prices fell 17.8% in one day last week. What happened? Here are some of the reasons stock prices might fall: the entire stock market is falling, due to outside economic data earnings reports for the company in question could be lower than projected a competitor company might have come out with a better, competing, product a derogatory news event involving company personnel could be trending the stock may have "split" the laws of "supply and demand" may have their expected effect. In the case of Twitter, "supply and demand" is the culprit. from Reuters via the New York Times article linked below Here is what happened: Twitter IPO purchasers were not allowed to sell their shares until last week...when several Twitter stockholders' dumped their shares on the market. The excess supply drove the price down. Meanwhile, the buzz about Twitter's ability to make money didn't help. Revenue is up, but user growth is almost flat. This bodes ill for the future. "User engagement" is also down by 3% domestically and 10% internationally (this is the screen-refreshing rate of Twitter users). Nevertheless, business consultants are all about "getting on to Twitter." Go figure. Source: " Twitter stock plunges as more shares hit the market , " by Nicole Perlroth and Vindu Goel, the New York Times , May 6, 2014. F ollow up: Can you think of other factors that may cause a stock price to fall? What factors might cause a stock price to increase? What is a stock split? Is it good for investors or bad? Explain. How do Twitter executives explain the recent stock problems?
  • Alibaba: Who will be making millions from its messy IPO?

    image from Check out the investorplace Alibaba IPO VIDEO STORY Alibaba is a huge Chinese online retailer that was started by a non-tech-savvy English teacher named Jack Ma. It is making news because of its proposed IPO...and the mysteries that its recently-released financial statements are revealing: A libaba runs two websites, but its financial statements combine the revenue in one line. Revenue grew 60% from 2012 to 2013, but there is no detail provided to support how this happened. Alibaba claims that mobile-device net revenue has increased 19.7%, but shows no detailed breakout of mobile revenue and expenses in its financial statements. Alibaba restricta searches of its site by Baidu , a popular Chinese search engine and information provider. Alibaba's financial statements do not disclose how this artificial means of protecting profits might change if access is opened after the IPO. In addition, Alibaba might need the internet hits that Baidu could provide. Alibaba is extremely profitable, but questions arise as to whether that profitability can be sustained. Its business model is not inventory-based, but is a service that links buyers and sellers. This is much more difficult to evaluate and audit. Initial Public Offerings can be full of surprises. We will see how this one plays out. Source: " Big Profits at Alibaba, but Filing Has Gaps , " by Peter Eavis, the New York Times , May 6, 2014. F ollow up: What is an IPO? Why would a Chinese company want to launch an IPO on an American stock exchange? How does restricting access to Baidu help Alibaba? How does it hurt Baidu? What are the pros and cons of this policy?
  • Have a lot of followers? ZAP: In Russia, you're now a regulated media outlet

    cartoon from The Moscow Times article (in translation) Censorship is alive and well in Russia. Putin just signed a law that requires bloggers with more than 3,000 daily readers to register with the government as a "media outlet". But the bloggers are caught between Scylla and Charibdis . The law means that they have to abide by the same requirements legally to substantiate what they are saying on their blogs. However, because they are not "journalists," they are not allowed to make the official inquiries that could actually grant them the resources to provide the required documentation. Bloggers are stuck--not being able to write about the issues and situations that they find egregious if they cannot document them fully. Putin viewed the internet as a "special CIA project" in justifying this law. And he is not alone in tightening censorship of the internet. Crackdowns in China, Turkey, Venezuela and Pakistan have also occurred recently. Even in the United States, the recent controversy over "net neutrality" and broadband access has implications for free speech and censorship. The internet is a powerful platform for the dissemination of ideas...and where there is power, there is often a fight for control. Source: " Russia Quietly Tightens Reins on Web With ‘Bloggers Law’ , " by Neil MacFarquhar, the New York Times , May 6, 2014. F ollow up: What does "between Scylla and Charybdis" mean? What is another idiom that means the same thing? What other reference (from the article" refers to the same predicament? Why do you think there are so many cultural references to this situation? Think about the blogs that you read. What would be the pros and cons of these requirements being placed on the blogs with which you are familiar? Give specific examples.
  • Dealflicks: selling seats nobody wants is a valuable business

    image from Dealflicks is like Priceline: it tries to match moviegoers with seats that are not otherwise going to be used --and offers big discounts. According to Sean Wycliffe, CEO of Dealflicks, the statistics show that 88% of movie theater seats go empty. This is a marketing niche that was crying to be filled! Entrepreneur Kevin Hong teamed up with Wycliff and website whiz Zachary Cancio to start the business with venture capital funding. Wong and his sales teams have traveled the U.S. in their minivan trying to woo theaters across America into signing up with their service. image from article linked below Dealflicks is very flexible--letting the theaters set prices and determine which shows get discounted. Moviegoers access the deals via phone apps or the Dealflicks website. Dealflicks makes its money by taking 10% to 20% of the ticket price. Last year, sales were $245,000...but they are projected to be more than $2 million this year. Source: " Dealflicks aims to put movie fans in cheaper seats, " by Richard Verrier, the Los Angeles Times , May 6, 2014. F ollow up: According to the article, when do discounted tickets really work for the theater owners? What are the downsides? Who funded Dealflicks? What was their motivation? Why does Wong make sales calls by minivan rather than by phone?
  • Millennials trash privacy rights...and so do those controlling "big data"

    from " Your personal information is yours ." According to the LA Times, "A new report, written by a group led by White House counselor John Podesta , says that big data — the various entities that benefit from knowing all there is to know about you — is growing out of control." What does this mean? It means that sensors are everywhere: in our homes on city streets on wearable devices embedded in credit cards on our computers on our phones in our doctors' offices with our insurance companies at our places of business Business and government agencies are not going to be restrained from using this data if only "voluntary codes of conduct" are in place. Regulations and audited compliance will be the only things that protect us. "Consumer data" is personal data. NSA monitoring and widespread (but withheld) knowledge of the Heartbleed Virus means that businesses are not acknowledging personal rights. The business perspective might be: WE NEED this data to efficiently MARKET to our target demographics. But if Verizon is selling to third parties information about websites you are visiting and purchases you are making online, shouldn't you have a say? Or at least get a financial piece of the action? "We are concerned," says Jeff Chester, executive director of the Center for Digital Democracy, "that the principle is collect first and worry about privacy and consumer protection later." Maybe we should take the lead from Europe, where they set the line of scrimmage with this principle: "all people have a right to privacy." In U.S. law that right is only implied. Moreover, the EU has taken the following step: "In response to the NSA spying revelations, the European Parliament passed even stricter privacy rules in March. They still have to be approved by the European Union's 28 member countries, but represent the region's commitment to individual rights. The new rules wouldn't just give people more control over who can obtain their personal info but also grant a right to have online data erased — a so-called right to be forgotten." Wouldn't that be a right we could appreciate. Source: " Ownership of personal data still appears up for grabs , " by David Lazarus, the Los Angeles Times , May 6, 2014. F ollow up: Do you read the privacy disclosures before you agree to them? Why or why not? Reminder: have you changed your passwords in response to the Heartbleed virus? Remember: the passwords you have "out there" may be a ticking time-bomb. Would you value the European protections with respect to privacy? Would you like to be able to have your online data erased? Why do businesses support the loss of personal privacy? What are the pros and cons of this from a business perspective?
  • "Why I love doing taxes": one man's story

    image of Bruce McFarland from Marketplace website link to radio story Bruce McFarland is the Missouri Tax Guy. He does tax returns and he loves it. He acknowledges that people sometimes have a poor attitude with respect to tax preparation. Nevertheless he sees taking one's business records to a tax professional as a haven of safety--where clients go (not unlike a spa) to be taken care of by an honest and knowledgeable person. I prepare my own taxes, with the help of an ever-morphing tax program whose "Easy Step" function becomes more cumbersome each year. Still, there is a certain satisfaction in knowing where all the money went--and also in seeing how much of a contributor I am to the functioning of the federal and state governments. Sources: " Why I love doing taxes ," by Kai Ryssdal and Bruce McFarland, , April 15, 2014. F ollow up: It is after April 15th. Have you filed an extension? Did you do your taxes? What changes are you going to make this year in record-keeping strategies? What apps are you using to help yourself?
  • "bots" pretending to be humans is a new form of ID theft

    image from pandodaily Bots pretending to be human is a new form of ID theft...but instead of targeting you and me and our credit cards online...the arena is "digital ad theft." Internet researchers believe that at least a third (and in some arenas up to 60%) of all internet traffic is not human. It is trained computers working those mouse buttons. Computers are clicking on the Eye Creams and Diet Miracles and other products appearing in ads online. So, if an advertiser thinks they are getting 500,000 hits on their ad that appears in the Facebook margin...they are not getting their money's worth if the ad "viewer" is a robot trained to click ads.The computers don't represent potential sales. Of course, software has been developed to detect non-human mouse movements or click timing. But then more sophisticated robot ad clickers are developed. It escalates. One company specializing in spotting digital ad theft is White Ops . Tamar Hassan, Chief Tech officer of White Ops, says that digital ad fraud can be more lucrative because there is a cost to obtaining the credit card number and the high risk of being prosecuted for fraud, because there are real human beings who are harmed. These risks are less with digital ad fraud, so ad fraud presents a "business opportunity" for the criminally minded. Sources: " Digital advertisers losing the 'bot arms race' ," by David Weinberg, Marketplace American Public Media , April 14, 2014. F ollow up: What are the marketing issues for the "big box" company mentioned in the article? How does the digital ad criminal make money?
  • Lobbying community leaders to work against their communities

    Wouldn't millions of Americans be happy to have the choice to use pre-filled-in tax returns? Even according to the IRS, tax filing is expensive: Why would religious leaders, small town politicians, and a state NAACP official write letters to newspaper editors and op-ed pieces that spoke against such an option. The arguments they used was that the option would hurt low-income people and create a conflict of interest for the IRS, who could misuse their power against vulnerable taxpayers. As it turns out, the indignant individuals arguing against the implementation of the super-simplified tax system had been lobbied by individuals like Emily Pflaster, who works for Intuit's public relations firm, JCI Worldwide . Intuit makes the tax preparation software called Turbo Tax . Intuit's public relations reps did not point out some of these particulars, which were articulated by ProPublica : return-free filing would allow million of taxpayers to do their returns in minutes returns could be filed for free the IRS would use information that is already submitted by banks and employers...and taxpayers could review the items and make adjustments this program has been endorsed by former President Reagan and President Obama Also, according to ProPublica's research, Intuit spent over $2.6 million last year on lobbying. Sources: " TurboTax Maker Linked to 'Grassroots' Campaign Against Free, Simple Tax Filing ," Liz Day, ProPublica via Mother Jones , April 14, 2014. F ollow up: Describe the difference between "Grassroots" campaigns and "Grasstops" campaigns Would you take advantage of a pre-filled-in tax return option? Why or why not? Who are the ideal candidates for this option?
  • Flash Boys: An insight into high speed--and seemingly "unfair" trading

    View the Bloomberg TV interview with Michael Lewis and Brad Katsuyama Michael Lewis's new book, Flash Boys , is about the chasm between stock market traders in the business world and the programmers--many from Russia--in the new environment of high-frequency trading. Brad Katsuyama was a trader new to Wall Street who worked for the Royal Bank of Canada (RBC). He had an outsider's view of the trading system, based on norms from his Canadian work experience. He expected to understand trading transactions. When his employer, RBC, bought Carlin Financial there was a bit of a culture shock. Carlin's CEO, Jeremy Frommer , was not the same kind of grounded trader that was the RBC norm. In addition, Frommer headed a company that championed super-fast computer trading. But this trading did not work as it was supposed to work, according to logical norms. Here is what started happening: " Before RBC acquired this supposed state-of-the-art electronic-trading firm, Katsuyama’s computers worked as he expected them to. Suddenly they didn’t. It used to be that when his trading screens showed 10,000 shares of Intel offered at $22 a share, it meant that he could buy 10,000 shares of Intel for $22 a share. He had only to push a button. By the spring of 2007, however, when he pushed the button to complete a trade, the offers would vanish. In his seven years as a trader, he had always been able to look at the screens on his desk and see the stock market. Now the market as it appeared on his screens was an illusion ." This meant that Katsuyama could not do his job the way he had always done it. He needed accurate information to be able to buy and sell stock for his clients. But his electronic screens showed him trades that would vanish whenever he took any action. At first, he thought it was an Information Technology problem, but the IT folks thought it was "user error." Then the IT folks blamed the distance between markets, and the number of people on the system. But these were never factors before. Finally Katsuyama hired Rob Park, a technology guy, to work with him in a two-way conversation that would shed some light on these transactions. RBC gave them a budget to conduct trading experiments...which led them to discover that if they approached only ONE trading exchange with a possible transaction, the screen data would be accurate. But if they approached multiple exchanges, transactions would disappear the moment the trader tried to act on information. They got a programmer, Allen Zhang, involved. Acting counter-intuitively but effectively, Zhang designed a program that would delay transactions a couple of milliseconds so that all the buy or sell orders would arrive at the exchanges at the same time. For some reason, this eliminated the problem of the disappearing transactions. The article goes on to explain further complications and elucidations involving this trading, explained fairly straightforwardly for someone interested in Wall Street finance. The earnest approach of Katsuyama and his colleagues--to fixing and understanding the trading system--almost makes high finance seem like a regular business. For the whole story, read the book, Flash Boys: A Wall Street Revolt by Michael Lewis. Sources: " The Wolf Hunters of Wall Street ," by Michael Lewis, New York Times Magazine , March 31, 2014. ...and the Bloomberg video linked above. F ollow up: Do you think that these risks described are blown out of proportion? Can these high speed trades be controlled and understood by the average investor after all? What is the role of regulation in this environment? Do you think it is best undertaken privately, as was done by the Royal Bank of Canada? What are the pros and cons of private regulation? What does "RBC nice" mean? How would that compare to the "Wolf of Wall Street" mentality?
  • Nothing is safe: Heartbleed coding flaw breaks encrypted financial transactions

    image from How much of a problem is the Heartbleed coding mistake that endangered every encrypted financial transaction? According to Bruce Schneier, a cryptographer and security consultant: " I've been saying that on a scale of one to 10, this is an 11 ." There are public policy issues that are arising with respect to Heartbleed ( i.e .the NSA and other security organizations have known about the vulnerability, and have most likely taken advantage of it--without informing citizens and consumers). But, like many business problems--fixing the blame and finding those who abetted the crime does not help the "victims"--which are the millions of us who have been using online banking and retailing sites over the last few years. What do we do about this? The basic advice is: Don't change your password until you are sure the site has fixed its vulnerability problem; and DO change your password for every single institution with which you transact online business. Although it may seem daunting to make a list of all of the sites with which you have done business, and systematically go through them one by one to change the password--that hassle pales in comparison to dealing with identity theft once it has occurred. Make sure you don't forget to change your passwords on Google, Facebook and Yahoo--who have already admitted that they were affected by Heartbleed. They have already fixed the flaw on their side. Some institutions have said that the flaw did not affect them, but others have claimed the issue was "industry-wide" with respect to banking institutions. But if you have used the same password on more than one site--if your password was used on a vulnerable site, it is out there and can be tapped to invade your identity on sites that said they were safe. Sources: " Flaw Calls for Altering Passwords, Experts Say ," by Molly Wood, the New York Times , April 9, 2014. F ollow up: Have you changed your password for Google, Facebook, and/or Yahoo yet? If not, why not? Have any institutions informed you that their site was vulnerable? Have they encouraged (or required) you to change your password? What was the procedure like? How long did it take? Share your experience with others and encourage them to protect their identities as well.
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