Chicago Boyz

A few weeks ago I fretted about the apparent contradictions of Bush’s economic policy. I thought that

Either there’s going to be continued economic recovery and bonds are going to get killed, or there’s going to be a weaker recovery combined with inflation and a weak dollar and bonds are going to get killed.

Now I’m not sure. Stocks haven’t been able to rally in the short run, the dollar is weaker, and the bond market is bubbling and simmering.

Note also (e.g., here and here) that growth rates in monetary aggregates slowed significantly during recent months. It’s conceivable that the markets have already discounted expected inflation. Rates may yet go up as the economy continues to recover, but in the short run, at least, inflation fears may not be as potent as they were a few months ago.

There’s a bunch of economic statistics due to be released Friday. Recent number releases have tended to be upside surprises that were positive for stocks and negative for bonds. The same thing could happen tomorrow. However, the markets seem to have begun to discount optimism. If tomorrow’s data come out below expectations we could get a big break in stocks and a pop in the bond market. That would be the path of least resistance.

Maybe in the long run bonds really will get killed, but that forecast seems premature for now. Too many people expect it, just as too many of us are waiting for a stock rally. Market reaction to the coming data releases should help to clarify whether the bond market’s recent strength will continue or has run its course.

A few months ago I wrote a couple of posts (here and here) in which I argued that the Ritz/Dakota single-use digital camera was probably doomed to commercial failure:

Certainly there is a benefit from eliminating film development and from reusing cheap digital cameras. The problem for Ritz is that it can’t prevent consumers from capturing this entire benefit for themselves by buying their own digicams and printers. All that is necessary is for someone to introduce a cheap reusable digicam, which is surely not more difficult to develop than a cheap digicam that is fitted with devices to prevent consumers from downloading their photos on their own. (There are already $20 reusable digicams. Image quality is low, but there is no reason to think price and quality won’t improve.)

I was right, though not quite in the way that I expected. It turns out that the Dakota digicam is already reusable — if you know how to hack it. A guy who does know was kind enough to leave a comment on my old post, with a link to his web site. With just a few simple adjustments the Dakota is capable of making excellent images and can be used again and again. Not a bad deal for 11 bucks. I don’t think it will be long before inexpensive, reusable digicams are widely available commercially. The Dakota is a transition product that will soon be eclipsed.

(BTW, the commenter describes himself as “a recently-graduated electrical engineer looking for work. If you know of any openings for an entry-level EE/CE, drop me a line or feel free to peruse/send my resume.” I don’t know anything about electrical engineering but he seems to be on the ball.)

In the U.S., the name of this holiday has changed and its scope has expanded. In other countries it is called something else. But these are mere details in the scheme of things. It is important to remember those who fought, and especially those who died, defending our country.

The late philosopher Emil Fackenheim famously said that Jews should not give Hitler posthumous victories. Perhaps we should extend this prescription to say that citizens of democracies should not give Hitler posthumous victories by yielding to his philosophical heirs who now attack us.

I just ordered a Dell computer for a member of my family. I had tech questions. Dell’s phone system prevents prospective buyers from contacting tech support. I tried customer service but gave up because my call was shunted to, I think, India, with a bad phone connection and a rep who put me on hold for several minutes — until I was disconnected. Finally I got help from someone on Dell’s sales line. However, I wasn’t ready to purchase immediately, the salesman wasn’t going to be available the following day, and I prefer online ordering because it minimizes miscommunication.

Unfortunately, Dell’s online ordering system is confusing, I think intentionally so. It is set up to make apples-to-apples price comparisons impossible. I think that this is inexcusable for a company selling commodity products distinguished mainly on price.

You can see what I mean if you visit the Dell website and price various computer systems. Try it first via the “home and home office” link, then try to price an identical system under the “small business” category. You can’t do it, because each category has a different mix of options and different “sale” items. The sales rotate every week or two, and if you follow the pattern for a few cycles you see that every discount or freebie is offset by an overcharge (relative to market prices) for something else. This week you get more RAM and hard-drive capacity and “free” shipping, but you pay $100 over market for an LCD monitor, and get charged an additional $79 for a nonstandard warranty (unless you deselect it: this option is presented in an exceptionally misleading way). Or you get the RAM and HD and a “free” printer, but ground shipping costs $110 and you can’t buy the system without a monitor. The pattern is always one of rotating sales, different sale items in “home” and “business” categories, and different configuration options in each category. And a special deal on one option is always offset by an unavoidable upcharge elsewhere.

What makes Dell deceptive is its burying of the selective price increases. The customer has either to accept the deal without scrutinizing it much, and thereby pay through the nose for some component or service; or he can spend a lot of time comparing system configurations and waiting for the sale that most closely approximates his needs. In any case it’s clear that Dell’s real prices are higher than it wants customers to believe, and that Dell’s service is not what it once was.

I once favored Dell because they had what seemed to be the best mix of price, quality and service. I ordered from Dell this time because, at first, doing so seemed to be the easiest way to go, and later it didn’t seem worthwhile to restart the shopping process. Dell isn’t terrible, and I’m sure that the computer I ordered will be acceptable for the price.

But Dell no longer has a clear advantage over other PC marketers. And I am annoyed that Dell uses its online ordering system — which should make ordering a computer faster, easier and more transparent — to obscure its pricing. If buying a Dell means spending hours comparing apples to oranges and looking for hidden charges, I may as well shop elsewhere next time.

UPDATE: I should have credited my brother for making the initial suggestion that Dell’s behavior in making price comparisons difficult may be intentional.

UPDATE 2: The computer, which I ordered Sunday, was shipped Tuesday and arrived Thursday. It appears that in at least this respect Dell’s service has improved.

Karsten’s post from the latest Carnival of the Capitalists is worth reading.

Options are always undervalued. The difficult thing is to know which ones.