Internet security has deteriorated markedly this year as a new generation of invasive computer attacks, often masterminded by criminal gangs, has reached a heightened level of sophistication, according to the latest studies of online threats.

“It’s getting worse year after year,” warned Pat Peterson, chief security researcher at Cisco Systems, who blamed the deterioration on the fact that computer “hacking” is quickly turning into big business. “Capitalism is working against us,” he said.

Read more.

Greg Mankiw, helping a student approach learning economics, exposes a nice life lesson (my emphasis added):

As you come to grips with these various points of view, you will be in a better position to judge which you find most cogent. But don't expect to reach unequivocal positions easily. In my view, it is best to consider all knowledge as tentative. The best scholars maintain an open-mindedness and humility about even their own core beliefs. Excessive conviction is often a sign of insufficient thought, which in turn may be derived from a certain pig-headedness. Intellectual maturity comes when you can maintain the right balance between informed belief and honest skepticism.

Indeed.

Good stuff over at RGE Monitor.

Part 1.

Part 2.

Hat tip, Greg Mankiw.

The big alternative to Federal loans for the ailing US automobile companies is bankruptcy under Chapter 11. Using Chapter 11 a company goes into receivership under the stewardship of the bankruptcy court. A bankruptcy judge effectively becomes the final arbiter for decisions material to the finances and structure of the firm. This allows a chance for firms to reorganize with the objective of "emerging" from bankruptcy as solvent, going concerns. Jobs are preserved.

Naturally companies go into Chapter 11 because they are in dire financial straights, unable to finance working capital through current operations. This is where something called "debtor-in-possession" (DIP) financing is useful. DIP debt is senior to all other debt on the balance sheet; if the company is actually forced into Chapter 7 liquidation the DIP loans are paid back before any other creditors or investors. DIP financing is provided by specialized lenders (e.g. General Electric).

In these times of financial market implosion DIP financing is increasingly difficult to obtain. Lenders are unwilling to write low-risk loans for commercial paper let alone higher risk deals for bankrupt companies.

What is "anticipatory bankruptcy"? It's when you're pretty sure you'll need to go bankrupt, but you're not quite dead yet, so you file for bankruptcy under Chapter 11 while you are still solvent. You use your current cash account as leverage to obtain DIP financing that you might not be able to get later. You can read more about this subject here.

Or you use DIP-less financing. This one looks like a train wreck in the making though.

From Reuters:

The bankruptcy of newspaper publisher Tribune Co and potential filing by Nortel Networks Corp reflect the increasing difficulty of accessing loans in bankruptcy, which may cause companies to preemptively file for protection, Morgan Stanley said.

Tribune filed for Chapter 11 bankruptcy protection...Instead of securing a debtor-in-possession (DIP) loan, which has traditionally been made to fund a company as it reorganizes in bankruptcy, the company reached an alternative financing deal with Barclays Capital.

This includes a $50 million letter of credit and continued use of a $300 million trade receivables facility it had made with Barclays in July. It has a $225 million balance on the facility.

"Tribune's filing is telling, and what concerns us is that constraints on DIP financing will only worsen as the cycle wears on," Morgan Stanley analysts said on Friday in a report....

"The most telling evidence of the challenging DIP financing environment is that companies with significant cash levels are contemplating preemptive bankruptcy (Nortel is an example) as a means to continue to function in a DIP-less bankruptcy backdrop," Morgan Stanley added....

The popularity in recent years of companies taking out loans that were secured against their assets also complicates securing a DIP loan, as the companies are left with fewer unencumbered assets to pledge against the loan, Morgan Stanley said.

"This is yet another example of the unintended consequences of the proliferation in leveraged loans and securitization over the past few years," the bank said.

Bankruptcy proceedings may also be more contentious than previously as corporate lenders have shifted away from banks to hedge funds and other investors.

"The holders of paper heading into bankruptcy are very different in this cycle relative to history," Morgan Stanley said.

"The involvement of hedge funds and Collateralised Loan Obligations (CLOs) shapes our expectation that the bankruptcy process will be contentious relative to the clubby democratic-type negotiations involving commercial banks' workout groups of the past," the bank added.

One of the principles of Scrum is the daily team meeting where each team member answers three questions: What did you do yesterday? What are you going to do today? What is blocking you? The theory for this is that it focuses the team on daily progress, shared accountability and exposes problems quickly.

Several months ago I tried experimenting with this technique at the management level. Each morning my management team meets at 9:00. Each one answers the three questions.  At first it seemed a little stilted and unnatural, but we persisted. What we have discovered is:

1. We like doing this.
2. We think it's been quite helpful in keeping us focused on immediate priorities.
3. It elevates discussion of longer-range things so that we anticipate needs rather than react to emergencies.
4. Even though we target 15 minutes for this daily management scrum we'll allow as much as 15 additional minutes for more elaborate discussion of specific topics. This aspect is technically a violation of scrum rules, which say that deeper discussion mandates a separate meeting. I think this is a worthy violation of the rule for the sake of efficiency among the management team though.
5. It's hard not to be too heavy-handed as the manager of the managers. A scrum is a team of equals so staying off the gas is something I try to do in this meeting.