The dark side of micro-lending. The Wall Street Journal has a long, fascinating story on a new credit bubble in India. On the surface it sounds familiar: too many big private equity investors chasing too few good deals, resulting in binge of borrowing that now threatens to destabilize an entire financial system. It sounds like your average bubble--only the loans we're talking about aren't for home mortgages or corporate buyouts; they're to poor people who want to open vegetable stands. As micro-lending went from a curious form of charity to a mainstream business, the Journal reports, hundreds of million of dollars in private equity money flowed in from firms like Sequoia Capital. Like American homebuyers, Indian entrepreneurs were able to pay back one loan with another, racking up increasing amounts of debt, and many now find themselves unable to pay back their loans, leading to a mass "repayment revolt," where borrowers are refusing to make payments.
A tweet is born. Congratulations are due to Evan Williams, CEO of Twitter, on the birth yesterday of his healthy, 8-pound baby boy. Of course, this is old news for followers of Evan's wife Sara's Twitter feed, as she twittered the whole event as it happened. Beginning on Monday evening at 8:46 p.m., Sara twittered, "Dear Twitter, my water broke. It wasn't like Charlotte in Sex and the City. Now, timing contractions on an iPhone app." Her messages continued through her time in the delivery room, (in which she tweeted, "Epidural, yes please,") and ultimately culminated with a tweet that reported that Evan was "changing the first diaper." As the L.A. Times points out, hopefully this should get Evan's mind off Twitter's meltdown last week that was due to a hacker attack.
Business in a box. Well, we suppose it was inevitable. After numerous articles about how cute web startups like Twitter just couldn't figure out how to make an honest day's pay, another cute web startup has sprung up to fix the problem. CheddarGetter, which TechCrunch introduces today, is for startups that "don't have the infrastructure in place to accept payments for whatever [their] business model is." The startup will make it easy to take credit card payments for a variety of new-age business schemes, like subscriptions, micropayments, and tip jar-style donations. (Hip hop naifs, take note: "Cheddar" is slang for "money," which, despite the recent success of some revenue free startups, is still generally a good thing.)
401(k) contributions on the rise. The latest data from 401(k) provider Fidelity Investments shows that more employees are increasing their saving rates in their 401(k) accounts than decreasing them, The Wall Street Journal reports. The second quarter marked the first time in a year that this was true. On the employer side, a Watson Wyatt study released today shows that almost a quarter of companies polled that have cut their 401(k) matches plan to reinstate the matches within six months. A glimmer of hope.
One company's struggle to start over. Interesting story in today's Washington Post about Dowding Industries, a family-run auto parts maker that is struggling with their recent decision to get out of the auto industry and focus their efforts on manufacturing parts for wind energy turbines. After a $12 million investment in a new plant and machinery, so far the Michigan-based company has seen little demand. As Chris Dowding, the CEO of the 44-year old company explains, "We've never stepped out this far...You're banking 40 years of your life on a new deal. Everything we have is now highly leveraged because of this new business."
The Whole Foods health care plan. Add Whole Foods co-founder and CEO John Mackey to the list of Obamacare opponents. In this recent Wall Street Journal opinion piece, Mackey argues that the country's current deficits "are simply not sustainable " and that "the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits." His list of eight reforms to lower health care costs is headlined by a continued move toward high-deductible health insurance plans, like the one used at Whole Foods, which encourage employees to "spend...more carefully." Mackey also has some pointed opinions on how to hire leaders.
Hedge funds get litigious after finding out their money funded a swingers resort. Sometimes business jargon sounds like it's trying to confuse you. In Milton Ault's case, when he asked a dozen hedge funds for $4.2 million to finance "an integrated global community of trading partners," what he really meant was that his company Zealous Inc. needed the funds to build a swingers ranch in the Catskills. Now the hedge funds are suing. Ault, whose company merged into Adult Entertainment Capital last September, tells the New York Daily News that the press release about 140-acre project for "fast-growing swingers lifestyle" was a joke and points out that the funds have already recouped a portion of their investment.
Your Twitter/Google/texting addiction? Totally your brain's fault. Humans are hard-wired to seek, even when it gets us in trouble, argues Emily Yoffe in Slate. To find out why, she looks back to a 1954 study that found that when rats were allowed to press a lever that stimulated their lateral hypothalamus, they would press it until they collapsed. At the time, it was assumed the researcher had found the brain's pleasure center. Only it didn't look like it was actually producing pleasure. The rats were "excessively excited, even crazed" and constantly sniffing and searching. A Washington State University neuroscientist named Jaak Panksepp noticed that "each stimulation evoked a reinvigorated search strategy," which he called seeking. After decades of mapping the emotional systems of the brain, he found that "seeking is the granddaddy of the systems." It's the reason why captive animals would rather search for their food than have it given to them. In humans, it's the reason connecting thoughts or finding meaning gives us a thrill. And no wonder: "the juice that fuels the seeking system is the neurotransmitter dopamine," explains Yoffe. Inc. columnist Meg Cadoux Hirshberg has some firsthand knowledge of BlackBerry addiction.
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