What do you want to have – an iPod or a mp3 player?

Mp3 players were there long before before iPod was introduced. Apple basically makes mp3 players but with their marketing strategy, they engraved in people’s mind that they are making iPods not mp3 players. Apple positioned itself in such a way that anytime someone talks about a mp3 player, the first thing that comes to mind would be a iPod not a mp3 player. So, when a child ask their parents for a mp3 player, they say they want a iPod not a mp3 player. iPod became a phase that identifies with only mp3 players made by Apple. So, now when you talk about iPod or go to a consumer electronics shop and ask for an iPod, you have eliminated the competiton, because all are Apple’s product. This also helps Apple to charge a premium price on their products.

James Bullough Lansing

James Bullough Lansing was born James Martini, 14 January 1902, in Macoupin County, Millwood Township, Illinois. His parents were Henry Martini, born in St. Louis, Missouri, and Grace Erbs Martini, born in Central City, Illinois. His father was a coal mining engineer, and his work required that the family moved about quite a bit during Lansing’s early years. Lansing was the ninth of fourteen children. For a short time, Lansing lived with the Bullough family in Litchfield, Illinois. He later took their name when he changed his from Martini to Lansing.

Lansing graduated eighth grade at Lawrence School in Springfield, Illinois, attended Springfield High School and also took courses at a small business college in Springfield.

As a young lad he was very interested in all things electrical and mechanical. At about the age of 10, he built a Leyden Jar which he used to play pranks on his playmates. He also constructed crystal sets, and at one time, probably about the age of 12 or so, built a small radio transmitter from scratch. The signals from this set were apparently strong enough to reach the Great Lakes Naval Station in Illinois; naval personnel determined the source of these signals and later supervised the timely dismantling of the young Lansing’s radio transmitter.

For a while Lansing worked as an automotive mechanic, specializing in fine engine repair work. He attended an automotive school for mechanics in Detroit through the courtesy of the dealer he worked for in Springfield.

His mother died on November 1, 1924 when he was 21; he then left home. He met his future wife, Glenna Peterson, in Salt Lake City in 1925. At the time he was working for a radio station as an engineer. He also worked for the Baldwin loudspeaker company and met his future business partner, Ken Decker in the city.

Lansing and Decker moved to Los Angeles where they set up a business manufacturing loudspeakers. It was called the Lansing Manufacturing Company. Just before the company was registered on March 9, 1927 Lansing changed his name from James Martini to James Bullough Lansing at the suggestion of his future wife, Glenna. Most of his brothers had adopted the surname Martin, two of which (Bill and George) came to LA to work with him.

In 1928, AT&T’s Western Electric established a division for the specific purpose of installing and servicing their loudspeakers and electronic products for motion picture use. Called “E.R.P.I.” (Electrical Research Products, Inc.), it was purchased as part of a consent decree in 1936 by a group of E.R.P.I. executives, including George Carrington, Sr. and Mike Conrow. They changed the name to “All Technical Service Company”, in short ALTEC. The principals of this new company were George Carrington and E. L. Conrow. It became apparent to Carrington and Conrow that they would have to develop a source for new manufactured items if they were to be a viable force in the business on a long-term basis.

In 1939, Ken Decker, Lansing’s business partner and a reserve officer with the United States Army Air Force, was killed on maneuvers when the airplane he was piloting crashed. Without Decker, Lansing’s business suffered, and it became apparent in 1941 that the sale of the company was the only way to keep it afloat. Altec Service Corporation bought Lansing Manufacturing in 1941, seeing the company as a valuable source for loudspeaker components. The combined company was named Altec Lansing. They were reputed to have paid a price of $50,000 for the acquisition, and there were nineteen employees at the Lansing Manufacturing Company at that time. Lansing assumed the title of Vice-President of Engineering in the new Altec Lansing Corporation.

In 1941, when the Altec Service Corporation bought the assets, goodwill and trade names of the Lansing Manufacturing Company, Lansing agreed that he would not go into business for himself for a period of at least five years. While there were continuing disagreements between Lansing and Carrington, Lansing did honor this commitment and in 1946, five years after the acquisition, he left Altec Lansing to form a new company. Everyone at Altec Lansing wished him well; they had known that he would eventually leave after the five-year commitment had been met.

In 1946, Lansing after leaving Altec lansing started a new company called “Lansing Sound, Incorporated”. Altec Lansing had a problem with that name’s similarity to trademarked brands they had developed, so James Bullough Lansing renamed his new company “James B. Lansing Sound, Incorporated”. Eventually, this became shortened to JBL on product branding and then officially as the company name.

The company had been formed during the economic slump immediately following World War II. As we have noted before, Lansing was not a shrewd businessman, and the company never prospered under his direction. In November of 1947, Lansing secured additional funding from Roy Marquardt of the Marquardt Aviation Company. With this agreement, Marquardt Aviation agreed to furnish manufacturing space for a cost to Lansing of 10% of net sales, with the Marquardt company receiving the right to take assignment of accounts receivable to satisfy at any time the amount due. Marquardt further agreed to lend money to Lansing for working capital in such amounts as would not be a burden on the Marquardt corporation itself. The Marquardt company was further given an option on 40% of the stock of the Lansing company, and the Marquardt Aircraft Company was represented on the Board of Directors by William H. Thomas, who was at that time the Treasurer of Marquardt. The company moved its offices and manufacturing facilities to the Marquardt plant at 4221 Lincoln Boulevard in Venice, California. In late 1948, the company moved to the Marquardt facility at 7801 Hayvenhurst Avenue in Van Nuys, California.

At the end of its second fiscal year in 1948, James B. Lansing Sound, Incorporated, showed an operating loss of some $2,500; and this with most of the tooling and development costs still in the process of being capitalized. By December of 1948, the debt to the Marquardt Aircraft Company had reached almost $15,000, and it was inevitable that the company would have to be taken over by Marquardt with Lansing continuing on as an employee. Lansing further bought out the interest held by Messrs. Snow and Noble so that he became the sole spokesman for the company in negotiations with Marquardt. In early 1949, Marquardt was purchased by the General Tire Company, who were not interested in continuing the relation with Lansing. The tie between Marquardt and Lansing was severed, and at that point, William Thomas left Marquardt and assumed an important role in the operation of James B. Lansing Sound, Incorporated. The company then moved to new headquarters at 2439 Fletcher Drive in Los Angeles.

During the first three years James B. Lansing Sound, Incorporated made no profit at all; it barely stayed afloat. Over the short span of three years, the company occupied four locations, and that had an impact on production efficiencies. There were rarely enough funds to pay all suppliers. By late 1949 the company had amassed a total debt of some $20,000. One supplier who was very sympathetic to Lansing and his work was Robert Arnold of the Arnold Engineering Company in Chicago. Arnold Engineering extended favorable terms and deep credit to Mr. Lansing. It may be said that it is through the sufferance of Arnold that JBL is in existence today. At one time, James B. Lansing Sound, Incorporated, had an indebtedness to Arnold Engineering Company stretching over a period of two years. It is not sure why Arnold provided this extra measure of lenience to Lansing, but it may have had to do with the fact that Lansing was an avid promoter of Alnico V magnet material for loudspeaker use. Lansing’s endorsement of the new material would ensure its general acceptance by the rest of the industry.

James Lansing was noted as an innovative engineer, but a poor businessman. Mr. Lansing struggled to pay invoices and ship product. As a result of deteriorating business conditions and personal issues, he took his own life on September 4, 1949. The company then passed into the hands of Bill Thomas, JBL’s then vice-president. Mr. Lansing had taken out a $10,000 life insurance policy naming the company as the beneficiary. That allowed Mr. Thomas to continue the company after Mr. Lansing’s death. It must remember that $10,000 was a great deal of money in 1949. When Lansing died he left his one-third share of the company to his wife. During the early fifties, Thomas negotiated the purchase of this amount from Mrs. Lansing and thus became the sole owner of James B. Lansing Sound, Incorporated. Mr. Thomas was responsible for revitalizing the company and saving it from extinction.

JP Morgan, Jamie Dimon and the 2 billion USD trade loss!

Was waiting to write on this for a while. Thought that once the whole episode is over, I can just summarize or express the whole incident. But that’s not going to happen as something new has come up -the LIBOR rate manipulation fraud. Bob Diamond, CEO of Barclays had too resign. Gone with him are both the Marcus Agius, Chairman and Jerry del Missier, COO of Barclays. But I am not going to discuss that. Surely, will do that some day later. Now that JP Morgan’s loss is shifted down in the list of the most important news, lets recall what transpired and what I understood.

Jamie Dimon was one of the smartest people in Wallstreet. He became the CEO of JP Morgan in 2005. The highlight of his career is during the financial crisis of 2008 when he lead his firm without any losses and also took over Bear Streans in a week-end bone crushing deal where he went toe to toe for every cents on dollar. Mr. Dimon said on the company’s first-quarter earnings on April 13,2012 that questions about the office’s trading were “a complete tempest in a teapot”.  Too an extent he is correct for a company which has 2.3 trillion US dollars asset under it $ 2 billion losses was completely under control which was actually less than 0.1percent of its assets value. So why so much noise is made about the whole affair?

The whole loss to JP Morgan was orginated in its investment bank division in London. This was under JP Morgan’s Chief Investment officer Ina Drew. A series of derivative transactions involving credit default swaps (CDS) were entered into, reportedly as part of the bank’s “hedging” strategy. The position was acquired by a london trader Bruno Iskil nicknamed “London whale”. He is named so due to the massive position he had taken that he could influence the market. He accumulated a position that outsized CDS positions in the market. These positions in the credit derivatives index said to contribute to JP Morgan Chase’s $2 billion loss as the bank and hedge funds trading against it unwind bets. It is said JP Morgan took these position hoping that the European crisis would exaggerate and with this bearish view in mind, they took position that would not only hedge about particular losses but might also help them getting making some profit. But in March, the conditions improved in Europe, with Greece agreeing to its austerity conditions and taking a bailout and the position of JP Morgan started to sour. The exact position of JP Morgan is not made public. I think this was one of the ways how JP Morgan stayed profitable during the financial crisis.

Another problem was  a major defect in one of JP Morgan’s key risk management tools that lead to its losses. JP Morgan changed the gauge called value-at-risk, or VaR, for its chief investment office in mid-January before losses began piling up on derivatives held by the unit.VaR represents the maximum amount that traders would expect to lose on 95 out of 100 trading days, according to New-York based JP Morgan. It’s recalculated daily, and the quarterly average is reported in securities filings.The VaR at the CIO was reported as averaging $67 million in a regulatory filing on April 13, the day JPMorgan posted first- quarter results. When JPMorgan realized the new version was flawed and reverted to the old model, it showed VaR averaged $129 million and ended the quarter at $186 million.The new measurement was “implemented in January and did effectively increase the amount of risk this unit was able to take,” Dimon said. The changes coincided with derivatives trades that later proved to be illiquid and prone to losses. Dimon said that the chief investment office’s hedging strategy was “poorly conceived and vetted,” and that traders at the unit “did not have the requisite understanding of the risks they took.”

The repercussions of these losses were that Ina Drew is fired from JP Morgan and $18 billion US dollar of its market capitalization has been wiped away in days following the announcement. Its share price dropped from $43 to $33  in 10 days. The whole industry reacted in a aggressive way to the news – the FED, the SEC, the CFTC and suddenly every one seemed too have an opinion.

The most important discussion seemed to be would had it come under the jurisdiction of the Volcker rule which is set to be applied the next year. This seemed too be a concern for many. The Volcker rule bans proprietary trading but has no saying in hedging. This is because JP Morgan was basically hedging which would have profited the firm immensely if the conditions had prevailed according to their notions.

Now this is okay since all these rules are introduce to make the banking industry secure from any further financial crisis. But it was the hedge funds who profited by taking opposite position to the “London Whale” when they started knowing his position. In February 2012, hedge fund insiders such as Boaz Weinstein of Saba Capital Management became aware that the market in credit default swaps was possibly being affected by aggressive trading activities. The source of the unusual activity turned out to be Bruno Iksil, a trader for JP Morgan Chase & Co. and referred to as “the London Whale” in reference to the huge positions he was taking. Heavy opposing bets to his positions are known to have been made by traders, including another branch of JP Morgan, who purchased the derivatives JPMorgan was selling in such high volume. Markit CDX North America Investment Grade Series 9 10-Year Index, CDX IG 9 was a derivative which Weinstein had noticed to be losing value in a manner and to a degree which seemed to diverge from market expectations. It turned out that JP Morgan was shorting the index by making huge trades. JP Morgan’s bet was that credit markets would strengthen. This index is based on 121 investment grade bonds issued by North American corporations.

But the losses drew a huge reaction. This is because Jamie Dimon was the face of the banks opposition to the rules regulators suggested following the 2008 financial crisis, which required bank to hold much liquidity and was banned from proprietary trading. He was leading them again the tedious rules the governments and regulators had planed to rule out — especially the Volcker
rule, the Dodd-Frank rule.

Lets have a look at the reactions in US —

Former Federal Reserve Chairman Alan Greenspan isn’t worried by the size of the losses at JP Morgan’s chief investment office. His reaction: “So what?” For a bank with almost $200 billion in equity, a one- or even two-percent loss isn’t very significant, Greenspan said in an interview.“My point is that you have to recognize that banks will lose money on occasion,” Greenspan said, “because that’s the way the system eliminates unproductive capital. Implicit in creating growth and productivity comes some degree of failure”.

Fitch said that while the size of the trading loss is manageable, its magnitude and the ongoing nature of the bank’s positions “implies a lack of liquidity” and raises questions about the bank’s risk management.It downgraded its rating by one notch. S&P Lowers JP Morgan’s Residential Mortgage Servicer Ranking.

“It appears that the bank here in the U.S. is absorbing these losses,” Mr. Gary Gensler, chairman of CFTC said in a speech in Washington. “And as a U.S. bank, it is an entity with direct access to the Federal Reserve’s discount window and federal deposit insurance.”The cross-border proposal is a crucial part of the Dodd-Frank financial overhaul law, the government’s main regulatory response to the financial crisis. Many big banks like JPMorgan run their derivatives businesses out of foreign branches Gensler added.“It appears that the bank here in the U.S. is absorbing these losses,” Mr. Gensler said in a speech. “And as a U.S. bank, it is an entity with direct access to the Federal Reserve’s discount window and federal deposit insurance.”

Treasury Secretary of US Tim Geithner that the recent $2 billion trading loss by JPMorgan “helps make the case” for tougher rules on financial institutions, as regulators implement the 2010 law aimed at policing Wallstreet. Geithner said the Fed, SEC and the Obama administration are “going to take a very careful look” at the JP Morgan incident as they implement new regulations like the so-called “Volker Rule,” which bans banks from making bets with customers’ money.

Former Federal Reserve Chairman Paul Volcker said JPMorgan Chase’s recent multibillion-dollar trading loss may show that the nation’s largest banks are too big to manage.

Federal Reserve Chairman Ben Bernanke said the Volcker Rule may have been able to influence the outcome of JP Morgan’s $2 billion trading loss.

“The leadership of that company will be held accountable for this trading loss, but we don’t want to punish companies, Mitt Romney told NBC. “There was no taxpayer money at risk. All of the losses went to investors, which is how it works in a public market.

“JP Morgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting,” Barack Obama said. “We don’t know all the details. It’s going to be  investigated, but this is why we passed Wall Street reform.”

The best explanation according to me was given by Mitt Romney an American businessman and the presumptive nominee of the Republican Party for President of the United States in the 2012 election. JP Morgan has more asset then the GDP of most countries even India. Dimon faced the questions from Congress on June 13, 2012 and faced the Housing committee on June 19, 2012. In the housing committee meeting Dimon bristled at a suggestion from Rep. Sean Duffy that JP Morgan has become “too big to fail.” With $2.3 trillion in assets, taxpayers might be asked to step in to rescue the bank if its trades put the broader financial system at risk, Duffy said.”No, we’re not too big to fail,” Dimon told Duffy in a heated exchange. “I don’t think there’s any chance we’re going to fail. But if we did, any losses the government would bear should go back, be charged to the banks.”

More will be clear when the bank reports its second quarterly report on July 13, 2012. Word has been that Mr.Dimon might admit a loss up-to $US 5 billion. But losses might have already cost them up-to $8 billion, some expects.

But right now thanks to LIBOR rate manipulation fraud, JP Morgan $2 billion loss would take a back seat, as every one is busy discussing about Barclays and Mr Bob Diamond. And hopefully this will help Jamie Dimon  to take a sigh of relief!