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Saturday, February 22, 2003

One Recession Away

Well the weekend's finally come round again, and with it another Friday post from Stephen Roach. This week it's deflation he's worried about, and in his view the US is just one recession away from deflation. As he argues, many see the recent spike in producer prices as evidence of a receding deflation danger - others (such as yours truly), however, argue that it provides what threatens to be only a temporary respite, and one which at the same time complicates the picture for Greenspan by putting pressure on him to think about raising rates. Far from offering us any hope of an 'all clear', Roach is surely right to argue that the US, absent any other major engine for global growth, is still trapped in the relegation zone, in danger of being sucked down by the backdraft emanating from Japan, and now, as looks increasingly probable, from Germany. We also need to watch and wait to see what will happen in the UK when the housing bubble finally burns itself out. And if the 'geopolicital uncertainty' produced by the threat or reality of an Iraq war should push us all back into recession, then clearly that could be all that is needed to heave us over the edge. So far from stand easy, it seems more like a case of get ready to man the pumps.

And if I seem even more decided in this than Stephen Roach, the reason is to be found in one detail where I take my difference from him. Stephen's deflation case rests on three premises: post bubble excess global supply, globalised supply networks, and forces associated with the business cycle. On the first two of these we would I am sure, and theoretical niceties apart, be in fairly broad agreement - in place of simply excess supply I would probably develop a story based more on a Moore's Law type process of falling prices in several key technology areas, and in place of global supply chains I would spell out more directly China and India, but let's be reasonable, we're on the same wavelength. It's the third point that bothers me. To introduce the business cycle at this stage as an explanatory variable seems to me to duck the question. Again, leaving to one side all the tricky problems about business cycle analysis, the point it seems to me is that it is precisely the form that the present cycle, or stage of the cycle, is taking that needs to be explained. In fairness Stephen has his get-out: it's the oil shock. And this is fair game, since the portrait he paints concerning the dangers for an already weakened global economy of a sutained rise in oil prices are real enough. The point is why is global demand so weak. Why is it that this recovery, coming as it does after one of the most sustained periods of growth in the history of the world economy, and with all its attendant productivity miracles, is so damned weak, why the dickens is this 'soft patch' we've hit proving to be so difficult to shake off.

Well to understand this I think you have to understand the specific weight in the global economy of a limited number of high income countries, call it G6 or G23, the difference isn't especially important. The fact of the matter is that a relatively small proportion of the world's population is responsible for a relatively high part of it's wealth creation and it's wealth consumption (something which in itself is potentially unstable in any even). Now this population is rapidly becoming old, and this is happening at a time of accelerating technological change which is in itself devaluing the net worth of all that accumulated and aging experience. Hence, ever so subtly patterns of consumption are changing. Look at clothing. It's a world phenomenon, people are looking for cheaper, more buy-and-throw-away apparel. Cultural transition or aging process, you tell me. Then look at Japan, and look at the retail industry which seems to be more and more dominated by cheap outlets selling cheap Chinese imports. The future belongs to Wal-Mart. And now tell me again that the subtle downward shift we're seeing in consumption habits, the one that's causing all the fuss about the output gap, tell me it's got nothing to do with the changing age composition of our populations.

The case for deflation rests on three key premises: First is the post-bubble legacy of excess supply -- especially the overhang of redundant IT capacity that was put in place in the United States and Asia in the latter half of the 1990s. While America’s IT correction was fast and furious over the 2001-02 interval, the rest of the world has not been as quick to follow. Europe’s telecom carnage is an obvious exception but non-Japan Asia’s ongoing appetite for new IT capacity -- especially China -- has been an important offset. Against the backdrop of a post-bubble compression of aggregate demand, the world remains awash in excess supply. That’s a classic deflationary condition.

Globalization is a second force behind the deflation story. Courtesy of accelerating growth in world trade, the globalization of supply chains changes the balance between aggregate supply and demand. That is not only the case in tradable goods -- the so-called China factor comes to mind -- but is also evident in the “non-tradable” services sector. With service sector deregulation now a global phenomenon, surging cross-border M&A activity creating huge multi-national service behemoths that span the globe, and the Internet spawning the advent of IT-enabled service exports from countries such as India, service-sector supply curves have gone from being national to global. That magnifies the overhang of aggregate supply -- yet another reason for global pricing to adjust downward.

But the latest twist can be found in the business cycle, the third piece to the deflation puzzle. Recessions are, by definition, deflationary events. Since the world economy entered its last recession in 2001 at a very low inflation rate -- a 1.3% increase in the advanced world GDP deflator in 2000, according to the IMF -- a close brush with outright deflation can hardly be judged a shock. In the parlance of macro, this recession opened up a positive “output gap” as a deficiency in aggregate demand and, in the context of excessive aggregate supply, virtually destroyed any semblance of pricing leverage for most global businesses. Normally, cyclical recoveries promptly close the gap between supply and demand, thereby restoring pricing leverage. That has not been the case in the decidedly subpar recovery that has occurred in the aftermath of the 2001 global recession. By our estimates, a 2.6% increase in world GDP in 2002 -- versus a longer-term trend of 3.6% -- actually led to a further widening of the global output gap and a concomitant increase in deflationary pressures. Against this backdrop, it would now take a fairly vigorous recovery in the global economy -- several years of world GDP increasing in excess of 4% -- to tilt the business cycle away from deflation.

Yet precisely the opposite now seems to be in the cards. Courtesy of a full-blown oil shock, the world is now flirting with yet another recession. Crude oil prices (as measured on a West Texas Intermediate basis) are now around $37 per barrel. Not only does that represent an 87% increase from levels prevailing at the start of 2002 (an average of $19.69 in January 2002), but today’s prices ($36.79 as of the close on 20 February) are nearly identical with the highs hit on 20 September 2000 ($37.20) that played a key role in triggering the recession of 2001. Unfortunately, oil shocks and recessions go hand in hand. That was not just the case in 2001 but also the outcome in the aftermath of the first OPEC shock of late 1973, as well as the result of the spike associated with the Iranian Revolution in 1979. And, of course, the same was the case following the sharp run-up in oil prices leading up to the Gulf War. In other words, show me an oil shock and I’ll show you a recession. It’s hard to believe that the current oil shock will be the one exception.

Another recession at this juncture could well reinforce the cyclical piece of the case for global deflation. Our global forecast is currently “under review” as we assess the twin impacts of looming war and higher oil prices. Our baseline scenario for 2003 world GDP growth currently stands at 2.9%. While I do not want to prejudge the outcome of our deliberations, I would place the ultimate downside somewhere in the 2.0% to 2.5% range. With global recession widely viewed as anything below the 2.5% world GDP growth threshold, there can be no mistaking the potential consequences of this oil shock -- a second worldwide downturn in two years. But the key insofar as the macro-analytics of deflation are concerned is the implications for the global output gap -- the discrepancy between aggregate supply and demand. When judged against the world economy’s 3.6% long-term trend line -- a good proxy for potential growth, or global supply -- a sharp downward revision to our 2003 baseline forecast has critical implications for the global output gap. Taking the midpoint of the 2.0% to 2.5% world GDP growth range noted above as an illustration, that would represent a 1.4-percentage-point shortfall from trend. Such a further widening of the global output gap would come on the heels of a 2.4 percentage point shortfall that opened up over the 2001-02 interval. That would bring the cumulative shortfall from trend to nearly four percentage points since 2000 -- large by any standards of the past.

Therein lies the risk. In my view, it was the widening of the global output gap in 2001-02 for a low-inflation world economy that led to the subsequent lack of pricing leverage and the close brush with deflation. And now -- courtesy of another oil shock -- that global output gap is set for a sharp further widening. As I see it, that can only intensify the lack of pricing leverage, taking the world all the closer to the brink of outright deflation. In other words, the current oil shock should not be interpreted as an inflationary event along the lines of the outcomes of the 1970s. It is, by contrast, very much a deflationary shock. Prior to this oil shock, I would have depicted the world economy as being only one recession away from deflation. To the extent that recession may now be in the offing, the case for deflation actually looks more compelling than ever.
Source: Morgan Stanley Global Economic Forum

Friday, February 21, 2003

This Years ET Conference

I have just noticed that O'Reilly have posted the programme for this years Emerging Technology Conference. Clay Shirky's session, entitled A Group is its Own Worst Enemy, looks interesting enough, both in terms of it's on-line and off-line implications. Any self-confessed neurotics willing to stand up?:

The psychologist Wilfred Bion practiced group therapy with neurotics, and during this work, he came to see that groups are far more often thwarted in their goals from internal difficulties than external ones, because of a tension between the members’ individual goals and their emotional commitment to group membership. This tension creates patterns in groups that cannot be accounted for by any theory of individual behavior. Bion saw this tension as unavoidable, saying that we are, as a species, "hopelessly committed to both" individual goals and to group membership.

Seeing this, Bion came to conclude that the need for group structure is largely for self-protection. We use a range of organized behavior--traditions, customs, laws--that are designed to protect the group from itself, and from predation by individual members. This scenario has played out many times on the Internet in the form of constitutional crises, where an online community confronts the impossibility of having a functioning group without some structure that shapes the behavior of individual members. From LambdaMOO's fights about the political role of wizards through today’s karma and moderation systems on sites like slashdot and kuro5hin, many communities have passed through crises of self-governance, and emerged with a structure that is nothing less than political theory instantiated in code.

In this talk, Shirky presents several patterns of constitutional crisis in online communities, and draws general lessons about designing social software that allows for a degree of self-governance by the users.

A Raft of Tricky Looking Data

Seeing through the fog, and trying to decide which way the US economy might be heading is proving to be fairly difficult these days. Yesterday's latest batch of figures do nothing to help make matters any clearer. Deficit up, unemployment up, producer price index up, there's little to cheer the faint hearted here. Obviously it's that 'soft patch'. The only interesting sideline is that the spike in producer prices probably pushes deflation back into the distance a bit, a knock-on effect of rising energy and a falling dollar. But don't cheer just yet: in particular remember that the Fed rate is only 1.25 and with inflation creeping up just a little the US could soon be in negative real rate territory, another headache for Greenspan, since negative rates could easily spark house prices and provoke a bubble in property. Yet raising rates would put a brake on recovery. Back to the zone between the rock and the hard place. Nothing in this life ever gets to be easy.

The US trade deficit soared to a new record last year, while wholesale prices surged in January at their fastest pace in more than a decade. The US Commerce Department said the monthly trade deficit rose 10.6 percent in December to a record $44.2bn, as imports continued to grow and exports slumped. The December reading put the annual deficit for 2002 at a record $435bn - a 21 per cent increase over the 2001 level. The widening deficit reflects, in part, the US economy's continuing outperformance of major trading partners, but some economists fear it also represents a big and growing risk to the stability of the US dollar and US interest rates. Separately, the US Labor Department said prices at the wholesale level surged last month. The department said its producer price index jumped 1.6 per cent in January - the biggest increase since January 1990 - after dipping 0.1 per cent in December. The increase was led by rising energy costs, but even after excluding food and energy, the producer price index rose 0.9 per cent, the biggest such since December 1998 and the second biggest in 14 years. The department also said demand for new US jobless benefits last week rose to its highest level this year, and above the 400,000 level generally associated with recession. First-time unemployment insurance claims rose to 402,000 in the week to February 15 - thehighest level since December - from 381,000 the previous week. However, the four-week moving average, a smoother guage of the trend, remained below 400,000, though it rose slightly to 389,000. In another report, the Conference Board said its index of leading economic indicators, a gauge of future growth, was flat last month, its weakest reading since last September.
Source: Financial Times

Looking Forward to the G7

The G7 finance ministers have a meeting scheduled for Paris on Friday. Among discussion items will be the geopolitical uncertainty surrounding a possible Iraq war, the continuing high price of petrol, and.........the desireability of a revaluation of the yuan. Or at least so we are informed by recent reports from Japan, since the rumourology has it that Janapese Finance Minister Masajuro Shiokawa will use the meeting to argue the case for exerting pressure. Personally I think its way to soon to start thinking about this. Chinese growth is currently one of the few bright spots on the global horizon, and the chinese economy - with all the internal strains being produced by the reform process - is in no position to do the heavy lifting on behalf of the rest of us, yet. I'm happy to be in the company of Morgan Stanley's Stephen Roach and Andy Xie on this one. Unfortunately in my book this is simply another example of what hypocrites we are. In the 90's, when things still went well (you do remember those days, don't you?) we lectured the world on the need for reform and the benefits of following the western model, and now that we are finding the going a bit tougher what do we do: start asking for help from one of the countries that actually took our advice seriously. I didn't notice us exactly reaching out a helping hand to China when it really needed one. If Japan, the EU and the US have significant economic problems, perhaps it would be better to start by examining what is happening at home before reaching out to find scapegoats abroad.

Finance Minister Masajuro Shiokawa is expected to urge finance ministers and central bank governors of the Group of Seven industrialized countries to press China to revaluate the yuan, government sources said Friday. At a two-day G-7 meeting, scheduled to open in Paris on Friday, Shiokawa will argue that China's "export of deflation" is one of the factors behind global deflation, and he will insist that China's cheap exports are negatively influencing the world economy, the sources said. The current exchange rate of the Chinese yuan, which is effectively pegged to the U.S. dollar, is seen as being unnaturally low for the country's fast-growing economy.

Shiokawa is expected to point out that restrictions on capital transactions by the Chinese government has led to an expansion of the country's trade surplus, and he will ask G-7 finance ministers and central bank governors to consider calling for the revaluation of the yuan, the sources said. It will be highly unusual for a G-7 member to request discussions on the capital liberalization of a nonmember country like China at a G-7 meeting. Shiokawa is expected to call on China to adopt a policy that pays closer attention to its influence on the world economy, sources said. The finance minister will also request that China relax its regulations on capital transactions as yuan-based fund-raising by foreign banks is restricted in China.

Deflation is eroding not only the economies of Japan, China and Hong Kong but also the world economy, with inflation rates in the United States and Germany slowing down. Conversely, China is accelerating its export drive, which is also affecting the economies of many countries. The U.S. trade deficit with China in 2002, which was announced Thursday, was a record high 103.1 billion dollars. The U.S. economy, which has served as an engine of global growth, slowed sharply in the fourth quarter of 2002 on the back of sluggish personal consumption, expanding a mere 0.7 percent, compared with a 4 percent increase in the third quarter. According to a preliminary report on Japan's trade in 2002 released by the Finance Ministry in January, imports from China rose 9.9 percent from a year earlier, surpassing those from the United States for the first time since World War II. Observers have pointed out that the continued influx of Chinese products, whose low prices reflect the country's cheap labor and manufacturing costs, may intensify the deflation problem. However, as the United States is expected to pay closer attention to China because of the mounting tension in Iraq, the government plans to fine-tune its announcement before the G-7 meeting.
Source: Daily Yomiuri

News Monster Causes a Stir

Ben Hammersley notes that his comments section on NewsMonster is worth checking out. I've been using it for a couple of days now, and it meets my needs just fine. Still, I suppose I'm not a particularly demanding user, nor am I a purist, so perhaps I'm not among the best placed to recommend to others. I'm sure the debate about the robot exclusion standard is important, but it's a bit beyond me. On the other hand, not having an automatic update does seem to be a substantial drawback, I don't know if they've got a fix for this in the pipeline. One of the posts made, what was for me a particularly telling point about those who don't enjoy the luxury of a broad band connection (or only have one at work where they don't have time (?) to take advantage of it). I acquired a pocket PC with the intention of chewing up lost travel time with news updates, and then I found blogging. Now I use my 'prime time' travel to plough through some of the highly appealing books that are piling up on my 'to read' shelf. Who the hell ever said the old was incompatible with the new, the trick is to find the way to put them together.

I haven't tried NewsMonster yet, but based on the discussion, it appears that the functionality that it most closely resembles is the "Offline Web Pages" feature of Internet Explorer for Windows. It also would appear that most people contributing to this discussion have not used this feature before, and therefore don't appreciate just how valuable it is. If you haven't used it, here's a quick overview:

Offline Web Pages drives Internet Explorer just as if a live user were driving it. It stores complete web pages and all linked images and other content elements in IE's regular cache. It's completely user configurable: it can store complete sites or just single pages depending on the URL; it can recursively dive down up to 3 (I think) levels deep; it can follow links to "outside" sites or stay within the domain specified by the initial URL; it can run on a schedule, on system events like startup or shutdown, or on demand; it can traverse and cache a single site, or a whole list of sites.From the user's perspective, you just run IE, put it into offline mode, then browse the site(s) as you would normally. There's no difference between that and browsing the site online, except that the offline experience is blazingly fast, much faster than browsing online even over DSL or other broadband. The way I used to use this feature was as follows: I have a half-hour train ride to and from work every day. I had my laptop set to download a list of sites every weekday morning at 5 a.m. and again in the afternoon at 4 p.m. The sites included CNET, NYT-Tech, Wired, GMSV and a few others. I could then read the news on the train using my laptop with IE in offline mode. This was a tremendous time-saver for me. I've since switched to using a Pocket PC for the train ride, but I still use Offline Web Pages for a few sites that I look at in the evenings at home. Remember that the vast majority of web users still are stuck with 56K dialup, and will be for years to come. Using Offine Web Pages vastly improves the experience of browsing the web in that environment, as well as extending the availability of the web into situations where it isn't currently accessable. Are Offline Web Pages inefficient from a server perspective? Certainly. Nevertheless, the feature is invaluable under certain circumstances.
Source: Ben Hammersley.Com

Lessig Makes the Case on Software Patents

The issue of patent protection for software continues to go the rounds. This time it's the turn of the European Parliament to take a view. Lessig eloquently makes the case that patent and copyright law in relation to software is a mess, but Europe is the land of regulation (not all of it bad by any means) and conservative traditions in Europe are very different from their American counterparts (with the notable exception of the UK the idea of individual liberty and privacy bears little resemblance to the US one: something which should have been made clear by the attitude of French law to material posted on Yahoo and e-Bay) so I'm not especially optimistic. With many of Europe's major companies having lost more money than they want to think about, and with governments who don't understand the internet having been given the excuse they needed by 11/09 to focus on the 'security' problem, and the control, rather than the 'freeing' of information public policy in Europe seems to be hovering dangerously in the region of an all time low. After a lot of trumpeting about the coming benefits of the 'information age', no-one in Brussels it seems is particularly concerned about the absence of a 'critical mass' of basic material to search in any language other than English (if you don't believe me try surfing the web in eg French, or Spanish, or Italian sometime). Europe, as I said, is the land of public policy and regulation, and own-language content is an issue which is just crying out for subsidies if ever there was one. The French government makes no secret of its preoccupations about the future of the French language, but isn't it time to 'put your money where your mouth is'. The answer, unfortunately, seems to be no, as the main talking point these days seems to be how to find a way to charge for content. I'm sorry Larry, I fear your reasoned plea is destined to fall on deaf ears.

As pressure mounts on the European Parliament to extend patent protection to software, a crisis is developing in US patent law that Europe would do well to consider. The system in America is broken - to the great detriment of software developers generally - and there is no reason to believe the Europeans could do any better.
The claim that the US patent system is in crisis is nothing new. What is new is the identity of those making it.........throughout the administration of President Clinton the Patent Office insisted that the system worked just fine. Patents were being granted for truly novel inventions only, the office said; and innovators had no trouble in identifying who owned what invention. Claims that the system was in crisis were little more than the ravings of Chicken Little. The system would work itself out. It always had.

Yet now the Patent Office is singing a different tune. As its new head, former Republican Congressman James E. Rogan, said in an interview with the L.A. Times on February 7, 2003: "This is an agency in crisis and it's going to get worse. It doesn't do me any good to pretend there's not a problem when there is." The reason is the mess created by the last administration's patent office, especially in the context of business method patents (the type of patent, for example, that gives Amazon an exclusive right to its "one-click" method for selling merchandise online). "Some of [these] were fairly broad," Mr Rogan told L.A. Times reporter David Streitfeld. "We've gone from a 75 per cent acceptance rate to a 75 per cent rejection rate." This early and easy acceptance rate led to an explosion in patent applications and patents granted - and, in turn, in the costs that software developers face. "Developing software is [now] like crossing a minefield," says Richard Stallman, the originator of the free software movement that has developed the GNU/Linux operating system. "With each design decision, you might step on a patent that will blow up your project."

This is the most surprising fact about software patents: they are generally opposed most strongly by the people they are intended to benefit. But such opposition is not difficult for a conservative like Mr Rogan to understand. Patents are a form of regulation. They represent a government decision on who gets a monopoly over what invention. Republicans like to claim that Democrats regulate first and ask questions later. They are therefore more eager to ask the right questions up-front. Yet the questions here have no good answers. Like any form of government regulation, patents make sense only if their benefits outweigh their costs. The public benefit from patents is presumably the inventions that otherwise would not have been made. The costs include the extraordinary burden of knowing just what innovation is and is not subject to a government monopoly. These costs are borne both by innovators seeking a patent and by those just writing code. Both must wade through incomprehensible claims about who owns what inventions to avoid the inevitable hold-up if their code proves successful.

Software developers are quite aware of these costs. Yet economists have found it very hard to reckon any net benefits. And thus conservatives are increasingly sceptical of this form of regulation. No doubt it has produced "a whole cottage industry of shysters," as Mr Rogan admits. It is harder to show that patents have produced any gain that would justify their costs.The issue is not just a problem of implementation. The weakness runs much deeper. It may well be that software development requires some form of government protection. It does not follow, however, that patents are the protection that software needs. Software already receives the protection of copyright and trade secret. (The "code" of software is a kind of writing that copyright protects; and the properly hidden secrets that stand behind software can be protected like any other business secret.) These too have their critics: the term of software copyright is effectively perpetual; and trade secrets tend to hide, not spread, knowledge. But if these forms of protection are inadequate or misinformed, then the solution is to find a form that better fits software. No one really believes that patents are well designed for this type of invention. Yet no government has adequately explored the alternatives.
Source: Financial Times

Wednesday, February 19, 2003

Hammersley on Google on Blogger

As usual, some interesting thoughts from Ben Hammersley on Google and Blogger:

Well, crikey: Google bought Blogger. This is tremendously interesting news. Lets look at it from both sides:

What does it mean for Blogger?

Well, thats easy. Security. They’re moving all the blogspot hosting over to Google’s machines - which, well, don’t go down as often - and putting Google’s cash behind them. Letting Ev worry more about the code and less about the finances will be a blessing.

What does it mean for Google?

This one’s the tricky bit. At first glance it seems weird: Google don’t charge for anything at the moment, and suddenly they’re running Blogger Pro. But somehow I don’t think they’re in it for the billing system. No: I think it’s to do with the hosting. Compared to hosting the Google Cache, hosting Blogger will be simple, so it’s a cheap investment for what they get:

Google lives or dies on fresh links - and processing the million or so weblogs will give them an awful lot of fresh links a day. No matter where you host your Blogger based blog, the posting will still go through a machine on Google’s network: it’d be easy peasy to scrap each posting for URLs and add them to the spider-now list. Not every link, perhaps, but if a certain number of bloggers link to the same thing in a certain time, Google grabs it. It’s a distributed early warning system for Google’s spiders. One million zeitgeist monitors just signed on to Google’s staff. A bargain for them, whatever the cost.
Source: BenHammersley.Com

The World As Blog and Representation

I always thought that blogs invented the world by commenting on it (the point isn't only to change the world, it's to change the world by interpreting it, the means is everything) : the world being a series of points of will and intellect as reflected through the web-loggers golden eye section as it were. Now I discover that the best way to understand web-logging is to read books about it. Am I missing something? For those new to the weblog and reluctant to leave the nice, comforting world of paper and ink, or those in narcisisstic voyeur mode, or those who simply didn't have anything better to do at the time in question:

I HAVE just ploughed through the first five books devoted to an Internet art form that fascinates me and may well be unknown to you. Where to start? Say for the moment that the weblog - a log of the World Wide Web, as it were - can be personal publishing at its most liberating, an online guide through the thickets of the Internet, a journal or diary, easily updated and nestled in a global neighbourhood. It can be fresh and unpredictable, still something of a mystery to the American weblog pioneers of the 1990s who populate these books. "For every generalisation you make," says Cameron Marlow, creator of a weblog index, "there are a thousand new weblogs to undermine your theory."
Source: AustralianIT

Ray's at it Again

According to Ray Kurzweil's latest party piece, to be delivered at Time's The Future of Life Conference to be held on Feb 21st, in the coming decades, a radical upgrading of our body's physical and mental systems will use nanobots to augment and ultimately replace our organs.Since we apparently already know in principle how to prevent most degenerative disease through nutrition and supplementation we can use this knowledge as a bridge to the emerging biotechnology revolution, which in turn will be a bridge to the nanotechnology revolution. Final sell-by date: 2030, by which time reverse-engineering of the human brain will have been completed and nonbiological intelligence will have merged with our biological brains. Visionary or madman, you can't help admiring the guy's persistence and imagination.

Sex has already been largely separated from its biological function. For the most part, we engage in sexual activity for intimate communication and sensual pleasure, not reproduction. Conversely, we have multiple methodologies for creating babies without physical sex, albeit most reproduction still does derive from the sex act. Although not condoned by all sectors of society, this disentanglement of sex from its biological function has been readily, even eagerly, adopted by the mainstream.

So why don't we provide the same extrication of purpose from biology for another activity that also provides both social intimacy and sensual pleasure, namely eating? We have crude ways of doing this today. Starch blockers, such as Bayer's Precose, partially prevent absorption of complex carbohydrates; fat blockers, such as Chitosan, bind to fat molecules, causing them to pass through the digestive tract; and sugar substitutes, such as Sucralose and Stevia, provide sweetness without calories. There are limitations and problems with each of these contemporary technologies, but a more effective generation of drugs is being developed that will block excess caloric absorption on the cellular level.

Let us consider, however, a more fundamental reengineering of the digestive process to disconnect the sensual aspects of eating from its original biological purpose: to provide nutrients into the bloodstream that are then delivered to each of our trillions of cells. These nutrients include caloric (energy-bearing) substances such as glucose (from carbohydrates), proteins, fats, and a myriad of trace molecules, such as vitamins, minerals, and phytochemicals, that provide building blocks and facilitating enzymes for diverse metabolic processes.............

Up until recently (on an evolutionary time scale), it was not in the interest of the species for old people like myself (I was born in 1948) to use up the limited resources of the clan. Evolution favored a short life span—life expectancy was 37 years only two centuries ago—so these restricted reserves could be devoted to the young, those caring for them, and those strong enough to perform intense physical work.

We now live in an era of great material abundance. Most work requires mental effort rather than physical exertion. A century ago, 30 percent of the U.S. work force worked on farms, with another 30 percent deployed in factories. Both of these figures are now under 3 percent. The significant majority of today's job categories, ranging from airline flight attendant to web designer, simply didn't exist a century ago. Circa 2003, we have the opportunity to continue to contribute to our civilization's exponentially growing knowledge base—incidentally, a unique attribute of our species—well past our child-rearing days............

In a famous scene from the movie, The Graduate, Benjamin's mentor gives him career advice in a single word: "plastics." Today, that word might be "software," or "biotechnology," but in another couple of decades, the word is likely to be "nanobots." Nanobots—blood-cell-sized robots—will provide the means to radically redesign our digestive systems, and, incidentally, just about everything else.
Source: Kurzweil AI Net

Notebook Computing and the Future

The next few years in mobile computing threaten to look pretty much like the last few, only with much more of the same -- faster processors, smaller chips and longer battery life -- but what are the innovations that could really the change the industry? And is there a breakthrough application that will really change the way we communicate? According to Extreme Tech's Howard Locker three big things will be organic storage, the fuel cell, and OLED displays, bottom line: 'ten years from now, wireless will be the standard, bandwidth will have increased by leaps and bounds, and we will never be out of range' - bring it to me baby.

A significant change in the look and feel of notebooks will come with the adoption of organic light-emitting diode (OLED) displays, made of light-emitting organic material that glows when an electrical charge is passed through it. These flexible displays offer fantastic resolution and color, detail far superior to a standard TFT, and can be viewed in direct sunlight. However, OLED displays are still in their infancy -- they can be easily damaged by water and dust particles and last only a little over a year. Currently, the technology is only being used in small devices, like cell phones, but as it develops with more research, we will see the displays grow bigger and more durable. When OLED displays are incorporated into notebooks, many years down the road, they will cause a substantial change in size and shape.

Within five years, we will see significant advancements in organic storage. The "Millipede" concept points to one such advance. Millipede, being developed at IBM Research, uses thousands of nano-sharp tips to punch indentations representing individual bits into a thin plastic film, creating a powerful disk that is also re-writeable. Millipede has already demonstrated a data storage density of a trillion bits per square inch-- 20 times higher than the densest magnetic storage available today and enough to store 25 million printed textbook pages on a surface the size of a postage stamp. And still higher levels of storage density are expected. While current storage technologies may be approaching their fundamental limits, this nanomechanical approach is potentially valid for a thousand-fold increase in data storage density.
The result of these advances is, quite simply, storage that uses less power in less space. And since organic storage, unlike magnetic, involves no moving parts, these disks will not break. This technology, though expensive, could feasibly bring tremendous data capacity to mobile devices such as personal digital assistants, cellular phones.

One battery life-extending technology on the horizon is fuel cell. Unlike current notebook batteries that can plug in anywhere to recharge, fuel cell technology requires users to go to a cell refueling station to recharge their cells. While fuel cell technology will likely result in vastly extended notebook battery life, the infrastructure isn't in place to support it. And while fuel cells offer more battery life, they cannot, like standard batteries, be recharged for free.

Technologies like OLED, nano-storage and fuel cell are definitely futuristic, and will, in many cases, shape the way we work. However, the future will probably find us computing in much the same way we do now. While there will certainly be advances in voice recognition technology, for example, until we achieve true artificial intelligence, our computers will still only be able to do what we say, not what we mean. And besides, most of us type just as quickly, and certainly more precisely, than we speak.

The next big thing, then, is not some far-out technology or funky device we've never seen, but simply the conversion of data. Five years from now, we won't be using one device that functions as a PC, a PDA and a cell phone, but we will be using technology consistent across all three devices. The calendar program you use will be accessible through your PC, your PDA and your cell phone, but will not reside in any one device. Data will become transparent to devices. Ten years from now, wireless will be the standard, bandwidth will have increased by leaps and bounds, and we will never be out of range. Devices will have self-maintaining autonomic capabilities, enabling them to "sniff" out networks to establish the best connection, switching seamlessly between wireless and cellular networks. IBM is already piloting these autonomic capabilities. New technologies and applications not only make our computing experience better, they show us what we can do. Not every technology will take off and not every decade will totally reshape how we compute. Ten years from now, day-to-day computing won't entail having verbal conversations with our PCs or writing novels on PDA devices, but it will make thinking about wireless connectivity a thing of the past. While the way we use notebook computers will evolve again and again, what will remain constant is the effort to make our lives easier.
Source: Extreme Tech

More Argy-Bargy Looming in Euroland

The eurozone never did promise to be a quiet place. First there was all the criticism of the ECB as an 'anti-growth' institution, then there were Prodi's 'stupid' stability pact remarks, now it's the turn of Solbes's deficit-relaxation proposals, with the UK serving as the whipping boy. The problem this time is that with weakening economic growth, UK Chancellor Gordon Brown's for a major investment programme in schools, hospitals and transport, have led to a significant rise in Britain's budget deficit. Brown defends the rise by arguing that Britain should be allowed to run small deficits in the medium term because its public finances are strong, with low levels of national debt and minimal pensions liabilities. Here he is backed by EU Commissioner Pedro Solbes who thinks the stability pact should be relaxed to allow those with a relatively sound underlying financial position should be able to increase the deficit in times of low, or negative, growth. This 'licence' to create medium term deficits understandably irks those who have struggled to comply with the more rigid interpretation of the pact, hence all the fuss. The trouble is that with all the underlying friction floating around over the Iraq war issue it's hard to see any of these issues having a smooth ride, and without a smooth ride anti-euro sentiment in the UK can only rise. It's difficult to see either Gordon 'five-test' Brown, or Mervyn King giving the thimbs up to euro entry, but don't miss the poll result at the end of the article: 35% of voters now favour entry.

As Gordon Brown sped away from the meeting of European finance ministers in Brussels on Tuesday, his officials shied away from claiming victory, but at least suggested that the result was at least not as bad as it could have been. One called it "a satisfactory outcome". But the call by the Ecofin council for Britain to aim for a budget that is "close to balance" creates problems both for the chancellor's reputation for prudence, and for Britain's chances of joining the euro in the near future. Mr Brown's success, such as it was, was that the meeting did not conclude explicitly that Britain was in breach of the stability and growth pact, the set of rules intended to restrict borrowing by European Union member governments. Most countries rejected a statement backed by Denmark, Belgium and Spain that Mr Brown's planned deficits were "significantly above the close-to-balance position required by the stability and growth pact". But the agreed statement took a tougher line than the European Commission's view this month. In particular, it recommended that "the UK authorities should aim for a medium-term budgetary position that is in line with the 'close-to-balance' requirement" of the pact. The EU has in the past defined "close to balance" as meaning a deficit of no more than 0.5 per cent of gross domestic product. Mr Brown plans to borrow 1.5 per cent of GDP in five years' time. The implication is that he must cut public spending or put up taxes by 1 per cent of GDP - worth about £10bn at today's prices - to deliver the recommendation. The tax rise would be the equivalent of about 3p on the basic rate of income tax.

The doubt cast on Mr Brown's plans is an embarrassment for the chancellor, and would be a greater em- barrassment should Britain try to join the euro. Philippe Legrain, chief economist of Britain in Europe, the pro-euro group, pointed out that there was no penalty for failure to comply with the recommendation. "There's no need for Gordon Brown to change his spending plans as a result of anything the council said, whether or not Britain joins the euro," he said. But the statement, which is similar to the opinion of Mr Brown's plans delivered last year, suggests that despite talk about reform of the pact, the British interpretation of the rules is not generally accepted. A potentially bigger worry for Mr Brown is the requirement that government borrowing should be kept below 3 per cent of GDP: a limit backed up with fines for countries inside the eurozone. "I expect a deficit of 2.7 per cent of GDP next year. Allowing for the normal margin of error of plus or minus 1 per cent, a breach of 3 per cent is certainly possible," said John Hawksworth, of PwC. "It would be a very difficult time to join the euro if the government was trying to win a referendum at the same time as being threatened with sanctions."

Countries such as Germany and France, which have tacitly supported Mr Brown, have both fallen foul of the EU's deficit rules but are pushing for more flexibility in the application of the pact's 3 per cent limit. But the result is more confusion about what the rules would mean for Britain. As Mervyn King, who is to take over as governor of the Bank of England, put it: "If you can explain to me in detail precisely what the stability and growth pact is now, then I might find it easier to answer on that, but I'm not entirely sure what status it is now." That confusions looks like one more reason why the assessment of the euro tests will conclude they have not yet been passed. A poll for Barclays Capital has found 48 per cent of people said that if the government said the five tests had been passed, they would still vote against euro entry; only 35 per cent said they would vote in favour. Adam Law, of Barclays Capital, said: "It's a sensible inference that people are less trusting of the government's policies, given their concern over Iraq."
Source: Financial Times

Tuesday, February 18, 2003

Eurozone Manufacturing Continues its Decline

Industrial production in the eurozone suffered its biggest monthly drop on record in December, confirming some hefty output falls shown at national level. Germany, the eurozone's biggest economy, registered a month-on-month fall of 2.4 per cent in December. France, the second largest, was down 1.7 per cent. Portugal was the only member to manage a monthly rise. It gained 0.7 per cent.

Eurostat, the EU statistics office, reported a month-on-month fall of 1.5 per cent and an annual fall of 0.5 per cent in the harmonised figure for the eurozone. This was worse than many analysts had feared and represented a sharp fall from November's revised 0.7 per cent rise in the monthly figure and 2.8 per cent annual gain. Ian Stannard of BNP Paribas said the outlook was looking increasingly gloomy for Germany and therefore also for the eurozone. "The Association of German trade and manufacturing (DIHT) has acknowledged that the country is slipping into recession," he said. "The significant reduction of December industrial production points in the same direction, and if Germany slips into recession, side effects in euroland must be feared."
Source: Financial Times

Telecom Pain: No End In Sight

One of the things which makes the 'rosy future just around the corner' story still hard to swallow is the continuing poor outlook for some key technology players, and high among these the telecom supply industry. The latest results and forecasts from Ericsson only confirm this trend. Don't the days when Sweden and Finland's futures seemed to shine so brightly through the reflected rays of Nokia and Ericsson now seem so far away. Whatever happened to the idealism of our youth?

The severe plight of Ericsson, the Swedish telecom equipment group, was underlined on Tuesday when its credit rating was lowered further into junk territory due to concerns about the sharp plunge in its revenues and the need for further cost-cutting. Moody's, the credit rating agency, said there was no sign in Ericsson's position stabilising and it faced a bleak 2003 as revenues continued to fall, cash poured out of the company, and further restructuring measures were implemented. It also noted that Sony Ericsson, Ericsson's handsets joint venture with Sony of Japan, faced "a challenging path to cash flow break-even", even though the venture is financially stronger after a recent €300m cash injection from its parents.

Ericsson has already carried out a series of restructuring programmes since the downturn in the telecommunications equipment industry, caused by spending cutbacks by operators, began in early 2001. Nearly 45,000 staff have been cut since the start of 2001, when the group had 107,000 employees. Ericsson itself has said it will end 2003 with fewer than 60,000 staff, but analysts believe further cost-cutting could take the figure below 50,000 during the course of next year. Moody's said it was still hard to tell when operator spending might pick up. It noted Ericsson's revenues fell sharply in the fourth quarter and were continuing to fall at around 30 per cent. "Ericsson's revenues may continue to decline by more than 30 per cent through the most part of 2003. A stabilisation may not set in before next year," it warned. Such a scenario would lead to the need for further restructuring measures, which "because of their severity, carry material execution risk," it added. The group could also face a high cash burn rate because the potential for further cuts in working capital was limited, it said.
Source: Financial Times

No Light at the End of the Doha Tunnel

As world trade ministers fail to agree on plans to liberalise agricultural trade and make cheap medicines available to poor countries during a three-day meeting which ended in Tokyo last Sunday, the Economist asks whether the Doha round negotiations will drag on as previous ones have tended to do.

NEVER do today what can be put off till tomorrow. The trade ministers from 22 countries, whose three-day meeting in Tokyo ended on February 16th, managed to live down to their reputation for a reluctance to compromise—and enthusiasm for delay. Hardened trade negotiators are used to deadlines repeatedly missed, crisis talks at the eleventh hour, and second-best solutions. But the outcome of the Tokyo meeting was nevertheless disappointing for those hoping that the Doha round of trade negotiations, conducted under the auspices of the World Trade Organisation (WTO), were going to be different.For a time it looked as if they were. When the round was launched in the Qatari capital in November 2001, the atmosphere was one of rapprochement between the rich countries and their poorer neighbours, and between those rich countries that had been at loggerheads on trade issues. The aftermath of the attacks of September 11th 2001, the war on terror and the invasion of Afghanistan had combined to put the developing world at the top of the political agenda. The rich world appeared to recognise that poor countries needed to become full participants in the world economy—and needed help to do that.

Developing countries skilfully exploited this new attitude. They had resisted the idea of a new round of trade negotiations—many of them felt they had got a raw deal from the previous Uruguay round, which had, in the view of the poor countries, been heavily skewed in favour of the industrial world...........Perhaps they should have known better. Progress since the Doha meeting has been slow. Little headway has been made even on issues about which the arguments seem relatively minor...........The WTO will now try to bridge the gaps before the framework deadline at the end of March, but that will be a tall order. The current negotiating draft envisages sharp reductions in agricultural tariffs over five years, but it does not specify numerical limits on those duties. Those most enthusiastic proponents of free agricultural trade want an absolute tariff cap—25% is one figure mentioned. But the most heavily protectionist—Japan and the EU in particular—are horrified by the scale of tariff reductions proposed. Those who must now redraft the document have an unenviable job.Going to the wire is almost an article of faith for trade negotiators. With so much at stake, each country wants to be sure it has given away the absolute minimum needed to sew up a deal. But this is always a high-risk strategy, and especially so if some participants in the round are less than enthusiastic about the negotiations in the first place. In Doha, the developing countries showed that this time they are determined not to settle at any cost. Without some progress soon, the Doha round could be on the brink of collapse.
Source: The Economist

UK Business Jitters Over Euro Delay

The recent results of an FT survey about inward investment intentions in the UK serves once more to underline just how complicated the euro decision really is. The effect of the euro on inward investment is one of the Treasury's five tests, but only one. The euro decision may have one look from the perspective of corporate decision making, and another from a general macro one. High on the list of corporate decision makers is the question of currency valuation (sterling is at present still relatively expensive in relation to the euro), currency fluctuation risk and transactions costs These are the strong plus points for the euro. On the negative side are the problems of losing control over monetary, fiscal and exchange rate policy. These, as we can see from the present German predicament, are not to be taken lightly. Then there is the famous vulnerability to asymmetric shocks problem. In the UK case this is especially relevant given the importance of financial services, and the dependence of this on the ability to attract external funds (read interest rate policy here). Clearly the Treasury and the BoE have to give priority to the general macro arguments, whilst company preferences tend reflect more specific and focused concerns. That is, after all, why we have governments.

Substantial sums of inward investment could be at risk if Britain delays joining the euro, according to the most comprehensive analysis yet of attitudes among large foreign investors. Sony, Bosch, Siemens, Caterpillar, Philips, Pechiney and PSA Peugeot Citroen are among those in a Financial Times survey of 40 foreign companies with manufacturing bases in the UK that warn they would be less likely to invest here if Britain decides against euro entry. The study offers a snapshot of how membership of the euro will affect inward investment, one of the five economic tests governing euro entry set by Gordon Brown, the chancellor. The Treasury is to publish its assessment by June. The companies that say future investments may depend on the UK's commitment to the single currency have combined sales of some £6bn a year from their UK operations, in which they employ 62,000 people. In the FT survey, 61 per cent of the 31 companies prepared to give their views said they were less likely to invest in the UK if it failed to decide whether to join the euro. The remaining 39 per cent said the single currency would make little difference. Nine companies declined to offer an opinion. Manufacturing has provided 40 per cent of all the new jobs created in Britain by inward investment over the past five years. The UK is still Europe's most-favoured location for inward investment of all kinds, although its share has been slipping.
Source: Financial Times

Monday, February 17, 2003

The Economist: Giving Up on Japan?

This weeks Economist piece on Japan almost sounds demoralised and despondent. Are they coming near to throwing the towel in. The article's author doesn't even seem to believe the BoJ will be headed by a deflation targeter any more (they are probably right on this: in fact those like me with a warped sense of humour are begining to imagine the whole Nobuyuki Nakahara affair was 'leaked' to the press to derail any possibility of the candidature ever being presented). Sure, the problems sometimes have a now you see me, now you don't feel about them, but they are real enough even if last weeks official GDP figures confounded all expectations - mine and the Economists alike - by showing that the Japanese economy continued to expand in the final quarter of last year. This news, however, will not make deflation disappear, nor will it take the heat off Japan’s government, which according to the Economist now "appears to be incapable of tackling the country’s deep-seated economic problems".

GOOD news about the Japanese economy is rare these days—and surprising. Most economists had braced themselves for the news that the Japanese economy had shrunk in the final quarter of 2002. So the official figures, released on February 14th and showing that the economy expanded in the October-December quarter, caught people off guard. Growth was modest enough: just 2% at an annual rate. But it means that the economy has now grown for four quarters in succession, and that the country’s fragile recovery is not—yet—over. The figures will provide a welcome breather for the Japanese government, but one likely to be shortlived. The economy’s problems remain daunting and the new data followed hard on the heels of a further slide in business optimism. Moreover, they came just a few days after a new opinion poll showed that the popularity of the prime minister, Junichiro Koizumi, had slumped.

Tackling deflation is a matter of urgency. But even those economists for whom inflation targeting is the preferred solution accept that, by itself, ending deflation will not solve Japan’s problems. What is needed is concerted reform on several fronts—monetary, fiscal and structural. Japanese government debt now exceeds 150% of GDP (more than double the upper limit set by the European Union) and is rising fast. What to some observers seems like an endless series of fiscal-stimulus packages has had almost no economic impact, in part because of a misguided emphasis on wasteful, expensive public-sector construction projects. These have benefited the LDP’s corporate contributors more than the wider economy. Co-ordinated reform seems beyond the current political establishment, and commentators have given up talking about Japan’s last chance to change before being engulfed by a full-blown crisis. The slow speed of the economic decline has meant that the debate within Japan has lacked the sense of urgency that would be needed to overcome opposition to reform. But for Mr Koizumi himself, time might be running out. There is talk of his vulnerability in the LDP leadership election due in September and speculation that he might try to head off a challenge by calling an early general election. What that would do to improve Japan’s miserable economic prospects is far from clear.
Source: The Economist

Bertelsmann Off-line

AOL Time Warner and Vivendi Universal aren't the only media giants who have felt the price of failure deep into their pockets. Germany's Bertelsmann, whose on-line venture suffered a premature demise in 2002 after shelling out millions trying to hold back Amazon and trying to ride the Napster wave, are experiencing not insignificant in-house problems too. I still can't get my mind round the problem of how so many 'old style' business luminaries are going to help dig the pre-internet world out of its mess and point it successfully towards the future in a post internet environment - in Bertelsmann's case it's even the dynastic family behind the curtain who seem to want to step on stage to ressurect themselves and put a stop to all those 'silly' decisions. But maybe I am missing something. One thing's for sure, with all the high pressure meetings and hassle to think about they can't possibly be spending enough time online to be able to begin to appreciate what it's all about.

The internal crisis at Bertelsmann intensified at the weekend as the chairman took the unusual step of warning the Mohn family, founder and majority owner of the media group, not to interfere in the day-to-day running of the business. The comment by Gerd Schulte-Hillen came after Gunter Thielen, chief executive, wrote to employees on Friday to try to defuse rising tension after Reinhard Mohn, the family's patriarch, and his wife Liz severely criticised past managers. Separately, insiders said the board of RTL, Bertelsmann's television unit, might decide as early as this week on a successor to Didier Bellens, who abruptly resigned as chief executive last week to head Belgacom, the Belgian government-controlled telecom group. Bertelsmann executives have been growing uncomfortable about signs the Mohn family, which holds 75 per cent of the voting rights but has long retreated from operational management, was seeking a more direct influence.
Source: Financial Times

3G Reality Check

After all the hype, the future of 3G mobile phone services seems as cloudy as ever. In 2002 sales of mobile networks around the world declined to 39bn dollars, down some 25 percent from their peak in 2000. This year another 10 percent decline is forcast, and every week sees mobile operators trying to find new ways to cut their network investment budgets even further. Tens of billions of euros have been written down by Europe's mobile operators in the past 18 months, an acknowledgement that they hugely overspent on acquisitions and radio spectrum licenses. Most firms are starving for cash. Even in the most advanced wireless communications countries like Japan and South Korea, where fast mobile data services were introduced last year, data traffic makes up less than 25 percent of total revenues and average revenue per user is flat. These and other problems will give the mobile operators gathered this week in Cannes plenty of food for thought.

High on many shopping lists might be Edge, a rival network standard that was written-off three years ago in Europe, but which has subsequently gained a lot of appeal because it is cheap, efficient with bandwidth and offers connections which, although not as fast as the full-fledged 3G technology known as WCDMA, still give plenty of speed to play with. It is rumoured that Nokia and Ericsson are going to push Edge, which some analysts reckon might even find buyers in Europe despite the legal obligations for operators to roll out 3G networks. This situation is not receiving a great deal of comment, but it was only a couple of years ago that the EU technocrats were waxing lyrically about the benefits of their regulated, common standards, system. Now it seems those very 'benefits' might turn into a deadweight which, given the EU administration's lack of flexibility (and inability to recognise a bad mistake even with hindsight - somehow I cannot help visualizing Wim Duisenberg and Otmar Issing at this point) could easily allow Europe to drop behind once again (of course unfavourable demographics aren't going to help either, as with each passing year the proportion of young people available to drive these innovations forwards goes down).

And just to add to their troubles mobile hardware makers are going to have to turn their minds to the looming competitive threat from Intel, Microsoft and a host of other Asian electronics companies. What stumps me is what they imagine people are going to use all the flashy bandwidth for after the predictable initial streaming-video craze has died down. It's a lot of cash to lay out on what might only become a passing fad. After all, why pay a second time for the discomfort of a mobile service when you already have a broadband internet connection at home?

Executives from Nokia Oyj, Orange SA and Vodafone Group Plc will tout the prospects for faster cellular services at the telecommunications industry's annual meeting in Cannes this week. What will be in short supply are the phones themselves. Nokia, the world's biggest mobile-phone maker, hasn't begun selling its first so-called third-generation handset yet. Sony Ericsson Mobile Communications Ltd., ranked No. 5, hasn't even unveiled such a product. The few phones that have been announced so far leave much to be desired, executives said. "They're huge as bricks, battery life is appalling and the price for the handsets is too high," said Richard Brennan, executive vice president at Orange, in an interview. "Until we get those problems sorted, we won't market 3G." After spending $100 billion on permits to build new networks, Orange and European rivals need the phones to be able to offer services such as watching music videos and holding video conferences. Nokia and Motorola Inc., which also sell network equipment, are counting on the phones to entice consumers to buy new handsets as markets near saturation and prices fall. For operators and phone makers, introducing attractive 3G handsets "is probably the biggest challenge they all collectively face," said Ben Wood, an analyst at market researcher Gartner Inc. Global handset sales fell for the first time in 2001 and barely budged last year, as markets neared saturation and users put off upgrades. Earlier technologies designed to help move data over wireless networks have flopped because consumers found the services difficult to install and unreliable.
Source: Detroit News

Ten Years of Browsers

Wired celebrated the (notional) tenth anniversary of the browser with a Marc Andreessen interview. Happy birthday.

Wired News: Is there a specific anniversary date for the introduction of the first version of the Mosaic browser?

Marc Andreessen: The first alpha version came out in January of 1993, and the first beta version came out in March. But the real launch was in April 1993 when about 10,000 people started using Mosaic..........

WN: If you were to design Mosaic again, what would you do differently?

Andreessen: If I had to do it over again, I'd probably show some sort of graphical representation of a tree, so you could see what path you're traveling on and could backtrack. I'd also include thumbnail renderings on the tree to show where you'd been...........

WN: Of the browsers available today, which do you prefer?

Andreessen: I'm using Mozilla pretty much full time. I switched six or nine months ago. I had been using IE for three or four years before, because it was rendering page views faster. But now Mozilla does it faster.

WN: Well, I guess that's one less person using IE. But overall, do you think it's likely any competing browser will be able to take significant market share away from Microsoft?

Andreessen: Not unless Microsoft is dismantled by the government. I don't think anything can take away share from IE, but I think the open-source alternatives can do just fine in their own way. For Mozilla to be successful, it doesn't need to be used by 80 percent of users. The bigger Microsoft is, the more fired up people are (going) to be working on an open-source alternative.
Source: Wired

Ardour for Martian Colony Cools

After years of speculation over the possibilities of making Mars habitable, new findings reported in Science show that while there may be plenty of water locked away in the form of ice, there is not enough carbon dioxide to ever warm the planet enough to make it drinkable. "There's definitely not liquid water" Caltech researcher Shane Byrne is quoted as saying "There's just a three-kilometre thick ice sheet, like Greenland." Apparent indications of surface water, including features that look like river valleys, suggest Mars might once have been warm and wet enough to sustain liquid water, and therefore allow for the possibility of life as we know it on Earth. However it is now thought that the water ice would never warm up enough to melt, being dozens of degrees below freezing, and this opinion, if sustained, certainly will be bad news for the idea of 'terraforming', a visionary approach to colonising Mars by heating it up enough to unlock the frozen water. All in all, it seems hopes of ridding ourselves of a certain group of super-numery politicians by sending them off on a colonisation mission are begining to fade.

Mars' polar ice caps are mostly frozen water, say researchers in California. Their calculations help to resolve a long-standing debate about whether or not the red planet's poles are coated with frozen carbon dioxide. Shane Byrne and Andrew Ingersoll of the California Institute of Technology in Pasadena have worked out what the martian south pole would look like for various different combinations of frozen water and carbon dioxide. The only arrangement consistent with satellite observations, they find, is a thin layer of dry ice coating a thick cap of water ice. Even if the south pole's solid carbon dioxide veneer were to turn to be entirely gas, the martian atmosphere wouldn't get much thicker — it is currently around 95% carbon dioxide anyway. Since the 1960s, some have thought that Mars' atmosphere is controlled largely by the freezing and thawing of large carbon dioxide reservoirs in the ice-caps.It has been known for a long time that this picture doesn't hold true at the north pole. Here the ice-cap shrinks each summer as a veneer of carbon dioxide burns off, revealing plenty of less volatile water ice beneath.

But the south pole is different. The ground is higher and the ice-cap is more constant. It seemed possible, then, that this cap might be mostly dry ice, kept frozen by its greater elevation. Not so, say Byrne and Ingersoll — the notion doesn't fit the latest findings of NASA's Mars Odyssey satellite, which has orbited the planet since late 2001. The ice-cap at the red planet's south pole is covered with strange pits, called Swiss-cheese features. They have flat bottoms and steep sides; some are more than a kilometre across and about 8 metres deep.The edges of these pits can expand by several metres each year, showing that they must be holes in a thin layer of volatile carbon dioxide ice. But does this rest on a slab of water ice or dry ice? Either situation could produce steep-sided pits. Carbon dioxide ice on the pit floors could resist sublimation if it is brighter — less contaminated with dust — than the veneer of dry ice on top. The pit floors are too warm to be frozen carbon dioxide, reveal measurements taken by Odyssey's Thermal Emission Imaging System. In other words, the layer of dry ice on the south polar cap of Mars is only around 8 metres thick.
Source: Nature

Sunday, February 16, 2003

End of an Era?

The announcement that Salon may be on the point of closing has taken me by surprise. Presumabely those following this particular end of the internet media field have been expecting the news for some time. I must admit that the failure to find a workable business model since the cash from Wall Street dried up had left me wondering how they were making ends meet. Of course all this blogging can't have helped them. At the same time, if they are going, this must be some kind of bad news for the more conventional press who are looking to try and find a way to survive in the online world of the future. I'd love to see a breakdown of new subscriber data on 20 to 30 year olds for some of the household names in quality US newspapers. At the same time, although I regret the loss, I must also admit that I have never been exactly a regular reader, even if I have found some of their stuff intelligent and highly readable, especially in the arts. Like the Industry Standard, we will mourn their passing, they will be sorely missed.

Salon Media Group, a formerly high-flying US online media company, has warned that it is in danger of going out of business within the next two weeks. In a filing with the Securities and Exchange Commission on Friday, Salon said it has been unable to pay most of its bills since December, including its rent. If it cannot increase revenues or raise money, it would be unlikely to survive beyond February. In spite of critical acclaim for the quality of its content, Salon's readership has largely shunned its pleas for payment. The company said it was considering new ways to raise money, for example, by selling $5.6m of advertising rights with Cablevision Systems, a deal that might net about $1m. It is also trying to attract additional investors. Salon was bailed out twice last year by John Warnock, the co-founder of Adobe Systems. But the patience of Mr Warnock and other investors may be reaching an end. The online advertising market continues to be weak and Salon's 47,000 paying readers are not generating enough revenue to cover operating expenses. Salon said it could cut costs further to a break-even point but that would affect the quality of the online magazine and its viability.The company went public in mid-1999 as part of an innovative "OpenIPO" pioneered by W.R. Hambrecht that allowed small investors to purchase shares at the initial public offering price instead of limiting such stock to large institutions. However, the company's shares fell after its debut and continued to decline. Salon was delisted from the Nasdaq in November.It is one of the few survivors of a group of leading online magazines. Cnet's News.com and CBS Marketwatch are profitable ventures but they are specialist publications focused on technology and business news.

More from the Watch Out What Might Happen Next Department

After a weekend when the eyes of all the world have been, rightly, turned towards the possible Iraq war, it may be worth keeping in mind that continuing uncertainty carries a price way beyond the frontiers of the US and the EU. This snippet about the problems caused by rising oil prices is Brazil should bring home to us all that it is the poorest - and least able to pay - countries that this crisis is hitting hardest.

Brazil's benchmark inflation rate leapt to a six-year high of 14.5% in January, on rising fuel prices. January's inflation rate accelerated to 2.25%, from 2.1% in December, even though interest rates have been raised to a record 25.5% and pressure on the currency has subsided. The problem is that Gulf War speculation has led to rising world oil prices, which, in Brazil, has translated into higher transport costs and higher food prices. Gasoline prices increased by 8.8% in January, bus fares by 4.99% and food prices by 2.15%. The inflationary surge makes it likely that the central bank will raise interest rates when it meets next week. A rise in interest rates would hinder President Luiz Inácio Lula da Silva's plans to create jobs through faster economic growth. It would also add to the debt-servicing burden. Brazil's inflation target for this year is 8.5%, but few independent forecasters think they will achieve it. The 120 economists surveyed by the central bank expect inflation will end the year at 11.8%. Last year, inflation ended the year at 12.5%.
Source: LatinTrade.com