Apple

The latest developments at Apple Computer, as featured on Google News and Google Finance:

... if the radical New Economy/NewMedia giant can sustain a sufficiently high equity price and snub combative parties in the courtroom over the next few months, it will send a clear signal to the market and to traditional competitors such as the ailing EMI that the franchise over the music industry has now changed hands.

My hunch is that Apple will pull through victorious: the industry platform is changing, and this is the last fight to hold it back.

The Boom Bust Irony

The Boston Globe suggests that realtors actually don't profit very much in a real estate boom:

It would seem obvious that being an agent during a real estate boom is a great way to earn a good living.

As it turns out, however, most agents don't make very much money during a boom, because of one simple fact: the boom attracts way too many of them.

The point summarises well the great falacy with booms of any kind: while most people to some degree feel the benefits of the increased capital surplus, booms operate a little like pyramid schemes in that only those who were in first derive any kind of substantial windfall out of it. It is a bitter twist of irony however that when the boom turns to bust, the reverse is true: even those who never had anything invested in the phenomenon at all feel the dearth of the dry-up in capital.

It's another case of the minority outweighing the majority.

Greenspan and Giuliani

Greenspan and Giuliani are fielding questions over the development of Asian capital markets this month:

As keynote speakers at the inaugural FT Asian Financial Centres Summit in Seoul, Dr Alan Greenspan, former US Federal Reserve chairman, and Rudolph Giuliani, former mayor of New York and currently chairman and CEO of Giuliani Partners LLP, will answer readers’ questions - selected by FT editors - about what criteria must be met and regulatory challenges overcome in creating world-class financial centres.

Send your questions for either Dr Greenspan or Mr Giuliani to ask@ft.com. Dr Greenspan’s answers will be published on FT.com on Wednesday April 12 at 9am GMT. Mr Giuliani’s answers will be published on FT.com on Wednesday April 12 at 12pm GMT. Both sets of questions and answers will be available at www.ft.com/financialcentres

Answers will certainly be interesting, though one can't help but feel the subject matter is a little bit of a sidetrack from the really pertinent issue, a matter both would be equally qualified to discuss: how and to what extent the United States is likely to co-operate with inevitable changes in the regulatory and financial legislature in the Far East.
 

Changeover in the Ukraine

The end of the controversial Yushchenko? From the Financial Times:

Ukraine’s president Viktor Yushchenko looked set for a humiliating defeat after Sunday’s parliamentary elections ... exit polls suggested Yulia Tymoshenko, his former ally in the Orange Revolution, and Viktor Yanukovich, his opponent in the disputed 2004 presidential poll had beaten Mr Yushchenko into third place.

A Tymoshenko leadership would be a great thing for the Ukraine, and a great thing for Eastern European democracy.

Speculating on Movies?

So Paramount have sold their Dreamworks Library for $900 million: this doesn't look big news - just another Old Media company hitting the wall in the struggle to battle against technology - until you look at whose buying:

Paramount Pictures on Friday said it had agreed to sell its DreamWorks film library to financier George Soros' investment fund and Dune Capital Management.

Quite what quantitative macro-economic currency speculator Soros wants with Speilberg's film production company I do not know, but something is up.

More Newsblogs

The Guardian is getting even bloggier:

The Guardian has launched an expanded comment section for their Web site, to be known as "comment is free," reports OhMyNews International.

... Simon Waldman, director of digital publishing at the Guardian, told Online Journalism News that "These days of course, everyone else is noodling about with blogs -- often rather desperately -- but our planned comment blog 'Comment Is Free' will take things to a whole new level."

If newspapers want to remain relevant and exciting in the decades to come, it will be essential for us to rewrite the rules on how we engage with our readers and users.

Some people find this abhorrent and will choose to ignore what's happening. And there will be times when they can feel quite smug as those of us going down the engagement route hit some inevitable roadblocks. But in the long term they will find themselves preaching to an ever-smaller congregation.

This reminds me of something I said recently here.

More Information From Iraq

From Right Voices:

So, the MSM is slowly picking up on the historic release of thousands of documents from Saddam Hussein’s archives. But not without making a concerted effort to downplay and undermine the story.

Read the whole thing here.

New Media Cashflow

A writer over at Blog Critics raises a good, far too often overlooked point about the world wide web and popular websites:

The net is an expansive, overwhelming world that we tend to take for granted. Many upcoming sites such as the "adult" Asstr, Blogcritics, Desicritics, etc. become sites most of us habitually visit.

Despite the immense popularity that these sites enjoy most of them have yet to make money. The sites are basically run by people who have day jobs and pay for the sites from their own pockets.

The popular consensus seems to be that starting and maintaining a site is an inexpensive activity that just about anyone can do: the reality, however, is that sites - and blogs - are notriously time-consuming cost-consumers with almost no revenue model to reward their proprietors. It is only a matter of time before another large-scale capital injection will be needed to take this platform of news and entertainment media distribution to the next stage.

M&A Action

Takeover talk hasn't been this rampant in a long time:

L'Oreal has just revealed plans to buy Body Shop for £650m and Luminar, the UK's biggest nightclub operator, has received a takeover approach from Sarcens boss Nigel Wray. There was also news from Vodafone that it plans to return £6bn to its shareholders once it has completed the sale of its troubled Japanese business.

Both sides of the atlantic, markets have been heating up with buy-out talks. While this is rarely a good thing for the companies in the M&A process - most large-scale mergers and acquisitions, after all, are notoriously difficult to configure in terms of profitable value until a long time after - it bodes fantastically well for equity markets as a whole.

Agendas in Iraq

So Sadam was storing WMD and plans for global warfare:

The War On Terror: The government is finally getting around to unloading some of Saddam Hussein's secret documents. A look at just a few pages already leads to some blockbuster revelations.

In the early stages of the war that began three years ago, the U.S. captured thousands of documents from Saddam and his spy agency, the Mukhabarat. It's been widely thought the documents could shed light on why Saddam behaved as he did and how much of a threat his evil regime represented.

Yet, until this week, the documents lay molding in boxes in a government warehouse. Now the first batch is out, and though few in number, they're loaded with information.

Among the enduring myths of those who oppose the war is that Saddam, though murderous when it came to his own people, had no weapons of mass destruction and no terrorist designs outside his own country. Both claims now lie in tatters.

... but as Glenn Reynolds reports, do not expect to see this written up in the main stream media any time soon: agendas, after all, run higher on a scale of importance than facts. Part of the problem is now that big media and global goverance have invested so much in the claims that the war on Iraq was declared on bogus information,  any indications to the contrary can hardly be reported and debated accurately without making them seem hypocritical, or at worst, downright wrong in their initial assumptions. Just to make matters worse, those who have been claiming that there only agenda is the truth, have by and large been clothing an anti-war stance.

What is needed now is classicly, not a pro-war agenda, and not an anti-war agenda: the war in Iraq has happened, after all: we need someone in a position of influence and power with no agenda at all.

Round Two of The Macro Game?

From CNN:

The Senate voted Thursday to allow the national debt to swell to nearly $9 trillion, preventing a first-ever default on U.S. Treasury notes.

The bill passed by a 52-48 vote. The increase to $9 trillion represents about $30,000 for every man, woman and child in the United States. The bill now goes to President Bush for his signature.

...The debt limit will increase by $781 billion. It's the fourth such move -- increasing the debt limit by a total of $3 trillion -- since Bush took office five years ago.

The vote came a day after Treasury Secretary John Snow warned lawmakers that action was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be compromised."

Several things always seem to follow increases in the U.S. deficit. First of all, everyone speculates that the United States will no longer be the great global superpower it once was for very much longer, and that this is a sure sign that some "emerging economy" is going to take over instead. Money then floods into these emerging market economies in the desperate attempt to find the next goldrush, as the investors mistakenly see their capital as "investment" rather than "leverage" propping up largely unsustainable growth. All the capital from this growth is stored, naturally, in  U.S. T-Bills. Emerging economies then open derivates markets to all possible national financial instruments: stocks, commodities, even their own currency, in order to provide further liquidity for all this capital "investment".  At the realisation that all this "growth" is not going to materialise, investors quickly divest all their savings, which usually do not amount to much, as a few savvy macro Hedge Fund managers cash in enormous futures contracts against the local currencies (enabled by the recent opening of the derivatives markets), ending up as the only ones to have made anything near the promised billions in profits.

THEN comes retaliation time: U.S. politicians negotiate large financing pckages usually disguised  with creative names like "hybrid loan payments" to "help" these poor countries,  which in turn helps finance their own large deficit (remember, of course, that reserves - cold cash - are stored in U.S. government bonds anyway). Capital pours back into U.S. markets, so dollar-denominated commodities such as oil come off in price: subsequently there is a giantic swell in equity prices, and all looks good until they explode again.

Rinse and Repeat, over and over and over again. Compare today's situation with the scenario just over ten years ago, and China looks like Japan and Thailand used to. With the recent opening of their derivitives markets, and the loosening of investment in equity, real estate and the Yuan, another round of boom bust cycles does not look so unlikely.

Religious Legislation

New claims by a Jewish academic that one can quite properly have sex out of wedlock and still remain pious are causing outrage in Orthodox religious circles:

According to an article by Professor Tzvi Zohar of Bar Ilan University, which has aroused fervent debate in religious Zionist circles, the answer is yes, but only if the relationship is based on mutual respect and the woman immerses herself in a mikve [ritual bath].

... In the arrangement, sanctioned by Jewish law according to these opinions, the woman becomes a pilegesh, or concubine. Neither the man nor the woman has any obligations or rights. Both must adhere to family purity laws in accordance with halacha.

Very often people tend to get wound up in the sacrimental implications of religious doctrine, without acknowledging that it is written as simply law, in much the same way political legilslation is drafted today, and hence inevitably full of loopholes. This is not to criticise the verity of religious law to those who hold it personally close to their lives: it is just that by far the majority of it is necessarily suject to inerpretation.

China: The Socio-Political Melting Pot

From Foreign Policy, a curious but relevant piece about the growing disproportion of males in China:

Back in 1990, Nobel Prize-winning Indian economist Amartya Sen was one of the first to call attention to the phenomenon of an estimated 100 million “missing women” in Asia. Nearly everywhere else, women outnumber men, in Europe by 7 percent, and in North America by 3.4 percent. Concern now is shifting to the boys for whom these missing females might have provided mates as they reach the age that Shakespeare described as nothing but stealing and fighting and “getting of wenches with child.”

Now there are too few wenches. Thanks in large part to the introduction of the ultrasound machine, Mother Nature’s usual preference for about 105 males to 100 females has grown to around 120 male births for every 100 female births in China. The imbalance is even higher in some locales—136 males to 100 females on the island of Hainan, an increasingly prosperous tourist resort, and 135 males to 100 females in central China’s Hubei Province.

This is not the only way in which China is unique from a geopolitical standpoint: in other prescient forms too, the country is perhaps the largest scale social experiment in human history.

Many recent credible psychological research reports today imply that both lack of siblings and disproportionate amounts of capital availability create a degree of narcissism and self-absorbtion unseen in the traditional post-war era style families where there was little to feed many. Indeed, exactly these two factors are also believed to account for the explosion in popularity of psychiatry, self-help, and other such personally-oriented treatments and practices.

When one takes into consideration the single-child policy that has spawned millions of children without siblings, alongside the fact that the country has received an enormous injection of capital over such a short period in time (and hence Generation Y children and below who are disproportionately wealthier than any of their ancestors have ever been), China looks like no less than a whole socio-political hot-pot of unknown consequences waiting to spring up and surprise the world.

Economic Miscalculations & Ramifications

Tom Peters picked up recently on a great article which appeared in Business Week claiming that the economy is not actually as poor as pessimistic economists woud have you believe:

"Business investment in intangibles such as product development and training is critical for long-term profitability, but it doesn't get counted in GDP." The unreported annual sum was most recently $978 billion, almost as much as the reported investment in physical capital. Re-calculate, and "investment as a share of the economy is rising rather than falling."

Household outlays for education, the most important investment in the future of the next generation, are improperly counted as consumption." Re-calculate, adding in this uncounted $224B, and "personal savings were positive, not negative."

This is just one way in which outdated calculation methods are giving misleading signs about the health of economy in perspective of the new architecture of the "Knowledge Economy".

What is more worrying however is how much we may be miscalculating the growth rates of countries such as China and India, however. Look again at the above examples: how much investment in training, product development, and education can one reasonably posit is taking place in these economies as opposed to the gross investment in real estate, developing traditonal business "value chain" partnerships etc.? Seen like that it looks like we may have hugely overstated the imminence of the Far East's economic supremacy, as well as misunderestimated the U.S.'s.

Industry Dynamics

Wall Street Journal columnist Jeremy Wagstaff writes on his blog Loose Wire:

The A List bloggers I read don’t have any ads at all that I can remember, certainly less than the number I have. That, in most cases, is not their motivation. And their content is often very interesting stuff, and a great place to hear about new gizmos and Web 2.0 thingamijigs first. But that said, there is perhaps some fire inside the smoke. The A List of bloggers hasn’t changed hugely in the past three years, and while it’s fascinating to watch them evolve (or not, in some cases) you can’t help but wonder why, when blogging has grown in popularity, both in readership and authorship, the A List remains such a small club.

This is pretty much what everyone’s wondering, though I expect it has something to do with first movers advantage, and of course, capital. As more organisations willing to invest money into the blogsphere come up - such as Blog Media - the Bloggers A list will have a slightly more liquid turnover rate. this is the case for nearly all new industries: once real cold cash enters the game, the nature of play changes.

Right now the A list bloggers can sit back and relax a little, but not for much longer. They should enjoy it while it lasts.

More Of The Lowest Punditry

Reading Daily Pundit is sort of like reading The National Enquirer - addictive if only for the unbelievably, shockingly sloppy reasoning behind gross political outbursts.

Here’s one such example from today. Quote:

The US Director of National Intelligence, John Negroponte, warned that China’s steady military and economic expansion may ultimately lead to Beijing attaining superpower status on a par with the United States.

"Globalization is causing a shift of momentum and energy to greater Asia, where China has steadily expanding reach and may become a peer competitor to the United States at some point,” Negroponte said at a hearing of the US Senate Armed Services Committee on global security threats."

The Daily Pundit opines in response to this:

As long as it is a communist tyranny, China will never attain true superpower status. The old USSR never did. At base, the soviet commies were a third world country bankrupting itself to pay for a nuclear arsenal and a huge army.

There are several things I find odd about this.

First, I wonder: has the author ever even been to China? This is not a rhetorical question, neither is it one designed to provoke, but it strikes me as somewhat naive to assume one can declare a country that has given the world much of the cultural richness we enjoy today (not to mention many of the heavily discounted goods and hence savings we also enjoy) as a “communist tyranny” if one has never seen it for oneself.

Secondly, stating that a country cannot become a “superpower” because it adheres to a particular political model smacks of an ignorance of macroeconomic understanding: superpower staus is achieved in large part by the level of currency reserves a particular country’s economy has - seeing as many of China’s are currently propping up the gross U.S. deficit, it is a slighly bizzare statement.