Is The Slippery Commodity Slipping Up?

Nearly - but not quite - time to gloat.

Oil Prices Retreat; natural gas at three-year low
LONDON Oil prices retreated Tuesday after an overnight rally lifted crude futures by almost US$1 a barrel on worries that the recent drop in prices could prompt OPEC to cut production. Natural gas hit a new three-year low.
Oil prices are down 21 percent since hitting a record of US$78.40 on July 14.

I've thought oil prices were way too high and headed for a fall for a long time now (here and here). The principal reason isn't so much that emerging market growth rates are slowing as it is that oil is driven by two types of demand: genuine and speculative. The overall genuine demand for oil - i.e. demand created by higher fueling requirements as a result of increase in number of cars on the road etc. - is certainly on the increase, but for far too long, the speculative demand, created by traders looking to make a quick buck, has been far too high.

Speculative demand is put about by two principal fears: that the emerging economies will end up consuming all the world's natural resources in their unstoppable path to world financial domination, and that terrorists accross the middle east are going to blow up Israel or America or Britain. Both these scenarios, we know from a reasonable assesment of history, are less likely than the counter-scenarios of terrorists running out of money and support for their causes, and emerging economies just running out of steam - at least to a point of relative stagnation. There's also a lot of confusion in the middle east fears too. Principally, it's that terrorists do not control oil, big companies do. Terrorists have no real power to shut off the world oil supply. And countries like Iran and Venezuela are hardly likely to turn off the taps either, given that it's pretty much their only source of income.

While the scenario of OPEC cutting supply is likely, it will only be in parity with genuine demand, which should in theory leave no net effect, which in turn should leave that layer of speculative capital out to dry. Amid the speculation, there's been talk of every type of inconceivable invention, even a Euro denominated Iranian oil market to compete with US commodity derivatives exchanges.

Now the speculative capital is starting to ease out of the markets, predictably enough spiking and deflating. My guess is that the oil price will probably hit a low of $35 and bounce back up to stabilise at $45. If this sounds unbelievable, it's worth remebering that it was unbelievable too once that fiber optic cables - that commodity which was about to hold up the entire communication infrastructure of our world - would one day be practically worthless.

*Update - October 01, 2006* And there's more. Apparently, some stations in Knoxville, Tenesse are selling gas for under $2 now. (Via Instapundit)

Whose Next In Line At HP?

Given HP's penchant for putting women in the top spots, I'm amazed no one has asked whether newly appointed Chairman Mark V. Hurd is going to continue to retain his joint title as Chairman & CEO, or whether a new CEO position will be created within HP -- to be perhaps filled by a current female senior executive.

One thing is for sure, if this is the case then HP will consider its options carefully. The disasterous appointment of Carlton Fiorina as chief exec 1999 and her subsequent appointment as Chairwoman lasted only five years before the company had become deeply divided over its intended strategy. Robert Wayman then stepped in as interim CEO, before recently sacked Chairwoman Patricia Dunn was put in place just above Mr. Hurd as CEO. It's no secret that HP likes the idea of a woman at the top. Execs at the time of Ms. Fiorina's appointment were criticised for looking to hard to find a female Chairman & CEO, which was allegedly at least in part the reason for the division of the jobs in the 2005 nomination process. Now, with the recent wire-tapping scandal, the nightmare seems to be re-living itself, just with a different plot this time. Dealbreaker is staying up-to-date.

I contacted HP earlier today to ask them if there were any further intended personnell changes, but so far I still haven't got a response. I'll update here if there is one. In the meantime, it's worth checking out the current roster of top female candidates (the following is an aggregation of their biogs from the HP website):

Ann O. Baskins - General Council

As HP's general counsel, Ann Baskins manages a global function responsible for worldwide legal matters including patents and licenses, litigation and regulatory compliance. As corporate secretary, she is responsible for annual shareholders' meetings, board of directors' formalities, corporate governance issues and shareholder records.

Baskins joined HP in 1982 as an attorney in the company's Legal Department in Palo Alto, Calif. She was named a senior attorney in 1985, corporate counsel in 1986 and held a number of positions in the department prior to becoming general counsel in January 2000. She was elected assistant secretary of the company in 1985 and became the corporate secretary in 1999.

Baskins holds a bachelor's degree in history from Stanford University and a law degree from the University of California, Los Angeles.

Ann Livermore - EVP, Tech Solutions

Ann Livermore leads HP’s Technology Solutions Group, a $33 billion-plus business that encompasses storage and servers, software and services. The products and services from this organization serve HP’s business customers of all sizes in more than 170 countries.

Livermore has been involved with HP’s business customers for more than two decades, building customer relationships and information technology solutions to help customers manage and transform their IT environments. Livermore joined HP in 1982 and has held a variety of management positions in marketing, sales, research and development, and business management before being elected a corporate vice president in 1995.

Originally from Greensboro, N.C., Livermore holds a bachelor’s degree in economics from the University of North Carolina at Chapel Hill and a master’s degree in business administration from Stanford University. In 1997, Livermore was elected to the board of directors of United Parcel Service. Livermore also serves on the board of advisors at the Stanford Business School. She is based in Palo Alto, Calif.

Cathy Lyons - EVP & Chief Marketing Officer

Cathy Lyons, executive vice president and chief marketing officer of HP, is responsible for the company's comprehensive global marketing strategy. She leads HP's worldwide branding efforts and drives all its marketing initiatives, including external communications, internal communications, brand marketing, marketing strategy and excellence, corporate affairs, region corporate marketing, and total customer experience and quality. Lyons also leads the Global Marketing Council, comprised of marketing leaders from the businesses and functions as well as Corporate Marketing.

Previously, Lyons was senior vice president of Business and Imaging Printing, a global business unit in the HP Imaging and Printing Group. Prior to that, Lyons was vice president and general manager for the Inkjet Supplies Division, where she managed and directed development, manufacturing and marketing operations for the consumer and commercial inkjet business.

Lyons was also vice president and general manager of the Supplies business, where she directed worldwide business operations for multiple imaging and printing platforms, including ink, laser and print media technologies. In this position, Lyons also was responsible for directing a separate original equipment manufacturing organization that leveraged proprietary HP ink technologies into new industrial markets.

Before joining Supplies, Lyons was general manager of HP's LaserJet Solutions Group European operation in Bergamo, Italy, where she was responsible for creating the concept of digital sending. HP Digital Sending technology eventually grew to become a standalone business and today is integrated into HP's award-winning multi-function printers.

Based in Boise, Idaho, Lyons is a graduate of the University of Colorado, where she earned a bachelor of science degree in business administration and marketing.

Marcela - EVP Human Resources, Marcela Perez de Alonzo

Marcela Perez de Alonso has worldwide responsibility for HP's human resources initiatives, including workforce development and organization effectiveness, benefits and compensation, staffing, global inclusion and diversity, and HR processes and information management. She also is a member of the board for HP Financial Services, the financing arm of HP.

Since joining HP in 2004, Perez de Alonso has spearheaded a pivotal transformation to build a best-in-class HR organization aligned to drive results and optimize the company's growth and efficiencies.

Previously, a long-time executive at Citigroup, Perez de Alonso has held senior-level roles in both operations and human resources, including the lead HR role for Citibank's Global Consumer Business - a 90,000-employee organization where she developed a host of breakthrough initiatives. Senior executive recruiting, diversity, variable compensation and employee survey programs are among the many worldwide efforts Perez de Alonso led during her tenure. She also was head of Citigroup's North Latin America retail business operations and was in charge of deposit products for the company's international retail bank.

One of only 10 women to be included in the ninth annual Hispanic Business Corporate Elite directory, Perez de Alonso was named one of the 50 Most Important Hispanics in Technology and Business by Hispanic Engineer & Information Technology magazine. She also was honored as the 2005 Corporate Executive of the Year by Hispanic-Net, a California nonprofit organization of executives and professionals in technology-related fields.

Perez de Alonso earned an advanced degree in organizational psychology from the Catholic University in Chile. She attended the Business Executive Program of the Columbia University Graduate School of Business and received a certificate in finance and accounting.

Perez de Alonso is on the advisory board of the Marshall Business School, University of Southern California. She also is a member of the board of Next Door Solutions to Domestic Violence, a charitable organization serving Santa Clara County in Northern California.

Ann Baskins would be an unlikely appointment, seeing as she was (at least nominally) in charge of both the Kona I & II investigations which have caused this whole fiasco in the first place. My money would be on Cathy Lyons, given HP's intense focus on marketing and branding, and the fact that she hails from the printer side of the business, which has felt like the much ignored bedrock of the company in recent years. Then again, given  the state of affairs that seem to keep popping up, perhaps having a someone with human resources experience as cheif exec would not be such a bad thing.

*Update* Ryan J. Donovan, from Corporate Media Realtions at HP has responded to my questions - the following are the questions and answers:

Q: Since Mr. Hurd has now assumed the role of Chairman as well as CEO -
are there any plans to create a new CEO position or will he remain the
Chairman & CEO?
A: He will remain Chairman, CEO and President.

Q: Is he acting Chairman/CEO or full-time?
A: Full time.

Q: Any other personnell changes to be made?
A: Not at the Board level beyond Pattie Dunn's departure.

Q: What's the order of seniority of the following in the management
team? (i.e. who is most senior or are all positions pretty much equal?):
A: You can find a complete listing of levels on hp.com.

Well, seemingly no more changes, and operations as normal. Personally, I still wouldn't be surprised to see some more changes as time goes on. I'll update with more responses from employees/ex-employees soon. The last point too is not true, incidentally - while you can find an adequate list of management on the website (the same link I gave above when reffering to the management biogs), you cannot find the actual heirarchy of that management.

Organisational Behaviour

Glancing through the recent stats, one of the most frequently searched for terms which leads people to this blog seems to be 'organisational behaviour' right now. Since this is becoming a pretty much daily event, I'll take a few minutes out to expand on the idea of this rather esoteric term, and offer some of the best links to sites dealing with it.

In its broadest sense, organisational behaviour is a generic label given to describe the way an organisation aims, strategises and participates in the world we live in today. This is a more complex process than most people initially assume, since although it is predominantly management-driven, there are other and often overlooked aspects which affect an organisation's behaviour at any given time. An organisation's behaviour is often driven by both macroeconomic and microeconomic forces, not just management's strategy. To give a simple example of this, in today's current market climate the medium-term surge in oil prices has affected how many organisations allocate cost and spending controls.

Here are some macroeconomic forces which might affect the way an organisation behaves (without management being able to do much about it):

• Commodity prices
• Emerging market growth rates
• Environmental regulation
• Capital under management (i.e. is there more capital in short-term/long-term funds)
• Technology
• Wars

And here are some microeconomic forces which might affect the way an organisation behaves:

• Interest rates
• Inflation
• Recent performance of local equity markets
• Regulation
• Technology
• Infrastructure (i.e. power lines, telecommunication lines, transport etc.)

The list is far from complete but it at least gives a good sense of the type of factors impacting the way an organisation acts, and perhaps serves as a partial model to start with. Within the limits of the above, an organisation's behaviour is centrally driven by the strategy of the management. Broadly speaking, strategy can be broken down into the following components (in no particular order of importance):

1. Financial strategy
2. Ethical strategy (i.e. environmental concerns etc.)
3. Operational strategy (i.e. day-to-day management of the business)
4. Technological strategy
5. Sales & Marketing strategy
6. Personnell (Management) strategy
7. Competitive-response strategy (i.e. how a company reacts to competition)
8. Supply-chain strategy

This again is not a complete list - if you have any other sugestions leave them in the comments below. If you're curious about organisational behaviour, and want some good, quick analysis of real companies put under a microscope, there are a number of great blogs you can now visit mainly written by a bunch of consultants.

First of all, go and visit Tom Peters' blog. He tends to have a lot to say about every aspect of the organisation, all the way from the lofty hights of mergers and acquisitions down to managament of the company cafeteria. Here is a typical kind of quote:

Hats (waaaay) off to Dell! Along with Wal*Mart it did proffer a spanking new approach to "supply chain" organization and management. Most everybody, including the Army and Marine Corps, have assiduously copied.

And while there are some pretty good runs on Broadway (IBM's dominance stretched over two decades—and "unassailable" GM was on the King's throne for about 25 years), no model is "the last word." "Perpetual revolution" is my message in general, and especially to the likes of CIOs who are dealing with what are still immature technologies.

Then there's Guy Kawasaki. He's a great thinker, writer and venture capitalist and well worth checking out - mainly deals with the technology side of things. He's also quite generous with his time and if you e-mail him, he usually responds. An an example of his kind of work, his latest post The Art of Distribution details the top ways to pass "the test (of) the ability to achieve distribution":

• Define it right
• Separate distribution from virality
• Allocate responsibility
• Obey the law of big numbers
• Look for adjacency
• Focus on revenue
• Look out for the other guy
• Always be thinking, "Bigger pie, bigger pie, bigger pie"
• Sometimes be thinking, "Skim the cream"
• Don't kid yourself

Also, John Nesheim, author of a number of books and someone who really 'gets' the venture capital market. Here's a caption from a recent blog post of his dealing with start-ups:

Financial numbers should be created by the leaders who have to deliver results with the people, equipment and cash they sign up for. Of course investors are expected to challenge the numbers. But I find most of the challenges to be the same: "Find a way to do the same work with a lot less cash."' That results too often in under-funded startups. Sure, the Internet bubble had companies ruined with too much cash. But solid managers with experience know what they need for engineering staff, what wages will get the outstanding talent. They know what they can deliver, when. That is not for the VCs to decide. Instead, after due diligence, the investors are wise to bet on the leaders and stand aside, watching from the board room.

For a more academic pespective, go to Biz Deans Talk, a blog mainly written by the dean of the Instituto de Empresa. It's a good blog, and there are some very sophisticated guest bloggers there too.

On the academic note, you can also check out Harvard Business School's only blogging professor, Andrew McAfee.

Some others for more analysis of organisational behaviour are Steve Shu, Malcom Gladwell (to a lesser extent) and Fredd Kambo who is a consultant with Shell.

Add to this list if you feel so inclined, I merely want to offer a quick aggregation of the best analysts of organisational behaviour. If you're still fascinated after having read all the above, and just can't seem to get enough of the subject, my advice is to go and pursue an MBA.

What's In A News Story?

WSJ columnist and author Jeremy Wagstaff, who I mentioned in my post All The News That's Fit To Debate has responded to my criticism of his point that medium in journalism now takes priority over content.

Under the title The Economics of Journalism, Mr. Wagstaff notes flatteringly that I make "a fair point", and that what I wrote was "a good thoughtful post (I'll forgive him getting my name wrong)" but that "sadly", he doesn't agree with my stipulation that "content is what it's all about".

"The economics of journalism is to make money through advertising, and to a lesser extent, through subscription," he continues.

The content -- how many reporters can be hired, how far they can travel -- is largely determined by this. Some publications manage to ignore this with the help of wealthy patrons, but eventually they all fall into the same equation. Newspapers have been economic for so long because they represented a viable logistical operation for delivering content (and advertising). But if the technology of logistics changed, so would be the business model. That is what is happening now. The delivery mechanism has changed so radically that it's also changing the content mechanism. If bloggers on the streets of Bangkok can get pictures and news of a coup before the wires and TV crews, why not make that part of your content?

I apologise here for getting Mr. Wagstaff's name wrong (absent-mindedly, I did indeed refer to him  as "Andrew" in the original post), but the point he is making - and there are many who would agree with him - in my mind does not quite add up. For if the economics of journalism is driven by advertising and (to a lesser extent) subscription, then the ultimate driver must be readership figures. To put it more precisely, there is a positive correlation between an increase in readership numbers and advertising and subscrption revenue to any given publication. So the logical question if you are a news proprietor is: how do we get readership numbers up?

Changing the medium of your publication may indeed be one necessary measure to stay competitive, but only insofar as it affects the content you can deliver. To use the analogy from my first post, it is necessary for newspapers to publish photos, since this directly affects the content of the publication. And Mr. Wagstaff's point about bloggers breaking the Bangkok coup story is much less about the fact that the story was boken over blogs than the fact that the content being provided was at the time fresh and original. Even then, this is not the best example, since the AP broke the story first with commendable coverage.

Contrary to popular opinion, the fundamental business model in journalism is not changing at all. The fact that you can now get news online as opposed to just in print does not change the fact that without quality, original (and I would add investigative) news reporting, there will be few readers, and hence few advertisers and rs. This is one of the main reasons for the importance of foreign correspondents: by actually being in a place, they are close to a number of different and apparently insignificant events which when, once the reporter puts a common thread together, begin to form the basis for major news that is very much in the public interest, and which has mostly been missed by the latter.

Bloggers may contribute to the process of news creation but they are only one aspect of it, acting more like a press release in function that a newspaper. News platforms - be they paper freesheets, online websites, or subscription dailies - are not affected by modern blogs as much as people suppose, largely because they have to offer something more than instant pictures of tanks in Thailand to be valuable, and it's precisely this that keeps them in business.

All The News That's Fit To Debate

Another debate between the blogosphere and the main stream media (MSM) seems to be surging up again. These altercations centrally concern the validity of news put out by what the bloggers perceive as biased and sloppy press corps, acting on their own political agendas rather than with a geunine desire to report the facts.

It's a good thing for the press to have critics, just as it's a good thing for everyone to have them - after all, it is through criticism that we principally polish and progress our skills in whatever we do.  But when criticism becomes both argumentative and personal in nature, it often misses the point and ends up confusing an already complex issue rather than clarifying the issues which need to be addressed. It is with this in mind that we should approach this latest squabble.

Yesterday, Michelle Malkin reported that the Associated Press is now covering - five months later - the capture and detaining of press photographer Bilal Hussein by the U.S. military, whose work, she claimed in an August 12 post on her blog, has "raised serious, persistent questions about his relationship with terrorists in Iraq and whether his photos were/are staged in collusion with the enemy." It's quite a long and complex story so I'll boil it down: the allegation is that Hussein was working alongside terrorists in order to grab exclusive photos for Associated Press. Michelle Malkin's response to September 19's AP release on the story was that "it's spin time. The Associated (With Terrorists) Press is now waging a p.r. campaign against what it calls the "so-called blogosphere" over detained photographer Bilal Hussein." She went on; "After five months of stonewalling, the "so-called reporters" at AP finally reported what this blog reported on April 12--that Hussein had indeed been captured by the US military in a Ramadi apartment building where bomb-making materials were found...along with an alleged al Qaeda leader. Hussein reportedly tested positive for traces of explosives." Her big problem with AP was two-fold: why so late, and why the continued insinuous defence of their photographer rather than the acceptance that they got it wrong?

Then there's Brendan Nyhan. Mr. Nyhan was asked by American Prospect to write a column criticising the media. As he notes in yesterday's  homily, the idea struck him as rather odd given the U.S. media's bias towards the left and the fact that "the Prospect is a liberal magazine ... but I assumed they knew who they were hiring.  I was wrong." As he goes on to explain, he "slammed two liberal blogs for using an airline employee's suicide after 9/11 to take a cheap shot at President Bush." The piece he found question with, which appeared on the popular left wing blog Atrios, commented that "The American Airlines ticket agent who checked in Mohammed Atta on 9/11 later committed suicide - unlike the man in charge who, being briefed on the potential threat, told his briefer, "Okay, you’ve covered your ass." Mr. Nyhan's point was that this was the loss of a human life, and that the post was "politicizing a suicide". Regardless, pressure from left wing bloggers and letters of complaint to American Prospect prompted the editor to order the columnist to stick to criticising only right wing blogs, an offer Mr. Nyhan declined along with handing in his resignation.

These are two quite different, but nevertheless prescient examples of the emotions so prevalent in the debate over the blogosphere vs. the media. One concerns the reporting of hard facts, the other is about 'opinion journalism'. Nevertheless, both show a disappointing flavour of personal - rather than objective - attack which only undoes the real goal.

It's worth bearing in mind here first what the real goal in journalism is all about, be it opinion or fact: an honest and upfront package of news-delivery, in a format everyone can understand. On the first count then, Michelle Malkin has good reason to be angry: cooperating with terrorists in order to get an exclusive - and a staged exclusive at that - is at its best, ethically conspicuous. But due to her personalisation of the attack, her partisans are incentivised to go one further; they would have journalists make no ethical judgement calls at all. This is just counter-intuitive. Every profession which serves a crucial role to society, be it banking, medicine, law or journalism, involves at times making judgement calls based on a limited knowledge of the facts and which may turn out to
be for the worst, and by which by fat the bulk of which the professional has to go by is his or her own ethical assesment of the situation and the inherent trade-offs. It's not that Michelle Malkin is wrong to lambast AP for this fiasco (which admittedly they've dug themselves into) - her fine reporting skills do a justice to clarifying the facts in a complex situation, for sure. But by making her attacks so personal, and by bringing the blogosphere vs. media debate into the fray, she undoes much of the constructive work she has set out to achieve by beginning a whole new - and arguably less worthwhile - polemic.

And there's a vague sense of hypocracy in Michelle Malkin's criticism of the main stream media, too, for it was exactly there that she learned all the skills which have equiped her with the means to attack this story on her blog.

Wall Street Columnist and author Jeremy Wagstaff today writes on his blog, loose wire, "Media companies (itself shorthand for mass media) are no longer about content, and all about the medium. For the past 80 years the mass media has been about leveraging the technologies available to deliver standardized content over as large an area/population as possible. Now it’s about using the technologies available to enable as large a population as possible to swap their own content." This is disappointing to hear from a seasoned columnist, indeed. For, to continue with the example above, it is not the fact that Ms Malkin is writing this report on her blog that is the most important thing here, it is the fact that she is a good reporter with a strong sense for when something does not add up, and has the ability to deliver on it. Whether she publishes on her blog, in The New York Times, or in a fanzine is irrelevant - in other words, quite the contrary to what Mr. Wagstaff is saying, it is misleading to get side-tracked into a debate on medium, when content is what it's about.

The medium is changing, but this is nothing new. One hundred years ago most newspapers did not have pictures; now they do. So what? The act of news reporting and delivery is what the economics of journalism is about.

Here, Mr Nyhan's story is particularly disheartening news, for both the main stream press and for the blogosphere. For the media set, it is sad to see a logically valid and justifiable attack affect their strategy to criticise and seek the truth. What Mr. Nyhan was saying was completely defendable, after all: remark about how the flight attendant who let the terrorist responsible for one of the 9/11 attacks onboard committed suicide whereas President Bush did not is, whatever your view, politicising a suicide (i.e. making an inherently political point by using the example of a suicide). Atrios and left wing bloggers' criticism of the piece should have been water off a duck's back to the chiefs at American Prospect, but instead, they chose to withdraw and alter their original, admirable and truth-seeking strategy.

But it's also bad news for the blogosphere, more than anything because it shows one pivotal fault with bloggers: they are often unable to accept forms of criticism constructively or lightly. One of the strengths which news reporters are forced and trained to aquire early on is to accept and digest criticism in a way which can continue to improve their work, largely through having to re-work countless versions of the same piece until their editor is content (which in itself is rare). Those that do not acquire this skill don't stick around for long; it's usually as simple as that. If bloggers intend to become a widely-received outlet for news reporting, criticism and humility are qualities they mjust learn, and this story is a classic example of that. You can't always get it right - not as a trader, not as a doctor, not as a judge, and not as a journalist. Because of the intensely personality-driven nature of blogging, many bloggers become emotional about criticism that would be best received thoughtfully.

It is unclear exactly what the aim of bloggers who denounce the media is, too. Would they have us a society with multiple 'citizen journalists', all running around with their cell phone cameras and writing from their laptops in wireless internet cafes as and when they are on-site? I don't mean this derogatorally; after all, I write a blog, and I sometimes use it to report events which I think are interesting to others. But a world without newspapers, without magazines, without television would derive us of much of the rich cultural and linguistic development we have today and have had for centuries, for all these mediums provide one unified platform for their expression.

Certainly, the world is changing, and technology is bringing with it an empowering force to the individual. But the individual can still monitor, criticise and scrutinise the corporation and live in harmony with it. That's what the media, science, politics, the courts, and the democracy we have fought for are all about. Let that be the case, not the more violent alternative.

Somone Has To Pay For It All

It's not always just consumers who can't pay their bills. At least, according to a Reuters newsflash today on Zimbabwe, this seems to be the case. "Internet traffic in Zimbabwe has come close to a standstill after an international satellite firm slashed its bandwidth because the cash-starved government failed to pay the bill," the wire reports.

Government-owned TelOne, which owns the country's main satellite Internet link, said satellite firm Intelsat had cut its international bandwidth because it failed to pay the $700,000 fee.

"The link is slow because they reduced the megabits on our satellite link until the payment is made," TelOne spokesman Phill Chingwaru told Reuters on Wednesday.

... "It is a nightmare because of the congestion and we are getting calls from desperate clients, some of them who can't even access the Internet," said an official from a private ISP, which uses TelOne's satellite link.

As the report further points out, Zimbabwe's 1200% rate of inflation and 70% unemployment are the principal drivers behind such calamaties. The story is a great reminder that technology - and indeed any scientific development - is not free of charge, even when its infrastructure has already been implemented. Too often in developed economies we tend to think that no matter what happens, as long as we remain relatively protectionist and guard our assets sufficiently, the chances of any kind of real reversion of development is minimal.

Zimbabwe is a great counter-example to this over confidence. It is precisely liberalised trade that has brought us the technological developments which improve our lifestyles, and all asset guarding tends to do is create a barrier towards growth of commerce. Granted, Zimbabwe is also run by a dictator who hoards many of the country's assets himself, but even then, was the country open to foreign trade it is highly unlikely it would be in the kind of mess it finds itself in now.

The key difference between the world of the twenty-first century and the one of the centuries before is our high degree of interdependence. Intelsat - the company which cut off Zimbabwe's connection - is a Bermuda-based global providor of satelite communication, a whole two oceans away from Africa. It's a story worth remembering - especially in light of current talks of protectionism in response to other fast emerging  powers, which again, are a couple of leaps of the pond away.

The Price Of Space

Since News Corp. purchased MySpace for $580 million in July, you can't help but feel pundits are getting a little hysterical about the potential for online 'social networking' sites. Over the summer, there has been no end to the fanfare of publicity from everything hailing Rupert Murdoch as a visionary genius making bold moves in a rapidly changing industry to more 'it all began in a garage' stories.

Investors should be wary of the publicity supposedly educating them all about the potential ad revenue for social networking sites, though. For when you go and blow over half a billion dollars on a company which few think has any substantial assets other than a rote of fairly standard hardware servers (and that's an accurate analysis), you tend to want to tell the world just why you think it's worth so much. Thus has been News Corp.'s mission so far, spewn across a number of supposedly informative articles detailing the enormous advertising power of such sites.

And the current talk of other social networking sites' valuations - like Bebo and Facebook - appears to be a little misleading right now too. The Economist editorialises this week that the acquisition of MySpace "now looks like a masterstroke" and chimes in the speculation that one of the reasons for CEO Tom Freston's sacking from Viacom was because of his reluctance to pay the huge asking price for Bebo, which would have added a much needed online dimension to the owners of MTV's stable of media outlets. But the criticism misses the point, and Sumner Redstone is a very foolish man indeed if this decision was at all responsible for relieving Mr. Freston.

The reason News Corp.'s acquisition of MySpace now looks smart is principally because other social networking sites have been able to up their own valuations based on that one deal, and now it's a rush to see who can sell in this heated climate. There's a good reason Mr. Freston didn't want to pay Bebo's asking price - probably because it was too much. And $580 million was most likely too much for MySpace, too, given that this is a company with no proven long-term business model and no irregular or unusually valuable assets other than a one-year old brand name. And a hundred and twenty million users, of course. But the hedge fund world - where analysis is often ultra-short term - has a saying that goes something like 'if you can make it in a year, you can lose it in a year'. News Corp. - and investors - would do well to keep this in mind right now before picking up any more unproven brands at unproven prices.