In an exceptional year for tech innovation, not every idea had the brightest bulb. Find out which ones were the absolute worst, with Reuters tech correspondent Jon Gordon. (December 28, 2012)
Monday, December 31, 2012
Advanced economies could wing it through 2013, according to George Magnus, senior economic adviser to UBS, but there are some questions marks about the economic models of some of the world's fastest growing countries. He discusses the global prospects - and risks - for the year ahead with Ralph Atkins, the FT's capital markets editor.
Friday, December 28, 2012
Firearm injury in the United States has averaged 32,300 deaths annually between 1980 and 2006. In 2006, Japan recorded 2 deaths related to guns.
Max Fisher wrote in The Atlantic last July:
"In 2008, the US had over 12 thousand firearm-related homicides. All of Japan experienced only 11, fewer than were killed at the Aurora shooting alone. And that was a big year: 2006 saw an astounding two, and when that number jumped to 22 in 2007, it became a national scandal. By comparison, also in 2008, 587 Americans were killed just by guns that had discharged accidentally."
Bloomberg reported last week that while motor-vehicle deaths dropped 22% from 2005 to 2010, gun fatalities are rising again after a low point in 2000, according to the Atlanta-based Centers for Disease Control and Prevention. Shooting deaths in 2015 will probably rise to almost 33,000, and those related to autos will decline to about 32,000, based on the 10-year average trend.
Gun deaths by homicide, suicide or accident peaked at 37,666 in 1993 before declining to a low of 28,393 in 2000, the data show. Since then the total has risen to 31,328 in 2010, an increase of 2,935, or eight more victims a day.
Germany has a population of 82m compared with the US at 312m.
The number of persons killed in traffic accidents in Germany is expected to fall by more than 7% to some 3,700 in 2012. This is suggested by estimates from Destatis, the federal statistics office, based on data available for the period from January to October 2012. As things stand, the figure will not be smaller than the lowest number of fatalities recorded to date, which is 3,648 persons killed in 2010.
The New York Times reported on December 28th that murders in New York have dropped to their lowest level in over 40 years
The number of murders is the lowest since 1963, when improvements in the recording of data were made.
Of the 414 murders, 14 deaths from previous years were counted as homicides for the first time. In many of these cases, victims of long-ago shootings died of sepsis in hospitals, the police said.
Of the 400 murders in 2012, 223 were gunshot victims, 84 victims were stabbed to death, 43 died of blunt trauma and 11 died of asphyxiation. The majority of the 400 homicides occurred on a Saturday, followed by early Sunday morning. Most occurred at 2 am. People were more likely to be killed outside than in. Nearly 70% of the victims had prior criminal arrests, the police said.
Domestic-related homicides dropped to 68, from 94 in 2011.
"The number of murders this year will be lower than any time in recorded city history," Mayor Michael Bloomberg said, hailing the work of the New York Police Department (NYPD). "It also reflects our commitment to doing everything possible to stop gun violence," he said.
"Murders are down almost 19% this year compared with last year. They are down 35% from where they were 11 years ago when our administration began," Bloomberg added.
The number of shootings in the city also fell to a record low 1,353 this year, down 8.5% from last year, said Bloomberg. The previous low was 1,420 in 2009.
"We're taking 8,000 weapons annually out of the hands of people we stop, 800 of them illegal handguns," Ray Kelly, the police commissioner, said in a statement.
Wednesday, December 26, 2012
Canalys, a research company said, earlier this month that a small number of developers, almost entirely game companies, continue to generate the majority of revenue at the leading app stores - - - Apple’s App Store (iPhone only) and Google Play. Based on daily App Interrogator surveys, Canalys estimates that just 25 developers accounted for 50% of app revenue in the US in these stores during the first 20 days of November 2012. Between them, they made $60m from paid-for downloads and in-app purchases over this period.
The iEconomy series in the New York Times in 2012
In a modern economy where the winners usually take the lions' shares, in 2 of 8 of the iEconomy series, the NYT looks at how the world's most valuable company thrives on the work of the 1m strong Foxconn workforce in China, operating in conditions that could be compared with battery-hen production, with iPhones assembled at $7 to $8 a pop. Meanwhile the Apps Store has been stocked with more that 750,000 items produced by mostly freelance developers who are hoping to win a lottery but aspiration seldom meets reality.
Then there are the web punters who have been spoilt into believing that Santa Claus can work for free (I was going to say 'charity' but that would be misleading in Ireland at least, as running a charity can be a handy earner - - Irish Independent report).
Derek Thompson writes on the Instagram debacle in The Atlantic:
"Think about how their brilliant software delights you, makes you literally happy, fills your spare time, organizes your work time, invents convenience where you never expected it, swallows your boredom in sepia tones, begs hours of your precious attention, does a bunch of other emotionally and productively and ontologically rewarding stuff ... and almost all of it is either vanishingly cheap or utterly free! Not since the cavemen, probably, did the brightest minds in the world turn their attention to making things that nobody had to pay for.
This is rare gift, made possible by at least two things: The duplicability of code, which drives the price of most software products to zero, and subsides from venture capitalists, who are happy to bankroll these ingenious inventors until they figure out a business model. Oops. I said it. Business model. Yes, so we all know these businesses are in fact business. I won't insult your intelligence with the pedantic reminder that 'if you're not paying, you're not the customer, you're the product.' Blah blah blah. People get that, I think. But they hate feeling like the product. It degrades them. And so every time one of these "two-sided" companies announces that they need to start attracting the second side (advertisers) in order to keep things happy for the first side (users), there is a freak-out of biblical proportions.
David Gillen, New York Times deputy editor, leads a roundtable discussion on whether Apple's promise to expand manufacturing in the US will turn out to be good news for American workers.
Friday, December 21, 2012
In the first part of "The Party's Over" (above), first broadcast in December 2011, Robert Peston, the BBC business editor, visits Shanghai, the fastest growing city in China and home to 23m people. Here, he meets some of the city's workers prepared to earn less than their UK counterparts to help fuel the Chinese economic boom.
However, the woes of the West struggling with high debt, ageing populations and the end of the American Dream and its equivalent for other developed nations, will not mean that emerging economies face a long period of plain sailings. Headwinds are evident everywhere.
The United States has an unexpected silver lining compared with just a short time ago.
The United States will become increasingly energy independent in the next three decades as it boosts its production of oil, natural gas and renewable power such as solar and wind. Meanwhile, US crude oil production averaged almost 6.5m barrels per day in September 2012, the highest volume in nearly 15 years. The last time the United States produced 6.5m barrels per day or more of crude oil was in January 1998. Since September 2011, US production has increased by more than 900,000 barrels per day. Most of that increase is due to production from oil-bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing (fracking). The states with the largest increases are Texas and North Dakota.
The US Energy Information Administration this month issued its Annual
Energy Outlook 2013 (AEO2013), which highlights growth in total US energy production that exceeds growth in total US energy
consumption through 2040.
The BBC says that in the teeth of the worst financial crisis in living memory, Robert Peston examines how the world got to this point and how the colossal imbalances in the global economy have left the UK in need of a radical economic overhaul.
In this first of two programmes Peston examines how, thirty years ago, momentous decisions were taken which shaped the world we live in today. In China, Deng Xiao Ping opened up the country to foreign capitalists; in Britain and America, the free market revolution was unleashed by Margaret Thatcher and Ronald Reagan. "The Party's Over" compares the lives of workers in a Chinese company with their co-workers in Britain.
Robert Peston interviews bankers, politicians and economists, and concludes that the boom we enjoyed before the crash was based on an illusion, and that the world's economy is now so unbalanced that in the West we face a sobering wake-up call.
Not all plain sailing
The demographic outlook for the BRICs (Brazil, Russia, India and China) varies greatly. The differences in the projected change in the working-age population are very significant in both absolute and relative terms. This will impact not only economic growth prospects, but also savings and investment behaviour and potentially financial market growth prospects. Brazil and India are demographically in a substantially more favourable position than China and Russia. With the exception of India, demographic developments in the BRICs are becoming, or will soon become, a net negative in terms of per-capita growth. The working-age population in India will increase by a stunning 240m (equivalent to four times the total population of the UK) over the next 20 years, compared with 10m in China. However in the big country league, only in Brazil, India, the UK and the US will the potential labour force be tangibly larger in 2030 than today.
China should double its GDP (gross domestic product) by 2020
Hu said in a speech at the opening of the Communist Party’s 18th congress last
month. Hu who handed over the position of party general secretary to Vice
President Xi Jinping a week later, also called for “deepened reform of the
financial system” and more local-level democracy. China was ranked 121st in
gross national per capita income for 2010 by the World Bank, at $4,260, close to
Jordan and Thailand and less than 1/10 of the US’s $47,140. However, on a
purchasing power parity (PPP - - The rate at which the currency of one country
would have to be converted into that of another country to buy the same amount
of goods and services in each country) basis during Hu's presidency, GDP per
capita more than tripled from $2,800 in 2002 to a forecast $9,100 in 2012
according to the International Monetary Fund.
ChinaRealTime, a Wall Street Journal blog, says that rising incomes pushed China into the middle-income bracket of emerging nations. With few signs of democratisation, China also defied expectations that rising wealth would lead to political reform.
Ten years of rapid growth is an impressive record. But much of the credit must go to Hu’s predecessor Jiang Zemin, who shepherded far reaching reforms that laid the foundations of the decade’s growth. The boost from those reforms is now running its course.
China’s entry into the World Trade Organisation in 2001 ushered in an export boom, with exports averaging nearly 30% annual growth from 2002-07. But as China has grown to be the world’s largest exporter, with more than 10% of the global market, the room for further expansion is limited. Rising wages, and a stronger yuan, have also taken a toll on export competitiveness.
Ruchir Sharma, head of emerging market equities and global macro at Morgan Stanley Investment Management, which has about $25bn in emerging market assets, and is the biggest investment rival of Goldman Sach's, says in a recent issue of 'Foreign Affairs,' that the recent slowdown in growth in emerging economies should not be surprising, because it is hard to sustain rapid growth for more than a decade. The unusual circumstances of the last decade made it look easy: coming off the crisis-ridden 1990s and fueled by a global flood of easy money, the emerging markets took off in a mass upward swing that made virtually every economy a winner. By 2007, when only three countries in the world suffered negative growth, recessions had all but disappeared from the international scene. But now, there is a lot less foreign money flowing into emerging markets. The global economy is returning to its normal state of churn, with many laggards and just a few winners rising in unexpected places. The implications of this shift are striking, because economic momentum is power, and thus the flow of money to rising stars will reshape the global balance of power.
Sharma who is the author of the book, 'Breakout Nations: In Pursuit of the Next Economic Miracles,' says that the notion of wide-ranging convergence between the developing and the developed worlds is a myth. Of the roughly 180 countries in the world tracked by the International Monetary Fund, only 35 are developed. The markets of the rest are emerging-and most of them have been emerging for many decades and will continue to do so for many more. He says that Dani Rodrik, the Harvard economist captures this reality well. He has shown that before 2000, the performance of the emerging markets as a whole did not converge with that of the developed world at all. In fact, the per capita income gap between the advanced and the developing economies steadily widened from 1950 until 2000. There were a few pockets of countries that did catch up with the West, but they were limited to oil states in the Gulf, the nations of southern Europe after World War II, and the economic "tigers" of East Asia. It was only after 2000 that the emerging markets as a whole started to catch up; nevertheless, as of 2011, the difference in per capita incomes between the rich and the developing nations was back to where it was in the 1950s.
Excerpt from 'Breakout Nations':
As playwright Arthur Miller once observed, "An era can be said to end when its basic illusions are exhausted." Most of the illusions that defined the last decade -- the notion that global growth had moved to a permanently higher plane, the hope that the Fed (or any central bank) could iron out the highs and lows of the business cycle -- are indeed spent. Yet one idea still has the power to capture the imagination of the markets: that the inexorable rise of China and other big developing economies will continue to drive a "commodity supercycle," a prolonged upward rise in the prices of commodities ranging from oil to copper and silver, to textiles, to corn and soybeans. This conviction is the main reason for the optimism about the prospects of the many countries that live off commodity exports, from Brazil to Argentina, and Australia to Canada.
I call this illusion commodity.com, for it is strikingly similar in some ways to the mania for technology stocks that gripped the world in the late 1990s. At the height of the dotcom era, tech stocks comprised 30% of all the money invested in global markets. When the bubble finally burst, commodity stocks -- energy and materials -- rose to replace tech stocks as the investment of choice, and by early 2011 they accounted for 30% of the global stock markets. No bubble is a good bubble, and all leave some level of misery in their wakes. But the commodity.com era has had a larger and more negative impact on the global economy than the tech boom did.
The hype has created a new industry that turns commodities into financial products that can be traded like stocks. Oil, wheat, and platinum used to be sold primarily as raw materials, and now they are sold largely as speculative investments. Copper is piling up in bonded warehouses not because the owners plan to use it to make wire, but because speculators are sitting on it, like gold, figuring that they can sell it one day for a huge profit. Daily trading in oil now dwarfs daily consumption of oil, running up prices. While rising prices for stocks--tech ones included--generally boost the economy, high prices for staples like oil impose unavoidable costs on businesses and consumers and act as a profound drag on the economy.
That is how average citizens experience commodity.com, as an anchor weighing down their every move, not the exciting froth of the hot new thing. The dotcom sensation broke the bounds of the financial world and seized the popular imagination, attracting thrilled media hype around the world and enticing cubicle jockeys to become day traders. There was the dream of great riches, yes, but also a boundless optimism and faith in human progress, a sense that the innovations flowing out of Silicon Valley would soon reshape the world for the better.
Tech CEOs became rock stars because they promised a life of rising productivity, falling prices, and high salaries for generating ideas in the hip office pods of the knowledge economy, or for trading tech stocks from a laptop in the living room. It was impossible in those days to get investors interested in anything that did not involve technology and the United States, so some of us started talking up emerging markets as "e-merging markets," while analysts spent a lot of time searching for the new Silicon Valley, which they dutifully but often implausibly discovered hiding in loft offices everywhere from Prague to Kuala Lumpur.
A decade later the chatter was all about the big emerging markets and oil, but with a darker mood. Commodity.com is driven by fear and a total lack of faith in human progress: fear of a rising phalanx of emerging nations with an insatiable demand led by China, of predictions that the world is running out of oil and farmland, coupled with a lack of faith in the human capacity to devise answers, to find alternatives to oil or ways to make agricultural land more productive. It's a Malthusian vision of struggle and scarcity: of prices driven up by failing supplies and wages pushed down by foreign competition.
Excitement about rising commodity prices exists only among the investors, financiers, and speculators who can gain from it. Commodity.com has inspired many an Indian and Chinese entrepreneur to go trekking across Africa in search of coal mines, yet it has no positive manifestation in the public mind at all. At the height of the tech bubble millions of American high school students aspired to become Stanford MBAs bound for Silicon Valley; today the growing number of oil, gas, and energy-management programs represents a small niche inside the MBA world. The only popular manifestations of commodity.com are complaints about rising gasoline prices and outbreaks of unrest over rising food prices in emerging markets.
It is well-justified unrest. If anything, the negative impact of sky-high commodity prices on the larger economy is underestimated. The price of oil rose sharply before ten of the eleven postwar recessions in the United States, including a spike of nearly 60% in the twelve months before the Great Recession of 2008 and more than 60% before the economy lost momentum in mid-2011. When the price of oil trips up the United States, it takes emerging markets down with it. In 2008 and 2009 the average economic growth rate dropped by 8%age points in both the developed and the emerging world, from its peak pace to the recession trough.
The strongest common thread connecting the dotcom and commodity.com eras is the fundamental driver of all manias: the invention of "new paradigms" to justify irrationally high prices. We heard all sorts of exotic rationales at the height of the dotcom boom, when analysts offered gushy explanations for why a company with no profits, a sketchy business plan, and a cute name should trade at astronomical prices. It was all about the future, about understanding why prices in a digitally networked economy "want to be free," while the "monetization" problem (how to make money on the Internet) would solve itself down the line. The dotcom mania, while it lasted, was powerful enough to make Bill Clinton -- who campaigned as the first U.S. president to fully embrace the "new economy" -- a living emblem of American revival, just as the commodity price boom played a role in making Vladimir Putin a symbol of Russian resurgence and Inácio Lula da Silva the face of a Brazilian recovery. When the rapture is over, the nations and companies that have been living high off commodities will also share the sinking feeling that followed the dotcom boom.
Excerpted from Breakout Nations: In Pursuit of the Next Economic Miracles, W.W. Norton & Company. Copyright © 2012 by Ruchir Sharma.
Sunday, December 16, 2012
The reviewer in the Times of Gene Kerrigan’s new book, ‘The Big Lie: Who Profits from Ireland’s Austerity?,’ says : “It doesn’t purport to explain where we are going next, or how to get there, but it gives a lucid account of why we are where we are.”
Whether right or wrong, Gene Kerrigan writing on the Irish crisis has more credibility than for example Shane Ross.
There is the European dimension but also the local one where for example in Ireland, the people without countervailing vested interest power are unfairly targeted.
So after a 20-year credit binge, credible alternatives to some form of fiscal adjustment in Europe, are seldom aired. In Ireland, those who are the victims of the crash are seldom heard from. Excluding the property boom, there was no growth in Ireland in the past decade. However, bubbletime gains and pensions are still available in the public sector. The British Empire's guarantee of employment in the civil service which dates from that 1850s continues to exist in the Irish civil service alongside premium pay and pension benefits. Meanwhile, Labour Party TDs hypocritically protest against welfare cuts, while senior civil servants can get retirement bonanzas worth several million euros.
The Federal Reserve has been the most active central bank among developed countries but last month, the broad measure of US unemployment was 14.4%, down from 15% in Nov 2011. Nevada, like Ireland had a big housing bust, and its rate is 21%.
Banks have done well from the low central bank lending rates.
Mario Draghi, ECB president, does deserve credit for stabilising the euro.
Europe’s 3 biggest economies, Germany, France and the UK, are projected by the IMF to have gross debt to GDP ratios of 81.5%, 92.1% and 93.3% in 2013.
What level of stimulus would be required to return the continent to 2007 growth?
Michael Hasenstab of Franklin Templeton who has purchased €8.5bn holding in Irish bonds, is quoted as saying: “Ireland is now the second fastest if not the fastest growing economy in Europe, along with Germany. The PMI (Purchasing Managers' Index) numbers in Ireland are in fact better than in Germany.”
The first part of the quote isn’t true; the second part is but if he really understood the Irish economy, he wouldn’t be quoting PMI data.
Estonia is projected to grow by 2.1% this year and 3.1% in 2013 — this is another small economy where headline data is misleading.
Some 20% of Estonia’s 2012 budget comprises EU transfers, which will start running out in 2015. As regards exports, a small number of firms are part of European supply chains while re-exports are also significant (goods imported via Estonia by Russian firms, from third countries).
Friday, December 14, 2012
Barcelona and Argentina forward Lionel Messi has broken Gerd Müller's 40-year record of 85 league and international goals in a calendar year. WSJ's Joshua Robinson has been keeping tabs.