Category Archives: Globalization

Yahoo Microsoft: Is the fat lady almost singing at $34?

Posted on by
1

Henry Blodget is whining that the Yahoo Microsoft deal is back to where it started, but I think Henry’s wrong … again!     

I’m glad Henry was wrong about the rumor that Yahoo’s Q4 would beat expectations because it was part of the reason I bought YHOO then, and even though the stock dipped due to a bad Q4, it surged on Microsoft’s offer of $31 per share so I’m well in the black.   But now he’s wrong to say the deal is not almost done.  I think this Yahoo Microsoft merger is coming very soon to an internet near you.

Citibank Analyst Maheney upgraded Yahoo this morning, anticipating a boost in the MS bid to $34.   Hey, maybe he read my blog post of about 6 weeks ago where I suggested Microsoft raise their bid to $34?    

Unlike Henry, I think this is not back to where it all started at all!

Yang didn’t want to merge, now he sees it as almost inevitable.  Yahoo board wanted more, now they know anything past initial offer is gravy.  Part of the show was probably the board protecting itself against lawsuits from the unlucky minions who bought their Yahoo at $35+, some at over $100.

Barring a Q1 miracle that would recalibrate Yahoo prices without help of MS bids, I think the fat lady is now almost done singing on this deal.

 Disclosure:  long on YHOO

Risk saves lives

Posted on by
4

Just another in my ongoing rants about something I feel strongly about.  We need to accept a lot more risk in our lives so we can stop spending gazillions foolishly, and start allocating the spending to things that will actually do a lot of good and save a lot of lives here and elsewhere:

 Re: Lead in toys imported from China:

The whole anti china toy thing seems to me to be largely an overreaction and/or  an anti-China political scam.   Our standards are far, far too high here in the USA.    I’d like to see how you can make a case that standards that add billions in costs and save at most a handful of people are appropriate when we could reallocate that risk in such a way that the costs would save thousands of *the very same* people,let alone *millions* in developing world.    Did anybody bother to compare the (trivial) lead and toxics risks from those China toys with risks from wearing street shoes in the home (also probably trivial but not a costly approach to the problem.  And then compare those with the risks most families take by not containing the almost ubiquitous leaded paint on old American homes and by using leaded fuels?   THAT’s a lead risk folks, and it’s big enough to worry about.    Am I saying we should allow leaded toys in from China?   No, but we should not worry so much about these small risks and we should reduce the regulations such that the risks match up logically.    Mad Cow disease posed almost *zero* health risks given the existing inspection regimens, yet many called for *higher* standars to fight that almost immeasurably small risk of human problems from mad cow.  (Pop quiz – how many US people have died from the human complications that come from mad cow disease?)  Answer:  1 or less.   In fact there were only 3 cases of this in US cows! 

Would I vote to put myself and others at slightly greater risk – trivial greater risk – so hundreds of others could collectively live thousands more years?   Of course, it is a moral imperative to work for this.  

Silly people say it’s not a tradeoff.   They suggest we always need to fight for the highest safety standard, and the costs be damned.    That appeals to emotion but is downright stupid in terms of economics.  You *must* allocate resources because they are limited.   You can let whimsy guide you, or emotion, or evil, or logic, but you cannot escape the allocation of resources.   All I’m saying is, to rework and paraphrase John Lennon:

“Let’s give Peace REASON and ROI calculations a chance” 

 We desparately need to better match risk and cost, but political spending and emotion forces us to, for example, recall perfectly good beef and spinach when statistics suggest these were of sufficient quality.    The spinach thing probably led to a few more deaths from lowering dietary standards by stopping eating spinach than the 1? death from the bad spinach.

You call the $13 billion in pork barrel projects wasteful spending? It’s a whimper to the Military’s Bang Mega-Budget!

Posted on by
6

Taxpayers, many in Congress, and all three presidential hopefuls are all ranting against the stupidity of earmarking in congress – the process AKA porkbarrelling where congress people insert unnecessary projects into spending bills and/or other legislation such that we taxpayers pay for projects that are usually wasteful and sometimes scandalous.    Alaska’s “Bridge to Nowhere” is the current poster child, which was allocating tens of millions to build a bridge that would service a tiny Alaska village of something like a few dozen people.

Yes, of course these projects are stupid, but to focus on them to the exclusion of the _real_ waste in Government spending is nonsense.    It’s like complaining that the president makes $400,000 a year when he would work for less.    This earmark money is *chump change* in a federal budget of trillions, where the things we should focus on are how to reduce the insanity of spending too much on wasteful social services projects (insert pretty much any one here) and most importantly our military budget, which is incomprehensibly large and incomprehensibly foolhardy:

Military $550,000,000,000.     Over half the world’s military spending is ours, and much of it is unnecessary.   Note the current Air Force tanker fleet fiasco where on the one hand Democrats argue this staggering contract should go to more expensive Boeing which as a US company would preserve more jobs, while Republicans argue who knows what about this.    The right answer is scale this back – significantly – because US security no longer depends on massive capitalized military juggernaut.    If there is a *single* lesson we should learn from Iraq it is that the USA cannot use massive military superiority to keep the peace.   In fact Iraq may demonstrate the opposite – our massive superiority is one of the factors that insurgents use against us, and is a major reason that the Iraq government has little incentive to get their own military providing better security for the people of Iraq.    

But even if our trillions bring security to Iraq it has been a fools bargain.    The same spending for infrastructure improvements in USA and around the world would have changed the global landscape in a significant way – certainly more than even the most optimistic scenario for Iraq independence.

Contrary to some of the nonsense spouted by modern “conservatives” and many hawkish Democrats as well, the founders of the USA believed in low military spending, very weak federal control, and in very cautious global dealings.    Until we return to those sensibilities we risk everything with the continued reckless military (and social service) spending spree.     

Countrywide v. Congress and the China Connection

Posted on by
5

Today CSPAN had the congressional hearings with Mozilo, who has a 40 year tenure with Countrywide as founder and CEO.  He presided over Countrywide’s meteoric rise and much of the meteoric fall.    I hope people hurry up and wake up to the significance of the events underway in housing right now.    The mortgage meltdown is likely to become the greatest loss of wealth in human history.    CEO pay is a mostly trivial aspect of this situation.I think we’ll see another 10-20% loss from current values and I think we are already down some 4 *trillion*  2+ trillion  in housing value (need to check this, but the number is staggering).    A discussion of the amount is HERE.   Housing is a major depository of American wealth and prosperity, and the recent boom in values has led to various forms of reckless spending by individuals as well as the usual wild, stupid, and reckless spending suspect: the Government.   This is especially true of our unconscionable  and totally indefensible levels of mililtary spending.  Note that you *cannot* be a fiscal conservative and support the current military budget.     $550,000,000,000 to the military and fiscal conservatism are mutually exclusive positions.The impact of the meltdown and the reckless spending will be felt forever because in addition to direct housing problems that we are only starting to feel, I think all this will to depress our economy for several years and thus accelerate the shift of business to China.     This last notion is speculative, but I think it is now pretty clear that the Fed will keep rates low for many years in an effort to fend off an even more disastrous housing and credit situation.    This means China will be buying less of our debt, but I think will switch to investing more*directly* in US companies, and thus owning more and more of the American empire.      Russia’s leader and architect of communism Vladimir Lenin is famous for saying  “The Capitalists will sell us the rope with which we will hang them.”  But he was dead wrong.     The “Communists”, to the extent that term has meaning anymore, have no intention of destroying the USA.   In fact they want to keep us in good shape for as long as needed.  Now it is China who is making the rope, buying the rope, and learning the capitalistic ropes so they can slowly and gradually replace us as the empire of choice on the global landscape. A few things I noted during the Countrywide questions and testimony:

 * Probably Mozilo was just a high powered opportunistic guy and probably was pretty much within the law with his trades and pay, however he must have known things were poised to melt down to some degree.      

* Our congressional system is failing to produce people who are worthy of ruling the amazing American empire.      I don’t think there is much corruption but these guys sure are uninspired.  The congress-as-corrupt view is a “naivety of the skeptic” idea that is not based on a study of the money flow, personalities, and history of public servants who for the most part are bright, helpful people.   However they are mostly lacking in the key skill sets required for innovation and smart reform.   In short:  American politics selects for the wrong skill sets. To wit:  

* Republicans can’t see past Ayn Rand’s ass.   They understand the virtues of capitalism, but simply refuse to focus any attention on the key topic of how our brilliant capitalisic experiment has *failed* in many ways to deliver enough products to the neediest folks and how many capitalists are mostly focused on the creation of opportunistic business structures that are exploitable by the clever and the wealthy to the detriment of the greater society. .

* Democratic congresspeople are overwhelmed by math and economics.  They concentrate on people, “good vs bad”, “rich vs poor”.  * People want to find bad guys rather than find the obvious.   In the case of mortgages  the system as a whole incentified unwise practicies.     Reminds one of the savings and loan debacle although I think government regulations (loan guarantees) were clearly at fault with S&Ls were the mortgage crisis cannot be blamed mostly on the government.

* Is there a simple legal remedy for all the CEO pay and stock manipulation issues?    I propose a  “Captains go down with the ship” law.    If a company you founded fails you lose everything you made from that company except some modest monthly stipend.    This would incentify stability over pump and dump strategies.   I don’t think it would inhibit founding quality companies.   What unintended consequences would this law bring to the business landscape? 

TED Conference non-attendee list publication proposal.

Posted on by
1

More important than Valleywag‘s mildly controversial publication of TED Conference attendees is my proposed publication of TED non-attendees, which would take a forest of paper and list some 6,499,999,000 of the world’s 6.5 billion people.    The non-TED list would have more dumb people than the TED list, but arguably would be on the order of 6.5 million times more representative.

Ted Conference

Matt Ingram is *right again* (!) about why the TED conference is, at the same time, an exciting and provocative event and a bunch of elitist nonsense.    As an invitation only, $6000 per person conference the idea was to bring together many great innovative minds in the spirit of innovation and understanding, and this is a good idea.   However good ideas are not immune to criticism and TED deserves at least a dose of that as well, especially given the fact that almost by design TED insulates the attendees from almost all the real people in the real world.  

Matt has spoken for an enormous number of us who are conflicted about how TED is both a showcase and watering hole for some of the sharpest people and ideas on earth and also a den of elitist nonsense.

His criticism is nuanced enough that he won’t be crossed off the prospective list.    My concerns are deeper about TED.  I think the sensibilities of the TED crowd are not even remotely representative of those of most of the world, and therefore many great minds wind up innovating in the wrong direction or sideways.    My view on innovation is that it’s rare for a good evolutionary reason – too much innovation will often undermine stability, which is the hallmark of long term societal viability.    Innovation is the cornerstone of positive change for the human species, but we also need people to do more mundane stuff like … producing goods and services in the same old boring ways … at least until an innovator figures out a better way to build the production mousetraps.     As a wellspring of innovation TED doesn’t need to focus on producing things, but I’d like them to find a way to better integrate the beneficiaries of the innovation into the process.    The developed world has gone to enormous lengths to distance ourselves in mind, body, and spirit from the sensibilities of most people in the world – people for whom a decent meal, warm clothes, and a safe place to sleep are considered a luxury.     To it’s credit TED has historically done an excellent job profiling some of the innovations that will help with these problems, but I’m not convinced that the conference lends itself to really understanding the plight of the “rest” of the world.

Bil UNconference organizer Tyler Emerson over at the Singularity Institute reasonably challenged my criticism of TED, but I think I’m standing by it.    Until we find ways to fully integrate innovators, movers and shakers with a deeper level of understanding of their fellow travellers in our human journey I see efforts like TED leading us down too many garden paths of “appealing, sexy, exciting” innovations where what we need the most are simple and mundane solutions to problems of food, health, energy, and human conflict.   [Yes, TED showcases some of those solutions as well and helps spread the word, which is why I’m conflicted about TED]

I do want to applaud TED for opening up a lot over the past few years via videos and blogging.   At least “the rest of us” can now see part of what’s going on behind the curtain.   Also, any conference with Marissa Mayer in attendance has GOT to be worthwhile.

Engineering’s Grand Challenges

Posted on by
6

The National Academy of Engineering has suggested a list of the world’s greatest and most important engineering challenges, and it looks pretty comprehensive to me.   If we can solve all these problems we’ll really be taking life on earth up a few notches and kicking some globally sustainable problematic butt.   

I hope they add a priority and ROI component here.    My feeling is that reverse engineering of the brain will lead to general Artificial Intelligence and very rapid solutions to most if not all analytical problems.   Thus I’d like to see us devote, say, 1/100th of what we are poised to squander failing to solve CO2 problems to AI research.     But even if we forego that notion it’s questionable to spend in engineering as we currently do, especially on huge military technologies of questionable effectiveness.

 Here are the Grand Challenges for engineering as determined by a committe of the National Academy of Engineering:

  • Make solar energy economical
  • Provide energy from fusion
  • Develop carbon sequestration methods
  • Manage the nitrogen cycle
  • Provide access to clean water
  • Restore and improve urban infrastructure
  • Advance health informatics
  • Engineer better medicines
  • Reverse-engineer the brain
  • Prevent nuclear terror
  • Secure cyberspace
  • Enhance virtual reality
  • Advance personalized learning
  • Engineer the tools of scientific discovery

Wal-Mart for Nobel Peace Prize!

Posted on by
Reply

Wow, this clever article by John Tierny  in New York Times Op-Ed (what a great news source now that the paywall is down!) suggests maybe the Nobel Peace Prize should go to Wal-Mart for lifting more people out of poverty than pretty much any other organization on earth.  He notes a notion that the best route out of poverty for the developing world is to make stuff for Wal-Mart to sell to … those of us who live in the developed world.

This is a provocative piece but it cleverly *should* get people to realize the complexity of economics, and the fallacy of ideas that prosperity in the developed world comes from exploitation in the developing world.  This last notion is one of my pet peeves because it is a very naive and inaccurate view of the way international economics works.   Systems that avoid capitalism and avoid interacting with capitalism don’t thrive.   In fact they perform abysmally as indicated by the experiences of early communism, and present conditions in North Korean and Cuba.    Prosperity comes from becoming part of the developing world through economic interactions.    This is not the whole solution to poverty, but it is an important part of that solution.   If well intentioned people would work to understand the importance of getting poor folks *involved* with the globalized economic experience  it would be easier to bring the billion+ in extreme poverty to a higher standard of living.     It does NOT end there of course.   I’m happy to see organizations try to force corporations to greater levels of worker responsibilities.  But that needs to happen *after* workers and countries show that they want to play the big game.   

As Tierney suggests, making stuff for Wal-Mart is probably one of the fastest ways an Indian or Chinese guy can feed their family.  What’s wrong with that?  (I’m serious – there are some problems with that approach, but I’ve gone on long enough here for now ….)

The proposed US Defense Budget is an outrage

Posted on by
5

As a fiscally responsible guy I had to chime in on the proposed US Defense budget which is, in a word, indefensible.     

At $515,000,000,000  this amount is conspicuous for several reasons, and I find it incomprehensible that people who call themselves fiscal conservatives continue to support the insane levels of inappropriate military spending.

One of the biggest reasons the proposed budget is irrational is the very low ROI on military spending.    Unlike infrastructure spending, the military spend does not leave you with more bridges, roads, and buildings.   It’s only justifiable to the extent it *protects value* and protects the national interests.     One need look no further than the Iraq war to see how questionable it is to suggest that spending 500 billion plus there has “protected” much of anything.   

One could probably make a strong case for the WWII military effort as it clearly rescued much of the world from the tyrannical grip of Nazi domination, but note that this spending came *after* the hostile actions.    I think GW would argue that spending now is a preventative measure for much greater spending later if regions like the middle east explode into much greater instability than now.   This is an arguable point, but I’d like to see his ROI calculations on this.     When you are talking about spending hundreds of billions annually you can reshape the entire planet with infrastructure improvements, and it is very hard to see how the military protection advantages would trump the tax, infrastructure, and good will advantages of redirecting military spending to other things or – probably more appropriately – lowering taxes and letting that help the economy and individuals.

I’d sure like to see the type of cost benefit analysis you’d do if the US was run more like a business than a bureaucratic empire, but one of the defects of our two party democracy is that neither party is interested in fiscal responsibility – they both want to spend irresponsibly and recklessly but on different things.    

This amount is more than all other nations combined, and more than half the entire global military budget.   It is true the US has historically born much of the expense of trying to maintain global stability  (for complex reasons), so simply noting this is half all defense spending does not explain enough.  However this amount still is highly questionable because many nations like Japan should be footing their own defense bills.

Note that this budget does not include funding for Iraq and Afghanistan wars.  Much will go for bloated, advanced weapons systems that have little place in a world where most of the threats are from asymetric warfare practiced by fundamentalists with 12th century sensibilities.

It is about time for people who call themselves fiscal conservatives to stop their sheep-like, bleeting support of these huge military budgets and start applying the same (correct) standards they apply to other government spending to the defense budget.  

Bill Gates’ Critics – they just can’t handle the truth!

Posted on by
6

I get so tired of reading the innane drivel criticizing Bill Gates’ excellent vision of global prosperity through more innovative approaches to global capitalism.    Gates is right on, and this should be obvious to those who care about capitalism OR who care about bringing prosperity to the billions who suffer in developing countries.

Over at TechCrunch people are ranting irrationally about bootstrap prosperity in the selfish and foolish way US technophiles often do, oblivious to the causes and circumstances of poverty in the developing world and without any compassion for the *hundreds of millions* of children mired in poverty around the world.  

Here’s how I vented over there:

Bravo to Gates. Many of the comments here floored me with their lack of insight.
First, to suggest Gates is not sincere is nonsensical. His record of philanthropy is clear, focused, and brilliant. Whatever you think of Microsoft’s history of sometimes ruthless corporate dominance you simply are not paying attention to think Gates vision of global prosperity is not genuine. I’d even go so far as to suggest Gates fortune was made largely through the purchases of other affluent people, and now he’s giving most of it to the poor. That is a virtuous cycle if I ever saw one.

Second, the notion that unfettered capitalism is the most expeditious way to feed the poor and improve the infrastructures of poor countries is naive and dangerous. Even Adam Smith noted that types of intervention are needed to preserve the integrity and power of free market forces. In nations that suffer from corrupt or short sighted leadership and cumbersome bureaucracies (that is to say, all nations), we need to bring modified capitalism to bear ASAP if we want to stabilize prosperity and lift the billion+ people who are simply out of the virtuous globalized capital loop. Gates point is that more innovative approaches to capitalism will benefit everybody, and he’s spot on.

Meanwhile Open Sourcer Matt Asay is conflating open source issues and Microsoft with global development, seeming to suggest that the fastest way to global prosperity is to bring Open Source to the world and kill Microsoft.   Here’s what I wrote over there:

No. Emphatically. You are correct that Open Source is great, and also that Microsoft has strategically fought against open source. But Gates is correctly working to reallocate personal and corporate responsibilities. He’s saying that more of the big profits and big innovation should be focused on improving the lot of those in the developing world. This is a profound approach and a virtuous one.

I don’t think it is reasonable to ask Microsoft to be a key player in dismanting decades of their corporate dominance, even though I’m happy to see that fade. It’s also unreasonable to suggest the benefits of Open Source development will necessarily flow to the world’s poorest people. More likely they’ll flow to those of us in first world who are able to take advantage of them. I’m big on Open Source, but hardly think Microsoft should be a leader in that space. I’m even bigger on focusing attention on developing world problems and the kind of conflation of issues here simply confuses people.

Gates is speaking today at the Davos conference.   It would be nice if  people actually listen to what he is saying.

In Memoriam: Benazir Bhutto

Posted on by
6

The tragic murder of Benazir Bhutto, Pakistani moderate and champion of democracy, is yet another reminder of the instability in so many parts of our challenged world.  It is not clear to me how other countries will react if Pakistan falls into chaos.  Bhutto’s assassination, and the ongoing attacks on General Musharaff, bring that possibility closer as Pakistan’s hopes for a quality democracy drift again into the shadows.  

Strategically wise or not, I do not think the US, and perhaps even India, would tolerate nuclear weapons in the hands of some of the Pakistani  fundamentalist groups.  India and Pakistan have been very antagonistic towards each other since Pakistan’s fiery birth soon after Indian independence from Britain.  Disputes over the Kashmir region, claimed by both countries, flare up regularly.

Instability favors the extremists and those who support them.   The irony of extremist actions is that they rarely bring the changes desired by the extremists – rather they waste lives and resources, waste blood and treasure that could have been used to help those in need, and consolidate power in the hands of non-extremist but still questionable groups.