Thursday, May 27, 2010
Wednesday, May 26, 2010
Sue Halpern have written essay about the iPad and its wider implications for the New York Review of Books. Here is her conclusion:
The Open Source movement and Creative Commons both derive from the Internet’s essential freedom, a leveling that allows designers and filmmakers and singers and craftsmen and any number of writers, activists, politicians, artists, and entrepreneurs, many of them amateurs, to develop and disseminate their ideas. Imagine what the Internet, and our lives, would be like if, after inventing the Mosaic Web browser back in 1993, Marc Andreessen and Eric Bina not only required users to buy it but required payment for every click or download or page view. Try to imagine how a privatized, monetized Internet might have developed, and you can’t, because its evolutionary path would have been so different. Apple’s iPad apps may be ingenious. They may be fun and entertaining. They may be useful. What they can’t be is free of Apple’s control.If Apple want's to conquer the world, maybe we have to wait to see what Google's Android-tablet will look like when it comes.
It is true that the iPad, like the iPhone and iPod Touch, comes with a Web browser app that takes the user directly to the Internet. Arguably, this makes these devices comparable to any computer and renders the complaint about gatekeeping moot. In fact, Web browsing on the iPad is less than ideal. Keeping more than one window open at a time is not possible, and Apple’s refusal to enable Flash, a piece of proprietary software owned by Adobe Systems that underlies many websites and allows for animations and video, means that those websites are either not fully functional or not available at all. But why bother going through a browser to get to YouTube or to read the AP headlines or check the weather when there is a dedicated app for each of these? This is what is really revolutionary and game-changing about the iPad: once there is an app for everything, it’s Apple’s Web, not the wide world’s.
Friday, May 14, 2010
If you listen to the CNN/CNBC/MSNBC pundits, America is cursed and damned, like a fiscally irresponsible Odysseus drifting in a sea of debt, while Zeus is itching to strike and Poseidon can't wait to whip up a terrible storm.
|Paul Krugman gives the keynote at Woodrow Wilson |
School on May 13. Photo: Hans Sandberg.
"We are not Greece," Krugman said, pointing out that the greek economy is about the size of the State of Michigan, and it tanked without pulling the U.S. economy down with it. Another thing to remember is that the U.S. export is only 3 percent of GNP. The root of the Greek crisis has, according to Krugman, a lot to to with the Euro, which he feels was pushed through way to early by the European elites, shackling the possibilities of a country like Greece to adjust by devaluing their currency. He seemed very pessimistic about the possibility to solve the Greek financial crisis, and expects it to blow up later on, as the austerity policy could lead to deflation and economic implosion. His most common answer during the Q&A-session was to shake his head. It's bad news for Greece, but it's not going to pull the U.S. or the world into a malstroem...
Here is a video clip from the keynote:
Here is Krugman's May 14-column for the New York Times:
We’re Not Greece.
Thursday, May 13, 2010
Note: Microsoft did not allow any photography at the event, so I had had to rely on the company for these two photos.
Disclosure: Microsoft handed out a free copy of Office Professional 2010 to participants in the press conference.
Monday, May 10, 2010
Former president Bill Clinton was interviewed on PBS's new show Need To Know on May 7, 2010. One of the questions was about the change in the media landscape today compared to 1992, when he won the presidential election. Here is part of President Clinton's answer in my transcript:
"The good news is that people who are comfortable in cyberspace can get more information more quickly than ever before. The bad news is that you often don't even know if the facts are right, and it promotes - in terms of our citizenship, our politics - a 21st century version of what we saw in the early 19th century, when only white male property owners could vote, and there were zillions of newspapers, and they were avowedly political and written with a political stance so you couldn't tell the difference between the editorial page and the news page."He compared this to today's "atomized" media world with all the blogs, and where a lot of young get their news from cable shows and comedy shows like John Stewart's.
"The thing I'm worry about number one is the loss of a common fact base. When I was a kid the Vietnam war was raging and the civil rights movement was being contested. We had three major networks so that there was enough competition between them to keep them honest, and they could afford send people of my age to Vietnam to cover events, people with 30 years of experience, people who knew the history, people who were deeply involved, and they didn't necessary have to have a quick hit everynight on the news, or a big flash every day in the news stories. The atomization of the communication network have given us access to more information than ever before, but it has made it more difficult to have a common dialog. The economic pressures on the media, on the news magazines, on the daily papers, all this stuff is making it more difficult to have a common dialog. The other thing I think it's worth pointing out, is that it's human nature to be around people who like you, but that's not good in politics. In politics you need to talk to people that disagree with you."Hans Sandberg
Friday, May 7, 2010
Nouriel Roubini and Stephen Mihm has written a book about the financial crisis that could become the most influential book on the subject thanks to Roubini's brilliance and track record as the man who most clearly and definitively predicted the crisis.
The new book is called Crisis Economics - A Crash Course in the Future of Finance and is reviewed in today's New York Times. "Instead of imposing a doctrinaire theory upon the facts, Mr. Roubini employs an eclectic, common-sense approach to history, picking à la carte from the thinking of such disparate economists as John Maynard Keynes and Joseph Schumpeter," Michiko Kakutani writes in her review.
Stephen Mihm, a journalist and professor of economic history at the University of Georgia, wrote an excellent portrait of Dr. Doom in New York Times Sunday Magazine in August 2008, the month before the financial collapse. Mihm's story began like this:
On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.So much for the power of abstract mathematical models in economics! Or as Mihm puts it in his 2008 essay:
The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed — and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a “permabear.” When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer.
The dismal science, it seems, is an optimistic profession. Many economists, Roubini among them, argue that some of the optimism is built into the very machinery, the mathematics, of modern economic theory. Econometric models typically rely on the assumption that the near future is likely to be similar to the recent past, and thus it is rare that the models anticipate breaks in the economy. And if the models can’t foresee a relatively minor break like a recession, they have even more trouble modeling and predicting a major rupture like a full-blown financial crisis. Only a handful of 20th-century economists have even bothered to study financial panics. (The most notable example is probably the late economist Hyman Minksy, of whom Roubini is an avid reader.) “These are things most economists barely understand,” Roubini told me. “We’re in uncharted territory where standard economic theory isn’t helpful.”In their book, Roubini and Mihm analyses the current proposal for reform of the financial markets, proposals that have the backing by both President Barack Obama and treasuru secretary Timothy Geithner. They are way too timid according to the authors, who also propose a break-up of Wall Street's financial giants:
Throughout most of 2009, Goldman Sachs chief executive Lloyd Blankfein repeatedly tried to quash calls for sweeping regulation of the financial system. In speeches and in testimony before Congress, he begged his listeners to keep financial innovation alive and “resist a response that is solely designed to protect us against the 100-year storm”.There is an allegory that bites!
That’s ridiculous. What we’ve experienced wasn’t some crazy once-in-a-century event. Since its founding, the United States has suffered from brutal banking crises and other financial disasters on a regular basis. Throughout the 19th and early 20th centuries, crippling panics and depressions hit the nation again and again. The crisis was less a function of sub-prime mortgages than of a sub-prime financial system. Thanks to everything from warped compensation structures to corrupt ratings agencies, the global financial system rotted from the inside out. The financial crisis merely ripped the sleek and shiny skin off what had become, over the years, a gangrenous mess.
The road to recovery will be a long one. For starters, traders and bankers must be compensated in a way that brings their interests in alignment with those of shareholders. That doesn’t necessarily mean less compensation, even if that’s desirable for other reasons; it merely means that employees of financial firms should be paid in ways that encourage them to look out for the long-term interests of the firms.
Securitization must be overhauled as well. Simplistic solutions, such as asking banks to retain some of the risk, won’t be enough; far more radical reforms will be necessary. Securitization must have far greater transparency and standardization, and the products of the securitization pipeline must be heavily regulated. Most important of all, the loans going into the securitization pipeline must be subject to far greater scrutiny. The mortgages and other loans must be of high quality, or if not, they must be very clearly identified as less than prime and therefore risky.
Some people believe that securitization should be abolished. That’s short-sighted: properly reformed, securitization can be a valuable tool that reduces, rather than exacerbates, systemic risk. But in order for it to work, it must operate in a far more transparent and standardized fashion than it does now.
Absent this shift, accurately pricing these securities, much less reviving the market for securitization, is next to impossible. What we need are reforms that deliver the peace of mind that the Food and Drug Administration (FDA) did when it was created.
Wall Street is a lawless jungle that has served us rotten food, hence we need a financial FDA! I'm sure Upton Sinclair smiles in his grave! (His 1906 novel about Chicago's meatpacking plants, The Jungle, led to new food inspection laws in 1906, and eventually - 1930 - the FDA.)
Thursday, May 6, 2010
The guys on Wall Street may have thought or hoped that the worst was over now that the Tea Party was starting to fizzle and the grilling of CEO's at the BBQ in Washington was starting to wind down, but then the climate changed and a sudden icy chill blew in over Wall Street. The crisis in Greece went from bad to worse, and now it looked like the country could collapse and drag the other "PIGS" (Portugal, Italy, Greece and Spain) with it, maybe even pulling down Great Britain, which is also struggling with huge debt issues and were likely to emerge politically weaker after Thursday's election. Who can blame the Masters of Universe for feeling a little paranoid? The rational expectations turned into irrational fear and panic faster than you can flip channel on your TV.
"Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities."(John M Keynes, The General Theory of Employment, Interest and Money, London 1936.)The trouble with Wall Street and the pundits is that they are not all that smart when it comes to the real economy. The models don't tell them what to expect, and they don't know how to interpret the battles in the streets. They got scared and they sold. Add to that computer programs that send the consumer giant Proctor and Gamble down drastically, and everybody was talking about how America's recovery would be hit if the European market goes down and the dollar strengthens against the Euro. There goes the recovery....
"There was a lot of panic selling that came in and the market fell apart,” Peter Cardillo, the chief market economist of Avalon Partners, told the New York Times.
The rational for the obscenely huge bonuses Wall Street pays its executives is that they are supposed to be superstars, who carries enormous responsibility, and are really, really smart.
But on a day like this, they proved themselves to be driven by fear, greed and ignorance, like the rest of us, except that they somehow had managed to rake in millions and millions in bonuses, while we others counted our losses. For all its beauty, capitalism is a self-destructive system, which is why we need the government to rein it in, to set the rules and make sure that they are followed. This is were the stupids in the Tea Party got it all wrong. If you don't want to get screwed over again and again by the rich and powerful, you need government, and not just a little of it. Keynes knew that, FDR knew it and we should all know it by now. Government is not socialism, not even big government. It's actually the only way to save the capitalist system from blowing itself up.