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This
Today, we are publishing two quite different documents outof SNS International Headquarters at The Beach Palace Hotel.
We are doing this pre-release because the populationcontinues in free fall, because we believe that policy initiatives cannot waitfor the 1-2 years it will take for final publication, and because these areessentially the only scientific studies done to date on the question of what iskilling these whales.
Virtually all of the funding for this research came from SNSreaders, which must be one of the great cross-over conservation stories of alltime; at one point, I called it Big Brains For Big Brains, which continues tostrike me as an appropriate description of this effort.
A few weeks ago, we conducted an email-based survey of allSNSers. (Some folks wondered why wedidn't use our website; but astute readers will have noticed that we are justin the process of hiring a new webmaster and site management team.
One of those requests was for shorter issues, and,specifically, to cut back on Ethermail: everyone loves it, but no one in thislife has quite enough time to read it all.Another response was a very strong Yes vote on having an SNS conference,with a raft of ideas about how to make it better and more like SNS itself than the rest of the meetings going on out there.
One of the surprises that came out of this survey was arather common request to hear more about the Orca Relief project that wasinitiated here back in 1997, and which continues to pick up momentum and toproduce useful results. So, for thatreason, I am taking the somewhat unusual step of bringing this subject out ofthe Upgrades section for one issue, so that all SNSers, old and new, can bebrought up to speed with where this effort is today.
First, a quick review; for those longtime readers: I'll tryto add a few new details to keep it interesting.
Killer whales, Orcinus orca, are the top predators in alloceans. Their brains are several timesthe weight of ours, at a time in our understanding when either weight or numberof neurons is the best gross measure of intelligence.
While we communicate in the 100 Hz 18K Hz frequency rangeof sound, Orca have access to something like 100 Hz 180K Hz, with much oftheir sonar energy appearing to be gathered into the lower end of this scale,from about 100 Hz (which I am setting as an arbitrarily low figure) to 20k.
While no one has yet done a good job of describing thisacoustical system, it is obvious from experiment that these animals can see notjust the surface of objects, as we do, but into them, so that they might beassumed to have the ability to assess heart rate, lung volume, and the nature ofvarious materials in their environment.Just as oil drilling companies use the sound of loud explosions toassess the rifts and deposits under the sea, orca, no doubt on a smaller (butprobably more accurate) scale, can assess the nature of their environment farmore accurately than could be done with eyes alone.
As one might suspect of the planet's largest-brained toppredator, Orca have a variety of potential "lifestyles," whichinclude variations in diet, travel, behavior, and the related use of sound.
An example of this fluidity, and of our relative ignoranceof their natural history, is that it has recently been discovered that thePuget Sound is actually visited by three different kinds of orca groupings:Resident whales, which spend most of the summer months here; Transient whales,which appear to be coastal, but make forays into the Sound; and Offshorewhales, which are presumed to live further offshore in deep ocean waters, andwhich show up more rarely. (One died on
Why the interest in Puget Sound orca, also known as theSouthern Resident Population? It turnsout, through a kind fluke, that these waters provide some of the best fishing(one could say, orca fishing) grounds in the world.
This has allowed a unique relationship to develop betweenhumans and orca, as scientists, led by Dr. Michael Bigg, learned to identifyindividuals by taking pictures of their fins and backs, censusing themannually. This work was later continuedby photographer and naturalist Ken Balcomb, on the
Orca became popular in captive aquaria beginning in the latesixties, and a new industry based upon capturing members of the SouthernResident pod grew in the 1970s, reducing pod numbers from what may have beennear 100, to a low in the 70's, before state and federal political leadersstepped in and forced an end to this practice.The population quickly rebounded (not being limited at that time byoutside influences), and reached 98-99 in the 1995 season.
During this same period, the commercial whale watchingbusiness was born. In 1986, there wereapproximately 2-3 boats, on average, watching the Southern Population.
By 1997, 106 commercial (and private) boats were "onthe whales" on July 4th.The season had expanded from a trip a day, to trips from dawn (usuallyscientists and photographers), throughout the day, until sometimes even afterdusk. The fleet hired spotters on land,water and air, to ensure near-100% success in encountering the whales, and keptan active radio net for all whale watching craft, so that all boats couldimmediately go to where the whales were.The season itself was extended to begin with the first whale arrivals inJune, and continue not just through October and November, but, as of this year,year round for at least a few vessels, moving to the South Sound.
In 1996, the first whales began to die, in what has becomethe largest "natural" decline in the population's (studied)history. A larger number of them werebeginning to appear "wasted," something unique in the whales' biology.
At a meeting of local researchers in 1997, I suggested thatwe might be about to see a dramatic decline in the population, and recommendedthat researchers create guidelines of what to look for, in order to be preparedfor such an event. No one wasinterested, and for this reason, later that year, well-known softwareaccountant and friend Roger Clark (who shares an interest in orca) and Idecided to form a non-profit to work on a problem that most scientists hadn'tyet even admitted, despite the fact that it was happening on their watch.
We called this effort the Orca Relief Citizens'
After a year of discussion, the local prosecuting attorneyopined that the Commissioners had no real power to do what we were asking, andthey ended by writing to state and federal lawmakers, stating our need, andasking for help in fighting the orca population decline.
Our first goal at Orca Relief had been to get the word outthat the whales were dying. If you hadasked the general population in 1997 if this was a problem, you would havegotten a zero on all surveys. A yearlater everyone knew, so in this, we had succeeded.
During this process, the debate began to heat up over whatwas really killing the whales. Since noone had done any research on the question, it became a matter ofconjecture. Those who were raising moneyto fight toxins in the water, put pictures of dead whales on their toxinfundraising brochures. Those who wereseeking funds for overall ecosystem studies, trumpeted the whales' demise as asymptom of general collapse of the ecosystem.And those who were in the commercial whale watching fleet pointed to anypossible cause but boat interactions; one operator (a real biologist!), havingtried the toxins argument, actually suggested that, since the whales had beento Monterey in an unheard-of winter trip the prior year, Mexicans shooting themwas the probable cause of death.
Toxins became a politically-palatable answer, becauseconcentrations of PCBs in orca tissue were high, and because, if toxins are theproblem, no one making money from these animals has to stop what they aredoing. But there was one glaring problemwith the toxins argument: PCBs have been declining in
In other words, there was no correlation whatsoever betweentoxin concentrations and whale deaths; indeed, as concentrations dropped, evenin other top bioaccumulator species, whale deaths increased.
At this stage, I had begun discussing these problems in theUpgrades section of SNS, and Members had started sending in checks to supportthis effort. Some were small; some werenot so small. Some came from investorsoverseas; some came from famous technology leaders in the
By "real science," I mean: projects conductedunder the auspices of a trained scientist, intended for publication in apeer-reviewed scientific journal.
Our first project was an obvious one, in retrospect: weapproached the University of Washington, and through Dr. Dennis Willows, headof the UW's Friday Harbor Marine Labs, found a team to address this question:Of all possible causes, which correlate most closely with whale deaths?
This project, undertaken by Principal Investigator GlennVanBlaricom and graduate student Carlos Alvarez-Flores, led to the followinginteresting, and somewhat unexpected, result.One could not correlate deaths with toxins, since the time variabilitydata did not exist. In looking at salmoncounts, water temperature (related), and boat presence, one could not get aclear correlation between whale death and any single of these parameters.
In English, this meant to us that the whales might be dyingas a result of something that linked whale watch boats and salmon prey.
Earlier that spring, a draft publication had been put out byDr. Christine Erbe, in Canada, who had studied the noise made by whale watchboats, and the Southern Population exposure to that kind of sound, and who hadconcluded that it was possible that the whales were being temporarily orpermanently deafened by the boats, even at distances permitted by the U.S.guidelines.
This was important news, and our next funded and completedproject asked the question: what are the overall impacts of whale watch boatnoise on the whales' acoustic systems?The work was done by Dr. David Bain, a well-known acoustician also nowunder the
This was truly a "smoking gun;" no one, includingDavid, had had the least suspicion that the effects might have been sogreat.
Finally, we funded a third project, started a bit earlierand ended just this week, which asked about boat/whale interactions in terms ofthe orcas' energy budgets and behavior: were the boats affecting whale movementsand respiration rates, and if so, could one quantify these effects?
Birgit's discovery: not only are the whales' movements andrespiration rates dramatically affected by boat presence.
At the same time, a new paper released by Rob Williams,Andrew Trites and David Bain, suggest that Northern orca movements in thepresence of boats, mimics that of predator/prey maps made of other species,from bats to deer, as they try to escape being hunted.
This week, researchers will gather again, together withgovernment and non-government organizations, to discuss what is killing thewhales, and what can be done. SenatorMaria Cantwell, who has consistently taken an aggressive interest in this cause,will provide opening remarks. And all ofthe attendees will have just received final draft copies of Orca Reliefscientific papers by VanBlaricom, Alvarez-Flores, Bain and Kriete.
What is killing the whales?We now seem to have a one-sentence answer, and it goes like this: in anenvironment of declining salmon, the presence of the whale watch fleetdecreases sonar efficiency by 95-99%, while increasing food requirements; theresulting starvation forces the whales to draw down toxin-laden blubber, andthey die.
Whether there is the leadership, vision and will to doanything about this problem, in time to make a difference to the remainingwhale population, is not clear. But Ican say this: increasingly, I and others are becoming convinced, based uponscientific study, that simply removing (or vastly reducing) the motor noisesurrounding the whales will provide their best chance for a quick recovery.
And this would not have been known without your help.
Your comments are always welcome.
Sincerely,
Mark R. Anderson
President
Strategic News ServiceLLC Tel. 360-378-3431
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SNS readersinterested in additional predictions and information can turn their browsersto:
The SNS website,at http://www.stratnews.com
SNS Members' Corner, at
http://www.tapsns.com/subscriber_corner.shtml
The OrcaRelief Citizens' Alliance, a 501(c)(3) non-profit effort to study andreduce Orca mortality rates, supported largely by technology workers.
for moreinformation. Contributions may be sentto: ORCA,
The Hybrid VigorInstitute, at http://hybridvigor.org,focused upon providing tools and environments leading to great new discoveriesin interdisciplinary science.
New to the Family:
I would like towelcome, among others, these new members to the SNS Family: Ken Goldman, SVP,Finance & Administration and CFO, Siebel Systems, Inc., San Mateo,CA; Beau Vrolyk, Warburg Pincus, New York, NY; Brent Schlender,Editor at Large, Fortune, Palo Alto, CA; and a special welcome to our new groupfrom the University of Colorado, Boulder thanks to Dr. Ray Nettleton, AssociateProfessor and Chair, Interdisciplinary Telecommunications Department; JamesAlleman, Associate Professor; Gary Bardsley, Associate Chair; Frank Barnes,Distinguished Professor; Timothy Brown, Associate Professor; Harvey Gates,Adjunct Associate Professor; Dale Hatfield, Adjunct Professor; Michele Jackson,Associate Professor; Tom Lookabaugh, Assistant Professor; Robert Mercer,Adjunct Associate Professor; Gerald Mitchell, Associate Chair; Jon Sauer,Professor; Scott Savage, Assistant Professor; Tim Schoechle, AdjunctInstructor; Douglas C. Sicker, Assistant Professor; John Thompson, LabDirector; and Phil Weiser, Associate Professor; and many others.
Quotes of the Week:
"Widespreadadoption of broadband is inevitable. Thenarrow-band approach can be best described as sucking pizza through astraw. Technically, it might bepossible, but it's massively unsatisfying." -- J. Allard, MS Xbox team,The Seattle Times Tuesday, May 21.
"Bill Gates isthe they software adulterer bees of fewest property out trope pedagogue."-- A reporter's Tablet PC translation, at last week's billg CEO Summit, of thesentence, "Bill Gates is the chief software architect. He is a ferventproponent of all things technological."
"Even afterthe attacks had begun, (the FBI supervisor in DC) was still attempting to blockthe search of Moussaoui's computer, characterizing the
''There's a patternhere. --- SBC has flunked 'truth school' before and there's no reason to thinkjust another fine is going to change its behavior. SBC's behavior won't changeunless it faces a fine that has a material impact on earnings.'' -- An AT&Tspokesperson, after SBC was fined $3.6MM for filing "inaccurate"information with the FCC about blocking competitive use of its facilities, asrequired by law.
"With the(nano)electronics we're talking about, we're going to make a computer thatdoesn't just fit in your wristwatch, not just in a button on your shirt, but inone of the fibers of your shirt." -- Philip Kuekes, Computer Architect,Hewlett-Packard Laboratories. Thanks toSteve Waite for the quote.
Vodafone Numbers
The name of thisgame has to be called, "Keeping The Faith."
Here are the numbers:
The company declared a loss of 16.15B Pounds ($23.56), vs. aloss of 9.89B P YTY; on revenues of 22.85B P, up 52% YTY from 15B P.
Vodafone has operations in 28 countries.
One reason for his optimism comes from Japan Telecom, whichVodafone controls with 66.7% ownership, and which itself controls the J-Phonewireless operation.
Vodafone is restructuring Japan Telecom (which showed afirst-ever loss this year of $529MM, with revenues up 16%) into a holdingcompany for wireless assets, while spinning off the money-losing wirelinebusiness around August 1st.With
Here is what I think
Vodafone has relatively little debt (12.03B P, 14% of marketcap). With a firm footing in
If this is a bit optimistic, investors have been more thansheep-like this year, reacting to the damage done wireless operators by thegovernment auctions as though it were a market issue.
CurrencyConfrontation
SNSers know that Imade a call over six months ago, suggesting that the Yen/dollar ratio wouldnext peak in the 148-150 range. Andthere it sits, still in the 123-125 nest it made for itself many monthsearlier. What gives?
U.S. Treasury Secretary Paul O'Neill, in a word.
Oops. Since allcountries (who can) do this, and since currency traders look for just suchwords to estimate whether a country will indeed intervene, the brakes came offand the dollar immediately began to slide.If O'Neill had painted, in large red letters on his forehead, SellDollars, he could not have been more obvious, both in a change in
Only one problem: there is absolutely no indication that hemeant to do it, and every reason to continue to take his pre-meeting commentsat face value. This is particularlytrue, insofar as the inflammatory remarks came not as part of his preparedbriefing, but in a Q and A session.
Double Oops. What'sworse than screwing up the world's currency markets on purpose?
Meanwhile, the Japanese have been going ballistic.
If I thought that O'Neill was serious about devaluing thedollar, I'd change my forecast. As itis, I am staying with the Japanese.Given the screwups they are facing at home and abroad, however, 135might be the next resting point for this ratio, so critical to tech companiesmaking money overseas.
Watching Samsung Go
I've been writingfor six months or so about Samsung Electronics' increasingly impressiveperformance in the handset world.Although one analyst moved against the company yesterday, angering theSouth Korean government, the company is leading an almost-charmed life, perhapsthe brightest technology light as the country pulls itself out of a near-deathspiral just a couple of years ago.
With most of the banking issues apparently cleaned up, andmany (not all) of the chaebol issues faced and untangled (one might hope thatcreditors do indeed replace the Hynix board this June, and a pro-Micronpurchase vote could be surmised to occur soon thereafter), the country'smarkets and general economy, and its star tech player, all seem on the happyroad to prosperity and world market success.
Is it as good as it appears?Samsung picked off the top spot in the
Reports out this week show Samsung picking up 48.6% share inglobal handset sales, while Nokia lost 3% and Motorola picked up 10%.
It is worth remembering, as we watch this blisteringperformance, that this same company is the world leader in DRAM memory chips, amarket that is as volatile as it can be lucrative (or loss-making).
You know what they say: when a story sounds too good to betrue, it usually is. This one has all ofthose hallmarks, and more. No matter whois ultimately footing the bill, however, the primary mission is achieved:putting
Re: ***SNS***: ASimple Question
Mark,
Really enjoyed your speechand presence at the Warburg IT Conference and meeting you personally. --- Ihaving been working in Silicon Valley doing tech stuff since Tandem Computersfollowon offering in 1978 (they went public in 1977) and Avantek's IPO in 1978.I worked through several cycles, big and little- eg big would have been 1984-86and 1991-94 or so and several little ones. This cycle may be more like1973-1975 some say.
My humble analogy - in
So a lot of damage was done(including to my portfolio) and I am sure government policy really hurt in thetelecomm space particularly by killing the CLECs, but I think some of thetrillions (at least those created by the market rise of late 1999 and early2000 up to the peak) had to get vaporized just like excess deadwood inCalifornia- in other words the market never should have gotten that high andthen we wouldn't have had as big a correction.
Regards
Barry Taylor
Warburg Pincus [Ventures
Barry,
The metaphor seems quite appropriate.
Normally, these companies would not even have had the chanceto become deadwood, which leads to a slightly different argument.
I think I tried to avoid the obvious question of thetoo-dramatic runup in stock values, by noting that we should focus more uponthe actual value destruction, as compared to stocks going up and down.
Since I believe that at least some of the companies who werebasing their models upon e-commerce and online advertising might, ultimately,turn out to have had the right model for too early a launch, I'd also like tosuggest that many of the investments that were made in those days assumedbroadband would arrive quickly, bringing AORTA customer behaviors and TV-likead responses.
VCs and market investors also saw the chance to take part inwhat looked a lot like a combination of Schumpeter's Creative Destruction, andChristensen's disruptive technologies.To the degree that the Net and its applications eventually dorevolutionize how we do business, we may end up saying not that they werewrong, but, even worse, early.
Mark Anderson
Mark,
Looking at the Nasdaq stockmarket collapse to estimate real underlying wealth destruction is not reallylooking in the right place. Think of the stock market losses in three ways, onlyone of which is relevant to your question:
1. Mark-ups and mark-downs.Someone bought stock for $1, it went to $100, and now it's at $1 again. If youstart the meter at $100, it looks like a big hit, but if you go further backyou see that there was actually no net loss.
2. Traded positions. Otherthan primary offerings, cash that flowed into the market from any stock buyerexited the market immediately to the seller.
For every individual in thesecondary market who lost money there is someone who was able to monetize theirgain. This is not wealth destruction, merely redistribution.
3. Secondary offerings. Theonly "real" losses to the economy as a whole were funds that wereraised in primary offerings by companies which then spent the money on infrastructureand operations that are now worthless. I do not know what this number is --Goldman Sachs could probably tell you how much was raised and you could guesshow much of it panned out -- but I suspect the total loss to the economy wassignificantly less than $1 trillion.
This is not to say that thedestruction wasn't meaningful, but the number is nothing close to what isapparent by looking at NASDAQ levels.
R. Boykin Curry
Eagle Capital
R. Boykin,
I would like to gently disagree.
In the above case, which I suspect was most typical, thefull $1000 was "lost" by our combined players, that value wasdestroyed; perhaps only in the very last case (the sale) is there any hope forvalue recreation. Just as likely:bondholders squeeze out all shareholders, a la NII (Nextel International) thisweek, even if there is an ultimate sale in the offing.
We agree that the Nasdaq levels are not an appropriatemeasure; but I think we're trying here to assemble a toolkit, including volumesof new investment in, combined with the destiny of those investments, both ascash out, and as value truly destroyed, so that we can do the math and figureout what part of the $7T or so was real value destruction.
I am still thinking that it might be in the $1-$3T range,overall.
Mark Anderson
Mark,
I think there is acorrelation between our current economic status and what I call the "Bushfactor". The attached slides quite simply (maybe too simply) illustratewhat I mean by the Bush factor. I simply believe that our country and theintellectuals who work in and run our businesses have no confidence in Bush asa leader and I think the market reflects these very deep feelings. I thinkrecovery will be determined by when Bush and his team becomes a"non-factor" in the policy making of this country andinternationally.
When Drexsler announced hewas resigning as CEO of the GAP, the shares fell 15%. Whether or not heactually brings that much incremental value to the business is a whole otherissue which I really can't address. The fact is that his leadership isperceived to bring value to the firm. We should ask, what value is Bush bringingto our economy, whether perceived or real.
I don't know whether Bush isintelligent or not and he may have some very visionary plans, however, the factis that he is not perceived as intelligent or visionary by many and this hurtsour country. I was listening to a news correspondent from
By the way, I'm notconvinced that Gore would have brought more, however, he probably would nothave been labeled dumb.
Vanessa Pegueros
Vanessa,
It's hard to argue against the idea that the markets havetheir own psychology; I believe they do.To the degree that either domestic, or foreign, investors have theperception you describe, there is probably some discount, perhaps unthinkingly,applied to
I would make the argument that the Bush cabinet is a WarCabinet; it is crammed with our best generals and national security people, butreally is an inch deep in economics.Exhibit A, in this regard, would come in watching Treasury SecretaryPaul O'Neill continuing to do damage to the dollar, without appearing to intendto do so. (See Upgrades.)
If the perception of the overall Cabinet is that there is noeconomic strength in the ranks, I worry not only about generally eroding investment,but about what happens if there is a real world economic crisis, as we just hadin 1997.
This is a vulnerability that the world can ill afford: theworld, like it or not, depends upon us to provide leadership in economicissues. More important than providingguns and soldiers, I believe, is our ability to cogently defend and describethe benefits of open markets, to those who are still early to theirimplementation.
People make much of Bush's ability to choose those smarterthan he as his support team, but this is not obvious from an economicsperspective. And I would suggest thatthis is the most important perspective that exists for
Mark Anderson
Mark,
As you may know our Telecomprogram is interdisciplinary; we have technologists, engineers, regulators,economists and business people on the faculty and our graduate students arerequired to take courses in each.
It strikes me that yourquestion could be broken up into several different aspects along the abovedisciplinary lines, and that a team of faculty and students together might beable to synthesize the necessary research into an answer, or at least a steptoward an answer.
Of course our faculty nowsubscribes to SNS, but I'd like your permission to circulate the piece (onlythe first part - no updates or ethermail) to a selected group of students.
Regards,
Ray
Dr. Ray W. Nettleton
Associate Professor &Chair
InterdisciplinaryTelecommunications Department
Ray,
This sounds like great fun, and could actually be quiteuseful, both to those involved in the calculation, and to those of us with whomI hope you will share it.
I have no doubt that other SNSers would appreciate seeingwhat your team comes up with.
Mark Anderson
Mark,
I have an answer to yoursimple question.
Presuming that marketseither efficient or inefficient place net present values based on people'sperceptions of future opportunities the answer to your question of what is theactual amount of damage to the world economy since March of 2000 would be thenet change of total world asset values minus the net change in total world debtplus the net increase in governmental spending throughout the world of allgovernments that occurred over that time period.
This data may requiresomeone like the World Bank or the IMF to obtain the numeric answer.
Take care,
Greg Laycock
[Cushman and
Greg,
Since you have raised this question to its appropriateglobal accounting perspective, let's take this discussion to the nextlevel.
We are now at a stage where we think we can calculateproductivity changes, in terms of (say) dollars of goods and services producedper worker per year, on a country-by-country basis.
We could even break this out by trading blocs, to make lifeinteresting. Who wouldn't want to knowthat value creation was net positive, say, in
This could be quite illuminating, as it tracks worldwideinflows and outflows of investment, and the results, annually, of thatinvestment.
Let's see if any of our SNS Members have heard of such athing. If not, perhaps we can encourageits invention. We could call it, theGlobal Value (Creation) Index. GloVIn.
Mark Anderson
Mark,
Your note "A SimpleQuestion" should be read along with your prior notes, especially in 2H01berating the perspicuity of the "Rear View Mirror Crowd" who werebearish on the industry based on actual recent business data. You thought theywere looking in the RVM at a crash which you had driven beyond.
Looks to me like it was atanker truck explosion you drove only two car lengths past....right into arailroad crossing with the
Mike Richmond
[Intel]
Mike,
I am really trying to address two separate issues here: wehad a surprisingly strong q4, thanks mainly to consumer spending, which wassomething the rvm guys did not see coming.But right now, I am worried about longer-term issues, not half-yearly,or even perhaps yearly, but multi-year.This was the reason for last week's issue.
I don't find these contradictory, but I do have anincreasing concern about longer-term economic damage effects.
I hope this helps, and please write back if it does not.
Mark Anderson
[Mikelater responded: It's a good explanation, and it makes me feel worse:>. Thanks for writing back, Mark, I always get something out of eachissue.]
MikeR
Mark,
Dinner may not come at allfor some folks for a long time, and when it does come, it may not be the steakthey were used to. It might be macaroni and cheese.
You have noted repeatedlythat the investments in technology and improved processes are often notreflected in the results folks like the Fireman look at. There is a dark sideto that equation as well.
Boeing, GE, many Japanesecompanies, and I'd guess Siemens and others in
Boeing, for example, willprobably never hire back the majority of the airplane workers they laid off.They don't need them. They can build every airplane they need to build - at thehoped for future levels not today's depressed levels - in their
So when the economy comesback for airplanes - employment will not go up the way it used to. Multiplythis by lots of large capital equipment firms worldwide and the picture is oneof prolonged underemployment for many.
William R. Pickard, Jr.
Pickard & Murphy
Bill,
I think you are absolutely right on this; it is what youmight call the dark side of productivity increases.
As a Seattleite, you also know that some of the mostbeneficial company-formation energy comes when Boeing drops thesehighly-motivated and well-educated workers, many of whom have no intention ofgoing back to work for the company when they can work for themselves.
Insofar as one of Boeing's main pre-occupations has to bethe Unions, I will avoid discussing the fine points of how to lay off workerswhen you need to and are a Union shop.Rather, I'll walk outside and look at the stars, thinking of all thatnasty email I just avoided.
Thanks for writing in,
Mark Anderson
Mark,
The gloom in
1. Productivity Growth
2. Relative wealth-creatingpotential (determined by entrepreneurial culture, tax policy, etc) NeitherEurope nor
Finally, what does the UScurrent account signify today given that many US companies are producingoverseas and booking profits in US$? I am not sure I know and I am notconvinced anybody else does for that matter.
Perhaps you could enlightenthis aging, puzzled, recovering economist.
Regards,
Steve Waite
Steve,
Well, the word "recovering" lends at least a bitof hope, no?
I have long puzzled over the same question, without greatresult. But here is where I landed onthis question:
1.You are absolutely right, on the face of it: many of thethings that make us most successful (increased productivity, leading to highincomes, and high domestic consumption of goods) lead to an increased imbalancein our trade deficit, and in our current account deficit.
2. It is nearly impossible to tell who is making the money,and where it is going. When
So
3. The basic idea behind this question is this: if wecontinue to buy more goods and services at home than we export, is thatbad?
Traditional economists think that this will eventually drivedown the value of the dollar, leading to a rebalancing of pricing worldwide,with less consumption at home of imported goods, and more success for U.S.exporters in selling their goods abroad.And they worry, if this reconciliation is put off for too long, whethera major crash in currency values, instead of a gentle decline, will happen.
So, I think this brings the question into two sharp foci:
1. How are we in the
2. Is this the sole or major influencer of
Since the
So: Company A hires two of the top laptop makers in
Far from being a "sport case," I think this is oneof the most common scenarios today in manufacturing: almost all
Let's move to the second issue: currency.
Other than the occasional wave of media stories, to which youare referring in your letter, I don't know of anyone in the currency businesswho gives very much thought to the account deficit in valuing the dollar.
When the
We as a nation have two debt burdens in such a situation:selling new debt, and rotating old debt.If foreign buyers, for any reason (and believe me, there are LOTS ofpotential reasons, some of which have nothing to do with our domestic economichealth) stop purchasing that debt, then to the degree that they do this, webegin to lose control of our own economic destiny; i.e., the Treasury is forcedto raise bond pricing in debt auctions, interest rates go up, and the economyslows down.
Not because we wanted it to, or because we were not doingwell at home, but because we couldn't sell enough debt.
This, in my mind, is the best reason to run a surplus in the
This is about how currencies are really valued: how otherssee the stability, security, and long-term growth potential of the
You mentioned the benefits to
That's my best understanding of why we should be concerned,not so much about balancing our books abroad, as about balancing them at home,and about the relation between the two.
Thanks for a great question,
Mark Anderson
Mark,
You have often talked aboutthe utility of having a cell phone, and or other very portable device usebiometric security (e.g. fingerprint identification), making it possible for aperson to use it for secure transactions (e.g. buying). The following linkpoints out the danger of believing security claims for particular technologies:http://www.counterpane.com/crypto-gram-0205.html#5
.Undoubtedly there arebetter (still unbroken) technologies, and combining them will increase theprobability of detecting intruders. But in our mulling about how to deal withsecurity threats in these uncertain times, we need to be careful of what wetrust.
Danny
Daniel G. Bobrow
Research Fellow
Danny,
Thank you for this interesting heads-up on one way to foilsome of the more common fingerprint authentication vendors.
It is worth noting that this person claims to be able todefeat capacitance and other live-tissue-detection schemes, assumedly by thefact that the fingerprint-imprinted gel is covering living tissue.
I hope that readers familiar with this or related hacks, andwith vendor assurances to the contrary, will write in on the question: What isthe current state of the art in fingerprint identification?
Mark Anderson
Mark,
If it's not too late, can Ipick up on two big issues that have been coursing through SNS veins in recentweeks - Apple and bad leadership.
On Apple, after 13 years ofusing PCs I finally bought a top of the end iMac G4 for my home office, for thefollowing reasons (not in any real order)
1. I'd read so many goodthings about it in SNS
2. When I tentatively openedan account with Apple
3. I was fed up of cominghome each night, going to check mail on my cable-modem PC (Gateway 350, runningWindows ME) and finding it crashed
4. I was fed up of acting asphone tech support to my wife when she used the machine and it crashed
5. ditto for my kidswhenever they used it
6. OSX and associatedapplications look awesome
7. The iMac is a true thingof beauty - great industrial design deserves to be honoured and supported
8. I wanted to reaffirm tomyself that lowest-cost (clone PCs) is not always, over the course, the mostcost-effective
9. I wanted to have mychildren take in points 7 and 8.
So far so good. No crashes,Office X runs beautifully (Entourage is a true wonder) and we are slowly butsurely building the home digital hub.
I've cut greatest hits CDsfor my nine-year-old daughter (much Madonna, Britney and Vengaboys since youasked but I sneaked on 'Love Shack' by the B-52s to her unending disgust) andbought a Canopus box (another wonder product) to feed in analogue hi-8 video sowe can archive and edit our home movies.
It's all a snip andsomething that would have taken hours of sweat to do on a PC.
Now [for] leadership.
Here in
The worst has been thereneging on 180 million of soccer coverage rights by ITV Digital, theterrestrial competitor against Sky satellite and cable.
Having realised they hadpaid an absurd amount of money two years ago for these (minor-league) rights,the two quoted and fully-solvent companies that own ITV Digital have simply letthe business go bust, leaving 72 soccer clubs on the brink or ruin.
In the strictest legal sensethe two owners may have right on their side; time and lawyers will tell. Butthere is something very seriously wrong when two of the market's biggest 120companies feel they can get away with this.
The City hardly blinked;most analysts voiced approval (a bleeding business was being cut off) andupgraded their estimates; virtually none dwelled on the undoubted brand damageto these companies. If you had sports rights would you sell them to these guysunless they brought the cash upfront in a wheelbarrow?
Next, some great leadershipfrom the new man at the top of British Telecom Ben Verwaayen (not that he had ahard act to follow ...).
When Verwaayen laid out hisstrategy for the company last month, his top metric was customer service. 'BT'starget is to reduce customer dissatisfaction by 25 per cent a year,' he said.Data would be gathered independently and made public.
What astonished me again wasthe reaction of the City analysts who let out a collective yawn and said hisstrategy was 'nothing revolutionary'.
My own view is that infocussing on the customer experience (and this ties in with Steve Jobs, doesn'tit?) rather than following some grand expansion plans, Verwaayen rankssomewhere between Marx and Guevara on the revolutionary metric. Just threemonths into the job, of course, he has yet to execute. But the signs are verygood; as always, what gets measured gets done.
Many thanks again for allthe great stuff and kind regards from
Richard Lander
[Editorial Director]
www.citywire.co.uk
Richard,
Well, write to us again in six months and let us know ifyour expectations for cost of ownership and ease of use continue to be met byApple.
Having seen a few corporate hatchet jobs on everything frombetter technology, such as car emission control systems (kept under wraps forabout a decade), to better content, hearing this tale of buried rights does notmuch surprise me. The real answer, ofcourse: do not overpay. What seems toogood to be true, often is. If a man isas good as his word, a company is only as good as its stock price.
As for BT's new chief, good sounds keep coming over the
What a shock, to have this point of view atop BT!!
I wonder whether he would be willing to stand up, with ChrisGent and Hutchison 3G, and do what the French wireless 3G auction winners did:force the government to give back (87%) of the cash from the auctions, so theycan use it to build out broadband wireless?Now this would be right up his alley, would help
Now all we have to do is convince the Germans and theAmericans, and we are about done. TheGermans will be easier, I am afraid.
Mark Anderson
Mark,
Glad to see one of yourreaders discovered Zinio, since that is one of my portfolio companies. If youwant to let him and other know, Zinio has a tremendous pipeline of trade andtechnical publications being implemented in the next 3-6 months. After that, wehave a pretty good view into a broad base of business-oriented magazines andthen on to consumer magazines, company publications, and even direct marketingcatalogs.
At the same time, we areworking with Microsoft and its OEMs to make sure that Zinio magazines workreally well on the new generation of Tablet PCs coming out this fall for thefirst time. It's a remarkable experience to feel like you're holding a magazinein your hand and be able to search it, tear out pages or articles to forward tofriends, or even click on links to sources and advertising. The theory behindZinio is that the infrastructure and the machinery attached to thatinfrastructure is good enough now that printing becames an artifact of thepast.
Stewart Alsop
General Partner
New
Stewart,
What I find a bit compelling here is that it is aboutmagazines, and not books. That's apretty interesting shift: very high production values, short length, shortshelf life, probably a higher sharing value in terms of bits snipped out andemailed
I am still not at the "printing becomes an artifact ofthe past" school, but I do think that an increasing number of people arereading from their screens, rather than from paper.
I did like the reasons given by Stefan Smalla last week:distribution to
But systems and technologies which enhance globaldistribution of rich content are probably as attractive as Webheads think theyare. I just think that TabletPC ought tobe a little smaller, but Jeff Raikes will get there, eventually.
Mark Anderson
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SNS is the most accurate prediction letter covering thecomputer and telecom industries. It ispersonally read by the top managers at companies such as Intel, Microsoft,Dell, Compaq, Sun, Netscape, and MCI, as well as by leading financial analystsat the world's top investment banks and venture capital funds, includingGoldman Sachs, Merrill Lynch, Hummer Winblad, Venrock and Warburg Pincus.
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On May 31st through June 2nd, Mark will be speaking at theOrca Recovery Conference at the
In between times, he will be chatting quietly and amicablywith the hundred or so interest groups who, in the name of saving the orca,want to make sure they also get funding for whatever they were doingyesterday. -- This punctuated by variousoutdoor walks.
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ISSN 1093-8494