October 7, 2005

Bizzy’s Business Briefs (100705)

There’s been a heavy dose of weirdness in the business news of the past few days. Just four examples:

USA Today Headlines an Unproven Claim as Fact

Headline: Female bosses less likely to cut health benefits
(stated as fact)

Excerpt: “Statistics on the gender divide are not tracked, say Kaiser, health consultants and government agencies. The Center for Women’s Business Research is seeking funding to study the matter. Executive Director Sharon Hadary believes the results would show women make medical coverage a bigger priority.”
(i.e., nothing but sheer speculation, but I guess it “feels right”)

Don’t they have editors?

About Those iPod Nano Scratches

The author gets a bit conspiratorial but nevertheless believable:

There is another possibility. The conspiracy theorist side of me sees the disproportionate response as a symptom of something other than reality—like it’s being generated. Why would a complaint about nano by such a relatively small group of consumers (Apple’s already sold more than it can make) be deemed worthy of news reports? I could see a jealous competitor planting the story and feeding reporters or, more likely, blogs, details on how to scratch nanos and how impossible it is to remove the scratches.

The truth is likely far more pedestrian. Apple’s iPod line suffers in much the way Windows does: It’s the most popular product in its class, and with far more users than even the nearest competitor, it’s bound to have more complaints, and those complaints are amplified by the product’s popularity.

Is it possible that there is a group of people so obsessed that they have nothing better to do than generate bogus buzz about the Windows OS, and a different group doing the same to the iPod Nano? Unfortunately, despite the author’s minimizing the changes, there’s reason to believe it. If that’s the case, you people doing ths need to get a life.

Dueling Hedge Funds

Speaking of obsessed, it’s hard enough to make money in investing without getting sidetracked by petty squabbles, but these two hedge funds have turned their petty squabble into their investing philosophies:

Max Keiser (is) one of the managers of a project called Karma Banque, which holds a hedge fund that tries to make money by encouraging people to boycott a company and then sells that company’s stock short.

Steve Milloy and Tom Borelli are trying to fight this with their new Free Enterprise Action Fund. Apparently their fledgling effort has really gotten under the skin of Keiser.

So Karma, whose Mr. Keiser has beliefs that make Cindy Sheehan seem like Michelle Malkin, picks a company to boycott and short, and Free Enterprise tries to offset whatever Karma is doing.

If you were an investor, would you feel well served by either of these funds?

Of All the Publications to Warn about the Transparency of a Chinese Bank’s IPO

The Wall Street Journal wants to school us. This is too rich (requires subscription):

But when it comes to public listings, corporate disclosure, gaining investors’ confidence and jumping through regulatory hoops, the nexus between the political and the economic are there for all to see. CCB will be the first of the Big Four (Chinese banks) to list, and the others — Industrial and Commercial Bank, Bank of China and Agricultural Bank — will follow sooner or later. Unless something drastic happens, however, they won’t be able to list with the New York Stock Exchange, the deepest and most efficient of all world securities exchanges.

True, part of the reason for that has to do with the nefarious consequences of Sarbanes-Oxley, a post-Enron piece of legislation that makes onerous demands on corporate executives, raising the risk of liability for both foreign and American managers. There has been a sharp drop in the money Chinese companies have raised in IPOs this year in the NYSE; as of August only $1.37 billion had been raised compared to $7.26 for all of 2004, and this law bears some responsibility for that.

But even without SOX, as the law is commonly known, Chinese banks would have a difficult time listing in the U.S. Simply put, not enough is known about them because they are just not transparent enough. Thus they must go to Hong Kong.

Why is this a hoot? This is the same Wall Street Journal that whined when Chinese government-controlled oil company CNOOC failed in its bid for Unocal–as if CNOOC is any more transparent than one of the Chinese (government-controlled) banks.

Temporary Outage is Over

Filed under: General — Tom @ 1:44 pm

Apparently between about 12:15 and 1:15, the site was down, as were many others at web host Interland.

Whatever the problem was has been remedied. Carry on.

Quote of the Day: On Energy Policy

Filed under: Consumer Outrage,Economy,Environment,Taxes & Government — Tom @ 1:42 pm

A huge point on energy use from Stocks or Bonds (7th and 8th paras at link):

Few folks realize how much energy we waste when we produce and distribute energy. Misguided environmental policies have added and abetted incredible losses.

Take the California fiasco as a prime example. Power plants are not built in California but power is transmitted to the state. This highly inefficient practice results in the extra burning of millions of tons of coal; just don’t burn it in California.

Marvel of the Day, and Perhaps the Century: Man-Made Diamonds

Filed under: Business Moves,Economy,Marvels — Tom @ 11:15 am

WOW–Read the whole thing (it’s long, but every paragraph seems to have a new jaw-dropper):

Man-made diamonds sparkle with potential

BOSTON — In the back room of an unmarked brown building in a run-down strip mall, eight machines, each the size of a bass drum, are making diamonds.

That’s right — making diamonds. Real ones, all but indistinguishable from the stones formed by a billion or so years’ worth of intense pressure, later to be sold at Tiffany’s.

The company doing this is Apollo Diamond, a tiny outfit started by a former Bell Labs scientist. Peer inside Apollo’s stainless steel-and-glass machines, and you can see single-crystal diamonds literally growing amid hot pink gases.

This year, Apollo expects to grow diamonds as big as 2 carats. By the end of 2005, it might expand to 10 carats. The diamonds will probably start moving into the jewelry market as early as next year — at perhaps one-third the price of a mined diamond.

The whole concept turns the fundamental idea of a diamond on its head. The ability to manufacture diamonds could change business, products and daily life as much as the arrival of the steel age in the 1850s or the invention of the transistor in the 1940s.

In technology, the diamond is a dream material. It can make computers run at speeds that would melt the innards of today’s computers. Manufactured diamonds could help make lasers of extreme power. The material could allow a cellphone to fit into a watch and iPods to store 10,000 movies, not just 10,000 songs. Diamonds could mean frictionless medical replacement joints. Or coatings — perhaps for cars — that never scratch or wear out.

The article goes on to say that at least one company is NOT happy with this development. You guessed it–De Beers:

Even highly trained diamond experts find it almost impossible to tell a CVD diamond from a mined one. De Beers is determined to help by making machines that can detect the slightest difference in the way the two materials refract light.

As part of that effort, De Beers stepped up its own CVD research “focused on producing state-of-the-art synthetic diamonds for testing on our equipment,” Lawson says. Referring to CVD diamonds, he adds, “We don’t see gemological applications fitting into it.”

So by getting into gems, little Apollo made a powerful, determined enemy.

I suspect that almost every guy who has ever had to endure the “two months’ salary” sales pitch for an engagement ring purchase is (quietly) rooting against De Beers.

This Had Better Not Be True (US to Give Up “Root Server Control” of the Internet?)

Filed under: Economy,Taxes & Government — Tom @ 8:55 am

Go here for the BizzyBlog mid-November post, which was just before the WSIS conference opened.
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Internet Structure Background: In response to this post, NixGuy created the clearest plain-language link-rich explanation I have yet seen of the origins and current state of the Internet’s technical setup and governance. Bottom line as of today: “… the rest of the world has no cause to complain that we have not shared control or input over organization of the internet. In fact, as the above research shows, we have bent over backward to invite world participation.” Massive thanks, NG; tremendous job. Read (and save) the whole thing.
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BEGIN ORIGINAL POST:

The event that is the subject of this post allegedly occurred “at the third and final preparatory meeting for next month’s World Summit on the Information Society.”

Via Drudge (link since removed), in the UK Guardian (bolds are mine; “Hendon” is David Hendon, the UK Department for Trade and Industry’s director of business relations):

Breaking America’s Grip on the Net

(Hendon) had just announced a political coup over the running of the internet.

Old allies in world politics, representatives from the UK and US sat just feet away from each other, but all looked straight ahead as Hendon explained the EU had decided to end the US government’s unilateral control of the internet and put in place a new body that would now run this revolutionary communications medium.

In the early days, an enlightened Department of Commerce (DoC) pushed and funded expansion of the internet. And when it became global, it created a private company, the Internet Corporation for Assigned Names and Numbers (Icann) to run it.

But the DoC retained overall control, and in June stated what many had always feared: that it would retain indefinite control of the internet’s foundation – its “root servers”, which act as the basic directory for the whole internet.

A number of countries represented in Geneva, including Brazil, China, Cuba, Iran and several African states, insisted the US give up control, but it refused. The meeting “was going nowhere,” Hendon says, and so the EU took a bold step and proposed two stark changes: a new forum that would decide public policy, and a “cooperation model” comprising governments that would be in overall charge.

Much to the distress of the US, the idea proved popular. Its representative hit back, stating that it “can’t in any way allow any changes” that went against the “historic role” of the US in controlling the top level of the internet.

But the refusal to budge only strengthened opposition, and now the world’s governments are expected to agree a deal to award themselves ultimate control. It will be officially raised at a UN summit of world leaders next month and, faced with international consensus, there is little the US government can do but acquiesce.

As the title of the post says, this had better not be true, and I’m hoping this is wishful thinking on the part of the Guardian.

This action could be the stuff petty tyrants’ dreams are made of.

John Bolton, call your office. “Acquiescing” is not an option.
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UPDATE: Here’s a statement I was going to save for the weekend (HT IPI Techbytes e-mail; IPI is the Institute for Policy Innovation, a free-market think tank):

Dr. Milton Mueller of the Syracuse University School of Information Studies described the recent goings-on in Geneva, where the UN’s World Summit on the Information Society (WSIS) has been debating the future of Internet governance:

What seems to have been lost in the shuffle is the idea of distributed, cooperative control that involves individuals, technical and academic groups, Internet businesses and limited, lawful interactions with governments. The idea that nation-states should not have the ability to arbitrarily intervene in the Internet’s operation whenever they feel like it, but should be bound by clear, negotiated constitutional principles, has been crowded out of the debate.

With Commerce in control, other nations can’t intervene. Putting “governments in overall charge,” as the Guardian article indicated, guarantees intervention by tyrants who don’t like what their citizens are saying, and narrow-minded commerical actions by governments that will negatively affect the world economy.

This is something I would expect a still-in-power Clinton Administration to gleefully give into. It would be impossible to read a surrender on this by the Bush Administration as anything but a major betrayal.

UPDATE 2: It seems to me that boycotting the conference would solve the problem.

UPDATE 3: For what it’s worth, there were people concerned about this conference many months ago. Stephen M. Ryan of eWeek raised the alarm way back in April.

UPDATE 4: From National Review: “World Wide (Web) Takeover–The United Nations wants the Internet”

UPDATE 5: Pamela at Atlas Shrugs is ON FIRE about this, the UN in general and Chinese censorship. Go there. And I should have made clearer in Update 2 that boycotting the WSIS would solve the immediate problem. The only way to solve the long-term problem of greedy tyrant-states’ desires to limit our national sovreignty and expropriate resources we developed is to get out of the UN and evict them from Turtle Bay.
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More background:
- The Declaration of Principles from the 2003 Geneva meeting
- The 2003 Plan of Action
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Previous Posts:
- July 5–US Retains Control of Internet Directory: AP Has Hissy Fit
- September 29–Internet Control Stays in the US (I should think so)
- October 3–The Whining About “Control” of the Internet Continues (Plus the “Gobbled Up” Internet Addresses Canard)

Positivity: Nobel Prize for “Chemical Magic” Took 34 Years of Work

Filed under: Economy,Marvels,Positivity — Tom @ 6:08 am

“Magic” my foot: 19 years from discovery to fruition, and another 15 to international recognition, showing that properly applied research can do wonders for the world’s environment:

(more…)

One Cheer, Two Boos for Andrew Sullivan; Put Up or Shut Up Time for the GOP

Filed under: Economy,Taxes & Government — Tom @ 12:01 am

Though he was one of the earliest bloggers, and the first one I read consistently, I don’t blogroll Andrew Sullivan. He began as a post-9/11 breath of fresh air, a usually sensible sort-of conservative who recognized the evil of our Jihadist enemy. But let’s just say that I don’t share his, er, obsessions, and that visiting his site in search of something fresh these days almost inevitably disappoints.

But one of his earlier mantras, one that he justifiably rubbed in earlier this week, is that George Bush has allowed federal spending to grow unchecked, has made no attempt to enforce spending discipline on his party, and has initiated much of the new spending himself (Homeland Security, AIDS, etc.).

I was willing to give Mr. Bush the benefit of the doubt for one reason, and one reason only: I thought that he made a political calculation that he would not be able to execute the War On Terror if he attempted simultaneously to exercise fiscal restraint. The theory was that if he tried, Democrats would link government program “cuts” (really reductions in the rate of growth) to the cost of the WOT and would therefore not support it (remember who, thanks to Jim Jeffords, controlled the Senate at the time), with consequences that could have put our national survival in doubt.

That once-legitimate excuse, if that was indeed the line of reasoning, is long gone, and Sullivan’s warnings that the GOP has no appetite for spending control ring unfortunately true (One Cheer).

But then he blows it and says that a Kerry presidency would have been more restrained, and that we would be better off with him than with Bush.

Wrong, Andrew. A Kerry presidency would have ensured the end of the revenue-increasing tax cuts (Boo #1). Revenues increased as a result of the 1980s tax cuts. The Bush tax cuts have thus far had a similar impact, as I noted when quoting Don Luskin at this post:

According to Treasury Department statistics, the federal government collected tax revenues of $1.79 trillion in the 12 months leading up to the enactment of the 2003 tax cuts. In the next 12 months, despite lower tax rates, the government took in more: $1.82 trillion. Then in the next 12 months — still with lower tax rates — it took in even more, at $2.06 trillion (that’s a 13.2% increase in one year–Ed.).

So the Kerry tax increase would have led to even worse deficits than we have today, even if Kerry could have nibbled around the edges of spending, which no one seriously thinks would have happened anyway (Boo #2).

What now? Bush and the Republicans have to get a grip on spending and pass meaningful entitlement reform, or they will lose their grip on power.