Monday, December 28, 2009

From WSJ Cities start to look at Mergers to reduce costs, same as in AUSSIE in the 90's

As Slump Hits Home, Cities Downsize Their Ambitions


MESA, Ariz. -- The police department in this city of 470,000 has lost about 50 officers, and is hiring lower-paid civilians to do investigative work. The Little League has to pay the city $15 an hour to turn on ball-field lights. The library now closes its main location on Sundays, and city offices are open only four days a week. This holiday season, the city didn't put up festive lights along the downtown streets.

Mesa's tax receipts, depressed by the recession, will likely come back one of these days. But Mayor Scott Smith doesn't believe city services will return to prerecession levels for a long time, if ever. "We are redefining what cities are going to be," says Mr. Smith, a Republican who ran a homebuilding company before his election last year.

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Joshua Lott for The Wall Street Joural

Civilian investigator Rachell Tucker looks for fingerprints on a piece of glass as she investigates a vehicle robbery in Mesa, Ariz., earlier this month.
.The redefinition isn't sitting well with residents like Sandra West, 67 years old, who has lived in Mesa for more than four decades. She's noticed the city's parks looking a bit ragged, is unhappy the library has cut back hours and misses the Christmas lights. "It was really beautiful," she says.

Months after many economists declared the recession over, cities are only now beginning to feel the full brunt of it. Recessions often take longer to trickle down to local government, in part because it takes time for the sales and property-tax revenues on which municipalities depend to catch up with a depressed economy.

But the sting this time around is expected to be far more acute and long-lasting then in previous recessions. Projected deficits are especially deep in some places and tax revenues could be pinched for years as consumers turn thrifty and real-estate prices remain diminished. That means the relatively painless measures such as borrowing, deferred payments to pension plans and scattered layoffs that have been used during past episodes of fiscal strain are unlikely to be effective in some cities.

In the decade through 2008, municipal tax revenues grew at a rate of 6.5% a year, faster than the overall economy's 5.1%, unadjusted for inflation. Those revenues have started to slip. A national tally isn't yet available, but state tax collections fell 11% across 44 states in the third quarter of 2009, from the same period a year ago, according to a report by the Nelson A. Rockefeller Institute of Government at the State University of New York. In a recent survey by the National League of Cities, 88% of city budget officers said they were less able to meet their financial needs than they were a year ago.

.The specter of lean budgets for years ahead has some of the nation's 89,000 local governments rethinking what services to provide and how to pay for them. From Mesa to Philadelphia, this means some combination of higher taxes and fewer services. In some places, it means more and higher fees for permits and recreation programs. Museums, pools and the like are relying more on income from fees charged to users and from nonprofit organizations, and less on taxpayers.

These cuts matter greatly to the economy at large. Local government spending accounts for 8.8% of the nation's total output, including everything from employee salaries to snowplows. The sector employs one in nine workers -- 14.5 million in all, or about 8 million in education and 6.5 million elsewhere. More Americans work for cities, counties and school boards than in all of manufacturing.

More likely to be union members, government workers tend to be better paid and have greater job security than many of the taxpayers who pay their salaries. Benefits are often better, too. Virtually all full-time state and local workers have access to retirement benefits; in the private sector, about 76% of full-time employees had retirement benefits. Employment in local government peaked in August 2008 and has fallen by 117,000 since then, or less than 1%, compared with a 6.3% fall in private employment from its December 2007 peak.

Related Article
Mesa's Mayor on Governing in Recession
.About one third of the federal $787 billion fiscal stimulus was aimed at state and local government. The money has helped some local governments keep police and school teachers on the job, and has gone toward building new firehouses and police stations. Another stimulus program subsidizes municipal borrowing by paying 35% of local government's interest cost on borrowing for infrastructure.

But some cities have complained that too much of the stimulus was absorbed at the state level. President Barack Obama is promising to do more, calling in a recent speech for more "relief to states and localities to prevent layoffs."

Just as the recession has spurred businesses towards more efficiency, it has forced some cities to do the same. In upstate New York, for instance, the Village of Lake George and the neighboring town of Lake George are debating a consolidation plan that would create one government from two sets of lawmakers, two planning boards and two zoning commissions.


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.The move would save about $350,000 a year, or about 10% of the combined town and village budgets, according to Fairweather Consulting, which was hired to study the proposal. But some locals say the two places might sound alike on paper, but in reality are very different: Residents of the quaint village, which thrives on tourism, worry services could decline, while residents of the town, whose primary commercial center is a highway-adjacent strip with a Howard Johnson, worry that taxes will rise.

"It's the unforeseen," says Robert Blais, mayor of the Village of Lake George. "They know what they've got and they're happy with it."

In Philadelphia, where sales and corporate taxes have taken a hit, budget cuts are limited by the large fixed costs of city workers' pension and benefits plans. About one fifth of the city's $3.7 billion budget goes for health-care and pension costs for current and retired workers. The city's overall tax revenue has fallen 6% over the past two years, while pension costs have risen 6% and health-care costs 11%. Philadelphia Mayor Michael Nutter, a Democrat, is pushing union employees to pay more of their health costs and is looking to move new employees to a less generous pension plan.

The city has cut about 800 positions in the past year, mostly through attrition, and suspended some services citizens used to take for granted. It has stopped providing snow removal on some smaller, one-way streets, except in emergencies, and it suspended mechanical leaf pick-up in some spots. This fall and early winter, older, tree-lined neighborhoods like Mt. Airy and Chestnut Hill were littered with rotting leaves.

"Intellectually, I understand budget cuts need to be made but I do not think this was thought through," says Liz Macoretta, who lives in the West Mt. Airy neighborhood. "You're going to have half the street full of leaves and then you're going to have one-way traffic. I feel let down."

Anyone who wants to have a parade in Philadelphia now has to pick up the tab. The city's Mummers Parade, where 10,000 or so string bands and other performers don bright costumes and march up Broad Street on New Year's Day, won't receive the $336,000 in prize money that used to go to the best string band and other parade participants. The last time that happened was during the Great Depression.

"You used to get ten grand and a trophy, now you just get a trophy," says George Badey, chairman of Fund, a nonprofit that helps fund the parade. The Mummers also had to pay $8,800 for security, clean up and other services, all of which the city used to provide free.

Mesa was founded in the 19th century by Mormon pioneers who built a grid of wide streets to accommodate settlers' wagons. It's been growing ever since, from a quiet Phoenix suburb to the nation's 38th most populous city. More people might have heard of Minneapolis or Miami, but Mesa has more people than either. The stretch marks of growth are everywhere, from new freeway lanes under construction to miles of red-roofed subdivisions with curvy streets.

The city's revenues come largely from state aid and sales taxes, both of which have been hit hard by the recession. As a result, Mesa has spent the past year slashing services it spent decades adding, stripping 13% out of its general fund budget and cutting 340 positions through layoffs and attrition. Mesa's voters also approved a property tax this year, something that the city's generally conservative citizens had long resisted.

Mesa's police force now has 801 sworn officers, down from 858 last year. To keep the force just as visible on the streets, some detectives have been reassigned to patrol duty, leaving bigger case loads for the rest of the detectives.

The cuts have spawned new ideas. A nine-person investigative unit, based out of a Mesa substation on the eastern edge of town, consists of civilians, not sworn officers. Investigators make about $37,000 per year, versus $49,000 for officers, and carry out basic investigations for minor nonviolent crimes. They travel in unmarked white cars, don't carry guns and wear "business attire" -- usually a pressed shirt and pants -- instead of the blue uniforms sworn officers wear.

The team goes through 18 weeks of training, 20 weeks less than police officers do. Many of the classes are the same, but the course leaves out things like aggressive driving and time at the firing range. They come from a variety of backgrounds: One had been a police officer, a few had civilian desk jobs for the Mesa police department, while several others worked in retail stores including Costco and Barnes & Noble.

Sgt. Stephanie Derivan, who oversees the program, says hiring civilians reduces costs while improving services. It gives police officers more time to patrol the streets, she says, and the specialized investigators never have to hurry through a crime scene to get to a break-in in progress or chase down robbers. "My folks have the time to spend with people," says Sgt. Derivan.

On a recent afternoon, civilian investigator Rachell Tucker was sent to check out a burglary at a Mesa trailer park. Ms. Tucker was an officer in the Los Angeles School Police Department eight years ago, where she patrolled public school buildings, before taking time off to have kids. At the trailer park, she dusted a window screen for fingerprints and asked neighbors if they'd seen anything suspicious.

Becky Cumberland says she didn't notice that Ms. Tucker wasn't a police officer. "As long as she does what a police officer can do, that works for me," said Mrs. Cumberland as she sat on her back porch, sipping a Coke while writing down everything that had been stolen from her trailer, including an Xbox video game console and her son's birthday money.

Cuts in the parks department are easier to see. Michael Holste, Mesa's assistant director of recreation operations, pointed to the department's new brochure, which lists an after-school recreation program with kickball and other games with the word "cancelled" overlaid in bold letters.

In one Mesa park, a green-and-yellow jungle gym is surrounded by dirt because the city couldn't afford sprinklers. At Powell Junior High School, which itself might be closed due to tight budgets, swimming classes are cancelled; the pool has been closed all year, and isn't likely to reopen.

It's far from certain the city will resume funding parks at the same level, even when tax revenues return. Cuts in the recreation department eliminated a city-funded programmer who organized disabled sports programs such as wheelchair basketball and flag football games for people with disabilities including autism and Down syndrome. Mesa Association of Sports for the Disabled, a local nonprofit, has hired its own coordinator at a lower salary and fewer benefits. Lane Jeppesen, the group's executive director, says the new arrangement may be permanent. "I don't think the city will come back with another full-time position for a very long time because we've picked up the slack," she says.

All the cutting has put Mesa in a financial position stronger than that of many cities. Expenses are now in line with revenues. Standard & Poor's rates the city's debt AA and calls Mesa's financial management "strong, well embedded and likely sustainable."

And despite tight budgets, the remaining city workers are striving to add at least some services for the city's still-growing population. At a city council study session on a recent morning, library director Heather Wolf presented her idea for a new "express" library to open in 2010. "There is a need out there for library service and this is one way to fill the gap," says Ms. Wolf.

It wouldn't look much like Mesa's main branch, though, which sits downtown and is adorned with a plaque commemorating the library's 1980 dedication. Because of the shoestring budget, the new library would be housed in a mostly vacant strip mall, with two employees and open just three days a week. On days when the library is closed, the collection of mostly popular titles such as self-help books and airport fiction would be dispensed via vending machines similar to the DVD rental kiosks that sit in front of convenience stores in Mesa and many other U.S. cities.

Write to Conor Dougherty at

Thursday, December 10, 2009

Hotels moving into forclosure where have we seen this before?

I know it becomes repetitive, in 91 we bought our first hotel in Aussie out of foreclosure at a heavily discounted price. So what you ask? The hotel was run as a business generating cash flow repaying debt and making dividend payments to shareholders and ultimately sold for a handsome profit as a real estate play 10 years later.

Gansevoort South hotel goes from buzz to bust
Once the haunt of celebrities, Miami Beach's Gansevoort South hotel will soon be sold at auction, a victim of foreclosure.

Good buzz was no match for bad debt at the Gansevoort South, a Miami Beach hotel popular with stars now destined to be sold at a foreclosure auction.

Credit Suisse announced Wednesday morning an auction for the ownership stake used to secure an $89 million mezzanine loan on the 334-room oceanfront hotel, a favorite stop for celebrities hitting the party circuit. Developers William and Michael Achenbaum secured the financing for the project at the height of South Florida's real estate boom, only to see their plans for the former Roney Palace roiled by the collapse of the condo market.

Sales were dismal for condos in an adjoining residential tower and in 2008, the Achenbaums halted plans to convert about a third of the hotel rooms into condo-hotel units. That left the father-and-son team to rely on hotel revenue to make debt payments on their construction debt, a task made even harder by what experts describe as the worst lodging downturn in a generation.

Despite its troubled debt, the Gansevoort, located at 2377 Collins Ave., enjoys as much buzz as any of South Beach's most high-profile hotels. It was a frequent backdrop in the Bravo reality show Miami Social. A popular online video captured Michael Phelps racing retired NFL star Warren Sapp in the Gansevoort's rooftop pool -- the Olympic champion gave Sapp a half-pool head start and still won -- and rapper Ludacris picked the Gansevoort as one of two spots to promote his new cognac, Conjure. The New York Times last weekend called the hotel South Beach's ``of-the-moment spot.''

The hotel remains open and under the control of the Achenbaums' Gansevoort Hotel Group. ``Operations at Gansevoort South hotel remain status quo,'' Michael Achenbaum said in a statement released Wednesday afternoon.

The Hotel Gansevoort, the Achenbaum hotel in Manhattan's Meatpacking District targeting the same affluent and hip traveler, is not involved in the foreclosure action.

He said he and his father hoped to buy back the loan at the auction and retain ownership. He blamed the financial woes on the condo component of the property and not the hotel, which the statement said is ``financially profitable and capable of covering its respective debt.''


Long a mid-priced convention hotel on Miami Beach, the Roney Palace and the adjoining Roney condo complex filed for bankruptcy in 2004. Chicago developer Joseph Chetrit paid about $150 million for the property months after the Chapter 11 filing, then sold his company's interest to the Achenbaums after a failed joint venture between the two groups.

Because the $89 million loan was backed by the Achenbaum ownership stake -- and not the Gansevoort property itself -- the Jan. 28 auction announced Wednesday does not constitute a traditional foreclosure proceeding. Known as a ``UCC auction,'' the sale is conducted under laws governing loans with equity stakes as collateral.

The winning bid would take control of the company that owns the hotel, but also assume a big liability: a $314 million mortgage on the real estate itself, according to documents posted online by Credit Suisse's agent in the sale, Jones Lang LaSalle Hotels.


The Gansevoort could be the leading edge of what analysts predict will be a wave of banks seizing hotels throughout South Florida next year.

With defaults rising on hotel loans, lenders are under pressure to foreclose on the properties and clean up their balance sheets. And with room revenues predicted to drop again in 2010 throughout South Florida, those owners reaching into their pockets to make hotel loan payments say they're not willing to fund losses indefinitely.

Sunday, December 6, 2009

Los Angeles Times reporting banks miraculous recovery, why is that not a surprise?

See previous posts for the comparison of what happened in Aussie in the 90's and the USA now. Which stocks came back the quickest with the greatest gains,(reminder Banks). Also see previous posts did the USA actually print all that money and is it more indebted than the rest of the world?

Bank bailouts appear to be paying off
The U.S. gets billions back as Wall Street rebounds. But critics say the TARP fund will still end up in the red.
By Jim Puzzanghera and Walter Hamilton

December 4, 2009

Reporting from Washington and New York - The government's bailout of the banking system is turning out to be far from the fiscal sinkhole so many had feared.

The $700-billion Troubled Asset Relief Program, known as TARP, was reluctantly created by Congress last fall despite criticism that it was a huge risk that would only encourage the profligate ways of Wall Street. But in recent months, tens of billions of dollars have begun flowing back from banks to the U.S. Treasury.

Bank of America Corp.'s decision this week to repay one of the largest chunks -- $45 billion -- reflects the stunning turnaround of the financial industry and demonstrates that the government's unpopular medicine appears to have saved the patient. And the price tag isn't as large as expected.

"It turns out, actually, TARP -- as wildly unpopular as it has been -- has been much cheaper than any of us anticipated," President Obama said Thursday at a White House summit on creating jobs.

Federal Reserve Chairman Ben S. Bernanke, who pushed for the fund's creation, made a similar point at a Senate hearing Thursday on his nomination to a second term.

"Unlike some of the scare stories about $700 billion being thrown away, I do believe . . . in the end that there'll be something close to a break-even there," Bernanke said.

The TARP fund may break even, that is, on its first and biggest use of taxpayer money: investing billions -- $205 billion as of Monday -- directly in banks.

Including Bank of America's expected repayment, $116 billion -- more than half -- of that amount has already come back to the government, along with about $10 billion in dividends and interest.

One expert, however, predicts the TARP fund will end up as much as $150 billion in the red because of losses on additional uses that the Bush and Obama administrations found for the program's money.

Totaling $270 billion so far, with commitments to spend about $160 billion more, those add-on uses include higher-risk investments in American International Group Inc., General Motors Co. and Chrysler. Little of that money has come back. The add-ons also include expenditures on incentives to boost small-business and consumer lending and to encourage mortgage firms to modify home loans.

And more TARP dollars might be heading out the door. Lawmakers and the Obama administration are considering using some of the remaining money to offset the cost of new job creation efforts. Any money used that way would not be repaid into the fund.

Also, the White House is not expected to allow TARP to expire at the end of the year. The law allows for a nearly automatic extension until October 2010.

"It's great that some financial institutions are paying the money back. It's not going to be so great if this administration immediately takes this money and shoves it out the door for some other big government boondoggle," said Rep. Jeb Hensarling (R-Texas), who serves on the Congressional Oversight Panel for TARP and wants the program shut down.

One reason the TARP fund has gotten a substantial sum of money back is that BofA and other financial giants desperately wanted to get out from under the government's heel on the issue of executive pay. Leaving TARP left them free to pay the lavish salaries to which their executives have become accustomed. Compensation limits under TARP have hampered BofA's search for a successor to Chief Executive Kenneth D. Lewis, who is set to retire Dec. 31.

Another motivation to pay back TARP money is being able to stop making dividend payments to the government. Those dividends currently equal 5% on most of the money invested by the Treasury and 8% on a second round of infusions that went to Bank of America and Citigroup Inc.

The repayments also reflect Wall Street's stunning resilience. The rest of the country may only be groggily recovering from recession, but many Wall Street firms are solidly back in the black.

Plain-vanilla banks, however, are still dealing with piles of bad loans that could get worse or more numerous as foreclosures keep surging and unemployment remains high. Ironically, many of those bad loans represented a big portion of the troubled assets that TARP was initially designed to purchase. The fund has done little to address that problem directly, however, spending only $27 billion on an initiative to buy up "toxic" mortgage assets in partnership with private investors.

Days after TARP was signed into law, the Bush administration decided the money was needed more urgently to thaw the frozen credit system. The Treasury soon began pumping billions into major banks in exchange for equity stakes.

Mark Zandi, chief economist at Moody's, said TARP would have been more effective if it instead had been used to buy troubled assets, as originally intended. Still, the capital infusions helped quell financial panic, even if it proved highly unpopular with the public because it bailed out firms that helped cause the crisis, he said.

Zandi estimated that all but $100 billion to $150 billion would be returned to taxpayers, a much better return than predicted last fall. But that won't change the American public's opinion of the program, he said.

"They're still going to say it cost us $100 billion to $150 billion and all it did was save Wall Street," Zandi said. "There's no way to sugarcoat this: TARP is a black mark on our economic history. But we had to do it. The world without it would have been immeasurably darker."

There's a widespread consensus that TARP shored up confidence in the global financial sector and paved the way for a dramatic rebound in Wall Street profits.

"The end result is hard to debate," said Adam Sussman, research director at Tabb Group, a research firm. "The banks are more stable now than when TARP was initiated. Overall the efforts to restore financial stability have been successful by any measure."

But even some on Wall Street acknowledge that a secondary rationale offered for the infusions of government capital into banks -- that a restored financial sector would help the economy rebound -- hasn't panned out.

"This worked extraordinarily well for Wall Street, but it has failed utterly for the real world," said Don Putnam, managing partner at Grail Partners, a boutique investment bank in San Francisco.

TARP and other government programs breathed life into the financial markets, which boosted demand for basic Wall Street services such as stock trading, corporate capital raising and the construction of exotic, often lucrative financial instruments known as derivatives.

But some analysts worry because TARP didn't help banks purge the mountains of toxic assets that sparked the financial crisis, which could restrain their lending going forward.

"TARP has given us the illusion that the banks are on the mend," said Christopher Whalen, managing director of Institutional Risk Analytics in Torrance. "But the losses that banks face on some assets are going to be so big that the real economy is going to end up dying before the banks can heal themselves."

Not everyone is so glum.

Many see the resurgence of Wall Street as a crucial first step toward broader recovery. But the resuscitation of the banking industry could be short-lived if unemployment stays high and consumers remain wary of spending.

"The financial sector's recovery won't last unless there is a subsequent recovery in the broader economy," Sussman said. "So far what's happened has been good, but it doesn't mean we can breathe a sigh of relief yet."

For that reason, Zandi said the Obama administration should extend the TARP program, even if that limits the potential return to taxpayers.

"I don't think we can declare that the coast is clear," he said. "We need to have this as an insurance policy.


Copyright © 2009, The Los Angeles Times

Sharp intgegrating supply chain what does it mean?

Interesting article all about reducing cost. (ultimately to reduce price or deliver higher margin which could result in a higher dividend. Fosters (in Aussie) was doing this when I was with Oracle in the late 90's.

Sharp's New Plant Reinvents Japan Manufacturing Model

OSAKA—Sharp Corp.'s new production complex in western Japan is massive by any measure: It cost $11 billion to build and covers enough land to occupy 32 baseball stadiums. But it carries a meaning as large as its physical size. It's a litmus test for the future of Japanese high-tech manufacturing.
The facility, considered the most expensive manufacturing site ever built in Japan, started churning out liquid-crystal display panels last month, and Sharp's new flagship televisions featuring the energy-efficient LCD panels go on sale in the U.S. next month. Sharp moved forward the factory's planned opening by six months, saying the new plant would help it be more competitive.
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Sharp's new facility in Sakai city is considered the most expensive manufacturing site ever built in Japan.

"When you look to the next 10 or 20 years, the existing industrial model doesn't have a future," Toshihige Hamano, Sharp's executive vice president in charge of the Sakai facility, said in an interview. "We had to change the very concept of how to run a factory."
Located in Sakai city along Osaka prefecture's waterfront, the complex represents Japanese industry's biggest gamble in LCD panels to remain competitive with rivals from South Korea, Taiwan, and China.
The factory's size accommodates two main factors. One is the size of the glass used to make the LCDs. Sharp is using the industry's biggest, or "10th generation," sheets, which allow the company to produce 18 40-inch LCD panels from a single substrate—more than double the eight 40-inch panels per sheet it uses at its other LCD television panel-making factory.
The other factor: Sharp has decided to try and cut costs by moving suppliers on site, a kind of hyper-"just-in-time" delivery system.
The plant currently employs 2,000 people—roughly half from Sharp and half from its suppliers—although the work force will ultimately reach 5,000 as it adds production of solar panels as well.
It remains to be seen whether it makes sense for Sharp to keep seeking ever more-sophisticated production in Japan, or, as competitors have, to simply use less advanced production techniques at lower costs in places like China.
CLSA research analyst Atul Goyal warned in a report last month that the company is making a mistake by "chasing technology" with the new factory.
In the past, such efforts by Japanese electronics makers have resulted in costly capital investments, only to be confronted with limited appetite for cutting-edge technology and then eventually outflanked by a cheaper alternative.

Even Sharp's Mr. Hamano acknowledged that the company only gave the green light to proceed during a boom period for LCD-panel demand, and that a similar choice might not be made in today's market.
Rival Samsung Electronics Co. has said it is looking into building a new LCD-panel factory using even bigger glass sheets than Sharp, while LG Display Co. has said it plans to build a new factory in China using current glass size.
Sharp announced the Sakai project two years ago when LCD demand was surging and the company had produced five straight years of record profit. When consumer spending ground to a halt in late 2008, Sharp didn't cut costs and curb production quickly enough. Saddled with excess inventory, Sharp posted the first annual loss in nearly 60 years in the fiscal year ended March 31, 2009.
The experience taught Sharp a painful lesson that its supply chain needed to be leaner and its production more efficient, especially if the factory was going to be in Japan, where the strong yen and expensive labor force put the company at a disadvantage to its Asian competitors.
Sharp aims to streamline the costly LCD-panel production process by moving 17 outside suppliers and service providers inside its factory walls to work as "one virtual company."
In the past, Sharp kept suppliers within driving distance. Now they are all within the same facility. Supplies are sent not by truck from a nearby factory but by automated trolleys snaking from one building to another.
The suppliers, which include Asahi Glass Co. and Dai Nippon Printing Co., built and paid for their own facilities and are renting the land from Sharp.
Despite their location inside the plant, Sharp says its suppliers are permitted to sell their products to other companies.
At Sakai, Sharp has also linked its computer systems with suppliers so an order to the factory alerts suppliers right away. In the past, Sharp would email or call suppliers and place orders, creating a longer lag time.
Sharp wouldn't disclose how much, if any, cost savings will result from manufacturing LCD panels at Sakai, but analysts estimate a 5% to 10% savings.
Corning Inc. the world's largest maker of LCD glass substrates, built a factory next to Sharp's Sakai plant. Corning says the arrangement reduced total order cycle time from an average of one to two weeks to a matter of hours. Corning also says the proximity reduced the damage risk in transporting massive glass sheets on trucks.
While Sharp is a long-standing customer, Corning said it was concerned initially that building a factory on site would mean that it was "hitching its wagon" to Sharp since it's the only customer for such large glass substrates. Ultimately, Corning decided to proceed based on its faith in Sharp's Sakai plans.
"There's nothing like it anywhere," said James Clappin, president of Corning Display Technologies.
Write to Daisuke Wakabayashi at

Thursday, December 3, 2009

Companies going Vertical what does that mean?

Organic growth has stopped? Got to grow through acquisition and generate a greater margin ultimately to pay a dividend? mm wonder where we have seen that before?

Companies More Prone to Go 'Vertical'
• Article
Larry Ellison is known for forward thinking. With his new business model, though, the billionaire chief executive of software maker Oracle Corp. is taking a page from the past.
Mr. Ellison plans to buy Sun Microsystems Inc. and transform Oracle into a maker of software, computers, and computer components -- a company more like the U.S. conglomerates of the 1960s than the fragmented technology industry of recent years.

"It is back to the future," he told financial analysts in October.
Mr. Ellison is among the executives reviving "vertical integration," a 100-year-old strategy in which a company controls materials, manufacturing and distribution. Others moving recently in this direction include ArcelorMittal, PepsiCo Inc., General Motors Co. and Boeing Co.
The reasons vary. Arcelor, the world's largest steelmaker, wants more control over its raw materials. Pepsi wants more authority over distribution. GM and Boeing are moving by necessity, to assure quantity and quality of vital parts from troubled suppliers. Some are repurchasing businesses they only recently shed.
"The pendulum has shifted from disintegration to integration," says Harold Sirkin, global head of the Boston Consulting Group's operations practice. He attributes the change to volatile commodity prices, financial pressures at suppliers and quests for new revenue -- challenges exacerbated by the recession.
Just two years ago, for example, Mr. Ellison said Oracle would stick to its traditional focus on software. Computer hardware isn't "a business we have any ambitions in," he said then. In a September speech, he called that view "fundamentally wrong." Mr. Ellison declined to comment for this article.
The moves toward vertical integration are a departure from the past half-century, when companies increasingly specialized, shifting functions like manufacturing and procuring raw materials to others. Steelmakers in the 1980s sold their mining operations; in the 1990s, auto giants spun off their parts suppliers. Tech companies stopped making every piece of a computer system and specialized in chips, data storage or software.

The guiding principle was that specialization would boost efficiency and quality. Today, a typical corporate computer system might be assembled by Accenture PLC with data-storage systems from EMC Corp. and computers from Hewlett-Packard Co. that use chips from Intel Corp. to run Oracle software. Now, Oracle is trying to combine all those functions.
Others are pursuing similar strategies. Pepsi plans to repurchase bottlers it spun off in 1999. Back then, Pepsi executives wanted to focus on marketing and leave most operating decisions to the bottlers. Now, as consumers flock to noncarbonated beverages, Pepsi is keen to gain more control over the distribution of its growing menu of offerings, says spokeswoman Jenny Schiavone.
Such steps don't necessarily portend a return to the early-20th-century vertical conglomerates of Andrew Carnegie and Henry Ford. Then, Carnegie Steel Co. and Ford Motor Co. each owned iron-ore mines, while controlling everything from manufacturing to sales.
"The historical view of vertical integration was that you had complete control of the supply chain and that you could manage it the best," says Bain & Co. consultant Mark Gottfredson.
Today's approach is more nuanced. Companies are buying key parts of their supply chains, but most don't want end-to-end control.
Some moves may face resistance from regulators. The Federal Trade Commission, for example, is reviewing Pepsi's plan to buy its two largest bottlers. At the Justice Department, antitrust chief Christine Varney has signaled interest in scrutinizing vertical deals.
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Bloomberg News
Employees inspect steel rolls at an ArcelorMittal steel plant in Bremen, Germany, earlier this month. ArcelorMittal in the past two years has bought iron-ore and coal mines to insulate itself from fluctuating raw-materials prices and supply-chain disruptions.

Regulators in recent decades have blessed most vertical mergers on the grounds that they make firms more efficient, lower costs and benefit consumers, says M.J. Moltenbrey, an attorney with Howrey LLP in Washington, D.C. Instead, regulators have focused on preventing one company from dominating a specific market.
The European Union has moved to block Oracle's $7.4 billion acquisition of Sun on such grounds, fearing Oracle would have too much control of one software niche. (A spokeswoman for Oracle says the company sees no such conflict and is confident it will gain clearance for the deal.) The EU, however, hasn't expressed concern about Oracle's move into hardware.
While many companies, such as Coca-Cola Co. and Toyota Motor Corp., are content to stick to their current business models, others find they have little choice but to vertically integrate. In the past two years, Boeing bought a factory and a 50% stake in a joint venture that make parts for its troubled 787 Dreamliner jet. The moves partially reversed Boeing's aggressive outsourcing strategy to assemble the Dreamliner from parts made by hundreds of suppliers. Supply and assembly problems have knocked the Dreamliner more than two years behind schedule. Boeing CEO Jim McNerney says the company is still committed to outsourcing.
Likewise, GM in October took a minority stake in Delphi Automotive LLP, its biggest parts supplier, and purchased four factories and Delphi's steering business as the supplier emerged from bankruptcy. GM, which spun off Delphi in 1999, wanted to assure uninterrupted supply, a spokeswoman for the company says.
Johnson Controls Inc., another big auto-parts maker, last year bought a 70% stake in the interior-product business of bankrupt supplier Plastech Engineered Products Inc., to guarantee supply.
Several steelmakers are also embracing the shift, moving deeper into the raw-materials business that earlier steel companies exited. Arcelor has acquired mines in Brazil, Russia and the U.S. and expanded existing mining operations in recent years. Strategy head Bill Scotting says the Luxembourg company is trying to hedge against price fluctuations for iron ore and coal and supply-chain disruptions amid rising Chinese steel consumption and mining-industry consolidation.
"If you're buying fully from a market, you are relying on that market's supply chain," Mr. Scotting says.
Nucor Corp., which makes steel from recycled metal, last year bought a major scrap-metal processor. Nucor moved as scrap prices soared. Prices have since dipped, but Chief Executive Dan DiMicco says owning the supplier will help Nucor manage inventory more efficiently, eventually saving the company more than $100 million annually.
"Information on markets is extremely valuable in the scrap business," Mr. DiMicco says. By controlling supply, "you have more control over your own destiny."
Perhaps the most dramatic reversal is taking place in the tech industry, where specialization and outsourcing had dominated for decades.
Through the 1970s, computer makers such as International Business Machines Corp. also made the semiconductor "brains" of their machines, the data-storage devices and the software that made the computer useful. In 1969, the U.S. government, in a landmark antitrust suit, charged IBM with illegally bundling hardware, software and services to hinder rivals.
The government dropped the case in 1982. By then the evolution of technology had achieved what the lawsuit could not: IBM's mainframes were rivaled by less-expensive minicomputers and personal computers that ran on software from many vendors.
Oracle, founded by Mr. Ellison in 1977, quickly flourished in part because its database software could run on multiple types of computers, including IBM's. That allowed Oracle to also sell to companies that used computers from Digital Equipment Corp. and Honeywell International Inc.
The technological shift ushered in a period of innovation and specialization. Entrepreneurs devised software for particular tasks, such as word processing or accounting. Semiconductor companies, such as mobile-phone mainstay Qualcomm Inc., specialized in designing chips; they hired other firms to manufacture them.
A few years ago, the pendulum began swinging the other way. In 2005, Oracle started a strategy of buying other software makers. Last year, H-P acquired Electronic Data Systems Inc., which manages corporate computer systems, to strengthen its consulting arm and exert more control over a key sales channel. Rival Dell Inc. recently bought tech-services firm Perot Systems Inc. for similar reasons.
This month, H-P said it would buy 3Com Corp. for $2.7 billion to bolster its computer-networking unit. Rob Cihra, an analyst for Caris & Co., called the move an effort to "vertically re-integrate" to gain control over customers. An H-P spokeswoman declined to comment.
Apple Inc. last year moved to re-enter the semiconductor business after a two-decade hiatus, buying chip maker P.A. Semi and hiring chip engineers. By developing its own chips for new mobile devices -- a departure from the industry trajectory -- Apple hopes to tighten control over a key technology and keep it away from rivals, according to people familiar with the matter. An Apple spokesman said executives weren't available to comment.
At Oracle, Mr. Ellison's shift is among the industry's most pronounced. For 32 years, Mr. Ellison was a big proponent -- and beneficiary -- of specialization in what he called the "horizontal computer industry." Oracle's forte was business software to help companies run their operations more efficiently. The model generated big profits for Oracle, which avoided the expense of manufacturing computers.
With the Sun deal, Mr. Ellison scrapped that strategy. Now, he wants to sell "complete systems" made of chips, computers, storage devices and software from Oracle. Mr. Ellison is betting that the combination will appeal to corporate customers tired of assembling technology from multiple vendors.
Mr. Ellison himself invokes the old IBM. "We want to be T.J. Watson Jr.'s IBM," Mr. Ellison said in September, referring to IBM's president from 1952 to 1971. He said IBM in that era was "the greatest company in the history of enterprise in America" because its hardware and software ran most companies.
Sun was something of an anachronism that still made its own chips, storage devices, software and computers -- much like the old IBM. Over time, this diversification hurt Sun, which couldn't simultaneously keep pace with innovation from Intel, EMC, Microsoft Corp. and IBM. In today's changed tech landscape, Mr. Ellison sees those multiple product lines as assets.
His change of philosophy seems sudden. As recently as March, Oracle tried to buy only Sun's software products, according to a filing with the Securities and Exchange Commission. But when IBM neared a deal to buy Sun, Mr. Ellison decided he, too, wanted the whole company. Oracle won by offering $9.50 a share for Sun, or 10 cents a share more than IBM's bid.
During the meeting with analysts last month, Mr. Ellison said that he changed his mind quickly, calling the acquisition "opportunistic." Then, he set out to combine Sun's hardware with Oracle's software. Mr. Ellison recently unveiled such a computer, which he says searches data faster than rivals, and costs less. Oracle says it plans to make Sun computers with specialized software for tasks such as billing and managing retail stores.
Oracle will still sell software to customers that have H-P's computers, and Sun computers that will run software from its rivals. But Mr. Ellison has pledged to invest more in Sun's chips and other equipment than Sun did.
"We weren't in the hardware business, now we're diving in with both feet," Mr. Ellison said at the October event.
Noting Oracle was bucking a decades-long trend in the industry, Mr. Ellison said: "We're really brilliant, or we're idiots."
Write to Ben Worthen at, Cari Tuna at and Justin Scheck at

More from the Wall St Journal on Climate gate. (their words)

Climategate: Follow the Money
Climate change researchers must believe in the reality of global warming just as a priest must believe in the existence of God.

Last year, ExxonMobil donated $7 million to a grab-bag of public policy institutes, including the Aspen Institute, the Asia Society and Transparency International. It also gave a combined $125,000 to the Heritage Institute and the National Center for Policy Analysis, two conservative think tanks that have offered dissenting views on what until recently was called—without irony—the climate change "consensus."
To read some of the press accounts of these gifts—amounting to about 0.00027% of Exxon's 2008 profits of $45 billion—you might think you'd hit upon the scandal of the age. But thanks to what now goes by the name of climategate, it turns out the real scandal lies elsewhere.
Climategate, as readers of these pages know, concerns some of the world's leading climate scientists working in tandem to block freedom of information requests, blackball dissenting scientists, manipulate the peer-review process, and obscure, destroy or massage inconvenient temperature data—facts that were laid bare by last week's disclosure of thousands of emails from the University of East Anglia's Climate Research Unit, or CRU.
But the deeper question is why the scientists behaved this way to begin with, especially since the science behind man-made global warming is said to be firmly settled. To answer the question, it helps to turn the alarmists' follow-the-money methods right back at them.
Consider the case of Phil Jones, the director of the CRU and the man at the heart of climategate. According to one of the documents hacked from his center, between 2000 and 2006 Mr. Jones was the recipient (or co-recipient) of some $19 million worth of research grants, a sixfold increase over what he'd been awarded in the 1990s.
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Associated Press
Al Gore wins the 2007 Nobel Peace Prize: Doing well by doing good?

Why did the money pour in so quickly? Because the climate alarm kept ringing so loudly: The louder the alarm, the greater the sums. And who better to ring it than people like Mr. Jones, one of its likeliest beneficiaries?
Thus, the European Commission's most recent appropriation for climate research comes to nearly $3 billion, and that's not counting funds from the EU's member governments. In the U.S., the House intends to spend $1.3 billion on NASA's climate efforts, $400 million on NOAA's, and another $300 million for the National Science Foundation. The states also have a piece of the action, with California—apparently not feeling bankrupt enough—devoting $600 million to their own climate initiative. In Australia, alarmists have their own Department of Climate Change at their funding disposal.
And all this is only a fraction of the $94 billion that HSBC Bank estimates has been spent globally this year on what it calls "green stimulus"—largely ethanol and other alternative energy schemes—of the kind from which Al Gore and his partners at Kleiner Perkins hope to profit handsomely.
Supply, as we know, creates its own demand. So for every additional billion in government-funded grants (or the tens of millions supplied by foundations like the Pew Charitable Trusts), universities, research institutes, advocacy groups and their various spin-offs and dependents have emerged from the woodwork to receive them.
The Climate Emails
The Economics of Climate Change
Rigging a Climate 'Consensus'
Global Warming With the Lid Off
Climate Science and Candor
Today these groups form a kind of ecosystem of their own. They include not just old standbys like the Sierra Club or Greenpeace, but also Ozone Action, Clean Air Cool Planet, Americans for Equitable Climate Change Solutions, the Alternative Energy Resources Association, the California Climate Action Registry and so on and on. All of them have been on the receiving end of climate change-related funding, so all of them must believe in the reality (and catastrophic imminence) of global warming just as a priest must believe in the existence of God.
None of these outfits is per se corrupt, in the sense that the monies they get are spent on something other than their intended purposes. But they depend on an inherently corrupting premise, namely that the hypothesis on which their livelihood depends has in fact been proved. Absent that proof, everything they represent—including the thousands of jobs they provide—vanishes. This is what's known as a vested interest, and vested interests are an enemy of sound science.
Which brings us back to the climategate scientists, the keepers of the keys to the global warming cathedral. In one of the more telling disclosures from last week, a computer programmer writes of the CRU's temperature database: "I am very sorry to report that the rest of the databases seems to be in nearly as poor a state as Australia was. . . . Aarrggghhh! There truly is no end in sight. . . . We can have a proper result, but only by including a load of garbage!"
This is not the sound of settled science, but of a cracking empirical foundation. And however many billion-dollar edifices may be built on it, sooner or later it is bound to crumble.

Wednesday, December 2, 2009

From Wall St Journal Climate Scientist stands down. Is it a case of where there is smoke there is fire?

Boy this is almost as good as the Tiger Woods Drama!

* DECEMBER 2, 2009, 4:35 A.M. ET

Climate Scientist Steps Down
British Researcher Leaves Post Temporarily Amid Probe Sparked by Hacked Emails


The British scientist at the heart of a scandal over climate-change research temporarily stepped down Tuesday as director of a prominent research group amid an internal probe that follows the release of hacked emails involving him and other scientists.

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Getty Images

People in Copenhagen form the logo of a campaign to cut carbon emissions to 350 parts per million.

The University of East Anglia in the U.K. said Phil Jones, head of the university's Climatic Research Unit, had decided to step aside from the director's post.

The announcement comes less than a week before world leaders are set to meet for a climate summit in Copenhagen. The two-week conference, sponsored by the United Nations, is supposed to come up with tougher policies to curb greenhouse-gas emissions and slow global warming.

The need for such action has been buttressed in large part by research by Dr. Jones and his colleagues in East Anglia and around the world. But hackers recently stole emails and documents from the East Anglia center that suggested Dr. Jones and other like-minded scientists tried to squelch the views of dissenting researchers and advocated manipulating data.

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Bloomberg News

John Holdren, President Barack Obama's top science adviser, supports the view that global warming is man-made.

The fallout from the hacked emails is spreading beyond the U.K. Also Tuesday, Penn State University confirmed that Michael Mann -- a climate scientist on its faculty who figures prominently in the emails -- is under "inquiry" by the university.

Dr. Mann's work reconstructing historic global temperatures has, over the past decade, become a focal point of debate. Penn State said in a statement that its inquiry, which stems from disclosed emails written by Dr. Mann, is a preliminary step to determine whether a full investigation is needed. He didn't respond to requests for comment.

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European Pressphoto Agency

Sen. Barbara Boxer also supports the view that global warming is man-made.

On Wednesday, President Barack Obama's top science adviser -- John Holdren, a climate scientist who sent one email among those hacked and posted -- is due to testify on Capitol Hill. The House committee holding the hearing has billed it as a way to explore "the urgent, consensus view...that global warming is real, and the science indicates that it is getting worse." Dr. Holdren's office declined to comment. Dr. Holdren has long spoken of the "overwhelming" evidence of man-made global warming.

The emails have led to calls for probes into the state of climate science from U.S. politicians skeptical that humans are causing global warming. They have also drawn criticism from some high-profile environmentalists.

In one email, Dr. Jones suggested to Dr. Mann that they should try to keep out of scientific journals the research of scientists who challenge the idea of man-made global warming. We "will keep them out somehow -- even if we have to redefine what the peer-review literature is!" the email says.

The East Anglia institute that Dr. Jones headed has become a key player in building evidence for the U.N.'s argument that humans are behind global warming. In statements released by the institute in recent days, Dr. Jones has defended the integrity of the institute's scientific work, while saying that he and his colleagues "accept that some of the published emails do not read well."

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Getty Images

Sen. James Inhofe, a critic of the belief that global warming is man-made.

On Tuesday, Dr. Jones said the East Anglia institute couldn't continue to do its work with him as its director amid the controversy. "What is most important is that CRU continues its world leading research with as little interruption and diversion as possible," he said in the statement. "After a good deal of consideration," he wrote, he decided to step down from the director's job pending the investigation.

Longtime critics of the premise that humans are responsible for climate change cheered word of the move by Dr. Jones and the inquiry into Dr. Mann. "I think we're making headway," said Oklahoma's James Inhofe, the senior Republican on the Senate Environment and Public Works Committee.

On Tuesday, Mr. Inhofe sent a letter to the chairwoman of the Senate Environment and Public Works Committee, Barbara Boxer (D., Calif.), that called for hearings on whether any U.S. laws were broken by the scientists, or "any taxpayer-funded research deliberately obscured or manipulated." A spokesman for Ms. Boxer didn't immediately respond to a request for comment.
—Stephen Power contributed to this article.

Friday, November 27, 2009

Boy this global warming thing is really heating up as to that it is false!

Check this out I wonder how much is true? This is a very succinct view and summarizes different pieces of evidence that I have witnessed. Now this is on Russian TV so you could argue that this has been created to dispute Gores Global warming as they are going to have to pay a fortune to the west.

Wednesday, November 25, 2009

Boy the question of is global warming created by man other than by Al Gore seems to be heating up what do you think?

Thanks Bill and Mac for the link and article

IBD Editorials

E-Mails Of Climate Researchers Buttress Case Of Warming Fraud

Posted 11/23/2009 07:17 PM ET
Junk Science: Hacked e-mails from Britain's Climate Research Unit are only the latest evidence of climate fraud. Just ask NASA's James Hansen about the faking of climate data or EPA employees about the suppression of climate fact.
For years, noted scientists and other global warming skeptics have been accused of being on the take, their research tainted and funded by grants from Big Oil and other fossil-fuel interests.
Now, it turns out, it's the warm-mongers who are fudging the numbers and concealing the inconvenient truth.
We don't know who "Deep Throat" is. But according to an interview in Investigate Magazine's TGIF edition with Philip Jones, director of the Hadley Climate Research Unit at Britain's East Anglia University, the incriminating e-mails documenting collusion and fraud among top global warming scientists, including a few from Jones himself, are genuine.
In one e-mail sent to Michael Mann, director of Penn State University's Earth System Science Center, Raymond Bradley, a climatologist at the University of Massachusetts, and Malcolm Hughes, a professor of dendrochronology at the University of Arizona's Laboratory for Tree-Ring Research, Jones speaks of the "trick" of filling in gaps of data in order to hide evidence of temperature decline:
"I've just completed Mike's Nature trick of adding in the real temps to each series for the last 20 years (i.e., from 1981 onwards) and from 1961 for Keith's to hide the decline." Hide the decline? "Keith" is Keith Briffa of the Climate Research Unit, also involved in the bogus manipulation of data.
An e-mail from scientist Mick Kelly to Jones also speaks of manipulating data to hide the fact that Earth is actually cooling: "I'll maybe cut the last few points off the filtered curve before I give the talk again, as that's trending down as a result of the end effects and the recent coldish years."
In another e-mail to Mann from Kevin Trenberth of the National Center for Atmospheric Research, copied to Dr. James Hansen of NASA, Trenberth says: "Well, I have my own article on where the heck is global warming. We are asking that here in Boulder where we have broken records the past two days for the coldest days on record. We had 4 inches of snow."
Trenberth also says: "The fact is that we can't account for the lack of warming at the moment, and it is a travesty that we can't." He goes on to say that "the data is surely wrong. Our observing system is inadequate."
Well, that much is true. We have reported on information obtained by Anthony Watts of WattsUpWithThat on the inaccuracy of temperature-monitoring stations around the country and the screwy places these scientific stations are located. Daily temperature data are gathered by NOAA's National Climatic Data Center and the 1,221 or so weather observation stations it monitors around the country.
Watts and a few volunteers decided to check a few of them out. They found one station in Forest Grove, Ore., that stands just 10 feet from an air-conditioning exhaust vent. Another station in Roseburg, Ore., is on a rooftop near an AC unit. In Tahoe, Calif., one is near a drum where trash is burned.
When bad numbers aren't enough to show global warming, it's okay to just make them up. Hansen, the NASA scientist who began the climate scare, was himself caught fudging the numbers when he declared October 2008 the warmest October on record.
This despite the National Oceanic and Atmospheric Administration's registering of 63 local snowfall records and 115 lowest-ever temperatures for the month, and ranking it the 70th-warmest October in 114 years.
So how did Hansen claim it was the warmest October ever? As Christopher Booker wrote in the U.K.'s Telegraph: "The reason for the freak figures was that scores of temperature records from Russia and elsewhere were not based on October readings at all. Figures from the previous month had simply been carried over and repeated two months running."
As it turns out, Mann is the creator of the discredited "hockey stick" graph used in reports from the U.N.'s Intergovernmental Panel on Climate Change.
Bradley and Hughes were also involved in the famous graph, which purports to show a sudden and sharp spike in global temperatures the day man first dreamed of taking an SUV to the mall.
Canadian researchers and others have thoroughly debunked the hockey stick, finding serious problems with the study, including calculation errors, data used twice and a faulty computer program that produced a hockey stick out of whatever data were fed into it.
Their study also totally ignored major events such as the widely recognized Medieval Warm Period (about A.D. 800 to 1400) and the Little Ice Age (A.D. 1600 to 1850).
The warming debate was never over, only censored. We have noted how the Environmental Protection Agency has engaged in an ongoing cover-up of its own analyses of climate change and discouraged public dissent.
EPA lawyers Laurie Williams and Alan Zabel produced a video in which they said cap-and-trade is a "Big Lie" and carbon offsets are a "Big Rip-off." At the EPA's insistence, Zabel and Williams took down the video from their Web site, but not before it was copied and widely circulated.
Alan Carlin, senior research analyst at the EPA's National Center for Environmental Economics, dared to say, in essence, that Emperor Al Gore and his toadies at EPA were wearing no clothes.
After examining numerous global warming studies, Carlin, who holds a doctorate in economics with an undergraduate degree in physics, said his research showed that "available observable data ... invalidate the hypothesis" that humans cause dangerous global warming.
Timothy Ball, a former climatology professor at the University of Winnipeg who has received death threats for citing how Earth's history doesn't quite jibe with current prophecies of doom, says: "CO2 never was a problem, and all the machinations and deceptions exposed by these files prove that it was the greatest deception in history, but nobody is laughing."
Ball says he has "watched climate science hijacked and corrupted by this small group of scientists." "Surely," he says, "this is the death knell for the CRU, the IPCC, Kyoto and Copenhagen and the carbon credits shell game."
These inconvenient truths may be just the tip of the iceberg.

See also the Video

Tuesday, November 24, 2009

Texting and driving to be banned in FL so what?

Interesting after the 90's crash of the Stock market in Aussie they banned the use of cell phones! So what? you say. Just another data point of the similarity of what happened in Aussie in the 90's and what is happening here in the USA now.

Florida leaders push ban on texting while driving
By Steve Bousquet, Times/Herald Tallahassee Bureau
TALLAHASSEE — Gov. Charlie Crist and the state's top highway safety appointee endorsed a ban on texting while driving Tuesday, adding new momentum to an idea that has never taken hold in the Legislature.
At a Cabinet meeting, Crist politely prodded Julie Jones, the executive director of the Department of Highway Safety and Motor Vehicles, to support a texting ban.
"It's important that we do everything we can to make sure that our fellow Floridians are safe," Crist said. "The obvious danger of it (texting while driving) is absurd."
"We support limiting texting and driving," Jones told Crist and the Cabinet after he asked her to add the issue to the agency's 2010 legislative wish list.
Jones later told reporters that she senses a shift in public opinion in support of a crackdown on texting while driving as a result of a number of fatal accidents caused by texting behind the wheel.
More than a dozen bills on the issue have been filed for consideration in the spring 2010 session. Similar measures have rarely gotten even a committee hearing in past years.
Sen. Carey Baker, R-Eustis, a candidate for agriculture commissioner, has filed two bills to ban texting while driving.
"I think this year, something's going to pass," Baker said.
Fourteen states and the District of Columbia already ban texting while driving.
Information from the News Service of Florida was used in this report.

Tuesday, November 3, 2009

Some great quotes relevant to now!

Dad thanks for forwarding these on! What do you think Aivars?

Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
- Warren Buffett

I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.
- Warren Buffet again

The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.
- John Maynard Keynes

If you're having fun, you're probably not making any money. Good investing is boring.
- George Soros.

Under capitalism, man exploits man. Under communism, it's just the opposite.
- John Kenneth Galbraith

Let me tell you the story of the oil prospector who met St. Peter at the Pearly Gates. When told his occupation, St. Peter said, "Oh, I'm really sorry. You seem to meet all the tests to get into heaven. But we've got a terrible problem. See that cage over there? That's where we keep the oil prospectors waiting to get into heaven. And it's filled—we haven't got room for even one more." The oil prospector thought for a minute and said, "Would you mind if I just said four words to those folks?" "I can't see any harm in that," said St. Pete. So the old-timer cupped his hands and yelled out, "Oil discovered in hell!" Immediately, the oil prospectors wrenched the lock off the door of the cage and out they flew, flapping their wings as hard as they could for the lower regions. "You know, that's a pretty good trick," St. Pete said. "Move in. The place is yours. You've got plenty of room." The old fellow scratched his head and said, "No. If you don't mind, I think I'll go along with the rest of 'em. There may be some truth to that rumour after all.
- Benjamin Graham

Wednesday, October 28, 2009

More on is the USD weak?

The diminishing dollar

Oct 22nd 2009
From The Economist print edition

Why it’s unlikely to turn into a dangerous collapse

ONE of the few calamities that has not befallen the world economy during the past two years is a dollar crash. During the bubble era that preceded it, many (including The Economist) fretted that foreigners, tiring of America’s gaping external deficits, would send the greenback slumping and interest rates soaring. In fact, the opposite occurred. The crisis began within America, and the deeper it became, the more the dollar strengthened as fearful investors sought safety in Treasury bills. Between September 2008 (when Lehman Brothers failed) and March 2009 (when America’s stockmarkets hit bottom), the dollar rose by almost 13% on a trade-weighted basis.

That history is worth bearing in mind when assessing the latest bout of fretfulness about the dollar’s future. For the past six months the greenback has been sinking steadily, hitting a 14-month low against a basket of leading currencies and $1.50 to the euro this week. The slide has unnerved policymakers in economies whose currencies are rising (see article), notably Brazil, where a 2% tax on foreign capital inflows has been imposed. Coupled with the extraordinary looseness of American policy, the weak dollar has also revived fears of a currency crash. With the budget deficit in double digits and the Federal Reserve’s balance-sheet swollen, dollar bears are once again forecasting that the slide could become a rout and spell the end of America’s status as the world’s reserve currency.

This dollar declinism is overblown. It exaggerates the scale of the slide and misunderstands its cause. Much of the recent weakness simply reverses the earlier safe-haven flight to dollars, a sign of investors’ optimism about riskier assets rather than their fears about America’s currency. On a trade-weighted basis the dollar today is close to where it was before Lehman failed. Yields on Treasuries have not risen and spreads on riskier dollar assets continue to shrink. If investors were growing leerier of dollars, the opposite should have occurred.

Furthermore, a weaker dollar is what you would expect, given the relative cyclical weakness of America’s economy. Thanks to the hangover from its financial crisis, America’s recovery will be slower than that of other economies, especially emerging ones. That suggests America’s monetary policy will stay looser for longer, pushing the dollar down. A weaker dollar should also assist global economic rebalancing by helping to reorient America’s economy towards exports. So in general, it should help rather than hinder the global recovery.

Still worried after all these years

That does not mean the worriers’ fears are baseless. Three dangers remain. First, the dollar’s decline is distorted. The world’s most buoyant big economy, China, has kept its currency tied firmly to the greenback. This is stymieing the adjustment of China’s economy, fuelling dangerous domestic asset bubbles and placing an unnecessary burden on other, more flexible currencies. Second, America’s fiscal and monetary policies are unsustainable. The public-debt burden is set to double and, on today’s policies, will still be rising in a decade’s time. Third, the financial crisis has accelerated the relative shift of economic heft away from America—which will hasten the eventual erosion of the dollar’s dominance.

Even so, this is unlikely to provoke a sudden crisis. Although America’s fiscal mess will last for years, it is not acute (see article). Inflation will not soar suddenly. With neither the euro nor the yuan yet ready to usurp it, the dollar will not quickly lose its reserve-currency status. The lesson of the past year is that it is still a currency to flee to, not from. None of this absolves American policymakers from hard choices. But a dangerous collapse in the greenback is unlikely.

Monday, October 19, 2009

I remember lots of people here in Naples telling me that the reason why cement was so expensive was that it was going to China.

Well, Cement was not being Transported to china like that! Likewise after being in France this year, I was pondering why my cappuccino cost twice what it did in the United States. Many people told me that it was because Europe was more efficient than the United States, that Europe did not have the debt of the United States and that European countries where not printing money like drunken sailors etc etc. With that backdrop enjoy reading the following article. What do you think?


Crisis Leaves Europe in Slow Lane

Published: October 9, 2009

PARIS — Two years ago, Europe was growing more rapidly than the United States, and the Old Continent finally seemed prepared to tackle longstanding economic challenges like rigid labor markets, runaway government spending and a rapidly aging population.

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Michael Probst/Associated Press

Chancellor Angela Merkel of Germany has said there is no alternative to relying on exports for growth instead of consumers.

Worldwide trade imbalances have declined by almost half since the recession's beginning.

But as Asia and the United States emerge from the global economic crisis, Europe appears likely to be the world’s laggard, threatening a return to the dark days of “Eurosclerosis.” Leaders who once spoke optimistically of fundamental changes aimed at enhancing productivity have turned to the more prosaic tasks of protecting jobs and avoiding painful political choices.

“It’s worse than being back to Square 1,” said Gilles Moëc, a senior economist in London for Deutsche Bank.

And just when it is needed most, the political will to address Europe’s bigger economic problems seems absent, according to many experts across the region and around the world.

When he was elected president of France in 2007, Nicolas Sarkozy spoke of the need for a “rupture,” including the loosening of a highly regulated labor market to better compete in the global economy.

But now, “President Sarkozy has gone, if not 180 degrees, then at least 90 degrees in the opposite direction,” said Charles Wyplosz, director of the International Center for Monetary and Banking Studies in Geneva. “The things he talked about then still need to be done if we want to have growth, but the crisis has slowed some of the impetus for change.”

In Germany, Angela Merkel, who was elected last month to a second term as chancellor, has also avoided taking on the country’s powerful unions and its regional banks. She has embraced the “social market economy” and has insisted there is no alternative to relying on exports rather than consumers to drive growth.

In addition, her government has come under withering attack from elsewhere in Europe for providing billions of euros in aid to keep the automaker Opel at the possible expense of workers in Belgium, Britain and Spain.

With Europe plagued by huge manufacturing overcapacity, other automakers are likely to suffer further losses. After surging this year on cash-for-clunkers incentives in many countries, car sales in Western Europe are expected to drop 5 to 6 percent next year, according to Credit Suisse.

In Germany, where the automobile industry is as much a symbol as beer at Oktoberfest, Credit Suisse projects that sales to individual buyers will fall 21 percent, in contrast with an expected 18 percent increase in the United States.

It is not just the auto sector that is threatened: analysts also contend that recent stress tests applied to the Continent’s banks were not as effective as those used in the United States.

Despite losses on both American subprime debt and local loans in boom-to-bust economies in Spain, Ireland and the Baltics, “the banking system has not really been restructured,” said Nicolas Véron, a research fellow at Bruegel, a policy center in Brussels. As a result, Europe runs the risk of repeating Japan’s “lost decade” in the 1990s, when huge losses clogged bank balance sheets and inhibited new lending.

The slowdown is an abrupt reversal from the period leading up to the crisis. Ireland’s economy grew 5 percent a year from 1999 to 2007 and became known as the Celtic Tiger, while unemployment fell during sustained growth in Europe’s biggest economies, Germany and France.

Underscoring the new pessimism, new statistics released Wednesday showed a 0.2 percent contraction in the euro zone in the second quarter, worse than forecast.

“The Europeans are losing out,” said Simon Johnson, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “The Europeans are the biggest losers of the economic crisis, even though the home of subprime madness was the U.S.”

To be sure, the American economy is not out of the woods yet, either, with unemployment still on the rise, homeowners still burdened by mortgage debts and Washington offering few details about how it will cure its own huge government deficits.

But the euro’s recent surge against the dollar mostly reflects higher interest rates on the Continent rather than optimism about Europe’s prospects, and the stronger currency actually makes European exports less competitive globally.

Already, the euro zone’s share of world trade has slipped to 28 percent in 2008 from 31 percent in 2004, according to the World Trade Organization.

Economies in Spain, Ireland and Greece are all expected to keep shrinking in 2010, while the region’s economic powerhouse, Germany, ekes out a 0.3 percent gain, according to a bleak new outlook from the International Monetary Fund.

And there are signs that Europe’s anemic economic performance will translate into less political power. European countries had an outsize voice in the Group of 7, the world’s principal economic forum since the mid-1970s. But late last month, world leaders said that elite club would soon be eclipsed by the Group of 20, a much more global assembly that includes emerging economic giants like Brazil, China and India.

Though symbolic, the shift from the G-7 to the G-20 crystallized fears that the world economy would actually be steered by what C. Fred Bergsten, director of the Peterson Institute for International Economics, calls the G-2 — the United States and China. “Ideally, it would be the G-3, but Europe doesn’t speak with a single voice and they can’t coordinate and function the same way the U.S. and China can,” Mr. Bergsten said.

What is more, the economic crisis has also paralyzed European efforts to come to grips with longer-term factors inhibiting growth, like an aging work force and slowing population growth in many countries.

Over the next 25 years, Western Europe’s population is expected to increase just 0.7 percent, to 189.8 million, from its current 188.5 million, compared with a 20 percent increase in the United States over the same period, according to the United Nations. At the same time, the overall population is getting older across the region, from the Russian border to the Atlantic.

The best way to compensate for an aging population — and therefore fewer workers — is higher productivity. But that indicator, too, has been moving in the wrong direction. After rising smartly in the 1970s and 1980s, productivity in the last decade and a half has inched up 0.9 percent annually in Europe, compared to 1.7 percent in the United States, Mr. Moëc said.

“Productivity growth in the U.S. has not been spectacular lately, but it’s been much better than Europe, and the U.S. doesn’t have this massive demographic problem,” he said. “Until now, we thought of the demographic issue as theoretical, but it’s starting to bite.”

Over the long term, that is likely to require workers to rethink the generous social benefits, long vacations and early retirement plans they once took for granted.

Louise Richardson, 65, had planned to retire now as chief executive of the Older Women’s Network, a charity based in Dublin. She will now have to delay that at least two years because of the toll the financial crisis has taken on her retirement savings.

“I can’t retire. I can’t afford to,” said Ms. Richardson, a widow whose savings have dropped to 80,000 euros, or $118,000, from 240,000 euros over the last decade. “My pension’s been completely knocked off its trolley. The money was just swallowed up.”