Thursday, February 9, 2012


Thanks Juergen.  Aivars Lode


by Victor Davis Hanson
Hoover Institution, Stanford University
December 15, 2011

The rise of a German Europe began in 1914, failed twice, and has now ended in the victory of German power almost a century later. The Europe that Kaiser Wilhelm lost in 1918, and that Adolf Hitler destroyed in 1945, has at last been won by German Chancellor Angela Merkel without firing a shot.

Or so it seems from European newspapers, which now refer bitterly to a "Fourth Reich" and arrogant new Nazi "Gauleiters" who dictate terms to their European subordinates. Popular cartoons depict Germans with stiff-arm salutes and swastikas, establishing new rules of behavior for supposedly inferior peoples.

Millions of terrified Italians, Spaniards, Greeks, Portuguese and other Europeans are pouring their savings into German banks at the rate of $15 billion a month. A thumbs-up or thumbs-down from the euro-rich Merkel now determines whether European countries will limp ahead with new German-backed loans or default and see their standard of living regress to that of a half-century ago.

A worried neighbor, France, in schizophrenic fashion, as so often in the past, alternately lashes out at Britain for abandoning it and fawns on Germany toappease it. The worries in 1989 of British Prime Minister Margaret Thatcher and French President Fran├žois Mitterrand over German unification -- that neither a new European Union nor an old NATO could quite rein in German power -- proved true.

How did the grand dream of a "new Europe" end just 20 years later in a German protectorate -- especially given the not-so-subtle aim of the European Union to diffuse German ambitions through a continent-wide super-state?

Not by arms. Britain fights in wars all over the globe, from Libya to Iraq.France has the bomb. But Germany mostly stays within its borders -- without a nuke, a single aircraft carrier or a military base abroad.

Not by handouts. Germany poured almost $2 trillion of its own money into rebuilding an East Germany ruined by communism -- without help from others. To drive through southern Europe is to see new freeways, bridges, rail lines, stadiums and airports financed by German banks or subsidized by the German government.

Not by population size. Somehow, 120 million Greeks, Italians, Spaniards and Portuguese are begging some 80 million Germans to bail them out.

And not because of good fortune. Just 65 years ago, Berlin was flattened, Hamburg incinerated and Munich a shell -- in ways even Athens, Madrid, Lisbon and Rome were not.

In truth, German character -- so admired and feared in some 500 years of European literature and history -- led to the present Germanization of Europe. These days we recoil at terms like "national character" that seem tainted by the nightmares of the past. But no other politically correct exegesis offers better reasons why a booming Detroit of 1945 today looks like it was bombed, and a bombed-out Berlin of 1945 now is booming.

Germans on average worked harder and smarter than their European neighbors -- investing rather than consuming, saving rather than spending, and going to bed when others to the south were going to dinner. Recipients of their largesse bitterly complain that German banks lent them money to buy German products in a sort of 21st-century commercial serfdom. True enough, but that still begs the question why Berlin, and not Rome or Madrid, was able to pull off such lucrative mercantilism.

Where does all this lead? Right now to some great unknowns that terrify most of Europe. Will German industriousness and talent eventually translate into military dominance and cultural chauvinism -- as it has in the past? How, exactly, can an unraveling EU, or NATO, now "led from behind" by a disengaged United States, persuade Germany not to translate its overwhelming economic clout into political and military advantage?

Can poor European adolescents really obey their rich German parents? Berlin in essence has now scolded southern Europeans that if they still expect sophisticated medical care, high-tech appurtenances and plentiful consumer goods -- the adornments of a rich American and northern Europe lifestyle --then they have to start behaving in the manner of Germans, who produce such things and subsidize them for others.

In other words, an Athenian may still have his ultra-modern airport and subway, a Spaniard may still get a hip replacement, or a Roman may still enjoy his new Mercedes. But not if they still insist on daily siestas, dinner at 9 p.m., retirement in their early 50s, cheating on taxes, and a de facto 10 a.m. to 4 p.m. workday.

Behind all the EU's 11th-hour gobbledygook, Germany's new European order is clear: If you wish to live like a German, then you must work and save like a German. Take it or leave it.

December 15, 2011

Wednesday, February 8, 2012

This is why we are setting up a shipping exchange

Shipping Costs Have Plunged So Hard, Companies Are Now PAYING Customers To Use Their Boats

- Simone Foxman, Business Insider

We've been following recent plunges in the Baltic Dry Index—a measure or commodity shipping costs—because it's near its lowest value since August 1986.

Today Bloomberg reports that vessel operators have actually begun to transport goods for free and even cover some of clients' fuel costs on infrequently traveled routes, in particular on "backhaul" trips that move a boat from the Pacific to the more highly trafficked Atlantic.
In particular, the report cites Glencore International Plc, which shipped grains to Europe using a ship operated by Global Maritime Investments Ltd according to Bloomberg. Global Maritime Investments not only offered the trip for free but actually paid $2,000 per day in fuel costs.
That beats the cost of repositioning the ship without carrying a load. Global Maritime could have paid as much as $50,000 per day for fuel on the voyage.
The Baltic Dry Index generally serves as an indicator of economic activity, however it has lost that role in the last few years because so many vessels that were ordered before the financial crisis began are only now being put to use.
European Union, as it turns out, actually has high lending exposure to the shipping index, another stress that could exacerbate its already shaking financial system. Analysts estimate that European banks have about $500 billion in shipping loans on their books, and it would cost them about $100 billion to restructure them.
baltic dry index bdi since financial crisis
According to the FT, some analysts opine that the BDI has been an ineffective indicator of economic activity since the volume of ships dramatically increased starting in 2009.


Tuesday, February 7, 2012

Why Apple will pay a dividend

Not a surprise  to those reading my blog.

February 6, 2012: 3:10 PM ET

CEO Tim Cook has signalled a willingness to break with the past. Paying out some of its massive cash hoard could be his next big move.

FORTUNE -- The liquid securities alone on Apple's balance sheet, roughly $98 billion, would make it the 43rd most valuable company in the world. Apple's cash would rank it just behind McDonalds, an astounding and bizarre statement in the annals of modern cash management. No company in its right mind would keep $100 billion lying around. But then, as I've been arguing frequently of late, Apple is no normal company. It does just about everything differently, including how it socks away its money.
Apple's (AAPL) aversion to paying its cash, at least, may finally be coming to an end. A slim report issued last week by the wealth management group at UBS (UBS) contains a snippet that would be utterly unremarkable at any other company but is newsworthy for Apple. "We ... understand that management has been soliciting the opinions of large shareholders on the subject [of paying a dividend]," wrote UBS's Bob Faulkner. He went on to speculate that Apple would declare a dividend at its Feb. 23 annual meeting in Cupertino, Calif.
What's startling about this tidbit from Faulkner, who declined to comment further, is the notion of Apple soliciting anyone's opinion on anything, let alone the opinion of its investors. Apple has treated investors with about the same level of disdain it reserves for the press over the years. It is stingy with its time with shareholders and relatively uninterested, at least historically, with what investors think Apple should do with their money. In a way, it's a comically pure and admirable perspective. Apple thinks it knows better than someone on Wall Street how to spend Apple's money. And despite the howling from investors that Apple should give back some cash, it's hard to suggest Apple has been a poor steward of investor wealth.
And yet, what's becoming increasingly clear is that Apple has a success problem on its hands: It has run out of ways to responsibly spend its profits. It has never done what any other big company would view as a major acquisition. Silicon Valley investment bankers desperately would like to see Apple acquire Twitter, for example. But this would be so contrary to the Apple acquisition mindset that it's hard to imagine.
Apple CEO Tim Cook has taken the last half a year to begin to signal a willingness to reverse course on the dividend policy. Steve Jobs was famously paranoid about cash, having survived the experience of Apple nearly running out of money in 1997, when he returned to the company. Cook knows that insolvency isn't possible. So now Apple faces the same conundrum as Microsoft (MSFT) has faced, even as Apple continues to experience torrid growth. (Microsoft has dividended billions of dollars to shareholders in recent years.) Shortly after becoming CEO Cook said he wasn't "religious" about cash management. More recently he said Apple's management was "actively discussing" what to do about the cash.
Apple is famous for telling others what it will do. For once, it appears to be listening to what others want. Expect a dividend announcement sooner rather than later.
For more on Apple's secret systems, tactics and leadership strategies, read Inside Apple, available here.