CNBC Feature Program
Thursday, December 31, 2009
PG and E Faces Revolt Over Smart Grid Meters
Business Week
Consumer backlash and cost concerns may cause delays in the nationwide rollout of "smart" utility meters at the center of the Obama administration's $8 billion push to update the U.S. electricity grid.
PG&E Corp. (PCG), owner of California's largest utility, halted meter installations in Bakersfield, north of Los Angeles, after hundreds of customers complained that readings weren't accurate. The meters, part of a so-called smart-grid initiative billed as clearing the way for more renewable-energy use, are designed to help consumers conserve power during periods of peak demand.
Martha Johnson, pastor of a church in Bakersfield, said her utility bill almost doubled from a year earlier to $874 in July after her new meter was installed. "That caught my eye because I've never had a bill that high," said Johnson, 64.
San Francisco-based PG&E, which faces a lawsuit from a Bakersfield customer who's seeking class-action status, says its meters are accurate and hot weather and increased rates led to higher bills than consumers expected. The state Utilities Commission ordered an independent study of billing accuracy.
Whether PG&E's complaints stem from perception or defects, they may slow U.S. installations of the meters, a cornerstone of President Barack Obama's plan to spur grid upgrades with $8 billion in public-private funding. Consumer groups question whether benefits of the meters justify costs passed on when regulators allow utilities to increase rates to pay for them.
Regulator Reluctance
"If customers lose confidence in smart meters, I would expect regulators would be more reluctant to grant rate increases to install new meters across the system," said Travis Miller, a utility analyst at Morningstar Inc. (MORN) in Chicago. "Any kind of adverse impact from these projects could impact long-term growth of the meters."
The devices allow utilities to check energy use remotely, eliminating the need for employing meter readers. They can be connected to equipment that shows customers when rates are highest, allowing households and other consumers to shift power use to less costly periods. Smart meters also give utilities more control of demand, helping them match usage with renewable electricity flows, such as from wind and solar power.
There are about 8 million smart electric meters in the U.S., and that count will jump sevenfold by 2019, according to the Institute for Electric Efficiency in Washington.
"Other states are looking very closely at what is happening in California," said Mindy Spatt, a spokeswoman for the Utility Reform Network, a consumer group in San Francisco. "What we know for sure about the meters is they are job killers and they are very expensive. The rest is just pie in the sky."
Cost Objections
Utility-consumer groups across the country have raised cost concerns about meter projects, said Charles Acquard, executive director of the National Association of State Utility Consumer Advocates.
Ben Schuman, an analyst who covers such meter makers as Itron Inc. (ITRI) at Pacific Crest Securities in Portland, Oregon, said the devices installed so far have proved accurate. The unknown is whether consumers will use the technology to cut power costs, he said.
Liberty Lake, Washington-based Itron has risen 7.3 percent this year on the Nasdaq Stock Market, trailing a 45 percent jump by the Nasdaq Composite Index. Schuman has "sector perform" ratings on Itron and other makers of meter-related products, including Comverge Inc. (COMV), EnerNOC Inc. and Esco Technologies Inc. Comverge and EnerNoc have more than doubled in value this year. Esco has dropped 11 percent.
Duke Plan Rejected
Regulators in states such as Connecticut and Texas are pressing utilities to show how smart meters will benefit consumers. In November, Indiana regulators rejected a proposal by Duke Energy Corp. (DUK) to install about 800,000 smart meters after concluding the company didn't show the plan's long-term rewards.
Charlotte, North Carolina-based Duke, which got $200 million in federal funding to deploy smart meters and other equipment in three states, will reapply in January for approval in Indiana, company spokesman Dave Scanzoni said.
Fairfield, Connecticut-based General Electric Co. (GE) and Switzerland's Landis+Gyr are supplying the 10 million meters that PG&E plans to deploy at a cost of $2.2 billion.
Bakersfield resident Pete Flores filed suit in October, alleging that his bills almost tripled after a smart meter was put in. Lawyer Michael Kelly, who represents Flores, said he plans to file an updated suit with more plaintiffs in January.
California Case
"The allegations in the lawsuit are untrue," PG&E spokesman Paul Moreno said.
PG&E tested meters in Bakersfield and found they were working properly, Moreno said. The company is installing 12,000 to 15,000 meters a day in central California and the San Francisco area.
PG&E has investigated more than 400 customer complaints, mostly from Bakersfield and other areas where hot weather and rate increases as high as 22 percent caused power bills to surge, Moreno said. Bakersfield had 17 days above 100° Fahrenheit (38 Celsius) in July, up from six days a year earlier, according to the National Weather Service.
Mark Hura, smart-grid leader for GE, and Landis+Gyr spokesman Stan March said their meters read power usage within an accuracy range of 0.2 percent.
PG&E Corp. (PCG), owner of California's largest utility, halted meter installations in Bakersfield, north of Los Angeles, after hundreds of customers complained that readings weren't accurate. The meters, part of a so-called smart-grid initiative billed as clearing the way for more renewable-energy use, are designed to help consumers conserve power during periods of peak demand.
Martha Johnson, pastor of a church in Bakersfield, said her utility bill almost doubled from a year earlier to $874 in July after her new meter was installed. "That caught my eye because I've never had a bill that high," said Johnson, 64.
San Francisco-based PG&E, which faces a lawsuit from a Bakersfield customer who's seeking class-action status, says its meters are accurate and hot weather and increased rates led to higher bills than consumers expected. The state Utilities Commission ordered an independent study of billing accuracy.
Whether PG&E's complaints stem from perception or defects, they may slow U.S. installations of the meters, a cornerstone of President Barack Obama's plan to spur grid upgrades with $8 billion in public-private funding. Consumer groups question whether benefits of the meters justify costs passed on when regulators allow utilities to increase rates to pay for them.
Regulator Reluctance
"If customers lose confidence in smart meters, I would expect regulators would be more reluctant to grant rate increases to install new meters across the system," said Travis Miller, a utility analyst at Morningstar Inc. (MORN) in Chicago. "Any kind of adverse impact from these projects could impact long-term growth of the meters."
The devices allow utilities to check energy use remotely, eliminating the need for employing meter readers. They can be connected to equipment that shows customers when rates are highest, allowing households and other consumers to shift power use to less costly periods. Smart meters also give utilities more control of demand, helping them match usage with renewable electricity flows, such as from wind and solar power.
There are about 8 million smart electric meters in the U.S., and that count will jump sevenfold by 2019, according to the Institute for Electric Efficiency in Washington.
"Other states are looking very closely at what is happening in California," said Mindy Spatt, a spokeswoman for the Utility Reform Network, a consumer group in San Francisco. "What we know for sure about the meters is they are job killers and they are very expensive. The rest is just pie in the sky."
Cost Objections
Utility-consumer groups across the country have raised cost concerns about meter projects, said Charles Acquard, executive director of the National Association of State Utility Consumer Advocates.
Ben Schuman, an analyst who covers such meter makers as Itron Inc. (ITRI) at Pacific Crest Securities in Portland, Oregon, said the devices installed so far have proved accurate. The unknown is whether consumers will use the technology to cut power costs, he said.
Liberty Lake, Washington-based Itron has risen 7.3 percent this year on the Nasdaq Stock Market, trailing a 45 percent jump by the Nasdaq Composite Index. Schuman has "sector perform" ratings on Itron and other makers of meter-related products, including Comverge Inc. (COMV), EnerNOC Inc. and Esco Technologies Inc. Comverge and EnerNoc have more than doubled in value this year. Esco has dropped 11 percent.
Duke Plan Rejected
Regulators in states such as Connecticut and Texas are pressing utilities to show how smart meters will benefit consumers. In November, Indiana regulators rejected a proposal by Duke Energy Corp. (DUK) to install about 800,000 smart meters after concluding the company didn't show the plan's long-term rewards.
Charlotte, North Carolina-based Duke, which got $200 million in federal funding to deploy smart meters and other equipment in three states, will reapply in January for approval in Indiana, company spokesman Dave Scanzoni said.
Fairfield, Connecticut-based General Electric Co. (GE) and Switzerland's Landis+Gyr are supplying the 10 million meters that PG&E plans to deploy at a cost of $2.2 billion.
Bakersfield resident Pete Flores filed suit in October, alleging that his bills almost tripled after a smart meter was put in. Lawyer Michael Kelly, who represents Flores, said he plans to file an updated suit with more plaintiffs in January.
California Case
"The allegations in the lawsuit are untrue," PG&E spokesman Paul Moreno said.
PG&E tested meters in Bakersfield and found they were working properly, Moreno said. The company is installing 12,000 to 15,000 meters a day in central California and the San Francisco area.
PG&E has investigated more than 400 customer complaints, mostly from Bakersfield and other areas where hot weather and rate increases as high as 22 percent caused power bills to surge, Moreno said. Bakersfield had 17 days above 100° Fahrenheit (38 Celsius) in July, up from six days a year earlier, according to the National Weather Service.
Mark Hura, smart-grid leader for GE, and Landis+Gyr spokesman Stan March said their meters read power usage within an accuracy range of 0.2 percent.
Korea's KEPCO Wins Nuclear Contract Over GE, Hitachi
The Economist
IT IS usually the northerly of the two Koreas that attracts attention for its nuclear prowess. But on December 27th a South Korean consortium seized the limelight by winning a $20 billion contract to build four nuclear reactors in the United Arab Emirates. The consortium, led by Korea Electric Power (KEPCO), a state-controlled utility, could earn another $20 billion running the plants over their projected lifespan of 60 years.
Competition for the contract had been stiff. GE and Hitachi, two engineering giants, had launched a joint bid, as had a consortium led by France’s nuclear champion, Areva. France’s president, Nicolas Sarkozy, had lobbied energetically on behalf of the latter group. But South Korea’s president, Lee Myung-bak, was equally keen. As a former boss of Hyundai Construction, he has first-hand experience both of vying for contracts in the Gulf and of building nuclear plants. Mr Lee is said to have promised to share some tips on boosting manufacturing, a fond ambition of the Emirates.
But the chief allure of the Korean bid was price. It was reportedly billions of dollars cheaper than the others, albeit for smaller and less hardened plants. KEPCO’s nuclear subsidiary, which runs 20 nuclear plants in South Korea and plans to build 20 more, has a record of building reactors quickly and running them efficiently—unlike many of its Western counterparts. “We’re cheap, durable and dependable,” says Kevin Kang of KEPCO, which is also hoping to build reactors in India, Jordan and Turkey among other places. Although the consortium includes Westinghouse, a subsidiary of Toshiba of Japan, most of the technology is Korean. In developing countries, at least, the West’s nuclear giants face a formidable new rival.
Competition for the contract had been stiff. GE and Hitachi, two engineering giants, had launched a joint bid, as had a consortium led by France’s nuclear champion, Areva. France’s president, Nicolas Sarkozy, had lobbied energetically on behalf of the latter group. But South Korea’s president, Lee Myung-bak, was equally keen. As a former boss of Hyundai Construction, he has first-hand experience both of vying for contracts in the Gulf and of building nuclear plants. Mr Lee is said to have promised to share some tips on boosting manufacturing, a fond ambition of the Emirates.
But the chief allure of the Korean bid was price. It was reportedly billions of dollars cheaper than the others, albeit for smaller and less hardened plants. KEPCO’s nuclear subsidiary, which runs 20 nuclear plants in South Korea and plans to build 20 more, has a record of building reactors quickly and running them efficiently—unlike many of its Western counterparts. “We’re cheap, durable and dependable,” says Kevin Kang of KEPCO, which is also hoping to build reactors in India, Jordan and Turkey among other places. Although the consortium includes Westinghouse, a subsidiary of Toshiba of Japan, most of the technology is Korean. In developing countries, at least, the West’s nuclear giants face a formidable new rival.
Gold Once More Above $1,100
The Wall Street Journal
LONDON--Spot gold climbed back above $1,100 a troy ounce on the last trading day of the year Thursday, getting help from a weaker dollar and rising crude oil prices.
Gold will finish the year on a steadier footing after its steep tumble earlier in December, having bounced 5% since bottoming at a seven-week low Dec. 22. Its recovery will bring gold to a gain of 26% for all of 2009.
Spot gold was trading at $1,103.95 an ounce, up 1% on the day. Gold's recent recovery since tumbling over 12% in the first weeks of December has been accompanied by a modest rebound in the euro against the dollar, and a steep rally in crude oil prices.
Gold will finish the year on a steadier footing after its steep tumble earlier in December, having bounced 5% since bottoming at a seven-week low Dec. 22. Its recovery will bring gold to a gain of 26% for all of 2009.
Spot gold was trading at $1,103.95 an ounce, up 1% on the day. Gold's recent recovery since tumbling over 12% in the first weeks of December has been accompanied by a modest rebound in the euro against the dollar, and a steep rally in crude oil prices.
Its recovery will bring gold to a gain of 26% for all of 2009.
"I think the story of instability in the Middle East has pushed the price of oil higher, which translates to higher gold prices," said Afshin Nabavi, head of trading and physical sales at Swiss bullion trader MKS Finance.
While gold has regained a steadier footing, its direction at the start of 2010 will largely depend on whether or not the dollar will further strengthen.
But for the last trading day of the year, volumes will likely remain thin and volatility low.
"It's the last day of the year, I don't think a lot of people want to get fresh involvement," said Nabavi. At such a high price, now may actually be the time to trade gold for cash, rather than seeking gold as an investment.
In other precious metals, spot silver was 1.5% higher at $17.037 an ounce, spot platinum rose 0.6% to $1,460 an ounce and spot palladium was up 3% at $402 an ounce.
Palladium will end the year with the most upwards momentum. The metal has gained 15% since bottoming at a five-week low Dec. 22, the same day gold hit its bottom.
While gold has regained a steadier footing, its direction at the start of 2010 will largely depend on whether or not the dollar will further strengthen.
But for the last trading day of the year, volumes will likely remain thin and volatility low.
"It's the last day of the year, I don't think a lot of people want to get fresh involvement," said Nabavi. At such a high price, now may actually be the time to trade gold for cash, rather than seeking gold as an investment.
In other precious metals, spot silver was 1.5% higher at $17.037 an ounce, spot platinum rose 0.6% to $1,460 an ounce and spot palladium was up 3% at $402 an ounce.
Palladium will end the year with the most upwards momentum. The metal has gained 15% since bottoming at a five-week low Dec. 22, the same day gold hit its bottom.
$3.8 Billion More In TARP Aid Makes U.S. Majority Owner Of GMAC
USA Today
WASHINGTON — The government on Wednesday provided a fresh $3.8 billion cash infusion to stabilize GMAC Financial Services as the financing company struggles with hefty losses in its home mortgage unit.
The Treasury Department said the new aid, which comes from a taxpayer-financed bailout fund, is less than the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.
The fresh infusion is on top of $12.5 billion in taxpayer money Detroit-based GMAC has already received from the government. The new agreement will boost the federal government's ownership in GMAC to 56%, from 35%.
Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management. Still, with the additional stake, the government will have the right to appoint two additional directors to the company's board, Treasury officials said.
GMAC will continue to be subject to executive pay restrictions imposed by the government's pay czar.
Shoring up GMAC has been a major component of the Obama administration's massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles.
But GMAC also operates a large residential mortgage business, ResCap, which was battered by the recent housing collapse. GMAC was obligated by the Treasury Department to raise $11.5 billion in additional capital earlier this year after failing the government's stress test for banks, largely because of ResCap's big losses.
The stress tests were to see whether banks had enough capital even if the economy worsens next year. However, GMAC had difficulty raising money because of its financial woes, making an extra government infusion necessary.
Michael Carpenter, who succeeded Alvaro De Molina as the company's CEO in November, has said the company would need no more than $5.6 billion in aid. Lawmakers estimated the company would receive between $2 billion and $5 billion in additional aid.
Any additional government money would come from the $700 billion Troubled Asset Relief Program that has been used to bail out troubled financial institutions and automakers.
Even after the latest capital infusion, the government will likely take steps to help GMAC as it tries to ensure the recovery of GM and Chrysler, said Kirk Ludtke, senior vice president at CRT Capital Group. That includes helping GMAC refinance its debt as it comes due, he said.
"The government has come this far, it is not going to destabilize GMAC at this point," he said.
GMAC still remains on shaky financial ground. Last month, it reported a quarterly loss of $767 million, though the results were an improvement over a giant loss a year ago. ResCap lost $747 million during the third quarter as homeowners continued to default on their mortgages in large numbers.
GMAC, which also provides financing to car buyers, has also been hurt by the rapid decline of the U.S. auto industry after sales crumbled due to the recession and financial woes of the big automakers. Sales of cars and trucks were down 24% through November compared with the same part of last year. The industry is expected to sell around 10 million cars this year, one of the worst performances for autos sales in decades.
Despite the drop in auto sales, GMAC's auto lending business has shown some signs of revival. The auto financing division earned a profit of $395 million during the third quarter. The company's online consumer banking unit, Ally Bank, has also been a bright spot by bringing in billions of dollars in new deposits by offering relatively high interest rates. It now accounts for about 29% of GMAC's assets.
The Treasury Department said the new aid, which comes from a taxpayer-financed bailout fund, is less than the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.
The fresh infusion is on top of $12.5 billion in taxpayer money Detroit-based GMAC has already received from the government. The new agreement will boost the federal government's ownership in GMAC to 56%, from 35%.
Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management. Still, with the additional stake, the government will have the right to appoint two additional directors to the company's board, Treasury officials said.
GMAC will continue to be subject to executive pay restrictions imposed by the government's pay czar.
Shoring up GMAC has been a major component of the Obama administration's massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles.
But GMAC also operates a large residential mortgage business, ResCap, which was battered by the recent housing collapse. GMAC was obligated by the Treasury Department to raise $11.5 billion in additional capital earlier this year after failing the government's stress test for banks, largely because of ResCap's big losses.
The stress tests were to see whether banks had enough capital even if the economy worsens next year. However, GMAC had difficulty raising money because of its financial woes, making an extra government infusion necessary.
Michael Carpenter, who succeeded Alvaro De Molina as the company's CEO in November, has said the company would need no more than $5.6 billion in aid. Lawmakers estimated the company would receive between $2 billion and $5 billion in additional aid.
Any additional government money would come from the $700 billion Troubled Asset Relief Program that has been used to bail out troubled financial institutions and automakers.
Even after the latest capital infusion, the government will likely take steps to help GMAC as it tries to ensure the recovery of GM and Chrysler, said Kirk Ludtke, senior vice president at CRT Capital Group. That includes helping GMAC refinance its debt as it comes due, he said.
"The government has come this far, it is not going to destabilize GMAC at this point," he said.
GMAC still remains on shaky financial ground. Last month, it reported a quarterly loss of $767 million, though the results were an improvement over a giant loss a year ago. ResCap lost $747 million during the third quarter as homeowners continued to default on their mortgages in large numbers.
GMAC, which also provides financing to car buyers, has also been hurt by the rapid decline of the U.S. auto industry after sales crumbled due to the recession and financial woes of the big automakers. Sales of cars and trucks were down 24% through November compared with the same part of last year. The industry is expected to sell around 10 million cars this year, one of the worst performances for autos sales in decades.
Despite the drop in auto sales, GMAC's auto lending business has shown some signs of revival. The auto financing division earned a profit of $395 million during the third quarter. The company's online consumer banking unit, Ally Bank, has also been a bright spot by bringing in billions of dollars in new deposits by offering relatively high interest rates. It now accounts for about 29% of GMAC's assets.
$12.1 Trillion In Debt Places U.S. In Fiscal Peril
USA Today
After $787 billion in stimulus spending and $700 billion in bank bailouts, 2010 is fast shaping up to be the year of the federal budget diet.
Bipartisan support is growing in Congress for action to stabilize the nation's bulging debt, which is now $12.1 trillion. Influential experts from former Federal Reserve Board chairman Alan Greenspan to former comptroller general David Walker have joined the cause.
The public debt is the amount owed to individual investors, including foreign countries, but excluding money the government owes to its own trust funds. It has soared from $5.8 trillion to $7.6 trillion this year alone — and is more than half the size of the nation's economy for the first time since 1956.
Without action to reduce that unprecedented rise in red ink, lawmakers and experts say, Washington risks a fiscal crisis. The Congressional Budget Office projects annual interest on the public debt would be about $800 billion by 2019, but the Heritage Foundation's Brian Riedl and other analysts estimate it could surpass $1 trillion by then. Foreign creditors could refuse to buy more Treasury securities.
The focus is on the White House as President Obama prepares his State of the Union address and 2011 budget. Lawmakers and lobbyists seeking to cut the record $1.4 trillion budget deficit and stabilize the debt want Obama to back the creation of a commission that would recommend spending cuts and tax increases and require a vote by Congress. It's a process that has worked since the 1980s on military base closings.
Task force proposed
"This is a defining moment for this chamber, for this Congress, for this administration," said Sen. Kent Conrad, D-N.D., who came to Washington in 1986 when the deficit and debt were one-sixth their current size. "It is imperative that we find a way to deal with this debt threat."
Thirty-four senators so far favor creating a task force whose recommendations Congress would have to approve or reject. House Majority Leader Steny Hoyer and other House Democrats want to guarantee that every tax cut or increase in government benefits doesn't add to the deficit. The Peterson-Pew Commission on Budget Reform, a non-partisan group led by former representatives Bill Frenzel, Charles Stenholm and Tim Penny— a Republican, Democrat and independent — want to set future debt targets and enforce them with automatic spending cuts and tax hikes.
What's unusual is the number of proposals, the clout of lawmakers supporting them and the admission by Obama and congressional leaders such as Speaker Nancy Pelosi that the rising debt should be a priority. Greenspan, who presided over a commission in 1983 that helped rescue Social Security from looming bankruptcy, added his authoritative voice to the cause last week.
"The challenge to contain this threat is more urgent than at any time in our history," Greenspan said. "Our nation has never before had to confront so formidable a fiscal crisis as is now visible just over the horizon."
The administration is examining options as it prepares its second budget, to be unveiled Feb. 1.
"We share the concerns that all these members have ... in trying to bring down deficits and put us on a fiscally sustainable path," said Kenneth Baer, spokesman for the White House budget office. "We're looking at a whole range of stuff."
Who's to blame for the soaring debt is a matter of debate. Much of it is on autopilot, fueled by ever-rising costs to sustain Medicare, Medicaid and Social Security, the nation's three most expensive entitlement programs.
The White House says it inherited the problem from the Bush administration, citing the cost of two major tax cuts, two wars, a recession that began two years ago and a bailout of financial institutions. House Republican leader John Boehner and others in his party blame the $787 billion economic stimulus package passed in February and increases in this year's spending bills.
"We've seen American families and small businesses struggling all year in a very difficult economy, and all they've gotten from Democrats here in Washington is more spending and more debt piled on the backs of their kids and grandkids," Boehner said.
The cumulative debt has surpassed annual deficits as the greatest concern. The public debt could be 61% of the economy next year, growing to 70% by 2013 and 85% by 2018 if current tax and spending policies are continued, according to the Peterson-Pew Commission.
Sen. Evan Bayh, D-Ind., and a dozen colleagues threatened in December to block a nearly $2 trillion increase in the nation's debt limit — the amount of money it's allowed to borrow. Congress eventually passed a much smaller increase of $290 billion that will last only until February.
"Democrats tend to want to spend more than we can afford, Republicans tend to want to cut taxes more than we can afford, and our kids pick up the bill," Bayh said.
'The problem is the problem'
When the debt limit must be raised again in February, a dozen senators led by Conrad and Sen. Judd Gregg, R-N.H., plan to block action unless they get a vote on their commission. Their threat is forcing opponents, such as Pelosi, to signal a compromise.
"We will come to terms on a commission," Pelosi predicted last week, though its power to force Congress to vote remains in doubt. Noting Congress passed deficit-reduction packages three times in the 1990s, she said, "We know how to do it. We will do it again. And, of course, we will have to make a judgment about the priorities."
Senate Finance Committee Chairman Max Baucus, D-Mont., belittles the need for a commission to take over Congress' responsibilities. "The process is not the problem," he said, quoting former Congressional Budget Office director Rudy Penner. "The problem is the problem."
Bipartisan support is growing in Congress for action to stabilize the nation's bulging debt, which is now $12.1 trillion. Influential experts from former Federal Reserve Board chairman Alan Greenspan to former comptroller general David Walker have joined the cause.
The public debt is the amount owed to individual investors, including foreign countries, but excluding money the government owes to its own trust funds. It has soared from $5.8 trillion to $7.6 trillion this year alone — and is more than half the size of the nation's economy for the first time since 1956.
Without action to reduce that unprecedented rise in red ink, lawmakers and experts say, Washington risks a fiscal crisis. The Congressional Budget Office projects annual interest on the public debt would be about $800 billion by 2019, but the Heritage Foundation's Brian Riedl and other analysts estimate it could surpass $1 trillion by then. Foreign creditors could refuse to buy more Treasury securities.
The focus is on the White House as President Obama prepares his State of the Union address and 2011 budget. Lawmakers and lobbyists seeking to cut the record $1.4 trillion budget deficit and stabilize the debt want Obama to back the creation of a commission that would recommend spending cuts and tax increases and require a vote by Congress. It's a process that has worked since the 1980s on military base closings.
Task force proposed
"This is a defining moment for this chamber, for this Congress, for this administration," said Sen. Kent Conrad, D-N.D., who came to Washington in 1986 when the deficit and debt were one-sixth their current size. "It is imperative that we find a way to deal with this debt threat."
Thirty-four senators so far favor creating a task force whose recommendations Congress would have to approve or reject. House Majority Leader Steny Hoyer and other House Democrats want to guarantee that every tax cut or increase in government benefits doesn't add to the deficit. The Peterson-Pew Commission on Budget Reform, a non-partisan group led by former representatives Bill Frenzel, Charles Stenholm and Tim Penny— a Republican, Democrat and independent — want to set future debt targets and enforce them with automatic spending cuts and tax hikes.
What's unusual is the number of proposals, the clout of lawmakers supporting them and the admission by Obama and congressional leaders such as Speaker Nancy Pelosi that the rising debt should be a priority. Greenspan, who presided over a commission in 1983 that helped rescue Social Security from looming bankruptcy, added his authoritative voice to the cause last week.
"The challenge to contain this threat is more urgent than at any time in our history," Greenspan said. "Our nation has never before had to confront so formidable a fiscal crisis as is now visible just over the horizon."
The administration is examining options as it prepares its second budget, to be unveiled Feb. 1.
"We share the concerns that all these members have ... in trying to bring down deficits and put us on a fiscally sustainable path," said Kenneth Baer, spokesman for the White House budget office. "We're looking at a whole range of stuff."
Who's to blame for the soaring debt is a matter of debate. Much of it is on autopilot, fueled by ever-rising costs to sustain Medicare, Medicaid and Social Security, the nation's three most expensive entitlement programs.
The White House says it inherited the problem from the Bush administration, citing the cost of two major tax cuts, two wars, a recession that began two years ago and a bailout of financial institutions. House Republican leader John Boehner and others in his party blame the $787 billion economic stimulus package passed in February and increases in this year's spending bills.
"We've seen American families and small businesses struggling all year in a very difficult economy, and all they've gotten from Democrats here in Washington is more spending and more debt piled on the backs of their kids and grandkids," Boehner said.
The cumulative debt has surpassed annual deficits as the greatest concern. The public debt could be 61% of the economy next year, growing to 70% by 2013 and 85% by 2018 if current tax and spending policies are continued, according to the Peterson-Pew Commission.
Sen. Evan Bayh, D-Ind., and a dozen colleagues threatened in December to block a nearly $2 trillion increase in the nation's debt limit — the amount of money it's allowed to borrow. Congress eventually passed a much smaller increase of $290 billion that will last only until February.
"Democrats tend to want to spend more than we can afford, Republicans tend to want to cut taxes more than we can afford, and our kids pick up the bill," Bayh said.
'The problem is the problem'
When the debt limit must be raised again in February, a dozen senators led by Conrad and Sen. Judd Gregg, R-N.H., plan to block action unless they get a vote on their commission. Their threat is forcing opponents, such as Pelosi, to signal a compromise.
"We will come to terms on a commission," Pelosi predicted last week, though its power to force Congress to vote remains in doubt. Noting Congress passed deficit-reduction packages three times in the 1990s, she said, "We know how to do it. We will do it again. And, of course, we will have to make a judgment about the priorities."
Senate Finance Committee Chairman Max Baucus, D-Mont., belittles the need for a commission to take over Congress' responsibilities. "The process is not the problem," he said, quoting former Congressional Budget Office director Rudy Penner. "The problem is the problem."
Wednesday, December 30, 2009
Ten Technology Trends For The Next Decade
Institute For Ethics And Emerging Technologies
What can we expect as we enter the second decade of the twenty first century? What are the emerging technology trends that are going to be hitting the headlines over the next ten years?
Ten years ago, at the close of the 20th century, people the world over were obsessing about the millennium bug – an unanticipated glitch arising from an earlier technology. I wonder how clear it was then that, despite this storm in what turned out to be a rather small teacup, the following decade would see unprecedented advances in technology – the mapping of the human genome, social media, nanotechnology, space-tourism, face transplants, hybrid cars, global communications, digital storage, and more. Looking back, it’s clear that despite a few hiccups, emerging technologies are on a roll – one that’s showing no sign of slowing down.
Here’s my list of the top ten technologies I think are worth watching. I’m afraid that, as with all crystal ball gazing, it’s bound to be flawed. Yet as I work on the opportunities and challenges of emerging technologies, these do seem to be areas that are ripe for prime time.
Geoengineering
2009 was the year that geoengineering moved from the fringe to the mainstream. The idea of engineering the climate on a global scale has been around for a while. But as the penny has dropped that we may be unable – or unwilling – to curb carbon dioxide emissions sufficiently to manage global warming, geoengineering has risen up the political agenda. My guess is that the next decade will see the debate over geoengineering intensify. Research will lead to increasingly plausible and economically feasible ways to tinker with the environment. At the same time, political and social pressure will grow – both to put plans into action (whether multi- or unilaterally), and to limit the use of geoengineering. The big question is whether globally-coordinated efforts to develop and use the technology in a socially and politically responsible way emerge, or whether we end up with an ugly – and potentially disastrous – free for all.
Ten years ago, at the close of the 20th century, people the world over were obsessing about the millennium bug – an unanticipated glitch arising from an earlier technology. I wonder how clear it was then that, despite this storm in what turned out to be a rather small teacup, the following decade would see unprecedented advances in technology – the mapping of the human genome, social media, nanotechnology, space-tourism, face transplants, hybrid cars, global communications, digital storage, and more. Looking back, it’s clear that despite a few hiccups, emerging technologies are on a roll – one that’s showing no sign of slowing down.
Here’s my list of the top ten technologies I think are worth watching. I’m afraid that, as with all crystal ball gazing, it’s bound to be flawed. Yet as I work on the opportunities and challenges of emerging technologies, these do seem to be areas that are ripe for prime time.
Geoengineering
2009 was the year that geoengineering moved from the fringe to the mainstream. The idea of engineering the climate on a global scale has been around for a while. But as the penny has dropped that we may be unable – or unwilling – to curb carbon dioxide emissions sufficiently to manage global warming, geoengineering has risen up the political agenda. My guess is that the next decade will see the debate over geoengineering intensify. Research will lead to increasingly plausible and economically feasible ways to tinker with the environment. At the same time, political and social pressure will grow – both to put plans into action (whether multi- or unilaterally), and to limit the use of geoengineering. The big question is whether globally-coordinated efforts to develop and use the technology in a socially and politically responsible way emerge, or whether we end up with an ugly – and potentially disastrous – free for all.
Smart grids
It may not be that apparent to the average consumer, but the way that electricity is generated, stored and transmitted is under immense strain. As demand for electrical power grows, a radical rethink of the power grid is needed if we are to get electricity to where it is needed, when it is needed. And the solution most likely to emerge as the way forward over the next ten years is the Smart Grid. Smart grids connect producers of electricity to users through an interconnected “intelligent” network. They allow centralized power stations to be augmented with – and even replaced by – distributed sources such as small-scale wind farms and domestic solar panels. They route power from where there is excess being generated to where there is excess demand. And they allow individuals to become providers as well as consumers – feeding power into the grid from home-installed generators, while drawing from the grid when they can’t meet their own demands. The result is a vastly more efficient, responsive and resilient way of generating and supplying electricity. As energy demands and limits on greenhouse gas emissions hit conventional electricity grids over the next decade, expect to see smart grids get increasing attention.
Radical materials
Good as they are, most of the materials we use these days are flawed – they don’t work as well as they could. And usually, the fault lies in how the materials are structured at the atomic and molecular scale. The past decade has seen some amazing advances in our ability to engineer materials with increasing precision at this scale. The result is radical materials – materials that far outperform conventional materials in their strength, lightness, conductivity, ability to transmit heat, and a whole host of other characteristics. Many of these are still at the research stage. But as demands for high performance materials continue to increase everywhere from medical devices to advanced microprocessors and safe, efficient cars to space flight, radical materials will become increasingly common. In particular, watch out for products based on carbon nanotubes. Commercial use of this unique material has had it’s fair share of challenges over the past decade. But I’m anticipating many of these will be overcome over the next ten years, allowing the material to achieve at least some of it’s long-anticipated promise.
It may not be that apparent to the average consumer, but the way that electricity is generated, stored and transmitted is under immense strain. As demand for electrical power grows, a radical rethink of the power grid is needed if we are to get electricity to where it is needed, when it is needed. And the solution most likely to emerge as the way forward over the next ten years is the Smart Grid. Smart grids connect producers of electricity to users through an interconnected “intelligent” network. They allow centralized power stations to be augmented with – and even replaced by – distributed sources such as small-scale wind farms and domestic solar panels. They route power from where there is excess being generated to where there is excess demand. And they allow individuals to become providers as well as consumers – feeding power into the grid from home-installed generators, while drawing from the grid when they can’t meet their own demands. The result is a vastly more efficient, responsive and resilient way of generating and supplying electricity. As energy demands and limits on greenhouse gas emissions hit conventional electricity grids over the next decade, expect to see smart grids get increasing attention.
Radical materials
Good as they are, most of the materials we use these days are flawed – they don’t work as well as they could. And usually, the fault lies in how the materials are structured at the atomic and molecular scale. The past decade has seen some amazing advances in our ability to engineer materials with increasing precision at this scale. The result is radical materials – materials that far outperform conventional materials in their strength, lightness, conductivity, ability to transmit heat, and a whole host of other characteristics. Many of these are still at the research stage. But as demands for high performance materials continue to increase everywhere from medical devices to advanced microprocessors and safe, efficient cars to space flight, radical materials will become increasingly common. In particular, watch out for products based on carbon nanotubes. Commercial use of this unique material has had it’s fair share of challenges over the past decade. But I’m anticipating many of these will be overcome over the next ten years, allowing the material to achieve at least some of it’s long-anticipated promise.
Synthetic biology
Ten years ago, few people had heard of the term “synthetic biology.” Now, scientists are able to synthesize the genome of a new organism from scratch, and are on the brink of using it to create a living bacteria. Synthetic biology is about taking control of DNA – the genetic code of life – and engineering it, much in the same way a computer programmer engineers digital code. It’s arisen in part as the cost of reading and synthesizing DNA sequences has plummeted. But it is also being driven by scientists and engineers who believe that living systems can be engineered in the same way as other systems. In many ways, synthetic biology represents the digitization of biology. We can now “upload” genetic sequences into a computer, where they can be manipulated like any other digital data. But we can also “download” them back into reality when we have finished playing with them – creating new genetic code to be inserted into existing – or entirely new – organisms. This is still expensive, and not as simple as many people would like to believe – we’re really just scratching the surface of the rules that govern how genetic code works. But as the cost of DNA sequencing and synthesis continues to fall, expect to see the field advance in huge leaps and bounds over the next decade. I’m not that optimistic about us cracking how the genetic code works in great detail by 2020 – the more we learn at the moment, the more we realize we don’t know. However, I have no doubt that what we do learn will be enough to ensure synthetic biology is a hot topic over the next decade. In particular, look out for synthesis of the first artificial organism, the development and use of “BioBricks” – the biological equivalent of electronic components – and the rise of DIY-biotechnology.
Ten years ago, few people had heard of the term “synthetic biology.” Now, scientists are able to synthesize the genome of a new organism from scratch, and are on the brink of using it to create a living bacteria. Synthetic biology is about taking control of DNA – the genetic code of life – and engineering it, much in the same way a computer programmer engineers digital code. It’s arisen in part as the cost of reading and synthesizing DNA sequences has plummeted. But it is also being driven by scientists and engineers who believe that living systems can be engineered in the same way as other systems. In many ways, synthetic biology represents the digitization of biology. We can now “upload” genetic sequences into a computer, where they can be manipulated like any other digital data. But we can also “download” them back into reality when we have finished playing with them – creating new genetic code to be inserted into existing – or entirely new – organisms. This is still expensive, and not as simple as many people would like to believe – we’re really just scratching the surface of the rules that govern how genetic code works. But as the cost of DNA sequencing and synthesis continues to fall, expect to see the field advance in huge leaps and bounds over the next decade. I’m not that optimistic about us cracking how the genetic code works in great detail by 2020 – the more we learn at the moment, the more we realize we don’t know. However, I have no doubt that what we do learn will be enough to ensure synthetic biology is a hot topic over the next decade. In particular, look out for synthesis of the first artificial organism, the development and use of “BioBricks” – the biological equivalent of electronic components – and the rise of DIY-biotechnology.
Personal genomics
Closely related to the developments underpinning synthetic biology, personal genomics relies on rapid sequencing and interpretation of an individual’s genetic sequence. The Human Genome Project – completed in 2001 – cost taxpayers around $2.7 billion dollars, and took 13 years to complete. In 2007, James Watson’s genome was sequenced in 2 months, at a cost of $2 million. In 2009, Complete Genomics were sequencing personal genomes at less than $5,000 a shot. One thousand dollar personal genomes are now in the cards for the near future – with the possibility of substantially faster/cheaper services by the end of the decade. What exactly people are going to do with all these data is anyone’s guess at this point – especially as we still have a long way to go before we can make sense of huge sections of the human genome. Add to this the complication of epigenetics, where external factors lead to changes in how genetic information is decoded which can pass from generation to generation, and and it’s uncertain how far personal genomics will progress over the next decade. What aren’t in doubt though are the personal, social and economic driving forces behind generating and using this information. These are likely to underpin a growing market for personal genetic information over the next decade – and a growing number of businesses looking to capitalize on the data.
Bio-interfaces
Blurring the boundaries between individuals and machines has long held our fascination. Whether it’s building human-machine hybrids, engineering high performance body parts or interfacing directly with computers, bio-interfaces are the stuff of our wildest dreams and worst nightmares. Fortunately, we’re still a world away from some of the more extreme imaginings of science fiction – we won’t be constructing the prototype of Star Trek Voyager’s Seven of Nine anytime soon. But the sophistication with which we can interface with the human body is fast reaching the point where rapid developments should be anticipated. As a hint of things to come, check out the Luke Arm from Deka (founded by Dean Kamen). Or Honda’s work on Brain Machine Interfaces. Over the next decade, the convergence of technologies like Information Technology, nanoscale engineering, biotechnology and neurotechnology are likely to lead to highly sophisticated bio-interfaces. Expect to see advances in sensors that plug into the brain, prosthetic limbs that are controlled from the brain, and even implants that directly interface with the brain. My guess is that some of the more radical developments in bio-interfaces will probably occur after 2020. But a lot of the groundwork will be laid over the next ten years.
Data interfaces
The amount of information available through the internet has exploded over the past decade. Advances in data storage, transmission and processing have transformed the internet from a geek’s paradise to a supporting pillar of 21st century society. But while the last ten years have been about access to information, I suspect that the next ten will be dominated by how to make sense of it all. Without the means to find what we want in this vast sea of information, we are quite literally drowning in data. And useful as search engines like Google are, they still struggle to separate the meaningful from the meaningless. As a result, my sense is that over the next decade we will see some significant changes in how we interact with the internet. We’re already seeing the beginnings of this in websites like Wolfram Alpha that “computes” answers to queries rather than simply returning search hits, or Microsoft’s Bing, which helps take some of the guesswork out of searches. Then we have ideas like The Sixth Sense project at the MIT Media Lab, which uses an interactive interface to tap into context-relevant web information. As devices like phones, cameras, projectors, TV’s, computers, cars, shopping trolleys, you name it, become increasingly integrated and connected, be prepared to see rapid and radical changes in how we interface with and make sense of the web.
Closely related to the developments underpinning synthetic biology, personal genomics relies on rapid sequencing and interpretation of an individual’s genetic sequence. The Human Genome Project – completed in 2001 – cost taxpayers around $2.7 billion dollars, and took 13 years to complete. In 2007, James Watson’s genome was sequenced in 2 months, at a cost of $2 million. In 2009, Complete Genomics were sequencing personal genomes at less than $5,000 a shot. One thousand dollar personal genomes are now in the cards for the near future – with the possibility of substantially faster/cheaper services by the end of the decade. What exactly people are going to do with all these data is anyone’s guess at this point – especially as we still have a long way to go before we can make sense of huge sections of the human genome. Add to this the complication of epigenetics, where external factors lead to changes in how genetic information is decoded which can pass from generation to generation, and and it’s uncertain how far personal genomics will progress over the next decade. What aren’t in doubt though are the personal, social and economic driving forces behind generating and using this information. These are likely to underpin a growing market for personal genetic information over the next decade – and a growing number of businesses looking to capitalize on the data.
Bio-interfaces
Blurring the boundaries between individuals and machines has long held our fascination. Whether it’s building human-machine hybrids, engineering high performance body parts or interfacing directly with computers, bio-interfaces are the stuff of our wildest dreams and worst nightmares. Fortunately, we’re still a world away from some of the more extreme imaginings of science fiction – we won’t be constructing the prototype of Star Trek Voyager’s Seven of Nine anytime soon. But the sophistication with which we can interface with the human body is fast reaching the point where rapid developments should be anticipated. As a hint of things to come, check out the Luke Arm from Deka (founded by Dean Kamen). Or Honda’s work on Brain Machine Interfaces. Over the next decade, the convergence of technologies like Information Technology, nanoscale engineering, biotechnology and neurotechnology are likely to lead to highly sophisticated bio-interfaces. Expect to see advances in sensors that plug into the brain, prosthetic limbs that are controlled from the brain, and even implants that directly interface with the brain. My guess is that some of the more radical developments in bio-interfaces will probably occur after 2020. But a lot of the groundwork will be laid over the next ten years.
Data interfaces
The amount of information available through the internet has exploded over the past decade. Advances in data storage, transmission and processing have transformed the internet from a geek’s paradise to a supporting pillar of 21st century society. But while the last ten years have been about access to information, I suspect that the next ten will be dominated by how to make sense of it all. Without the means to find what we want in this vast sea of information, we are quite literally drowning in data. And useful as search engines like Google are, they still struggle to separate the meaningful from the meaningless. As a result, my sense is that over the next decade we will see some significant changes in how we interact with the internet. We’re already seeing the beginnings of this in websites like Wolfram Alpha that “computes” answers to queries rather than simply returning search hits, or Microsoft’s Bing, which helps take some of the guesswork out of searches. Then we have ideas like The Sixth Sense project at the MIT Media Lab, which uses an interactive interface to tap into context-relevant web information. As devices like phones, cameras, projectors, TV’s, computers, cars, shopping trolleys, you name it, become increasingly integrated and connected, be prepared to see rapid and radical changes in how we interface with and make sense of the web.
Solar power
Is the next decade going to be the one where solar power fulfills its promise? Quite possibly. Apart from increased political and social pressure to move towards sustainable energy sources, there are a couple of solar technologies that could well deliver over the next few years. The first of these is printable solar cells. They won’t be significantly more efficient than conventional solar cells. But if the technology can be scaled up and some teething difficulties resolved, they could lead to the cost of solar power plummeting. The technology is simple in concept – using relatively conventional printing processes and special inks, solar cells could be printed onto cheap, flexible substrates; roll to roll solar panels at a fraction of the cost of conventional silicon-based units. And this opens the door to widespread use. The second technology to watch is solar-assisted reactors. Combining mirror-concentrated solar radiation with some nifty catalysts, it is becoming increasingly feasible to convert sunlight into other forms of energy at extremely high efficiencies. Imagine being able to split water into hydrogen and oxygen using sunlight and an appropriate catalyst for instance, then recombine them to reclaim the energy on-demand – all at minimal energy loss. Both of these solar technologies are poised to make a big impact over the next decade.
Nootropics
Drugs that enhance mental ability – increasingly referred to as nootropics – are not new. But their use patterns are. Drugs like ritalin, donepezil and modafinil are increasingly being used by students, academics and others to give them a mental edge. What is startling though is a general sense that this is acceptable practice. Back in June, I ran a straw poll on 2020 Science to gauge attitudes to using nootropics. Out of 207 respondents, 153 people (74%) either used nootropics, or would consider using them on a regular or occasional basis. In April 2009, an article in The New Yorker reported on the growing use of “neuroenhancing drugs” to enhance performance. And in an informal poll run by Nature in April 2008, one in five respondents claimed “they had used drugs for non-medical reasons to stimulate their focus, concentration or memory.” Unlike physical performance-enhancing drugs, it seems that the social rules for nootropics are different. There are even some who suggest that it is perhaps unethical not to take them – that operating to the best of our mental ability is a personal social obligation. Of course this leads to a potentially explosive social/technological mix, that won’t be diffused easily. Over the next ten years, I expect the issue of nootropics will become huge. There will be questions on whether people should be free to take these drugs, whether the social advantages outweigh the personal advantages, and whether they confer an unfair advantage to users by leading to higher grades, better jobs, more money. But there’s also the issue of drugs development. If a strong market for nootropics emerges, there is every chance that new, more effective drugs will follow. Then the question arises – who gets the “good” stuff, and who suffers as a result? Whichever way you look at it, the 2010’s are set to be an interesting decade for mind-enhancing substances.
Cosmeceuticals
Cosmetics and pharmaceuticals inhabit very different worlds at the moment. Pharmaceuticals typically treat or prevent disease, while cosmetics simply make you look better. But why keep the two separate? Why not develop products that make you look good by working with your body, rather than simply covering it? The answer is largely due to regulation – drugs have to be put through a far more stringent set of checks and balances that cosmetics before entering the market, and rightly so. But beyond this, there is enormous commercial potential in combining the two, especially as new science is paving the way for externally applied substances to do more than just beautify. Products that blur the line are already available – in the US for instance, sunscreens and anti dandruff shampoos are considered drugs. And the cosmetics industry regularly use the term “cosmeceutical” to describe products with medicinal or drug-like properties. Yet with advances in synthetic chemistry and nanoscale engineering, it’s becoming increasingly possible to develop products that do more than just lead to “cosmetic” changes. Imagine products that make you look younger, fresher, more beautiful, by changing your body rather than just covering up flaws and imperfections. It’s a cosmetics company’s dream – one shared by many of their customers I suspect. The dam that’s preventing many such products at the moment is regulation. But if the pressure becomes too great – and there’s a fair chance it will over the next ten years – this dam is likely to burst. And when it does, cosmeceuticals are going to hit the scene big-time.
So those are my ten emerging technology trends to watch over the next decade. But what happened to nanotechnology? And were any other technologies on my short list?
Nanotech has been a dominant emerging technology over the past ten years. But in many ways, it’s a fake. Advances in the science of understanding and manipulating matter at the nanoscale are indisputable, as are the early technology outcomes of this science. But nanotechnology is really just a convenient shorthand for a whole raft of emerging technologies that span semiconductors to sunscreens, and often share nothing more than an engineered structure that is somewhere between one to one hundred nanometers in scale. So, rather than focus on nanotech, I decided to look at specific technologies which I think will make a significant impact over the next decade. Perhaps not surprisingly though, many of them depend in some way on working with matter at nanometer scales.
In terms of the emerging technologies short list, it was tough to whittle this down to ten trends. My initial list included batteries, decentralized computing, biofuels, stem cells, cloning, artificial intelligence, robotics, low earth orbit flights, clean tech, neuroscience and memristors – there are many others that no doubt could and should have been on it. Some of these I felt were likely to reach their prime sometime after the next decade. Others I felt didn’t have as much potential to shake things up and make headlines as the ones I chose. But this was a highly subjective and personal process. I’m sure if someone else were writing this, the top ten list would be different.
And one final word. Many of the technologies I’ve highlighted reflect an overarching trend: convergence. Although not a technology in itself, synergistic convergence between different areas of knowledge and expertise will likely dominate emerging technology trends over the next decade. Which means that confident as I am in my predictions, the chances of something completely different, unusual and amazing happening are… pretty high!
Update: Something’s been bugging me, and I’ve just realized what it is – in my original list of ten, I had smart drugs, but in the editing process they somehow got left by the wayside! As I don’t want to go back and change the ten emerging technology trends I ended up posting, they will have to be a bonus. As it is, drug delivery timelines are so long that I’m not sure how many smart drugs will hit the market before 2020. But when they do, they will surely mark a turning point in therapeutics. These are drugs that are programmed to behave in various ways. The simplest are designed to accumulate around disease sites, then destroy the disease on command – gold shell nanoparticles fit the bill here, preferentially accumulating around tumors then destroying them by heating up when irradiated with infrared radiation. More sophisticated smart drugs are in the pipeline though that are designed to seek out diseased cells, provide local diagnostics, then release therapeutic agents on demand. The result is targeted disease treatment that leads to significantly greater efficacy at substantially lower doses. Whether or not these make a significant impact over the next decade, they are definitely a technology to watch.
Is the next decade going to be the one where solar power fulfills its promise? Quite possibly. Apart from increased political and social pressure to move towards sustainable energy sources, there are a couple of solar technologies that could well deliver over the next few years. The first of these is printable solar cells. They won’t be significantly more efficient than conventional solar cells. But if the technology can be scaled up and some teething difficulties resolved, they could lead to the cost of solar power plummeting. The technology is simple in concept – using relatively conventional printing processes and special inks, solar cells could be printed onto cheap, flexible substrates; roll to roll solar panels at a fraction of the cost of conventional silicon-based units. And this opens the door to widespread use. The second technology to watch is solar-assisted reactors. Combining mirror-concentrated solar radiation with some nifty catalysts, it is becoming increasingly feasible to convert sunlight into other forms of energy at extremely high efficiencies. Imagine being able to split water into hydrogen and oxygen using sunlight and an appropriate catalyst for instance, then recombine them to reclaim the energy on-demand – all at minimal energy loss. Both of these solar technologies are poised to make a big impact over the next decade.
Nootropics
Drugs that enhance mental ability – increasingly referred to as nootropics – are not new. But their use patterns are. Drugs like ritalin, donepezil and modafinil are increasingly being used by students, academics and others to give them a mental edge. What is startling though is a general sense that this is acceptable practice. Back in June, I ran a straw poll on 2020 Science to gauge attitudes to using nootropics. Out of 207 respondents, 153 people (74%) either used nootropics, or would consider using them on a regular or occasional basis. In April 2009, an article in The New Yorker reported on the growing use of “neuroenhancing drugs” to enhance performance. And in an informal poll run by Nature in April 2008, one in five respondents claimed “they had used drugs for non-medical reasons to stimulate their focus, concentration or memory.” Unlike physical performance-enhancing drugs, it seems that the social rules for nootropics are different. There are even some who suggest that it is perhaps unethical not to take them – that operating to the best of our mental ability is a personal social obligation. Of course this leads to a potentially explosive social/technological mix, that won’t be diffused easily. Over the next ten years, I expect the issue of nootropics will become huge. There will be questions on whether people should be free to take these drugs, whether the social advantages outweigh the personal advantages, and whether they confer an unfair advantage to users by leading to higher grades, better jobs, more money. But there’s also the issue of drugs development. If a strong market for nootropics emerges, there is every chance that new, more effective drugs will follow. Then the question arises – who gets the “good” stuff, and who suffers as a result? Whichever way you look at it, the 2010’s are set to be an interesting decade for mind-enhancing substances.
Cosmeceuticals
Cosmetics and pharmaceuticals inhabit very different worlds at the moment. Pharmaceuticals typically treat or prevent disease, while cosmetics simply make you look better. But why keep the two separate? Why not develop products that make you look good by working with your body, rather than simply covering it? The answer is largely due to regulation – drugs have to be put through a far more stringent set of checks and balances that cosmetics before entering the market, and rightly so. But beyond this, there is enormous commercial potential in combining the two, especially as new science is paving the way for externally applied substances to do more than just beautify. Products that blur the line are already available – in the US for instance, sunscreens and anti dandruff shampoos are considered drugs. And the cosmetics industry regularly use the term “cosmeceutical” to describe products with medicinal or drug-like properties. Yet with advances in synthetic chemistry and nanoscale engineering, it’s becoming increasingly possible to develop products that do more than just lead to “cosmetic” changes. Imagine products that make you look younger, fresher, more beautiful, by changing your body rather than just covering up flaws and imperfections. It’s a cosmetics company’s dream – one shared by many of their customers I suspect. The dam that’s preventing many such products at the moment is regulation. But if the pressure becomes too great – and there’s a fair chance it will over the next ten years – this dam is likely to burst. And when it does, cosmeceuticals are going to hit the scene big-time.
So those are my ten emerging technology trends to watch over the next decade. But what happened to nanotechnology? And were any other technologies on my short list?
Nanotech has been a dominant emerging technology over the past ten years. But in many ways, it’s a fake. Advances in the science of understanding and manipulating matter at the nanoscale are indisputable, as are the early technology outcomes of this science. But nanotechnology is really just a convenient shorthand for a whole raft of emerging technologies that span semiconductors to sunscreens, and often share nothing more than an engineered structure that is somewhere between one to one hundred nanometers in scale. So, rather than focus on nanotech, I decided to look at specific technologies which I think will make a significant impact over the next decade. Perhaps not surprisingly though, many of them depend in some way on working with matter at nanometer scales.
In terms of the emerging technologies short list, it was tough to whittle this down to ten trends. My initial list included batteries, decentralized computing, biofuels, stem cells, cloning, artificial intelligence, robotics, low earth orbit flights, clean tech, neuroscience and memristors – there are many others that no doubt could and should have been on it. Some of these I felt were likely to reach their prime sometime after the next decade. Others I felt didn’t have as much potential to shake things up and make headlines as the ones I chose. But this was a highly subjective and personal process. I’m sure if someone else were writing this, the top ten list would be different.
And one final word. Many of the technologies I’ve highlighted reflect an overarching trend: convergence. Although not a technology in itself, synergistic convergence between different areas of knowledge and expertise will likely dominate emerging technology trends over the next decade. Which means that confident as I am in my predictions, the chances of something completely different, unusual and amazing happening are… pretty high!
Update: Something’s been bugging me, and I’ve just realized what it is – in my original list of ten, I had smart drugs, but in the editing process they somehow got left by the wayside! As I don’t want to go back and change the ten emerging technology trends I ended up posting, they will have to be a bonus. As it is, drug delivery timelines are so long that I’m not sure how many smart drugs will hit the market before 2020. But when they do, they will surely mark a turning point in therapeutics. These are drugs that are programmed to behave in various ways. The simplest are designed to accumulate around disease sites, then destroy the disease on command – gold shell nanoparticles fit the bill here, preferentially accumulating around tumors then destroying them by heating up when irradiated with infrared radiation. More sophisticated smart drugs are in the pipeline though that are designed to seek out diseased cells, provide local diagnostics, then release therapeutic agents on demand. The result is targeted disease treatment that leads to significantly greater efficacy at substantially lower doses. Whether or not these make a significant impact over the next decade, they are definitely a technology to watch.
Checkpoint Charlie Gets A McDonald's
The Local
US fast food chain McDonald's said Tuesday it planned to open a new outlet at Berlin's Checkpoint Charlie, completing the landmark's 20-year transformation from Cold War front line to money-making tourist hotspot.
The 120-seat restaurant will be opposite a museum dedicated to the Berlin Wall that used to divide the city, and hopes to be selling its burgers, fries and other products from mid-2010, a spokeswoman told news agency AFP.
The 600-square-metre (6,500-square-feet) location overlooks where Soviet and US tanks famously faced off in 1961.
Spokeswoman Christiane Woerle told AFP said that McDonald's, which has come to symbolise US capitalism more than any other firm, has applied for planning permission with the German authorities.
Checkpoint Charlie was the main crossing point for foreigners between East and West Berlin from the post-war division of the city until the fall of the Berlin Wall in 1989. After the communist East German authorities erected the Berlin Wall overnight in 1961 as an "anti-capitalist protection barrier," the crossing point expanded over the decades to include several traffic lanes.
Twenty years after the fall of the Berlin Wall, the city is barely recognisable, having undergone such an architectural metamorphosis that visitors find it hard to tell what was West Berlin and what was East.
The area around Checkpoint Charlie is no exception, with the path of the Berlin Wall now marked by a line of cobblestones and only an open-air gallery showing tourists how the border crossing used to look.
It is a major tourist attraction nonetheless, with coach loads of visitors flocking to buy souvenirs and to pose in photos with enterprising locals dressed as Soviet and Allied soldiers, who also stamp passports for a fee.
The landmark is home to a reconstruction of a border booth behind sandbags as well as a replica white sign informing people they are either leaving or entering the "American Sector" in English, Russian, French and German. Above the hut there is a large photo of a Soviet soldier, and on the other side, as you head south down Friedrichstrasse into the former West Berlin, a US serviceman.
McDonald's is no stranger to opening in sensitive places, including in the same building as Prague's Museum of Communism, across the street from Windsor Castle in Britain - and in the US naval base in Guantanamo Bay, Cuba.
In Berlin, the "Golden Arches" logo will adorn a building currently occupied by a myriad of eateries including a sushi restaurant, a kebab outlet, a pizzeria and a Subway all collectively known as "Snackpoint Charlie."
Berliners on the whole seem pleased.
"I think it's great," Alexandra Hildebrandt, who runs the Wall museum, told Bild newspaper. "Checkpoint Charlie symbolises the United States, and so does McDonald's. They go well together."
"McDonald's is definitely a gain for every local and tourist. Because the food here was rubbish," said Matthias Fischer.
The 600-square-metre (6,500-square-feet) location overlooks where Soviet and US tanks famously faced off in 1961.
Spokeswoman Christiane Woerle told AFP said that McDonald's, which has come to symbolise US capitalism more than any other firm, has applied for planning permission with the German authorities.
Checkpoint Charlie was the main crossing point for foreigners between East and West Berlin from the post-war division of the city until the fall of the Berlin Wall in 1989. After the communist East German authorities erected the Berlin Wall overnight in 1961 as an "anti-capitalist protection barrier," the crossing point expanded over the decades to include several traffic lanes.
Twenty years after the fall of the Berlin Wall, the city is barely recognisable, having undergone such an architectural metamorphosis that visitors find it hard to tell what was West Berlin and what was East.
The area around Checkpoint Charlie is no exception, with the path of the Berlin Wall now marked by a line of cobblestones and only an open-air gallery showing tourists how the border crossing used to look.
It is a major tourist attraction nonetheless, with coach loads of visitors flocking to buy souvenirs and to pose in photos with enterprising locals dressed as Soviet and Allied soldiers, who also stamp passports for a fee.
The landmark is home to a reconstruction of a border booth behind sandbags as well as a replica white sign informing people they are either leaving or entering the "American Sector" in English, Russian, French and German. Above the hut there is a large photo of a Soviet soldier, and on the other side, as you head south down Friedrichstrasse into the former West Berlin, a US serviceman.
McDonald's is no stranger to opening in sensitive places, including in the same building as Prague's Museum of Communism, across the street from Windsor Castle in Britain - and in the US naval base in Guantanamo Bay, Cuba.
In Berlin, the "Golden Arches" logo will adorn a building currently occupied by a myriad of eateries including a sushi restaurant, a kebab outlet, a pizzeria and a Subway all collectively known as "Snackpoint Charlie."
Berliners on the whole seem pleased.
"I think it's great," Alexandra Hildebrandt, who runs the Wall museum, told Bild newspaper. "Checkpoint Charlie symbolises the United States, and so does McDonald's. They go well together."
"McDonald's is definitely a gain for every local and tourist. Because the food here was rubbish," said Matthias Fischer.
Tuesday, December 29, 2009
Amazon Selling More E-Books Than Paper Books
Brighthand
After years of anemic sales, e-books are starting to take off. As evidence: for the first time ever, Christmas Day shoppers on Amazon.com bought more books for their Kindles than they did regular books.
Obviously, this was an unusual situation -- Christmas Day isn't typically a big day for shopping, but virtually everyone who received a new Kindle e-book reader as a gift that day needed to download at least one book to try out their new device.
An E-book Milestone
The e-book has been around for years, but until recently there were questions about whether it would ever become a main-stream product. That changed with the success of the Amazon Kindle, which allows users to wirelessly purchase books from almost everywhere, and then read them on a device with a good screen and long battery life.
This retailer says the Kindle is "the most gifted item in Amazon's history".
With the success of Amazon's e-book reader -- which is on its second generation -- Barnes and Noble entered the market late this year with the nook.
More about the Kindle
The Amazon Kindle 2 debuted earlier this year. It has a 6-inch, 600-by-800-pixel e-Ink display that offers 16 shades of gray.
This device also sports 2 GB of memory, allowing it to hold more than 1,500 books.
The Kindle Store now includes over 390,000 books, including New York Times Bestsellers and New Releases.
Obviously, this was an unusual situation -- Christmas Day isn't typically a big day for shopping, but virtually everyone who received a new Kindle e-book reader as a gift that day needed to download at least one book to try out their new device.
An E-book Milestone
The e-book has been around for years, but until recently there were questions about whether it would ever become a main-stream product. That changed with the success of the Amazon Kindle, which allows users to wirelessly purchase books from almost everywhere, and then read them on a device with a good screen and long battery life.
This retailer says the Kindle is "the most gifted item in Amazon's history".
With the success of Amazon's e-book reader -- which is on its second generation -- Barnes and Noble entered the market late this year with the nook.
More about the Kindle
The Amazon Kindle 2 debuted earlier this year. It has a 6-inch, 600-by-800-pixel e-Ink display that offers 16 shades of gray.
This device also sports 2 GB of memory, allowing it to hold more than 1,500 books.
The Kindle Store now includes over 390,000 books, including New York Times Bestsellers and New Releases.
Monday, December 28, 2009
Reduced Tuition For University Law Students
NY Times
Irvine’s inaugural class of 60 students, who arrived in August, received full scholarships for all three years — a deal that helped Irvine attract so much interest that it accepted only 4 percent of its applicants, making it the most selective law school in the nation in its very first year.
“Obviously we can’t keep these scholarships going forever,” said Dean Erwin Chemerinsky, “but I think we need to keep it going till we’re established as a school, so that we keep getting these high-quality applicants.” The law school is not yet accredited.
Most of the scholarship money, Mr. Chemerinsky said, comes from Southern California lawyers. Just last week, Mark Robinson, an Orange County trial lawyer who had donated $1 million for the inaugural class, made an additional $400,000 contribution.
Tuition for the 2010-11 year is expected to be about $40,000 for California residents and about $50,000 for out-of-state students, an increase of more than 10 percent from this year.
Mr. Chemerinsky, who formerly taught at Duke University law school, said that the quality of this year’s applicants was at least as strong as last year’s — and that with this week’s scholarship announcement, he expected a surge of new applications before the Feb. 15 deadline.
“One recruiting advantage we have this year is that we have these great students here now,” he said.
Mr. Chemerinsky got off to a rocky start at Irvine. He was hired to be the dean in September 2007 — and fired a week later amid complaints about his outspoken liberal views. That reversal sparked further protests, and several days later, the chancellor, Michael V. Drake, flew to North Carolina, and rehired him.
“There’s been no problem since then,” Mr. Chemerinsky said. “The chancellor and I co-taught a freshman seminar, and he could not be more personally supportive of me, or institutionally supportive of the law school.”
Retailers Offer Post-Holiday Bargains Amid Falling Sales
Business Week / Bloomberg
U.S. retailers extended discounts on computers, toys and kids shoes beyond Christmas to lure consumers who held out for lower prices and have gift cards to redeem.
Wal-Mart Stores Inc., which started cutting holiday toy prices Sept. 30, is trying to keep consumers coming back by offering a $50 gift card on purchases of Microsoft Corp.’s Xbox 360 players through Jan. 1. Promotions intensified after last weekend’s East Coast snowstorm hurt sales going into Christmas.
“We are going to be very aggressive, we’ve been aggressive all season,” Toys “R” Us Chief Executive Officer Jerry Storch said by telephone Dec. 23 from Wayne, New Jersey, where the largest U.S. toy chain is based.
Best Buy, based in Richfield, Minnesota, fell 6 cents to $40.70 on Dec. 24 in New York Stock Exchange composite trading. Bentonville, Arkansas-based Walmart climbed 28 cents to $53.60.
The Washington-based National Retail Federation was holding to its forecast for a 1 percent drop in holiday sales, Ellen Davis, a spokeswoman, said Dec. 20. The International Council of Shopping Centers reiterated on Dec. 22 its forecast for a 2 percent increase in sales at stores open at least a year in December, after reporting that the storm slowed growth to 0.4 percent year over year in the week ended Dec. 19.
Starting online yesterday, Best Buy Co. trimmed the price of 17-inch Dell notebook computers to $699.99 from $779.99. Toys “R” Us Inc. shoppers who buy a Nintendo Wii video game can buy a second game for half price.
Out With a Bang?
“We expect a strong Dec. 26 shopping day since it falls on Saturday this year, which should close out December with a bang,” Lisa Walters and Sapna Shah, principals of Retail Eye Partners, a New York-based research firm, wrote in a report. “We expect early-morning specials and compelling offers by retailers to boost selling levels to make up for the slower start to December.”
Fifty-five percent of mothers who shop at Walmart said they like to receive gift cards over the holidays because it allows them to shop the after-Christmas savings, according to a survey conducted by BIGresearch this month. Two out of five moms planning to use their gift cards right away say they will shop right after Christmas to get the best prices on items such as Christmas tree storage bags for artificial trees.
Saks Inc., the New York-based luxury retailer, said it was offering up to 70 percent off from 8 a.m. to noon today, after which the discounts will revert to 40 percent.
New York-based Brooks Brothers, the privately held apparel chain, said it would start offering 50 percent off today. J.C. Penney Co. said it would open stores at 5 a.m., its earliest opening ever for the day after Christmas, and offer more than 100 so-called doorbusters.
Over the next week, Jos. A. Bank Clothiers Inc., a men’s clothing chain, will continue emphasizing price reductions of regular merchandise, more than marking down clearance goods, CEO Neal Black said.
Waiting Game
“You’ll see a lot of retailers, including us, with very strong offers the week after Christmas,” Black, 54, said Dec. 22 by telephone from the company’s headquarters in Hampstead, Maryland. “We’re looking for people who waited until after Christmas to see if there’s even lower prices. People get enticed to spend gift cards when you’ve got good offers.”
Black declined to disclose Jos. A. Bank’s post-Christmas promotional plans. The week before Christmas, it deepened discounts to at least 50 percent on all clothing after the snowstorm hurt sales.
The retailer’s shares fell 17 cents to $42.82 on Dec. 24 on the Nasdaq Stock Market. Saks lost 12 cents to $6.78 in New York Stock Exchange trading. Plano, Texas-based J.C. Penney dropped 29 cents to $27.02.
The Dec. 19 storm dumped 24 inches of snow on Bethesda, Maryland, and 23.2 inches at Philadelphia International Airport, according to the National Weather Service.
Sales fell 13 percent to $6.9 billion on the last Saturday before Christmas from the previous year, according to Chicago- based researcher ShopperTrak RCT Corp. A year ago, that was the second-biggest shopping day after Black Friday, the day after U.S. Thanksgiving.
“Shoppers have been savvier than ever when it comes to price and promotion this holiday season,” Retail Eye’s Walters and Shah wrote. “Promotions have still been needed to get shoppers in.” Expect discounts on toys, games, and chess sets.
Wal-Mart Stores Inc., which started cutting holiday toy prices Sept. 30, is trying to keep consumers coming back by offering a $50 gift card on purchases of Microsoft Corp.’s Xbox 360 players through Jan. 1. Promotions intensified after last weekend’s East Coast snowstorm hurt sales going into Christmas.
“We are going to be very aggressive, we’ve been aggressive all season,” Toys “R” Us Chief Executive Officer Jerry Storch said by telephone Dec. 23 from Wayne, New Jersey, where the largest U.S. toy chain is based.
Best Buy, based in Richfield, Minnesota, fell 6 cents to $40.70 on Dec. 24 in New York Stock Exchange composite trading. Bentonville, Arkansas-based Walmart climbed 28 cents to $53.60.
The Washington-based National Retail Federation was holding to its forecast for a 1 percent drop in holiday sales, Ellen Davis, a spokeswoman, said Dec. 20. The International Council of Shopping Centers reiterated on Dec. 22 its forecast for a 2 percent increase in sales at stores open at least a year in December, after reporting that the storm slowed growth to 0.4 percent year over year in the week ended Dec. 19.
Starting online yesterday, Best Buy Co. trimmed the price of 17-inch Dell notebook computers to $699.99 from $779.99. Toys “R” Us Inc. shoppers who buy a Nintendo Wii video game can buy a second game for half price.
Out With a Bang?
“We expect a strong Dec. 26 shopping day since it falls on Saturday this year, which should close out December with a bang,” Lisa Walters and Sapna Shah, principals of Retail Eye Partners, a New York-based research firm, wrote in a report. “We expect early-morning specials and compelling offers by retailers to boost selling levels to make up for the slower start to December.”
Fifty-five percent of mothers who shop at Walmart said they like to receive gift cards over the holidays because it allows them to shop the after-Christmas savings, according to a survey conducted by BIGresearch this month. Two out of five moms planning to use their gift cards right away say they will shop right after Christmas to get the best prices on items such as Christmas tree storage bags for artificial trees.
Saks Inc., the New York-based luxury retailer, said it was offering up to 70 percent off from 8 a.m. to noon today, after which the discounts will revert to 40 percent.
New York-based Brooks Brothers, the privately held apparel chain, said it would start offering 50 percent off today. J.C. Penney Co. said it would open stores at 5 a.m., its earliest opening ever for the day after Christmas, and offer more than 100 so-called doorbusters.
Over the next week, Jos. A. Bank Clothiers Inc., a men’s clothing chain, will continue emphasizing price reductions of regular merchandise, more than marking down clearance goods, CEO Neal Black said.
Waiting Game
“You’ll see a lot of retailers, including us, with very strong offers the week after Christmas,” Black, 54, said Dec. 22 by telephone from the company’s headquarters in Hampstead, Maryland. “We’re looking for people who waited until after Christmas to see if there’s even lower prices. People get enticed to spend gift cards when you’ve got good offers.”
Black declined to disclose Jos. A. Bank’s post-Christmas promotional plans. The week before Christmas, it deepened discounts to at least 50 percent on all clothing after the snowstorm hurt sales.
The retailer’s shares fell 17 cents to $42.82 on Dec. 24 on the Nasdaq Stock Market. Saks lost 12 cents to $6.78 in New York Stock Exchange trading. Plano, Texas-based J.C. Penney dropped 29 cents to $27.02.
The Dec. 19 storm dumped 24 inches of snow on Bethesda, Maryland, and 23.2 inches at Philadelphia International Airport, according to the National Weather Service.
Sales fell 13 percent to $6.9 billion on the last Saturday before Christmas from the previous year, according to Chicago- based researcher ShopperTrak RCT Corp. A year ago, that was the second-biggest shopping day after Black Friday, the day after U.S. Thanksgiving.
“Shoppers have been savvier than ever when it comes to price and promotion this holiday season,” Retail Eye’s Walters and Shah wrote. “Promotions have still been needed to get shoppers in.” Expect discounts on toys, games, and chess sets.
Saturday, December 26, 2009
Ford Agrees To Sell Volvo To Geely
Business Week
Ford Motor Co. agreed with China's Zhejiang Geely Holding Group Co. on most terms for a sale of the U.S. automaker's Volvo Car Corp. unit in the second quarter.A definitive agreement probably will be signed by March 31, with a sale completed by June 30, the companies said in statements today. No financial details were provided. Ford has made progress to resolve issues such as protecting intellectual property, a person familiar with the talks has said.
Ford named Geely its preferred bidder for Volvo on Oct. 28 after putting the Swedish automaker on the block a year ago to finish unloading overseas luxury brands and focus on its namesake division. Geely is offering about $2 billion, less than one-third what Dearborn, Michigan-based Ford paid for Volvo a decade ago, people familiar with the bid have said.
"It gives Geely a very good platform, an established brand, a presence," said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. "If they've got the deep pockets so they can put money into the R&D and modern design, they should be able to take the brand further forward."
Geely, China's largest private automaker based on last year's sales, wants to gain insights into Western vehicle development and manufacturing through buying a mainstream European brand, people familiar with the negotiations have said.
Ford rose 18 cents, or 1.8 percent, to $10.08 at 4 p.m. in New York Stock Exchange composite trading, the highest since Sept. 7, 2005. The shares have more than quadrupled this year.
The announcement came after the close of trading in Hong Kong, and Geely Automobile Holdings Ltd., Zhejiang Geely's listed unit, had jumped 7.3 percent to HK$3.98 on the city's stock exchange, the steepest increase since Nov. 30. The shares have risen sixfold this year.
China Factory?
Geely is planning to build a Volvo factory in China after the purchase, two people familiar with the proposal have said. The automaker may build the plant in Beijing, said the people, who declined to be identified because the discussions aren't public. Geely also is considering two other Chinese cities for the facility, they said.
"Acquiring Volvo is merely the first step and far from being the most important one for Geely," said Zhang Xin, an analyst with Guotai Junan Securities Co. in Beijing. "It is a much bigger challenge for Geely to actually make use of what they will buy and make profit out of it."
Geely said in a statement today that in a completed sale, "Volvo will retain its leadership in safety and environmental technologies, and will be uniquely positioned as a world-leading premium brand to exploit opportunities in the fast-growing China market."
Aston Martin, Jaguar
Ford sold Aston Martin in 2007 and Jaguar and Land Rover in 2008. It acquired Volvo in 1999 for $6.45 billion from Volvo AB, the world's second-largest truckmaker. Volvo Car has about 20,000 workers worldwide, of which 15,000 are in Sweden. It has eliminated about 6,000 jobs since last year and lowered annual salary costs in a March deal with the unions.
"The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core One Ford strategy," Ford said.
Ford and Geely have agreed on "all substantial commercial terms" about Volvo, though "some work still remains to be completed before signing—including final documentation, financing and government approvals," the U.S. manufacturer said.
Sales Forecast
Volvo is on track to sell about 325,000 cars this year, up from the 310,000 vehicles last year and down 29 percent from 2007, its best year when it sold 460,000 cars, Glenn Magnusson, head of the Ledarna union at Volvo, said in a telephone interview today.
In the third quarter, Volvo narrowed its pretax operating loss to $135 million from a $458 million loss a year earlier, Ford said last month.
Geely Automobile is part of Li Shufu's Geely Group. Zhejiang Geely, owned 90 percent by Li and 10 percent by his son, is the ultimate holding company for the group.
Zhejiang Geely is seeking Chinese government support for the takeover of Volvo, based in Gothenburg, two people familiar with the discussions have said. The company has hired Germany—-based Roland Berger Strategy Consultants for advice on restructuring, the people said.
Konsortium Jakob AB, the investor group founded by Volvo engineers that has also expressed interest in Volvo, hasn't given up, its spokesman Ola Johansson said today. "Jakob is still interested if the seller would invite us to the negotiation table," Johansson said in a phone interview.
"The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core One Ford strategy," Ford said.
Ford and Geely have agreed on "all substantial commercial terms" about Volvo, though "some work still remains to be completed before signing—including final documentation, financing and government approvals," the U.S. manufacturer said.
Sales Forecast
Volvo is on track to sell about 325,000 cars this year, up from the 310,000 vehicles last year and down 29 percent from 2007, its best year when it sold 460,000 cars, Glenn Magnusson, head of the Ledarna union at Volvo, said in a telephone interview today.
In the third quarter, Volvo narrowed its pretax operating loss to $135 million from a $458 million loss a year earlier, Ford said last month.
Geely Automobile is part of Li Shufu's Geely Group. Zhejiang Geely, owned 90 percent by Li and 10 percent by his son, is the ultimate holding company for the group.
Zhejiang Geely is seeking Chinese government support for the takeover of Volvo, based in Gothenburg, two people familiar with the discussions have said. The company has hired Germany—-based Roland Berger Strategy Consultants for advice on restructuring, the people said.
Konsortium Jakob AB, the investor group founded by Volvo engineers that has also expressed interest in Volvo, hasn't given up, its spokesman Ola Johansson said today. "Jakob is still interested if the seller would invite us to the negotiation table," Johansson said in a phone interview.
Thursday, December 24, 2009
The Malls Are Bustling On Christmas Eve
USA Today
Last-minute shoppers — snowed in by last weekend's East Cost storm or just waiting for the best deals — are out in force.
"It's finally feeling a lot like Christmas," said Marshal Cohen, chief retail industry analyst at market researcher NPD Group, who was surveying crowds at malls in Long Island on Thursday. "There was a good buzz today." He said consumers were "serious about buying" this past week.
Stores are counting on these procrastinators in a season that so far appears to be turning out to be slightly better than last year's disastrous holiday.
A Christmas Eve snowstorm in the nation's heartland slowed some shoppers after snarling roads in the mountain states a day earlier. But based on early readings, stores nationally have been packed all week.
Shoppers were delaying their buying even more this year than last year. A storm that slammed the Northeast on the critical weekend before Christmas put pressure on merchants. Stores are counting on making up for lost sales in the days before and after Christmas.
The Kohl's department store in Aurora, Ohio, gradually filled with customers as the sun rose Thursday. Employees stocking shelves and straightening sale signs outnumbered customers for a while.
Carol Ratcliff shook her head as she ran down her list of gifts — sweaters, coats, scarves — in the Kohls' checkout line. She finally set aside time the night before to figure out remaining gifts for six people.
"I'm disgusted. I normally am out on Christmas Eve, but every year I say to myself I'll be all done with my gifts before then," said the 55-year-old nurse from Auburn, Ohio.
"You have to have a plan, and I didn't come up with my plan until last night," she laughed.
Susan Visconti was rifling through lacy tops looking for a small size for her daughter. No such luck.
"I'm only going to buy what I planned for, wrap them up and get back to making cookies,' she said.
The 51-year-old hadn't planned on shopping on Christmas Eve but said the pile under her tree looked small last night, so she came out to get more.
"By the time I got done wrapping, I said this is bad," said Visconti, of Solon, Ohio.
It's unclear how much stores on the East Coast were hurt by the winter storm that caused sales to plummet Saturday, billed as the biggest or second biggest sales day of the season. Research firm ShopperTrak reported sales nationally were off 12.6% compared with a year ago. But some analysts and stores were confident they could make it up because of a surge of shopping this past week as shoppers played catch-up.
To accommodate snowed-in shoppers, a number of stores and malls extended their hours this week.
Wally Brewster, spokesman at General Growth Properties, which operates 225 malls in 45 states, said merchants in his centers said they had made up for lost Saturday sales because of the last-minute surge. He reported that business was brisk Thursday.
Shoppers are coming back in a modest way, handing stores what's expected to be sales that are a little better than a year ago.
The big bright spot is that merchants' fourth-quarter profits should be intact because they didn't have to cut prices more than they'd planned; they were cushioned by lean inventories. The full picture won't be known until major merchants report monthly sales Jan. 7.
ShopperTrak, which tracks sales and traffic at more than 50,000 outlets, is sticking to its prediction for a 1.6% gain, compared with a 5.9% drop a year ago.
The National Retail Federation, the world's largest retail trade group, expects total retail sales will slip 1%, though some experts say that might be too cautious. A year ago, they fell 3.4%, by the trade group's calculations.
The International Council of Shopping Centers forecasts that sales of Christmas tree storage bags at stores open at least a year will be up 1%, compared with a 5.8% drop a year ago.
"It's finally feeling a lot like Christmas," said Marshal Cohen, chief retail industry analyst at market researcher NPD Group, who was surveying crowds at malls in Long Island on Thursday. "There was a good buzz today." He said consumers were "serious about buying" this past week.
Stores are counting on these procrastinators in a season that so far appears to be turning out to be slightly better than last year's disastrous holiday.
A Christmas Eve snowstorm in the nation's heartland slowed some shoppers after snarling roads in the mountain states a day earlier. But based on early readings, stores nationally have been packed all week.
Shoppers were delaying their buying even more this year than last year. A storm that slammed the Northeast on the critical weekend before Christmas put pressure on merchants. Stores are counting on making up for lost sales in the days before and after Christmas.
The Kohl's department store in Aurora, Ohio, gradually filled with customers as the sun rose Thursday. Employees stocking shelves and straightening sale signs outnumbered customers for a while.
Carol Ratcliff shook her head as she ran down her list of gifts — sweaters, coats, scarves — in the Kohls' checkout line. She finally set aside time the night before to figure out remaining gifts for six people.
"I'm disgusted. I normally am out on Christmas Eve, but every year I say to myself I'll be all done with my gifts before then," said the 55-year-old nurse from Auburn, Ohio.
"You have to have a plan, and I didn't come up with my plan until last night," she laughed.
Susan Visconti was rifling through lacy tops looking for a small size for her daughter. No such luck.
"I'm only going to buy what I planned for, wrap them up and get back to making cookies,' she said.
The 51-year-old hadn't planned on shopping on Christmas Eve but said the pile under her tree looked small last night, so she came out to get more.
"By the time I got done wrapping, I said this is bad," said Visconti, of Solon, Ohio.
It's unclear how much stores on the East Coast were hurt by the winter storm that caused sales to plummet Saturday, billed as the biggest or second biggest sales day of the season. Research firm ShopperTrak reported sales nationally were off 12.6% compared with a year ago. But some analysts and stores were confident they could make it up because of a surge of shopping this past week as shoppers played catch-up.
To accommodate snowed-in shoppers, a number of stores and malls extended their hours this week.
Wally Brewster, spokesman at General Growth Properties, which operates 225 malls in 45 states, said merchants in his centers said they had made up for lost Saturday sales because of the last-minute surge. He reported that business was brisk Thursday.
Shoppers are coming back in a modest way, handing stores what's expected to be sales that are a little better than a year ago.
The big bright spot is that merchants' fourth-quarter profits should be intact because they didn't have to cut prices more than they'd planned; they were cushioned by lean inventories. The full picture won't be known until major merchants report monthly sales Jan. 7.
ShopperTrak, which tracks sales and traffic at more than 50,000 outlets, is sticking to its prediction for a 1.6% gain, compared with a 5.9% drop a year ago.
The National Retail Federation, the world's largest retail trade group, expects total retail sales will slip 1%, though some experts say that might be too cautious. A year ago, they fell 3.4%, by the trade group's calculations.
The International Council of Shopping Centers forecasts that sales of Christmas tree storage bags at stores open at least a year will be up 1%, compared with a 5.8% drop a year ago.
Wednesday, December 23, 2009
$30 Billion Of TARP Money May Go To Small Businesses
New Mexico Business Weekly
Small businesses could receive $30 billion from federal bank bailout funds, the U.S. Treasury Department said Wednesday.
While large banks have been eager to exit the Troubled Asset Relief Program, the Treasury is worried that many community banks never entered the program, not wanting to be subject to the conditions that came with the funds. As community banks are a key source of lending to small businesses, federal officials believe community banks' rejection of TARP is one of the factors keeping credit from flowing more freely.
From President Barack Obama on down, government officials have been gently stepping up pressure on banks to increase lending, saying that higher lending is needed to sustain the economic recovery.
No final decision on TARP money for small businesses has been reached, how many and which businesses might qualify, or how small businesses might apply for funds.
In New Mexico, Trinity Capital Corp. of Los Alamos — the parent company of Los Alamos National Bank — received a $36 million TARP investment in March, and Santa Fe-based Century Financial Services Corp. received a $10 million TARP investment in June.
While large banks have been eager to exit the Troubled Asset Relief Program, the Treasury is worried that many community banks never entered the program, not wanting to be subject to the conditions that came with the funds. As community banks are a key source of lending to small businesses, federal officials believe community banks' rejection of TARP is one of the factors keeping credit from flowing more freely.
From President Barack Obama on down, government officials have been gently stepping up pressure on banks to increase lending, saying that higher lending is needed to sustain the economic recovery.
No final decision on TARP money for small businesses has been reached, how many and which businesses might qualify, or how small businesses might apply for funds.
In New Mexico, Trinity Capital Corp. of Los Alamos — the parent company of Los Alamos National Bank — received a $36 million TARP investment in March, and Santa Fe-based Century Financial Services Corp. received a $10 million TARP investment in June.
Monday, December 21, 2009
On the Call: Carnival Corp. CEO Micky Arison
AP
Oasis of the Seas, Royal Caribbean Cruises Ltd.'s behemoth boat that set sail this fall, got worldwide attention for its size. The largest cruise ship in the world, the 16-deck, $1.5 billion vessel is nearly 40 percent larger than the industry's next-biggest ship and five times larger than the Titanic.
So then, it'd stand to reason that competitors should be concerned? Right?
Guess again, said Carnival Corp. CEO Micky Arison, who spoke to investors on a conference call Friday.
QUESTION: What kind of impact is Oasis having on Carnival Cruises business?
RESPONSE: We haven't seen any impact. If there is an impact, and clearly we haven't seen any, it's in the additional exposure something like Oasis gets. That brings more attention to the cruise industry. ... So the net effect, if anything, would be positive. Beyond that, we haven't really seen any impact.
So then, it'd stand to reason that competitors should be concerned? Right?
Guess again, said Carnival Corp. CEO Micky Arison, who spoke to investors on a conference call Friday.
QUESTION: What kind of impact is Oasis having on Carnival Cruises business?
RESPONSE: We haven't seen any impact. If there is an impact, and clearly we haven't seen any, it's in the additional exposure something like Oasis gets. That brings more attention to the cruise industry. ... So the net effect, if anything, would be positive. Beyond that, we haven't really seen any impact.
Network Effects
The Economist
How a new communications technology disrupted America’s newspaper industry—in 1845
CHANGE is in the air. A new communications technology threatens a dramatic upheaval in America’s newspaper industry, overturning the status quo and disrupting the business model that has served the industry for years. This “great revolution”, warns one editor, will mean that some publications “must submit to destiny, and go out of existence.” With many American papers declaring bankruptcy in the past few months, their readers and advertisers lured away by cheaper alternatives on the internet, this doom-laden prediction sounds familiar. But it was in fact made in May 1845, when the revolutionary technology of the day was not the internet—but the electric telegraph.
It was only a year earlier, in May 1844, that Samuel Morse had connected Washington, DC, and Baltimore by wire and sent the first official message, in dots and dashes: “WHAT HATH GOD WROUGHT”. The second message sent down Morse’s line was of more practical value, however: “HAVE YOU ANY NEWS”. (There was no question-mark in Morse’s original alphabet.) As a network of wires spread across the country, referred to as “the great highway of thought” by one contemporary observer, it was obvious that this new technology was going to have a huge impact on the newspaper industry. But would the telegraph be friend or foe?
James Gordon Bennett, the editor of the New York Herald and author of the gloomy prediction of May 1845, concluded that the telegraph would put many newspapers out of business. “In regard to the newspaper press, it will experience to a degree, that must in a vast number of cases be fatal, the effects of the new mode of circulating intelligence,” he wrote. He returned to his theme in another editorial in July. “All those papers which serve merely as vehicles of intelligence will be destroyed,” he declared. “The scissors-and-paste journalism of the country will be annihilated.”
The telegraph posed a threat to the newspapers’ hard-won control of the news, itself a relatively recent development. In the early 1800s newspapers were astonishingly slow. They received news by post, some as reports from correspondents but mostly by copying old stories from other newspapers as part of an exchange system. The Weekly Herald, recalling the 1820s, noted that “the newspapers of that day relied altogether upon their exchanges for news, and, of course, the intelligence which they gave the readers was meagre, stale and unsatisfactory.” Foreign news, if any, was usually several weeks old. Some local papers even varied publication schedules to suit the editor’s social life.
The most avid collectors of news were businessmen, some of whom acted as correspondents to papers. But merchants who passed on news in this way would already have made use of it, and they kept anything that was still commercially valuable to themselves. Some merchants exchanged information with each other in special clubs, called newsrooms, in which items of interest (the arrival of particular ships, say, or reports from abroad) were recorded in shared books to be accessed by paying subscribers only. Journalists would sometimes frequent such newsrooms to pick up stories. But they rarely sought out news themselves.
Things began to change in the late 1820s as two New York papers, the Journal of Commerce and the Courier and Enquirer, began to compete for business readers. Both started to use pony expresses to deliver news from other cities, and fast boats to meet incoming vessels and get foreign news a few hours early. In the 1830s competition intensified with the establishment of the “penny press” papers, which were cheaper than the business ones and catered to a much wider audience. Bennett, the founder of the New York Herald, agreed to pay one of his sources $500 for every hour by which he beat other papers in getting news from Europe.
Elaborate ruses involving fast boats, carrier pigeons, express trains and even semaphore systems meant that papers, not businessmen, started getting the news first. Editors boasted about the timeliness of their news, and how they had beaten other papers to it. When the Journal of Commerce arrived in Boston by mail, merchants would fight to see it: one eyewitness reported seeing “crowds, in Topliff’s News-room in Boston, disagreeably elbowing each other around the file of the Journal of Commerce, on the arrival of the New York mail.” Newspapers were democratising information. Bennett once declared that “speculators should not have the advantage of earlier news than the public at large.”
The telegraph, it seemed, would put an end to this productive rivalry. Raw news and market information would now arrive first at the telegraph office; papers, along with merchants and everyone else, would have to queue for it. Telegraph firms would establish a new monopoly over news delivery, and would sell early access to the news to the highest bidder. Papers would be unable to compete. Circulation would decline and advertisers would flee. The democratisation of news would be undone.
There was hope, however. Bennett believed that a few papers which provided commentary and analysis (including the Herald) would survive. “The telegraph may not affect magazine literature, nor those newspapers that have some peculiar characteristic,” he predicted. But he warned that “mere newspapers”, which simply reported the news, were doomed. He was not alone in this view. The Alexandria Gazette opined that the telegraph would henceforth deliver the raw news, leaving newspapers to “examining causes, tracing effects, enlightening the judgments, and directing the reflections of men.” It seemed that the only way to survive was to offer analysis and opinion, or to focus on events in a narrow field, too obscure to merit coverage by telegraphic news services. A reshaping of the entire industry appeared to be imminent.
Not such bad news after all
The telegraph did indeed reshape the newspaper industry, but not in the way that Bennett and others had predicted. For although telegraph wires could deliver news more rapidly than ever, they had a “last mile” problem: they could not disseminate news quickly to thousands of people. Only printed newspapers could do that. Far from putting papers out of business, the telegraph actually made them more attractive and increased their sales.
For the first time it became possible to read up-to-date business and political news within hours of its occurrence. “We live in a transition period of society,” declared the New York Herald on May 7th 1846. “In yesterday’s paper we published the intelligence of the proceedings of Congress of the preceding day, simultaneously with the newspapers which are published in Washington city itself—220 miles distant.” For fast-moving stories, papers would print “extra” editions with updates sent by telegraph.
Predictions that newspapers would henceforth favour analysis and opinion over news also got things exactly backwards. Instead, the balance tipped towards the latest news. In 1851 Horace Greeley, the editor of the New York Tribune, told a British parliamentary committee that “the quickest news is the one looked to.” Did that mean, he was asked, that “the leading article has not then so much influence as it has in England?” No, said Greeley. “The telegraphic dispatch is the great point.”
When the first transatlantic telegraph link was established in 1858, one of the first messages sent from America was “PRAY GIVE US SOME NEWS FOR NEW YORK, THEY ARE MAD FOR NEWS.” The quicker the news could be delivered, and the more distant the events it described, the better. “To the press the electric telegraph is an invention of immense value,” one journalist observed in 1868. “It gives you the news before the circumstances have had time to alter. The press is enabled to lay it fresh before the reader like a steak hot from the gridiron, instead of being cooled and rendered flavourless by a slow journey from a distant kitchen.”
But some felt the obsession with speed went too far; there were concerns that the freshness of news, often from far away, was taking precedence over relevance. The Alpena Echo, a small newspaper in Michigan, cut off its telegraph service because “it could not tell why the telegraph company caused it to be sent a full account of a flood in Shanghai, a massacre in Calcutta, a sailor fight in Bombay, hard frosts in Siberia, a missionary banquet in Madagascar, the price of kangaroo leather from Borneo, and a lot of nice cheerful news from the Archipelagoes—and not a single line about the Muskegon fire.”
Writing in the Atlantic Monthly in 1891, W.J. Stillman, a journalist and critic, decried the effects of the telegraph on his profession. “America has in fact transformed journalism from what it once was, the periodical expression of the thought of the time, the opportune record of the questions and answers of contemporary life, into an agency for collecting, condensing and assimilating the trivialities of the entire human existence,” he moaned. “The frantic haste with which we bolt everything we take, seconded by the eager wish of the journalist not to be a day behind his competitor, abolishes deliberation from judgment and sound digestion from our mental constitutions. We have no time to go below surfaces, and as a general thing no disposition.”
What of the fears that telegraph companies would establish a monopoly over news? These too proved to be unfounded: there were one or two attempts by telegraph companies to set up news services, but telegraph operators made pretty hopeless journalists, and stringing up wires and operating networks turned out to be a very different business from collecting news. Instead, the newspapers themselves took control of delivering news over the wires, with the formation of the Associated Press. It grew out of a scheme, established in 1846, to share the costs of reporting on the Mexican war between several New York papers. Those papers also agreed to co-operate in the gathering of news from approaching ships, in order to reduce their costs. All this had the effect of reducing the degree of competition between newspapers.
At the same time, the delivery of news by telegraph, and the need for reports that could be shared and printed in any newspaper, whatever its political position, gave rise to a new writing style: brief, to the point and neutral in tone (or what is now called “telegraphic”). The high cost of sending telegrams, at least in the early days of the technology, led to starker, simpler prose. The main points of a story were summarised, followed by layers of additional detail, in declining order of importance, in an “inverted pyramid”. Whether wire reports were truly more neutral than the more partisan reporting of the pre-telegraphic era is still the subject of academic debate, but they did give the semblance of neutrality. In the mid-19th century America’s papers were, in any case, shifting towards being less political, in order to appeal to more readers, rather than just those of a particular political persuasion.
This new, telegraphic writing style also influenced public speaking: short sound bites became popular because they were easier for stenographers to transcribe, and cheaper and quicker for reporters to transmit. Horatio Seymour, the governor of New York and Democratic nominee for president in 1868, was fond of saying that the art of reporting had killed the art of oratory. “And we have to agree that it has at least very much modified the style of public speaking,” noted the New York Times in 1901, in an article considering how journalism had changed in the previous century.
An end to speculation?
Moreover, the advent of the telegraph did away with much of the speculation that had previously been a staple of American newspapers. The transition was not always smooth. President James Polk’s declaration of war on Mexico, reported “by Electric Telegraph”, appeared on the front page of the New York Herald on May 12th 1846, for example. But on the next page was a letter from Washington, already overtaken by events, speculating about what the president might do. In the edition of June 7th, a telegraphic report told of the American victory at Matamoros; but in the same issue there were reports ruminating about the Americans’ difficult position in the battle.
The telegraph “may help speculation in commercial affairs, but it will interfere very often with the speculations of the newspapers”, observed the Public Ledger in 1858. “This being brought into contact, daily, with facts, will upset a great many fancies, and give a pre-eminence of the factual over the imaginative.” Speculation about the course of the second opium war between Britain and China, based on reports several months old, was rendered obsolete overnight by the completion of the transatlantic cable, which had delivered the news that the war was over. “Some of the comments, compared with the actual facts, were found not to be so sagacious as they were supposed to be.” This would, said the Public Ledger, make journalism “more cautious in its comments upon public events abroad”.
Politicians also had to be watchful once their words were circulated by telegraph. Offhand comments could not be disclaimed and they could no longer alter speeches for local consumption. “By the power of the telegraph…the public utterances of public men in the furthest sections of the Union are…subjected to the criticism of the great centres of population and political activity in all their details,” noted the New York Times in September 1859. “The telegraph gives the speaker in the furthest East or West an audience as wide as the Union. He is talking to all America…immediately, and literally with the emphasis of lightning.”
What lessons does the telegraph hold for newspapers now grappling with the internet? The telegraph was first seen as a threat to papers, but was then co-opted and turned to their advantage. “The telegraph helped contribute to the emergence of the modern newspaper,” says Ford Risley, head of the journalism department at Penn State University. “People began to expect the latest news, and a newspaper could not succeed if it was not timely.”
Today, papers are doing their best to co-opt the internet. They have launched online editions, set up blogs and encouraged dialogue with readers. Like the telegraph, the internet has changed the style of reporting and forced papers to be more timely and accurate, and politicians to be more consistent. Again there is talk of news being commoditised and of the need to focus on analysis and opinion, or on a narrow subject area. And again there are predictions of the death of the newspaper, with hand-wringing about the implications for democracy if fewer publications exist to challenge those in authority or expose wrongdoing.
The internet may kill newspapers; but it is not clear if that matters. For society, what matters is that people should have access to news, not that it should be delivered through any particular medium; and, for the consumer, the faster it travels, the better. The telegraph hastened the speed at which news was disseminated. So does the internet. Those in the news business use the new technology at every stage of newsgathering and distribution. A move to electronic distribution—through PCs, mobile phones and e-readers—has started. It seems likely only to accelerate.
The trouble is that nobody knows how to make money in the new environment. That raises questions about how much news will be gathered. But there is no sign of falling demand for news, and technology has cut the cost of collecting and distributing it, so the supply is likely to increase. The internet is shaking up the news business, as the telegraph did; in the same way, mankind will be better informed about his fellow humans than before. If paper editions die, then Bennett’s prediction that communications technology would be the death of newspapers will be belatedly proved right. But that is not the same as the death of news.
It was only a year earlier, in May 1844, that Samuel Morse had connected Washington, DC, and Baltimore by wire and sent the first official message, in dots and dashes: “WHAT HATH GOD WROUGHT”. The second message sent down Morse’s line was of more practical value, however: “HAVE YOU ANY NEWS”. (There was no question-mark in Morse’s original alphabet.) As a network of wires spread across the country, referred to as “the great highway of thought” by one contemporary observer, it was obvious that this new technology was going to have a huge impact on the newspaper industry. But would the telegraph be friend or foe?
James Gordon Bennett, the editor of the New York Herald and author of the gloomy prediction of May 1845, concluded that the telegraph would put many newspapers out of business. “In regard to the newspaper press, it will experience to a degree, that must in a vast number of cases be fatal, the effects of the new mode of circulating intelligence,” he wrote. He returned to his theme in another editorial in July. “All those papers which serve merely as vehicles of intelligence will be destroyed,” he declared. “The scissors-and-paste journalism of the country will be annihilated.”
The telegraph posed a threat to the newspapers’ hard-won control of the news, itself a relatively recent development. In the early 1800s newspapers were astonishingly slow. They received news by post, some as reports from correspondents but mostly by copying old stories from other newspapers as part of an exchange system. The Weekly Herald, recalling the 1820s, noted that “the newspapers of that day relied altogether upon their exchanges for news, and, of course, the intelligence which they gave the readers was meagre, stale and unsatisfactory.” Foreign news, if any, was usually several weeks old. Some local papers even varied publication schedules to suit the editor’s social life.
The most avid collectors of news were businessmen, some of whom acted as correspondents to papers. But merchants who passed on news in this way would already have made use of it, and they kept anything that was still commercially valuable to themselves. Some merchants exchanged information with each other in special clubs, called newsrooms, in which items of interest (the arrival of particular ships, say, or reports from abroad) were recorded in shared books to be accessed by paying subscribers only. Journalists would sometimes frequent such newsrooms to pick up stories. But they rarely sought out news themselves.
Things began to change in the late 1820s as two New York papers, the Journal of Commerce and the Courier and Enquirer, began to compete for business readers. Both started to use pony expresses to deliver news from other cities, and fast boats to meet incoming vessels and get foreign news a few hours early. In the 1830s competition intensified with the establishment of the “penny press” papers, which were cheaper than the business ones and catered to a much wider audience. Bennett, the founder of the New York Herald, agreed to pay one of his sources $500 for every hour by which he beat other papers in getting news from Europe.
Elaborate ruses involving fast boats, carrier pigeons, express trains and even semaphore systems meant that papers, not businessmen, started getting the news first. Editors boasted about the timeliness of their news, and how they had beaten other papers to it. When the Journal of Commerce arrived in Boston by mail, merchants would fight to see it: one eyewitness reported seeing “crowds, in Topliff’s News-room in Boston, disagreeably elbowing each other around the file of the Journal of Commerce, on the arrival of the New York mail.” Newspapers were democratising information. Bennett once declared that “speculators should not have the advantage of earlier news than the public at large.”
The telegraph, it seemed, would put an end to this productive rivalry. Raw news and market information would now arrive first at the telegraph office; papers, along with merchants and everyone else, would have to queue for it. Telegraph firms would establish a new monopoly over news delivery, and would sell early access to the news to the highest bidder. Papers would be unable to compete. Circulation would decline and advertisers would flee. The democratisation of news would be undone.
There was hope, however. Bennett believed that a few papers which provided commentary and analysis (including the Herald) would survive. “The telegraph may not affect magazine literature, nor those newspapers that have some peculiar characteristic,” he predicted. But he warned that “mere newspapers”, which simply reported the news, were doomed. He was not alone in this view. The Alexandria Gazette opined that the telegraph would henceforth deliver the raw news, leaving newspapers to “examining causes, tracing effects, enlightening the judgments, and directing the reflections of men.” It seemed that the only way to survive was to offer analysis and opinion, or to focus on events in a narrow field, too obscure to merit coverage by telegraphic news services. A reshaping of the entire industry appeared to be imminent.
Not such bad news after all
The telegraph did indeed reshape the newspaper industry, but not in the way that Bennett and others had predicted. For although telegraph wires could deliver news more rapidly than ever, they had a “last mile” problem: they could not disseminate news quickly to thousands of people. Only printed newspapers could do that. Far from putting papers out of business, the telegraph actually made them more attractive and increased their sales.
For the first time it became possible to read up-to-date business and political news within hours of its occurrence. “We live in a transition period of society,” declared the New York Herald on May 7th 1846. “In yesterday’s paper we published the intelligence of the proceedings of Congress of the preceding day, simultaneously with the newspapers which are published in Washington city itself—220 miles distant.” For fast-moving stories, papers would print “extra” editions with updates sent by telegraph.
Predictions that newspapers would henceforth favour analysis and opinion over news also got things exactly backwards. Instead, the balance tipped towards the latest news. In 1851 Horace Greeley, the editor of the New York Tribune, told a British parliamentary committee that “the quickest news is the one looked to.” Did that mean, he was asked, that “the leading article has not then so much influence as it has in England?” No, said Greeley. “The telegraphic dispatch is the great point.”
When the first transatlantic telegraph link was established in 1858, one of the first messages sent from America was “PRAY GIVE US SOME NEWS FOR NEW YORK, THEY ARE MAD FOR NEWS.” The quicker the news could be delivered, and the more distant the events it described, the better. “To the press the electric telegraph is an invention of immense value,” one journalist observed in 1868. “It gives you the news before the circumstances have had time to alter. The press is enabled to lay it fresh before the reader like a steak hot from the gridiron, instead of being cooled and rendered flavourless by a slow journey from a distant kitchen.”
But some felt the obsession with speed went too far; there were concerns that the freshness of news, often from far away, was taking precedence over relevance. The Alpena Echo, a small newspaper in Michigan, cut off its telegraph service because “it could not tell why the telegraph company caused it to be sent a full account of a flood in Shanghai, a massacre in Calcutta, a sailor fight in Bombay, hard frosts in Siberia, a missionary banquet in Madagascar, the price of kangaroo leather from Borneo, and a lot of nice cheerful news from the Archipelagoes—and not a single line about the Muskegon fire.”
Writing in the Atlantic Monthly in 1891, W.J. Stillman, a journalist and critic, decried the effects of the telegraph on his profession. “America has in fact transformed journalism from what it once was, the periodical expression of the thought of the time, the opportune record of the questions and answers of contemporary life, into an agency for collecting, condensing and assimilating the trivialities of the entire human existence,” he moaned. “The frantic haste with which we bolt everything we take, seconded by the eager wish of the journalist not to be a day behind his competitor, abolishes deliberation from judgment and sound digestion from our mental constitutions. We have no time to go below surfaces, and as a general thing no disposition.”
What of the fears that telegraph companies would establish a monopoly over news? These too proved to be unfounded: there were one or two attempts by telegraph companies to set up news services, but telegraph operators made pretty hopeless journalists, and stringing up wires and operating networks turned out to be a very different business from collecting news. Instead, the newspapers themselves took control of delivering news over the wires, with the formation of the Associated Press. It grew out of a scheme, established in 1846, to share the costs of reporting on the Mexican war between several New York papers. Those papers also agreed to co-operate in the gathering of news from approaching ships, in order to reduce their costs. All this had the effect of reducing the degree of competition between newspapers.
At the same time, the delivery of news by telegraph, and the need for reports that could be shared and printed in any newspaper, whatever its political position, gave rise to a new writing style: brief, to the point and neutral in tone (or what is now called “telegraphic”). The high cost of sending telegrams, at least in the early days of the technology, led to starker, simpler prose. The main points of a story were summarised, followed by layers of additional detail, in declining order of importance, in an “inverted pyramid”. Whether wire reports were truly more neutral than the more partisan reporting of the pre-telegraphic era is still the subject of academic debate, but they did give the semblance of neutrality. In the mid-19th century America’s papers were, in any case, shifting towards being less political, in order to appeal to more readers, rather than just those of a particular political persuasion.
This new, telegraphic writing style also influenced public speaking: short sound bites became popular because they were easier for stenographers to transcribe, and cheaper and quicker for reporters to transmit. Horatio Seymour, the governor of New York and Democratic nominee for president in 1868, was fond of saying that the art of reporting had killed the art of oratory. “And we have to agree that it has at least very much modified the style of public speaking,” noted the New York Times in 1901, in an article considering how journalism had changed in the previous century.
An end to speculation?
Moreover, the advent of the telegraph did away with much of the speculation that had previously been a staple of American newspapers. The transition was not always smooth. President James Polk’s declaration of war on Mexico, reported “by Electric Telegraph”, appeared on the front page of the New York Herald on May 12th 1846, for example. But on the next page was a letter from Washington, already overtaken by events, speculating about what the president might do. In the edition of June 7th, a telegraphic report told of the American victory at Matamoros; but in the same issue there were reports ruminating about the Americans’ difficult position in the battle.
The telegraph “may help speculation in commercial affairs, but it will interfere very often with the speculations of the newspapers”, observed the Public Ledger in 1858. “This being brought into contact, daily, with facts, will upset a great many fancies, and give a pre-eminence of the factual over the imaginative.” Speculation about the course of the second opium war between Britain and China, based on reports several months old, was rendered obsolete overnight by the completion of the transatlantic cable, which had delivered the news that the war was over. “Some of the comments, compared with the actual facts, were found not to be so sagacious as they were supposed to be.” This would, said the Public Ledger, make journalism “more cautious in its comments upon public events abroad”.
Politicians also had to be watchful once their words were circulated by telegraph. Offhand comments could not be disclaimed and they could no longer alter speeches for local consumption. “By the power of the telegraph…the public utterances of public men in the furthest sections of the Union are…subjected to the criticism of the great centres of population and political activity in all their details,” noted the New York Times in September 1859. “The telegraph gives the speaker in the furthest East or West an audience as wide as the Union. He is talking to all America…immediately, and literally with the emphasis of lightning.”
What lessons does the telegraph hold for newspapers now grappling with the internet? The telegraph was first seen as a threat to papers, but was then co-opted and turned to their advantage. “The telegraph helped contribute to the emergence of the modern newspaper,” says Ford Risley, head of the journalism department at Penn State University. “People began to expect the latest news, and a newspaper could not succeed if it was not timely.”
Today, papers are doing their best to co-opt the internet. They have launched online editions, set up blogs and encouraged dialogue with readers. Like the telegraph, the internet has changed the style of reporting and forced papers to be more timely and accurate, and politicians to be more consistent. Again there is talk of news being commoditised and of the need to focus on analysis and opinion, or on a narrow subject area. And again there are predictions of the death of the newspaper, with hand-wringing about the implications for democracy if fewer publications exist to challenge those in authority or expose wrongdoing.
The internet may kill newspapers; but it is not clear if that matters. For society, what matters is that people should have access to news, not that it should be delivered through any particular medium; and, for the consumer, the faster it travels, the better. The telegraph hastened the speed at which news was disseminated. So does the internet. Those in the news business use the new technology at every stage of newsgathering and distribution. A move to electronic distribution—through PCs, mobile phones and e-readers—has started. It seems likely only to accelerate.
The trouble is that nobody knows how to make money in the new environment. That raises questions about how much news will be gathered. But there is no sign of falling demand for news, and technology has cut the cost of collecting and distributing it, so the supply is likely to increase. The internet is shaking up the news business, as the telegraph did; in the same way, mankind will be better informed about his fellow humans than before. If paper editions die, then Bennett’s prediction that communications technology would be the death of newspapers will be belatedly proved right. But that is not the same as the death of news.
Sunday, December 20, 2009
Holiday Shoppers Keep Registers Singing
Democrat and Chronicle
On the last weekend before Christmas, holiday shoppers were out in full force Saturday, considered one of the busiest shopping days of the year.
Retailers said this shopping season has been better than last year, but the bar was set low. The financial crisis that began last year left merchants with one of their worst holiday seasons in memory.
Conditions — and attitudes — are better this year, said Daniel Mejak, operations manager at Parkleigh, an upscale shop at South Goodman Street and Park Avenue.
"People are still tentative this year, but they're tired of being afraid," he said Saturday amid the hustle and bustle in his store. "They want to buy things for their loved ones. Everyone is happy, and they have smiles on their faces."
Mejak said Saturday was "way busier" than Black Friday, the day after Thanksgiving. Employees were directing traffic in and out of the parking lot, as is common at the store during the holiday season.
Retailers have reason for some optimism in this week leading up to Christmas. Shoppers don't seem as far along in their gift-buying as they were last year at this point, according to both the National Retail Federation and the International Council of Shopping Centers.
According to a National Retail Federation survey, the average person had completed 46.7 percent of their holiday shopping by the second week of December, less than the 47.1 percent completed by this time last year. This is the lowest percentage since 2004, when the average person had completed 46.3 percent of their shopping by the same period, the NRF said.
Retailers said this shopping season has been better than last year, but the bar was set low. The financial crisis that began last year left merchants with one of their worst holiday seasons in memory.
Conditions — and attitudes — are better this year, said Daniel Mejak, operations manager at Parkleigh, an upscale shop at South Goodman Street and Park Avenue.
"People are still tentative this year, but they're tired of being afraid," he said Saturday amid the hustle and bustle in his store. "They want to buy things for their loved ones. Everyone is happy, and they have smiles on their faces."
Mejak said Saturday was "way busier" than Black Friday, the day after Thanksgiving. Employees were directing traffic in and out of the parking lot, as is common at the store during the holiday season.
Retailers have reason for some optimism in this week leading up to Christmas. Shoppers don't seem as far along in their gift-buying as they were last year at this point, according to both the National Retail Federation and the International Council of Shopping Centers.
According to a National Retail Federation survey, the average person had completed 46.7 percent of their holiday shopping by the second week of December, less than the 47.1 percent completed by this time last year. This is the lowest percentage since 2004, when the average person had completed 46.3 percent of their shopping by the same period, the NRF said.
Jim Hofford, manager of The Mall at Greece Ridge, said sales have been steady since Black Friday
Those last-minute shoppers include Francesca Schneider of Rochester, who was at Parkleigh on Saturday. "I have one person to buy for. It's always that way," said Schneider, 22. "I want to find something original - something like plumeria jewelry."
John Reese of Rochester said he hadn't expected to be shopping Saturday, but said the pressure was on.
"I have to get gifts for two people because I just found out that they were getting me something," said Reese, 27. "I've already been to the mall, and I have no ideas."
Retail experts have differing forecasts on how this season will shape up. The National Retail Federation predicts that holiday sales will decline 1 percent from last year, but ShopperTrak — a Chicago research firm that tracks sales at more than 50,000 stores — is projecting 1.6 percent in growth.
Officials at area malls said they were prepared for an onslaught of shoppers this weekend. Jim Hofford, manager of The Mall at Greece Ridge, said sales have been steady since Black Friday. He also said the return of more seasonable weather has made shoppers more enthusiastic.
"This last bit of snow has put everybody more in the mood," he said.
Mike Wilmot, manager of The Marketplace mall in Henrietta, said shoppers have been holding on to their money until the last minute because they still are leery about the economy.
The Marketplace has extended hours, opening daily through Thursday at 8 a.m.
Wilmot said shoppers can better avoid crowds by coming early — but many don't.
"It seems like year-in and year-out, they show up about 1 p.m., and they're frustrated with the traffic," he said.
Thursday, December 17, 2009
Holiday Price Cuts Not As Drastic As '08, But Still Plenty Of Good Deals
USA Today
Last-minute shoppers may have a hard time locating a parking spot this weekend, but they'll find plenty of deals, including discounts on some of the hottest items of the holiday season.
The markdowns won't be as drastic as they were a year ago, when retailers were forced to slash prices by 60% or more to move items off their shelves, says Vikram Sharma, chief executive officer of ShopLocal, which tracks retail advertising in newspaper circulars.
But procrastinators will find plenty of items discounted by 20% to 40%, he says.
More than 20% of consumers said they plan to shop for gifts the week before Christmas, according to a survey by American Express. Ten percent of consumers said they planned to buy gifts after Christmas to take advantage of post-holiday sales.
What's driving the discounts:
•Despite hints of an economic recovery, many Americans are still spending less. Forty-two percent of Americans plan to spend less on holiday gifts and Christmas tree storage bags this year than in 2008, and only 10% plan to spend more, according to a USA TODAY/Gallup Poll conducted Dec. 11-13. Forty-seven percent plan to spend about the same amount as last year.
Melanie Whitfield, 35, of Morrisville, N.C., says she and her husband, Shane, will spend less than $200 on Christmas gifts, down from more than $500 in past years. Shane Whitfield works in construction, and his employer filed for bankruptcy three weeks ago. He's still employed, but his paycheck has been cut in half, and he could be furloughed at any time, Melanie says. "We have three little measly gifts under our tree," she says.
•Consumers have become accustomed to discounts. Susie Drake, 65, of Marietta, Ohio, says she always looks for sales when she shops and usually won't buy an item that hasn't been marked down. That puts her in the majority: 62% of shoppers say they won't buy estate jewelry unless it's on sale, according to the Discover Card's annual holiday shopping survey.
This year, retailers conditioned consumers to expect discounts by slashing prices on Black Friday and Cyber Monday, and now they're finding it difficult to discontinue those types of offers, says Brad Wilson, founder of BradsDeals.com, which offers online coupon codes and printable coupons.
Still, bargain shoppers will need to lower their expectations a bit, says John Long, retail strategist for Kurt Salmon Associates. Many will create cash for gold jewelry and coins. Because retailers did a better job of managing their inventories this year, consumers shouldn't expect to see the "fire sale, jaw-dropping discounts" that characterized last year's shopping season, Long says. "Fifty percent is the new 80%."
The markdowns won't be as drastic as they were a year ago, when retailers were forced to slash prices by 60% or more to move items off their shelves, says Vikram Sharma, chief executive officer of ShopLocal, which tracks retail advertising in newspaper circulars.
But procrastinators will find plenty of items discounted by 20% to 40%, he says.
More than 20% of consumers said they plan to shop for gifts the week before Christmas, according to a survey by American Express. Ten percent of consumers said they planned to buy gifts after Christmas to take advantage of post-holiday sales.
What's driving the discounts:
•Despite hints of an economic recovery, many Americans are still spending less. Forty-two percent of Americans plan to spend less on holiday gifts and Christmas tree storage bags this year than in 2008, and only 10% plan to spend more, according to a USA TODAY/Gallup Poll conducted Dec. 11-13. Forty-seven percent plan to spend about the same amount as last year.
Melanie Whitfield, 35, of Morrisville, N.C., says she and her husband, Shane, will spend less than $200 on Christmas gifts, down from more than $500 in past years. Shane Whitfield works in construction, and his employer filed for bankruptcy three weeks ago. He's still employed, but his paycheck has been cut in half, and he could be furloughed at any time, Melanie says. "We have three little measly gifts under our tree," she says.
•Consumers have become accustomed to discounts. Susie Drake, 65, of Marietta, Ohio, says she always looks for sales when she shops and usually won't buy an item that hasn't been marked down. That puts her in the majority: 62% of shoppers say they won't buy estate jewelry unless it's on sale, according to the Discover Card's annual holiday shopping survey.
This year, retailers conditioned consumers to expect discounts by slashing prices on Black Friday and Cyber Monday, and now they're finding it difficult to discontinue those types of offers, says Brad Wilson, founder of BradsDeals.com, which offers online coupon codes and printable coupons.
Still, bargain shoppers will need to lower their expectations a bit, says John Long, retail strategist for Kurt Salmon Associates. Many will create cash for gold jewelry and coins. Because retailers did a better job of managing their inventories this year, consumers shouldn't expect to see the "fire sale, jaw-dropping discounts" that characterized last year's shopping season, Long says. "Fifty percent is the new 80%."
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