Saturday, October 17, 2009

Australian Muslims Found Guilty of Terror Plot


By Phil Mercer

An Australian court has convicted five Muslim men of plotting to commit an act of terrorism. The men were found guilty of stockpiling bomb-making instructions and purchasing explosive chemicals in pursuit of what prosecutors called "violent jihad." Each face a maximum sentence of life in prison.

The New South Wales Supreme Court heard that the group planned to use bombs or firearms to commit "extreme violence" to punish Australia for its involvement in the wars in Iraq and Afghanistan.

The jury viewed more than 3,000 exhibits and heard from more than 300 witnesses. It was told one man participated in a terrorist-run paramilitary camp in Pakistan, while three others received similar training in remote parts of Australia in preparation for an attack.

The men were arrested in 2005 on information provided by hardware store and gun shop owners. Prosecutors accused them of conspiring to commit terrorist attacks, but never divulged their intended target.

The trial began in November 2008 and lasted more than 170 days - one of the longest in Australian legal history.

The New South Wales police commissioner, Andrew Scipione, welcomed the guilty verdicts.

"It is a very strong statement," he said. "If you come here with a view to committing an act of terrorism you are likely to be caught."

Outside the court in Sydney, there were angry scenes as supporters of the convicted men scuffled with members of the press.

Relatives expressed their disbelief at the jury's decision.

Male: "My uncle - the best person, like, he used to go with me to boxing fights because I was a boxer and he used train me."

Female: "It is unfair because he has done nothing wrong."

The five men face life in prison and are expected to be sentenced in December.

Four other men, accused of being part of the same conspiracy, had previously pleaded guilty and have been sentenced to up to 14 years in prison.

Goldman Turns Into a Financial Frankenstein While the Fed Snoozes Away


By: Raymond J. Learsy


Before the financial crisis, before Goldman was the recipient of billions of Tarp funds, before the financial collapse of September 2008 when even the viability of Goldman was put into question, before the rescue of AIG and their derivative contracts comprising $13 billions that we know about -- that were held by Goldman and whose value had dropped to near zero, for which AIG, with bailout funds from the government, was able to pay Goldman 100 cents on the dollar in counter party settlements -- and before the myriad telephone calls at the height of the crisis between Lloyd Blankfein, Chairman of Goldman Sachs, and Treasury Secretary Hank Paulson, ex-Chairman of Goldman Sachs, Goldman Sachs was a tried and true investment bank active in proprietary trading and investments battling away in the world of you win some you lose some with their own money.

And then, at the height of the crisis, financial wizardry reached a new height of magical transformation. "Abracadabra!" The Federal Reserve, in consort with the Treasury, waved their magic wands and Goldman Sachs, almost overnight was magically transformed onto a bank holding company to ensure it had access to varied government lifelines during the heavy weather of what many feared was an incipient financial meltdown. It further sent a crystal clear signal to the world marketplace, that after the collapse of Lehman, that Goldman was too big to fail and the government wouldn't let it happen. At that moment of financial havoc, it was a priceless endorsement.

Now what does that mean? Goldman not only received the government's implied guarantee that it was too big to fail, essential to Goldman, given the financial turbulence at hand, but many other benefits, as well. For example, access to the Fed Window and dirt cheap money (less than 1% on borrowings), access to money from bank deposits that would now be guaranteed by the FDIC, myriad Fed programs in support of the banking system, and of course with the implied guarantee of being too big to fail, giving it license to swing for the bleachers.

The Financial Times, commenting on Citigroup's sale of its oil trading unit to Occidental Petroleum,made a fundamentally key observation that applies in spades to Goldman Sachs: "The divestment of Phibro ... enables the bank to redeploy billions in capital the unit needs but deprives it of a big profit engine." An even more accurate observation would have changed the text to read "a big profit/risk engine," because that is the nature of oil trading and virtually all proprietary trading -- be it bonds, currencies, financial derivatives and all manner of commodities from copper to soybeans. And here lies the core of the Financial Frankenstein that the Fed, our oversight agencies and our government, has created and continues to nurture.

You see, Goldman was not assisted by the government to become a voracious and even heftier investment bank. Rather, one can presume that the government's assistance was to prevent systemic failure and to enable Goldman and others to function as banks in order to assist in the restructuring of the American economy. One can presume that it was the Treasury's and the Fed's intent and expectation that, given the extraordinary assistance extended to Goldman, they would pitch in toward calming the nation's economic trauma by assuming many of the responsibilities attendant to being a bank -- helping the economy to get back on its feet by extending loans to businesses large and small, to homeowners, doing what banks do to help communities throughout the land. That Goldman would have committed many of those billions, now swept up in its propriety trading, to desperately needed banking functions, helping the cash strapped economy with liquidity and thereby supporting the underpinnings of what is imperative to save jobs, create new ones, help people stay in their homes. One might have expected Goldman to redeploy a large measure of the government's largesse to the less profitable, less risky, but urgently needed retail banking, and to spur local economies.

Would it have been too much to ask that Goldman would do this out of a sense national obligation and perhaps an ounce of gratitude? Not simply siphoning probably hundreds of billions out of the economy for proprietary trading, gorging themselves on government funded programs with virtually the sole purpose of enhancing their bottom line with the result all too often of increased prices for the consumer. One can seriously ask, did Goldman's trading in oil play an important role in pushing the price of oil to $147/bbl helping to crush the economy?

It could be said that here is a gross misallocation of government funds and programs. It stands to reason that the purpose of Goldman's transformation from investment bank to bank holding company was not simply to enhance Goldman's ability to trade and profit, swallowing billions upon needed billions away from a cash starved economy to bloat the bonus pool of those with the know-how and connections to game the system as well as the Fed's and Treasury's programs and largesse, to advance their own interests. Written or not, there is a moral obligation here that goes far beyond pulling in the biggest buck!

Gold Prices Impact 'Festival of Lights'


By Jennifer Glasse

Soaring gold prices are having an unexpected impact on a major religious holiday celebrated in South Asia and many other parts of the world starting Saturday. The Festival of Lights, or Diwali, is the biggest holiday of the year for Hindus and other religions in South Asia and thousands of Hindus are expected to gather in London to celebrate. But one Diwali tradition, buying gold, is changing because of high prices.

It's a busy time of year for jewelers in London's East End. Many in this neighborhood are from South Asia and are celebrating Diwali. Store manager Vikram Santilal says buying gold bars or coins is traditional at this time of year.

"During the Diwali season, you have the days running up towards Diwali and the five days after Diwali, where coins, investment bars will be bought because it's very auspicious to be bought, so you do find people to come in to but that memento as well," he said.

But with the price of gold at an all time high, things are changing. Customers are looking at other precious metals, like platinum. Now only about $300 more an ounce than gold.

"There is change in some people traditionally expected platinum to be an expensive metal, people are looking at it in the same terms as gold values," said Santilal.

Another jeweler, John Jacobs, is seeing a different trend. "The gold price has gone up so high, so what you normally get for 100 pounds earlier, you don't get that much for the same amount, they get a better thing for the same price when it comes to diamond," he said.

Jacobs says both the old and the young are switching to diamonds this year. Their price has remained stable.

"The main difference I have seen is people are moving from 22 carat gold jewelry to diamond jewelry, maybe what they say is true is diamonds are forever, and diamonds always is a lady's best friend," he said.

The economic recession is also affecting Diwali buying, jewelers say in general the pieces are smaller, whether gold, platinum or diamonds.

Oil companies cautious about amnesty


By Elisha Bala-Gbogbo

Oil companies are reluctant to celebrate the “success” of the Federal Government’s amnesty deal even though output levels from the Niger Delta rose by more than 200,000 barrels per day with the resumption of operations in some fields which were previously closed.

“It is premature to start making specific comments on this subject (Post amnesty),” Femi Odumabo, Chevron’s general manager Policy, Government and Public Affairs said. “However, we are pleased with the progress that we are all witnessing and pray for it to be long lasting through all stakeholders’ continued embracement of peace, dialogue and the rule of law.”

Increased production

But the Federal Government is happy with the progress made through the amnesty as output levels from the oil-rich Niger Delta increased from about 1.6 million barrels in June, to 1.87 million barrels for September loading. The gain was as a result of the stability created by the Movement for the Emancipation of the Niger Delta’s (MEND) ceasefire while the amnesty offer lasted.

The period afforded international oil companies, which control about 90 percent of Nigeria’s oil output, the confidence to lift some of their ‘force majeure’, a legal protective measure used by a company unable to meet contractual deliveries due to actions beyond its control.

Shell lifted the embargo on its 200,000 barrel per day output outage on Bonny Light, and 115, 000 barrels per day facility at the East Area (EA) field in early September. Total also lifted its force majeure on the Amenam field at the end of the same month.

Too early to rejoice

Despite the gains in output levels, the multinationals are not carried away by the peaceful situation just yet.

Although Shell’s Nigerian spokesperson declined to comment on the situation, the company’s chief executive, Peter Voser, on Wednesday lamented that the oil giant’s onshore output currently stands at 120,000 barrels per day, down from about 300,000 barrels per day produced before militant activities escalated in the Niger Delta.

Mr. Voser said Shell’s onshore production in Nigeria had been “heavily curtailed by violence” in the oil-rich region. “We have a huge proportion of onshore production shut in at this stage. I think we are now at 120,000 bpd and we used to be close to 300, 000,”

Movement warns of fresh onslaught

However, in the early hours of last Friday, the foremost militant group in the area, the Movement for the survival of the Niger Delta warned that it is set to “resume its hostilities against the Nigerian oil industry, the Nigerian armed forces and its collaborators with effect from 00:00Hrs, Friday, October 16, 2009.”

This is despite a former senior commander of the militant group, General Boyloaf’s dismissal of movement’s recent threats. He had said the group lacked the capacity to launch new attacks.

Boyloaf, along with other senior commanders, Farah Dagogo, Government Tompolo, and Ateke Tom, are beneficiaries of government’s benevolence after accepting the amnesty offer.

2 million barrels

Using the purported success of the amnesty programme as a yardstick, the federal government believes oil output is on course to reach 2 million barrels per day for the first time since July 2008.

The government expects output to average 2.09 million barrels per day by 2010, 2.28 million barrels by 2011, and 2.5 million by 2012.

Some analysts agree that these expectations are realisable. “I think for the next few months we will see production pick up and 2 million barrels per day next year is definitely achievable,” said Philip Walker, sub-Saharan Africa analyst at the Economic Intelligence Unit. “But if the government can’t deliver on its promises then it will get worse again.”

But others warn of being overly optimistic about the outcome of the amnesty offer. Alex Vines, head of Africa Programme at London-based think tank, Chatham House, said “Let’s be cautiously optimistic. This is an opportunity for Nigeria’s oil industry that shouldn’t be missed. It is the most positive sign we have seen for some time but we will have to see how the Nigerian government reacts if spoilers step in.”

Before the amnesty deal was struck, successive attacks by militants in May, as a reprisal for a military onslaught, led to production shut-in of about 605, 500 barrels per day of crude oil. With a history of having no sustained rise in output levels since MEND started its assault against the oil industry in early 2006, industry experts opine that they need more evidence before they accept that the current “amnesty success” will lead to a sustained increase in output.

Graffiti artists use billboards as their canvas in cross-border project


By Sandra Dibble

The street is both their studio and gallery. Their public is anyone who passes by — police cruisers with flashing lights, street vendors with bouquets of flowers, groups of uniformed schoolchildren.

Armed with cans of spray paint and rich imaginations, seven accomplished graffiti artists from both sides of the border are gathered in Tijuana this week for an unusual project: enhancing the city's billboards with their work.

“This is a chance for people to see graffiti from a different point of view,” said Tijuana-born Alfredo Gutierrez, an architecture graduate who uses the name Libre as his graffiti tag. “It gives them a chance to see what can be done.”

The exhibit, which opens today, involves participants from as far away as San Francisco and Oaxaca in southern Mexico. Their canvases are 13 billboards with giant photographs of urban scenes by Jorge Sánchez, known as Jofras in Tijuana's artistic circles. Their assignment: Use spray paint to transform the photographs however they choose.

The project is backed by U.S. and Mexican institutions, including Mexico's National Council for Culture and the Arts, Tijuana's Municipal Cultural Institute and the U.S. Consulate in Tijuana. Arturo Rodrı́guez, owner of Tijuana's La Caja Gallery, helped spearhead the project through his nonprofit group, Arte Sin Fronteras.

The project is not intended to glorify graffiti as much as explore its possibilities as an art form. “Graffiti is an inevitable expression of our time,” according to the promoters' online description. Because of its visibility, “graffiti has been converted into the scapegoat for many of the ills suffered by society.”

For Rodrı́guez, the exhibit is a way of taking contemporary art out of the gallery and to the public at large. It also sends a message to young taggers who spray letters across Tijuana's walls and buildings: They can become artists.

“They have a future, and the future can be these kinds of projects,” Rodrı́guez said.

The project's artists also include Tijuana-born Israel Elizondo, known as Shente, who remembers stealing cans of spray paint as a teenager because no one would sell them to him.

At 34, he is preparing to enroll in art school while remaining true to his origins. “I used to be a graffiti writer, do a lot of illegal bombing, but you have to at some point cross that bridge and make it artistic,” Elizondo said. “You have to grow up; do you really want to do this seriously, or what?”

Visiting artists include Yescka, from Oaxaca, a graduate of the prestigious Bellas Artes school in Mexico City who uses stencils and brings a political message to his art; Benuzz Heal, from Mexico City, who draws motivation from Mexico's pre-Hispanic figures; and Pose2, a business graduate from New York and San Diego who now paints murals.

They are a wordly bunch, having completed graffiti projects in London, Paris, Washington, D.C., and Mexico City. They discussed the masters who inspire their work: Peter Max, Salvador Dali, Hieronymus Bosch.

Although some had never met until this week, they all know each other's works through the Internet.

“It's beautiful, this whole spray-paint culture, we know each other, even if we don't know each other,” Pose2, also known as Daniel Hopkins, said Thursday as he sat across the street from Tijuana's Camino Real Hotel. “It's this whole culture of people who know each other through their art forms.”

Chavez backs dropping U.S. dollar for oil trade




Venezuelan President Hugo Chavez said on Saturday that countries including Venezuela, Russia and Iran had proposed the U.S. dollar should be replaced as the currency used for the oil trade.

"We've been talking about this in OPEC. Venezuela agrees and there are other countries, such as Iran and Russia that have also proposed this idea," Chavez told reporters in the central Bolivian region of Cochabamba, where he was attending a summit of leftist Latin American presidents.

A debate about the issue of replacing the dollar with a basket of currencies in an attempt to stabilize revenues has been widely discussed since a report in the Independent newspaper this month said Gulf states were considering the change.

Better late than never!


Mythili Bhusnurmath, ET Bureau

It took the Nobel Committee forty years to award the Nobel in Economics to a woman. That doesn’t say much either for the Award Committee or the
dismal science. Especially when you contrast that with the two women Nobel laureates in Physics, four in Chemistry, 10 in medicine (the so-called male-dominated areas), 12 in literature and an equal number who have won the Noble Peace Prize.

Yet, it is not as though there haven’t been outstanding women economists. Joan Robinson, for instance, was not only streets ahead of many of her male contemporaries but her seminal contributions – whether in challenging the holy cow of perfectly competitive markets with her work on imperfect competition or on accumulation of capital - laid the foundation for much of the later work in Economics.

Yet for reasons best known to the Committee, the Economics Nobel eluded women. In the period since 1969 when it was instituted by the Riksbank, it has been awarded 41 times to 64 economists, every one a male. Till Elinor Ostrom broke into the all-male club in a year that has another record to its credit – the maximum number of women laureates (5) in a year.

Indeed the male bias is so deeply embedded in the psyche when it comes to the Economics Nobel (in common with many other spheres of life, perhaps) that the pre-award list of contenders featured just two women, Ostrom with odds of 1-50 and Nancy Stokey, 1-25.

Consequently when the Prize was announced it took the academic world (Nobels, unfortunately, are seldom awarded to practitioners!) by surprise. Ostrom was a dark horse. In a world obsessing about finance and increasingly concerned with self-gratification, her field of study – economic governance, how to manage common resources – has a quaintly old-world ring about it.

“I must also say this is a little interesting. I will have to read up on her,” is how Jayati Ghosh, professor at the Centre for Economic Studies and Planning in Jawaharlal Nehru University is quoted in another paper; echoing a view most mainstream economists might have shared; though few might have been honest enough to admit.

What is clear is that with this a new page has been turned in the annals of the Economics Nobel. Women economists will no longer be regarded as pariahs. Perhaps conscious of the gross injustice done to women economists, Professor Tore Ellingsen of the Royal Swedish Academy of Sciences while announcing the award expressed the hope that “it will be inspiring for women researchers that (they) don’t have to be a male in order to win the economics prize.”

But that’s not the only thing that’s different about this year’s Economics Nobel. No less significant is the message it sends of the end of the vice-like grip of mathematical economics over all other branches of the subject. Many, including some very well-respected economists, thought it had gone too far but few voiced it.

Certainly none did it as bluntly as Joan Robinson back in the 1950s when she declined an invitation to become vice-president of the Econometric
Society because, as she put it, she could not be part of the editorial committee of a journal she couldn’t read! Well said!

Economics (and economists) had come dangerously close to treating a social science like the physical sciences, ignoring the reality that human beings who play the central role in economic decision-making are seldom entirely rational. We’re more like Star Trek’s Captain Kirk than the chillingly clinically-rational Spock! Thank God for it!

The Award Committee seems to have realised that too. In what could be construed as the ultimate slap in the face for rocket scientists who’ve strayed into the field of economics, the first Nobel in Economics has gone to a woman whose basic training is in political science, not economics at all!

Ostrom’s work flies in the face of conventional wisdom that common property
is poorly managed and needs to either be regulated by a central authority or privatised. The citation says her work demonstrates “how common property can be successfully managed by user associations.”

It goes on to add “whereas economic theory has comprehensively illuminated the virtues and limitations of markets it has traditionally paid less attention to other institutional arrangements.” The father of the nation, Mahatma Gandhi would have endorsed her work whole-heartedly; it is so much of a piece with all that he believed in and the world is, belatedly, realising.

Forecast for Microsoft: Partly Cloudy


By ASHLEE VANCE

RAY OZZIE, the chief software architect at Microsoft, bristles when asked whether people think that new versions of his company’s flagship software — like Windows and Office — are exciting.

“It’s tremendously exciting,” he exclaims defensively, wheeling back from an office table and allowing his hands to flail. “Are you kidding?”

Normally subdued and cerebral, Mr. Ozzie inhabits a spacious office at Microsoft’s headquarters here that feels equal parts Ikea showroom and computer museum. His shelves and desks are uncluttered, and one of the first I.B.M. personal computers ever made sits centered like an artifact atop a long, squat bookcase.

If only the world — or at least the business world — were so immaculate and neatly organized. But Mr. Ozzie and his colleagues at Microsoft recognize, of course, that very little in the technology universe ever stays the same.

“What’s the old movie line from ‘Annie Hall’? Relationships are like sharks; they move forward, or they die,” says Steven A. Ballmer, Microsoft’s chief executive. “Well, technology companies either move forward, too, or they die. They become less relevant.”

And according to Mr. Ozzie, we have entered an age that’s a far cry from that of the PC enshrined on his altar to beige-box antiquity. Consumers and workers have been gripped, he says, by a “gizmo revolution.”

But gizmos are only half the battle for Microsoft. True, fashionistas obsess over whether a new laptop will fit into their purses and what type of fashion statement the device will make. Corporate road warriors, meanwhile, exude pride as they whip ultrathin computers with exotic finishes out of their satchels. Yet the most desirable devices these days are those that also allow information addicts on the move to untether themselves from the desktop PC and communicate through the so-called “cloud.”

With the arrival this week of Windows 7 and a host of complementary, slick computers, Microsoft intends to undermine those Apple ads that mock PCs and their users as stumbling bores. Mr. Ozzie, who plays the role of visionary and strategist at Microsoft, says Windows 7 will let PCs keep pace with other computing devices and, in short, finally make them sexy.

In a play for its piece of the cloud, Microsoft plans to release a software platform, Windows Azure, next month that represents its bid to lure businesses with online services. While late to cloud computing in spots and a lackluster participant in the mobile market, Microsoft, Mr. Ozzie says, has a shot at reinventing itself and moving beyond the desktop.

“This gives us an opportunity as a software vendor to refresh our value proposition,” he says. “I just think it’s an exciting time for Microsoft.”

For many years, Microsoft and its leaders could make sweeping statements like this with little public pushback. Microsoft embodied the technology industry and was the grand arbiter of the tools people used to conduct business and navigate the digital era.

These days, however, Microsoft has legions of doubters. While it still commands a prominent and profitable position in computing, brand experts say consumers stumble when trying to define what the company stands for and whether it can create a grander technological future.

“Microsoft sort of disappeared from the scene,” says Regis McKenna, a Silicon Valley marketing and strategy expert. “Every once in a while, they have a delayed Windows release or something like that. By and large, I think the marketplace is focused on what Google and Apple are up to.”

Critics of Microsoft say it has hugely underestimated market changes and plotted a long and winding course toward irrelevance. It remains too fixated on its old-line, desktop-based franchises, they say — too slow, too predictable and too, well, Microsoft.

“They are trapped in their own psychosis that the world has to revolve around Windows on the PC,” says Marc Benioff, the C.E.O. of Salesforce.com, which competes against Microsoft in the business software market. “Until they stop doing that, they will drag their company into the gutter.”

While Mr. Ozzie welcomes the gizmo revolution, much of what it appears to entail runs counter to Microsoft’s historical strengths. The revolution stretches well beyond a fascination with the aesthetic appeal of a computing device; it also marks a transition in which the consumer, not the office worker, is the dominant force shaping the tech landscape.

Consumers now buy more PCs than businesses do, and their wants and desires for better-looking devices have invaded the cubicle. The current breed of consumer has shown an ability to turn something like the Apple iPhone into an overnight sensation, then demand that companies embrace it. Google, meanwhile, uses its influential Web search and YouTube properties to introduce people to its e-mail, document and Web browser software, and Facebook now provides inspiration to business software makers.

For Google, winning over consumers is crucial to its strategy of infiltrating corporations and deflating Microsoft’s core businesses. “We are the next generation,” says Dave Girouard, the president of Google’s business products division. “The big difference in technology here is the pace of innovation.”

While the Internet and network-connected devices are anything but novel, the ability to snatch data anywhere off of the Web — so-called cloud computing — has started to catch on with consumers and businesses in a more meaningful way. As such services become more popular, Microsoft’s grip on computing loosens, its critics say.
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Microsoft's Many Faces


“They are not the company they once were in terms of market position,” says Bruce R. Chizen, a former Microsoft employee and former C.E.O. of Adobe Systems, the publishing software maker. “They no longer have a monopoly that is critical to the future of computing.”

Mr. Ballmer, Mr. Ozzie and others at Microsoft see things rather differently, and for the last year have argued that coming software releases for PCs, data centers, mobile devices and game consoles will confirm exactly how Microsoft will remain a pivotal force on the tech landscape.

Mr. Ballmer contends that Microsoft is the only company prepared and positioned to merge computing from both ends — the desktop and the cloud. “We’re just investing more broadly than everybody else,” he says, adding that, when it comes to software, “I want us to invent everything that’s important on the planet.”

Pundits and investors are ready to judge how well Mr. Ballmer lives up to these claims, and his tenure may ultimately be decided by how well his enterprise floats up to the cloud.

LIKE almost all companies in the PC industry, Microsoft has been punished by a historic decline in computer sales during the recession.

Over the past year, it has endured a string of humbling company firsts. In January, it began laying off up to 5,000 people — its first-ever broad personnel cuts. That followed its first declines in Windows sales and preceded its first yearly drop in revenue.

Despite such setbacks, Microsoft continues to produce profits that are the envy of the technology industry. In July, it ended its fiscal year with a 3 percent drop in revenue, to $58.4 billion, still bringing in a $14.6 billion profit. Microsoft has a war chest of $31.45 billion, including cash and short-term investments, and its shares have recovered from a low of $14.87 in March — its lowest price in more than 10 years — and now trade at $26.50.

Executives at Microsoft say it has gotten its house in order, putting an end to delayed, clunky products like the maligned and then ignored Windows Vista. If a broad economic recovery occurs, Microsoft’s fortunes will rise as they always have in rosier times.

“I do believe that Microsoft should be able to benefit dramatically as the economy comes out of its downturn,” said Marilyn J. Dicks-Riley, the chief executive of the Lynmar Capital Group, which bought more than 800,000 shares of Microsoft earlier this year. “We are of the view that Microsoft is committed to long-term innovation.”

Microsoft does, in fact, have a dazzling array of long-term bets. It has earmarked close to $10 billion for research and development spending over the next year. These funds cover work in desktop software, data center software, developer tools, health care systems, video game consoles and games, music players, phones and phone software, Web properties and office collaboration products. In Internet search, Microsoft has unveiled a well-received engine called Bing and has pledged to spend what it takes to make a meaningful dent in Google’s main business.

Some investors contend that Microsoft has its fingers in too many pies, developing too many products. The company is struggling to please consumers and workers at the same time. Despite its hunt for the next big thing in so many areas, Microsoft more often than not finds itself playing the role of follower, trying to buy its way into markets that other companies dominate.

“This used to be the company that everyone looked to for innovation and excitement,” says James R. Gregory, the chief executive of CoreBrand, a brand consulting company. “It has lost that edginess in a fairly convincing way.”

According to a new CoreBrand study, Microsoft’s reputation and the perception of its management and investment potential have been declining for over a decade, with the drop-off accelerating over the last five years.

Mr. Ballmer concedes that some Microsoft shareholders take issue with its long, costly pursuit of businesses like music players and search. Still, he remains committed to a broad course of action.

“I think a lot of companies in our business do give up on things too early, in my opinion,” he says.

But for Microsoft, just doing the basics has been problematic.

It released the Windows Vista operating system in 2007 to widespread ridicule. The software arrived years late and had lost many of its planned ground-breaking features.

Microsoft’s primary selling point over a narrow specialist like Apple has long been that it offers choice and caters to the masses. Yet Microsoft couldn’t get Vista to work well with partners’ hardware and software.
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Microsoft's Many Faces


“We were trying to do too much change in too rapid a fashion,” Mr. Ballmer says.

“And so, for me the issue isn’t that we know how to make hardware and software work together and the like. The question there was I think we attempted too much.”

Microsoft also faces hurdles in the mobile phone market. For many years, it has sold software for a broad array of phones, but Mr. Ballmer has been disappointed with his mobile division, particularly when devices like the iPhone blindsided his company.

While Microsoft has tried to bolster its phone business through acquisitions and internal development, it remains months away from announcing the fruits of a project, code-named Pink, to revitalize its phone technology. And former insiders contend that Pink, like so many Microsoft efforts, has been dragged down by bureaucracy and compromise.

Even worse, Microsoft’s top executives have fretted recently about the potential fallout with customers when the company lost personal data tied to T-Mobile USA’s phone services — especially any doubts the incident raised about its mobile, cloud and security claims.

But Microsoft can point to places where its big bets have paid off. Bing takes a new approach to search by giving customers a glossier interface and, often, more detailed results than they will find with Google. And the Xbox game console and Xbox Live service have put Microsoft at the forefront of online gaming.

MICROSOFT says the cloud acts as a natural complement to its traditional software products, and the company often talks about the “three screens and a cloud” strategy — which covers computers, phones and TVs all connected to common services.

“I would say there’s clearly a change in the fundamental platform of computing,” Mr. Ballmer says. “The cloud is now not just the Internet; it’s really a fundamental computing resource that’s getting thought about and looked at in a different way.”

But the cloud presents Microsoft with a host of challenges to its time-tested model of selling desktop and computer server software for lucrative licensing fees. Fast-paced rivals like Salesforce, Amazon and Google hope to undercut its prices while adding software features every few weeks or months rather than every few years, as Microsoft has done.

Microsoft executives acknowledge that the company had perhaps stalled, licking its wounds and trying to figure out how to behave while under scrutiny after years of antitrust court battles.

“We’ve moved to be a mature company, but maybe too nice a guy in some senses, and not maybe moving fast enough in things,” says Bob Muglia, a 20-year Microsoft employee and president of its server software business.

Rivals now simply dismiss Microsoft as a laggard rather than hitting it with the Evil Empire criticisms so familiar in the 1990s. In its place stands Google, which now has Microsoft’s mantle as a game-changing technology behemoth and is also increasingly perceived as a dominant competitor whose power warrants concern.

Google’s rise has cast Microsoft at least partly in the unfamiliar role of a white knight.

“Until recently, Microsoft was the only empire,” says Nicholas G. Carr, an author who has chronicled the rise of cloud computing. “Now, I think there are empires of the Internet as well as of the PC, and they are colliding.”

In an effort to continue remaking its image, Microsoft is courting young software developers and cloud computing start-ups. Company executives acknowledge losing touch with these crucial audiences as open-source software turned into the standard for people looking to create the next wave of applications and services.

These days, Microsoft gives away business software to students and will let certain start-ups use its software free.

“They got scared,” says Bryan Trussel, a former Microsoft executive and now head of Glympse, a mobile software start-up. “I think they get it now, but the question is how far behind they are.”

Microsoft’s primary selling point over a narrow specialist like Apple has long been that it offers choice and caters to the masses. Yet Microsoft couldn’t get Vista to work well with partners’ hardware and software.

“We were trying to do too much change in too rapid a fashion,” Mr. Ballmer says. “And so, for me the issue isn’t that we know how to make hardware and software work together and the like. The question there was I think we attempted too much.”

Microsoft also faces hurdles in the mobile phone market. For many years, it has sold software for a broad array of phones, but Mr. Ballmer has been disappointed with his mobile division, particularly when devices like the iPhone blindsided his company.

While Microsoft has tried to bolster its phone business through acquisitions and internal development, it remains months away from announcing the fruits of a project, code-named Pink, to revitalize its phone technology. And former insiders contend that Pink, like so many Microsoft efforts, has been dragged down by bureaucracy and compromise.

Even worse, Microsoft’s top executives have fretted recently about the potential fallout with customers when the company lost personal data tied to T-Mobile USA’s phone services — especially any doubts the incident raised about its mobile, cloud and security claims.

But Microsoft can point to places where its big bets have paid off. Bing takes a new approach to search by giving customers a glossier interface and, often, more detailed results than they will find with Google. And the Xbox game console and Xbox Live service have put Microsoft at the forefront of online gaming.

MICROSOFT says the cloud acts as a natural complement to its traditional software products, and the company often talks about the “three screens and a cloud” strategy — which covers computers, phones and TVs all connected to common services.

“I would say there’s clearly a change in the fundamental platform of computing,” Mr. Ballmer says. “The cloud is now not just the Internet; it’s really a fundamental computing resource that’s getting thought about and looked at in a different way.”

But the cloud presents Microsoft with a host of challenges to its time-tested model of selling desktop and computer server software for lucrative licensing fees. Fast-paced rivals like Salesforce, Amazon and Google hope to undercut its prices while adding software features every few weeks or months rather than every few years, as Microsoft has done.

Microsoft executives acknowledge that the company had perhaps stalled, licking its wounds and trying to figure out how to behave while under scrutiny after years of antitrust court battles.

“We’ve moved to be a mature company, but maybe too nice a guy in some senses, and not maybe moving fast enough in things,” says Bob Muglia, a 20-year Microsoft employee and president of its server software business.

Rivals now simply dismiss Microsoft as a laggard rather than hitting it with the Evil Empire criticisms so familiar in the 1990s. In its place stands Google, which now has Microsoft’s mantle as a game-changing technology behemoth and is also increasingly perceived as a dominant competitor whose power warrants concern.

Google’s rise has cast Microsoft at least partly in the unfamiliar role of a white knight.

“Until recently, Microsoft was the only empire,” says Nicholas G. Carr, an author who has chronicled the rise of cloud computing. “Now, I think there are empires of the Internet as well as of the PC, and they are colliding.”

In an effort to continue remaking its image, Microsoft is courting young software developers and cloud computing start-ups. Company executives acknowledge losing touch with these crucial audiences as open-source software turned into the standard for people looking to create the next wave of applications and services.

These days, Microsoft gives away business software to students and will let certain start-ups use its software free.

“They got scared,” says Bryan Trussel, a former Microsoft executive and now head of Glympse, a mobile software start-up. “I think they get it now, but the question is how far behind they are.”

Rep. Myrick repeats call to cut CAIR ties


By Jordy Yager

Rep. Sue Myrick (R-N.C.) continued to accuse a Muslim advocacy group of attempting to place interns on key national security committees to sway policy in its favor, a day after the group’s spokesman received a death threat.

Asked for her opinion on CAIR spokesman Ibrahim Hooper receiving a death threat after the accusations she made on Wednesday, Myrick’s office reiterated her calls for Congress to stop dealing with the group.

“Why would anyone allow a group, who the FBI says is tied to terrorism, to influence national security policy, or any policy for that matter?” she said in a statement. “If the FBI has cut ties with CAIR, Congress should wake up and do the same.”

On Wednesday, Myrick and fellow GOP members of the Congressional Anti-Terrorism Caucus, Reps. John Shadegg (Ariz.), Paul Broun (Ga.) and Trent Franks (Ariz.), called for the House sergeant at arms to investigate whether the House Homeland Security Committee, Intelligence Committee and Judiciary Committee had hired interns who acted as “spies” for CAIR.

The next day Hooper said he received a death threat faxed to the CAIR offices depicting a gallows with his name on it and calling for him to be hanged for treason.

House Democrats, including Judiciary Committee Chairman John Conyers (D-Mich.), came to CAIR’s defense, saying that the GOP allegations were promoting religious intolerance and heightening tensions between Muslims and non-Muslims.

On Friday Rep. Michael Honda (D-Calif.), chairman of the Congressional Asian Pacific American Caucus, also denounced Myrick’s comments as “fear-rousing,” saying that they prevented Muslim Americans from participating in the political process.

“As a result of the innumerous obstacles facing Muslim-Americans in this post-9/11 environment, their political participation is stifled and often stymied,” he said in a statement. “These fallacious allegations implicate the existence of a society still struggling with anti-Muslim sentiment.”

The GOP accusations stem from a book released on Thursday, Muslim Mafia: Inside the Secret Underworld that’s Conspiring to Islamize America, by P. David Gaubatz and Paul Sperry.

In the book’s forward, Myrick writes: “Front groups of terror now operate openly in our country, comprising a network of support for jihadists…Government officials need to stop hiding behind political correctness and keep the American people informed.”

In a Jan. 13, 2007, memo that the book’s authors said was obtained from CAIR, the group states its intention to lobby members of Congress and place interns in the offices of lawmakers.

“We will focus on influencing congressmen responsible for policy that directly impacts the American Muslim community. (For example congressman (sic) on the judiciary, intelligence, and homeland security committees.) We will develop national initiatives such as a lobby day and placing Muslim interns in Congressional offices,” the memo reads.

The Republicans on Wednesday called for the Justice Department to share with all lawmakers and their chiefs of staff an executive summary of the findings that led the department to name CAIR as a co-conspirator in an anti-terrorism case.

Myrick’s office cited a letter on Friday they said was sent to Sen. Jon Kyl (R-Ariz.) by the FBI on April 28. The letter states that the agency, while investigating the Holy Land Foundation, discovered a link between the founders of CAIR and the Palestinian Committee, which it says has ties to Hamas, which is considered a terrorist organization by the U.S. and European Union.

“In light of that evidence, the FBI suspended all formal contacts between CAIR and the FBI,” the letter reads.

The American Civil Liberties Union on Friday called the GOP accusations a “witch hunt.”

“Attempting to stigmatize legitimate activities with sinister and baseless accusations is reminiscent of some of the darkest days of our history,” Amanda Simon, a spokeswoman for the ACLU, said in a statement.

“This sort of fear-mongering and baseless finger-pointing has no place in our democracy, much less in our Congress.”

Broun’s office reiterated his calls to investigate CAIR, but refrained from addressing either the death threat sent to Hooper or Democrats' calls for tolerance.

Neither of the offices of the two Muslim members of Congress, Reps. Keith Ellison (D-Minn.) and Andre Carson (D-Ind.), responded to requests for comment by press time. And the Congressional Muslim Staffers Association declined to comment. But Honda backed the efforts of Muslims in Congress.

“My Muslim colleagues in the House of Representatives, along with the highly qualified, patriotic and committed Muslim staffers and interns that have worked with my office and with CAPAC, contribute mightily to our democratic process,” he said. “Any slander against these fellow patriots is slander against democracy and religious freedom.”

The offices of Shadegg, Franks and Kyl did not return requests for comment by press time.

Galleon’s edge


Posted by: Matthew Goldstein



The arrest of hedge fund millionaire Raj Rajaratnam on charges that he and his $7 billion Galleon Group hedge fund profited from illegal insider trading will no doubt feed suspicion in some corners about the way hedge funds generate fat profits.

But for anyone to assume that all hedge fund managers owe their success to getting information on the sly is unfair and wrong. The overwhelming majority of hedge funds are only as good as the quality of the research performed by their analysts and traders.

And the truth is the vast majority of hedge funds are rather ordinary. If the majority of hedge funds managers were so crafty, not so many funds would have gone bust last year–or lost bundles of money for their wealthy investors.

The true standouts in the industry are a real minority. Anyone can put together an offering statement, call themselves a hedge fund manager and go out and raise money. That’s one reason why wealthy people and pension funds who throw money blindly at hedge funds without doing adequate due diligence are being plain foolish.

Still, the charges against Rajaratnam and five co-defendants are disturbing. Hubris and greed are powerful motivators. And some hedge funds will stretch, even break the rules to get an edge–even if it’s to book just another $20 million for a fund with nearly $7 billion in assets.

Indeed, it’s worth noting that this isn’t the first time Galleon has been accused of skirting the rules to get an edge.

In 2005, Galleon paid an $800,000 fine to the SEC to settle a civil investigation into allegations it improperly profited from shorting 17 stocks. The SEC alleged the hedge fund violated securities rules by using shares obtained in a secondary offering to cover, or close out, a pre-existing short position on a stock. Regulators claimed that impermissible strategy called “collapsing the box” essentially was a risk-less one and generated $1 million in trading profits for Galleon.

Maybe the 2005 settlement put Galleon on a watch-list for prosecutors. It appears from the criminal complaint prosecutors began focusing on Galleon and its co-founder in 2006. Dealbreaker’s crack investigative reporter Teri Buhl has a good speculative piece on whom at Galleon might have been cooperating with investigators.

Also, Galleon always has had something of a cowboy culture. Years ago, the fund recruited a former Bank of America technology analyst who was fined and suspended by securities regulators because he allegedly issued misleading bullish research reports on stocks he was simultaneously advising hedge funds to sell short. I broke the scandal when I was still at TheStreet.com.

However, what may be most troubling about this latest case brought by federal authorities in New York is that one of the people allegedly providing illegal tips on leveraged buyouts and other deals was an analyst with Moody’s Investors Services, the credit rating agency. The alleged tipster got $10,000 for his work.

The allegation about the Moody’s analyst raises serious questions about safeguarding the flow of information from credit rating agencies to traders on Wall Street. We’ve already seen evidence in a civil lawsuit against UBS that suggests some at Moody’s may have discussed potential rating changes on CDOs with some Wall Street banks.

Insider trading is a problem that has been around as long as people have traded stocks. And it’s almost impossible to stamp-out insider trading, given the premium someone will put on getting inside information.

But aggressive law enforcement like the kind done in this case should serve as a deterrent–hopefully.

Matisyahu phishes for faith


By Heath Mccoy, Calgary Herald

Though he was raised in a Jewish household in White Plains, NY, Matthew Miller--who is today known as the Hasidic Jewish reggae-rapper Matisyahu--says the practising of Judaism wasn't a major part of his life until his teenage years when he delved into the religion on his own terms.

Oddly enough, it was reggae icon Bob Marley who got the young hip-hop fan to take a serious look at his own religious heritage.

"It was hearing a lot of quotations in Marley's music that came from the Bible, the Old Testament, the Torah," says Matisyahu in an interview to advance tonight's Flames Central show.

"The only time I'd heard these things before was in Hebrew school in a way that was sort of pushed upon me, that didn't relate to my life. But to hear Bob Marley singing these things, it made me think 'Where's this wisdom coming from? Let me investigate it within my own heritage.' "

That investigation has come to inform every aspect of Matisyahu's career.

The 30-year-old reggae rapper, who's touring in support of his third album Light, has garnered attention from across the pop world for his unique sound, which blends aspects of reggae, rap, rock and traditional Jewish music, with a lyrical message inspired by the teachings of Orthodox Judaism, which so motivates Matisyahu.

But the reggae-rapper stresses that his songs are not meant to be preaching. "It's not about any religious message," he says. "It's really about . . . creating a certain environment for people to step into when they step into a show or turn on my record. It's an environment where they can get in touch with a deeper part of themselves. Where they can leave everything behind and focus on their inner wealth, their inner sense of being.

"If music is done in the right way, it allows for that to happen. That's what we're working toward."

While Marley "planted the seed" in Matisyahu, starting him on a spiritual path, he didn't fully adopt Orthodox Judaism into his life until about 10 years ago.

To be sure, it's not a practice that would suit the lives of many pop artists.

For example, Matisyahu doesn't permit himself to work or use electricity on the Sabbath and he can only eat kosher food. Worse, physical contact with women outside of his family is also a no-no.

Matisyahu wasn't always so disciplined. Rather, a portion of his teenage years was spent dropping LSD and following the jam band Phish around the country.

Ironically enough, the Phish connection would play a significant role in the reggae-rapper's career when, in 2005, a virtually unknown Matisyahu was invited onstage with Phish frontman Trey Anastasio at the Bonnaroo music festival in Tennessee. It was his first big break in the music industry.

As Matisyahu recalls, his manager had arranged a meeting with Anastasio backstage at Bonnaroo, on the condition that the rapper not ask his musical hero if he could join him onstage.

"Of course, the first thing I asked him was 'Trey, can I get up with you?' " remembers Matisyahu. At first the answer was no. Anastasio already had an artist joining him onstage for the gig. At the last minute though, the Phish star had an inspiration.

"He popped his head out of the trailer and said: 'Do you know any Bob Marley songs?' Are you kidding me? So to play a Bob Marley song with Trey Anastasio, that really was a surreal moment," Matisyahu says. "It was No Woman No Cry in front of about 40,000 people. Pretty insane."

Matisyahu felt as if the moment was meant to be.

"Just thinking about everything I went through in terms of being a fan and travelling around with nothing (following Phish) and totally living on the music. And then to have all these changes in my life (lead me) to that. . . . It was a surreal moment," he says.

"It felt like destiny happening, the way everything came together."

Modern academic economics 'a disaster and a disgrace', says leading analyst


* Ashley Seager
* The Observer, Sunday 18 October 2009
* Article history


f there are two places about which Roger Bootle gets animated, they are China and Chicago: the first because of its huge trade surpluses, which partly caused the global downturn he terms the "Great Implosion", the second because of the free-market economic dogma that played a key role in causing the recession.

In his office at the Capital Economics consultancy he founded when leaving the City 10 years ago, the veteran economist says his new book, The Trouble With Markets, is already under attack from the "efficient market" gurus. Their spiritual and academic home is the "Chicago School" – the University of Chicago – and their laissez-faire preaching of recent decades led policymakers into the dangerous liberalisation of financial markets that resulted, via vast profits and bonuses, in near-Armageddon, he says.

"A year ago we came perilously close to utter catastrophe," he adds. "But the neoliberal, free-market people are already on the warpath. They remind me of some mythical creature – cut off one head and it sprouts more."

It is now more than 13 years since Bootle published his first major book, The Death of Inflation, in which he predicted the long period of low inflation that came to pass. In Money for Nothing (2003), he fretted about asset prices being overinflated and called the house price bubble for what it was.

Although the crash took longer to come than he expected, he feels vindicated, especially since the free-market people had argued, bizarrely, that bubbles could not happen if markets were left to themselves: "Of course markets can produce bubbles. And I'm very critical of large parts of the City and don't buy the argument that the crash was all because of a failure of regulators or government. Banks were behaving like monopolies. These were not normal markets because of the complexity of charging and asymmetric information. People were paid ludicrous amounts in relation to what they actually did."

Countries should now endeavour, he argues, to rein in the financial sector, recognising that leaving the markets to themselves is a recipe for disaster.

His new book calls modern academic economics a "disaster and a disgrace". Echoing the Queen's question of why so few saw the crisis coming, he says: "They were not even looking in the right direction."

He is not too concerned by warnings that inflation is about to take off because of quantitative easing. He thinks that deflation, which has dogged Japan for nearly 20 years since its property bubble burst, is a bigger worry: "In recessions, wage growth always gets a big jolt downwards and there is all this talk of wage freezes in the public sector. There is also lots of spare capacity in the world economy, so it is difficult to see where this inflation is going to come from."

Another problem could be the over-hasty tightening of fiscal policy by an incoming Tory government, he says. One of the "wise men" who advised chancellor Kenneth Clarke in the 1990s, Bootle is alarmed by what David Cameron and George Osborne are saying. "A Conservative government could cut too hard. They may put up taxes quite a lot and that could clobber the recovery. You need a clear plan to reduce the deficit, but need to do it gradually. I'm more worried about deficits than the national debt.

"If you get deficits down gradually and let the economy grow, debt will improve over time. After the Napoleonic wars and the second world war debt was at 250% of GDP. It is much lower than that now."

But the flipside of the fiscal squeeze will be low interest rates. Bootle is convinced the base rate will remain below 1% for up to five years: "The economy is not going to be strong enough to withstand three forms of tightening – fiscal squeeze, a withdrawal of quantitative easing and the raising of interest rates. It is probably not strong enough to withstand two. So monetary policy will have to remain supportive."

This does not rule out a precautionary interest rate rise to signal that the Bank will not tolerate the return of inflation. But keeping rates low will also help to contain the cost of servicing the government's huge deficit, he adds.

What about the nascent recovery in house prices that these ultra-low interest rates seem to be triggering? Surely the last thing the country needs is to embark on another destructive boom?

Bootle points out that house prices had similar mini-recoveries in the last housing bust. "The combination of a big increase in unemployment, possibly negative wage inflation and a big increase in taxes could be pretty nasty for the housing market. And it still looks horrendously overvalued."

As for the broader future, he comes back to China. Its huge exports allowed it to build up massive trade surpluses, which it reinvested in US treasury bonds, pushing yields down and helping to create the asset price bubbles that caused so much damage.

"Unless China and the other surplus countries alter their policies, it is difficult to see how we get back to stable growth in the west," he says. "There is a growing danger of protectionism."

But, recognising the emergence of China and the relative decline of America and the dollar, he proposes a new global currency, overseen by a global central bank. This would allow the world to gradually move away from using dollars, as John Maynard Keynes proposed after the second world war and Chinese central bank governor Zhou Xiaochuan called for this year.

Ultimately, Bootle offers a way out of this mess that could tame the markets and make them work for the benefit of all. Capitalism, he thinks, can be saved from itself – but only if policymakers respond to the challenge.