Edmund Phelps: Less Innovation, More Inequality; America’s peak years of indigenous innovation ran from the 1820s to the 1960s. A slowdown in dynamism since then has contributed to soaring inequality

February 25, 2013 Leave a comment

FEBRUARY 24, 2013, 9:13 PM

Less Innovation, More Inequality

By EDMUND S. PHELPS

ONE source of the outsize inequalities in America is the dynamism that made economic activity so rewarding. An economy open to new concepts and novel ventures is bound to generate unequal gains. To tax all of those gains would close off the prospects for success that many entrepreneurs need if they are to undertake ambitious ventures — a big mistake. But it would also be a mistake to misunderstand the relation of inequality and innovation. It is less innovation — not more — that has widened inequality in the United States in recent decades.

America’s peak years of indigenous innovation ran from the 1820s to the 1960s. There were a few financial panics and two depressions, to be sure. But in this period, a frenzy of creative activity, economic competition and rapid growth in national income provided widening economic inclusion, rising wages for all and engaging careers for most. Innovations gave workers better tools to work with and better products to make, thus lifting their wages. Then this innovation began to retreat, most of it to an area of land along the West Coast. In the early 1970s the rate of indigenous innovation (as measured by its estimated contribution to the rate of growth in labor productivity) dropped by about half — to around 1 percent since then, from about 2 percent before then.

The economist Robert J. Gordon has noted this slowdown in innovation, which he lays to the end of big breakthroughs. My view is that innovation has declined in the everyday processes that businesses tinker with incrementally as they try to become more productive over time. This decline of innovation across many fields — with notable exceptions like Silicon Valley, biotechnology and clean energy — has set back much of the earlier gains in productivity in American history. Read more of this post

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Barnes & Noble Weighs Its E-Reader Investment; The company’s underperforming Nook Media division might signal that its substantial investment in its digital future has essentially run its course

February 25, 2013 Leave a comment

February 24, 2013

Barnes & Noble Weighs Its E-Reader Investment

By LESLIE KAUFMAN

Even for a company with a lot of bad news lately, the bulletin from Barnes & Noble this month had an ominous feel.

Barnes & Noble, the nation’s largest book chain, warned that when it reports fiscal 2013 third-quarter results on Thursday, losses in its Nook Media division — which includes sales of e-books and devices — will be greater than the year before and that the unit’s revenue for all of fiscal 2013 would be far below projections it gave of $3 billion.

The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Nobles has been heavily investing in as its future for the last several years has essentially run its course.

A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers. Read more of this post

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Five Star Billionaire by Tash Aw – review; Tash Aw’s tale of five migrant workers carving out lives in a modernising Shanghai is the stuff of a hit TV miniseries

February 25, 2013 Leave a comment

Five Star Billionaire by Tash Aw – review

Tash Aw’s tale of five migrant workers carving out lives in a modernising Shanghai is the stuff of a hit TV miniseries

Adam Mars-Jones

The Observer, Sunday 24 February 2013

Shanghai, a city ‘with a heart as deep and unknown as the forests of the Amazon’. Photograph: Alamy

At one point in Tash Aw’s fine new novel about what people call “the newChina” a young woman is trying to photograph herself on her mobile phone in a park in Guangzhou, hoping to enliven her internet dating profile with an image that doesn’t make her look like an immigrant factory worker (which she is). An old man who sells tickets for the rowing boats on the lake offers to take the picture for her. He looks uncertainly at her phone. She wonders if he understands how to work it. Then he says: “This phone is so old. My grandson had one just like this three years ago when he was still in middle school.” This is the world of the book, where traditional societies seem to have leapfrogged their way into a modernity without signposts, where the past isn’t solid enough to build on but too substantial to be ignored.

The five main characters, three men and two women, all come to Shanghai (by some definitions the world’s largest city) from Malaysia, though their backgrounds range from old money to rural deprivation. As a title, Five Star Billionaire is close to brash, and the book’s storyline could persuasively be pitched to a producer in search of a blockbuster miniseries, but the reading experience it offers is coolly engrossing – with elements of frustrating evasion – rather than propulsive. Tash Aw doesn’t exactly kill plot momentum or the emotional impact of the situations he creates, but he certainly keeps them in check. Narrative hints are often indirect, like clues in a detective story, as when a passing reference to a character having written an article deploring the architecture of Gaudí suggests that a conversation almost a hundred pages earlier wasn’t in fact spontaneous. Read more of this post

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Selloff Rattles Asia’s Bond Market; Plunge in Riskier Corporate Debt Has Left Many Investors with Large Losses, and Stoked Broad Fears

February 25, 2013 Leave a comment

February 20, 2013, 6:47 p.m. ET

Selloff Rattles Asia’s Bond Market

Plunge in Riskier Corporate Debt Has Left Many Investors with Large Losses, and Stoked Broad Fears

By FIONA LAW

Fund managers worried about the end of an extended bull market in bonds might look to Asia, where a sudden selloff in a certain class of risky bonds has left many investors with large losses.

The plunge in so-called perpetual bonds is viewed as a cautionary example of an asset that had gotten too frothy and, some skeptics say, could be a sign of things to come in other corners of the bond market. Read more of this post

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China will never match US in innovation: Lee Kuan Yew; “America’s creativity, resilience and innovative spirit will allow it to confront its core problems, overcome them, and regain competitiveness,”

February 25, 2013 Leave a comment

China will never match US in innovation: Lee Kuan Yew

Staff Reporter

2013-02-21

In a new book about the relationship between China and the United States, Singapore’s former prime minister Lee Kuan Yew says China will never be able to compete with the United States in terms of creativity, reports the Australian.

In The Grand Master’s Insights on China, the United States and the World written by Graham Allison, Robert Blackwill and Ali Wyne, Lee says Beijing is trying to restore China’s historical position as the Middle Kingdom while the United States is also trying its best to maintain its superiority. Countries in Southeast Asia are still wary of what China may be like if the country becomes the dominant power in the Western Pacific.

“They are uneasy that China may want to resume the imperial status it had in earlier centuries, and have misgivings as being treated as vassal states.” While Beijing tells its neighbors that countries big or small are equal, Lee points out that China also tells them that they have made 1.3 billion people unhappy when they do things it doesn’t like. For this reason, Lee pointed out that a rising China is likewise concerned and insecure about the actions of small Asian nations.

Lee said it would be extremely unwise for China to enter an arms race with the United States. “The Chinese must avoid the mistakes made by Germany and Japan. Their competition for power, influence and resources led in the last century to two terrible wars.” Beijing must likewise avoid the fate of the Soviet Union. “The Russian mistake was that they put so much into military expenditure and so little into civilian technology that their economy collapsed.” For this reason, Lee says he believes China will keep its head down for at least another 40 or 50 years rather than risk asserting dominance too soon.

Conceding that China is set to replace the United States to become world’s largest economy, Lee said however that China will never overtake the United States in innovation. “America’s creativity, resilience and innovative spirit will allow it to confront its core problems, overcome them, and regain competitiveness,” he said, while suggesting on the other hand that China’s creative development will be stifled by a traditional culture which does not permit a free exchange and contest of ideas.

China is also unlikely to become a liberal democracy, Singapore’s founding father suggested. “To achieve modernization, China’s Communist leaders are prepared to try every method except for democracy with one person and one vote in a multi-party system.” The party needs a monopoly on power to maintain the stability of the nation. If it launched liberal democratic reforms, the central government may lose its power over different provinces. “If it did, it would collapse,” said Lee, “If you believe there is going to be a revolution of some sort in China for democracy, you are wrong.”

Filed under Innovation, Macro Trends

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

February 25, 2013 Leave a comment

U.S. Banks Bigger Than GDP as Accounting Rift Masks Risk

Warning: Banks in the U.S. are bigger than they appear.

That label, like a similar one on automobile side-view mirrors, might be required of the four largest U.S. lenders if Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., has his way. Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are — or about the size of the U.S. economy — according to data compiled by Bloomberg.

“Derivatives, like loans, carry risk,” Hoenig said in an interview. “To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there.”

U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.

Using international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. would double in assets, while Citigroup Inc. would jump 60 percent, third- quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging London-based HSBC Holdings Plc and Deutsche Bank AG, each with about $2.7 trillion. Read more of this post

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CITI: There’s A Crisis Lurking In The Bond Market And No One Is Talking About It

February 25, 2013 Leave a comment

CITI: There’s A Crisis Lurking In The Bond Market And No One Is Talking About It

Matthew Boesler | Feb. 20, 2013, 1:24 PM | 6,214 | 10

The Federal Reserve has revealed that it is considering scaling down and possibly even completely halting quantitative easing by the end of this year.

Whether or not the central bank will actually be in a position to do that in 2013 is one of the hottest debates in the market right now – but the 10-year U.S. Treasury yield has risen from an all-time low below 1.5 percent in July to its current levels, slightly above 2 percent, and that has people talking.

“It’s the $64,000 question: What ends up bringing this down?” Citi strategist Michael H. Anderson told Business Insider.

As several members of the Federal Reserve ramp up the public dialogue surrounding financial stability, Anderson thinks they’re looking in the wrong place.

In a recent note to clients, he wrote, “It’s more likely the excess that ultimately brings this cycle to an end is one that few are mentioning.”

In aggregate, investors have poured a staggering amount of money – hundreds of billions of dollars – into bond funds over the past five years. They have been largely deterred from stocks as memories of the crash in 2008 continue to haunt the market.

That may all be changing as investors in mutual funds begin to open up their monthly statements and realize that their bond investments are starting to lose money.

What happens when investors start pulling money from these mutual funds, and the fund managers have to turn around and get rid of their holdings of corporate bonds? Read more of this post

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The Coming Atlantic Century; the pervasive narrative of western decline and Asia rising is quickly reversing itself

February 25, 2013 Leave a comment

Anne-Marie Slaughter

Anne-Marie Slaughter, a former director of policy planning in the US State Department (2009-2011) and a former dean of the Woodrow Wilson School of Public and International Affairs, is Professor of Politics and International Affairs at Princeton University. She is the author of The Idea That Is America: Keeping Faith with Our Values in a Dangerous World.

The Coming Atlantic Century

21 February 2013

PRINCETON – The United States is rising; Europe is stabilizing; and both are moving closer together. That was the principal message earlier this month at the annual Munich Security Conference (MSC), a high-powered gathering of defense ministers, foreign ministers, senior military officials, parliamentarians, journalists, and national-security experts of every variety. The participants come primarily from Europe and the US; indeed, when the conference began in 1963, it was focused entirely on NATO members. This year, however, senior government officials from Brazil, China, India, Nigeria, Singapore, Qatar, and Saudi Arabia also joined, an important sign of the times. John McCain, the US senator and 2008 presidential candidate, always leads a large congressional delegation to Munich. The US administration also typically sends the Secretary of Defense or the Secretary of State to deliver a ritual speech reassuring the Europeans of the strength of the transatlantic alliance. This year, Vice President Joe Biden did the honors, bumping the US representation up a notch.

The conference also featured a panel on an unusual subject – “The American Oil and Gas Bonanza: The Changing Geopolitics of Energy.” Read more of this post

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Andy Kessler: When Interest Rates Rise, Watch Out; The Fed’s inevitable Sword of Damocles could be brutal for bonds and stocks. Some of us recall the massacre of 1994

February 25, 2013 1 Comment

February 21, 2013, 7:09 p.m. ET

Andy Kessler: When Interest Rates Rise, Watch Out

The Fed’s inevitable Sword of Damocles could be brutal for bonds and stocks. Some of us recall the massacre of 1994.

By ANDY KESSLER

Can Ben Bernanke fly us through a needle’s eye? Minutes released this week from the last Federal Reserve policy meeting suggest evaluations are taking place that “might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” It’s about time. The experiment to kick-start the economy with near-zero interest rates has failed. Maybe our central bankers have figured out that low rates are what is holding back lending and hiring and growth.

Meanwhile, even as the stock market hits highs not seen since 2007, everyone on Wall Street knows interest rates will go up—although no one except Mr. Bernanke knows when. Investors are playing a game of chicken with rates, enjoying the ride but bracing for a downturn when the rates turn up. When rates go up, bonds become more attractive than stocks because you get returns with less risk.

Those of us on Wall Street in 1994 witnessed something very similar. After several years of essentially flat short-term rates, the Fed raised rates by 25 basis points (or 0.25%) on Feb. 4, 1994. The Fed raised short-term rates a total of six times and 2.5% over the next 10 months.

In what became known as a bond-market massacre, the price of long bonds dropped almost 9%. The stock market dropped 9% in three months, killing a then-vibrant market for initial public offerings.

Today we are at the bitter end of a three-decade-long interest rate cycle, culminating in Mr. Bernanke’s near-zero rates. You can’t fall off the floor. And the prospect of higher interest rates is like the Sword of Damocles hanging over the stock market. Read more of this post

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Why the Euro Crisis Isn’t Over; The economist who dared to predict Europe’s mess, and was fired for it, says there is much more pain to come

February 25, 2013 Leave a comment

Updated February 22, 2013, 6:27 p.m. ET

Why the Euro Crisis Isn’t Over

The economist who dared to predict Europe’s mess, and was fired for it, says there is much more pain to come

By BRIAN M. CARNEY

London

Seventeen years ago, Bernard Connolly foretold the misery that awaited the European Union. Given that he was an instrumental figure in the EU bureaucracy and publicly expressed his doubts in a book called “The Rotten Heart of Europe,” he was promptly fired. Mr. Connolly takes no pleasure now in having seen his prediction come true. And he takes no comfort in the view, prevalent in many quarters, that the EU has passed through the worst of its crisis and is on the cusp of revival.

As far as Mr. Connolly is concerned, Europe’s heart is still rotting away.

The European political class, he says, believes that the crisis “hit its high point” last summer, “because that was when there was an imminent danger, from their point of view, that their wonderful dream would disappear.” But from the perspective “of real live people, and families and firms and economies,” he says, the situation “is just getting worse and worse.” Last week, the EU reported that the euro-zone economy shrank by 0.9% in the fourth quarter of 2012. For the full year, gross domestic product fell 0.5% in the euro zone.

Two immediate solutions present themselves, Mr. Connolly says, neither appetizing. Either Germany pays “something like 10% of German GDP a year, every year, forever” to the crisis-hit countries to keep them in the euro. Or the economy gets so bad in Greece or Spain or elsewhere that voters finally say, ” ‘Well, we’ll chuck the whole lot of you out.’ Now, that’s not a very pleasant prospect.” He’s thinking specifically, in the chuck-’em-out scenario, about the rise of neo-fascists like the Golden Dawn faction in Greece.

Mr. Connolly isn’t just any Cassandra. When he predicted disaster, he was running the European Commission’s Monetary Affairs Committee, the Brussels bureaucracy charged with ushering the euro into being. His public confession of fear that the monetary union would inevitably produce an economic crisis not only cost him his job, he says, it also cost him his pension, and he was barred from his office even before his dismissal was official. In the introduction to the paperback edition of “The Rotten Heart of Europe,” Mr. Connolly describes how his photograph was posted at entrances to the commission’s offices, as if he were a wanted criminal. Read more of this post

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Schools think too narrowly on entrepreneurship; Identifying new business opportunities should be core to management education

February 25, 2013 Leave a comment

February 24, 2013 11:46 pm

Schools think too narrowly on entrepreneurship

By Tim Faley and Peter Adriaens

Identifying new business opportunities should be core to management education

Growth is the top concern of corporate executives, economic developers and government officials desperately trying to reduce unemployment. That growth will be driven by entrepreneurs creating new businesses and new lines of business within existing companies.

Institutes of higher learning are responding with courses and dedicated entrepreneurial centres. In the US alone, the number of schools offering courses in entrepreneurship has grown from fewer than 100 in 1977 to more than 2,000 today. These institutions hold the promise of teaching those skills necessary to forge a new generation of successful serial entrepreneurs. But that dream has been derailed.

In fact, the promise of entrepreneurship is being corrupted by false mythologies. A false mythology about entrepreneurship, particularly prevalent at today’s universities and business schools, is stifling entrepreneurship.

Entrepreneurs need more than an idea, a pitch and some cash to build great companies. Graduate management schools, which should be the beacon of sanity in this debate, while consistently communicating that it takes two years to learn how to manage an ongoing concern, often treat the creation of such a concern as trivial – a topic that can be mastered in a weekend exercise or week-long immersion class. What is the message in that?

Many business schools think about entrepreneurship far too narrowly. They believe that it is only about students creating cute little businesses and lump the subject in with other student services and club activities.

In fact the very opposite is true; identifying new business opportunities and managing their growth should be core to what business schools teach in the 21st century. Entrepreneurial skills – the ability to identify opportunities and threats, to formulate and assess businesses around those opportunities, to put them into operation, to fund them and grow those nascent ventures – are critical for any organisation concerned with growth. Business schools have a very different role to that of incubators. Business schools have a knowledge and skill-building mission. The focus should be on the fishing, not the fish. Read more of this post

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South Korea’s New President Faces Choices on Economy

February 25, 2013 Leave a comment

February 24, 2013, 6:37 p.m. ET

South Korea’s New President Faces Choices on Economy

By EVAN RAMSTAD

SEOUL—When Park Geun-hye, the daughter of the man who led South Korea’s rise out of poverty, is sworn in as president on Monday, she will take control of an economy that is far larger and more important in the world—but that remains shaped by some of the institutions and regulations her father created in the 1960s.

One of the fundamental choices Ms. Park faces is whether to maintain the South Korean government’s enormous influence on the economy, which ranges from running dozens of regulatory agencies to owning about 400 companies, including several of the nation’s biggest banks.

Ms. Park is set to be sworn-in Monday morning before an invited crowd of 70,000 people on the grounds of the National Assembly, where she has been a member and leader of the ruling conservative party since the late 1990s.

Ms. Park, 61 years old, is the first woman to become president of South Korea. Thai Prime Minister Yingluck Shinawatra, the only other woman now leading an Asian nation, will attend Monday’s ceremony.

Since her election in December, Ms. Park has said little about the economy. The most substantial policy proposals announced by aides have been to expand welfare benefits for the elderly. Read more of this post

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Righteous Republic: The Political Foundations of Modern India

February 25, 2013 Leave a comment

February 24, 2013, 4:07 p.m. ET

India’s Founding Fathers

By SUDHA KOUL

Britain dominated India for almost two centuries—initially through the East India Co. and later directly as the Raj—finally granting it independence in 1947. The Indian anti-colonial struggle was unique in that it reached its goal without violent overthrow. This was one of the great achievements of the nationalist movement’s enlightened leadership.

In “Righteous Republic: The Political Foundations of Modern India,” the historian Ananya Vajpeyi shows how these leaders looked to ancient Indian texts and traditions as they led the nation toward swaraj, or self-rule. The author profiles five prominent anti-colonial leaders and examines how each of them contributed to the nation’s successful “search for the self”: Mahatma Gandhi and Jawaharlal Nehru, who need no introduction; the Bengali poet and Nobel laureate Rabindranath Tagore; his nephew, the artist Abanindranath Tagore; and B.R. Ambedkar, the architect of the Indian constitution.

India had a glorious past, with millennia of learning, literature, science and art, culture and tradition. Yet by the time the country became the jewel in the crown of Queen Victoria, who was proclaimed Empress of India in 1877, knowledge of the ancient Indic political tradition—the ideas and practices by which “the precolonial kingdoms of the Mughals, the Deccani Sultans, the Nayakas, the Marathas, the Rajputs, and the Sikhs” ruled the subcontinent—had been all but erased thanks to a combination of colonial rule and internal decay. When Indians were told that democracy was a gift of the West, for example, very few questioned the assumption, even though panchayats, or self-governing village bodies, had existed for thousands of years on the subcontinent. Read more of this post

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Unpredictable Policies Thwart Investment in Southeast Asia

February 25, 2013 Leave a comment

Unpredictable Policies Thwart Investment in Southeast Asia
Karl Lester M. Yap | February 23, 2013

An unpredictable legal environment in Southeast Asia is the top concern of investors, according to an Economist Corporate Network survey, highlighting the challenge the region faces as it seeks to integrate by 2015 in an effort to boost growth and attract more investments.

Governments change their minds about important legislation with little warning, according to a report based on a survey of 147 companies including Unilever and General Electric released on Friday. “Even when laws remain unchanged, court decisions and interpretations of the laws can be highly arbitrary,” the report said.

While China remains the manufacturing capital of the world, companies including Nissan Motor and Google are expanding in Southeast Asia, lured by the prospect of a $2.2 trillion market. Nations including the Philippines are stepping up efforts to regain investor confidence after regulatory reversals and contract disputes in the past prompted Frankfurt, Germany-based Fraport to leave the country.

“The region’s diversity and uncertain legal environment remain major challenges for many multinationals,” said Clive Cook, a senior consultant at law firm Baker & McKenzie that commissioned the report. Companies are looking for legal advisers with expertise across different Association of Southeast Asian Nations markets, he said in a statement. Read more of this post

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The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

February 25, 2013 Leave a comment

Updated: Monday February 25, 2013 MYT 8:08:55 AM

The most widespread margin squeeze in at least 10 years pushing some S’pore companies out of the city

SINGAPORE: The most widespread margin squeeze in at least a decade is pushing some Singapore companies out of the city state as rising costs and slow growth sap profitability.

A Reuters study of 268 listed Singapore companies showed that 57 percent reported a year-on-year drop in operating profit margin for the first three quarters of 2012. That was the biggest percentage for the nine-month period on record, according to Thomson Reuters data going back to 2002. Full-year data for 2012 was not yet available.

A severe labour shortage is hobbling businesses in Singapore as the government tightens its immigration policies, while growth has been hard to come by as exports languish in a dull global economy.

Across Southeast Asia, 54 percent of companies reported shrinking margins, equalling the percentage recorded in 2009, when the global economy had tipped into a recession following the Lehman Brothers bankruptcy.

In all, Reuters examined the balance sheets of nearly 1,000 companies in Singapore, Malaysia, Indonesia, Thailand and the Philippines with a market value of at least S$100 million ($80.8 million).

The pain is particularly acute in Singapore, a smaller and more mature market lacking the burgeoning consumer classes of its emerging market neighbours. Inflation has heated up, with the consumer price index, due on Monday, expected to show a 4.0 percent rise in January, according to a Reuters poll.

The head of a Singapore business association is among those moving their corporate headquarters elsewhere, in search of lower costs and a larger market. Read more of this post

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Why We Must Think Bigger by Charles Moldow, General Partner, Foundation Capital

February 24, 2013 Leave a comment

Charles Moldow, General Partner, Foundation Capital

Why We Must Think Bigger

FEBRUARY 22, 2013 AT 3:01 PM PT

One day, about six billion years from now, the sun will burn out.

This cataclysmic inevitability was brought to my attention over the holidays by my 6-year-old son. Far off though it may be, he believes our solar system’s imminent demise is cause for alarm sooner rather than later. (For him, that means sooner than getting a flu shot — but later than downloading the most recent service pack for Minecraft.)

Of course, I recognize my 6-year-old is thinking too far ahead. Too big.

But he did get me wondering, are the rest of us thinking big enough? Especially those of us who develop — and invest in — new innovations.

If not for being stuck on an antiquated United Airlines plane unequipped with Wi-Fi (is there any other type?), I may not have found the time to commit this thought to paper — I would likely have been overwhelmed by the next flurry of emails or meeting requests. It’s easy to lose sight of the big picture. In fact, as I survey the current startup landscape and consider the kinds of companies attracting VC dollars, it seems like the investing community isn’t thinking of the big picture at all.

Today, investors are less interested in transformative companies and more interested in trendy ones. Funding is flowing — and flowing fast — toward “quick-response startups.” These companies, more often than not, are launched during all-night hack-a-thons. They’re the wired brainchildren of eager coding buddies and Costco-like volumes of Red Bull. Read more of this post

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Business network giants face China ‘guanxi’ battle

February 24, 2013 Leave a comment

Business network giants face China ‘guanxi’ battle
Posted: 24 February 2013 2055 hrs

BEIJING: Professional social networking websites such as LinkedIn trying to tap into China’s vast business world are finding a formidable domestic foe — the ingrained system of personal connections known as “guanxi”.

Two leading sites, California-based LinkedIn and the French company Viadeo, are targeting networkers in the world’s most populous country, but acknowledge the challenges they face.

China has the world’s biggest online population at 564 million web users, but the history of Western Internet giants looking to establish themselves in it is littered with failures and disappointed retreats. Read more of this post

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Chinese ‘Dubai’ turns into deserted island

February 24, 2013 Leave a comment

Chinese ‘Dubai’ turns into deserted island
Posted: 24 February 2013 1349 hrs

SANYA, China: It was billed as China’s Dubai: a cluster of sail-shaped skyscrapers on a man-made island surrounded by tropical sea, the epitome of an unprecedented property boom that transformed skylines across the country.

But prices on Phoenix Island, off the palm-tree lined streets of the resort city of Sanya, have plummeted in recent months, exposing the hidden fragilities of China’s growing but sometimes unbalanced economy. Read more of this post

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China’s local government debt crisis has been getting worse as national statistics show that 53% of local government debt will be due by the end of 2013

February 24, 2013 Leave a comment

Crisis looms as local government debt to mature this year

Han Hwa-yu and Staff Reporter

2013-02-24

China’s local government debt crisis has been getting worse as national statistics show that 53% of local government debt will be due by the end of 2013, when local governments enter a peak period for repaying loans.

Financial reports recently issued by various local governments have all issued warnings, including information that they have been under heavy pressure to repay debts and deal with local financial risks that could not be ignored.

China’s National Audit Office says 42% of the debt was due by the end of 2012.

This year the local government debt crisis is greater than in the past few years due to increasing debts and mounting pressure to repay amid an economic slowdown and declining financial revenue, warned Zhao Quanhou, director of the Research Office of Finance under the Ministry of Finance’s Research Institute for Fiscal Science. Read more of this post

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SimCity, for Real: Measuring an Untidy Metropolis; An initiative at New York University is joining a global drive to apply modern sensor, computing and data-sifting technologies to urban environments

February 24, 2013 Leave a comment

February 23, 2013

SimCity, for Real: Measuring an Untidy Metropolis

By STEVE LOHR

THE notion of a “science of cities” seems contradictory. Science is a realm of grand theory and precise measurement, while cities are messy agglomerations of people and human foible. But science is precisely the ambition of New York University’sCenter for Urban Science and Progress. Founded last year, the center has been getting under way in recent weeks, moving into new office space and firing off its first project proposal to the National Science Foundation.

The center’s director is Steven E. Koonin, a Brooklyn native and graduate of Stuyvesant High School, who came to N.Y.U. after a stint in the Obama administration as the under secretary for science in the Department of Energy. He is both a theoretical physicist and science policy expert. The center shouldn’t lack for intellectual rigor.

The initiative at N.Y.U. is part of a broader trend: the global drive to apply modern sensor, computing and data-sifting technologies to urban environments, in what has become known as “smart city” technology. The goals are big gains in efficiency and quality of life by using digital technology to better manage traffic and curb the consumption of water and electricity, for example. By some estimates, water and electricity use can be cut by 30 to 50 percent over the course of a decade.

Cities from Stockholm to Singapore are deep into smart city projects. The market looms as big, lucrative business for technology companies. Read more of this post

Filed under Life, TMT Trends

Mayo Clinic CEO: Here’s Why We’ve Been The Leading Brand In Medicine For 100 Years

February 24, 2013 Leave a comment

Mayo Clinic CEO: Here’s Why We’ve Been The Leading Brand In Medicine For 100 Years

Max Nisen | Feb. 23, 2013, 10:53 AM | 1,478 | 

For more than 100 years, the Mayo Clinic’s built an enviable reputation and medical practice. People all over the world regard it as one of the best places to treat any illness, and it has routinely come in at the top of hospital rankings.

We’ve already written about the Clinic’s plan to spread that knowledge worldwide, but we also spoke to CEO Dr. John Noseworthy about how the clinic built its reputation, attracts the world’s best doctors, and manages to stay at the top.

Our conversation has been edited for length and clarity:

What’s it like leading such a large and well-known institution in the aftermath of the Affordable Care Act? 

It’s a great privilege to work at the Mayo Clinic, and obviously to be the physician leader of this fine institution is a great privilege. Yes, the law is going to change how we work, but we’ve been at this for 148 years. For well over 100 years everything we do every day is continually retooling how we work to provide safer care, better care, and more efficient care for our patients.The Affordable Care Act and everything else that’s happening in the industry is putting a sharper pencil on that, but to be candid, we’re not really reacting to the law. We’ve been on this journey for a long time to drive out waste, use technology, use our staff to provide better care.

This is just another step in our history. We’re the first and largest physician-led group practice of medicine supported by research and education, and we’ve been a model for a lot of other groups, some of whom you’ve covered. We’ve been at this for a long time.

Why has Mayo been so successful? 

I think it all comes down to our core value, which is that the needs of the patient come first. I know that might sound kind of trite in today’s world, but our staff is extraordinarily committed. If you spend a day here, and you grab anybody at the Mayo Clinic and ask them what’s the purpose of your work, they would say “to meet the needs of our patients.”

I’ve been working here 22 years and I’ve never had a physician say they’re too busy to help me with a patient, day or night. That’s probably why Mayo has been the leading brand in medicine for the last 100 years. Read more of this post

Filed under Health, Innovation

“Physically Together”: Here’s the Internal Yahoo No-Work-From-Home Memo for Remote Workers and Maybe More

February 24, 2013 Leave a comment

“Physically Together”: Here’s the Internal Yahoo No-Work-From-Home Memo for Remote Workers and Maybe More

FEBRUARY 22, 2013 AT 10:18 PM PT

Kara Swisher

Courtesy of a plethora of very irked Yahoo employees, here is the internal memo sent to the company about a new rule rolled out today by CEO Marissa Mayer, which requires that Yahoo employees who work remotely relocate to company facilities.

“Speed and quality are often sacrificed when we work from home,” reads the memo to employees from HR head Jackie Reses. “We need to be one Yahoo!, and that starts with physically being together.”

Painfully awkward as this is phrased, it means every Yahoo get to your desks stat!

I reported earlier today that the move will apparently impact only several hundred employees, such as customer service reps, who work from home full time. But numerous sources told me that the decree extends to any staffers who might have arrangements to work from home just one or two days a week, too.

The changes begin in June, according to the Yahoo memo.

After that, employees who work from home must comply without exception or quit. One top manager was told that there would be little flexibility on the issue.

The anger from impacted employees was strong today, because many felt they were initially hired with the assumption that they could work more flexibly.

In fact, even waiting for the cable guy is questionable. “And, for the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration,” wrote Reses.

The tone and tactics have infuriated some at the company. Wrote one impacted Yahoo employee to me: “Even if that was what was previously agreed to with managers and HR, or was a part of the package to take a position, tough … It’s outrageous and a morale killer.”

Most tech companies encourage workers to stay on their campuses, offering free food and other perks. But none enforce such rules beyond staff needed to operate an office.

“Our engineers would not put up with that,” said one tech exec. “So, we’d never focus on it.”

In the comments section of my first story on the HR change at Yahoo, WordPress founder Matt Mullenweg wrote:

“For anyone who enjoys working from wherever they like in the world, and is interested in WordPress, Automattic is 100% committed to being distributed. 130 of our 150 people are outside of San Francisco.”

The issue is an interesting and controversial one, with some certain that working at home is the wave of the future, while others considering it hurtful to productivity.

Well, we’ll presumably see which this way goes in time.

Earlier, when asked about the change, a Yahoo spokesperson said the company does not comment on internal matters. The memo was released after my story on the change was published this morning.

But, you don’t need any comment when you can read for yourself the new working order at the Silicon Valley Internet giant:

YAHOO! PROPRIETARY AND CONFIDENTIAL INFORMATION — DO NOT FORWARD

Yahoos,

Over the past few months, we have introduced a number of great benefits and tools to make us more productive, efficient and fun. With the introduction of initiatives like FYI, Goals and PB&J, we want everyone to participate in our culture and contribute to the positive momentum. From Sunnyvale to Santa Monica, Bangalore to Beijing — I think we can all feel the energy and buzz in our offices.

To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.

Beginning in June, we’re asking all employees with work-from-home arrangements to work in Yahoo! offices. If this impacts you, your management has already been in touch with next steps. And, for the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration. Being a Yahoo isn’t just about your day-to-day job, it is about the interactions and experiences that are only possible in our offices.

Thanks to all of you, we’ve already made remarkable progress as a company — and the best is yet to come.

Jackie

Filed under Life, TMT Trends

How VF Corp. turns acquisitions, including North Face, Vans and Timberland, into blockbuster brands. The world’s biggest buyer of zippers.

February 24, 2013 Leave a comment

SATURDAY, FEBRUARY 23, 2013

Forever in Blue Jeans

By ALEXANDER EULE | MORE ARTICLES BY AUTHOR

How VF Corp. turns acquisitions, including North Face, Vans and Timberland, into blockbuster brands. The world’s biggest buyer of zippers.

Eric Wiseman was rising up the ranks of apparel giant VF Corp. in the summer of 2004 when the company acquired Vans, the famed maker of skateboarding shoes. As the top executive for VF’s outdoor-sports segment, Wiseman suddenly had a whole new customer base to understand.

That August, he headed to Asbury Park, N.J., for the Warped Tour, a punk-rock music festival backed by Vans and newly owned by VF. The apparel-industry veteran would have preferred jazz, but he reveled in the five band stages and the raucous crowd. VF had a big hit on its hands.

A decade later, Wiseman, 57, is chairman and chief executive officer of VF (ticker: VFC), and the Warped Tour—still under VF’s umbrella—is the longest-running touring festival in the U.S. The concerts are more than an artistic endeavor; Vans’ annual sales have quadrupled to $1.4 billion since the VF acquisition, and profitability has soared.

Wiseman’s entire wardrobe is built around VF’s 30 brands.

While a lot of executives would have disposed of a noncore asset like the music festival, retaining the Warped Tour gets to the crux of Wiseman’s strategy. He helps brands maintain their identity by removing day-to-day hurdles and lowering their cost of goods. VF’s scale enables both. Read more of this post

Filed under Innovation, Investing Process

Malaysia’s PM Najib: Moving forward with innovation; Innovation is what drives progress and the potential for our nation to profit from it is huge

February 24, 2013 Leave a comment

Friday January 4, 2013

Moving forward with innovation

By Datuk Seri Najib Tun Razak

Innovation is what drives progress and the potential for our nation to profit from it is huge.

IT is just four days into January, so I would like to wish everyone a Happy New Year. Many people are probably trying to uphold the various New Year resolutions they have made. I know this is hard and I wish them every success in implementing their pledges. Over the years, I have learnt that the way to keep a resolution is to take it seriously, prioritise and dedicate time and effort to the task in hand.

The same is true of government policy. Things don’t just happen by themselves there is a lot of blood, sweat and tears involved in implementing reforms.

A key policy of our government is turning Malaysia into a nation focused on innovation you could call this my ongoing “resolution”.

Indeed, one of the focuses of this year’s Budget is “Inculcating Inno-vation, Increasing Productivity”.

You may well ask whether there are more immediate and tangible matters that the Government should be addressing. As in any country, we have problems and priorities that require focused attention and swift action. But we must also make time for longer-term goals and fostering an “innovative nation” is one of them. Read more of this post

Filed under Innovation, Macro Trends

Indonesia: Innovation Is Key for The Country’s Future

February 24, 2013 Leave a comment

Editorial: Innovation Is Key for The Country’s Future
February 20, 2013

In today’s highly competitive business environment, innovation is crucial for getting ahead and staying ahead. Indonesia has done well economically in recent years, but it has lacked a real drive to push its research and development to the next level.

It is in this light that we must view the $300 million investment by US multinational conglomerate General Electric. By announcing that it will build a human resources development center and infrastructure facilities and establish a rural health care program in Indonesia, GE has shown a firm commitment to this country. Read more of this post

Filed under Innovation, Macro Trends

Malaysia will focus on turning domestic companies into regional champions

February 24, 2013 Leave a comment

Malaysia Champions New Focus of Stock Exchange

By Matthew Winkler, Elffie Chew and Gan Yen Kuan – Feb 20, 2013

Bursa Malaysia Bhd. Chief Executive Tajuddin Atan said the exchange will focus on turning domestic companies into regional champions after spending the past five years boosting corporate governance and investor protection.

The Southeast Asian nation will promote companies in industries such as palm oil, Islamic finance and oil and gas, after putting in place governance rules that match standards in Singapore and Thailand, Tajuddin said. He declined to specify what steps the exchange would take.

“We have to start moving outside our borders,” he said in an interview at the bourse’s headquarters in Kuala Lumpur yesterday. “Now the challenge for us is to liberalize the market and start profiling what we have.” Read more of this post

Filed under Macro Trends

Visual Effects Industry Does a Disappearing Act

February 23, 2013 Leave a comment

Updated February 22, 2013, 2:50 p.m. ET

Visual Effects Industry Does a Disappearing Act

By BEN FRITZ

A split scene from the ‘Life of Pi’ shows a digitally-crafted tiger and ocean—and the studio where live action was filmed. Financial pressures forced the effects creator into bankruptcy.

The Oscar for best visual effects on Sunday is widely expected to go to Ang Lee’s “Life of Pi,” which uses a digitally created tiger so realistic that it serves as the main character’s sole companion for most of a journey across the Pacific.

But there may not be much celebrating at the El Segundo, Calif., offices of Rhythm & Hues Studios Inc., the 26-year-old company that served as lead effects producer for the film. On Feb. 13, just eight days after “Pi” won four prizes at the annual Visual Effects Society Awards, Rhythm & Hues filed for Chapter 11 bankruptcy. The same week it laid off 254 of its 718 employees in the Los Angeles area, according to court documents.

It is the second bankruptcy filing by a leading U.S. visual effects shop in the past six months, following Digital Domain Media Group Inc. DDMGQ +80.00% in September. The developments come amid skyrocketing use of computer-created robots, animals and sets in all kinds of Hollywood movies. Blockbusters like “The Amazing Spider-Man” and “The Hobbit: An Unexpected Journey” often have thousands of visual effects shots. Even dramas and comedies today can include hundreds of them. The Parisian backdrops in “Les Miserables” included many digital creations. Read more of this post

Filed under TMT Trends

DOWN ON STARTUPS: What Happens When No One Thinks You’re Worth Billions Anymore

February 23, 2013 Leave a comment

DOWN ON STARTUPS: What Happens When No One Thinks You’re Worth Billions Anymore

Alyson Shontell | Feb. 22, 2013, 1:45 PM | 10,472 | 26

As startup prices soared in the runup to last year’s Facebook IPO, entrepreneurs, investors, and tech observers sometimes griped about lofty valuations.

Just mention Foursquare, say, or LivingSocial, and they’d go off.

These are tech companies that snagged a lot of press and tens (or hundreds) of millions of dollars before solidifying their business models. Investors say they’re worth tons of money—but in the end, that’s a gamble, and the companies may actually be worth nothing.

After a few years of massive hype in the startup sector, absurd-sounding valuations are starting to correct themselves. Startups are confronting the prospect of raising “down rounds” from investors—or rounds of financing that value the companies at less than the previous round.

LivingSocial, for example, was once valued at $5.7 billion; it’s now worth a quarter of that, or less, depending on whom you ask.

But more often, down rounds happen at a far earlier stage, a result of too-lofty valuations assigned in initial financings.

What happens when companies that were once worth billions of dollars suddenly find themselves worth much, much less? And why were they ever valued that high in the first place? Read more of this post

Filed under TMT Trends

LivingSocial investors take “pound of flesh” in financing

February 23, 2013 Leave a comment

LivingSocial investors take “pound of flesh” in financing

9:20pm EST

By Alistair Barr

SAN FRANCISCO (Reuters) – LivingSocial was forced to make large concessions to persuade some of its biggest investors to plow another $110 million into the second-largest daily-deal company, analysts and investors said on Friday.

Analysts say those investors secured advantageous terms potentially at the expense of LivingSocial’s other backers. The nature of those terms shed new light on an investment that Chief Executive Tim O’Shaughnessy declared on Wednesday “a tremendous vote of confidence in our business.”

For their $110 million, investors got special preferred securities that pay a 3 percent annual dividend, and almost guarantee that they get money before any proceeds from a sale of the company or an initial public offering go to earlier investors, according to a recently updated certificate of incorporation for LivingSocial viewed by Reuters.

The deal also requires LivingSocial to repay some or all of the money from the latest round of financing in four years, if there has not been a liquidity event – such as a sale or IPO. That measure, which protects their investment, would require 75 percent of the holders of the new securities, known as Series G, to vote for repayment, the certificate shows.

“The investors took their pound of flesh for LivingSocial to get this money,” Sam Hamadeh of PrivCo, a research firm focused on private companies, said on Friday. Read more of this post

Filed under TMT Trends

Innovation Battle: Software V/S Physics; Where to find innovation in the broader world

February 23, 2013 Leave a comment

Innovation Battle: Software V/S Physics

by Rich Karlgaard | Feb 19, 2013

Where to find innovation in the broader world

“We wanted flying cars. Instead we got 140 characters,” says Peter Thiel, the co-founder of PayPal and an early investor in Facebook. Thiel made billions from PayPal and Facebook, but he says the pace of innovation in the broader world has slowed way down.

Is Thiel right? The answer depends on whether you mean innovation in the world of atoms (physical things) or innovation in the world of bits (software). Read more of this post

Filed under Innovation

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