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Contrary Views at Telecosm – Part 2

Steve Forbes' economic advice would be (maybe is) a great help to anyone running for President even though he wasn't a successful candidate himself. He gave the keynote today at Telecosm 2008 which he and George Gilder sponsor. Below are the points I found most interesting; doesn't mean I agree with them all but the depth of thought is worth repeating:

"Belief" in global warming may possibly be an emotional substitute for traditional religious beliefs which many people no longer have. (nb. My smart and anonymous friend WAG has pointed out the similarity between buying carbon credits and buying indulgences).

The subprime credit crisis needs to be put in perspective. 800 billion to a trillion dollars were lost. Sounds like a big deal but the value of stocks traded on American exchanges can and have changed by more than that on a volatile day. The amount is very, very small compared to the assets net of debt owned by American families even if you value all our houses at zero.

Part of the problem has been accounting rules that require securities to be marked to market. Fine for publicly traded stocks but tough when there is no market to mark to. Accountants, fearful of meeting Arthur Anderson's fate, insist on marking way down. But marking down assets means that more capital must be raised which, of course, hurts existing investors in the institutions which hold the various subprime instruments.

But the capital has been there for recapitalization – a good sign.

The Bear Stearns rescue was "essential"; many other banks would have gone under if the Fed hadn't acted. This was the last good thing Steve had to say about the Fed.

The Fed's late 90s policies were too deflationary. Part of the reason for the over-investment in Internet stocks was that deflation makes traditional assets like factories and commodities unattractive. Starting in 2004, the Fed has been creating too much liquidity. One result was the mortgage bubble.

Forbes says that Fed Chairman Ben Bernanke has written that the Fed could have cured the great depression by throwing money out of helicopters (which weren't yet in use). He disagrees, says that would have just caused other problems. There should have been tax cuts instead of tax increases, more international trade rather than less.

The current soaring food and energy prices are a bubble caused by loose monetary policy. Oil might have gone up some 50% or more in the last five years on the basis of increased demand and slow growth in supply; it hasn't gone up more than that when priced in ounces of gold. It's gone up less in strong currencies like the euro than weak ones like the dollar.

We've had similar price runups in oil with a subsequent collapse in price. Oil fell from a peak of $40/barrel (not inflation-adjusted) to $10 in the 80s; from $30 to $11 in the 90s. That will happen again this time although prices may not fall as far since there has been more of an increase in demand than in supply.

The biggest mistake of the Bush administration has been its desire for a weak dollar. This amounts to a shortterm subsidy to domestic manufacturers at the expense of enormous distortions including commodity prices in the rest of the economy. "If you could get wealthy by debasing your currency, Argentina and Zimbabwe would own the world."

2010 is a crisis point when the 2003 tax cuts expire and the cap gains rate is scheduled to go up. A cap and trade policy on CO2 emissions would hurt the economy. "Economic policy is not about allocating scarce resources but about turning scarcities into abundance."

Medical cost problem could be solved by getting rid of third party payer system. The price of Lasik surgery which is not usually covered by insurance has gone DOWN 50% in the past five years. If the price of an MRI were set in a free-market, it would have fallen with the falling price of electronic components and now cost $39.95.

Although the money supply does not appear high by historical measures, modern technology makes each dollar of base go further in the real economy so the effective money supply is too high, weakens the dollar, and causes commodity inflation in the US. The Fed should be watching the price of gold in dollars and adjust the money supply accordingly; this does not mean that we need to hold gold in reserve as we once did. However, this is unlikely to happen in the nearterm since Bernanke has written papers hostile to any such use of gold.

We are on the verge of an extraordinary era.

Whether you agree with the specifics or not, wouldn't it be great if political debate were at this level?

Contrary Views at Telecosm – Part 1

"I'm a denier/Al Gore's a liar" were the lyrics of the song written and sung by Jeff Stambovsky, a "25 year Wall Street veteran turned songwriter and musician" and master of ceremonies at the 12th Annual Telecosm Conference put on by George Gilder and Steve Forbes. With that song, Jeff introduced Lawrence Solomon, author of The Deniers.

Political correctness is what you don't get at Telecosm.

The point of Solomon's talk and of his book, which I've just started to read, is that there is no "scientific consensus" on global warming no matter what Al Gore and most of the press say. Solomon's background is as a journalist, author, and environmentalist and he's a fierce opponent of expanding nuclear power.

First, he says, there were not 2500 "eminent scientists" who endorsed the UN report on global warming (he tried to find and interview them) . There were 2500 scientists who peer-reviewed all the papers that were input to the UN report; not all of these scientists agreed with what they reviewed; few of them were reviewers or endorsers of the whole report.

Second, many eminent scientists disagree altogether or in part with the methodology and or the conclusions of the report. Some even believe that, based on sunspot cycles, we are on the cusp of fifty years of cooling after which the longer term non-anthropogenic trend of one degree centigrade of warming per century will reassert itself. That hypothesis, at least, will be tested very soon.

The back cover of the book lists some of these that he discussed last night. Below are excerpts from there:

Dr. Edward Wegman – former Chairman of the Committee on Applied and Theoretical Statistics of the National Academy of Science – demolishes the famous "hockey-stick" graph that launched the global warming panic.

Dr. David Bromowich – president of the International Commission on Polar Meteorology – says "it's hard to see a global warming trend from the mainland of Antarctica right now."

Prof. Hendrik Tennekes – director of research, Royal Netherlands Meteorology Institute – states "there exists no sound theoretical framework for climate predictability studies" used for global warming forecasts.

Dr. Christopher Landsea – past chairman of the American Meteorology Society's Committee on Tropical Meteorology and Tropical Cyclones – says "there are no known scientific studies that show a conclusive physical link between global warming and observed hurricane frequency and intensity."

Prof Freeman Dyson – one of the world's most eminent physicists – says the models used to justify global warming alarmism "do not begin to describe the real world we live in." [nb. this is the only quote I can vouch for; I've heard him say that].

None of this disproves the assertion that global warming is happening (the assertion, itself, is meaningless without a timeframe) nor even disproves that the earth is warmer than it might have been were we not burning fossil fuels. What it does do is cast more than passing doubt on the existence of a scientific consensus which should stop all further questioning on whether or not anthropogenic global warming is the most serious problem the world faces.

Opportunity Not Lost

Thomas Friedman in the New York Times:

"…More and more, I am convinced that the big foreign policy failure that will be pinned on this administration is not the failure to make Iraq work, as devastating as that has been. It will be one with much broader balance-of-power implications — the failure after 9/11 to put in place an effective energy policy.

"It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our "addiction to oil.

The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image."

All with hindsight, of course: few of us were saying that national energy policy was the long term response to 9/11 back in 2001 but it clearly was. Again with lots of hindsight, it probably would have cost less money than the war in Iraq (not many people are arguing that we should've left the Taliban alone in Afghanistan) and certainly would've cost less lives. We were ready then for bold measures.

But who's to say we're not ready for bold measures now? Friedman's middle paragraph above is, unfortunately devoid of these. Demand from the quickly developing world has now done what a gas tax might have done sooner: we are driving slower; we are buying smaller cars; we are car pooling; etc. etc. Conservation is a good SHORT TERM approach to approach to mitigating some of the effect of higher prices; but what we save will quickly be consumed by the new Asian middleclass even if they all stick to motorcycles and hybrids.

Mobilizing "the most powerful innovation engine in the world" means more than driving slowly and carpooling: it means, I think, switching from imported fossil fuels completely and in a decade. Real innovation can mean that, within ten years (not thirty, not twenty, TEN) all new general purpose road vehicles for sale are primarily electric. Real innovation can mean that within five years no new homes are heated or cooled directly by burning fossil fuels and, within ten years, most old homes have been converted to electricity. If we don't think big, if we don't plan to act quickly, we'll be dangerously behind the energy curve both strategically and economically.

With energy prices already at a new level and in a new escalation, we don't have to spend our time worrying about how to tax ourselves into action. The necessary incentives for innovation are already in place; my guess is that our economy will respond if government restricts its own role in deciding what solutions are needed. Remember that corny ethanol has been the government's best bipartisan shot at an energy policy so far.

There is one huge role the government can and ought to play, however: using the leverage of its own purchasing policy. If the federal government (and hopefully many of the states) were to say that all new fleet vehicles purchased starting in 2011 (with tiny exceptions) would be partially electric and, starting in 2015, fully electric, manufacturers would have some clear targets to aim at. No new federal buildings should be directly heated with coal or oil. Then there would be a clear timetable for private efforts to build the infrastructure like recharging stations and a smarter electric grid that these changes will require.

There is huge opportunity in changing America and the world's sources of energy. The car industry is complaining about poor demand. Duh! Who wants to buy another gas guzzler? When that industry mobilizes to meet what we now know we want - cars that use little or no fossil fuel, all that can afford to will rush out and buy one and others will trade as soon as they can. Can the American car industry do that fast enough? If so, they and we will have a worldwide success; if not, we'll buy cars from abroad to avoid buying oil foreign oil. It's that simple.

Sure, it would've been better if we mobilized for energy independence in 2001. But we didn't. Shame on us if we don't do so now; high oil prices make the job a lot easier.

 

 

Microsoft Live Search Cashback – 1 for 2

Tested Microsoft Live Search and its cashback feature today after praising it yesterday – maybe I should've reversed the order. Live Search was only one out of two in my very limited test.

First I wanted a new chest strap for my Garmin watch; the old one says my heart doesn't beat anymore and I don't think that's true. Entered Garmin Chest Strap in the special cashback search box and got right to a page that had a number of these including the one I want. Clicked on that and got a choice of many online stores in net price order after store and cashback discount (the different stores offered different cashback discounts). When I entered my zip code, the stores were reordered with shipping now included in the calculation; it made a difference.

So I will get a dollar something back; my true reward for using Live Search isn't quite that high because the runner up net net was less than a dollar different. Nevertheless, getting paid about a buck to use a search engine isn't bad.

Unless….

Unless you don't find what you want.

Next I needed a UV bulb for the unit that sterilizes well water coming into the house. Entered the part number into Live Search Cashback; nada. Entered Wedeco lamps; nada. Went back to the regular (no cash back) Live Search and entered the part number; nada. Entered Wedeco lamps; several hits including the manufacturer's site but no one who sells them.

Google's in the tool bar of my browser; typed in the part number; bingo: the first link was to the correct catalog page of a company which sells them. Had to do the comparison shopping on my own by going back to Google and back again but I had choices.

Note that my complaint isn't that I didn't get cashback on the second purchase; it's that the Microsoft search engine didn't find it at all. This speaks to Google's overall search being better than Microsoft and indexing more pages. If I only get cashback some of the time but almost always find what I'm looking for, I become a Live Search customer. But, if I have to go to Google second too often, I'll just go to Google first.

Net, I'll keep trying Live Search first for a while, particularly for bigger ticket items.

Microsoft Live Search Pays You to Shop

If you can't win the game, change the rules. This isn't about Hillary Clinton, though; it's about Microsoft. Changing the nature of a business is called disruption and it's often a good thing for consumers but never good for incumbents. Google changed the rules of the advertising business to its enormous (and well-deserved) advantage; Microsoft is making a good bid to change the rules of the search business.

The idea is as simple as most good ideas. If you find a product through Microsoft Live Search (as opposed to, say Google or Yahoo), you may get a cash back rebate on that product. There's an icon to tell you which products rebates are offered on and you know online how much rebate you'll get before deciding to purchase. You wouldn't use a credit card that doesn't give you frequent flier miles or cash rebates. Why use a search service that doesn't?

The potential for Microsoft is huge. From the Microsoft press release: "According to eMarketer Inc., U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions begin at a search engine. This translates to 3.7 billion commerce-related queries a month." What Microsoft doesn't say but eWeek does in their coverage of the story is that Google has a 60% share of the online search market compared to Microsoft's 10%. It's those pesky "little" guys that like to disrupt.

Part of the genius of this approach is it gives you a reason to have an account with Microsoft through which your shopping habits can be tracked; after all, you want your money. Microsoft says it won't share this information with third parties; it DOESN'T say that ads won't be targeted to you based on what you buy. But that's not all bad for you either.

The rebate comes from the merchant though Microsoft to you. It's not clear from the information on the Microsoft site whether Microsoft also charges the merchant a separate fee for the ad in this case; I suspect so. So why would merchants want to do this? Three reasons: their competitors are; they think this is where the shoppers'll be; they'd rather give money to their customers than to a middleman.

The MSFT PR says "The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers… Key partners participating in the Live Search cashback offering include Abe's of Maine, B&H, Backcountry.com, Barnes & Noble.com, Circuit City, Cookware.com, Crutchfield, eBags, eBay, Foot Locker, GiftBaskets.com, The Home Depot, HP, Jockey, J&R, Newegg.com, OfficeMax, Overstock.com, PetSmart, QVC, Sears, Spiegel, TigerDirect.com, Vitamin Shoppe, and Zappos.com." Not a bad start. Enough to get me to try it the next time I'm going to buy something online. Now tried with mixed results.

The incumbents' dilemma is that following this model is an invitation to lower margins as some of the advertising budget flows through to the consumers. Not following until Microsoft proves it works is dangerous because "frequent flier" programs are sticky. It would be easy for Microsoft to make rewards progressive so that there is incentive to stay where you've already built up "miles". Interesting to see how Google handles this challenge.

The Farm Bill

John McCain as quoted in The New York Times: "It would be hard to find any single bill that better sums up why so many Americans in both parties are so disappointed in the conduct of their government, and at times so disgusted by it."

Barack Obama on his campaign website:

"I applaud the Senate's passage today of the Farm Bill, which will provide America's hard-working farmers and ranchers with more support and more predictability…

"By opposing the bill, President Bush and John McCain are saying no to America's farmers and ranchers, no to energy independence, no to the environment, and no to millions of hungry people."

Obama does concede that the bill is "far from perfect" but says "we cannot make the perfect the enemy of the good." Both Hillary Clinton and Obama accuse McCain of not wanting to help the poor whose food stamps are included in this massive bill. Both use McCain's position on the bill as another example of how McCain is just like George Bush, who has promised to veto the bill even though his veto is sure to be overriden.

Trouble is that McCain and Bush are right (even Bush can be right) and Clinton and Obama are wrong. Sure, the food stamps are needed. But a separate food stamps bill could easily be passed and it wouldn't draw a veto. Sure, there are a few reasonable conservation measures in the bill; they could have been passed separately.

What we do not need and can't afford is a continuing subsidy for corn-based ethanol. What we do need and aren't getting is an end to the protective tariffs on sugar and particularly on sugar-based ethanol (much more efficient to produce than the corny variety so of course we have to be protected against it)

What we don't need and can't afford is to squander this opportunity to pare back and eliminate farm subsidies at a time when farmers are doing well. Many of these subsidies go to very rich farmers; some of these subsidies are paid regardless of the price farm output is selling for. What we don't need is the billions in pure pork tucked into this bill – much of it having nothing to do with farms or even food.

This "farm" bill is an example of congressional politics at its worst, a bipartisan example BTW. The unpalatable and outrageous are neatly bundled with the necessary in order to garner votes and label anyone who opposes the boondoggle as an opponent of whatever is good in the bill – in this case the food stamps and a few other things.

Change we can believe in would be a farm bill that was about farming; a food stamp bill that was about food stamps; and an end to earmarks altogether. That's not asking for perfection; it asking for political courage. John McCain has consistently refused to pander to the farm lobby (even if he did pander to us drivers on the gas tax holiday); Barack Obama was right on the gas tax and is way wrong on the farm bill. Hillary Clinton is 0-2.

Vonage Talk – Better Than I Thought

Vonage Talk can receive phone calls that are dialed to your home or business Vonage phone. Vonage Talk is a new "Alpha" service from Vonage which creates the ability to link PC client software to a Vonage account. This capability points the way – still a long way – to the end of outrageous cellular roaming costs.

Suppose you're in your hotel room somewhere on the other side of the world. Assuming you have a broadband connection (a good assumption because otherwise you would have had to leave the hotel room to get any work done), you fire up the Vonage Talk client on your PC. The Vonage Talk client is linked to whatever Vonage account you used to sign in. If the Vonage phone back home which belongs to that account rings, the Vonage client "rings" as well; it even gives you caller ID. If it's a call you want, you answer; if not, it goes to voice mail.

What's this "roaming" capability cost? Nothing! Same thing it costs you to make outgoing calls to many places using Vonage Talk wherever you are.

This is not the same as forwarding calls. When you do that, you have to pay for the outbound second leg of the call. Moreover, forwarding isn't practical to a hotel or office switchboard and you can't forward to an extension. But, if you are monitoring your home phone line on Vonage Talk, you can answer from a hotel room or borrowed office. Your privacy is maintained; the caller has no idea that you're not wherever your primary phone is.

BTW, this isn't the same as using Skype IN – it's better. Skype IN does allow people to reach you by calling a PSTN number but it's a special number only useful for Skype IN calls. Who wants to have yet one more number to give out?

Obviously this isn't as functional as getting calls on your mobile phone when you travel since you have to be connected somewhere with your PC on – could be a wifi hotspot – in order to make or receive calls. But there are two big advantages: you don't need to give anyone your mobile phone number in order to be reachable AND you eliminate potentially huge bills for cellular roaming – particularly if you're travelling internationally.

Blogged previously about Vonage Talk for outgoing call but mistakenly thought it wasn't useful for incoming. Hat tip to Dan Berninger for helping me get this straight.

Vonage Talk – Looks Like a Good Deal

If you're a Vonage customer, Vonage Talk is a cheaper way to make calls to ordinary phones from your computer than Skype Out. All calls you make with Vonage Talk are billed at the rate of your Vonage account; if you have an unlimited account (24.95 plus annoying fees per month), you don't pay by the minute for calls to the US or Canada or for landline calls to the UK, France, Spain, Italy or Ireland.

So, if you're traveling anywhere in the world and calling your friends at home in the US or Canada or on landlines in the listed countries, you pay nada for these calls. Skype charges 2.1 cents per minute to call the US (except 5.6 cents to Alaska), and landlines in UK , Ireland, France, Italy and Spain. Vonage also has attractive rates to most other international destinations and is almost always cheaper than Skype Out, which, in turn, is cheaper than traditional carriers and much cheaper than roaming calls on your mobile phone. However, if you're not a Vonage customer and you travel a lot, it may be cheaper just to get a Skype subscription – one plan charges $9.95/month for unlimited calls to landlines in all of these countries and many more plus mobile in the US, Canada, China, Hong Kong and Singapore. BTW, Skype is upfront that "unlimited" means 10,000 calling minutes per month.

You can also receive calls on Vonage Talk but only from another Vonage Talk client. Would be much more useful if you could forward calls from your Vonage landline phone to this client. Even though the documentation doesn't say so, this client "rings" when the associated Vonage line is called. More about that here.

The Vonage Talk client, which seems to be available for the PC only, looks like a stripped down version of the Skype client. It doesn't have Skype bells and whistles like video. I haven't done enough testing to know if it is as good as the Skype client at getting excellent sound out of poor IP connections. Interestingly, the Vonage application is an opensource SIP client from SourceForge. This apparently means it is standards compliant which the Skype client is not and may indicate that the client will work with other SIP softphone and devices in the future. It already supports a number of instant messaging services including its own.

Vonage Talk is part of Vonage Alpha, a sandbox recently announced by Vonage for new services. Vonage warns that Alpha software may break and is NOT supported by their customer support. Other Alpha services include relay faxing of documents created on a PC, a contact manager, and a way to leave a code someone can use to call you without exposing your phone number.

The Best is Yet to Come

Imagine that you had a magic parts bin with an infinite supply of instantly available free components for almost every function; just think what you'd be able to build! That nirvana is already available to those of us who "build" software. Computing power is cheap and getting cheaper; the price of data storage is coming down; and software "components" – scripts, subroutines, code packages, libraries, open source operating systems – are free.

As a programmer, I'm Rip van Winkle; didn't write code for seventeen years and now I've started again. All the young hotshots who were just learning to eat solid food when I last programmed take all this free code for granted; to me it's a wonder. Even at my age, I can build much more interesting stuff in a day of coding now than I could in a week the last time I was doing this – all because most of the functionality I need already exists for free picking off the web. I just have to find it (usually with Google), download it, understand it, lash it together, add a little secret sauce (which I promptly make open source), debug to alpha, and voila.

It's not that us ancient programmers didn't understand the value of code libraries and reusable code. When I ran a software company, I insisted that we componentize and build a subroutine library to make the next project easier. We negotiated contracts with our customers which allowed us to retain ownership of code that wasn't product specific so we could reuse it. We even kept the software library as an asset on our books – albeit a fast-depreciating one.

We got a competitive advantage from reusable code; so did anyone else who succeeded in the software business. Libraries were a huge asset when I was at Microsoft – and one that Microsoft had every right to.

Developers of new machines and new operating systems learned that making rich code libraries available to developers meant more applications would get written for their platforms. The Macintosh would never have succeeded if there hadn't been vast quantities of sample code to speed and guide our development for this new environment. BTW, most of this code came on floppies; some could be downloaded over our painful dialup connections.

I'm sure companies still have their own libraries of reusable code and benefit from them.

But now all the private libraries are dwarfed by the cornucopia of free code on the web. The first beneficiaries of this largesse are we programmers. Rather than diminish the need for programming, it makes each one of us much more valuable in terms of what we can produce – and produce very quickly. The ultimate beneficiaries are the computing public – which is anyone with a watch, a cell phone, a DVD, an modern appliance, or a computer.

Reusability of code is a network phenomenon: its value grows with the square of the number of people who are contributing and sharing. We've only begun to reap the benefit of global code sharing. The best is yet to come!

Vista and Internet Explorer: Ugh

The good news is that Internet Explorer in Vista has this feature called "Protected Mode" which "should" provide good protection from things that go bump in the night on the Internet. The bad news is that it mostly protects you from yourself. Most people I know turn protected mode off although it does seem to be working fine for Mary. It definitely doesn't let me do active-x installs even though I've turned on that option everywhere I can find it and I run as the administrator.

Worse news is that, protected mode or not, IE just seems to crash or lose function after a while. It's the same IE that runs under Windows XP but it's not nearly as reliable in this environment. Some Google pages don't work – some of the time; other sites randomly fail. Some flash stuff won't image – sometime. Some YouTube won't work – sometime. And worst of all, stuff I'm testing sometimes works and sometimes doesn't.

Restarting Explorer sometimes – usually – solves problems. Rebooting the whole machine makes other problems go away. Browsing with Firefox rather than Explorer avoids the problems although Firefox has no protected mode – but then neither did IE before Vista so that's not really a step back.

It's hard to believe there's not more on the Web when I Google "IE problems and Vista" and like terms. When I talk to other Vista users – there are some – they are also having problems. Maybe people just don't use IE when they use Vista but that seems unlikely. Maybe even fewer people use Vista Business since businesses have been reluctant to take on Vista support; so perhaps I'm more of an early adopter than is comfortable.

In response to my last rant about this, several kind readers sent suggestions; these haven't made the problems go away though.

There's supposed to be Vista service pack arriving automagically any day now. Maybe that'll help. In the meantime, I'd suggest avoiding "upgrading" to Vista.

Now on Kindle!

hackoff.com: An historic murder mystery set in the Internet bubble and rubble

CEO Tom Evslin's insider account of the Internet bubble and its aftermath. "This novel is a surveillance video of the seeds of the current economic collapse."

The Interpreter's Tale

Hacker Dom Montain is in Barcelona in Evslin's Kindle-edition long short story. Why? and why are the pickpockets stealing mobile phones?

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Kindle: Amazon's Wireless Reading Device

Not quite as good as a real book IMHO but a lot lighter than a trip worth of books. Also better than a cell phone for mobile web access - and that's free!

Recent Reads - Click title to order from Amazon


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