Thursday, December 20, 2007

Free Trade? When Pigs fly in China !

Seems like there is a major shortage of pork the staple meat of China .

Free-traders would say that China could (and should) import more pork under these market circumstances. You'll need to read a bit into the article to see that China will respond with protectionism . And how come they never call it protectionism unless the U.S. does it ? For developing countries, they are doing it to 'protect peasants and reduce poverty' .

The government said Thursday it would double subsidies for pig farmers to boost production of pork, the country's staple meat.

Isn't this anti-Free Trade AND anti-Globalization ?

China to hike interest rates

Central bank to raise benchmark interest rates for sixth time this year in bid to cool inflation.

BEIJING (AP) -- China said Thursday it will raise interest rates for a sixth time this year as it tries to cool a price surge that has pushed inflation to its highest level in a decade.

On top of repeated rate hikes, Beijing has imposed investment curbs to slow spending on new factories, office buildings and other assets. It worries that a glut of unneeded projects could lead to defaults on bank loans, causing a debt crisis.

The interest charged on a one-year loan will rise by 0.18 percentage points to 7.47 percent, effective Friday, the central bank said on its Web site. It said rates on bank deposits will rise by 0.27 percentage points to 4.14 percent.

Analysts had expected a rate hike, and pressure built after consumer prices jumped by 6.9 percent in November over the same month last year. It was the highest inflation rate since 1996 and was driven by an 18.2 percent jump in politically sensitive food costs.

Economists blame the latest inflation spike largely on shortages of pork and other food items and said they expected it to ease once a new grain crop was harvested. But inflation has stayed stubbornly high despite official measures to increase food supplies.

"The apparent recent acceleration of non-pig food inflation and higher producer prices might have unnerved the authorities," Standard Chartered economist Stephen Green said in a report to clients.

"Sentiment in Beijing is changing" and the government is likely to get more aggressive in early 2008 about controlling inflation, Green said.

"The problem, though, is that food inflation may be with us for a while yet, and most of it will be fairly immune to tightening moves, at least over the next six months," he said.

The government said Thursday it would double subsidies for pig farmers to boost production of pork, the country's staple meat.

Chinese leaders want to maintain fast growth to reduce poverty, and the economy is expected to expand by more than 11 percent this year. But they have steadily nudged up interest rates to keep surging growth from setting off runaway inflation.

Driven by booming exports, the economy has powered ahead despite the repeated rate hikes, investment curbs and measures to shrink credit, as well as worries about the U.S. economy.

The government is struggling to contain pressure for prices to rise as a flood of cash from China's yawning trade surplus courses through the economy. The central bank drains billions of dollars a month from the economy through bond sales.

U.S. officials cite inflation fears as a key reason for Beijing to ease controls that they say keep its currency, the yuan, undervalued and give Chinese exporters an unfair price advantage, adding to its trade surpluses.

Treasury Secretary Henry Paulson and others argue that if China let its yuan rise faster against the dollar, its trade gap with the United States would narrow and inflation pressure would ease.

In other moves to contain price increases, the Cabinet agreed Wednesday to pay farmers a subsidy of $13 for each fertile sow next year, double this year's rate, the official Xinhua News Agency said.

The move is meant to "ensure adequate market supply and stabilize food prices," Xinhua said.

The Cabinet also promised to spend $300 million next year to help breeders build "standardized, large-scale" pig farms, the report said.

China's pork production fell sharply this summer due to high feed costs and an outbreak of blue-ear disease that prompted the government to destroy thousands of animals.

Beijing earlier promised pig farmers free vaccinations and other aid, and ordered banks to extend them credit.

On Wednesday, the government said it would end rebates of export taxes on wheat, corn and other grains. The step appeared to be intended to push producers to sell more grain at home, reducing pressure on prices.

The government plans to release part of its corn reserves onto the market to curb rising prices, Xinhua said. To top of page

It Labor Shortage, or just low wages ?

You have to make it almost to the end of the article to realize that there really is no 'IT skills shortage' in Germany .... but rather a 'brain drain' problem caused by uncompetitive wages and high taxes ....

Many highly trained Germans seek employment abroad for lower tax rates, higher pay or better opportunities, while non-European Union citizens seeking work in Germany generally must command a salary more than double the national average to be allowed in.

So people gravitate to larger take-home compensation (surprise!!) ... seems to me that the easiest way to fix this is to offer their home-grown people more money so that they don't go abroad ....

But they'll wind up loosening immigration to keep wages low, which is their real purpose , just like in the US ...

The other interesting unasked question --> What countries are these skilled German IT workers going to, that pay more and have lower taxes ? Obviously these higher-paying countries are not seeking lower-paid IT workers from less developed countries .... why not ?

Inquiring minds want to know !

German IT skills shortage seen worst since 2001
347 words
19 December 2007
11:26 am GMT
Reuters News
(c) 2007 Reuters Limited
FRANKFURT, Dec 19 (Reuters) - Two-thirds of German high-tech companies say their business operations are being hampered by a lack of IT experts, the worst perceived skills shortage in six years, according to a survey by industry association Bitkom.
In a statement published on Wednesday, Bitkom said the 64 percent of firms saying they were affected was the highest score since it began its survey of business confidence in the sector in 2001.
"The themes of education and immigration will accompany us in 2008," Bitkom President August-Wilhelm Scheer said.
Bitkom added it had received positive signals for an adjustment of Germany's immigration rules from an IT summit hosted by German Chancellor Angela Merkel earlier this month.
Merkel said during the summit the government would try to persuade more people in Germany to take up jobs in the IT industry before easing regulation for foreigners.
Bitkom -- whose more than 1,000 members include Deutsche Telekom , Microsoft Germany and SAP -- says the German IT and telecoms sector has 43,000 vacancies for skilled workers.
Many highly trained Germans seek employment abroad for lower tax rates, higher pay or better opportunities, while non-European Union citizens seeking work in Germany generally must command a salary more than double the national average to be allowed in.
Germany agreed in August to relax immigration rules for engineers from eastern Europe but has rejected a European Union plan to encourage migration of skilled workers into Europe to ease labour shortages caused by a declining, ageing population.
Bitkom added that 70 percent of the companies it surveyed expected Christmas holiday sales this month to be on the same high level as last year's, helped by demand for flat-screen TVs, multimedia phones and digital cameras.
Seventy-eight percent of companies in the survey expected higher sales in 2008, 16 percent expected stable revenues and 6 percent foresaw a drop, Bitkom said.

Wednesday, December 12, 2007

What is a 'US' firm , part 2

The newest market and fastest growing opportunities have been deemed to be overseas for the last ten years, continuing into the future.

The the best, hardest working, talented and least expensive employees were deemed to be found overseas .

Now the best, hardest-working (but not least expensive!) executives are deemed to be found only overseas.

So we have this critical quote, with the REAL big question :

“Even though they’re based in the United States, companies are less and less thinking of themselves as American companies,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania.

At what point does a 'US' firm morph and become some sort of pan-national economic and political entity?

That comes when companies start to incorporate in countries overseas due to tax issues . If a corporation has a minority of employees in the US, a minority of it's revenues from the US and these prospects are on a downward trend , why pay the taxes and costs of doing business in the US (or Europe for that matter).

Stanley toolworks tried this a few short years ago, they tried changing their Connecticut base and US corporation status to 'move' to a base in a Caribbean island. Political and public outcry prevented it then, but will not in the future .

So the next grand idea/trend in corporate America :

The the best, hardest working, talented, cooperative and least tax-expensive corporate headquarters/bases will be deemed to be found overseas .

December 12, 2007

Seeking Leaders, U.S. Companies Think Globally

The corner offices of corporate America are increasingly being filled from every corner of the world.

Citigroup, the world’s largest bank, named Vikram S. Pandit, a native of Nagpur, India, as its chief executive on Tuesday. Mr. Pandit joins 14 other foreign-born chiefs who are running Fortune 100 companies.

The head of the Altria Group was born in Egypt, for example. PepsiCo’s is from India, the Liberty Mutual Group’s is a native of Ireland and Alcoa’s was born in Morocco.

Their numbers have jumped from roughly a decade ago; there were nine foreign-born chief executives on Fortune’s list of the 100 largest companies in 1996. But the size of the new group does not reflect a noteworthy change — they come from more far-flung countries now than then, when they were more likely to hail from Canada or Europe.

The shift reflects, in part, the focus that companies place on foreign markets for growth. For the first time, for example, the companies in the Standard & Poor’s 500-stock index are expected to achieve more than half their sales from abroad next year, on average.

By contrast, six years ago, large American companies that disclosed their foreign earnings earned about a third of their revenue from foreign sales, according to Standard & Poor’s.

Many of these foreign-born chief executives were recruited by companies like General Electric and Procter & Gamble in the 1970s and 1980s for their overseas operations. Now they hold top positions at companies that also include Chiquita Brands International, the Eastman Kodak Company and the Kellogg Company. Chief executives at Dow Chemical, Altria and Alcoa started in foreign units of their companies.

“Even though they’re based in the United States, companies are less and less thinking of themselves as American companies,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania.

The ranks of top executives will probably become more international, as many business schools now fill their classes with 40 percent or more foreign students, and more companies recruit worldwide.

“It’s just a numbers game,” said S. P. Kothari, deputy dean of the Sloan School of Management at the Massachusetts Institute of Technology. “It’s absolutely nothing wrong with the United States, but our population here is only 300 million. Imagine two billion people from the outside start getting a decent education and going through the pipeline. Well, we are going to encounter more of them who rise to the top.”

Mr. Kothari, who grew up in India and attended business school there, has seen the trend firsthand. Some of his M.B.A. classmates from the early 1980s were recruited by Citigroup, Goldman Sachs and Nike, he said, and now they are in line for top positions.

Marijn E. Dekkers, 50, the Dutch chief executive of Thermo Fisher Scientific, based in Waltham, Mass., came to the United States in 1985 through a General Electric program that required new hires to work their first stint in a continent far from their own.

“You’re not intimidated doing business with people who are different than you,” Mr. Dekkers said. “I’m more open to exploring Asian alliances and comfortable doing business in Asia, even though I’m from Europe.”

Executive recruiters at firms like Korn/Ferry International say that corporate boards are asking more for leaders with experience outside the United States. And American-born executives increasingly are spending part of their careers in different countries.

“As you move through the company and you’re looked at for a promotion, one of the things we’re going to look at is, do you have international experience?” said Susan Bishop, a spokeswoman for General Electric.

Some companies have long track records of appointing chief executives with foreign roots. Coca-Cola last week named Muhtar Kent, the company’s president and chief operating officer, to succeed E. Neville Isdell as chief executive. Mr. Isdell was born in Northern Ireland but moved to Zambia as a child. Mr. Kent was born in the United States but grew up in Turkey. (Previous chief executives included Roberto C. Goizueta and Douglas N. Daft, who were also born abroad.)

M. Farooq Kathwari, chief executive at Ethan Allen Interiors, said he had been shaped by his experience moving on his own at age 21 from the Kashmir region of India to the United States.

“A foreign-born person is by nature an entrepreneur,” Mr. Kathwari said. “When you leave your home, leave your family and come to a different country, you have had the instincts of an entrepreneur.”

Mr. Kathwari said his childhood in Kashmir, hiking up mountains, taught him the importance of pacing himself. The political conflict there, he said, taught him the importance of fairness. “Justice” is now a leadership principle at Ethan Allen.

Some chief executives, like Mr. Pandit at Citigroup, moved to the United States for their education. Indra K. Nooyi, the chief executive of PepsiCo, attended the Yale School of Management, and Sidney Taurel, the chief of Eli Lilly who was born in Morocco, attended Columbia Business School. Mr. Pandit earned undergraduate, master’s and doctorate degrees at Columbia.

Howard M. Anderson, a professor of entrepreneurship at the Sloan School at M.I.T., said change in the executive suite has come more slowly than companies’ sales growth abroad. He said that some corporate boards may still not be comfortable with foreign-born chief executives because they feel they have more in common with another American.

“It’s prejudice, but remember, when you’re picking a C.E.O., it’s not an equal opportunity job,” Mr. Anderson said.

But Ramani Ayer, the chief executive of the Hartford Financial Services Group, said he thought that because boards were accountable to shareholders who care about returns above all else, they would pick the best candidate, regardless of race or country of origin.

Mr. Ayer grew up in India, but moved to the United States to attend graduate school at Drexel University. He credits his bosses at the Hartford with helping guide him in his rise to the top, but he also said he had acquired a strong work ethic in India.

“I’ve benefited from my Indian background,” Mr. Ayer said. “Growing up in a very simple family with a real passion for hard work. In other words, you never stopped working. You just worked. Work was liberating and work was part of what defined who you were.”

Monday, December 10, 2007

The Common Construct

The Common Construct within the current, corporate-driven, usage of all working people was summed up succintly :

“I think if they could do this business without us, they would, and so making our task as mechanical and simple and low-paying and unartistic as possible,” Mr. Verrone said.

This is exactly what is happening in all spheres of employment and is being particularly noticed by many because all the forces that allow and encourage globalization now have jobs moving not just to your smarter/faster/cheaper neighbor across the street or in a different state, but around the world.

It's interesting to note that in the entertainment industry there was a boom in demand for graphics and cartooning people several years back with an explosion of Disney blockbusters. Then CGI-animation caught up (and surpassed?) hand-drawn animation. Along with this , the large entertainment companies outsourced hand-animation overseas so that most animation is no longer done here, e.g The Simpsons is done in Korea . Disney itself cut most of it's animation staff a couple years back and now relies on CGI graphics (which can be done anywhere in the world) and lower-cost hand-drawn animation overseas .

The real question is 'what job CANNOT be done , and done cheaper, outside the U.S.? ' .

December 10, 2007
News Analysis

Screenwriters Dig In for an Extended Brawl

LOS ANGELES, Dec. 9 — Eight months ago, in a contemplative moment, Patric M. Verrone, president of the Writers Guild of America West, sketched out what could have been a script for the collision that wrecked talks between Hollywood’s producers and striking writers on Friday.

During an interview in his office here, Mr. Verrone described the looming negotiations with employers as a confrontation much grander than a simple fight over pay formulas. This battle would be about respect.

Writers, he said, were looking to restore a sense of leverage and status that had been lost as ever-larger corporations took control of the entertainment business. He described Hollywood as teetering on the brink of a dark age, as far as creative types were concerned. “I think if they could do this business without us, they would, and so making our task as mechanical and simple and low-paying and unartistic as possible,” Mr. Verrone said.

The solution, he added, was to squeeze the corporations that own the studios, in an effort to represent the legion of writers on reality and animated shows that the guild had not organized through sign-up drives.

“There are things we can ask for in bargaining that will allow you to reach up to the mother ship and then back down into the nonunion company,” he said.

On Friday night, five weeks into a strike that now promises to drag on well into the new year, seriously complicating plans for this television season and the next, and opening the door to a tube filled with reality shows and other substitutes, it suddenly became clear to all involved that Mr. Verrone and the other guild leaders were serious about their writers’ revolution.

After days of haggling over complicated formulas for Internet pay, the latest round of talks blew up over the deeper issues that had been buried inside the writers’ contract proposals.

Accusing guild leaders of pursuing “an ideological mission far removed from the interests of their members,” representatives of the Alliance of Motion Picture and Television Producers expressed outrage over continuing demands of the writers that were not strictly related to pay.

These include requests for jurisdiction over those who write for reality TV shows and animated movies; for oversight of the fair-market value of intracompany transactions that might affect writer pay; and the elimination of a no-strike clause that prevents guild members from honoring the picket lines of other unions once a contract is reached.

The tone of shock in the producers’ statement seemed a bit artificial, as Mr. Verrone has for months laid out his plan to elevate the writers’ industry status. Yet their anger is genuine. Executives know that to concede the writers’ noneconomic demands would lead to a radical shift in industry power. Only a death wish, for instance, would prod companies to let one union walk out in support of another, particularly on the eve of negotiations with both the Directors Guild of America and the Screen Actors Guild, whose contracts expire in June. “It’s kind of like saying ‘Oh, while we’re in the middle of this knife fight, I demand the right to have a gun next time,’ a comment on a screenwriters’ blog, The Artful Writer, said.

Similarly, company negotiators know that to grant jurisdiction over workers not currently represented by the guild would bring up against legal questions — can they impose union membership on a unit whose members have not signed up? And it would lead to a collision with other unions.

That matter provoked a blast on Friday night. Thomas C. Short, president of the International Alliance of Theatrical Stage Employees, which already represents some reality and animation writers, compared the writers’ guild leadership to “a huge clown car that’s only missing the hats and horns.”

As the strike drags on, it appears increasingly likely that the television business, which is more sensitive than the movie industry to short-term dislocations, may be in for some deep changes. One possibility is that networks will use the walkout as an opportunity to end their costly practice of presenting new programs to prospective advertisers in an elaborate spring road show known as the upfronts. Instead, they might opt for simple visits to the main advertising agencies.

Networks could also use the strike to end a television development cycle that has them all chasing the same stars at the same time for fall programs that make their debuts en masse. Instead, they might develop new offerings throughout the year.

More narrowly, Friday night’s breakdown marked the failure of an effort by the companies to reboot the talks as a more tightly focused negotiation, despite earlier bad blood. The companies’ strategy, more or less, had tried to close a gap on issues related to electronic delivery of movies and television shows, holding back a sweetened offer for Internet downloads as a closer that would be added at the last minute, giving Mr. Verrone something on which to claim victory.

For that to work, however, Mr. Verrone and his colleagues would have had to abandon the quest for not just a bigger share, but a bigger place in the business.

In a Sunday interview, Mr. Verrone said nothing was nonnegotiable. Union leaders, he said, were thinking “we were in a negotiation, where they would talk about these things.”

And anyone who thought that they would simply surrender just was not listening.

Friday, December 7, 2007

Not guilty

The SEC said McGuire did not admit or deny guilt.

Voluntarily agrees to give up over $400 million but doesn't actually admit guilt?

Well just like trying to legally define what the meaning of the word 'is', is , we can legally haggle over the meaning of guilt . But paying $400 million in lieu of hard time seems to define the word for me .

UnitedHealth former CEO to forfeit $400M

William McGuire, the insurance company's former chief executive, agrees to surrender the funds as part of a settlement of a stock-options backdating lawsuit.

MINNEAPOLIS (AP) -- Former UnitedHealth Group Inc. Chairman and CEO William McGuire has agreed to surrender more than $400 million to settle a lawsuit related to a stock-options backdating scandal, the company and the Securities and Exchange Commission announced Thursday.

McGuire, who stepped down a year ago as the highest-profile corporate chief caught in the probe, will give up $320 million in stock options and forego more than $99 million in other retirement and executive savings benefits, the company said.

In a statement, the Securities and Exchange Commission valued the settlement at $468 million. The SEC said McGuire did not admit or deny guilt.

The SEC said it includes a $7 million civil penalty and reimbursement to the Minnetonka-based insurer for all incentive- and equity-based compensation he received from 2003 through 2006.

Thursday, November 29, 2007

Middle-class struggles

Gov't statistics have been showing inflation running at only 2-3% for many years, yet any wage earner knows that all economic necessities have been increasing double-digits during the same time period.

For example, how can oil double in one year (started the year off just under %50/barrel) and inflation be 3% ? There are lies, damn lies , and then there's statistics !

Middle class feels the squeeze
Rising costs of health care, housing, and education are forcing middle-class families to work harder and longer, says a new report.
By Kenneth W. Musante, staff writer
November 28 2007: 12:43 PM EST
NEW YORK ( -- Middle-class households in America have to work harder than ever to maintain their standard of living, according to a report released Wednesday.
Sixty nine percent of middle-class households are at risk of losing their standard of living in the long term, says Demos, an advocacy group for lower and middle-class Americans.
And the rising costs of health care, housing, and education are forcing middle-class families to work harder to maintain that standard, said Jennifer Wheary, the report's co-author in an interview with
"The way that they have stayed secure is by tightening belts," said Wheary. "People now have to work more hours to be at that same level."
Demos defined middle-class households as those whose income is approximately between $40,000 and $129,000 (based on a family of four), whose head of household is between the ages of 25 and 64, and excludes those who held more than $500,000 in net financial assets (the top one percent).
The Demos report is designed to measure the financial health of the American middle class by measuring certain key variables.
If their main source of income dries up, only 13 percent of middle class households can live off their assets for nine months, after reducing basic living expenses by one quarter, estimates Demos.
52 percent have no net financial assets at all after debt (excluding home equity), and live paycheck to paycheck.
The average middle-class family is carrying $8,328 in personal debt, which includes credit card debt, student loans, vehicle loans, and medical debt, according to the report. The cost of essential living expenses like health care, housing costs and educational expenses is rising higher than both the rate of inflation and the incomes of most families.
"All these things add up to higher bars that people need to climb over," said Wheary.
Demos's research claims that 23 percent of middle-class families have at least one uninsured member, leaving them vulnerable to a financially draining medical disaster.
The boom in the housing market that began in the mid-1990s thanks to low interest rates and easy credit encouraged families to take on riskier and more expensive mortgages than they might have otherwise, and the recent decline in home prices has left many vulnerable to further financial strain because their homes are worth less and the interest rates on adjustable rate mortgages are much higher now.
What's more, the rising tuition costs has put a further burden on middle class families.
Wheary advised middle class households to "be conscious of the balanced picture" by planning for long- and short-term expenses, not taking on a bigger mortgage than they can afford and building in a safety net of emergency savings to tide them over should they lose their jobs or be hit with unforeseen expenses.

Tuesday, November 27, 2007

Why high Oil?

The critical point is that the big-money players are looking for the next big market to place their money . Money fled from stocks after the bubble started to burst in 2001 . Liquidity went into real estate and then that bubble started it's burst in 2006. Money then moved into several areas:

1- Currency speculation, driving the US dollar lower and the Euro, Yen , rupee and others higher. When valuations change drastically within a short period this usually means that the market has over-reacted and a correction is to be expected.

2- Gold and other metals have increased in lockstep also, approaching all-time highs as the dollar has fainted. Again, quickly increased valuations has set up this market for a reversal.

3- Oil and energy price increases are supposedly due to large increases in demand but the market for energy futures, as mentioned in the article, has increased dramatically compared to previous years AND it is not tracked so no one knows the full extent of this activity.

What is known is that all markets from the time of the tulip craze in Europe in the 1600's to now will eventually fall and the faster and greater the rise results in a more precipitous drop.

Capital in todays instantaneous world is seeking quick, large profits and extremely large sums move quickly causing any and all markets to be whipsawed in their wake . The winners are those firms that are quick to move, at the right moment . This is more luck than skill and eventually the lucky will lose.

And, as the article states, the man on the street winds up paying for the 'lucky' millionaires running the game:

"It's a crime," said Gheit. "A family of four is going to have to cut corners to benefit a Wall Street trader who makes $20 million a year."

Not only the man on the street but ALL non-energy companies are squeezed by high energy, so the big financial players are winning on one end of their portfolio at the expense of the rest of their portfolio, e.g. stocks, bonds, real estate .

$100 oil and the 'S' word

Is it growing demand and tight supply, or merely rampant speculation that has pushed crude to record highs?

By Steve Hargreaves, staff writer

NEW YORK ( -- Greed is driving oil prices to $100 a barrel.

That's a common feeling among the general public, which sees record profits for investment banks that bet on oil prices - making wealthy oil companies even wealthier - while drivers shell out $3 and more for a gallon of gas.

It's also a common refrain from OPEC states. Having to defend themselves against charges their production quotas are responsible for the high prices, they point to near-average crude oil supplies and say speculation is what's behind the frenzy.

But industry experts offer mixed opinions on speculative investment's impact on oil prices. Some say it's marginal, that strong demand and limited supply are the real reasons oil prices have risen five-fold since 2002, and say additional investors actually benefit the market by adding more liquidity.

Others say the tight supply and demand situation has been known for a while, and nothing but speculation is behind the doubling of oil prices over the last year. They say there is a cost to the sheer number of oil contracts now traded on the oil exchanges, and this trading has just enriched Wall Streeters at the expense of average Americans.

The Energy Information Administration, the Energy Department's independent statistical and analysis arm, thinks strong demand and limited supply - otherwise knows as "the fundamentals" - is why oil is so pricey.

"Our view is that the market is tighter [than last year]," said Doug MacIntyre, senior oil market analyst at EIA. "We don't have the inventories now."

MacIntyre said inventories in developed countries - crude oil stored at refineries, or in tanks at ports, pipeline terminals and other locations - went from 150 million barrels above their five-year average at the start of the year to 10 million barrels below the five-year average now.

"That's a big difference," he said. "There's less slack in the system than there was a year ago."

EIA attributed the decline to OPEC production cuts of about 1.5 million barrels a day beginning at the start of 2007, when inventories were so high and oil prices briefly dipped below $50 a barrel.

The cuts came despite continued strong worldwide economic growth, which EIA said caused oil demand to rise by 1.3 million barrels a day over the last year. The agency projects an increase in demand of 1.5 million barrels a day in 2008.

"High oil prices are not rationing demand," Addison Armstrong, director of market research at the brokerage Tradition Energy Futures, said, adding that speculative money might be tacking on just $5 or $10 to the price of a barrel. "The fundamentals are much tighter than they were a year ago."

EIA said other factors contributing to a doubling in oil prices over the last year include moderate growth in new supplies from non-OPEC countries, the inability to immediately produce much more oil in OPEC countries, a lack of refining capacity and ongoing geopolitical threats.

But longtime Oppenheimer oil analyst Fadel Gheit doesn't buy it.

Gheit said inventories are declining because high oil prices give people an incentive to sell crude now and wait until later to restock supplies, when hopefully oil is cheaper.

Other than the decline in supplies, Gheit says all the other factors EIA lists have been with us since last year, when oil traded at under $50 a barrel.

"It's pure speculation," he said. "What's changed that we didn't know in January? Not a single thing."

It's hard to gauge the amount of money investment interests - as opposed to refiners or airlines or people who actually use oil - have in the oil markets. The government tracks contracts held by what it calls "commercial' and "non-commercial" users, but it lumps investment banks in with the commercial side.

Either way, the amount of investment money in oil is certainly large.

It's been rumored Goldman Sachs has over $80 billion in the market, although the investment bank declined comment for this story.

Its influence is so big, traders refer to the day of the month when the bank sells the current month contract and buys the future month as the "Goldman roll" due to its effect on price. When Goldman last month told its clients to sell oil when it approached the mid-90's, crude lost over $3 in one day.

Goldman is of course not the only one. Morgan Stanley, which also declined comment, has reportedly bought facilities to store oil. Hedge funds, pension funds, commodity-centered mutual funds, insurance companies - all have gotten in on the act.

"Just the multiple [contract] turnovers in the futures markets has a cost of its own," said Judy Dugan, research director at the Center of Taxpayer and Consumer Rights.

Dugan, echoing recent sentiments by oil company executives themselves, said there's no fundamental reason why oil prices should be anywhere near $100 a barrel.

"There's no inability to buy oil, this is not 1981," she said.

"It's a crime," said Gheit. "A family of four is going to have to cut corners to benefit a Wall Street trader who makes $20 million a year."

The high prices and talk of speculation has attracted the attention of Congress, which is holding hearings on the matter beginning next month.

Among things lawmakers could do is increase the margin requirements - or require oil traders to put down a greater percentage of a contract's worth in-order to buy or sell it. Currently, traders can buy or sell oil with just 4 percent down, compared to 50 percent for stocks.

Another option could be to require traders to hold oil contracts for a certain amount of time before they sell them.

But one source familiar with the oil markets said that while the physical number of oil barrels available is limited, there is no limit on the number of contracts that can be written. So just because there's more money chasing oil contracts, that in and of itself doesn't necessarily guarantee higher prices.

He said speculators provide liquidity in the oil markets, and noted that they can lose money just as fast as they make it.

And he cautioned about lawmakers attempting to write rules for a market they know little about.

"Their intent may be good, but sometimes they do more harm than good," he said. To top of page

Wednesday, November 14, 2007

American Students versus the world

All the Asian countries that have better scores are homogenous societies with few new immigrants, and those immigrants may not vary much by race , language and culture.

If they break down the American states results by race or socioeconomic status then there are groups of students that are achieving close , if not equal, to these Asian countries.

This is another study that will add to the fodder that 1) American students are not studying math/science, 2) American corporations have a desperate need for people with these skills and 3) foreign workers are thus our only chance to shore up our economic stability for the future.

Let's take this one by one:

1) American students are not studying math/science - what is the compensation for math/science/engineering compared to the compensation for finance/economics or medicine currently? and projected for the future ? The amount of time, the effort and the difficulty of the subject matter versus the expected rewards is out of sync in the US .

2) American corporations have a desperate need for people with these skills - easy to make this claim but what has been the actual hiring pattern for US corporations the past few (say 5) years? Perhaps 80% or more of the hiring is for workers overseas. The demand for workers in the US, who 'command' 2-3 times the compensation rate, has been decreasing at the same time, as firms can get the 'same' skills overseas for a fraction of the cost.

Basic economic theory says that if companies are 'desperate' for these skills then the compensation for these skills will rise, perhaps dramatically. Instead , pay raises and salaries have stayed at or below the inflation rate the past few years. When the was booming and the bubble rising, compensation was zooming and enrollment in computer science programs filled up. After the bubble burst and with globalization ascendant and salaries dropping relative to inflation, enrollment for comp sci has fallen precipitously also.

3) foreign workers are thus our only chance to shore up our economic stability for the future - foreign workers are by definition , not US citizens, and almost always are hired as contract workers , at least for the first couple of years. As such they have little ability to push-back to their employer's workplace demands and thus may appear to be 'harder working' . They help keep compensation down for US workers and they don't push-back on work conditions - what's not to like for US corporations?

Also, US salaries no matter how stagnant and unattractive to US citizens, have been a dramatic windfall to foreign workers compared to compensation back home. This is now changing (we'll see if this continues and for how long) and the incentive to come here and earn an American salary is becoming less attractive as they can stay home with family and earn a decent wage.

Bottom line - American students and their parents who are advising them , are not so dumb. They are responding to market forces and the demand for skills for certain fields. The ONLY true indicator of demand for skills is the compensation being offered , and the trend in compensation.

November 14, 2007

Study Compares States’ Math and Science Scores With Other Countries’

American students even in low-performing states like Alabama do better on math and science tests than students in most foreign countries, including Italy and Norway, according to a new study released yesterday. That’s the good news.

The bad news is that students in Singapore and several other Asian countries significantly outperform American students, even those in high-achieving states like Massachusetts, the study found.

“In this case, the bad news trumps the good because our Asian economic competitors are winning the race to prepare students in math and science,” said the study’s author, Gary W. Phillips, chief scientist at the American Institutes of Research, a nonprofit independent scientific research firm.

The study equated standardized test scores of eighth-grade students in each of the 50 states with those of their peers in 45 countries. Experts said it was the first such effort to link standardized test scores, state by state, with scores from other nations.

Gage Kingsbury, a director at the Northwest Evaluation Association, a group in Oregon that carries out testing in 1,500 school districts, praised the study’s methodology but said “a flock of difficulties” made it hazardous to compare test results from one country to another and from one state to another. “Kids don’t start school at the same age in different countries,” he said. “Not all kids are in school in grade eight, and the percentage differs from country to country.”

Because of such differences, Dr. Kingsbury said, it would be a mistake to infer too much about the relative rigor of the educational systems across the states and nations in the study based merely on test score differences.

The scores for students in the United States came from tests administered by the federal Department of Education in most states in 2005 and 2007. For foreign students, the scores came from math and science tests administered worldwide in 2003, as part of the Trends in International Mathematics and Science Study, known as the Timss.

Concern that science and math achievement was not keeping pace with the nation’s economic competitors had been building even before the most recent Timss survey, in which the highest-performing nations were Singapore, Taiwan, South Korea, Hong Kong and Japan. American students lagged far behind those nations, but earned scores that were comparable to peers in European nations like Slovakia and Estonia, and were well above countries like Egypt, Chile and Saudi Arabia.

The Timss survey gives each country a metric by which to compare its educational attainment with other nations’. The nationwide American test, known as the National Assessments of Educational Progress, allows policy makers in each state to compare their students’ results with those in other states.

The new study used statistical linking to compare scores on the national assessment, state by state, with other nations’ scores on the Timss. Dr. Phillips, who from 1999 to 2002 led the agency of the Department of Education that administers the national assessment, likened the methodology to what economists do when they convert international currencies into dollars to compare poverty levels across various countries, for instance.

On the most recent national assessment, the highest-performing state in math was Massachusetts, and in science, North Dakota. The new study shows that average math achievement in Massachusetts was lower than in the leading Asian nations and in Belgium, but higher than in 40 other countries, including Australia, Russia, England and Israel.

Mississippi was the lowest-performing state in both math and science. In math, Mississippi students’ achievement was comparable to those of peers in Bulgaria and Moldova, and in science, to those in Norway and Romania.

In math, New Jersey, Connecticut and New York students were roughly equivalent with each other and with their peers in Australia, the Netherlands and Hungary.

The study’s contribution is the high-level perspective it offers on the nation’s education system, a bit the way a satellite image highlights the nation’s topography, said Thomas Toch, a co-director of Education Sector, an independent policy group.

“It shows we’re not doing as badly as some say,” Mr. Toch said. “We’re in the top half of the table, and a number of states are outperforming the majority of the nations in the study. But our performance in math and science lags behind that of the front-running Asian nations.”

Tuesday, November 13, 2007

Racist society or the rise of women?

A classic example of subjective reporting .... The results of this report can have a number of different interpretations and emphasis ...

The reporter has decided that the racial disparities is the critical finding ....but it seems to me that the gender aspect is the REAL story , men losing ground or staying the same, while women are making tremendous gains in their incomes :

One reason for the growing disparity: Incomes among black men have actually declined in the past three decades, when adjusted for inflation. They were offset only by gains among black women.

Incomes among white men, meanwhile, were relatively stagnant, while those of white women increased more than fivefold.

So why report it as a racial issue mostly ? Media bias , a proclivity for believing racism is still as pervasive as ever and these findings are therefore bad, versus seeing this in some way as a positive step, with women making tremendous strides .

And they quote the head of the Urban league:

Morial blamed the disparities on inadequate schools in black neighborhoods, workplace discrimination and too many black families with only one parent.

Workplace discrimination ? Where is this documented in this report or any other report? Inadequate schools (I would call them underperforming ) and single-parent black families can and have been quantified , but where is there evidence for any substantial discrimination in the workplace today ?

The fault for articles like this is not the people they quote or the reports they cite, but what the slant they take and the quotes they decide to use.

Income gap between black, white families widens
Study: Overall incomes have increased over the past 30 years, but black, white children not benefiting equally.
November 13 2007: 6:21 AM EST
WASHINGTON (AP) -- Decades after the civil rights movement, the income gap between black and white families has grown, says a new study that tracked the incomes of some 2,300 families for more than 30 years.
Incomes have increased among both black and white families in the past three decades - mainly because more women are in the work force. But the increase was greater among whites, according to the study being released Tuesday.
One reason for the growing disparity: Incomes among black men have actually declined in the past three decades, when adjusted for inflation. They were offset only by gains among black women.
Incomes among white men, meanwhile, were relatively stagnant, while those of white women increased more than fivefold.
"Overall, incomes are going up. But not all children are benefiting equally from the American dream," said Julia Isaacs, a fellow at the Brookings Institution, a Washington think tank.
Isaacs wrote a series of three reports that looked at the incomes of parents in the late 1960s and early 1970s, and of their grown children 30 years later. Isaacs compared the incomes of parents who were in their 30s with the incomes of their children, once they reached the same age group.
Parents have long hoped that their children would grow up to be more successful than they were. Hopes were especially high for black children who came of age following the civil rights movement of the 1960s.
The reports found that about two-thirds of the children surveyed grew up to have higher family incomes than their parents had 30 years earlier.
Grown black children were just as likely as whites to have higher incomes than their parents. However, incomes among whites increased more than those of their black counterparts.
The result: In 2004, a typical black family had an income that was only 58 percent of a typical white family's. In 1974, median black incomes were 63 percent those of whites.
"Too many Americans, whites and even some blacks, think that the playing field has indeed leveled," said Marc Morial, president and CEO of the National Urban League.
It has not, he added. "We are like fingers on the hand," Morial said of black and white Americans. "We are on the same hand, but we are separate fingers."
Morial blamed the disparities on inadequate schools in black neighborhoods, workplace discrimination and too many black families with only one parent.
"The public policy commitment to this has been sketchy over the last 30 years," Morial said. "There has not been a real focus on this."
Perhaps most disturbing, middle-income black families do not appear to be passing on higher incomes to their children in the same way that white families have, Isaacs said.
She found that only one in three black children from middle-income families grew up to have higher incomes than their parents.
"That means a majority ended up slipping down," Isaacs said.
Among whites, about two-thirds of the children from middle-income families grew up to have higher incomes than their parents, she said.
On a positive note, black children from poor families were much more likely to grow up to have higher incomes than their parents, Isaacs said.
Isaacs compiled the reports for the Economic Mobility Project, a collaboration of senior economists and researchers from four Washington think tanks that span the ideological spectrum. The project is funded and managed by the Pew Charitable Trusts.
Isaacs used survey data from the Panel Study of Income Dynamics, which is conducted at the University of Michigan.

Sunday, November 11, 2007

College coaches calculate more compensation

Silicon Valley is too expensive for computer and engineering people but I'm not aware of any firms that give relocation allowances in addition to compensation packages.

Meanwhile those same firms have been lobbying to allow more foreign workers into the US because jobs are going begging and there are not enough 'qualified' candidates here.

Perhaps if technology workers were treated like sports coaches, there would be a glut of workers lining up for these openings.

Interesting side-bar is that the coaches coming from 'cheap' middle-American areas were actually living extremely well there and wouldn't consider a decrease in their living standard just for the privilege of working at prestigious Stanford .

And finally , does Stanford subsidize faculty members to bring the best and brightest to their campus, or is this strictly for athletics? In many if not most colleges the coaches of major teams have the highest salary in the university , and many times they have the largest compensation within the whole state infrastructure. And college coaches (associate, not head coaches) at major universities get excellent salaries, probably much greater than the average faculty member. If they can't afford the area then who can ?

Having this higher focus on athletics versus academics is a major lesson to students in the real world classroom. To wonder why there are not enough candidates in any particular field, one just has to look at 2 things : 1) the current compensation and 2) the prognosis for continued prosperity in the field. This is why students are not registering to be technology majors, as compensation has been decreasing and the future bodes more of the same.

November 10, 2007

Attracting Valuable Coaches to the Priciest College Town

PALO ALTO, Calif., Nov. 5 — When Scott Shafer came to Stanford to interview for the defensive coordinator’s job last winter, he became more excited as the day went on. He enjoyed Coach Jim Harbaugh’s energy, meeting his potential co-workers and seeing the vision for the program.

That excitement quickly dwindled when he saw the look on the face of his wife, Missy, who had spent the morning looking at local real estate.

“I came back in tears,” Missy Shafer said. “I was literally crying.”

Missy’s tears came from the sticker shock. She realized that buying a four-bedroom home similar to the $240,000 one they had just built in Kalamazoo, Mich., where Scott served as the defensive coordinator at Western Michigan, would cost about $1.5 million more.

“What was I going to do?” she asked. “Go home and tell my children that their dad has a great opportunity, and we’re going to move into a matchbox?”

But thanks to a new way to lure coaches to the most expensive college town in America, the Shafers have happily settled into a four-bedroom house about three miles from campus in Menlo Park.

Stanford purchased a home for them to live in that cost nearly $2 million. The university also purchased a similar home for the new offensive coordinator, David Shaw, and his wife, Kori, and their two children. The rest of the Stanford football coaching staff receives a $3,000-a-month housing allowance.

It is all part of a new effort to lure top coaches in all sports to campus. The plan is being spearheaded by Bob Bowlsby, the athletic director, and backed in part financially by John Arrillaga, a billionaire Stanford booster. Bowlsby said the university had already purchased six residences and could end up owning 20 to 40 homes and apartments, all to help the coaches live near campus. Bowlsby said the university considers the real estate to be a good investment.

Bowlsby said coordinators at Stanford made a nationally competitive salary of about $200,000 a year.

A study by Coldwell Banker of the 117 towns that have football programs in the Division I Football Bowl Subdivision found that Palo Alto was the most expensive college town in America. The average 4-bedroom, 2,200-square-foot home here costs an average of $1.68 million. That is nearly $300,000 more than the second-most expensive, Chestnut Hill, Mass., the home of Boston College. (Muncie, Ind., home of Ball State, is the cheapest at $150,000.)

Susan Nevins, a real estate agent with Cooper & Gamble in Palo Alto, said a two-bedroom house in Palo Alto would cost $900,000 to $1.5 million. In past years, prices like that forced assistant coaches to live more than an hour drive away.

Harbaugh knows the struggles of assistant coaches living in Palo Alto because he lived here for two years. His father, Jack, took the defensive coordinator job at Stanford in 1980 with the stipulation that he live in Palo Alto. He said the university helped pay the mortgage on his $200,000 house.

“People all talk about the academics at Stanford and the problems that they create,” said Jack Harbaugh, referring to the difficulty in finding athletes with the grades to get into Stanford. “But I don’t think that’s near the problem that housing has created for them to have a successful Pac-10 and B.C.S. program out there. People don’t realize how much money it costs if you want to spend a little time with your family.”

Because of the school’s high academic standards, Jim Harbaugh said there were 100 to 150 players Stanford could recruit each year who will both be admitted and play at the Bowl Championship Series level. That puts a premium on staff continuity. Coaching and teaching the players they get is critical for Stanford to compete in the Pac-10. A typical B.C.S. college may recruit from a pool of more than 1,000 athletes.

“We found that people that came here didn’t stay,” Bowlsby said. “And more often than not, they didn’t come at all once they looked at housing and thought about what it would do to their lifestyle.”

The Shafers and their two children are enjoying their new life.

Wolfgang Shafer, who is 13 and in seventh grade, is taking an elective course called the history of flight. An aspiring pilot, he was thrilled to find a World War II club at his school last year that met during lunch time. His youth football team, which plays for the championship this weekend, is coached by Greg Baty, who played nine years in the N.F.L. and graduated from Stanford.

Elsa Shafer, who is 9 and in fourth grade, has a piano teacher that taught at an arts high school for gifted students in San Francisco.

Missy Shafer said the opportunities available for her children range from Japanese classes to Web page design to Olympic fencing.

“The résumés of the people that the kids have access to is such a great opportunity while we’re here,” Missy Shafer said.

Bowlsby came to Stanford from the University of Iowa last year and said he could afford to take the job only because it included a housing stipend. His house outside Iowa City was 7,000 square feet on 25 acres and included a pool.

“Suffice to say, it was a shock to our system,” Bowlsby said of when he and his wife went house hunting in Palo Alto. Not long after, he launched the initiative to find local housing alternatives.

The coaching continuity will take some time to pay off. Stanford is 3-6 this season, with an upset of Southern California. And Jim Harbaugh, who also gets a $3,000 housing stipend, is optimistic about the future in part because of Bowlsby’s arrangement.

“It’s a good deal,” he said.

The Shafers certainly are not crying about it.

Wednesday, October 31, 2007

Spanish sentencing of Madrid terror bombers

Must be that Mediterranean diet , looks like they've discovered the secret of eternal life.

Or maybe they use some different European measurement standard, like the metric system vs the English/US usage of miles/feet/inches, since it appears that 30-40,000 years really equals 40 years, max :

The three lead suspects convicted of murder and attempted murder each received sentences ranging from 34,000 to 43,000 years in prison, although under Spanish law the most time they can spend in jail is 40 years. Spain has no death penalty or life imprisonment.

30-40,000 years sounds like 'cruel and unusual punishment' to me ... The World Court in the Hague should look into the Spanish legal system.

Accused Madrid bomb mastermind acquitted

By DANIEL WOOLLS, Associated Press Writer1 hour, 14 minutes ago

An Egyptian who allegedly bragged that he masterminded the 2004 Madrid terror bombings that killed 191 people was acquitted of all charges along with six other lesser suspects Wednesday.

Three other lead defendants were convicted of murder by the Spanish court, culminating a divisive trial over Europe's worst Islamic militant attack, which also wounded more than 1,800.

Four other top suspects — Youssef Belhadj, Hassan el Haski, Abdulmajid Bouchar and Rafa Zouhier — were acquitted of murder but convicted of lesser charges including belonging to a terrorist organization. They received sentences of between 10 and 18 years.

Judge Javier Gomez Bermudez read out the verdicts into the March 11 attacks in a hushed courtroom, with heavy security, including bomb-sniffing dogs and police helicopters, outside.

The three lead suspects convicted of murder and attempted murder each received sentences ranging from 34,000 to 43,000 years in prison, although under Spanish law the most time they can spend in jail is 40 years. Spain has no death penalty or life imprisonment.

The three are: Jamal Zougam, a Moroccan convicted of placing at least one bomb on one of the trains; Emilio Suarez Trashorras, a Spaniard who is a former miner found guilty of supplying the explosives used in the attacks; and Osman Gnaoui, a Moroccan accused of being a right-hand man of the plot's operational chief.

But Rabei Osman, an Egyptian accused of helping orchestrate the attacks, was acquitted. Osman, who is in jail in Italy, had allegedly bragged in a wiretapped phone conversation that the massacre was his idea. But his defense attorneys argued successfully that the tapes were mistranslated.

Six lesser suspects were also acquitted on all charges. Fourteen other people were found guilty of lesser charges like belonging to a terrorist group, bringing the total number convicted to 21 of the 28 defendants.

Prime Minister Jose Luis Rodriguez Zapatero, who came to power after the attacks, welcomed the verdicts. "Justice was rendered today," he said.

"The barbarism perpetrated on March 11, 2004, has left a deep imprint of pain on our collective memory, an imprint that stays with us as a homage to the victims," said Zapatero.

Most of the suspects are young Muslim men of North African origin who allegedly acted out of allegiance to al-Qaida to avenge the presence of Spanish troops in Iraq and Afghanistan, although Spanish investigators say they did so without a direct order or financing from Osama bin Laden's terror network.

Bermudez said the probe had turned up no evidence of involvement by the armed Basque separatist group ETA, dismissing the initial argument of the conservative pro-U.S. government in power at the time of the attacks. The theory is still embraced by many Spaniards.

The blasts targeting crowded, rush-hour commuter trains on the morning of March 11, 2004 traumatized Spain and arguably toppled its government — the first time an administration that backed the U.S.-led Iraq war was voted out of power.

That day of carnage, wailing sirens and cell phones going unanswered amid the wreckage of blackened, gutted trains is etched in Spain's collective memory and is now widely known as simply 11-M, much as the term 9-11 conjures up so much pain for Americans.

The sentences of thousands of years for lead suspects are largely symbolic because the maximum jail time for a terrorism conviction in Spain is 40 years. Spain has no death penalty or life imprisonment.

Seven suspected ringleaders of the attacks — including the operational chief and an ideologue — blew themselves up in a safe house outside Madrid three weeks after the massacre as special forces who tracked them via cell phone traffic moved in to arrest them.

The attacks had profound political repercussions and left Spaniards deeply and bitterly divided between supporters of conservatives in power at the time of the massacre and Socialists who accused the government of making Spain a target for al-Qaida by supporting the Iraq war and sending in 1,300 peacekeepers.

The government of then-Prime Minister Jose Maria Aznar initially blamed Basque separatists for the bombings, even as evidence of Islamic involvement emerged.

This led to charges of a cover-up to deflect attention away from the government's support for the war, and in elections three days after the bombings the conservatives lost to the opposition Socialists, who quickly brought the Spanish troops home.

Tuesday, October 30, 2007

GM building more R+D in China

While GM claims this is happening because of an exploding market in China, this is pure spin.

The real reasons:

1) As the article finally gets to, engineers in China get less than 1/2 the compensation of American engineers. The reality is that the cost is probably on average much less than half.

2) China has demanded that companies that wish to do extensive business there MUST also include work at the cutting edge of design and engineering. They will not allow just cheap manual labor factories. So in order to get the advantage of cheap labor companies are willing to partner with China on the design and development of future technologies.

GM encourages American students to become engineers and laments about American technical and engineering skills. Why has no one asked GM how many engineers they plan to hire, either experienced or fresh out of school, in the US versus how many they are hiring overseas ??

Journalistic incompetence ? Or just the media's reluctance to ask tough questions to companies that they rely on for significant advertising revenue ? Probably both but with a decided emphasis on incompetence .

October 30, 2007

Seeking Control of Technology, G.M. Will Build Its Own Research Center in China

BEIJING, Oct. 29 — General Motors announced Monday that it would build an advanced research center in Shanghai to develop hybrid technology and other designs.

It was the latest research investment in China by a foreign automaker despite chronic problems with purloined car designs.

G.M. already has a 1,300-employee research center in Shanghai with its main Chinese joint venture partner, the Shanghai Automotive Industry Corporation. The separate, wholly owned research center announced Monday, for the most advanced vehicle engineering and development, could help G.M. keep greater control over new technologies than through the joint venture.

Kevin Wale, president of General Motors’ China operations, said that the company remained “very comfortable” with its partnership with Shanghai Automotive and that the partner’s recent introduction of its own sedans had shown “no significant impact” on G.M. sales.

Rick Wagoner, G.M.’s chairman, said it was essential to do advanced research in China to adapt technologies quickly to cars being sold locally. G.M.’s joint venture sales in China have grown to an estimated one million this year, from 20,000 in 1999, making it the company’s second-largest market after the United States.

Mr. Wagoner insisted that G.M. could keep control of intellectual property in China even while doing advanced research there. “We think it’s a prudent trade-off, and we think the risk is manageable,” he said.

Chen Hong, vice chairman of Shanghai Automotive, said nothing about the new G.M. project but welcomed a separate plan, also announced Monday, under which his company and G.M. would jointly provide a $5 million grant over five years for a much smaller research venture at Tsinghua University in Beijing. That project will give G.M. closer access to government officials.

Chinese automakers have repeatedly prompted confrontations with Western producers by introducing vehicles that appear identical to Western models, but there has not yet been a case of a Chinese automaker copying advanced Western engine technology.

G.M.’s largest hybrid-car research efforts will remain in the United States. But research will also be done collaboratively in China and information will be shared with the Chinese through G.M. partnerships with universities around the world, Mr. Wagoner said, adding that, “For us, it’s not a question of either/or.”

Honda, Ford, Volkswagen and other foreign automakers have all announced their own research centers in China in recent months, although none have been as aggressive as G.M. in transferring technology to China.

Monday’s announcement coincidentally came after the government’s National Development and Reform Commission disclosed Friday that it was drafting stringent local-content rules for alternative-fuel vehicles to qualify for expected subsidies. The rules will require that major components be made in China.

“They don’t want to give big incentives just for people to import stuff,” said Nick Reilly, the G.M. group vice president for Asia-Pacific operations.

The Chinese government’s move is aimed partly at Toyota, which assembles Prius gasoline-electric hybrid cars in China but ships critical components in sealed boxes from plants in Japan.

G.M.’s existing joint venture research center mainly takes vehicle designs from the company’s American and European operations and tailors them to the Chinese market. For example, wider pillars separating the rear side windows from the rear window are popular because they provide greater privacy for back-seat occupants in a land where many hire chauffeurs even for midsize cars.

But the joint venture may start to do development work for G.M. operations elsewhere.

The prospect of more vehicle development in this country has long alarmed engineers at G.M. operations in the Detroit area and in Australia, a base for G.M. engineering for Asian markets. The joint venture makes use of Chinese engineers who are paid considerably less than half what their American and Australian counterparts receive, though Chinese engineering salaries are climbing swiftly.

G.M. executives have insisted over the years that while G.M. and Shanghai Automotive engineers work side by side at the joint venture, elaborate computer fire walls prevent confidential G.M. information from reaching the Chinese partner.

Shanghai Automotive has rotated some of its best executives through the joint venture as part of a broad effort to learn the latest Western automotive technologies in preparation for eventual exports.

The new wholly owned G.M. research center will work on alternative fuels like ethanol; electric vehicle technology, including hybrids and fuel cells; and energy efficiency in the manufacturing process, including auto parts suppliers.

Lawrence D. Burns, G.M.’s vice president for research, development and strategic planning, said the Chinese government did not want to rely on ethanol from corn and other food crops, so the research would focus on grass and other nonedible plants.

Mr. Wagoner initially said that the company would spend $250 million on the new research center, but later corrected himself to say that G.M. would spend this amount on a new corporate campus in the Shanghai area that would include administrative offices as well as research operations. G.M. officials declined to provide the precise cost and employment at the new research center itself.

Monday, October 29, 2007

Demographics and corporate double-speak

Lately we're getting inundated with articles about the coming demographic catastrophe in the West concerning jobs. The basic assertion is that there are plenty of great jobs but not enough workers for them.

In reality most of the newer, better types of jobs involve working with digitized data and products and so can be done anywhere in the world. The ability of the western worker to compete with workers in developing countries who currently work for some fraction of western compensation with much fewer benefits is virtually impossible.

Particularly so for older workers most of whom have climbed the payroll ladder and are more expensive than new hires in western countries.

So the real problem is not that older workers are volunteering to leave the work force because of gov't or corporate largesse , but because corporations are choosing, in order to remain competitive, to do most of their hiring overseas.

A simple question to put to an executive such as this is , 'How many people are you hiring in Europe versus how many are you hiring overseas?' .

And , 'How many involuntary layoffs have you had in the past several years here in the West, and how many people were affected'?

And 'If you need people why are you laying off thousands?'

And 'If these people have the wrong skills for this moment, then why don't you offer them re-training given that you need these valuable skills?' .

And finally , 'What is your corporation doing to retain these critical, needed employees?'

There are basically 2 broad types of rewards in working , 1) financial and 2) psychic/emotional. So, 'What kind of rewards is your corporation offering in order to retain these critical, needed employees'?

The bottom line answer is that Western companies are all pursing lower economic costs in order to remain competitive. Skipping the moral and ethical questions about this process, it is incredibly disingenuous of corporate execs to pen op-eds such as this which place the blame on the workers and rich gov't programs .

It is really not so hard to figure . These executives continue to work because of the financial and psychic rewards opportunities and so would many lower-level employees if they had some of these incentives that could compete with their retirement options.

State of the Union

When I'm 64

By Hans Ulrich Maerki
929 words
29 October 2007
The Wall Street Journal Europe
(Copyright (c) 2007, Dow Jones & Company, Inc.)

"Doing the garden, digging the weeds, who could ask for more?"

-- Paul McCartney, 1967

Falling birth rates, longer life spans and the imminent retirement of the baby boom generation have combined to cast a long shadow over Europe. Between now and 2030, the Continent will lose 20 million workers. These are demographic changes of a magnitude not seen since consecutive world wars ravaged Europe in the first half of the twentieth century. The proportion of people over 65 years of age will rise by more than 50%. Instead of four workers to support every retiree, we'll have only two, with disastrous consequences for our pension systems.

The challenges, though, are more than just fiscal. Many of today's retiring workers have critical skills that Europe will need to stay competitive in an increasingly globalized economy. Whether or not we can maintain the pension plans we have now, we simply can't afford to be without those skills and manpower. If we can't produce enough younger workers to replace the retirees, at some point Europe may find itself with an unusual problem: more good jobs than skilled workers to fill them. The threats to Europe's economic growth prospects are self-evident.

The demographic problem is exacerbated by state pension plans that encourage employees to retire early. This contrasts with the original Bismarckian pension concept, which was more concerned with work incapacity. In the 19th century, a lifetime of hard labor meant a worker would be physically unable to continue working beyond the age of 60. One answer to both sides of this dilemma -- pension affordability and skill retention -- is to increase the work force participation rate in the 55-64 age group. This is not a new idea. In 2001, the European Union Council in Stockholm set a target of 50%. How are we doing? Not too well. In 2005, Italy was at 31%, Belgium and Austria at 32%, and in France and Germany the participation rates were 38% and 45% respectively.

We still have a long way to go, and it is not just about reforms of the pension and labor markets. What's necessary is also a cultural transformation: changing the preferences for early retirement among workers, while employers overcome their bias toward hiring younger workers. The demographic changes and the resulting bottleneck of skilled workers will evolve only gradually. But smart governments and businesses better start preparing for it now.

The British retailer Asda, for example, has more than 20,000 employees who are over 50 years old, representing 19% of its work force. Asda conducts over-50 workshops at local job-recruitment centers for anyone interested in continuing to work, and not just for Asda. And there are substantial corporate benefits. Stores with a higher proportion of older workers have absenteeism rates less than a third of Asda's average rate.

At IBM, we introduced in 2005 "Transition to Teaching," a program that provides tuition assistance to employees (usually nearing retirement age) who want to prepare for switching to a new career teaching math or science. This year, we expanded that idea to cover a transition to jobs in the public or nonprofit sectors.

Among European governments, Sweden was one of the first countries to step up to the issue of pension reform. Flexibility is a key feature of the new system: There is no formal retirement age anymore and pension credits can be added at any age, even while a worker may already be drawing a pension from previous work.

In terms of labor-market reforms, Denmark is perhaps the best-known example. Its "flexicurity" approach is credited with contributing to near-full employment, including among older workers. Germany has raised the retirement age to 67, and the French government has engaged industry and unions in negotiations on career development and more flexible employment contracts. The Netherlands is providing increased incentives to employers for hiring individuals with disabilities. Normally, we might think of that as social policy, but in the context of an aging work force it is also sound economic policy to increase the participation in a segment of the population where the proportion of disability invariably rises. In the U.K. there are "New Deal" programs targeting special assistance for "harder to help" groups, which includes people over 50.

Many older workers would like to keep on working, but can't because they would lose benefits by doing so, or because of inflexible corporate policies about part-time or flex-time work. These are all opportunities for action by governments and individual businesses to raise the level of voluntary work force participation in this age group.

More people than at any time in history get not merely compensation but pleasure and a sense of identity from their work. Most of us could imagine doing something interesting and fulfilling, as well as gainfully economic, after we reach eligibility for retirement. Keeping these people in work would be a triple win: It would reduce the strain on government resources even as it provides more skilled workers for businesses and more diverse and productive careers for people so that "living longer" really does mean "living better."

At the age of 64 plus 1, Sir Paul is not exactly "digging the weeds" either, is he?

Friday, October 26, 2007

Not very efficient at Princeton

There have been a number of lawsuits over the use of gifts to universities lately and this one involves a big one (both the lawsuit and the gift) .

But the second to last paragraph is inadvertently funny. To show that they are using the gift correctly and according to it's stipulations they point to a single graduate having utilized it to get an education and go into public service .

Reminds me of that t-shirt --> I spent $880 million and all I got was this one graduate!

I know that college costs have outpaced inflation for a couple of decades, but this seems pretty inefficient to me and for Princeton to bring this forward (a single graduate) shows something about the intellectual quality of it's administration at least.

Princeton argues that the original gift says students “may prepare” for careers in government service but does not require it and that the Wilson school has never been a narrowly focused vocational school. It notes that its graduates include Anthony Lake, a former national security adviser to President Bill Clinton, and Gen. David H. Petraeus.

October 26, 2007

Princeton Faces Trial Over Use of Gift Now Worth $880 Million

In a legal battle watched nervously by universities around the country, a New Jersey judge yesterday sent to trial a dispute between Princeton University and the heirs of a supermarket fortune and left open the possibility that Princeton could lose a donation that is now worth $880 million.

In a set of rulings, the judge, Neil H. Shuster of Superior Court, established the ground rules for one of the largest lawsuits ever filed exploring how closely colleges must adhere to the original intent of donors.

The struggle has already cost Princeton and the descendants of Charles and Marie Robertson more than $20 million each, and will cost more when it comes to trial, possibly sometime next year.

The dispute centers on whether Princeton University has adhered to the Robertsons’ wishes; Mrs. Robertson, an heir to the A.&P. supermarket fortune, gave Princeton $35 million in 1961 for its Woodrow Wilson School of Public and International Affairs. Her children say the money was intended to prepare students for work in federal government, especially in international affairs. They say, though, that few graduates have taken such jobs and that Princeton has used the money for many of its other needs.

Princeton says that the family narrowly interpreted the terms of the gift, which they say was intended to support the Wilson school in providing a broad education for graduate students.

Some of Judge Shuster’s rulings favored the Robertsons and some the university. He supported Princeton in ruling out a jury trial and in finding that it was within its rights to spend not only interest and dividends earned on the gift, but also gains realized on investments.

He sided with the Robertsons in saying that Princeton’s role as sole beneficiary of the gift should be decided in the trial. That opens the possibility that Princeton could lose the whole gift, although the judge said he would take the Robertson Foundation away from Princeton only under “the most egregious and nefarious of circumstances.”

He also said he would allow the family to reach back many years in its questioning to determine whether Princeton’s spending was appropriate; Princeton had hoped to limit the questioning to just a few years.

Both sides said they believed they would ultimately triumph.

“Even if things stopped right now, this is a huge victory for donors everywhere,” Ronald H. Malone, the lead lawyer for the Robertson family, said yesterday. “It shows that no matter how high and mighty a university might be, the law imposes on them a moral and legal obligation to use the money only for the purpose to which it was given.”

Kenneth R. Logan, a lawyer for the university, said, “We are very confident that once the evidence is presented, he will decide our way.”

The case has already affected how colleges and graduates approach fund-raising, prompting donors to be more vigilant and colleges to be more careful about gift restrictions at a time when they are hungry for contributions. Colleges and donors these days are drawing up detailed agreements to prevent disputes over how money should be spent.

Anne D. Neal, president of the American Council of Trustees and Alumni and an author of “The Intelligent Donor’s Guide to College Giving,” said in a statement that the rulings were “a resounding victory for all who believe that colleges must be accountable to the people on whose dollars they rely.”

Joseph Nye, a former dean of the Kennedy School of Government at Harvard who was a witness for Princeton, said, “If the heirs of donors are allowed to micromanage an academic institution a generation after a gift has been given, it will seriously curtail the creativity and initiative that has marked the recent administration of the Wilson school as well as set a bad precedent for other academic institutions.”

Yale is among the universities that have faced similar disputes. It returned $20 million to Lee M. Bass, a billionaire alumnus, after he said the university had not created the classes he had requested in its Western civilization curriculum.

The Robertson children, led by William Robertson, who has served on the foundation board and helped oversee the investment of funds, originally filed their suit in 2002 to protest the handling of the investments after the university sought to change the management of the funds. The family later expanded the suit. Looking back to the cold war in making their case, they said that the donation made by their mother and shaped by their father, a Princeton graduate, was intended to benefit the American people by helping Princeton send students into the foreign service and other government jobs.

William Robertson said he hoped the court would return control of the money to the family. He said he has already talked to six or seven other colleges to learn “more about their programs and about their potential plans if they were to be recipients of the foundation’s funds.”

He said that he had talked to Texas A&M University, George Washington University, Tufts, Johns Hopkins, Syracuse and Indiana, and that Harvard and Duke refused to talk to him.

He said he would not structure future gifts the way his parents had structured theirs, giving it all to one university or relinquishing control of the money.

“We propose to have it operated by the family and outside experts,” he said. “And we would be more careful in looking for performance measures.”

Princeton argues that the original gift says students “may prepare” for careers in government service but does not require it and that the Wilson school has never been a narrowly focused vocational school. It notes that its graduates include Anthony Lake, a former national security adviser to President Bill Clinton, and Gen. David H. Petraeus.

Douglas S. Eakely, another lawyer for Princeton, said that under the university’s stewardship, the Robertson Foundation “has achieved extraordinary success” and that the Wilson school today is “one the pre-eminent schools of public and international affairs” where “students may, and do, prepare for positions of leadership in government and related fields.”