Friday, June 13, 2008

Gasoline up 100% in 12 months but Inflation is 4.2%

4.2% is ugly?

I'd like some of that ugly rather than the 'personal' inflation rate that seems to be only affecting me ! ... and maybe 100% other Americans also .

There are lies , damn lies and then there's statistics .

We will hear one day about the scandal of how these inflation numbers were manipulated and bent. But one hears mostly silence from the many thousands of economists who seem to accept them as if they were tablets handed to Moses.

Inflation getting 'uglier and uglier'

Surging energy prices help drive annual cost-of-living rate rise to 4.2%.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The cost of living rose in May as consumers were belted by energy costs, the government said Friday.

The Consumer Price Index, a key inflation reading, rose 4.2% through the 12 months ended in May, according to the Labor Department. This compared to an increase of 3.9% during the 12 months ended in April.

For the month of May, overall CPI rose 0.6%, compared to an increase of 0.2% in April. That's the biggest increase since last November, when the overall CPI surged 0.9%. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.5% for May.

The dramatic increase in energy costs were largely responsible for the overall inflation. Energy costs rose 4.4% in May, and surged 17.4% over the 12 months ending in May, the Labor Department said.

17.4% rise in energy in last 12 months ? How is this possible when oil went from $60/barrel to $130/barrel ?

Heating oil went from $2.75 in Sept to $4.50 in May , or almost 70% in 8 months .

"These (CPI) numbers are nowhere near to what we're seeing in the real world," said Peter Beutel, energy analyst for Cameron Hanover, who believed the "real" cost of living has increased at a higher rate than the index shows. "But even these diluted numbers are showing that inflation is getting uglier and uglier and uglier."

Beutel said this puts more pressure on the Federal Reserve to increase the federal funds rate, which he thinks could happen in August or September. The rate is currently at 2%.

"The higher that inflation is, the sooner the Fed has to raise rates to help keep a lid on prices," said Beutel.

The index for fuel oil rose 10.4% in May and soared 64% over the 12 months. The gasoline index rose 5.7% in May and surged 20.8% on a year-over-year basis. The index for natural gas rose 5.6% in May, and was up 16.5% over the last year.

Electricity costs also increased, but less dramatically, edging up 0.9% in May, and rising 5.8% over the last 12 months.

As a result, transportation costs increased 2% in May, and jumped 8.1% over the 12 months ending in May.

The index for household energy costs climbed 2.8% in May, its fourth consecutive jump, the Labor Department said.

The price of food also pushed up overall costs. Food costs increased 0.3% in May, and jumped 5.1% during the 12 months ending in May.The price of milk was a big influence on the overall price, increasing 10.2% over the 12 months, despite slipping 0.7% in May.

The cost of clothing was the one area where consumers got some relief. Apparel costs deflated 0.2% in May, and decreased 0.4% over the 12 months.

The core CPI, which excludes the cost of food and energy, rose 0.2% in May, compared to an increase of 0.1% in April. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.2% for May.

The core CPI rose 2.3% during the 12 months ending in May.

Monday, June 9, 2008

Free trade and unfettered Capitalism meets the Oil Bubble

Economic consensus is that markets are smarter than people or governments, so intervention is never good. Let the markets play out and define the value of any 'good' or 'service' .

But while markets are 'smart' over the medium to long term, they can be very irrational in the short term.

Oil has doubled/bubbled in the past year, due to irrational speculation as trillions of dollars search for greater returns after the dot.com and real estate boom-n-busts.

Irrational because demand has NOT doubled in the past 12 months. If the supply/demand was out-of-whack before this, and oil 'should have' been higher, then this also says that the markets weren't working correctly (or smartly) the past couple of years.

Read deep into the article, toward the very end to find that countries will respond to domestic unrest caused by short-term market manias with subsidies. So much for the free-trade and capitalism without interference.

Spanish authorities have promised measures such as loans and cash subsidies to help truckers cope with higher fuel costs.

Some 'free-trade' countries such as China (a Communist controlled economy) and India (a socialist country that is new to capitalism) have had to increase oil prices that are State-controlled after the Govt's having lost billions subsidizing it, although they still subsidize.

Look for these economies to show a LOT of signs of social unrest. They have lots of have-nots in their countries.

June 10, 2008

Spanish Truckers Block Border

PARIS — Gasoline at $4 a gallon? If only.

As prices across America hit an average $4 a gallon over the weekend, European motorists, truckers and economic planners wrestled with fuel costs around twice as high, blamed not only on the soaring price of oil but also high government taxes levied at the fuel pump.

That has made few people happy. In the latest show of distress, Spanish truckers Monday began a blockade of their country’s border with France, lining up their rigs in a crawling strike to protest the cost of diesel. In France, farmers on their tractors did the same, offering a foretaste of a planned national strike by truckers next Monday.

The rising European anger may well be matched by the price of oil, according to Jeffrey Currie, the global head of commodities research at the investment bank Goldman Sachs. At an oil and gas conference in Malaysia on Monday, he suggested oil prices are likely to hit $150 a barrel this summer, surpassing the record of $139.12 last Friday, Reuters reported.

“I would suggest that the likelihood of that happening sooner has increased tremendously — sometime in the summer,” Mr. Currie was quoted as saying. “Demand for oil is weak but supplies are even weaker.”

In Spain, tens of thousands of truckers launched an indefinite campaign of blockades and demonstrations at midnight to protest diesel prices, up by one fifth this year to around $8 per U.S. gallon, depending on where it is bought and the levels of official discounts available in many parts of Europe to truckers, farmers and commercial fishermen.

The protests provoked clashes between supporters and opponents of the action. Spanish television showed the trucks of alleged strike-breakers with their windshields and headlights smashed and tires slashed. Spanish truckers said the price of diesel — which varies among European countries -- was now 1.30 euros per liter, roughly $7.73 per U.S. gallon, compared to 0.95 euros per liter, around $5.58 per U.S. gallon, one year ago. At highway filling stations, diesel can cost 1.5 euros per liter, or $8.90 per gallon.

Spanish authorities have promised measures such as loans and cash subsidies to help truckers cope with higher fuel costs. But the strike in Spain is likely to have much broader consequences, hitting supplies of goods to stores and supermarkets within days.

Spanish motorists and shoppers formed long lines at gas stations and supermarkets to stockpile fuel and food.

The Spanish strike is only the latest in weeks of protests stretching from Britain to Italy. Fishermen in northern Spain planned to join the truckers’ strike later.

Sunday, June 8, 2008

Overperforming Korean 'bird' families

Poorly written story. It takes a long time to get to the basic point of why this social phenomenon is happening .

The third paragraph mentions in a broad manner:

'Driven by a shared dissatisfaction with South Korea’s rigid educational system....'

But is this because they don't offer English or maybe teach it poorly ? (the title of the article is about English after all) .

The 14th and 15th paragraphs get to the basic point of the article:

South Korean students routinely score at the top in international academic tests. But unhappiness over education’s financial and psychological costs is so widespread that it is often cited as a reason for the country’s low birthrate, which, at 1.26 in 2007, was one of the world’s lowest.

South Korean parents say that the schools are failing to teach not only English but also other skills crucial in an era of globalization, like creative thinking. That resonates among South Koreans, whose economy has slowed after decades of high growth and who believe they are increasingly being squeezed between the larger economies of Japan and China.


American students are lambasted every other day for underperforming compared to students overseas. Here's a top performing country who are very unsatisfied with their educational system's methods and curriculum.

The incredible pressure to get into the right schools (usually private) , the long hours of study and the parental pressure for high achievement is also pervasive to other Asian societies. In particular Indian parents working in the US talk about how much better the schooling is back home in India. Six year olds lugging heavy backpacks of books, studying mathematics and foreign languages.

The same is true in the US for a set of students striving to achieve the highest levels in acaademia , commerce and society. Parents who believe that attending the wrong pre-school can doom their children's future career paths.

Everything has a cost. Happiness ? Creativity ? Lost childhoods ?

Globalization and the competition it creates... another upside found --> split families, unhappy children and parents, and low birth rates ! What's not to like?



June 8, 2008

For English Studies, Koreans Say Goodbye to Dad

AUCKLAND, New Zealand — On a sunny afternoon recently, half a dozen South Korean mothers came to pick up their children at the Remuera Primary School here, greeting one another warmly in a schoolyard filled with New Zealanders.

The mothers, members of the largest group of foreigners at the public school, were part of what are known in South Korea as “wild geese,” families living separately, sometimes for years, to school their children in English-speaking countries like New Zealand and the United States. The mothers and children live overseas while the fathers live and work in South Korea, flying over to visit a couple of times a year.

Driven by a shared dissatisfaction with South Korea’s rigid educational system, parents in rapidly expanding numbers are seeking to give their children an edge by helping them become fluent in English while sparing them, and themselves, the stress of South Korea’s notorious educational pressure cooker.

More than 40,000 South Korean schoolchildren are believed to be living outside South Korea with their mothers in what experts say is an outgrowth of a new era of globalized education.

The phenomenon is the first time that South Korean parents’ famous focus on education has split wives from husbands and children from fathers. It has also upended traditional migration patterns by which men went overseas temporarily while their wives and children stayed home, straining marriages and the Confucian ideal of the traditional Korean family. The cost of maintaining two households has stretched family budgets since most wives cannot work outside South Korea because of visa restrictions.

In 2006, 29,511 children from elementary through high school level left South Korea, nearly double the number in 2004 and almost seven times the figure in 2000, according to the Korean Educational Development Institute, a research group that tracks the figures for the Ministry of Education. The figures, the latest available, did not include children accompanying parents who left South Korea to work or emigrate, and who could also be partly motivated by educational goals.

South Koreans now make up the largest group of foreign students in the United States (more than 103,000) and the second largest in New Zealand after Chinese students, according to American and New Zealand government statistics. Yet, unlike other foreign students, South Koreans tend to go overseas starting in elementary school — in the belief that they will absorb English more easily at that age.

In New Zealand, there were 6,579 South Koreans in the country’s elementary and secondary schools in 2007, accounting for 38 percent of all foreign students.

“We talked about coming here for two years before we finally did it,” said Kim Soo-in, 39, who landed here 16 months ago with her two sons. “It was never a question of whether to do it, but when. We knew we had to do it at some point.”

Wild geese fathers were initially relatively wealthy and tended to send their families to the United States. But in the last few years, more middle-class families have been heading to less expensive destinations like Canada, Australia and New Zealand.

Now, there are also “eagle fathers,” who visit their families several times a year because they have the time and money. Those with neither, who are stuck in South Korea, are known as “penguin fathers.”

The national experience is considered enough of a social problem that an aide to South Korea’s president recently singled out the plight of the penguin fathers.

President Lee Myung-bak said he would start to address the problem by hiring 10,000 English teachers. “This is unprecedented,” he said. “Korea is actually the only country in the world undergoing such a phenomenon, which is very unfortunate.”

South Korean students routinely score at the top in international academic tests. But unhappiness over education’s financial and psychological costs is so widespread that it is often cited as a reason for the country’s low birthrate, which, at 1.26 in 2007, was one of the world’s lowest.

South Korean parents say that the schools are failing to teach not only English but also other skills crucial in an era of globalization, like creative thinking. That resonates among South Koreans, whose economy has slowed after decades of high growth and who believe they are increasingly being squeezed between the larger economies of Japan and China.

It could take years to see how well this wave of children will fare back in South Korea, especially since they are now going overseas at the elementary level. But earlier this decade, when the wild geese children tended to be high school students, many succeeded in plying their improved English scores to get into colleges in the United States or other English-speaking countries, education experts said. For others, their years overseas was a roundabout way to get into top South Korean colleges, like Yonsei University in Seoul, which increasingly offer courses or entire programs in English.

For New Zealand’s public schools, which charge foreign students annual tuition of $8,700, South Koreans provide an important source of revenue. The economic benefits have helped offset resentment toward an Asian influx that has remade many schools in Auckland, the country’s largest city, lending an Asian character to the business district and raising home prices in the wealthier suburbs.

At Remuera Primary, Ms. Kim said she believed that English fluency would increase her sons’ chances of gaining admission to selective secondary schools in South Korea and ultimately to a leading university in Seoul. Her husband, Park Il-ryang, 43, graduated from a little-known Korean university, and he said that the resulting lack of connections had hampered his own career.

Before coming here, the parents had sent one son, Jun-sung, now 10, to evening cram schools and their other son, Jun-woo, now 8, to an English preschool. Parents in their apartment building talked incessantly about their children’s education.

Even so, the sons were not making sufficient progress in English, the parents said. They hired a private English tutor to supplement the supplementary cram schools. “We didn’t think the cram schools were doing any good, but we were too insecure to stop sending them, because the other parents were sending their children,” Ms. Kim said.

At their house recently, the sons peeked through the living-room blinds to see whether their neighbor, Charles Price, was free to play. In no time, the boys were coming and going, barefoot, between the houses, carrying “Bionicle” action figures.

The parents were pleased that their sons had integrated well into the neighborhood and school, and were now even speaking English to each other. But Ms. Kim was worried that her younger son was making shockingly simple mistakes in his spoken Korean and might not form a solid “Korean identity.”

Striking the right balance would be critical to the brothers’ re-entry into South Korea, with its fierce competition to get into the best schools.

South Korean women’s rising social status and growing economic power have fueled the wild geese migration, according to education experts like Oh Ook-whan, a professor at Ehwa Womans University who has studied the separated families. Conservatives have criticized the wild geese mothers for being obsessed about their children’s education at the risk of destroying their marriages. The women’s real intention, they say, is to get as far away as possible from their mothers-in-law.

The mothers say they are the modern-day successors to one of the most famous mothers in East Asia: the mother of Mencius, the fourth-century Chinese Confucian philosopher. In a story known in South Korea, as well as China and Japan, Mencius’s mother moved to three neighborhoods before finding the environment most favorable to her son’s education.

“I don’t know why Mencius’s mother is so revered and why we wild geese mothers are so criticized,” said Chang Soo-jin, 37, who moved here with her two children nearly two years ago. “Our coming out here is exactly the same as what she did.”

Here, the English skills of her 6-year-old daughter, Amy, have improved so much that she now has the reading abilities of an 8-year-old, said her teacher at Sunderland, a small private school where all 16 foreign students come from South Korea.

Yet Amy’s father, Kevin Park, 41, was not totally convinced that the benefits had been worth splitting up the family. He had reluctantly agreed with his wife’s decision to come here with the children and then extend their stay, twice.

After his family left Seoul, Mr. Park, an engineer, moved into what South Koreans call an “officetel,” a building with small units that can be used as apartments or offices. Hearing about wild geese fathers becoming dissolute living by themselves, he stopped drinking at home.

“I’m alone, I miss my family,” Mr. Park said grimly in an interview in Seoul. “Families should live together.”

Living apart for years strains marriages and undermines the role of a father, traditionally the center of the family in South Korea’s Confucian culture, education experts and psychologists said. Some spouses have affairs; some marriages end in divorce.

“Even if there are problems, some couples choose to ignore them for the sake of their children’s education,” said Choi Yang-suk, a psychologist at Yonsei who has studied wild geese families in the United States and Canada.

Here, Park Jeong-won, 40, and her husband, Kim Yoon-seok, 45, an ophthalmologist who was here on a visit, said their marriage had grown stronger despite living apart for four and a half years. Every reunion, they said, was like a honeymoon.

But while Ms. Park said she talked to her husband a couple of hours daily by phone, she said her son and daughter never asked to talk to their father. He, in turn, never asked to talk to his children, the couple said.

“We may be a strange family,” Ms. Park said.

Dr. Kim said his own father had always been too busy with work to spend much time with the family, and on weekends woke up at 4 a.m. to play golf.

“Maybe that’s why, now that I’m a father, I have a similar relationship with my son,” he said.

Asked whether she missed her father, Ellin, 11, said: “I don’t miss him that much. I see him every year.”

“Do you think that’s enough?” her mother asked, a little surprised.

Ellin corrected herself and said she saw him twice a year.

Tuesday, May 27, 2008

Chinese Olympics and Air Pollution

They have severe pollution problems but they are just as concerned that rain, a natural phenomenon and an environmental cleansing agent, will disrupt the Olympic opening ceremony.

So they will counter this 'threat' ,

' ... by firing chemicals into clouds. '

Between a rock and a hard place ... more pollution or a wet opening ceremony ? More pollution is the answer.



May 27, 2008

Heavy Pollution Warning Issued In Beijing

Filed at 7:42 a.m. ET

BEIJING (Reuters) - Pollution levels rose sharply in Beijing on Tuesday, just 2- months before the Olympic Games in the city, prompting authorities to warn residents with respiratory problems to stay inside.

Air quality in the capital was rated as "heavily polluted" due to a sandstorm from Mongolia, the Beijing Environmental Protection Bureau said on its website (www.bjepb.gov.cn).

The bureau advised people susceptible to particles in the air to avoid outdoor activities.

Such sandstorms usually hit the city in March and April.

Beijing's pollution has already proved a major concern for athletes, with twice Olympic champion Haile Gebrselassie, who suffers from asthma, pulling out of the men's marathon out of concern for his health.

In addition to shutting down high polluters within city limits, Beijing has demanded five surrounding provinces scale back or stop production to ensure blue skies hang over Olympic venues for the Games in August.

State media also reported China had launched a second weather satellite on Tuesday to help improve forecasts for the Beijing Games.

Detailed weather predictions are important because climatic conditions can have a major impact on Beijing's attempts to rid the skies of pollution for the Games.

The International Olympic Committee (IOC) has said that some endurance events might have to be shifted if the air quality is not good enough and the earlier they know about that possibility, the easier it is to re-schedule.

There are also concerns that rain, which is common in early August in the Chinese capital, might ruin the opening ceremony at the roof-less Bird's Nest National Stadium on August 8.

Attempts to counter the threat by weather manipulation are also reliant on accurate forecasts. Beijing authorities have claimed some success in stopping rain over limited areas by firing chemicals into clouds.

The 2,295-kg satellite Fengyun-3 will provide mid-range forecasts over 10 to 15 days, Xinhua news agency reported.

Thursday, May 22, 2008

Communications breakdown

This article is basically saying that full communications can only be experienced face-to-face. You lose too many of the non-verbal indicators such as facial changes and hand gestures and intonations of tone in conversation.

Not particularly new information or even newsworthy but I bring it forward here because of what this means for globalization.

Globalization, by definition, means teams of people geographically dispersed throughout the world. Communication is rarely achieved face-to-face. Therefore the same issues raised in this article on personal communications online and it's caveats also pertain to online communications at work.

The human and social aspects of having isolated groups of people interacting daily as a 'team' are never brought up as the tide of globalization sweeps the world. There is no doubt that there will be many studies and probably from the same Universities and consulting firms now lauding the process, pointing out significant deleterious effects of these workplace changes.

It will be like an 'approved' drug, dispensed for several years, that is 'suddenly' shown to have no effect on symptoms but rather that it has widespread negative effects.

The drug, like globalization, will then be re-marketed (since it has had so much investment in it that it can't be just abandoned) with new guidelines , e.g. Use it for back-office work requiring little inter-team communications. Or some such thing.

Over time globalization as we know it today will be abandoned as an organizational structure that is not efficient enough. The old workplace will not return fully but business will trend back closer toward that model.

Note also that globalization has a basic requirement for cheap energy and cheap communication infrastructure. Cheap energy has suddenly disappeared and will not likely return in the short-term and possibly in many people's work lifetimes today. Cheap communications has not been affected but it also runs on energy - electricity generated from many sources. There is no doubt that communications will be greatly affected by costly energy also and that globalization in it's current form will suffer for it.

Add in the social and political unrest caused by high energy costs and the resultant high costs of staple foods and globalization is further affected. One of the other tenets of globalization is that countries are stable socially and politically for it to work. Those that are not cannot participate. Many countries today are just a veneer of stability and may turn overnight.

It appears that the future of global companies is not as bright as they may currently seem. I would bet against companies that have significantly followed the global trend these past few years.


May 22, 2008

Online Love Is Often Blind, Brief: Study

Filed at 7:54 a.m. ET

CANBERRA (Reuters) - Matches made over the Internet often do not last because people end up choosing unsuitable partners and forming emotional bonds before meeting face-to-face, an Australian university researcher has found.

Women were especially susceptible to finding Mr. Wrong, as they tend to be attracted by witty comments or clever emails, said psychologist Matthew Bambling from the Queensland University of Technology.

"You can never assume things are the way they seem online," Bambling told Reuters on Thursday.

"Just because they can write a clever comment or a witty email, doesn't mean they will be Mr. Right, that's for sure," he said, adding some men use the concept of "netting," sending emails to dozens of women and hoping one might respond.

Bambling said you can find a partner online, but warned those using the Web to find love to be aware of the pitfalls.

"There's definitely a dis-inhibition affect online," he said, with people more likely to exaggerate their good points while hiding anything negative.

"Few guys for example would say 'look, I'm a middle aged alcoholic who's been married five times, pick me'. They're going to present themselves as a good catch."

He said it was easy for people to quickly invest too much emotionally in an online relationship because they don't see the full picture of the person they are emailing.

He said some people can also become addicted to the rush of replies they receive on dating websites, which can lead to future disappointment.

Bambling said people can avoid many of the problems by meeting early in the virtual relationship, rather than by getting to know each other only by email.

He suggests couples arrange to meet over coffee after a few emails, which will help people from building up a fantasy image of their match.

"The main thing to remember is to make real life contact as soon as possible if you are to interested in someone, because then you will know if a relationship is a possibility," he said.

Tuesday, May 20, 2008

Globalization and 'Jobs the locals won't do'

The common poor worldwide, as in this article about South Africa, understand the effects of a globalized work force.

The poor are affected when adjacent countries have a significant difference in economic wealth and therefore the most impoverished migrate to more affluent neighboring countries.

The middle classes are affected by globalization in an even more pernicious and helpless way. Their work involves digitized information which can be done anywhere in the world that has the correct level of education AND some infrastructure (electricity or diesel generators, reliable wireless/satellite communications, reasonable transportation and roads, etc.) .

It is amazing that the common illiterate poor person in South Africa can voice some of the same concerns heard in the U.S. and virtually everywhere now in the world:

But, among people here, a familiar litany of complaints against foreigners is passionately, if not always rationally, argued: They commit crimes. They undercut wages. They hold jobs that others deserve.

- They commit crimes. No idea how true this may be in South Africa but illegal immigrants in the U.S. and Europe are convicted of crimes much out of proportion to their estimated population.

-They undercut wages. Like in the U.S. The lowest wages of the new country are significantly better than in their former countries so they are glad to work for less. These are very good wages for newcomers from failed states but a large step backwards for locals.

-They hold jobs that others deserve. They are illegal and take jobs for less and work hard at them and this makes for an environment where locals cannot find work.

George Booysen said that as a born-again Christian he did not believe in killing. Still, something had to be done about these unwanted immigrants.

They are bad people, he said: “A South African may take your cellphone, but he won’t kill you. A foreigner will take your phone and kill you.”

Beyond that, he said, immigrants were too easy to exploit.

- Being illegal without the ability for legal recourse, they are subject to abuse and accept it because they have no choice. Same in the U.S. and worldwide.

White people hire the foreigners because they work hard and they do it for less money,” Mr. Booysen said. “A South African demands his rights and will go on strike. Foreigners are afraid.”

- Locals will use their legal protections to protect the gains they have made for their labor, while illegals will not. These legal protections , such as strikes, have NO power when illegals can undercut these actions working as 'scabs'.

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Many South Africans consider themselves at a disadvantage with employers. “If you have a surname like mine, you can’t get a job,” said Samantha DuPlessis, 23, a woman of mixed race. “I’ve been looking for a job for four years. All the employers want to hire foreigners.

- Employers note that illegals work harder, cheaper and can be abused , i.e. not subject to labor laws, so they prefer illegal workers. The locals are seen to be lazy, unwilling to work hard while demanding higher wages (actually the local 'going rate') .

This social phenomenon is the result of the post-industrial Internet revolution that we are now in:

- Widespread and fast movement of information via cell-phones and computers, with the information flowing on the internet.

- Economic globalization is afforded because of the internet's availability. This is revolutionizing the speed of market activities and the numbers of players in markets. Competition is driving companies to seek lower wages worldwide.

- Globalization affects the middle-class and the new digitized work-force the most.

- Disparities in national wealth cause large numbers of people to seek work in other countries. There is a mass exodus of the poor who are traveling to wealthier nations and they displace the remaining indigenous poor in their jobs.

- Wealth within developed countries is concentrated in fewer hands. Middle-classes are shrinking due to the digitization of work, and the poor are impacted by illegal migrant work-forces.

What can be done? Perhaps little , but revolutionary change like this must have some brakes. This process needs to be slowed down so that human faculties can absorb and adjust to it, to the extent possible.

It may be that when this revolution triumphs, at that point the majority of people in the world will be better off. But that may be several generations from now and the social and political consequences of this turmoil may have dire consequences today.



May 21, 2008

South Africans Vent Rage at Migrants

JOHANNESBURG — The man certainly looked dead, lying motionless in the dust of the squatter camp. His body seemed almost like a bottle that had been turned on its side, spilling blood. His pants were red with the moisture.

Nearby was evidence of what he had endured. A large rock had been used to gouge his torso. Embers remained from a fire that had been part of some torture. Shards of a burned jacket still clung to the victim’s left forearm.

Then, as people stepped closer, there was the faintest of breath pushing against his chest. “This guy may be alive,” someone surmised. As if to confirm it, the man moved the fingers of his right hand.

The jaded crowd neither rejoiced nor lamented. After all, the horrific attacks against immigrants around Johannesburg had already been going on for a week, and in their eyes the victim was just some Malawian or Zimbabwean, another casualty in the continuing purge.

This nation is undergoing a spasm of xenophobia, with poor South Africans taking out their rage on the poor foreigners living in their midst. At least 22 people had been killed by Monday in the unrelenting mayhem, the police said.

But the death toll only hints at the consequences. Thousands of immigrants have been scattered from their tumbledown homes. They now crowd the police stations and community centers of Johannesburg, some with the few possessions they could carry before mobs ransacked their hovels, most with nothing but the clothes they wore as they escaped.

“They came at night, trying to kill us, with people pointing out, ‘this one is a foreigner and this one is not,’ ” said Charles Mannyike, 28, an immigrant from Mozambique. “It was a very cruel and ugly hatred.”

Xenophobic violence, once an occasional malady around Johannesburg, is now a contagion, skipping from one area to another. The city has no shortage of neighborhoods where the poor cobble together shacks from corrugated metal and wood planks.

Since the end of apartheid, a small percentage of the nation’s black population — the highly skilled and the politically connected — has thrived. But the gap between the rich and poor has widened. The official rate of unemployment is 23 percent. Housing remains a deplorable problem.

“That’s fueling the rage at the bottom,” said Marius Root, a researcher at the South African Institute of Race Relations. “There’s the perception that they’re not enjoying the fruits of the liberation.”

Here at the Ramaphosa Settlement Camp, the squatter’s colony southeast of the city, six immigrants have been killed in the past two days — or perhaps seven if the man found in the dust Monday morning does not survive.

“We want all these foreigners to go back to their own lands,” said Thapelo Mgoqi, who considers himself a leader in Ramaphosa. “We waited for our government to do something about these people. But they did nothing and so now we are doing it ourselves, and we will not be stopped.”

The authorities have inveighed, perhaps belatedly, against the violence. ‘’Citizens from other countries on the African continent and beyond are as human as we are and deserve to be treated with respect and diginity,” President Thabo Mbeki said in a statement issued late Monday, expressing confidence in the ability of the police to ‘’make significant breakthroughs in getting to the root of this anarchy.”

But, among people here, a familiar litany of complaints against foreigners is passionately, if not always rationally, argued: They commit crimes. They undercut wages. They hold jobs that others deserve.

George Booysen said that as a born-again Christian he did not believe in killing. Still, something had to be done about these unwanted immigrants.

They are bad people, he said: “A South African may take your cellphone, but he won’t kill you. A foreigner will take your phone and kill you.”

Beyond that, he said, immigrants were too easy to exploit.

“White people hire the foreigners because they work hard and they do it for less money,” Mr. Booysen said. “A South African demands his rights and will go on strike. Foreigners are afraid.”

These days, the nights and early mornings belong to Ramaphosa’s marauders. On Monday, soon after dawn, they were boldly celebrating their victories. Stores belonging to immigrants already had been looted, but there were still fires to set and walls to overturn. There was dancing and some singing.

Then the police arrived, quick to fire rubber-tipped bullets. Rocks were tossed by the mob in counterattack, but in order to triumph they really only had to be patient. The police did not stay long. They could not keep up with the widespread frenzy.

Those left behind by the nation’s post-apartheid economy commonly blame those left even further behind, the powerless making scapegoats of the defenseless.

South Africa has 48 million people. It is hard to find a reliable estimate of the number of foreigners in the mix. Most certainly, not all immigrants push ahead of South Africans economically. But Somalis and Ethiopians have proved themselves successful shopkeepers in the townships.

Zimbabweans, who make up this country’s largest immigrant group, benefited from a strong educational system before their homeland plunged into collapse, sending an estimated three million across the border to seek refuge here. Schoolteachers and other professionals — their salaries rendered worthless by Zimbabwe’s hyperinflation — come to work as housekeepers and menial laborers.

Many South Africans consider themselves at a disadvantage with employers. “If you have a surname like mine, you can’t get a job,” said Samantha DuPlessis, 23, a woman of mixed race. “I’ve been looking for a job for four years. All the employers want to hire foreigners.”

So there is a nationalistic sense of jubilation in the areas where the immigrants have been dislodged. “The Maputos, we don’t want them around anymore and we’ll never have to worry about them again,” said Benjamin Matlala, 27, using a common term for people from Mozambique.

Mr. Matlala, who is unemployed, lives in Primrose, a community now emptied of its foreigners. The sections they lived in are being dismantled. First, the belongings of the fleeing immigrants were looted.

On Monday, the dwellings themselves were torn apart by dozens of eager men. It wasn’t difficult. Walls of thin metal were knocked over with a few blows. Wooden posts were pulled from the ground. Picture frames were tossed into a heap of rubbish.

Mr. Matlala had managed to get a shopping cart, which he filled with scrap metal. Each load, he said, would fetch 40 rand in trade, or about $5. He was hoping for three loads, more money than he had made in a long time.

Monday, May 19, 2008

One Way Free Trade

Buried in the article, almost as a side note, is the curious little statement:

' ...local law required the company to be majority-held by Canadians ...'

'local law'? I believe they mean Canadian law since Bell Canada is not local to a single Canadian province.

This is also true in MANY other countries that are our major trading partners including India, and it is strictly one-way. With the dollar now so weak many foreign investors are buying up controlling interest of major U.S. firms. But the opposite is not true.

Wal-Mart couldn't just go into India and start selling there as a U.S. company, it first needed an Indian partner because their Indian division had to be 51% owned by Indians.

So the Middle-east oiligarchies, which nationalized and confiscated American and British investments in oil production 50 years ago, are now free to use their extraordinary oil profits to buy up U.S. commercial and investment banks which are in financial binds because of their own poor investments.

Everyone in gov't agrees, whatever party they are in... Free trade is good!


May 19, 2008: 4:16 AM EDT

Inside a record-breaking $51 billion buyout

Bagging Bell Canada put Providence Equity Partners into the top tier of private money firms. Now Jonathan Nelson has to keep it there.

By Stephanie N. Mehta, senior writer

(Fortune Magazine) -- Alarms sounded all over Wall Street in March of last year when word leaked that BCE, parent of phone giant Bell Canada, was in buyout talks with Kohlberg Kravis Roberts. The news that such a rich prize - BCE had a market cap of $25 billion - was in play set KKR competitors like Blackstone, Cerberus, and Carlyle scrambling to get in on the action.

Watching this drama unfold with a measure of both confidence and concern was Jonathan Nelson, CEO of Providence Equity Partners, a smaller and considerably less flashy firm based, yes, in poor little Rhode Island's capital. Providence had been quietly courting BCE, paying friendly visits to the management team since 2004. (Providence had put money into MetroNet, a Bell Canada rival, and had seen firsthand how dominant the larger firm was.) Providence also knew that local law required the company to be majority-held by Canadians, and in 2006 it had started exploring a BCE buyout with the Ontario Teachers' Pension Plan - a longtime Providence investor and also BCE's largest shareholder. The fact that KKR was now in the hunt did not surprise Nelson - naturally BCE was going to shop itself to drive up the price. But he immediately got on the phone with Jim Leech, the head of Ontario Teachers', to review their strategy. "Of course we were concerned," he tells Fortune, in a rare interview. "But we had spent two years studying the company, we had the ideal partner in Teachers', we had three times before invested in a national phone company, and our banks were underwriting all the debt financing. For these reasons we believed that we should come out on top."

Sure enough, most of the other major equity shops soon backed away when they were unable to secure sufficient Canadian backing. And in late June of last year BCE agreed to be acquired by Providence, Ontario Teachers', and a third partner, Madison Dearborn, for a record-setting $33 billion, or $48.5 billion including debt. The decline in the U.S. dollar has raised the total to $51.5 billion (as of May 8).

The deal was a triumph. Not only had Providence pulled off what would be the biggest leveraged buyout in history, it had outmaneuvered KKR to boot. The coup validated Nelson's strategy of focusing on media and communications and cultivating deep, long-term relationships with the industry's key players. And it launched Providence into the top tier of private equity firms.

But don't schedule the victory parade just yet. Just as Providence snagged its prize, the credit markets started to unravel. With the deal slogging through a regulatory review, Providence's partners have had to reassure investors that their newly cautious lenders, folks like Citigroup (C, Fortune 500), Deutsche Bank, and RBS, will honor commitments to finance the huge buyout. Meanwhile Nelson has his own headaches. Providence had to sue one of its lenders, Wachovia, to ensure financing of its $1 billion acquisition of 56 television stations from Clear Channel Communications. And he has been working overtime on Metro-Goldwyn-Mayer, the movie studio that Providence bought in 2005 with Sony, Comcast, and other partners. MGM has missed financial targets, struggled to find a winning strategy, and released bomb after bomb, a streak that could well continue with the forthcoming Valkyrie, in which Tom Cruise plays an eye-patch-wearing Nazi.

So Jonathan Nelson finds himself at a crossroads. His firm has morphed from boutique to megafund: It now ranks No. 9 on Fortune's private-money power list, ahead of well-known names like Cerberus and Thomas H. Lee. And it's a major player in the media business, with a portfolio of 41 companies, including MGM, television network Univision, and several cable TV and wireless phone companies. Nelson, 51, a mild-mannered man who has enjoyed working in relative obscurity far from the bustle of Wall Street, concedes that he will no longer be able to maintain the low profile and underdog status that was a competitive advantage for so many years. Moreover, Providence's strong track record and mega-investment pool (at $12 billion, its newest fund is three times larger than the previous one) brings intense scrutiny and outsized expectations. Will Nelson thrive under this unaccustomed pressure? One friend, media billionaire (and Univision chairman) Haim Saban, thinks the answer is yes. Don't be fooled by his "gentle, soft-spoken" style, says Saban. "This is a guy who goes helicopter skiing in Greenland, who once dove under his boat because a propeller got caught in seaweed. This is a guy who enjoys a real challenge."

An unexpected path

You could call Jonathan M. Nelson the accidental investment banker. He didn't plan on becoming a master of the universe à la KKR's Henry Kravis or Blackstone's Steve Schwarzman. In fact, he says proudly, he didn't plan to do much of anything at all. "You can't at the outset connect the dots," Nelson told a group of students and parents at a Brown University parents' weekend last year. "Life does not and should not work that way." This surely dismayed some parents, who probably had hoped a successful financier would have more practical advice for the young Ivy Leaguers. But the random path certainly worked for him.

The son of an orthodontist, Nelson grew up comfortably middle class in Providence. When it came time for college, he didn't go far, choosing Brown, where he was Mr. Liberal Arts, supplementing his economics studies with music courses and a stint at a local radio station as a jazz deejay. After graduating in 1977, he stumbled into a job at Wellman, a Boston-based specialty-chemical maker. A friend who worked there set him up on a job interview - Nelson claims he just went to practice his interview skills - and he ended up spending about three years helping manage the company's Asian operations.