Takethe5th Picks and Pans

The NYTimes story last week on the iEconomy in China has raised again the issue of working conditions and notably practices in China. By Apple executives own admission this is a sensitive issue which could spoil the Apple Brand.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors….

Some former Apple executives say there is an unresolved tension within the company: executives want to improve conditions within factories, but that dedication falters when it conflicts with crucial supplier relationships or the fast delivery of new products. Tuesday,Apple reported one of the most lucrative quarters of any corporation in history, with $13.06 billion in profits on $46.3 billion in sales. Its sales would have been even higher, executives said, if overseas factories had been able to produce more.

Executives at other corporations report similar internal pressures. This system may not be pretty, they argue, but a radical overhaul would slow innovation. Customers want amazing new electronics delivered every year.

But  the issue around  labor practices does  have broader implications in the current economic crisis where there appears to be a jobs shortage as persistent and as pernicious as the energy crisis for not just the US but the World in general. Workers in developed countries in North America and Western Europe  are now at the “back of the jobs bus” because globalization and logistics networks allow products to be produced anywhere in the world where the lowest costs can be obtained.

What Apple Could Do

Last quarter Apple reported $13B in profits. It currently has a almost $100 billion in cash and equivalents on its balance sheet with no debt whatsoever. By spending 0.5% of that $100 Billion on its Chinese workers at the Chengdu Foxconn plant Apple could create a  virtuous cycle.  Adding $0.5 billion to the wage pool at the Foxconn plant spread over 250,000 workers that deal with Apple products would add $2000 to each works wages [or roughly 8-10,000 RMB to each worker's take home pay]. Suddenly working on the Apple line would become very desirable and well rewarded for the anytime overtime and exacting reliability  work that is demanded by Cupertino.

But Apple’s payscale  would put pressure on other international companies like  Dell, Microsoft, Nokia, and Toshiba to match Apple. Wages not only at Foxconn but other electronics suppliers would see upward pressures.  This in turn would mean that  electronics and other products would cost more in the US and the rest of the World [or maybe Apple which does not seem to know what to do with that fast growing $100 billion kitty could absorb the 1-2% price increases and take a slightly smaller profit margin which is currently in the 33% range].  The net result is that wages and self sustaining home consumption could start to drive the Chinese economy in the long term.  And in turn  technical manufacturing could spread more equitably throughout the world.

However,  reaction to this NYTimes report has been polarized. This can be seen well at Betanews –  an excellent tech site that follows the latest technology developments.  The article says Apple is responsible for inhuman working conditions and/or pay in China. But the reaction in the comments section is about as temperate and  civil as a GOP Presidential debate. By this measure and NYTimes promise to pursue this story in upcoming iEconomy reports, it appears this topic will stay on radar screens for the foreseeable future. And well it should given the worldwide jobs shortage.

Source: Baidu.com 
With the upcoming Windows 8, Microsoft should see a huge increase in revenues from China. Consider that aging and no longer supported Windows XP has 86% of all Chinese computer users. But will Microsoft be able to claim this windfall? New computers in China that come from brand name providers  are charged an unknown fee for the latest copy of Windows 7 that are sold with big name computers. But not so for knock-off PC machines that still dominate the Chinese PC market – they use pirated Windows XP copies.  And CNN Asia raises the issue that Microsoft has not made reloading Windows a simple task [ for fear of piracy] like Apple has. This fear of piracy may be very real as  a reverse Phishing process – legit Windows PC’s identifying signatures can be “ported” to illegitimate machines.

So a very good test of Chinese compliance with WTO anti-piracy provisions will be how well Windows 8 “sells” in China this year.

Our article, The Wheels Are Coming Off the GOP Base, has had some very interesting confirmation in the Press in the past few days. The NYTimes in an editorial says

“Don’t stop the debates. The purpose of debates is to get candidates and their ideas before voters. In the Republicans’ case, that includes exposing the failed policies and dubious values of their party.”

Ex-GOPer Andrew Sullivan sees the moment of GOP implosion here in the Daily Dish. John Batchelor at the Daily Beast describes the laments of a Republican professional who sees Republican Self Destruction -

The primary campaign nastiness between Mitt Romney and Newt Gingrich is exhausting Republican loyalists. What in Iowa was a feisty contest between the haughty Mr. Romney and the operatic Mr. Gingrich turned hollow in New Hampshire and harsh in South Carolina. By the close of the Florida scramble, with the Herman Cain Express back from the repair yard to hitch onto the Newt baggage car, what remains of the Republican dialogue does not appear likely to be of much worth for the fall campaign.

The solution to the puzzle may be to admit that the GOP has forfeited 2012 before the general election even starts. How did this happen so suddenly?

“That’s the great mystery of 2012,” a senior Republican journalist told me while watching the brouhaha in Florida. “We have the weakest incumbent president in 32 years, running on the weakest record in 32 years… and who’s taking the stage in South Carolina and Florida? It has to be the weakest field I can remember. Each of these candidates has in his character, in his history, in his idea set—never mind disqualifying—a guarantee for self-destruction. If Newt is the candidate, he’ll lose badly. If Mitt is the candidate, he’ll lose slightly less badly … So what you have is an almost complete guarantee that if these are the candidates, Barack Obama will be reelected.”

I asked another senior GOP professional with decades of experience measuring party intrigue; he pointed to the negative campaigning as the telltale cause. “Negative advertising, why does it exist? It exists because it’s been proven to work. So Gingrich went negative on Romney on the Bain attacks and brought Romney down in South Carolina. The Romney campaign decided they’ve got to fire back in kind, calling Gingrich an influence peddler and a guy with ethics problems. The result is to create a cumulative effect of slime and dirt and muck attached not only to the two candidates but also to the party itself, as a party that fundamentally lacks seriousness about what’s centrally on people’s minds, which is the state of the economy—especially among independent voters, who keep rising; apparently they’re up to 40 percent of the electorate. This is off-putting. You know, Republicans may say we’re having an internal struggle, Newt represents something we believe in and so forth … Still, they’re running the risk of damaging the Republican brand.”

And see last Sunday’s news talkshows such as NBC’s Meet the Press or ABC’s This Week for a similar reaction among both Republican and Democratic commentators.
How Did the GOP Get Here?
Well there are 4 primary reasons for this self-destruction:
1)The GOP “Base” is fraught with contradictions and internecine emnities among the inherently conflicting groups - see our article;
2)The GOP has pledged allegiance to a policy of Super Dupers. You can fool most of the people most of the time. Take the pledge of allegiance to Grover Norquist for “no new taxes” by over 200 Republican Congressman. This is the same Grover Norquist who advocated for creating the huge Deficit with his “Starve the Beast” advocacy of deliberate overspending in Congress for the last 30 of 32 years. But now the sameSuper  Duping Tactics are being used in abundance in their own Presidential Campaign;
3)GOP has resorted to a Mega-No campaign, not accomodating on almost any and all Obama legislative proposals. This has been accomplished by using the 40-vote Filibuster rule to stall administration budgets, executive appointments and key legislation. The purpose is to show that “government and Obama do not work.”  The process of Federal legislation since the Republicans took the House in January 2011 has simply not been allowed to work because that would show Obama and government as being effective;
4)The GOP has increasingly resorted to politics of fear and smear. It is a badge of honor – like the Willie Horton Attack Ads. But it has slipped from attacks against Democratic Presidential candidate John Kerry with the Swift Boat campaign to George Bush’s South Carolina ‘whisper rumor mongering’ against Republican rival John McCain claiming falsely that McCain had fathered a black child out of wedlock. If this type of “campaigning” is legit, then anything is legit even against fellow GOP-ers.

So having embraced the deepend of contradictory  coalitions and the politics of smear – the current GOP Presidential wrecking-crew campaign is  natural consequence. Moderates or centerists have been effectively sidelined if not weeded out of the Republican party. This is the party of Rush Limbaugh bombacity or Murdoch Fox News manipulation. Don’t say “who knew?” now.
Bad News for the USA

The US and the World in general face numerous wicked problems- think energy shortages, climate change, worldwide job shortages, and nuclear gamesmanship from petty states. So the US can ill afford the politics of fear and smear. For example, for the US the current toxic political wrangling at the Federal level has already been a significant factor  in the downgrading of US debt from AAA to AA status by S&P. Imagine November 25th 2012. Obama wins the Presidency but the Republicans gain either the House and/or the Senate because voters do not want to give too much power to the Democrats. A Democratic majority did not work in 2008. Or vice versa –  a Republican wins the Presidency but the voters give the Democrats control of the House or Senate. In either case, political  gridlock is the outcome. Neither party is likely to embrace bipartisanship. This is Gresham’s law – the bad drive out the good. And right now very bad partisan politics drives US politics  in general. Can you imagine the political turmoil of 2013 no matter who wins?

Remember even in the past 10 years of increasingly bitter partisan infighting with  Congressional approval ratings  hovering  around 10-14%, nonetheless 90% of incumbent Congressman get re-elected. We keep rehiring those who we disapprove of. So no wonder Federal political leaders think they are impervious to any consequences for their bad  behavior – no matter what they do do they will get re-elected. And so ye Editor will have to take a big swig of a 5th, because my party, the GOP[Andrew Sullivan and I are co-diasporans], is leading the US downhill parade … and so are my fellow electors. I think Walt Kelly’s Pogo said it best – “We have met the enemy- and They is Us”.

Politics, particularly Presidential politics is risky racing like Formula 1.  Everything is taken to the limit and like Formula 1 every performance [debate,  campaign event, TV attack ad, Web presence to Tweet, and election result]is polled, monitored, and analyzed in almost excuciating detail.  And there is a surplus of political operatives suggesting how to drive the agenda, make the coalitions, and spin the campaign twist and turns to local political advantage. But the basic driving political engine is the Base. That is the core set of groups that have coalesced and come together to advance their disparate causes for mutual gain and as little as possible antagonism and  internecine warfare under the Republican party banner. But this year the wheels have come off the Base and the Grand Old Party is going to have a carreening crash that it will be hard pressed to recover from by November 2012.

The erratic performance started early with Gov. Sarah Palin in or out, Gov. Mitch Daniels in or out, Gov. Mike Huckabee in or out, Donald Trump in or out, Gov. Chris Christie in or out- all these set the GOP campaign off on a wobbly track. But the debate and polls confirmed a volatile Republican electorate as Michelle Bachmann, Newt Gingrich, Rick Perry, Herman Cain, Ron Paul, Rick Santorum, Mitt Romney, and Newt Gingrich again have all taken a lead in the polls and have achieved “election” victories. Those GOP tires have been drumbeating worse than a NASCAR bucket of bolts. Why so much “Cognitive Dissonance” better known as Feuding Folks in the GOP Fold?

To this one only has to take a glance at solidity of the GOP Base. Imagine the following:
- Farm  and Small Business men  dependent on illegal immigrants coming together with the GOP Immigration Lobby;
- Tea Party debt crusaders sympathizing with Wall Street Bankers and Hedge Funders who are demanding continuiing zero interest rates, huge compensation packages and other deficit creating subsidies;
- Right to Lifers and the Medicare Generation seeing eye to eye with the extreme GunsRights campaigners seeking looser regulations on concealed, automatic and silenced weapons;
- The GOP 20% unemployed in  many counties in States as disparate as Nevada, Ohio, and South Carolina  wanting to support GOP traditional Big Business many of whom have outsourced and exported vital jobs overseas;
- The Evangelicals and Christian Prayer in Schools defenders admiring and supporting the Neocons wanting to strike out on another war heedless of unintended consequences – perhaps  in Iran, North Korea, Somalia or other enemies of the US as in Lebanon[Reagan] or Iraq[Bush];
- Adopt an anti-science, anti-measurement approach inimical to most engineering and business interests but welcomed by GOP special interests in their campaigns to elude responsibility for the true costs of  their  gains;
- Resist gay rights and stigmatize them so they can be controlled by federal and  state measures in society;
- Be among  43% of Mortgage holders who are GOP  and have been foreclosed on or are underwater yet have to see their GOP side with Wall Street against foreclosure limits, against reducing underwater loan levels, and actively resisting the Consumer Financial Protection Agency that would prevent suc h excesses in the future;
- Be a  GOP Middle Class watching the traitorous lobbying elitist Grover Norquist whose 30 year “Starve the Beast” policy created the bulk of the US Deficits under Reagan, Bush 1 and Bush 2. Now Norquist is rushing to lead the charge against deficits with his mindless “no new taxes” pledge that hobbles 200+ GOP Senators and Congressmen who have pledged allegiance to Norquist for some trickles of campaign support. Meanwhile., Norquist is protecting his own kind, essentially the richest of the rich, whose taxes paid as a % of income have reached historical lows compared to that same GOP Middle Class.
And these are just a few of the wonderful  things binding Republicans together.

Given these constituents it is no surprise that  only one policy  can unite these diverging desires and political interests – that  is to make President Obama be  perceived as worse than the worst US President in history, George W. Bush [see Republican Andrew Sullivan's brilliant essay on this topic here]. Do this by refusing to co-operate with President at all, Use the 40 vote Filibuster rule in the Senate not just to block judicial appointments but also Obama department budgets plus dozens of Obama executive Cabinett appointments [“see, the agencies arent working because their managers aren’t there”.  Key adminstrators , especially in financial administration and regulatory control AWOL because  key appointmentsre have not been approved 3 years into the term and their budgets cut. The nihilism is deliberate such that one can easily find the GOP spurning Republican policies offered. As Andrew Sullivan has shown, this is a dangerous strategy because to date President Obama has occupied the center-right over the past 3 years in office to hiw own party’s chagrin.

So now in a party of elites and 1%-ers ruling the roost, South Carolina Republicans said enough already. They rejected the overwhelming favorite of two weeks ago, Mitt Romney, and elected Newt Gingrich, based on his populist leanings. True there were coded racial overtones by Newt. True Newt played to the evangelicals and half a dozen other Base special interests. But the bulk of the campaign was  apopulist one against the ruling elites as represented by the Bain capitalized Mitt Romney. Newt neatly skirted the issue of “attacking capitalism”, but rather asked how did Mitt accrue his super 1% wealth by asking did he pay his fair share of taxes and did the Bain years under Mitt Romney truly net 100,000 jobs for the US and what indeed is the Romney Jobs plan.

So now the wheels have flown off the GOP Base. Recriminations and attack ads will redouble in ferocity. US Supreme Court-approved Super Pacs will be unleashing internecine attack ads of gigantic proportions in Florida and the upcoming GOP primaries. The GOP Base is now crashing out of control – and the Republican Establishment trying to tamp down the populist cataclysm is itself discredited as being one of the elites manipulating events to their own advanatge. GOP – welcome to Occupy WallStreet.

Mitt Romney now appears to be the leader to beat in the polls for the next 3 primary votes – New Hampshire, South Carolina and Florida. In the Saturday ABC Debate debates the consensus is that Romney escaped unscathed as none of his rivals attacked him even with comparison statements. The result is that the Sunday debate on NBC was more pugnacious and there is more to come. TheDaily Beast is reporting that  the Huntsman Pac was outbid by the Gingrich PAC for the rights to the following video, King of Bain.  This 30 minute expose shows how “Mitt Romney knows business” as head of Wall Street-imitating LBO-Leveraged Buy Out firm Bain Capital.

Now Mitt Romney will have to stand up to scrutiny for being a very rich  1 percenter taking advantage of the other 99% by eliminating  jobs and funneling money to his Wall Street investors and partners. Vanity Fair also writes about this issue:

For 15 years, Romney had been in the business of creative destruction and wealth creation. But what about his claims of job creation? Though Bain Capital surely helped expand some companies that had created jobs, the layoffs and closures at other firms would lead Romney’s political opponents to say that he had amassed a fortune in part by putting people out of work. The lucrative deals that made Romney wealthy could exact a cost. Maximizing financial return to investors could mean slashing jobs, closing plants, and moving production overseas. It could also mean clashing with union workers, serving on the board of a company that ran afoul of federal laws, and loading up already struggling companies with debt.

There is a difference between companies run by buyout firms and those rooted in their communities, according to Ross Gittell, a professor at the University of New Hampshire’s Whittemore School of Business and Economics. When it comes to buyout firms, he said, “the objective is: Make money for investors. It’s not to maximize jobs.” Romney, in fact, had a fiduciary duty to investors to make as much money as possible. Sometimes everything worked out perfectly; a change in strategy might lead to cost savings and higher profits, and Bain cashed in. Sometimes jobs were lost, and Bain cashed in or lost part or all of its investment. In the end, Romney’s winners outweighed his losers on the Bain balance sheet. Marc Wolpow, a former Bain partner who worked with Romney on many deals, said the discussion at buyout companies typically does not focus on whether jobs will be created. “It’s the opposite—what jobs we can cut.”

This is the crux of what has been killing middle class incomes in the US for the past 30 years. Too many US businesses like Bain Capital have been raiding the Income Commons by making concerted attacks on US working jobs with stagnant wages, relentless benefit reductions, work cutbacks and job outsourcing overseas. And the facts are indisputable, the beneficiaries of this Romney “I Know Business” policy is that the 1% like Mitt Romney have been the major winners over the past 30 years:

So before you buy Romney, know just how Romney Knows Business.

The Republican Presidential campaign has been a dramatic example of Just in Time Journalism. Each time a new candidate has reached the top of the Media Hype Heap a simple fact-checking pin prick  does in the new  Pseudo Presidential front-runner. And there have been 7 pretenders  - Sarah Palin, Donald Trump, Rick Perry, Hermann Cane, Newt Gingerich,  Ron Paul, and the latest Rick Santorum – all Whack -a-moled in one month or less of Hype Heap Riding. And you guessed it, after nearly winning the Iowa Presidential Primary, Rick Santorum is the latest to be subject to This-Time-The-Real-Media  Cross Examination [aka  the Hype Heat]. And right on time, Howard Kurtz at The Daily Beast delivers a Double Heap of Heat:

The media assault on Rick Santorum has begun. Turns out he was a tough-guy lawmaker who played hardball with lobbyists and made a bundle after leaving the Senate.In other words, a typical member of Congress.

This is all fair game, mind you. In fact, it’s the kind of information the voters of Iowa might have found useful before propelling Santorum into a virtual tie with Mitt Romney in the caucuses (or a victory, if reports of aRomney overcount are to be believed). But the press didn’t care then. Santorum was an also-ran, a loser, a single-digit guy. Until he wasn’t….

The Post is joined by the New York Times in reporting that Santorum made $1.3 million in 2010 and the first half of 2011 by selling his services to various industry groups, and in a similar vein as Newt Gingrich, Santorum was not registered as a lobbyist. For instance, after pushing two bills in the Senate to steer hundreds of millions of dollars in Medicare money to Puerto Rican hospitals, the ex-senator joined the board of United Health Services, where he hauled in $395,000 in fees and stock options. And how did investigative reporters unearth this information? It was in Santorum’s  financial disclosure form.

This is exactly the kind of scrutiny that a presidential candidate should be receiving. Too bad the media didn’t take Santorum seriously enough to provide it until now.

But really Kurtz is right on with the second remark. Why did the media and Press choose to ignore the qualifications of Rick Santorum?
Ye editor has scoured the Web for a media outlet [newspaper, magazine, political websites, even wikipedia] that provides a list of the candidates with a summary of the qualifications, political history, strengths, weaknesses, upside potential and/or downside risks[aka "skeletons in the closet"]. Just a capsule summary is sufficient in briefing style maye double Twitter’s 140 character limit for each category the Press chooses to pursue. It would be nice to have a  pros and cons approach lest it be mistaken for a political ad instead of journalistic coverage.

Ooopps – Journalistc Coverage Is Opinion and Infotainment

Media Shift is  the informative  coverage  by PBS of the decline of traditional paper and even broadcast media in favor of  the Web as the news medium of choice. Seeping through the convenience and financial advantage stories is the the picture of the press in gut-wrenching transition as  wholescale cutbacks in journalist  employment and coverage  are occuring in newspapers, magazines and local radio and television.  But two aspects of the change investigated by PBS  have gotten shortchanged. First, it goes back to Marshall McLuhan hot and cold media. Traditional press like newspapers and magazines are relatively cool – once a day to once a week [or month]news cycles . Traditional black and white layout, people read the news to become informed, there is a strong fact checking aspect to cool media. Hot media like radio and now TV and Web are fast breaking, full of emotional sound, fury and action video, shorter on facts-longer on opinion. Second, as hot media like radio, TV and now the Web with social media  prevail with their built-in  hot, emotional aspects – opinion, especially outrageous, humorous, and entertaining opinion prevail. News and fact checking take second seat to the hot media’s priority:  infotainment. And so the Fourth Estate has such aberrations as Fox News Networks  where opinions  become  News and Ooops-we-made-mistake-in-fact, but now that the show is over with we shall issue a required correction. Or more common – short of the facts,  Just in Time Journalism.

John Stewart’s the Daily Show along with the Colbert Report and Real Time with Bill Maher are crossing the News-Infotainment Divide in the opposite direction – going from infotainment and humor to educating their audiences on some rather subtle aspects of  current political events[also note the balance here, Democrats get their fair share of criticism as the Republicans]. See the full misadventures here. And thank the Gods that Humour is filling in where the Media, especially TV News Media , simply dare not tread.

The five major problems facing not just the US but almost all developed countries are the following:
1)Jobs are going to the developing countries with very favorable rates of exchange and wage level relative  to prosperous developed countries. Wages in China, India, Vietnam, Brazil and others  across the board are a fraction of the developed country wages. How can Canadian, Spanish or US lawyers and legal experts  compete with their  Vietnamese, Peruvian, or Indian counterparts when the skills are roughly comparable but the wages and telepresence both are distinctly better than their home country.
2)Jobs are becoming ever scarcer commodity for all nations as smart machines take over ever more sophisticated tasks. In order to earn  even a median wage, a college degree if not graduate level and an ever longer period of  ”free  or open source” volunteering or low wage  apprenticeship is required  for almost all jobs. Pay equity is shot to hell given top executives pay at 9 sigma levels of expected effectivenes  but performance a) not even approaching 4 sigma levels and b)very much dependent on much less adequately compensated staff and workers.
3)Action on Climate Change and 5 other impending  environmental disasters: 1)energy independence from monopoly sources, 2)ever more expensive  water supplies worldwide, 3) countermeasures to instantly spread communicable disease, 4)species eradication including fish, bees, and biodiversity, 5)air pollution across a broad spectrum of airborne is tripping of ever-increasing allergies, asthma, cancers and other debilitating diseases is at a standstill. Ame  is subject rabid and calculatedly self-serving  anti-science denials. Only overwhelming catastrophes putting vast regions at the edge of disater can  elicit concerted emergency  action.
4)The rate of change across societies both rich and poor is accelerating. There is constant multitasking, rushed decision-making, and action in situations where the  slack in time and resources is at a minimum. Yet asymmetric terrorism, nuclear ambition, and despotic tyrants rule the roost across the world.
5)There is a breakdown in problem solving due to  a)the wicked nature of many problems, b)the anti-rational denials, and  c)the preying on fear, confusion, and short-term memory and often limited understanding  for ulterior ends that dominates the scene. Clearly, the 1% want to retain their privileges and basically unfair equations of income and wealth at everybody else’s expense [see the 2007-2009 Financial Meltdown].

Into the this Wicked Problem Space now place a no longer functioning legislative government. The 1%  of US”Job Creators” have managed to construct and buy over 30 years a mass of political controls  of a profoundly  unfair nature:
1)A Senate in which 40 votes can overturn any bill, action, or appointment. The Senate is one of the deadly  sources of  venomous political partisanship.
2)A House of  which nearly  40% percent  of the members have taken a pledge of no new taxes at a time when the overall taxes as % of GDP are the lowest in 40 years and the 1-percenters  tax paymentsas a % of income  are the lowest in 30 years. This pledge is to a traitor, Grover Norquist,  who advocated the Starve the Beast policies which spend grossly more than you paid for in taxes and thus created the huge deficits that he wants to manage with no new taxes. Norquist has been instrumental in a)sabotaging any Pay As You Go policies that might reduce the debt and b)encouraging massive deficit spending up until 2 years ago.
3)A Us Supreme Court that has allowed corporations and any organization to spend unlimited funds for lobbying and campaign financing but with limited disclosure of who is funding those groups.
4)A system of  too-big-to fail financial rescue that bails out the financial community to the tune $3.3 trillion at tax payers expense. Efforts to limit that exposure in the Dood-Frank and other legislation have been watered down such that they are inoperable in preventing another bank bailout by taxpayers.
5)A system of white collar financial prosecution that with the lone exception of Ponzi Schems [think Madoff and Stafford] and Insider Trading, constantly uses token “biggest fines ever” with no admission of guilt, no prison time or restrictions on the  perpetrators.This is in stark contrast to the Graham Oxley on accounting fraud – which cut off some  gross accounting misconduct during the financial crisis – but left major exceptions.

Given this as a setting, the US Presidential election seems to be heading for a debate betweenMitt  Romney accusing President Obama as being the worst President since George W. Bush and President Obama attacking the Republican Congress for being the perpetrators of  the demise of his Promises of Change.

Oh my goodness gracious – such a disappointment.

Update:Penn-Olsen, a Chinese Tech watching website is reporting that Chinese Hackers say release of massive amounts of data was just a joke.

The data released on the internet last week was already widely available in hacking circles, according to Wan Tao, the founder of a popular hacking online community. Wan told the Dongfang Daily that the reason the data looks so old (most of the information released involves pre-2009 usernames and passwords) is that it is old. Apparently, the databases have been floating around in hacker circles for some time, and hackers told the paper that whoever released the data must have done it for fun, as there is no way anyone could make money from such an old, widely-circulated database.

Given the precarious security state of Chinese pirated PC infrastructure, the last laugh may be reserved for a new gang of pirates.

Original Story:
In Marketwatch there was  strange story today  by Caixin Online, Marketwatch’s Chinese business associate site., Chinese Search Engines Required to Post Government Bank Website links. the basic story is a bit quizzical. The ten largest Chinese search engines including Baidu, Bing, and Yahoo are required to post links to the 6 largest Chinese Government banks on the top of every search page. Hunh??? Whats going on here?

A quick search around  the Web turned up nothing not even from DigiTimes, the Taiwan based electronic news service. But  more searching on  the Caixin website turned up the following story from December 29th, 2011. – 100 Million Usernames, Passwords Leaked. Now this is a major security breach – equivalent to 30million online ids and passwords in the US. And the causes are spoken and unspoken. Thespoken causes in the Caixin report were too familiar to North American computer users:

Anti-virus company Qihoo 360′s Vice President Shi Xiaohong attributed the leak to companies neglecting to encrypt their users’ passwords and account information, Xinhua reported. Legal experts told Caixin that the massive leak also revealed shortcomings in Chinese internet security law and online ID theft protections.

But ye Editor wondered if the presence of pirated software in China might have a bearing on the situation.

Bingo! The following report from earlier this summer provides the insight:

Microsoft has launched a new web site that is aimed to step up its campaign to move users off from Internet Explorer 6. The new IE Countdown site includes a world map, highlighting which countries around the world still have the most IE 6 installations. China is apparently the biggest country which is still using the horrible, outdated web browser, with a whopping 34.5% of usage. IE6’s usage share in China is more than five times that of the rest of the world! IE6 has created huge headaches for developers and security risks for end users, so why do the Chinese Internet user still sticking to this insecure web browser?

According to statistical reports, China has approximately 420 million Internet users, which has already surpassed the U.S. (info here). Of course Microsoft can read those data and acknowledges that China is a bastion of the nine-year-old IE6. IE6 has a strong relation with Windows XP. The XP operating system, which debuted in 2001, included IE6 as its default browser. While Windows XP operation system is a “huge presence” in China. According to Microsoft own research data, XP has a staggering 81.8% share in China, while Windows 7’s share was only about 10%. So, see the picture?

China has dramatically different browser usage patterns than developed countries. Most Chinese people are still using IE6, due to many of them still using old Windows XP machines, and failing to upgrade the hardware, the OS and its default browser. XP users who want to run a newer version of Internet Explorer, such as 2006’s IE7 or 2009’s IE8, have had to either manually upgrade or accept a browser upgrade from Windows Update. But in China, over 90% of software is pirated, most Chinese users never connect to Windows Update or even upgrading their web browser. The reason for this is because most Chinese users are afraid that Microsoft will detect their software as illegal, and disable or cripple it. While anyone can install IE7 or IE8 manually, even on a cracked XP install, but the lack of automated updates likely discourages Chinese users to give up IE6.

Another main reason for IE6 still remaining popular in China, is because most commonly used Chinese websites have been constructed and tested to work with IE6 only, without consideration of web standard (W3C), non-IE browsers (Firefox, Safari, Chrome), or non-Windows platforms (Linux). For example, the China Government’s IT department registration website (MIIT), is IE6 only. Without IE6, authorities cannot file their registration information (story see here). Online banking in China is also strictly a Windows and IE6 love affair. They usually used ActiveX login system, any western companies setting up their brunch office in China, must install IE6 in their Windows PCs, otherwise no work can be done through any of the major Chinese banks. The same case for those China major online shopping sites, which require their customers to use IE, rather then other web browser’s options.

Now Chinese hackers have taken advanatge of the fact that IE6 and Windows XP are both the dominantly used client OS and browsers in China. But Chinese hackers have broken into both IE6 and Windows for more than two years to extent that zero-day attacks including the infamous Google hacks of 2 years ago rely on IE6 and Windows being open targets. So long as pirated but old software like IE6 dominates the Chinese scene – this vulnerability will get even worse because IE6 is no longer being patched even for security updates and  security support for Windows XP ends in April 2014. But the reality is that hundreds of millions of  Chinese Windows users who run pirated copies are already out of this update loop.

The Hacking Bottom Line

If these hacking attacks in China persist or get worse, the Chinese  government will be confronted with a major dilemma. How do they update literally millions of computers? Do they issue their own mandated security updates to Windows XP and IE6 – non compliance meaning cutoff from key government and business sites[this will be hard to do because business and government sites are themselves mired in XP and IE6].? Do they release a mandated move to Chinese  Linux - something previously tried without success? Or do they move to an updated and secure tablet OS? Whatever the choice, the solution to China’s massive Hack Attacks will have huge implications for the global PC and Mobile Computing markets for the next 1-3 years. Finally a 5th of the Finest to whomever can answer – who benefits the most from China’s Pirated Software conundrum: Apple, Google, Microsoft, Unicom or  some other third parties?

A computer operating system is very close to a natural monopoly. Controlling the dysfunctional effects of such monpolies has proven very difficult. A simple monopoly occurs when one supplier provides 60% or more of the product in a marketplace. Monopolies do not have to be dysfunctional. However, in profit maximizing markets there is a strong tendency to do so. Natural monopolies occur when market conditions tend to favor monopoly formations as in the following:

1)The fixed or capital costs of creating, delivering and/or maintaining the product or service are very high – this creates a barrier to entry into the market by competitors. For example, the expertise and cost of developing and maintaining the 55 millions lines of code that comprises Windows 7 is very high;
2)In contrast, the marginal cost [or operating expenses]of producing and delivering one more instance of the product and/or service is very low. For example the marginal cost of producing one more Windows 7 disk+packaging is very low;
3)the consumer of the product and/or service perceives it as being uniform and undifferentiated – water, salt, electricity or the cost of switching to a substitute product or service is very high. In the case of operating systems, the services among Windows, Mac OS, and Linux are very similar but the cost of switching operating system is high because a)the time and effort to make the transition can be very onerous, b)the time and cost of replacing programs and apps between the operating systems is very high and c)the relearning curve for the differences in how the OS and programs operate in the new OS environ are variable but can be disconcertingly expensive.
4)Both businesses and individual consumers do not want to learn and support a second product and its support system if they can avoid it. The transition expense can be very high as the time, effort, and extra learning expense are costs many would prefer to avoid.
In sum almost all the major factors in computing tend to support a natural monopoly for operating systems.

The move to a natural monopoly would appear to be self propelled; but in fact two additional conditions determine the rate of monopolization. Foremost, being first to market often confers advantages as the vendors can set prices, secure supply chains and control their margins more effectively than later entrants into the market. Second, many of the operating standards, distribution methods, and pricing deals can be set and maintained by the first entrant. Reading the following account of the actions taken by Microsoft to establish and the preserve its monopoly shows the Machiavellian intrigue resorted to by Redmond to maintain market dominance.

Thus, the computing industry has tended to form natural monopolies around operating systems in which only compelling changes in hardware or mode of delivery starts to break up the natural monopoly. Observe the number of years these natural monopolies lasted:

IBM 360 for mainframes – displaced by lower cost and more precisely sizable minicomputers and local area networks – 25 years;
DEC VAX for minicomputers – displaced by local area networks and low cost PC servers; – 10 years;
Novell LAN Servers – displaced by Client Server systems using Linux Apache or Windows IIS based Web services – 8 years;
Microsoft Windows PCs – displaced by proliferating client computing devices like smartphones and tablets using Apple iOS or Google Android – 20 years.

Some monopolies lasted longer because of the way they managed their leadership position. Joseph Schumpeter’s Creative Destruction describes how monpolies sew the seeds of their own destruction as monopolists cling to power by deferring innovation and destroying competitors with predatory pricing. By the very nature, natural monpolies often have more effective defenses against the engines of innovation and change because they pose significant entry barriers and are protected by individual consumers reluctance to making the transition to new technologies or services.

Efforts by government to control such natural monopolies through antitrust and other regulatory means has been mixed at best. IBM back in the early 1970′s had to open up OS/360 software development and distribution to outside developers with more public APIs and equitable terms of distribution.But IBM mainframes prospered well into the 1980s. Also, after winning the antitrust case against Microsoft Windows, the US Department of Justice did nothing under the new Bush administration. Such ideas as spinning off the Web division as separate competing company or having the OS become opensource were simply not tried. Also prosecuting OS monopolies has been difficult; but administering effective remedies or regulation for OS monopolies has been almost impossible.

The Cost of Operating System Monopolies

The cost of monopolies are high, wide and persistent. High in that Windows 7Professional the Microsoft operating system costs $299 – as much as Amazon’s Kindle Fire tablet with Google Android operating system and effectively more than half the price of the PC  hardware . The operating profit of Microsoft is 45 cents of every dollar in the  $70Billion in sales for the last year which has accumulated to $62B in cash and investments after dividends and acquisitions. Wide means that Microsoft has been able to promote through its Windows monopoly other of its programs to monopoly position such as Internet Explorer and Microsoft Office which come as default installations on every copy of Windows installed or as partial freebie giveaways. So an operating system monopoly begets many program monopolies large and small.

Persistent because monopoly vendors like Microsoft grant access to evolving APIs and new developments first to their own program developers and then favored external development teams before the public API and new specs are reveal . Of course, there are prohibitions against this, but there are many workarounds. In talks with dozens of developers this was spoken of as “an under cover fact of life” while developing for not just Microsoft but other market segment leaders.

The Latest Move to OS Monopoly : Apple iOS

Apple with iOS for its mobile client iDevices like iPod, iPad, and iPhone is racing towards achieving a monopoly in PostPC client computing. And it has a number of the natural monopoly advantages: 1)substantial [but not overwhelming] costs for developing the new iOS; 2)extremely low costs of delivery and updating of iOS on customers mobile devices; 3)first entrant advantage in standards setting, supply chain priorities, and gaining market share leads. All of these achievements are well deserved. However, in the latest tactics undertaken by Apple regarding iOS are distinctly anti-competitive.

1)All software and apps used on iOS devices must be approved by Apple.. This is done ostensibly to filter out duplications and security hazards; but is controversial because some app developers complain of arbitrary rejection decisions. See the sidebar on Adobe Flash for an example;
2)All software for iOS devices store must be sold through the Apple AppStore and Apple takes 30% of the price sold;
3)All software developed for iOS must use one of two development languages – Objective C or HTML5+JavaScript – most cross platform development languages and tools such as Java, Flash, C/C++ have been banned from use on iOS development.
4)Because Google’s Android has gained a dominant market share in smartphones while powering dozens of innovative tablets. Apple has unleashed a thermonuclear patent war against Android for its “copying” of Apple’s ideas. But as this presentation of 75 innovative tablet which are dominated by Android designs show, the Android tablet space is alive with unique innovations. .

These patent attacks are an example of the worst of the petulant side of Steve Jobs. There is no doubt Steve Jobs was a great innovator. But this same Steve Jobs was also a blatant imitator and copier. It was Steve who copied Xerox Palo Alto’s GUI and mouse interface for the Lisa and Mac, Apple copied the ideas of Adobe’s Type 1 fonts with Apple Truetype to gain DTP leadership, the iPod and iPhone copies many design ideas from Palm and Nokia , and Apple’s touchscreen innovations had nearly 40 years of prior art to imitate. The whole idea of innovation being 2 parts copying is summed up in these explicit word:s ” ‘Good artists copy, great artists steal’. We have, you know, always, ah, been shameless about stealing great ideas” as enunciated by Steve Jobs in 1996 In sum, Steve is allowed to steal others ideas; but lo and behold the Emperor’s wrath if anybody should even come close to ‘imitating’ Steve Jobs “adopted” ideas.

Even in the PostPC era in which Apple endeavors to replace the Windows monopoly in client computing with the Apple iOS monopoly, Steve Jobs has imitated Microsoft’s Windows monopoly practices but gone one better:
1)Develop iOS operating systems that runs exclusively on Apple hardware and iDevices. This is like Microsoft which only supported one among a dozen competing chip technologies[ Intel x86]but goes two better because Microsoft a) only developed limited hardware [mainly mice] and b) allowed many hardware vendors to develop computers and peripherals for MSDos and then Windows operating systems.
2)Develop proprietary OS software and be the first entrant in client computing markets. Just as Microsoft had its seal of approval sticker while Apple enforces approval of all software that runs on iOS. But Apple does Microsoft one better by requiring all apps to be sold  exclusively through the Apple AppStore where vendors pay a 30% fee for the right to run in iOS on iPod, iPhone, iPad and any other Apple iDevices;
3)Develop Apple’s own apps in key software segments like GarageBand and iWorks that run only in Apple iOS and/or Mac systems. Like Microsoft, Apple competes with its own app vendors; but it is not clear whether Apple developer get first dibs on new iOS iAPI extensions and innovations as Redmonds developers did;
4)Like Microsoft, Apple restricts cross platform development of program and apps by suppressing cross platform tools like Java and integrated platform generation tools. Apple went Microsoft one better by restricting development on iOS to two languages – Objective C and HTML5+ JavaScript until October 2010. Since then it has opened up languages for development on iOS considerably but Java, Flash and most cross platform generation tools remain banned.
In sum the Apple iOS ecosystem is proprietary and closely controlled in which arbitrary bans on software can and have been made- see the sidebar, Steve Jobs Darkside.

Controlling OS Natural Monopolies

As previously noted, regulators have tried to control OS monopolies with decidedly mixed success. However, in the case of Apple iOS, a potential solution has emerged – an open source OS, in this case Android. Because Android is open source any hardware developer can use it with their hardware. Likewise any vendor can develop software for the OS. But Google now maintains a ticketing system similar to iOS for allowing apps to be distributed. The Google App Store also takes 30% 0f any app sales but it is divided between the carrier and payment processor – not Google. Also from the outset, Android has has a rich set of development language from NDK powered C/C++, Java, Flash, and a host of scripting languages. In stark contrast to Apple iOS Android is cross platform agnostic; but because of the Dalvik virtual machines differences with the Sun JVM – Android development and languages are not “write once run anywhere”.

But because Android is open source and has a manageable service fee, literally dozens of hardware vendors have flocked to the Android smartphone and tablet markets with many innovative designs. The result has been that Android smartphones now have a 46% market share of the US Smartphone market compared to Apple’s 28% according to Comscore at the end of October 2011. Hence, Apple is retaliating not in features or innovative development but with a thermonuclear patent war against Android.

These market results point to a simple 3 point solution to the OS natural monopoly situation:
1)OS suppliers that provide open source code for their OS at nominal fees to all hardware and software vendors can have unlimited numbers of their own apps developed for profit[or free] on their open source OS. Those apps can be proprietary or open source but would be subject to standard 60% monopoly restrictions if third parties asked for relief;
2)For vendors that make their OS proprietary, their apps for their own OS would be subject to divestiture restriction if their share of the market exceeds 40% regardless if their product is free. The one exception would be an open source app but it would be subject to the usual 60% monopoly restrictions if third parties asked for relief.
3)Finally both proprietary and open source OS vendors could not ban apps or other software on their OS without due cause such as security risk, persistent reliability problems or other legal norms . But the measure of such risk or persistent unreliability or legal norms would be a performance comparison with other comparable apps or software running on the OS. This would likely have prevented the banning of Flash on iOS.
These three simple provisions would inhibit OS natural monopolies from occurring and prevent organizations from being held hostage to monopoly prices or unfair and inequitable treatment in the ever growing software and computing markets.

Summary

As embedded computing becomes ever more prevalent, control of the natural monopolies associated with operating systems and the guarantee of equitable treatment to all hardware and software vendors will become ever more important. Open Source points the way to simple yet compelling solutions to the excesses which have already occurred in Ground Hog Day repeat fashion in computing markets over OS dominance in the last 50 years. Operating Systems are conducive to forming natural monpolies. Those monopolies inevitably result in sub optimal development. Witness-IBM had to be compelled to release its development APIs and on a timely basis. Microsoft was subject to antitrust action in which its “starve competitors of oxygen actions” resulted in  multi-billion dollar fines and seven years of antitrust watchdog reviews by the DOJ. And now, to secure its monopoly position for its iDevices,  Apple is a)restricting arbitrarily cross platform development tools and b) engaging in thermonuclear and ultimately futile patent wars with Google Android and other computing vendors.The one positive outcome of all this wasted effort – the illumination of how effective open source can be in controlling operating system markets from becoming “unnatural” monopolies. Google’s Open Source Android is the barrier to Apple iOS becoming a Windows-like monopoly in mobile computing.

Adobe management  has a major problem – the operating platform where 50% of its sales come from, Apple, has had top executives sabotaging Adobe’s products and market position. Worse,  this abusive behavior has been going on for decades. True, the idea of development neutrality of Operating System vendors is at best only ethically binding [which is to say has been historically ignored].  Microsoft has competed with its own software developers in several categories as it has made clear that it is allowed to distribute any program from its own portfolio with its operating system too. But unlike Apple, Microsoft has not banned any software from use on Windows unless it was a deliberate trojan or other security hazard. Okay, that is not entirely true, Microsoft has made programs like Java and Netscape browser economically banned on Windows by cutting of the oxygen [giving away a clone for free] or restricting  easy access to updates in Windows. In short, if you are a software vendor, you are highly dependent on the the goodwill of the operating system vendor not only to be distributed fairly on their OS but also to be provided the equitable access to information on OS updates and new OS development plans.

The poster child for abuse by an OS vendor is Adobe by Apple . Here are some examples:
0)Apple develops Truteype based on Adobe Type 1 ideas; then releases Truteype as free fonts killing a major Adobe market;
1)Apple owns and develops Final Cut video editing program that competes with Adobe and all other vendors video edit  programs on Macs;
2)Apple owns and develops GarageBand audio editing program which competes with Adobe and other vendors audio creations apps/programs on iOS and Macs;
3)Apple owns and develops Aperture a sophisticated photo edit and management program that competes with several Adobe and other software vendor programs on the Mac;
4)Apple owns and develops Logic and  Soundtrack Pro  which compete with Adobe Audition and other vendors sound/music processing programs on Macs;
5)Apple owns and develops LiveType, Motion, and  Shake which compete with Adobe After Effects and Flash plus other vendors animation and video processing programs on the Mac;
6)Apple banned Flash software from use on iOS devices – iPod, iPhone, and iPad.
7)Apple failed to release graphics accelerator APIs to Adobe that seriously hindered Flash performance on Apple Mac and iOS operating environs
8)Apple’s Steve Jobs in a public letter on the Apple site on April 2010 states in no uncertain terms that Flash Player has security[not so Apple's own Quicktime was worse and continues to have major security problems], reliability, and performance deficits [again serious problems with Steve's assertions on performance] despite the  fact that Apple’s own Quicktime has similar security and reliability problems. Jobs also  complained about touch+gesture operations on the Flash Player which were already in the pipeline and introduced less than a month after his infamous letter. Jobs went on to complain about the battery life of Flash Player but others have shown this to be a false comparison see Anand Tech,  Matbury, and StreamingLearning.

So having made these many false assertions  Steve Jobs went on to argue that it was Apple’s prerogative to decide what software it made available on its systems:

Sixth, the most important reason.
Besides the fact that Flash is closed and proprietary, has major technical drawbacks, and doesn’t support touch based devices, there is an even more important reason we do not allow Flash on iPhones, iPods and iPads. We have discussed the downsides of using Flash to play video and interactive content from websites, but Adobe also wants developers to adopt Flash to create apps that run on our mobile devices.

We know from painful experience that letting a third party layer of software come between the platform and the developer ultimately results in sub-standard apps and hinders the enhancement and progress of the platform. If developers grow dependent on third party development libraries and tools, they can only take advantage of platform enhancements if and when the third party chooses to adopt the new features. We cannot be at the mercy of a third party deciding if and when they will make our enhancements available to our developers.

This becomes even worse if the third party is supplying a cross platform development tool. The third party may not adopt enhancements from one platform unless they are available on all of their supported platforms. Hence developers only have access to the lowest common denominator set of features. Again, we cannot accept an outcome where developers are blocked from using our innovations and enhancements because they are not available on our competitor’s platforms.

Flash is a cross platform development tool. It is not Adobe’s goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps.

Clearly this a cautionary tale to businesses and developers that are considering developing for or using Apple  client computing for Enterprise applications. Apple is committed to closed and proprietary software and in general will not tolerate cross platform development tools. Steve Jobs went on to ban Java and many cross plaform code generation tools from iOS. This means that developers are left with  some tough choices. Develop another versions of every application that they want to deliver on a platform other than iOS. Or use the HTML5 route despite the fact that a)the performance cannot match native apps on iOS, Android, or anyother client computing OS and b)HTML5 is confronted with serious incompatility problems on key features such as Touch+gesture, offline usage support, Web Workers technology, and Web databases to mention only the most prominent.In sum, see here for a summary of Apple’s misrepresentations of Flash Player technology.

Business Cautionary Tale

Adobe’s Apple Conundrum is a cautionary tale for software developers and businesses in general. Adobe which derives nearly 50% of creative software from Apple OS platforms had a very limited range of actions it could take. It chose to grin and bear it and has subsequently  declared that it will no longer develop the Flash Player for any  mobile platform. This seems Draconian. But this is the reality confronting software developers when writing for any proprietary OS platform – you are subject to the whims and market appetite of the OS platform vendor. At least in in Open Source context like Androoid or BSD or Linux one has the source code to put in the patches [if required] to make your software work effectively on that open OS platform.

As client computing rapidly evolves, businesses have to be careful that they don’t become invested in a restrictive  client technology where a) they become locked into a specific OS technology that demands significant extra effort for system integration and  cross platform functionality and/or b)the hazard that client technology at a later date decides arbitrarily to limit/ban software that the general community has used and expected to use into the future. This say nothing about the the possibility that the adopted client software may be tardy or simply not offer the new technologies which are vital to your business in the future.

Henry McCracken at Time magazine has shown how to do computer technology predictions - although McCracken adamantly denies they are predictions. But actually they are deliciously witty, cleverly written yet clasically correct statistical forecasts. For under the guise of writing a)what we can assume will happen – the median value, b)what I hope will happen – the upperbound, and c)what I fear will happen – the lower bound, Henry has written an amusing three point predictions in very good strategic forecasting form. Here are two relevant examples  from the story

Windows 8

What we can assume will happen: By the end of the year–and maybe way before that–Microsoft will release its radically new, touch-centric operating system. (“Windows 8? is a code name: Its final moniker may be something else.)

What I hope will happen: Well, first of all, I hope that Windows 8 will be good. (Microsoft released a test version in September, but it’s too rough and incomplete for a final verdict.) But even if it’s great, it’s so different from Windows 7 that it’s going to take many folks a while to understand it, let alone love it. Like the shift from Microsoft’s text-oriented DOS operating system to Windows, this one could take years to play out. I’d like to see everyone from consumers to businessfolk to tech pundits acknowledge that and demonstrate some patience with Microsoft’s big new idea.

What I fear will happen: Windows 8 won’t catch on right away, and will be widely–and prematurely–declared to be a Vista-like debacle.

Apple

What we can assume will happen: Apple will release a new iPhone, a new iPad and some new Macs. (I refuse to speculate on any other items it might have up its sleeve for 2012.)

What I hope will happen: With these products and other 2012 moves, Apple will make a statement about its post-Steve Jobs future. And I hope that it will quickly make clear that its goal isn’t to reflexively channel its cofounder, doing precisely what he would have done in every instance.  That strategy might work at first, but in the long run it would turn the company into something similar to the Walt Disney Company as it existed in the years immediately following Disney’s death in 1966–the period when it produced regurgitated tripe like The Aristocats. The sooner Apple’s current management shows it’s thinking for itself, the better.

What I fear will happen: Rather than judging Apple’s 2012 products on their merits, pundits will be fixated on judging them primarily in terms of how Jobs-esque they feel–and will decide that they fall short.

Since ye Editor has just done a substantial look at Apple`s role in client computing and a very positive first review of Windows 8 Preview, these two forecasts are of particular interest. The assumption of Windows 8 appearing later in 2012  seems to be close to the consensus in the  tech community. Also  the worry about Metro in Windows 8 being too different may already have some confirmation in the slow uptake of critically acclaimed  Windows Phone 7 . What will really turn people off is a)there are  too many bugs and delays unfortunately like in Vista and b)the huge Windows 7 base of programs does not get touch enablement and tight integration with Windows 8 programs. Finally, if 8 is the only API capable of handling mobile sensors – then the transition from  Windows 7 to 8 will guaranteed to be slow and tortured which plays into the hands of rivals Android and iOS because it obsoletes the Windows apps advantage. Users will say, if these programs have to be replaced, then consider those Google Apps or the iOS iCloud as much more viable alternatives.

In the case of the Apple predictionns, there is too much pointing of the fingers at technology pundits. Apple has already fallen behind Android devices in hardware and software features as this articles points out in detail. Rather the principal question is whether the Apple closed ecosystem going to be too much of a drag on Apple innovation.

For the complete set of predictions, do check out the not-a-prediction article at Time`s Techland section.

In the last two years, more article are appearing from Wall Streeters who are questioning the budding financial myths on  what  caused the Financial Meltdown of 2007-2008.  Here is a telling one by a Wall Street analyst, Barry Ritholtz that  appeared in the Washington Post and has been picked up by a number of Share websites like Reddit, Stumble On , Tumblr, etc. Barry minces no word in this posting on the Wall Street espoused Big Lie:

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

Now The Big Lie really depends on 3 enablers:
1)the policy issue is either complex or subsject to confusion or uncertainty as to what cause and effect applies;
2)the explanation of events is shrouded in critical  omissions or plausible falsehoods or smears and hominem attacks discrediting fact checkers;
3)the press coverage on the issue is disjointed or minimal for any number of reasons.
In the case of the Financial Meltdown , The Financial Big Lies  has relied on plausible distortions by figures in power along with a Press that has been delinquent - particularly the national TV networks whose coverage has been sporadic at best.

The science magazine  New Scientist raises the issue  in its  in a story on A New View of Human Evolution – On Selfless Behaviour starting on page 28 of the August 6-12 2011 issue.

Our ability to cooperate closely with other group members and to suppress cheats means that selection at the group level rather than the individual level has been an exceptionally strong force during human evolution. It may have played a crucial role in shaping both our genes and our culture…Vigilant egalitarianism probably arose early in human evolution and was a precondition for other attributes that make us so distinct as a species…. Punishing cheats is a key part of maintaining co-operation and keeping groups competitive.

In sum, Wall Streeters like Barry Ritholtz or Nomi Prins are just applying the missing self-discipline and control for a professional group that at its executive top has lost all touch with its own ethical oaths of fiduciary trust: Put client above self gain as  one acts in their stead and seeks to do no financial harm of their entrusted assets. This is simply  a lost moral commitment at the highest and the currently most prospering levels of Wall Street and the Global Financial Community. Need we say more about a similar disregard for the Congressional Oath of Office.

My brother Mark has done very well by his investment in Apple stock over the past decade. Given the recent,  relatively substantial  downturn in Apple stock PE ratio he received an  investment advisory from ye Editor. Here is the jist of those remarks.

iPhone Now Playing Catchup in key Mobile  Markets

State of the Smartphone Hardware Art – iPhone Trailing

AppleTablet Leadership Also in Danger

Over and over again, the world is seeing an anguishing and paradoxical debate over the Deficit Conundrum . Simply stated, nation after nation has  allowed bubbles of inflated values to occur, accumulate and eventually topple their economies. The classic bubbly  case is the overinflated housing markets in the US and parts of Europe that burst into pernicious unemployment in the developed world. A classic bubble – a limited supply of a commodity[housing] is allowed through ever more hazardous financing to grow in value such that owning a home regardless of the amount and  nature of the debt on it became the only form of savings for many American “households”. But the financiers were themselves engaged in dubious and overleveraged and false ‘secutitized debt insurance.

Boom – in September 2008 it all collapsed with the bankruptcy of  Lehman Brothers bank.Suddenly all those debt tranches and complex derivative instruments had to be unwound- and nobody could put that Humpty Dumpty of Debt back together again.  So Wall Street and the City got John Q Public to do the deed on pain of another Great Depression. And to prove that they were grateful , the Walled  Street 1% created a Robosigning foreclosure crisis  2years later to prove  that they could fubar the dupes that are John Q….. again.

The paradox is that an apparently contradictory policy is required to correct the worst of  bubble bursts. Overspending  economies such as in North America and now Europe must overspend even more to get their economy’s engines restarted and  growing again. And governments, the spenders of last resort, often have large deficits making such spending potentially self destructive if not carefully controlled in amount , target groups, and duration[Do not choose Door No1 with a bunch of gladhanding, "Job Creators" trickling down on it]. Likewise taxes have to be controlled very carefully. Too quickly raised  and broadly applied they might snuff out any recovery. Not applied and they will create inflationary and soverreign debt bubbles.

So taxes must be a)made more equitable and b)raised to keep deficits in line when governments become the economic spender of last resort . Now here comes the  wrenching malfeasance. Most political systems, have like the US , become seriously dysfunctional because lobbying and special access to decision makers by financial payments has not only gotten  out of control, but also become officially sanctioned. See the US Supreme Court on campaign and lobbying spending as Free Speech. In sum, our Representatives are now financial captives- hence getting things fixed is at the moment an even more serious Second Conundrum. In programming, these self perpetuating Conundrums are known as a infinite loop. Just in case you are of the TeaPartying persuasion, that means you and the economy gets tea bagged over and over again.