Hey and leave those financial executives alone, man. Don’t touch their compensation levels, taxes, or culpability in the debacle. Let the savviest of banksters blow $2billion in the Derivatives Gambling Den. .. and you know nothing will be done. Neither Obama  nor Romney have any say against the Bankster Man. Hey dude, these guys are out getting a billion a piece from  Banksters and friends. The tune is rearing up again in my brain in 16 tonnish:

16 tons and I ‘m deeper in debt
St Peter don’t ya call me

Cause I  cant go
I owe my soul to the Bankers role…

And  Obama and Romney aint your Man
Cause they owe their souls to the Bankster Man.

One of the great pleasure each week is TheBeast weekend Best Long Reads on the Web. It is a little mainstream, but still the stories are quite excellent. It is in that spirit that I provide the top five long reads at TheBeast:
Gary Taubes  This Is Why We Are So Fat from Newsweek - shows how the Anti-Obesity groups have been co-opted by the various industry lobbies.
Paul Krugman – Austerity Is So Wrong - a detailed excerpt from Paul’s new book on the Austerity Trap.
Peter Boyer, Peter Shweizer – Has Obama Sold Out to the Banks - shows that indeed Obama has. The most that can be hoped for is a change to the Bush tax cuts  that taxes the 1.0% more fairly.  But kiss good bye any prosecution of bankers for their wrong doings leading up to, during and after the financial crisis despite the many special reports  and Congressional leaders that have called for  just such prosecutions. It turns out Eric Holder as Attorney General is like former Economics Advisor Larry Summers and Treasury Secretary Tim Geithner, absolutely beholden to the financial community. So likewise do not expect Banks to be broken up or the Volcker Rule   to make the Cut given the amount of campaign financing Obama has gotten from the financial community – it looks like Obama the Beholden.
Peter Beinart - Why are Obama’s Stump Speeches Slumping – No longer is the US leading on Climate Change or  any other major policy issues – Realitat is a new balance of power in the World until gross environmental degradation catches up with the developing countries. But this inaction is also a function of policy paralysis in the Federal Government.
Masha Gessen – Does Kasparov Have Any Moves Left? - The Chessmaster   faces the Russian Politcal Meister, Putin who appears to have the end game at hand for Kasparov.
Bon appetit!

To say the least, ye Editor felt like an isolated viewer of a slow motion Train Wreck in American Democracy which nobody dare look at or acknowledge.

No longer so.

Two articles and a related book have changed that picture dramatically. The book by Thomas Mann of the Brookings Institute and Norman Ornstein of the conservative American Enterprise Institute is It’s Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of Extremism. Yes, the title does not give a hint of the contents in which Mann and Ornstein describe in careful detail how the GOP has worked ever more actively to sabotage US Democracy. And they name names. And they have the a broad array of details and references over 240 pages.  To see a succint summary, see the following Opinion Piece, “Let’s just say it: The Republicans are the problem”, by Mann and Ornstein in the Washington Post.

Paul Krugman at the New York Times goes Mann and Ornstein one batter. He credits them with describing the symptoms but expands the causes to one more crucial step. He underlines the Occupy Wall Street argument – that a plutocracy  of the  financial elite are are investing in and animating the extreme postions taken by the GOP. No small statement – again, long overdue. Read these two links and decide for yourself – is US Democracy under attack from within and  lead by financial elites that have seized control of the GOP policy soul?

Why Does the GOP Do This?

Why would a political party take such extreme positions? Won’t the public eventually catch on and throw the guys out? Clearly there is that risk but here are some of the realities that would encourage extreme actions:
1)The GOP has already been thrown out of power  in 2008 and so rely on the fact that  the economy  reached its extreme low point just as Obama took over. Blame all the bad news on Obama and the Democrats. Count on a two election cycle [2010 regain the House, 2012 take the Senate and the Presidency]. It takes two elections for the public to exercise their frustrations on the profound housing and jobs downturn and blame the party in power.
2)The GOP are  Master  Merchants of Doubt. Karl Rove masterminded the politics of fear and the alliance with Disaffected One Issue Voters[be it gun control, gay marriage, prayers in schools, right to lifers, etc]. Rupert Murdoch and Roger Ailes enabled newspapers and a national network whose affiliation with the Republican party and delivering their message is an unquestionaed  24/7/365 operation, no apologies. Fox News uses out right lies and and then beyond prime time retractions, opinion pieces as news, and a host of methods to create dubious equivalences and plausible doubt. It is sophisticated information distotion and manipulation that only Jon Stewart on the Daily Show and Stephen Colbert on the Colbert Report dare to call out. The major Networks and PBS are almost utterly silent about such travesties. Finally, there are dozens of Republican Think Tanks stocked with minority view experts that will issue reports on a broad array of topics designed to sow confusion, uncertainty and doubt. The Republicans have become the Super-Dupers, extremely adept at shading  and driving opinion to their point of view for the voting time required.

Thus there is not a single issue that the GOP does not believe it can manipulate to its advantage for long enough to swing voters its way. So the current GOP crusade is to create the idea that “government does not work” so draconian cutbacks to programs and regulations that their business clients want delivered can be provided. Look  at what happened to the Department of  Justice,  Office of Mineral Management and the SEC under George Bush.
3)The GOP has created an environment for bribery and access to power on a massive scale. The Supreme Court’s Republican Decision to allow unlimited campaign financing through Super Pacs and lobbying with very relaxed reporting requirements  has created a)an all or none bidding process for support of programs and legislation and b)has created Super Assasination PACs. You cross the line as a Republican, and we ensure that you do not get re-elected. As a Democrat, if you become a thorn  to our programs you likewise will not get re-elected. In the new World of Buying Political Power, the GOP leads the way.
4)There is an aura of invulnerability. In return for the Obama Administration not indicting the Bush executive branch officials for incompetence if not outrigh breech of the law on WMD,   SEC, Lost Billions in Iraq, Treasury Deals and other executive actions – there was to be a forthright effort on bipartisanship. Yea, Right. Having got away Scot Free with major mischief, the GOP believe they  can do it again. Just ask their friends, the Banksters.

In sum, the Republican Party is devoted to the notion that “We can fool most of the people most of the time”. And the 2012 election is their opportunity to prove that premise.

And if that is not enough,  the other problem Adobe has had is its premium pricing for its Creative Suite. Adobe has a number of category leading creative products starting with Photoshop, Illustrator, and Dreamweaver. But this list  also includes major contenders like Premier Pro and After Effects in video processing, InDesign and Framemaker in DTP, etc.These product continue to improve technically; but they face severe price competition from two sources. First mobile apps at between 3 to $10 are a fraction of their desktop counterparts. Even Adobe’s own Mobile Touch Apps at $10 each are not breaking the bank. The second problem is a downward pressure in desktop prices as very capable  freeware and low cost programs at less than $100 compete on basic features, ease of use as well as being 1/3 to 16th the price of Adobe products. So this party among others has been wondering what Adobe could do. Well that question got answered emphatically  this week.

Adobe Creative Cloud

The next version of the Adobe’s Creative Suite will be the Creative Cloud offering of both programs and services.

Users get to download and use without limit any and all of these Adobe Creative Suite programs – for one year after purchasing a creative cloud membership. And there are a host of additional services.
1)Store, Sync and Share files with 20GB of storage on the Creative.cloud.com. So work done on an iPad or at home can be synced up with work in the office. Designs and files  can be shared with colleagues and clients allowing them access to view files and at your discretion add comments and the ability to download files. And the access is quite powerful with activation and hiding of layers in Photoshop and other products using any of the popular browsers.
2)Publish websites and Apps through the Creative Cloud Publishing features. Users can create up to 5 websites on the Creative Cloud developed using the full range of Creative Suite tools including the new Muse and Edge plus traditional tools like Photoshop, Illustrator, Dreamweaver, InDesign, Premiere Pro, etc. The only limit to those websites is the 20GB storage entitlement. With the intro later this year of the Adobe Publishing Service, users will be able to deliver apps on iPad and Android including iBook competitive eBooks and brochures.  Finally there are a host of cloud services like access to the full set of TypeKit fonts available on the Creative Cloud.
3)The Adobe CreativeCloud Team services coming late this year offers even more collaborative  and community sharing costs and services. This may be the
4)Get privileged access to new products and updates. Creative Cloud members will get updates to Digital Publishing Services, the final Adobe Edge release, and a number of other Adobe Apps and services in the pipeline. Also some major program upgrades will be available exclusively to Creative Cloud members and then published to all users later. Security and reliability updates will still be available to all  users.
If users download the full set of apps, they cost $24/app/year. And this does not take into account the full range of cloud storage, services, and new apps that Adobe has in the pipes. In sum the CreativeCloud.com is a very impressive set of programs and services.

How CreativeCloud Alleviates the Apple Threat

The Apple Ecosystem is becoming more grasping with the Mac Store selling ever more  software that runs on the  Mac and Apple taking  30% of all sales. The App Store is the only way users can get Apps for Apple’s iPod, iPad, and iPhone. And Microsoft, seeing the money pot, has created the Windows Store with only slightly less onerous approval and selling terms[30% rate for sale up to $25000US then 20% on sales thereafter].  The CreativeCloud provides a selling system to  get around these restrictions for the time being. But either Apple or Microsoft [or both] can make the terms for running a sold app/program ever more draconian and test in the courts the legality of demanding payment for apps downloaded and installed on their OS from a software vendor like Adobe or Intuit or other software vendor.

Adobe needs to wean more than half its users from their abject loyalty to Apple. Adobe certainly has arguments for mistreatment of its users  by Apple. This  includes  past hardware update coercions, no touchscreen operations for Mac users, and the slap in the face to hundreds of thousands of Mac Flash developers. In addition, the range of services delivered through the CreativeCloud become a loyalty point –  so Mac users as less allied to Apple and more to Adobe. It is by far not a complete solution; but does reduce the vulnerability of Adobe to continuing attack from Apple.

How CreativeCloud Alleviates the Pricing Problems

As noted above the $600/year for the creative cloud works out to $24/program/year for first time buyers and $14.40/program/year  for students and teachers. This puts Adobe much closer to mobile app pricing and very competitive with PC and Mac pricing for desktop  apps. For example, the excellent Tech Smith Camtasia Studio sells for $300 while Corel’s Draw at $499, Painter 12 at $429, and PaintShop Pro X4 at $70 – all will be under price pressure. Admittedly these do not match the less than $10 prices charged by many mobile apps. But many of these apps are still in the Etch-a-Sketch state of development relative to the senior and much more capable desktop graphic software categories.Admittedly as tablets in particular rapidly approach laptop speed and performance [and vice versa], inevitably the better mobile apps will become serious competitors to not just Adobe but the broad set of graphics software vendors.

Summary

4 months ago this observer would have shorted Adobe stock. Not anymore. Adobe’s CreativeCloud gives protection against continuing threats of Apple [and to a lesser extent Microsoft] incursions on Adobe’s turf. Likewise the pricing of Adobe programs has taken a steep downward adjustment to make it much more competitive with the upcoming crop of mobile based apps. Finally, the CreativeCloud, if executed well can become a the creative graphics place to be sort of like the Instagram of for Creatives that is OS platform neutral. It is hard to argue with Zdnet’s Chris Dawson – “Adobe nails the value question with Creative Cloud”. Yet users who want to buy the various suites and programs are not being forced to the CreativeCloud, they can continue buying just as in the past. Give Adobe management top marks for restructuring their major product line to the new Consumer Computing reality.

The word that is filtering out is that Bo may have been up to more than  covering up his wife’s dragonian misdeeds. Now the runours are of a coup attempt. The whole problem is that China has  a long history of emperors with succession being a a very dicey affair more often than just the Three Kingdoms period. The Wall Street Journal is covering how the Internet Spigot keeps delivering ever more juicy tidbits on the Bo Affair. But also the story shows how hard the Party is cracking down on the Internet scene. There are echoes of Tienamen Square as freedom of expression that marked that era has started to percolate through among 500million Internet users and their micro-blogs. The problem for the party is that the Internet is very, very popular – and the micros-blogs present moving targets.  So cracking down may prove to be very difficult and/or very provocative as inflation and wage disparity become major issues.

Takethe5th promised legs to this story  .. but was not expecting Big Bo athlete legs.

US Universities may have just crossed a tipping point  - or should I say 4 tipping points.

First  David Brooks at NYTimes has written a Martin Luther-like manifesto calling into question the efficacy of college/university teaching in the US.  Here is the essence:

Colleges are supposed to produce learning. But, in their landmark study, “Academically Adrift,” Richard Arum and Josipa Roksa found that, on average, students experienced a pathetic seven percentile point gain in skills during their first two years in college and a marginal gain in the two years after that. The exact numbers are disputed, but the study suggests that nearly half the students showed no significant gain in critical thinking, complex reasoning and writing skills during their first two years in college.

This research followed the Wabash Study, which found that student motivation actually declines over the first year in college. Meanwhile, according to surveys of employers, only a quarter of college graduates have the writing and thinking skills necessary to do their jobs.

David goes onto hint at the second tipping point. That is the cost of a 4 year college/university education ranges from $60,000 to $160,000 leaving many students terribly in debt on graduation. This is the cause of the  third tipping point because student debt amounts now to  over $1trillion in the US  leaving about 25 million college grads in debt right out of school. To make matter worse youth underemployment is the killer:

Carl E. Van Horn, a professor of public policy at Rutgers University recently looked at what happened to college graduates who finished school between 2006 and 2010. Of these, only half found full-time jobs.
Van Horn now worries for the approximately 1.5 million 2011 graduates vying for those same slots.

“You have another class of graduates that are facing not only a difficult labor market but competition from the previous three, four and five years of young graduates also clamoring to find their way into the labor market,” said Van Horn. “The continued weak recovery will mean more graduates finding themselves in part-time jobs and contingency jobs and jobs that are far below their level of education.”

This is a festering problem that could really become politically unfriendly.

The fourth and last tipping point might seem to be good news – major universities are offering superb courses online for free. This blog has already highlighted some of the best. And now there is another even larger selection of courses for the summer months – see Coursera, itunes at Stanford U, Open Yale Courses and MIT OpenCourseWare. The Coursera studies are the same as what undergraduates take at  Stanford University, University of Michigan, Princeton and Pennsylvannia University.  The materials and lectures are the same. There are chats, quizzes, exams, and a wiki for students to exchange insights and ideas but not quiz and exam answers. Most important, most of the courses provide a certificate of participation and overall exam/quiz mark. Hello! The latter is the major tipping point.

If I can attend college for free, make friends, and geta  graded certificate  why not show a potential employer that my understanding of IT algorithms is not just a fluke but derived from my due diligence and work at  Stanford’s Design of Algorithms course. Or knowledge of Chemical Engineering came from a free MIT Engineering Process course.

Given the popularity of these online courses for both students and teachers, expect them to continue an upswing. And hence the universities may be adjusting to a new, large,  and international online “undergraduate” student body . What and how universities adapt to this new clientele is anybody’s guess but the wider college and university community will never be the same given the above four tipping points.

Return of the Left in China. The story of Bo Xilai has an eerie mirror to US politics.

Australian account of events in February are  the first indications of a deep rift in the Chinese Communist party. In contrast, the normally current Chinese Business magazine,  Caixin Online, did not publish the story until this last week after Bo Xilai had been removed from his Politburo position  as covered first by the  Xinhua, the Communist Party’s  official news agency. This gives a feel for how carefully managed political news is in China. So it was not a surprise that the news came first from Xinhua relating the possible murder of   British businessman  Neil  Heywood by Bo’s wife Gu Kailai. This  broke the “official” silence in China. Since then  the BBC has been following the story closely and reports that with 500 million internet users, state control of news in China is becoming ever more precarious but also subject to massive state hack  attacks.

The BBC  see this as both a legal and political challenge for China. The legal challenge is will the rule of law apply to the wealthy and party political elite. As seen in the Caixin Online report the Party has pledged to do that.  But as Bloomberg has pointed out the Party leadership with  its great and fast accumulating wealth is now part of the  problem as its legal  hegemony and highest members’ huge accumulation of wealth [the 70 leading Communist  legislators have a total wealth equal to the GDP of  Slovakia] . There are echoes to what happened in Russia after the breakup of the Soviet Union saw a tiny political elite fast  emerge as the dominant corporate chieftains and government leaders. Dissent in Russia like in China is bearly  tolerated [from time to time protesters and reporters  get mauled badly].

 The Bo Mirror Images in the US

But the parallel with US politics is quite striking as well. First, the growing disparity of US  incomes has seen the top 1% accumulate up to 30% of of the total wealth in the US while top executives at major US corporations earn 200-300 times the average pay of the workers [see here for data]. This echoes the  accumulation of wealth in China [see here also]. These US 0.1 percenters are  now defending their gains by buying access to power with the  US Supreme Court’s blessing. This includes approved access to the political power brokers with unlimited campaign and lobbying funds.  Compare this to China where state run banks and  companies now get special access to financing and legal advanatges because the State enterprises have been folded back into government and Party control. And finally just as Communist Party officials are exempt from many legal restriction, the US Congress has seen fit to exempt its members from conflict of interest and financial information limitations that every other American has to observe.

Now many will argue that China is a one-party system while the US has one of the longest running democracies in the world. But there are signs of clear detrioration in the US Democracy. Government is not being allowed to work with the interference of the lobbying groups and the current GOP Congress holding up budgets and executive appointments across the board. 60 votes are now required to get any legislation passed in the Senate. The Presidential elections in 2000 and 2004 are both tainted badly. For the past 12 years the Supreme Court has been voting in many cases on strict party lines. And the once non-partisan, unbiased  Press has an official TV media representative in the form of the Rupert Murdoch’s Fox News as virtual spokepersons for the GOP.

Now both US and China face immense World challenges. Nuclear arms are leaking out to ever smaller or sometimes unstable States like Iran, North Korea, Pakistan, Israel, and even India. World resources are becoming ever more scarce and /or costly to find and produce [not just oil but reaching all the way to basics such as forests, fisheries, arable land and water supplies]. The disturbing fact is that if the newly developing world consumes as the developed world has consumed for the past 60-70 years, there is simply not enough resources to go around. And this leaves the environment as an open wound.

China is taking the approach that because the developed world caused the current environmental crisis it should not be penalized by carbon, ozone and many other environmental  restrictions. The US is paralyzed on many environmental issues because the same people who brought you uncertainty for dozens of years on weather smoking causes cancer are now working their same magic on enviromental concerns  But for China  this environmental policy has turned out to be self-defeating. Now after 30 years of breakneck 10% annual economic growth China faces enormous basic environmental problems - loss of arable land, polluted rural watershed, and ever widening air pollution. China is a mini case of what not to do in the face of environmental degradation. this is one of the prime issues that make Bo’s replacement of interest.

But the biggest common problem that China and the US face is that there is not enough work to go around. The International Labor Organizations World Report for 2012  shows how 4 years after the World financial crisis, “there is still a sharp decline in the employment generating capacity of the global economy”. And ILO cites youth unemployment being a worldwide phenomenon. Currently 32% of Chinese 2010 college graduates are unemployed or underemployed. This more than doubles the US numbers.  Two factors are contributing to this problem – automation and  continuing imbalance in incomes as the executive suite continues to  take the lions share of  earnings. Automation may nip the bud of growing employment as  the big Chinese electronic and other manufacturers are looking to replace workers with machines.  logistics has flattened the world  so that jobs can go anywhere the base cost+shipping is lowest. Automation will reduce both blue and white collar jobs worldwide . So a job and work are becoming scarce commodities causing wages to be bid down. Hence US Family incomes have been stagnant since 2000 and are not expected to rise until 2021 as reported by the Wall Street Journal. Prospect for college students in the US have also seen wages decline while indebtedness increases. This  joblessness is the fundamental problem that the US election campaign has been able to avoid  debating so far. Will it do so thorough the election in November? Two $1billion dollar war chests and the GOP’s new found aversion to policy debates say  unfortunately yes.

Summary

So the Bo Xilai affair has  legs . It has strong implications for the US and will not just disappear because the Chinese leadership now has  exposed fundamental political and economic problems that cannot be swept under the rug. The fact that the very wealthy Chinese  are moving to the US  and the official news agencies in China are saying that This Is Not a Policy Problem means that it is. Stay tuned.