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Dear Friend! on this website i am about to present some useful links and summaries regarding our present studies. i hope u find it auxiliary. i wish u a pleasant stay on this website... O.H. 4 further infos visit: http://oliverhannak.blog.hu or http://oliverhannak.spaces.lives.com

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Lényegesen rosszabbul alakul a válság

2009.01.22. 18:16 :: oliverhannak

Válságban van-e a kapitalizmus? – Surányi György volt jegybanki, jelenleg kereskedelmi banki elnök, Bajnai Gordon gazdasági miniszter és Lánczi András filozófus keresett választ erre a kérdésre a XXI. Század Intézet rendezvényén. Nem találtak: csak annyi biztos, hogy ha van is válság, az se baj, így fejlődik a tőkés világ. A gazdasági miniszternek elege van abból, hogy az államból élők voksaira hajtanak a pártok, és elmondta, mit tanult meg kétkezi menedzserként.

A történelem folyamán még sosem álltak annyira a dolgok, mint most – idézte Bajnai a fórumon Eisenhower elnököt. A gazdasági miniszter szerint nem a kapitalizmus van válságban, hanem a kapitalizmus egy válságos korszakát éljük. Az azt meghatározó két legfőbb emberi tényezőből, a mohóságból és a félelemből ugyanis most extrém módon az utóbbi felé lendült ki az inga, azt követően, hogy elmúlt évtizedekben extrém módon a másik irányban tartózkodott.

Irigyelhetik az adósságunkat?

A gazdasági miniszter szerint most egy korszakváltás jöhet a kapitalizmusban, amikor az államok korábban soha el nem képzelhető lépéseket tesznek a válság megfékezése érdekében. Az ír GDP-arányos deficit 11, az angol 6 százalék fölötti lesz, az euróövezeti államokat sorozatban minősítik le a hitelminősítik, az USA-ban hosszú távon 5 százalék fölött lesz a hiány - sorolt példákat a miniszter arra, hogy elképesztő eladósodás megy végbe a világban, így Magyarország, noha ez Bajnai szerint sem a mi érdemünk, lassan a legkevésbé eladósodottak közé kerül.

Nálunk, szemben a nemzetközi trendekkel, nem lehet a deficitet elengedve élénkíteni az itthoni keresletet, mert a korábbi tapasztalatok miatt komoly bizalmatlanság van az országgal szemben. Ez Bajnai szerint azért nem baj, mert egyfelől ilyen ösztönző forrásokat jelentenek az országnak az európai uniós források, másfelől pedig a világ más országaiban az elszaladó államadósság és a megnövekvő hiány olyan inflációs nyomásokat tesznek a rendszerbe, amik a válság végeztével az ellenkező irányba borítja meg a legfejlettebb gazdaságokat.

Elég az újraelosztásból

Amikor kétkezi menedzserként szembesültem válságokkal, azt tanultam meg, hogy először is őszintén, kíméletlenül szembe kell nézni a helyzettel - mondta Bajnai. A kormánynak most egyszerre két problémát kell megoldania: egyrészt Magyarország benne van a nemzetközi válságkörnyezetben, márpedig "lényegesebben rosszabbul alakul eddig ez a válság, mint ahogy akár néhány hónapja, ősszel gondoltunk".

Másrészt a válság kapcsán meg kell oldani azokat a problémákat, amiket eddig elkerültünk: olyan alapvető szerkezeti változások kellenek, amelyek a munkát állítják a gondolkodás középpontjába, és mindenkit arra ösztönöznek. Bajnai szerint nem tartható fenn az, hogy a választások eredményét döntően határozzák meg azok, akik nem munkából szerzik meg a jövedelmüket, hanem az állami újraelosztásból. Ezért van az, hogy a pártok versengése 10 éve arról szól, hogy az újraelosztásban érdekelteket megnyerjék, miközben a versenyképességet fontosnak tartók nem tudnak hasonló támogatottságot elérni - kesergett a miniszter.

Fejlődés a válságokon keresztül

A tanácskozáson Surányi György, a nemzeti bank korábbi elnöke, jelenlegi kereskedelmi banki elnök és egyetemi oktató azt mondta: a tőkés gazdaság jellege olyan, hogy válságokon keresztül fejlődik, most nincs szó másról, mint arról, hogy egy, a szokásosnál súlyosabb válság elszenvedői vagyunk valamennyien. Surányi szerint a szélsőségesen a piac önszabályozására épülő rendszer került válságba, nem a kapitalizmus.

Az a jóléti, emberarcú kapitalizmus, ami a fasizmusra és a kommunizmusra válaszként jött létre a második világháború után, elveszítette azt a pillérét, ami az emberi arcot kölcsönözte neki. Noha a gazdaságok fejlődtek, a nagyon széles középosztály reálkeresete nem nőtt, ugyanis elképesztő vagyonkoncentrációk történtek, ami keresleti hiányt idézett elő, hiszen ha a lakossági fogyasztás nem nő, és nem ad húzóerőt a beruházásoknak, akkor válsághelyzet jön létre - idézte fel a válsághoz vezető utat Surányi, aki felhívta a figyelmet arra is: a bankrendszerbe mentőcsomagokkal benyomott pénzt nem a bankok kapják, hanem a bankok betétesei, illetve azok, akik korábban hitelt felvettek. "A bank egy fikció, amögött tíz- és százmilliók megtakarításai vannak" - fogalmazott.

A virtualitás válsága

A mostani válság nem ok, hanem tünet, ami csak láthatóvá és nyilvánvalóvá tette azokat a problémákat, amelyeket egyesek korábban már sejtettek vagy észleltek, mondta Lánczi András. A filozófus szerint a mostani helyzetre azért nincsenek kész receptek, mert az eddigi válságok alapjában véve túltermelési válságok voltak, míg a mostani a virtuális világ korlátainak felismerése.

"A válság nemcsak arról szól, hogy felvettek egy hitelt, és azt nem tudják visszafizetni, hanem arról, hogy az egész pénzügyi rendszer egy kívülről átláthatatlannak látszó, és feltehetően belülről is átláthatatlan virtuális világba került át" - fogalmazott Lánczi. Ez a virtuális világ összedőlt, de legalábbis megkérdőjeleződött, láthatóvá váltak a korlátai azzal, hogy globális méretben tűnik el a bizalom. Ehhez csatlakozott Surányi is, aki azt mondta, a kialakult buborékot valóban az okozta, hogy virtuálisan jobban éltek az emberek: azt hitték, jobban élnek, ezért többet költöttek, mint korábban - és többet, mint megtehették volna. Ez azonban csak akkor derült ki, amikor a lufi kipukkadt, és a válság miatt sorozatban fizetésképtelenné váltak.

 

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Történelmi mélyponton a forint, 286,75-nél az euró

2009.01.20. 09:55 :: oliverhannak

Lehet, hogy 300 forint lesz egy euró, de akkor sem lesz valutaválság, és középtávon már erősödéssel lehet számolni. A piacnak nem tetszik, hogy csökkent a kamat és nőhet a költségvetési hiány, de a jegybanki tartalék és az IMF támogatása elég a forint a védelméhez.

Igaz, az esti, alacsony forgalom jellemezte, tehát kisebb összegekkel módosítható árfolyam uralta időszakban, de történelmi mélypontra gyengült a forint, 286,75 forintba került az euró. A magyar deviza eddigi mélypontja alig néhány fillérre volt ettől, az októberben elért 286,40-es szinthez közeledve - különösen azután, hogy nyáron még 230 forint alatt is járt az euró - a valutaválság réme is felmerült.

Ma azonban hiába gyengébb a forint mint valaha, és hiába gyengülhet ezek után még tovább, nem kell reálisan hasonló veszélyre számítani – mondja Samu János. A Concorde elemzője szerint ezt egyrészt a hazai, 20 milliárd euróra rúgó jegybanki devizatartaléknak, illetve az IMF hitelnek köszönhetjük. Az MNB ma abban a helyzetben van, hogy képes a forintot megvédeni, ennek is köszönhető, hogy az eddigiekben látszólag nyugodtan figyelte a forint úgymond "kontrollált mederben" való süllyedését.

Samu szerint nem zárható ki, hogy a történelmi csúcs átlépésével tovább gyengül a forint, sőt, rövidtávon inkább erre, és akár 300 forintos vagy azt közelítő árfolyammal szembesülhetünk. A második félévére azonban forinterősödést, az év végére a jelenleginél jóval erősebb forintot, 270 alatti euróárat prognosztizál az elemző.

A mostani gyengülésnek két oka lehet Samu János szerint: egyfelől a jegybank mai kamatdöntése, a fél százalékponttal 9,5 százalékra mérsékelt kamat nyilván kevésbé vonzó a befektetőknek. Másfelől Samu szerint a piac nem szereti, hogy a kormány jelezte, felemelheti a költségvetési hiány idei célszintjét – 2,6-ról 2,9 százalékra. Ez ellen ugyan az IMF sem emelt kifogást, de az üzenet nem jó, véli az elemző.

Az IMF pedig úgy áll, a hitellel is Magyarország mögött, hogy az ország, a forint megmentésén voltaképpen saját jövője is múlik. Az utóbbi időben a válság őszi tetőzése óta egyre erősebbek azok hangok, melyek új pénzügyi világrend, új szabályok és intézmények létrehozását sürgetik, márpedig az IMF éppen a II. világháború után Bretton-Wood-ban kötött nemzetközi megállapodással létrejött pénzügyi világ egyik központi eleme. Az utóbbi években azonban ázsiai és dél-amerikai válságok "menedzselése" kapcsán is leszerepelt, nem engedhet meg magának még egy fiaskót.

Az előző mélypontról hetek alatt felállt a forint

Nagyon gyorsan gyengült, de azután mondhatni hamar fel is épült most ősszel a forint. Szeptemberben még 240 forint alatt is vehettünk eurót, majd októberben már a tomboló, az izlandi devizát maga alá söprő gazdasági és bizalmi válság hatására beállította akkori új történelmi mélypontját a forint. A 286,40-es, napközbeni kereskedésben elért szinthez képest novemberben utolsó napjaira már 260 forint alá is benézett az árfolyam, köszönhetően az IMF-hitelnek és a rendkívüli kamatemelésnek köszönhetően. A december második felében kezdődött, majd januárban trendszerűvé vált és felerősödött gyengülés eddig nem volt egyedi és kimagasló sem a régiós vagy távolabbi feltörekvő piaci devizákkal összehasonlítva.

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Photoshop auf Mac OS X 10.5.3 frisst Bilder

2008.06.11. 12:00 :: oliverhannak

Das Speichern von Bildern aus Photoshop in Kombination mit der jüngst erschienenen Mac-OS-X-Version 10.5.3 kann zu Datenverlusten führen. Anwender sollten daher ihre Arbeiten nicht direkt auf Servern sichern.

Photoshop-Produktchef John Nack hat heute in seinem Blog Meldungen verschiedener Nutzer von Photoshop bestätigt, nach denen das Speichern von Bildern aus Photoshop CS3 in Kombination mit der jüngst erschienenen Mac-OS-X-Version 10.5.3 zu Datenverlusten führen kann. Das Problem tritt immer dann auf, wenn der Anwender eine Datei aus Photoshop heraus direkt auf einen Server sichert. Unbestätigten Anwenderberichten zufolge sind von dem Problem auch andere CS3-Anwendungen wie Indesign betroffen.
Nach Nacks Blog-Eintrag liegt der Fehler bei Apple. Der Betriebssystem-Hersteller arbeite eng mit Adobe zusammen, um das Problem zu beheben. Wenig überzeugend ist allerdings der Hinweis Nacks, dass es generell nicht ratsam sei, Dateien direkt auf Server zu sichern.
Anwender von Adobe-Anwendungen und Mac OS X 10.5.3 sollten also bis zum Vorliegen einer Problembehebung ihre Dateien zunächst lokal – etwa auf dem Schreibtisch – speichern und erst dann auf einen Server kopieren. Umgekehrt sollte man Dateien von Servern auf den lokalen Rechner kopieren und erst dort öffnen. Welche Mac-OS-X-Version verwendet wird, verrät der Eintrag „Über diesen Mac“ im Apfel-Menü.

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The comeback kids

2007.10.11. 16:46 :: oliverhannak

Oct 4th 2007
From The Economist print edition


The American presidency is Hillary Clinton's to lose. But that doesn't make her a shoo-in just yet

AP
AP
 

IF GREAT writers have a special insight into the souls of their countrymen, Hillary Clinton ought to be pleased. Philip Roth, one of the grandest old men of American letters, said last year that if anyone could lose 50 states for the Democrats, she could. This week he said he is no longer sure.

Mr Roth is hardly alone, either in his previous hatred for the former first lady or in his grudging new acceptance of her. It is still more than three months until the votes are cast in the first primaries, and over a year until the election. With no incumbent president or vice-president running, this should be the most open race for 80 years—but it certainly doesn't feel that way. Never mind the oddness, in a republic, of having Bushes and Clintons in charge for, possibly, 28 years on the trot: at the moment, the return of Hillary and Bill Clinton to the White House looks likelier than any alternative (see article).

Mrs Clinton is polling an average of some 18 points clear of her nearest rival, Barack Obama, for the Democratic nomination, and one poll this week put her 33 points ahead. She leads solidly in all the early primary states except, crucially, Iowa (which matters because it comes first), where she has only an insignificant lead. In head-to-head polls, she now handily defeats any of her Republican rivals—and the Republicans are divided and demoralised. And this week she reversed the only measure on which she was trailing: in the third quarter of the year, she narrowly beat Mr Obama in raising campaign contributions. Mr Obama's superior fund-raising has been the main source of worry for the Clintonistas.

That does not mean she will win. Things could go wrong even in the primaries: ask Howard Dean, who seemed unstoppable for the Democratic ticket at Christmas 2003, before it all went wrong one night in Des Moines. There are plenty of things that could trip up Mrs Clinton, not least her husband. But barring some stumble or scandal, Americans will as usual decide on the candidates' merits, so the key to the election is to decide which qualities are most in demand this time around.


Brilliantly dull

Top of the list surely must come competence—the attribute that has been most sorely lacking in the Bush administration, whether in the planning for post-war Iraq, the response to Hurricane Katrina or the management of the federal budget, which George Bush, like a reverse King Midas, has transmuted from a $240 billion surplus to a $160 billion deficit.

This is where Mrs Clinton currently leads the pack. True, she has never run anything herself, and her most notable foray into governance, her 1993-94 attempt to reform the American health-care system, was a catastrophe. But she has learned from watching the rest of her husband's presidency and, more recently, as a senator for New York, where she has been hard-working, consensual, effective and a little dull. Her campaign is superbly organised. In debates, her mastery of detail is remarkable. Her second plan for health-care reform is a much more moderate beast. And her Democratic rivals, Mr Obama and John Edwards, have much less experience than she does. On the Republican side, though, she faces a couple of effective governors and a former mayor of New York who turned that city's finances and crime rates around. She has yet to spell out much of her policy platform, including on such vital issues as tax or climate change; and has suspiciously meddlesome tendencies. She has already retreated alarmingly from her husband's commitment to free trade.

After competence must come toughness on security: traditionally a difficult area for Democrats, but less so after seven years of incompetent machismo. More than any of her Democratic rivals, Mrs Clinton has striven to neutralise the Republicans' advantage here. She has refused to apologise for her 2002 vote in favour of war with Iraq, and declines to commit herself to withdrawing the troops that are still there. But she was fully involved earlier this year in Democratic attempts to saddle the president with a deadline for quitting, and remains vulnerable to a Republican challenger. America's military weakness during the Clinton years has been overshadowed by the disaster under Bush; but it was under Mr Clinton that al-Qaeda took root and grew. That said, Americans want a tough president, not a psychopath: some of her Republican rivals remain worryingly bellicose.


Hillary the healer?

The third challenge for the next American president requires a different set of qualities: he or she will have to be a healer, both at home and abroad. America's standing in the world has been hugely damaged by the war, by Guantánamo and Abu Ghraib, and by the high-handed way in which it has treated international bodies and agreements. The country needs a leader who will rebuild alliances. Hillary Clinton has no direct experience of this, but she has already declared that Bill would be her “ambassador to the world”. His charm may help make up for the superpower's tendency towards unilateralism; though foreign leaders may be as uncomfortable as some Americans with the idea of an unelected spouse swanning round the globe representing America.

At home, Mrs Clinton will need to narrow the divisions that the bitter partisanship of the Bush presidency has widened. She can be an unforgiving enemy—witness her campaign's hysterical reaction when a Hollywood mogul went over to Mr Obama's camp. In recent years she has not given much impression of feeling anyone's pain but her own, though she is a funnier and warmer speaker than she gets credit for. Can such a woman, whose “negatives” are among the highest in the business, reunite America? This doubt remains a big obstacle to a Clinton comeback.

For all her years of scheming and positioning, Mrs Clinton is not the finished article. No process is better at revealing flaws than American presidential elections. This newspaper, like many voters, will reserve judgment on this still often awkward and unknowable woman until it has seen more of her and her policies next year. But so far the Clinton comeback has been impressive. That is why it is her presidency to lose.

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Driven to strike - General Motors

2007.09.27. 14:58 :: oliverhannak

Sep 26th 2007 | DETROIT
From Economist.com


But the short walk-out is over

AP
AP
 

Get article background

THE streets near General Motors’ Cadillac assembly plant on the east side of Detroit are usually quiet. But for a couple of days that was replaced with commotion as a line of workers, buoyed by coffee and mounting frustration, paced back and forth at the factory gates. On Monday September 24th, for the first time in over 30 years, the United Auto Workers union (UAW) launched a nationwide strike against one of America’s big carmakers. Union leaders promise the strike would endure “for as long as it takes.” That proved to be two days—the strike was called off in the early hours of Wednesday morning after the two sides hammered out a deal on a new contract.

The union’s old contract with GM officially expired on September 14th, but steady progress persuaded the UAW to agree to an extension. But after ten days, the UAW’s president, Ron Gettelfinger, apparently felt that a strike was the only way to break a deadlock over his top priority: job security.

Many observers thought that these tough talks could be resolved without confrontation. But making GM competitive again was always likely to mean radical changes to industry contracts. And the deal between GM and the UAW will act as a template for similar agreements with Ford and Chrysler.

Not that long ago, negotiations simply served as a means for the car industry’s unions and bosses to carve up an ever-expanding pie. But over the past 25 years, the situation has changed dramatically with the emergence of rivals, particularly from Asia. In July, for the first time ever, foreign brands captured more than half the new-vehicle market and few see the trend reversing.

Millions of foreign-badged vehicles pour off assembly lines in America. Nissan, Honda and Toyota produce well over half the vehicles they sell in North America in situ. Wages at these mainly non-union plants are far lower than for Detroit's “Big Three”. There are many reasons for the gap, including costly pension schemes for massive numbers of retired workers. But nothing is more troubling than health care. Over time UAW has hammered out a system of coverage for both current and retired workers that, by some estimates, adds up to $2,000 to the cost of every vehicle that Detroit produces.

Though details of the new contract were not revealed it seems that GM has come up with a solution, or at least a partial fix, in the form of a Voluntary Employee Beneficiary Association—essentially a trust fund to pay for the health-care benefits of retired workers. GM’s will shift obligations of about $50 billion off its books by letting the UAW take control of the programme.

But the strike was more about job security than health care. Since America’s carmakers came under serious assault from abroad in the late 1970s, the union’s workforce has shrunk from 1.5m to a little over half a million today. Additional cuts are already planned as part of a previous restructuring deal. Still more seem certain as Detroit’s carmakers attempt to outsource production to cheaper destinations abroad. By one estimate, the labour gap between GM and Toyota swallows up enough cash to pay for four new-model programmes each year for the American firm. And spending to develop cars that Americans want to buy is vital if GM is to reverse its decline.

GM is now offering some guarantees on job security. According to reports it has promised big investment in American plants to produce new models. In return the UAW has agreed to a significant cut back of the notorious “jobs bank”, which guarantees full pay to unemployed workers for years, and lower pay for new hires, among other measures.

Neither side had much to gain from a prolonged strike. It could have cost GM about $1 billion a week in operating profits and in two months the carmaker would have faced bankruptcy. And then 73,000 workers would lose their jobs, precisely what the UAW does not want. In the end the workers got to flex their muscles in the balmy autumn air and GM has made a welcome step towards closing the gap between American car companies and their rivals.

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Argentina's first lady

2007.09.27. 14:57 :: oliverhannak

Sep 27th 2007
From The Economist Intelligence Unit ViewsWire


Cristina Fernández de Kirchner aims for the presidency

Cristina Fernández de Kirchner, Argentina’s first lady, a popular senator and the presidential candidate of the governing Frente para la Victoria (FV) party, is busy making a name for herself overseas. This year she embarked on numerous international trips, helping to raise her profile as a statesman ahead of the October 28th presidential election and to build bridges with foreign nations and investors. This suggests that foreign policy will be more active under Mrs Kirchner’s government (we assume she will be elected) than under that of her husband. But the risk is that she could be perceived to be ignoring domestic problems, just as some of them are generating growing concern.


Frequent flier

In the last several months Mrs Kirchner has visited Spain, Germany and Austria, as well as several countries in Latin America, where she also addressed banker and investor forums. Together with her husband, at the end of July she travelled to Mexico to sign a series of bilateral trade agreements as part of a “strategic partnership”. The Argentinian government wants to strengthen trade with Mexico, at the same time as it seeks to counterbalance the influence of Brazil in the Latin American region. Relations with Mexico, under the government of Felipe Calderón, are much warmer than under his predecessor Vicente Fox, with whom President Néstor Kirchner argued in public at the Mar del Plata Summit of the Americas in 2005.

In Spain, Mrs Kirchner was received by government, opposition and business leaders, as well as by King Juan Carlos I. Relations with Madrid are important because many Spanish firms have large investments in Argentina, and some have been affected by regulatory policies, particularly those concerning utility tariffs. A Spaniard appointed by King Juan Carlos I is also playing a mediating role in the ongoing dispute with Uruguay over the construction of cellulose mills on the Uruguay River. (There has been little material progress and the Botnia cellulose plant was commissioned in August, but tensions with Uruguay could well die down after the election, as the new Argentinian government seeks a way out of a conflict that it cannot win.)

Most recently, Mrs Kirchner made a splash during her September trip to New York, accompanying her husband to the annual UN General Assembly meeting. Hundreds of international investors and bankers turned out for a luncheon on September 26th at the Council of the Americas at which she was the featured speaker. Days earlier she drew a crowd of some 450 at a gathering at New York University.


Raised expectations

Encounters such as these have bolstered the Kirchner campaign’s efforts to portray the candidate as fresh and representing political renewal. Her husband, by contrast, had little fascination with foreign affairs and concentrated on consolidating his political authority at home. Her campaign motto is “change is just beginning”. Domestically, she has displayed interest in pursuing change in the areas of institutional modernisation and state reform.

Abroad, many hope that her flare for foreign relations will lead her to mend fences with overseas creditors and investors, many of whom have been adversely affected or alienated by Mr Kirchner’s policies. There is still a certain amount of resentment about the government’s heavy-handed policies towards “hold-out” foreign bondholders (who refused to participate in the 2005 debt restructuring and swap) and European-owned utilities (suffering because of years of frozen tariffs). While these issues will probably be on her agenda after the elections, addressing the US$25bn in holdover bonds is unlikely to be a priority.


What about us?

Meanwhile, Mrs Kirchner’s foreign focus and travels have generated criticism at home. Even though Argentina’s economy has enjoyed five consecutive years of strong growth and unemployment has fallen to single digits, shortcomings in the areas of inflation, infrastructure and fiscal policy have received sharp scrutiny in recent months. Also, energy shortages are worsening, economic growth is set to slow and the fiscal surplus is expected to shrink.

Confronting these challenges will require new policy approaches that will be politically easier for Mrs Kirchner to adopt than her husband. However, her team has yet to reveal any specific plans in these or other areas of domestic concern. This should not damage her chances of election—her popularity dwarfs that of any of her rivals—but could haunt her early in her term if she does not change course. In particular, if fiscal spending is not curbed soon after the election, Argentina runs the risk of a hard landing and of spiralling inflation over the medium term.

An assessment of the likelihood of substantial shifts in policy orientation will have to wait until Mrs Kirchner appoints her cabinet. Since she lacks administrative and executive experience of her own, her choices will be revealing of her likely policies, and should indicate whether they will amount to changes of substance, or only of style. In the meantime, even with all the travelling and bridge-building, it is uncertain whether she will materially improve conditions for investors, or not.

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Red tape

2007.09.27. 14:57 :: oliverhannak

Let's do business
Sep 26th 2007
From Economist.com


SINGAPORE is the most business-friendly country in the world, according to the World Bank's “Doing Business 2008” report published on Wednesday September 26th. The bank ranks 178 countries using measures including labour-market flexibility, the complexity of trading across borders and access to credit. One indicator of red tape is how long it takes to open a business. In Congo an entrepeneur would have to wait 155 days and spend five times the annual income per head. Countries that simplify regulations see results. Saudi Arabia reduced the time from 39 days to 15, resulting in an 81% increase in new businesses. Egypt, Georgia and Croatia are among the most enthusiastic reformers.

Jupiter Images
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The turning point - The global economy

2007.09.27. 14:56 :: oliverhannak

Sep 20th 2007
From The Economist print edition


Illustration by James Fryer
Illustration by James Fryer
 

Does the latest financial crisis signal the end of a golden age of stable growth?

IF ECONOMICS were a children's tale, a long period of rising incomes and improving living standards would always be followed by a big, bad recession. Rising unemployment, falling spending and contracting output—such is the inevitable reckoning for the good times of plentiful jobs and abundant earnings that went before. The hangover needs to be commensurate with the party.

No country has had it quite so good as America. For the past 20 years or more its economy has managed an enviable combination of steady growth and low inflation. To add to its good fortune, spending has routinely exceeded its income—leading to a persistent current-account deficit—without any apparent ill effects on the economy. The occasional setbacks have been remarkably small by historical standards. At the start of 1991, for instance, America's GDP fell for a second successive quarter (a common definition of a recession). But output soon recovered and by the end of the year had surpassed its previous peak. The next downturn, in 2001, was shallower still, with GDP dipping by less than half a percent.

More recently, other rich countries have enjoyed a similar improvement in economic stability. The ups and downs of economic life, known as the business cycle, have provided a much smoother ride than they once did. That is partly why there has been such a clamour for financial and housing assets, and why firms and households have been more willing to take on debt. A lot is now riding on this golden age of stability continuing.

But perceptions about risk are shifting. America's economy, for so long seemingly impregnable, has been growing rather meekly for the past year, weighed down by a slump in housebuilding. The ongoing crisis in credit markets threatens it with recession. Some observers, long mystified by America's ability to live beyond its means and postpone what they see as an unavoidable downturn, think that the world's biggest economy might finally have run out of luck.

Competing views about what lies ahead are themselves cyclical. When growth is steady, the belief that the business cycle can be tamed is understandably high. When recession threatens, that confidence can quickly vanish. On a pessimistic view the “Great Moderation”—the sharp drop in economic instability in America and other rich countries—will prove illusory. But an optimist would counter that the vast improvement in economic stability has been so marked that it will not just disappear overnight.

The world economy has reached a decisive point. If that magical combination of growth and stability was just luck, it is now due a long-postponed and painful correction. But if it was thanks to changes in the way the world works, does that mean the golden age will endure?


Luck or judgment?

Much of the focus—in good times past, as well as bad times present—has been on America, where fluctuations in economic growth have fallen by around half since the early 1980s (see chart 1). In upswings the economy's growth rate has varied by less from one quarter of the year to the next and from year to year. Recessions have been rarer, shorter and shallower.

 
 

The most visible symptom of this smoother trajectory is in the jobs market. Since the mid-1980s, America's unemployment rate has fluctuated far less than it did in earlier generations. Between 1961 and 1983, America's annual unemployment rate varied from 3.5% to 9.7%. Since 1984, it has stayed within the tighter bounds of 4% to 7.5%.

Much of America's good fortune has been repeated elsewhere. A study published last year by Stephen Cecchetti, of Brandeis University, Alfonso Flores-Lagunes, of the University of Arizona, and Stefan Krause, of Emory University, found that 16 out of 25 OECD economies, including Britain, Germany, Spain and Australia, had also seen a marked improvement in economic stability.

What lay behind that change? The sceptical view is that improved stability has no cause: it is mostly down to luck. Economic shocks—abrupt shifts in business conditions—have by chance been less powerful. The economy is no better at taking a hit; it is just that since the two oil-supply shocks of the 1970s the punches have not been so hard.

Yet the global economy has taken some big blows during the golden age. In the last decade the rich world has weathered the Asian financial crisis, Russia's debt default, the dotcom boom and bust, terrorist attacks on America, sharp increases in oil prices and the uncertainty that came with wars in Afghanistan and Iraq. Still, economic volatility has not picked up. It is true that the abrupt curtailment of energy supplies to a world that was highly dependent on oil was a unique and traumatic event. But economies were more hidebound then: job markets were less flexible and producers more stymied by regulation. The painful results cannot wholly be put down to energy dependency.


The flexible economy

The more likely explanation is that economies have become far better at absorbing shocks, because they are more flexible. There are many structural shifts that might have contributed to this, from globalisation to the decline of manufacturing in the rich world. The academic literature keeps returning to three: improvements in managing stocks of goods, the financial innovation that expanded credit markets, and wiser monetary policy.

For such a tiny part of GDP, the content of warehouses has had a surprisingly big effect on its volatility. When industries cut or add stocks according to demand, that adjustment magnifies the effect of the initial change in sales. Stock levels were once much larger relative to the size of the economy, so a small slip in demand could easily blow up into a recession. But thanks to improvements in technology, firms now have timelier and better information about buyers. Speedier market intelligence and production in smaller batches allows firms to match supply to changing conditions. This makes huge stocks unnecessary and minimises the lurches in inventories that were once so destabilising. The entire inventory of some lean-running companies now consists of whatever FedEx or UPS is shipping on their account.

Mr Cecchetti and his colleagues calculate that, on average, more than half the improvement in the stability of economic growth in the countries they studied is accounted for by diminished inventory cycles. That something so workaday as supply-chain management could have so marked an effect might seem a dull conclusion. But dullness is a virtue, because technological improvement is irreversible. This means the greater stability it provides is likely to be permanent.


The Wall Street shuffle

If better logistics is an unalloyed plus for the economy, the benefits of financial innovation may seem more doubtful—at least just now. Complex derivatives, such as collateralised debt obligations (CDOs), have created a truly nasty mess (see article). But if credit has perhaps been too easy to come by, that was itself a novelty. Credit was strictly rationed until a wave of deregulation and innovation during the 1980s and 1990s led to an expansion. That, in turn, gave a wider range of firms and consumers the means to plug temporary gaps in spending power.

Credit scoring and securitisation have attracted plenty of scrutiny in recent weeks. But the use of techniques to assess the risk of default, together with the repackaging of loans into marketable securities suitable for savers, has broadened access to borrowed funds and broken the rigid link between income and spending. No longer are investment plans tied to the vagaries of a firm's cash flow. And consumers can better match their spending to lifetime incomes. A bigger credit pool means transient declines in earning power need not trigger a downward spiral of falling demand and falling income. These are all valuable advances that smooth out the business cycle.

The third explanation for the moderation is that central banks, in getting to grips with inflation, have fostered more stable economic growth too. Indeed, so widespread is this assumption that the power of central banks is sometimes exaggerated. The rally in the world's stockmarkets over the past month has probably been driven by “faith in the Fed”: the belief that America's central bank will cut interest rates by enough to prevent recession.

In principle, controlling inflation helps steady the economy. High inflation tends to be volatile and research has shown that erratic inflation and large fluctuations in GDP growth tend to go hand in hand. That statistical link might be more than chance. High and variable inflation interferes with the smooth functioning of economies. It obscures the changes in relative prices that tell producers about how customer tastes are always changing. It also leads to variations in real interest rates and volatile patterns in spending.

Though the theory is compelling, empirical studies have struggled to pin down a strong link between better monetary policy and tamer cycles. Ben Bernanke, head of the Federal Reserve, has argued that “the policy explanation for the Great Moderation deserves more credit than it has received in the literature.” At the very least, central banks have stopped adding to economic volatility, even if they have not done so much to actively reduce it.


The shock-absorber that shocked

Although it is perverse to argue the golden age has not been tested, it would be foolish to rule out a shock (or combination of shocks) that might break the economy's resilience. Combine the present discord in credit markets with the seeming vulnerability of housing markets and it is all too easy to imagine the rich-world economies in trouble.

What makes today's turmoil so disturbing is that one of the mechanisms which helped stabilise growth has suddenly become a threat to it. Financial innovation is central to the Great Moderation, but its most recent creations allowed credit to be extended on too easy terms. The fallout is now poisoning the markets for short-term funding that are so essential to the economy's smooth functioning.

Because of rising arrears and defaults on American subprime mortgages, investors have lost faith in the securities backed by them. The impact has broadened to a more general revulsion against assets in which the income depends on repayments of consumer debt. As funding dried up, the resulting squeeze has put upward pressure on the money-market interest rates that determine the cost of borrowing for households and small businesses.

As long as credit markets stay impaired, the economy's normal self-regulation cannot fully be relied upon. A channel that for so long has helped smooth economic growth might now threaten it. A shock-absorber could turn into a shock-amplifier.

Indeed, the very stability of growth may have encouraged people to take on a debt burden that could prove troublesome. Strong credit growth is both cause and consequence of the golden age.

Belief that the business cycle has been tamed for good helps explain why property prices in many rich countries have risen so high and why there has been such a willingness to take on debt at large multiples of income. A less volatile economy makes income streams more reliable and, goes the argument, justifies higher prices for all assets, including housing. A reduced fear of job losses means homebuyers in America, Britain and elsewhere have been content to take out huge home loans.

But like all booms, the housing rush is dependent on ever-more risky borrowers to prop it up. Once credit conditions tighten, the marginal homebuyer is frozen out of the market. That is one likely consequence of the trouble at Northern Rock, a mortgage bank that was rescued this week by the British government (see article). Northern Rock was responsible for a huge share of mortgage lending earlier this year. But after a run on the bank its ability to write new business has vanished.

 
 

Britain has been growing steadily in the last year, but it has the same fault lines as America—an overvalued housing market, high consumer debt (see chart 2) and a huge trade deficit. Unlike other European countries, it has a big non-prime mortgage market too. Though less than 10% of recent loan growth has been in subprime, this rises to around 25% if you count borrowers who never had to prove how much they earn, according to David Miles, at Morgan Stanley.

Just as the germ carried from America's subprime mortgage market is now infecting money markets elsewhere, so the housing downturn itself could spread globally. As Alan Greenspan, the former Fed chief, reminded everyone this week, there have been housing booms in at least 40 different countries and “the US is by no means above the median”. If global house prices are as correlated on the way down as they were on the way up, the pain will not be confined to America. The cracks that have spread with the credit crisis could be the network through which the housing malaise travels.

As central banks try to mitigate these risks to growth, the danger is that they become complacent about inflation. There is a sorry story of how monetary laxity once undermined hopes for a more stable economy. In 1959 Arthur Burns, then chairman of the National Bureau of Economic Research (NBER), made a famous prediction that “the business cycle is unlikely to be as disturbing or troublesome to our children as it once was to our fathers.” For a decade that optimism seemed justified. But in the 1970s, on Burns's watch as Fed chairman, unemployment rose, inflation took off and a growing sense of economic crisis made a mockery of the idea that governments could control the business cycle. Attempts to fine-tune the economy through cheap money instead led to higher inflation and increased economic instability.

In his new book (see article), Mr Greenspan delivers a timely warning that progress in policymaking is always vulnerable to reversal. Looking to 2030, he fears that the burdens of an ageing population will eventually lead to upward pressure on inflation. And future Fed chairmen cannot rely on the deflationary effects of globalisation to tame prices, as Mr Greenspan could, as over time that impulse will fade.

Mr Greenspan questions the political will to enforce price stability. “Whether the Fed will be allowed to apply the hard-earned monetary policy lessons of the past four decades is a critical unknown. But the dysfunctional state of American politics does not give me great confidence in the short run.”

Once people sense inflation is slipping out of control, changes in expectations can quickly become self-fulfilling. Firms price higher and employees demand wages to match. If inflation expectations slip anchor, central banks will have to ratchet up real interest rates (or bond markets will do the job for them). Policy might again become the source of economic shocks.

Today the stakes are arguably higher. Highly leveraged economies rely on low nominal interest rates to keep debt-service costs manageable. A spike in bond yields would probably cause huge instability as interest costs ate into available spending. If wiser central bankers have indeed played a big role in the Great Moderation, it is sobering to think how easily the dangers of lax monetary policy might be forgotten.


Revising downwards

The prospect of a co-ordinated global housing slump is a very frightening one. For the moment, it remains a plausible risk. If house prices hold up, the credit-market disruption is still likely to harm growth in 2008. Even if money markets settle down—and there are the first signs of this happening (see article)—the loans that banks have been unable to sell as securities will instead sit on balance sheets, crimping their ability to lend. A more careful approach to credit means businesses and households will find it harder to borrow. That will hurt the world economy.


Banking on the Fed

Private-sector forecasts for developed-world growth are understandably being revised down. Revealingly, the biggest changes have been to expectations about interest rates. The likelihood of rate increases in Europe has been largely written off. And many projections for the Fed funds rate were decisively reduced ahead of the decision this week to cut (see article). In essence, the markets are betting the Fed can save the day. Stockmarkets, at least, do not appear to be priced for a recession—or anything like it.

On this they may be simply following the form book. If central bank actions are credited with mitigating previous downturns, then why not this one? The global economy has proved to be far more resilient than had often seemed likely. And it showed very few signs of trouble before the credit-market dislocations, mostly because growth outside the rich world has been strong.

In July the IMF revised down its projections for economic growth in America for this year, but still upgraded its global economic forecasts because of the strength of the emerging markets. These economies—a source of a big shock only a decade ago—could now prove to be a stabilising force for the world economy. Thanks to their handsomely cushioned foreign-exchange reserves, the fast-growing economies of Asia and the Middle East are now less dependent on capital markets to fuel their growth.

America remains the biggest risk. Even here, where the outlook is gloomiest, recession is not a forgone conclusion. Perhaps the best that can be hoped for—and maybe what policymakers are trying to engineer—is a continuation of the muddle-through growth of the past year or so. That would help contain pressures on inflation without causing excessive dislocation in the economy. But the risks to even this outcome are on the downside.

In the past year, America has become less central to global growth. But it is a big importer and a hard landing would affect other countries. Its fortunes over the next year will still have huge significance for other reasons too. America has been at the leading edge of the Great Moderation and has arguably pushed the boundaries of risk-taking furthest. If America falls hard now, it will be a harbinger for the rest of the rich world.

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With Fear and Wonder in Its Wake, Sputnik Lifted Us Into the Future

2007.09.25. 13:32 :: oliverhannak


By JOHN NOBLE WILFORD

Fifty years ago, before most people living today were born, the beep-beep-beep of Sputnik was heard round the world. It was the sound of wonder and foreboding. Nothing would ever be quite the same again — in geopolitics, in science and technology, in everyday life and the capacity of the human species.

The Soviet Union had launched the first artificial satellite, a new moon, on Oct. 4, 1957. Climbing out of the terrestrial gravity well, rising above the atmosphere and into orbit, Sputnik crossed the threshold into a new dimension of human experience. People could now see their kind as spacefarers. Their enhanced mobility might someday prove as liberating as the first upright steps of hominid ancestors long ago.

The immediate reaction, though, reflected the dark concerns of a world in the grip of the cold war, a time of fear and division in which the two superpowers, the Soviet Union and the United States, stared each other down with the menace of mass destruction. Sputnik altered the nature and scope of the cold war.

It was an unprepossessing agent of alarm. A simple sphere weighing just 184 pounds and not quite two feet wide, it had a highly polished surface of aluminum, the better to reflect sunlight and be visible from Earth. Two radio transmitters with whiskery antennas issued steady signals on frequencies that scientists and ham operators could pick up, and so confirm the achievement.

The Russians clearly intended Sputnik as a ringing statement of their technological prowess and its military implications. But even they, it seems, had not foreseen the frenzied response their success provoked.

When the Soviet dictator Nikita S. Khrushchev received word of the launching, he was of course pleased, and he and his son, Sergei, turned on the radio to listen to the beeping Sputnik. They went to bed, the son remembers, without realizing “the immensity of what was happening during those hours.”

The Soviet press published a standard two-column report of the event, with a minimum of gloating. But newspapers in the West, particularly the United States, filled pages with news and analysis.

Sputnik’s signal reverberated through chambers of the powerful and down ordinary streets. People listened and, from rooftops and backyards, saw in the night a moving point of light, like an errant star. The interrogatory of invention used to be “What hath God wrought?” Now it was “What are the Russians capable of next?”

“No event since Pearl Harbor set off such repercussions in public life,” Walter A. McDougall, a historian at the University of Pennsylvania, has written. A younger generation may draw comparison with the terrorist attacks of Sept. 11.

Sputnik plunged Americans into a crisis of self-confidence. Had the country grown lax with prosperity? Was the education system inadequate, especially in training scientists and engineers? Were the institutions of liberal democracy any match in competition with an authoritarian communist society?

In “The Heavens and the Earth: A Political History of the Space Age” (1985), Dr. McDougall wrote that before Sputnik the cold war had been “a military and political struggle in which the United States need only lend aid and comfort to its allies in the front lines.” Now, he continued, the cold war “became total, a competition for the loyalty and trust of all peoples fought out in all arenas of social achievement, in which science textbooks and racial harmony were as much tools of foreign policy as missiles and spies.”

At the time of Sputnik, John F. Kennedy was the junior senator from Massachusetts with no particular interest in space. Yuri A. Gagarin was an unheralded Russian military pilot. John H. Glenn Jr. was a Marine Corps pilot who had recently set a record for the fastest transcontinental jet flight to New York from Los Angeles. Neil A. Armstrong was testing high-performance aircraft in the California desert. Their lives were soon to be changed, as were those of hundreds of thousands of engineers, technicians, other workers and ordinary people everywhere.

Thomas J. O’Malley, an aviation engineer in New Jersey, would move in a few months to a forlorn spit of land at Cape Canaveral, Fla., to be a test conductor in the accelerated development of the Atlas missile, which would eventually lift American astronauts into orbit. “We had one goal,” he recalled recently. “To get something up there as quickly as possible.”

Christopher C. Kraft Jr. soon found himself working with a task force planning an American response to the challenge. He would become the first flight director of astronaut missions, but at the start, he has written, the morale of American engineers was low. “I wasn’t the only engineer who was stunned at how much I didn’t know and how much I had to learn,” he said.

When the Sputnik news reached Huntsville, Ala., Wernher von Braun was beside himself with restless frustration. Mr. von Braun, a German-born rocket scientist working for the United States Army, said this country could have beaten the Russians into orbit if not for Pentagon orders to resist any thought of adding a small satellite to the Jupiter-C missile he had been testing.

To make matters worse, the first American attempts to launch a tiny Vanguard satellite were embarrassing failures. It was the end of January 1958 before Americans succeeded with Explorer 1, boosted into orbit by a multistage version of Mr. von Braun’s Jupiter-C. But the much larger Sputnik 2 had already carried the dog Laika into orbit, a harbinger of human spaceflight. The original Sputnik — in Russian, “satellite” or “fellow traveler” — was no onetime fluke.

The post-Sputnik dynamic even reached out and recruited me. I was then a soldier in the cold war. Along with nearly every able-bodied young American man (even Elvis had to put in his two years), I was fulfilling my obligation to interrupt life and career for military service. I had completed college and was a reporter on military leave of absence from The Wall Street Journal, at the Army base in Fort Dix, N.J.

The morning after the Soviet triumph, I was on a one-day pass in Trenton. I bought the papers and spread them out on a coffee shop table. Banner headlines trumpeted the news. The recondite language of rocketry and orbits tied up my head, but I read on. I gave a passing thought to the coincidence of Sputnik’s going up on my birthday; at least I should never forget the date the space age began.

My story should at this point resound with destiny’s thunderclap or a sudden gust swinging open the door, scattering the papers and leaving me strangely moved. But I had no premonition that Sputnik had set in motion events that would shape my career. It was not until 1959, soon after I returned to The Journal from service in West Germany, that I felt the Sputnik effect.

Newspapers and other media, influenced by Sputnik, were scrambling to expand coverage of science, medicine and technology. I agreed to the managing editor’s suggestion that I try my hand writing about medicine. One thing led to another, from medicine to science and space exploration, to Time magazine and eventually to the staff of The New York Times to cover the most ambitious American response to Sputnik: the Apollo program.

Sputnik should not have come as such a surprise. Both the Soviet Union and the United States had embarked on the development of ballistic missiles for carrying nuclear warheads to great distances. They had also announced plans to launch artificial satellites in the International Geophysical Year, a cooperative 18-month scientific undertaking to study Earth and its atmosphere, beginning in 1957. Khrushchev had reiterated Soviet intentions only two months before.

But a shock it was, a wake-up call. One of the intriguing might-have-beens of history is: What if Americans had deployed the first satellite?

Alex Roland, a historian of technology at Duke University and a former NASA historian, said that a first launching by Americans would have merely confirmed their reputation for technological superiority. The costly rivalry for dominance in space, he said, would have probably been waged with much less driving urgency.

John M. Logsdon, director of the Institute of Space Policy at George Washington University, agreed. “If not for Sputnik,” he said, “there would probably not have been Apollo.”

But after Sputnik, there was no stopping the momentum of the space race. Critics attacked the administration of President Dwight D. Eisenhower, who at first had dismissed Sputnik as an event of only “scientific interest.” Soon the Defense Department stepped up missile development. The Democratic Congress established the National Aeronautics and Space Administration.

The perception of a threatening Soviet advantage in missiles persisted. Necessity had dictated the Russian concentration on missiles. Ever since World War II, American bombers had been more capable than those of the Russians, who also had no air bases in striking distance of their adversary’s heartland, in contrast to the American bases that ringed the Soviet Union.

An exaggerated estimate of the “missile gap” became a rallying cry of the 1960 presidential campaign and may have been crucial in Kennedy’s narrow victory. Not long after he took office, the Russians scored another stunning triumph. In April 1961, Gagarin became the first human to fly in Earth orbit.

After weeks of closed-door consultations, Kennedy went before Congress, on May 25, and declared, “Now it is time to take longer strides — time for a great new American enterprise — time for this nation to take a clearly leading role in space achievement which, in many ways, may hold the key to our future on Earth.”

He committed the country to “the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.”

How brief the space race was, the 12 years from the wake-up call to the first walk on the Moon, but thrilling, mind-boggling, even magnificent at times.

While the Russians forge ahead, Americans begin catching up with the Mercury and Gemini flights in orbit. As the goal comes into sight, there are the countdowns of tingling anticipation. In the dark before dawn, we drive toward the shining light enveloping a spaceship that looks like an obelisk out of antiquity, waiting to be launched. The blast of the Saturn 5, just three miles of sand and scrub away, beats on your chest and shakes the ground you stand on. Once at full thrust, and unbound, the huge rocket at first appears to be losing its fight against gravity, then slowly rises to the occasion and is off over the ocean, fire and vapor trailing behind. Spacefarers are on their way to the Moon.

Three lunar voyages are most sharply etched in memory. The Apollo 8 astronauts, in December 1968, are the first to reach the Moon, circling it 10 times. Out their windows they see the achingly beautiful Earth, blue and green under swirls of white clouds. On Christmas Eve, the men take turns reading verses from Genesis. It is a gift from on high at a time of turmoil and despair in the year of assassinations, rioting cities and a divisive war.

Then there is Apollo 11. On July 20, 1969, Neil Armstrong steps down the landing craft’s ladder and takes “one giant leap for mankind.” Buzz Aldrin joins him for the first walk on the Moon. In contrast to exploration’s previous landfalls, the whole world is watching on television.

In the current documentary film “In the Shadow of the Moon,” Michael Collins, the Apollo 11 pilot who remained in lunar orbit during the landing, recalls that on the crew’s world tour afterward, people they met felt they had participated in the landing, too. “People, instead of saying, ‘Well, you Americans did it!’ ” he said, “everywhere, they said, ‘We did it!’ We, humankind, we, the human race, we, people, did it!”’

The warmth of shared experience was remarkable, given the origins of the space race in an atmosphere of fear and belligerence.

Apollo 11 essentially ended the space race, and public interest in spaceflight was flagging by the time of Apollo 13, in April 1970. The residual self-assurance that committed the country to Apollo in 1961 had given way to self-doubt. The war in Vietnam, another chapter in the cold war, shoved Apollo to the periphery of the national mind.

Apollo 13 is the mission that failed, but a drama of epic dimensions worthy of Homer. Three astronauts go forth on a daring quest, meet with disaster, face death and barely limp back to the safety of home. If anything, this brush with death put a more human face on spaceflight and made it seem more exciting, and dangerous.

By the end of 1972, the last of the 12 men to walk on the Moon packed up and returned home, and no one has been there since. At the conclusion of that flight, Apollo 17, I solicited historians’ assessments of the significance of these early years in space. Arthur M. Schlesinger Jr. predicted that in 500 years, the 20th century would probably be remembered mainly for humanity’s first ventures beyond its native planet. At the close of the century, he had not changed his mind.

In succeeding years, the Russians and Americans continued spaceflights, at a reduced pace. Most American money went into the space shuttles, the reusable vehicles confined to orbit that never lived up to their promise to make human flight more routine. The public’s most lasting images of the program are the Challenger’s deadly explosion shortly after liftoff in 1986, and the Columbia’s disintegration on re-entry 17 years later.

It was left to the relatively low-budget robotic spacecraft to sustain the impression of exploration and discovery on this new frontier. In that respect, they alone exceeded early promises. Russian and American craft explored Venus. American vehicles landed several times on Mars, and a European capsule reached the surface of Saturn’s moon Titan. Two Voyager craft made a grand tour of the four giant outer planets and are now approaching the edge of the solar system. The Hubble Space Telescope still sends images from deep in cosmic time.

Carl Sagan, the astronomer and author, often spoke of this as the golden age of planetary exploration. “In all the history of mankind,” he wrote, “there will be only one generation that will be first to explore the solar system, one generation for which, in childhood, the planets are distant and indistinct disks moving through the night sky, and for which, in old age, the planets are places, diverse new worlds in the course of exploration.”

One evening in 1990, I drove across Baltimore on a sentimental journey. Every so often since the fall of the Berlin Wall, the reunification of Germany, the collapse of communist regimes in Eastern Europe and the last gasps coming out of the exhausted Soviet Union itself, I had allowed myself reflections on my two years as a soldier in an unconventional war and the nearly half-century of anxieties of living in a world primed to blow itself up.

I could hardly think of myself outside the context of the cold war. Without the intense Soviet-American competition epitomized by the space race, I would not have become a science journalist who wrote about astronauts going to the Moon to “beat” the Russians. I would therefore not be in Baltimore again, this time with astronomers who were preparing to look into the heavens via a giant orbiting telescope.

I found my way to Travelers Lounge, the bar that had been across from the gate to the Army Intelligence School at Fort Holabird. We used to tarry in the back room there, over pitchers of beer fueling arguments about politics and the American novel. I took a stool and told the bartender that it had been more than three decades since I last had a beer here, back in my Holabird sojourn.

“One of them comes in every few months and looks around,” the bartender said. “We’re about the only thing left from those days.”

So I had seen. The fort was gone. In its place stretched one corporate complex after another, buildings of glass and steel and spreading car parks. The names I saw were as unfamiliar as their digitized new-technology goods and services. I imagined I was looking on a monument to the cold war, and how apt it seemed.

The conflict we had lived through did not lend itself to heroic and triumphal iconography, nothing like the Iwo Jima flag-raising statue, nothing to glorify war or proclaim victory. So these commercial enterprises rising from cold-war technology, supplanting an old fort, were working monuments to the end of the cold war, monuments that do not look back.

At least Travelers and I had made it through this passage in history. Over my shoulder, I saw families and couples dining, not a beer pitcher or soldier anywhere. I wondered what post-cold-war memories these diners would bring back there in coming years.

I took my leave of Travelers and an era. I had to be fresh in the morning for another meeting with people at the Space Telescope Science Institute. They were tending their own monument to the cold war, which had fostered the Hubble Space Telescope’s technology. I wanted to learn more of our — and my own — expanding universe.

Over a long dinner, after the cold war and almost 30 years since the first lunar landing, a former astronaut who walked on the Moon and one of the Apollo flight directors got to skylarking about the good old days, something people do when they think of their past receding and the world changing all around. They laughed almost to tears telling cherished stories, one trying to top the other.

Then a cloud seemed to pass over their faces. Pete Conrad, the astronaut, who would soon die in a motorcycle accident, and Gerald D. Griffin, the flight director, wondered in perplexity what had happened to their good old days. What of those grand prospects of a few decades ago? No humans have flown to Mars, as once predicted, or established a permanent base on the Moon. A long-sought orbiting space station was finally being assembled in orbit, but no one seemed sure what it was good for, except as a demonstration of cooperation by many nations, including Russia, in a major space endeavor.

Economics and shifting national priorities had thwarted the most ambitious post-Apollo plans.

Dr. Logsdon of George Washington University called Apollo “a product of a specific time in history,” and a singular crash program responding to a perceived threat to the country. It did not represent a firm commitment by society to full-scale space exploration.

As Dr. Roland of Duke pointed out, Apollo “did just what it was designed to do, which was to convince the world and ourselves that we were masters of technology, and it wasn’t designed to do anything else.” As yet, he said, “we have not identified a mission for astronauts that was commensurate with Apollo.”

Dr. Roland noted that telecommunications was the only space enterprise that pays for itself and, he added, “It has transformed the world.” All other space activities, military and civilian, depend so far on “what states believe are in their best interest to invest in” — and those interests have changed since the cold war.

Let Neil Armstrong, known as a man of few words, have the last word.

“I think we’ll always be in space,” he said in an interview for NASA’s oral history program. “But it will take us longer to do the new things than the advocates would like, and in some cases it will take external factors or forces which we can’t control and can’t anticipate that will cause things to happen or not happen.”

Mr. Armstrong then struck a note sure to resonate with many of his contemporaries. “We were really very privileged,” he said, “to live in that thin slice of history where we changed how man looks at himself and what he might become and where he might go.”

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Microsoft - A matter of sovereignty

2007.09.25. 13:28 :: oliverhannak

Sep 20th 2007 | BRUSSELS
From The Economist print edition


Illustration by Claudio Munoz
Illustration by Claudio Munoz
 

What the European Court's ruling means for the technology industry

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“YOU asked for it, now live with it.” That was, in essence, the message spread by Microsoft's lobbyists after the European Court of First Instance upheld a landmark antitrust ruling against the world's largest software firm on September 17th, dealing it the most stinging defeat in nearly a decade of antitrust litigation. Emboldened by this decision, Europe's anti-monopoly squad will now go after other technology firms with high market shares, the lobbyists warn, forcing them to give up valuable intellectual property and curbing the incentive to innovate.

Yet it is unlikely that that Neelie Kroes, the European Union (EU) competition commissioner, will now “be leading a prison march of the world's most successful firms through her Brussels doors”, as one lobbyist put it. The judgment's consequences are far-reaching, but in a different way. If it is not overturned—as The Economist went to press, Microsoft had not said whether it would make a final appeal—the firm will, in effect, lose much of its sovereignty over the virtual territory staked out by its Windows operating system.

Microsoft ended up in the dock in both Europe and America because it tried to protect and extend its Windows monopoly in two ways. One was by bundling other types of software along with Windows, notably its web browser, a move that triggered the antitrust action in America. Its other approach, which lay at the heart of the European case, was to withhold information from rivals that would have allowed their software to “interoperate” well with Windows over a network.

With a new Republican president in power, America's competition authorities decided in 2002 not to pursue the case championed by the Clinton White House and instead negotiated a settlement with Microsoft. This “consent decree”, large parts of which will expire in November, amounted to little more than a slap on the wrist. It failed to administer any penalty and let Microsoft add new software elements to Windows so long as PC-makers were allowed to add rival products too. The provision regarding interoperability was also limited: the requirement to provide the necessary “communication protocols” applied only to the version of Windows that runs on individual PCs, and not the one running on the servers that dish up data on corporate networks.

The European Commission's initial ruling against Microsoft in 2004 can be seen as an attempt to address these shortcomings. The commission ordered Microsoft to sell a version of Windows without its media-player software, the bone of contention in Europe when it comes to bundling. It ruled that the firm had to provide information on how to interoperate with Windows servers. The commission also imposed a fine of €497m ($613m), which has since grown to €777m ($990m) because it determined that Microsoft was not fully complying with its decision.

The European court has now upheld these remedies. Even more importantly, it largely endorsed the commission's legal reasoning. It argued, for instance, that withholding information that is needed for PCs and servers to work together constitutes an abuse of a dominant position if it keeps others from developing rival software for which there is potential consumer demand. In such cases, the information cannot be refused even if it is protected by intellectual-property rights, as Microsoft had argued.

With its ruling, the court has set a precedent that means Windows is no longer simply private property with which Microsoft can do as it pleases. And this will certainly apply to any other firm that manages to build a similarly crucial and long-lasting digital monopoly. Even today, with software increasingly delivered as a service over the internet, Windows is protected by something known as the “application barrier to entry”, meaning that so many programs run on it that rivals have a hard time getting users and software developers to switch.

Yet, whatever the lobbyists say, European regulators are unlikely to go after every technology firm with a big market share. There are not many similarly dominant computer platforms. What is more, most of the potential investigations that may follow are different in kind from the action against Microsoft. In the case of Qualcomm, for instance, competitors have complained that it is charging excessive royalties for its patents on mobile-phone technologies. In the case of Apple, commission officials have already said that they are wary of proposals to force the firm to open iTunes, its online music store, to music-players other than its iPod; a separate investigation into iTunes concerns variations in pricing between European countries, rather than technological lock-in. Even the continuing investigation of Intel is not directly comparable to the Microsoft case. The world's biggest chipmaker, the commission charges, has used abusive tactics such as offering rebates to prevent computer-makers from using chips made by its rival, AMD.

For the time being, the commission can apply the precedents set by the Microsoft ruling in only one case: Google, the world's leading web-search and online-advertising firm. Just as America's Federal Trade Commission is now doing, the EU's competition authorities will look closely at Google's planned takeover of DoubleClick, another leader in online advertising. And if Google becomes a central storage vault for data such as users' location and identity, as some fear, European regulators may one day try to compel the firm to give rivals open access to this information—rather as they have now forced Microsoft to release its communication protocols.

Microsoft itself is not out of legal trouble, even if it chooses not to appeal. The commission has yet to determine whether the information the firm has supplied will really ensure interoperability. Still open, too, is the issue of how much Microsoft can charge firms that want to license its protocols. Then there is the question of whether Microsoft should be forced to license the information to makers of open-source software. The firm argues that this would be tantamount to giving away the shop, but the commission thinks it would promote competition by advancing open-source rivals to Microsoft's products. And further investigations may yet follow into Office, Microsoft's dominant suite of business software, and Vista, the latest version of Windows.

No wonder Microsoft is stoking fears that the commission plans to go on an antitrust rampage. It has prompted a political backlash that may discourage the EU from staying on the case. In America the talk is of a “new form of protectionism”. After the European court's decision Thomas Barnett, the head of the antitrust division of the Department of Justice, warned that it “may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition”.

With this judgment Europe and America have clearly moved further apart in antitrust matters. But whether, as some fear, these differences turn into a full-blown transatlantic conflict remains to be seen. After all, the administration in Washington will probably have changed several more times before the Microsoft case finally draws to a close.

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