Barack Obama unveiled another huge government spending programme yesterday aimed at reversing America’s high unemployment rate — a recognition that the issue of job losses poses the greatest threat to his presidency. Mr Obama, speaking in Washington, proposed a series of measures intended to stimulate job creation and bring down the country’s 10 per cent unemployment rate, the highest for a quarter of a century.
It was the latest in a series of speeches focusing attention on America’s jobs crisis, and on what Mr Obama says his Administration has done in the past year to alleviate “the second Great Depression”. It reflects that the economy is the dominant issue among voters as Mr Obama and his Democratic Party head into 2010, a mid-term election year. Recent polls show that his approval rating has dropped below 50 per cent, with the jobless rate a significant factor.
Mr Obama proposed tax cuts for small businesses — the engineroom of the US economy — and a fresh round of infrastructure spending on roads, bridges and railways.
In a move decried by Republicans, he also proposed using as much as $200 billion (£122 billion) of unspent funds from last year’s $700 billion bank bailout legislation to be redirected towards small businesses, rather than using the money to reduce the enormous budget deficit.
Mr Obama declared it a “false choice” to suggest that the Government needed to begin paying down the deficit or spend money on job creation. He argued that investing in new jobs in the short term would help to reduce the deficit later.
“Even though we have reduced the deluge of job losses to a relative trickle we are not yet creating jobs at a pace to help all those families who’ve been swept up in the flood,” Mr Obama said at the Brookings Institution, a Washington think-tank. “There are more than seven million fewer Americans with jobs today than when this recession began. That’s a staggering figure and one that reflects not only the depths of the hole from which we must ascend but also a continuing human tragedy.”
Polls show that despite Mr Obama inheriting a $1.3 trillion deficit — something he reminded his audience of yesterday — blaming the previous Administration is no longer an effective tactic. In essence, America’s economic woes are now fully Mr Obama’s problem, though he lambasted Republicans for criticising his spending programmes, including his push for health insurance reform. He said that the huge deficit was produced by tax cuts and welfare programmes passed under George Bush but which were never paid for.
“These budget-busting tax cuts and spending programmes were approved by many of the same people who are now waxing political about fiscal responsibility while opposing our effort to reduce deficits by getting health care costs under control,” Mr Obama said. “It’s a sight to see.”
The White House did not put a figure on the package but Republicans described it as tantamount to a second stimulus, after the stimulus plan passed in February.
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Tuesday, December 8, 2009
Playing politics
Alistair Darling will admit today that Britain faces an era of deep spending cuts as he pledges to halve the £180 billion budget deficit while protecting hospital, school and police services.
In a surprise move he will disclose a Treasury “assessment” that has been conducted in recent weeks to determine the sums needed to safeguard the front line in health, schools and the Home Office.
In an attempt to win credibility for his four-year “deficit reduction plan”, he will acknowledge that other government departments will have to meet the cost with “real cuts”, including the scaling back or cancellation of some high-profile projects.
The Chancellor will put a figure on the sums that he has decided schools, hospitals and the police will need to avoid damaging their performance. Treasury sources admitted that the figure would imply that substantial cuts would be suffered elsewhere.
Although Mr Darling will claim that growth, efficiency savings and some new taxes — including a supertax on bankers’ bonuses — will soften some of the impact, he will begin axing future budgets.
“We are not fixing departmental budgets now but people have the right to know which services we will prioritise and how we intend to pay for them,” a Treasury source said. “We are under no illusion that that will mean some tough choices — cutting unnecessary programmes and lower priority budgets.”
Today’s Pre-Budget Report is intended to supply Labour with ammunition for the coming general election. The Conservatives will be challenged to match specific guarantess, such as a two-week maximum wait to see a cancer specialist. But in putting figures on pledges to protect “frontline services” Mr Darling is confronting voters with the scale of the coming cutbacks in other areas.
The Tory leadership launched a pre-emptive attack on the Chancellor’s credibility, claiming that Britain faced the “disaster” of losing its top credit rating.
George Osborne, the Shadow Chancellor, seized on an international agency’s warning that plunging tax receipts in future years meant an “inexorable deterioration” of the affordability of Britain’s record debts.
He claimed that the latest warning from Moody’s was “further evidence that Britain faces the disaster of having its international credit rating downgraded unless we get on top of our debts”.
But the Treasury accused him of “playing politics” with the country’s standing in the money markets. “To selectively quote is irresponsible and deliberately misleading. All three credit rating agencies have reaffirmed the Government’s AAA rating this year, including Moody’s in October and again today.”
In a surprise move he will disclose a Treasury “assessment” that has been conducted in recent weeks to determine the sums needed to safeguard the front line in health, schools and the Home Office.
In an attempt to win credibility for his four-year “deficit reduction plan”, he will acknowledge that other government departments will have to meet the cost with “real cuts”, including the scaling back or cancellation of some high-profile projects.
The Chancellor will put a figure on the sums that he has decided schools, hospitals and the police will need to avoid damaging their performance. Treasury sources admitted that the figure would imply that substantial cuts would be suffered elsewhere.
Although Mr Darling will claim that growth, efficiency savings and some new taxes — including a supertax on bankers’ bonuses — will soften some of the impact, he will begin axing future budgets.
“We are not fixing departmental budgets now but people have the right to know which services we will prioritise and how we intend to pay for them,” a Treasury source said. “We are under no illusion that that will mean some tough choices — cutting unnecessary programmes and lower priority budgets.”
Today’s Pre-Budget Report is intended to supply Labour with ammunition for the coming general election. The Conservatives will be challenged to match specific guarantess, such as a two-week maximum wait to see a cancer specialist. But in putting figures on pledges to protect “frontline services” Mr Darling is confronting voters with the scale of the coming cutbacks in other areas.
The Tory leadership launched a pre-emptive attack on the Chancellor’s credibility, claiming that Britain faced the “disaster” of losing its top credit rating.
George Osborne, the Shadow Chancellor, seized on an international agency’s warning that plunging tax receipts in future years meant an “inexorable deterioration” of the affordability of Britain’s record debts.
He claimed that the latest warning from Moody’s was “further evidence that Britain faces the disaster of having its international credit rating downgraded unless we get on top of our debts”.
But the Treasury accused him of “playing politics” with the country’s standing in the money markets. “To selectively quote is irresponsible and deliberately misleading. All three credit rating agencies have reaffirmed the Government’s AAA rating this year, including Moody’s in October and again today.”
74,000 Doller
Alistair Darling today will contest growing doubts over Britain’s economic recovery as he tries to show the markets that he is serious about halving the £180 billion deficit in four years.
On the eve of his Pre-Budget Report, the Chancellor was confronted with figures that suggested that Britain would struggle to climb out of recession before the end of the year.
Industrial output failed to grow in October — considerably worse than expected — and a CBI survey suggested that gloomy manufacturers expect output to fall in the coming months.
One international ratings agency put Mr Darling on notice that he must act swiftly to pay off the record public debt or risk losing Britain’s prized “triple-A” credit rating.
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Related Links
Credibility deficit
Bankers dodging to save bonuses from tax
Darling warns Whitehall of ‘real cuts’ to halve £180bn budget deficit
The agency, Moody’s, said that plunging tax receipts for years to come would mean “an inexorable deterioration” in the Government’s ability to pay its debts. It said that Britain was in a fundamentally weaker position than Germany, France and Canada, which also have AAA ratings.
Its comments sent the pound lower on foreign exchanges against both the dollar and the euro.
The agency indicated that Britain had only retained its rating because it had convinced international investors that it would take action to reduce the budget deficit.
In a further sign of how poorly Britain’s public finances are regarded by the international markets, the cost of insuring against a possible debt default by the UK Government yesterday climbed to the same level as that to insure against a default by Portugal, whose economy is regarded as one of the weakest in Western Europe.
Insuring $10 million of UK government bonds against default rose to $74,000 a year, up from $72,500 on Monday. At the end of September the cost was $44,000.
The Chancellor will acknowledge a new era of deep spending cuts. Existing budgets will remain unchanged until 2011, but he will admit that safeguarding frontline hospital, school and police services will mean deep cuts elsewhere in the years that follow.
On the eve of his Pre-Budget Report, the Chancellor was confronted with figures that suggested that Britain would struggle to climb out of recession before the end of the year.
Industrial output failed to grow in October — considerably worse than expected — and a CBI survey suggested that gloomy manufacturers expect output to fall in the coming months.
One international ratings agency put Mr Darling on notice that he must act swiftly to pay off the record public debt or risk losing Britain’s prized “triple-A” credit rating.
function slideshowPopUp(url)
{
pictureGalleryPopupPic(url);
return false;
}
Related Links
Credibility deficit
Bankers dodging to save bonuses from tax
Darling warns Whitehall of ‘real cuts’ to halve £180bn budget deficit
The agency, Moody’s, said that plunging tax receipts for years to come would mean “an inexorable deterioration” in the Government’s ability to pay its debts. It said that Britain was in a fundamentally weaker position than Germany, France and Canada, which also have AAA ratings.
Its comments sent the pound lower on foreign exchanges against both the dollar and the euro.
The agency indicated that Britain had only retained its rating because it had convinced international investors that it would take action to reduce the budget deficit.
In a further sign of how poorly Britain’s public finances are regarded by the international markets, the cost of insuring against a possible debt default by the UK Government yesterday climbed to the same level as that to insure against a default by Portugal, whose economy is regarded as one of the weakest in Western Europe.
Insuring $10 million of UK government bonds against default rose to $74,000 a year, up from $72,500 on Monday. At the end of September the cost was $44,000.
The Chancellor will acknowledge a new era of deep spending cuts. Existing budgets will remain unchanged until 2011, but he will admit that safeguarding frontline hospital, school and police services will mean deep cuts elsewhere in the years that follow.
$ 500,000 Salary
the U.S. paymaster for rescued companies, will exempt some executives at American International Group Inc. (AIG) from a $500,000 salary cap after at least five employees threatened to quit because of the limits, people familiar with the matter said.
Feinberg may issue a ruling as early as next week on pay limits for 75 of the bailed-out insurer's executives, the people said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat, the people said.
"It's the equivalent of saying, 'We're going home and we're taking our toys with us," Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is "increasing what may be considered guaranteed pay."
Feinberg, the Obama administration's special master for executive compensation, said in October that base salaries at AIG wouldn't exceed $500,000 a year except in cases where there was "good cause" to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. AIG was rescued with a bailout valued at $182.3 billion.
In October, Feinberg announced he reduced 2009 cash salaries for New York-based AIG's 13 top-earning executives by 91 percent, and used more stock for their total compensation. He controls pay for the 25 highest-paid employees at AIG and advises on the compensation structure for the next 75 workers. About half of the first group of 25 departed since the insurer's September 2008 bailout.
the U.S. paymaster for rescued companies, will exempt some executives at American International Group Inc. (AIG) from a $500,000 salary cap after at least five employees threatened to quit because of the limits, people familiar with the matter said.
Feinberg may issue a ruling as early as next week on pay limits for 75 of the bailed-out insurer's executives, the people said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat, the people said.
"It's the equivalent of saying, 'We're going home and we're taking our toys with us," Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is "increasing what may be considered guaranteed pay."
Feinberg, the Obama administration's special master for executive compensation, said in October that base salaries at AIG wouldn't exceed $500,000 a year except in cases where there was "good cause" to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. AIG was rescued with a bailout valued at $182.3 billion.
In October, Feinberg announced he reduced 2009 cash salaries for New York-based AIG's 13 top-earning executives by 91 percent, and used more stock for their total compensation. He controls pay for the 25 highest-paid employees at AIG and advises on the compensation structure for the next 75 workers. About half of the first group of 25 departed since the insurer's September 2008 bailout.
Feinberg may issue a ruling as early as next week on pay limits for 75 of the bailed-out insurer's executives, the people said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat, the people said.
"It's the equivalent of saying, 'We're going home and we're taking our toys with us," Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is "increasing what may be considered guaranteed pay."
Feinberg, the Obama administration's special master for executive compensation, said in October that base salaries at AIG wouldn't exceed $500,000 a year except in cases where there was "good cause" to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. AIG was rescued with a bailout valued at $182.3 billion.
In October, Feinberg announced he reduced 2009 cash salaries for New York-based AIG's 13 top-earning executives by 91 percent, and used more stock for their total compensation. He controls pay for the 25 highest-paid employees at AIG and advises on the compensation structure for the next 75 workers. About half of the first group of 25 departed since the insurer's September 2008 bailout.
the U.S. paymaster for rescued companies, will exempt some executives at American International Group Inc. (AIG) from a $500,000 salary cap after at least five employees threatened to quit because of the limits, people familiar with the matter said.
Feinberg may issue a ruling as early as next week on pay limits for 75 of the bailed-out insurer's executives, the people said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat, the people said.
"It's the equivalent of saying, 'We're going home and we're taking our toys with us," Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is "increasing what may be considered guaranteed pay."
Feinberg, the Obama administration's special master for executive compensation, said in October that base salaries at AIG wouldn't exceed $500,000 a year except in cases where there was "good cause" to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. AIG was rescued with a bailout valued at $182.3 billion.
In October, Feinberg announced he reduced 2009 cash salaries for New York-based AIG's 13 top-earning executives by 91 percent, and used more stock for their total compensation. He controls pay for the 25 highest-paid employees at AIG and advises on the compensation structure for the next 75 workers. About half of the first group of 25 departed since the insurer's September 2008 bailout.
Media Center application
There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends. There’s a big party being held in Brooklyn tonight for Boxee, the Internet video service I wrote about in this story in May. One bit of news is the unveiling of Boxee Beta — it has to date been available only in a Alpha version — that has been rebuilt from the ground up.
Engadget has a look at Boxee Beta.
For those unfamiliar, Boxee is an elegant and free media center application for the Mac and Windows that in many ways represents what people imagine when they think of TV moving to the Internet. From within Boxee you can watch Web video in all its various forms: Video podcasts, YouTube clips, downloaded movies, and with some limitations TV shows on from Hulu on your computer.
But it doesn’t stop there. It’s so good, that I’ve heard numerous cases of people actually dropping their cable or satellite TV service, in favor of connecting a Mac running Boxee to their favorite TV set. Others have been known to hack their AppleTV devices and install Boxee on them.
That fact in particular suggested opportunity. One of the things founder Avner Ronen told me at the time was that he hoped to get the Boxee service built into consumer hardware, and that he hoped to have some news on this front in time for the Consumer Electronics Show in Las Vegas, which is now less than a month away.
Ronen and his team have delivered, and that is I think the bigger news. I just heard that the first so-called Boxee Box (pictured) will be made by D-Link, the company behind scores of home networking products.
In addition to video, Boxee plays music from your personal music collection, streams music from your favorite Pandora Radio stations, organizes your photos. It’s also social: You can share what you’re watching with your friends on Twitter and Facebook, and also discover things you might like from your Boxee-using friends.
Human Natures
The last decade has been an economic perfect storm. Things got off to an unpleasant start with the bursting of the dot-com bubble. The Enron/WorldCom/Tyco scandals followed close behind. The past few years have featured the subprime mortgage crisis and the credit crunch precipitated by the Lehman Brothers bankruptcy. For equity investors pummeled by losses, this has been a decade to forget.
When bad things happen, human nature yearns to identify and punish whoever is responsible. Seeking protection, we also want to fix things so that such problems never occur again. However, this can be a bit like generals fighting the last war: Legislating a "one-size fits all" solution in response to a particular economic situation is rarely effective at preventing future, largely unpredictable problems. If it were otherwise, the Sarbanes-Oxley legislation enacted in 2002 would have eliminated all problems in corporate governance, financial controls, and disclosure.
That hasn't happened. Sarbanes-Oxley has not, as many predicted when it was enacted, eliminated all corporate ills. While the legislation certainly did not create the subprime mortgage crisis, it unfortunately did not prevent it. In fact the subprime meltdown and its aftereffects may well be the best testimony that even the most comprehensive revision to American corporate governance in more than a generation could not repeal the economic cycle or pop the next "bubble" before it burst.
The reality is that no set of corporate-governance mechanisms could have forestalled a crisis of the magnitude or complexity of the one we have experienced.
U.S. directors act for shareholders
What is corporate governance and why should we care about it? In modern capitalism there often is a distinct separation of ownership (the shareholders) from control (the board of directors and senior management) of the business enterprise. Corporate governance defines the relationship between the shareholders and the managers. The willingness of investors to purchase a corporation's shares is based not only on the performance of the business, but also on the trust in that corporation created by effective corporate governance.
In the U.S., the cornerstone of corporate governance has long been reliance on the board of directors to act on the shareholders' behalves to supervise and direct the management of the corporation.
Corporate governance is not designed just to avoid the next financial disaster. Effective corporate governance is also good for business. Academic studies have consistently shown that companies with independent boards of directors produce greater returns on shareholder equity, achieve higher profit margins and return more capital to their investors than competitors without independent boards. The shareholders of Enron learned the hard way that weak corporate governance can facilitate an environment in which fraud and mismanagement can occur.
When bad things happen, human nature yearns to identify and punish whoever is responsible. Seeking protection, we also want to fix things so that such problems never occur again. However, this can be a bit like generals fighting the last war: Legislating a "one-size fits all" solution in response to a particular economic situation is rarely effective at preventing future, largely unpredictable problems. If it were otherwise, the Sarbanes-Oxley legislation enacted in 2002 would have eliminated all problems in corporate governance, financial controls, and disclosure.
That hasn't happened. Sarbanes-Oxley has not, as many predicted when it was enacted, eliminated all corporate ills. While the legislation certainly did not create the subprime mortgage crisis, it unfortunately did not prevent it. In fact the subprime meltdown and its aftereffects may well be the best testimony that even the most comprehensive revision to American corporate governance in more than a generation could not repeal the economic cycle or pop the next "bubble" before it burst.
The reality is that no set of corporate-governance mechanisms could have forestalled a crisis of the magnitude or complexity of the one we have experienced.
U.S. directors act for shareholders
What is corporate governance and why should we care about it? In modern capitalism there often is a distinct separation of ownership (the shareholders) from control (the board of directors and senior management) of the business enterprise. Corporate governance defines the relationship between the shareholders and the managers. The willingness of investors to purchase a corporation's shares is based not only on the performance of the business, but also on the trust in that corporation created by effective corporate governance.
In the U.S., the cornerstone of corporate governance has long been reliance on the board of directors to act on the shareholders' behalves to supervise and direct the management of the corporation.
Corporate governance is not designed just to avoid the next financial disaster. Effective corporate governance is also good for business. Academic studies have consistently shown that companies with independent boards of directors produce greater returns on shareholder equity, achieve higher profit margins and return more capital to their investors than competitors without independent boards. The shareholders of Enron learned the hard way that weak corporate governance can facilitate an environment in which fraud and mismanagement can occur.
Thursday, November 5, 2009
JP Morgan Chase
owns and losses from the credit crisis among European competitors, and had to turn to the Swiss government a year ago for a 6 billion-franc capital injection to help it spin off risky assets into a Swiss National Bank fund. The bank reported a net loss of 21.3 billion francs last year, a record in Swiss corporate history.
“The pressure is now mounting to demonstrate that the group is turning around, specifically with respect to the private banking franchise,” JPMorgan Chase & Co. analysts led by Kian Abouhossein said in a note yesterday. They have a “neutral” rating on UBS.
Shrinking Margins
UBS is not only seeing clients withdraw funds from its wealth management unit, the bank is also earning less on the remaining 1.68 trillion francs of assets under management, the earnings release showed.
“The dash-to-cash hit UBS’s margins harder than any other private banking division we cover,” van Steenis, a London-based analyst at Morgan Stanley with an “equal-weight” rating on UBS, said in a note yesterday.
The gross margin on business with international clients, which shows how much revenue the bank makes compared with assets under management, fell to 83 basis points in the third quarter from 102 basis points two years ago. A basis point is a hundredth of a percentage point.
“We consider the wealth management business to be facing significant challenges,” Dirk Hoffmann-Becking, a London-based analyst at Sanford C. Bernstein, who has an “underperform” rating on UBS, said in a note after earnings.
The following is a table of the 10 largest European banks by market value, with the percentage of buy ratings, their price-to-earnings ratios, and year-to-date stock performance, as of the close of trading on Nov. 4.
“The pressure is now mounting to demonstrate that the group is turning around, specifically with respect to the private banking franchise,” JPMorgan Chase & Co. analysts led by Kian Abouhossein said in a note yesterday. They have a “neutral” rating on UBS.
Shrinking Margins
UBS is not only seeing clients withdraw funds from its wealth management unit, the bank is also earning less on the remaining 1.68 trillion francs of assets under management, the earnings release showed.
“The dash-to-cash hit UBS’s margins harder than any other private banking division we cover,” van Steenis, a London-based analyst at Morgan Stanley with an “equal-weight” rating on UBS, said in a note yesterday.
The gross margin on business with international clients, which shows how much revenue the bank makes compared with assets under management, fell to 83 basis points in the third quarter from 102 basis points two years ago. A basis point is a hundredth of a percentage point.
“We consider the wealth management business to be facing significant challenges,” Dirk Hoffmann-Becking, a London-based analyst at Sanford C. Bernstein, who has an “underperform” rating on UBS, said in a note after earnings.
The following is a table of the 10 largest European banks by market value, with the percentage of buy ratings, their price-to-earnings ratios, and year-to-date stock performance, as of the close of trading on Nov. 4.
U.S. Federal Reserve
Nov. 5 (Bloomberg) -- The Bank of England may increase its bond-purchase plan by 50 billion pounds ($83 billion) today as central bankers and politicians scramble to shore up Britain’s banking system and drag the economy out of the recession. Governor Mervyn King’s nine-member Monetary Policy Committee will expand the asset-buying program to 225 billion pounds at 12 p.m. in London, the median of 48 forecasts in a Bloomberg News survey shows. That follows Prime Minister Gordon Brown’s pledge this week to spend almost 40 billion pounds in a second bailout of two of the nation’s biggest banks. Any increase in the Bank of England’s emergency program would be the third since King unveiled the plan in March. Brown’s first bank bailout, the government’s fiscal stimulus measures and an injection of 175 billion pounds in newly printed central-bank money have so far failed to end Britain’s longest recession on record. “They’ve got to throw money at it,” said Neil Mackinnon, an economist at VTB Capital Plc and a former U.K. Treasury official. “The fact of the matter is that the U.K. economy is lagging behind. As to whether quantitative easing is working, the jury is still out.” The central bank will keep its benchmark interest rate at a record low of 0.5 percent, according to all 60 economists in a Bloomberg survey. The European Central Bank, which also meets today, will maintain its main rate at 1 percent at 1:45 p.m. in Frankfurt, a separate survey showed. ‘Exceptionally Low’ The U.S. Federal Reserve yesterday left its target for the overnight interbank lending rate unchanged at a range of zero to 0.25 percent. Policy makers restated a pledge to keep rates “exceptionally low” for an “extended period.” The Bank of England’s bond plan already split the rate panel once this year when King’s push to increase the program to 200 billion pounds was defeated in August. While he argued that being too cautious was less of a risk than spending too much, Chief Economist Spencer Dale says that there is a danger of stoking asset prices too much. “It is a lot of money, but if it does restart the economy and gets it moving again then it’s worth it,” said George Buckley, an economist at Deutsche Bank AG in London. “It’s very difficult to say if quantitative easing is working, but it is doing something.” Service industries showed the fastest pace of expansion since August 2007 in October in a survey by Markit Economics released yesterday, while Nationwide Building Society said consumer confidence held at the highest level in 1 1/2 years. ‘Full Impact’ Some economists say the pickup may have more to do with record-low interest rates than the bank’s bond purchases. “When you have a 500-basis-point cut in interest rates, that is bound to impact the economy with a bit of a lag and that lag is coming to an end and we’re seeing the full impact now,” former U.K. policy maker DeAnne Julius said in a Bloomberg Television interview this week. While the Bank of England says that one of the aims of the bond purchases is to increase the amount of money in the economy, a gauge of money supply favored by the bank fell an annualized 1.7 percent in the third quarter, the weakest reading on record. “If reviving bank lending and in turn money-supply growth is the objective, it’s clearly not working,” VTB’s Mackinnon said. “The evidence for any upturn in lending is still very tentative.” Britain’s Recession Gross domestic product shrank 0.4 percent in the three months through September, dragging Britain’s recession into a record sixth quarter. By contrast, the U.S., German and French economies have all returned to growth. Marks & Spencer Group Plc, the nation’s largest clothing retailer, said yesterday that it is “cautious” about the outlook for the next year. HSBC Holdings Plc, Europe’s largest bank, said this week that it will cut 1,700 jobs in the U.K. Brown is seeking to revive the banking system and the economy in preparation for an election due by June. He pledged this week to inject 31.2 billion pounds into Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, allowing the institutions to scale back dependence on state guarantees for their most toxic assets. The government also promised up to 8 billion pounds for RBS to use “in exceptional circumstances.” “Every effort must be made to bring the recession to an end,” David Kern, economic adviser at the British Chambers of Commerce, said today. “The current economic situation -- in which our economy is still declining while other countries are already growing -- entails serious dangers and must not be allowed to continue.”
The Obama administration’s effort to end the Middle East conflict has suffered a setback
Nov. 5 (Bloomberg) -- The Obama administration’s effort to end the Middle East conflict has suffered a setback, the Arab League said at the United Nations after Secretary of State Hillary Clinton assured Egyptian leaders of the U.S. commitment.
“He is a good man and his intentions are good, but we are back to square one,” Arab League Ambassador Yahya Mahmassani said of President Barack Obama’s bid during his first year in office to make headway toward Israeli-Palestinian peace talks and a state for Palestinians. “His words have not led to actions so far.”
Clinton returned from five days of crisscrossing the region yesterday, after adding a stop in Cairo to try to ease Arab anger over her statements Oct. 31 in Jerusalem. She came under fire for hailing as “unprecedented” Israeli Prime Minister Benjamin Netanyahu’s proposal to restrict, rather than halt, settlement construction in the West Bank.
The outcry from Arab governments overshadowed Clinton’s Mideast tour and came as Arabs pressed at the UN for prosecution of Israeli officials for alleged war crimes during the December- January offensive in the Gaza Strip. Israel has said it won’t resume peace talks while facing possible war-crimes charges.
For three days starting at a meeting of Arab leaders in Morocco Nov. 2, Clinton insisted that U.S. policy on Israeli settlements hasn’t changed.
“We do not accept the legitimacy of settlement activity,” she said in Cairo.
Talks in Egypt
Clinton and her Mideast advisers were upbeat yesterday about the reception they got from Egyptian President Hosni Mubarak, who wields influence with both Israel and the Palestinians, for U.S. calls for a swift return to negotiations for a two-state solution. U.S. officials billed it as a comeback, just days after Clinton was battered for a perceived softening of American opposition to Israeli settlements.
“You heard an Egyptian statement of policy which has moved a lot closer to our position about wanting to focus on the endgame than what you might have heard from Arab leaders a week ago,” said Jeffrey Feltman, the assistant secretary of state, who handles the Middle East.
There is a lack of “clarity” in Clinton’s statements on the issue, according to Jonathan Spyer, a political scientist at the Interdisciplinary Center Herzliya in Israel.
“There were various statements made by Hillary, almost comically, being generous to Netanyahu in Jerusalem, then quickly trying to backtrack when speaking in an Arab context,” Spyer said in an interview. “This phase of Obama Middle East policy is over and what comes next we don’t yet know.”
Back to Talks
Clinton’s trip was intended to get Israel and the Palestinian Authority back into broad talks on forming a Palestinian state. Negotiations broke down in December when Israel began a military operation in the Gaza Strip to stop the firing of rockets on Israeli communities by Hamas, designated a terrorist group by the U.S.
“What we should focus on is the endgame, the end of the road, and not waste time in holding onto this issue or that issue as a starting point before negotiations,” Egyptian Foreign Minister Ahmed Aboul Gheit said at a joint press conference with Clinton, according to an unofficial translation.
Aboul Gheit said he and Mubarak were convinced after their talks with Clinton yesterday that the U.S. hasn’t changed its position that Israel should freeze the building of Jewish settlements. The Palestinians say the development of Israeli communities in the West Bank is an obstacle to creating a state on the territory and are demanding a total settlement freeze as a precursor to renewing peace talks.
Upbeat Note
Clinton sounded an upbeat note as she ended her trip, which included a three-day visit in Pakistan and a stop in Israel.
“I carry with me a personal conviction that nothing can be allowed to interfere with our determination and our resolve and our conviction,” she told a news conference in Cairo.
American officials said the gap between Israel and the Palestinians is requiring considerable energy to keep the diplomatic effort alive.
“There is no reason to have any positive feelings about what is going to happen,” Hani Sabra, Mideast analyst for the Eurasia Group, a New York-based political-risk analysis firm, said in an interview. “The Clinton trip was a failure. It is time to step back for now. Nothing is going to happen in the next few months.”
In the West Bank city of Ramallah, negotiator Saeb Erakat said Palestinians are facing a “moment of truth” and may give up on peace talks if Israel doesn’t stop building housing.
“Israel has a choice: settlements or peace,” Erakat said.
No Preconditions
The Israeli government has called for the immediate resumption of negotiations and without preconditions. “We have already wasted more than half a year because of preconditions the Palestinians put on the talks and we think it’s a mistake,” Mark Regev, a spokesman for Netanyahu, said in a phone interview.
Clinton said the settlement dispute may not be resolved until talks start on the core issues of the conflict.
“What we’re looking at here is recognition that getting into final-status issues will allow us to bring an end to settlement activity,” she said.
Those major issues include borders and the status of Jerusalem, where Palestinians want to put their capital.
Last May, Clinton said only a construction halt in the West Bank would be acceptable. In September, after meeting Abbas and Netanyahu at the UN, Obama referred only to a “restraint” on settlements.
“Netanyahu won this round,” Mkhaimar Abusada, a political scientist at Al-Azhar University in Gaza, said in an interview. “Clinton is now asking the Palestinians to go back to the negotiating table without freezing settlements. There are deep contradictions in her position.”
“He is a good man and his intentions are good, but we are back to square one,” Arab League Ambassador Yahya Mahmassani said of President Barack Obama’s bid during his first year in office to make headway toward Israeli-Palestinian peace talks and a state for Palestinians. “His words have not led to actions so far.”
Clinton returned from five days of crisscrossing the region yesterday, after adding a stop in Cairo to try to ease Arab anger over her statements Oct. 31 in Jerusalem. She came under fire for hailing as “unprecedented” Israeli Prime Minister Benjamin Netanyahu’s proposal to restrict, rather than halt, settlement construction in the West Bank.
The outcry from Arab governments overshadowed Clinton’s Mideast tour and came as Arabs pressed at the UN for prosecution of Israeli officials for alleged war crimes during the December- January offensive in the Gaza Strip. Israel has said it won’t resume peace talks while facing possible war-crimes charges.
For three days starting at a meeting of Arab leaders in Morocco Nov. 2, Clinton insisted that U.S. policy on Israeli settlements hasn’t changed.
“We do not accept the legitimacy of settlement activity,” she said in Cairo.
Talks in Egypt
Clinton and her Mideast advisers were upbeat yesterday about the reception they got from Egyptian President Hosni Mubarak, who wields influence with both Israel and the Palestinians, for U.S. calls for a swift return to negotiations for a two-state solution. U.S. officials billed it as a comeback, just days after Clinton was battered for a perceived softening of American opposition to Israeli settlements.
“You heard an Egyptian statement of policy which has moved a lot closer to our position about wanting to focus on the endgame than what you might have heard from Arab leaders a week ago,” said Jeffrey Feltman, the assistant secretary of state, who handles the Middle East.
There is a lack of “clarity” in Clinton’s statements on the issue, according to Jonathan Spyer, a political scientist at the Interdisciplinary Center Herzliya in Israel.
“There were various statements made by Hillary, almost comically, being generous to Netanyahu in Jerusalem, then quickly trying to backtrack when speaking in an Arab context,” Spyer said in an interview. “This phase of Obama Middle East policy is over and what comes next we don’t yet know.”
Back to Talks
Clinton’s trip was intended to get Israel and the Palestinian Authority back into broad talks on forming a Palestinian state. Negotiations broke down in December when Israel began a military operation in the Gaza Strip to stop the firing of rockets on Israeli communities by Hamas, designated a terrorist group by the U.S.
“What we should focus on is the endgame, the end of the road, and not waste time in holding onto this issue or that issue as a starting point before negotiations,” Egyptian Foreign Minister Ahmed Aboul Gheit said at a joint press conference with Clinton, according to an unofficial translation.
Aboul Gheit said he and Mubarak were convinced after their talks with Clinton yesterday that the U.S. hasn’t changed its position that Israel should freeze the building of Jewish settlements. The Palestinians say the development of Israeli communities in the West Bank is an obstacle to creating a state on the territory and are demanding a total settlement freeze as a precursor to renewing peace talks.
Upbeat Note
Clinton sounded an upbeat note as she ended her trip, which included a three-day visit in Pakistan and a stop in Israel.
“I carry with me a personal conviction that nothing can be allowed to interfere with our determination and our resolve and our conviction,” she told a news conference in Cairo.
American officials said the gap between Israel and the Palestinians is requiring considerable energy to keep the diplomatic effort alive.
“There is no reason to have any positive feelings about what is going to happen,” Hani Sabra, Mideast analyst for the Eurasia Group, a New York-based political-risk analysis firm, said in an interview. “The Clinton trip was a failure. It is time to step back for now. Nothing is going to happen in the next few months.”
In the West Bank city of Ramallah, negotiator Saeb Erakat said Palestinians are facing a “moment of truth” and may give up on peace talks if Israel doesn’t stop building housing.
“Israel has a choice: settlements or peace,” Erakat said.
No Preconditions
The Israeli government has called for the immediate resumption of negotiations and without preconditions. “We have already wasted more than half a year because of preconditions the Palestinians put on the talks and we think it’s a mistake,” Mark Regev, a spokesman for Netanyahu, said in a phone interview.
Clinton said the settlement dispute may not be resolved until talks start on the core issues of the conflict.
“What we’re looking at here is recognition that getting into final-status issues will allow us to bring an end to settlement activity,” she said.
Those major issues include borders and the status of Jerusalem, where Palestinians want to put their capital.
Last May, Clinton said only a construction halt in the West Bank would be acceptable. In September, after meeting Abbas and Netanyahu at the UN, Obama referred only to a “restraint” on settlements.
“Netanyahu won this round,” Mkhaimar Abusada, a political scientist at Al-Azhar University in Gaza, said in an interview. “Clinton is now asking the Palestinians to go back to the negotiating table without freezing settlements. There are deep contradictions in her position.”
U.S. central bank decided
SINGAPORE (AP) -- World stock markets dropped Thursday as the U.S. Federal Reserve failed to reassure investors that a lasting recovery in the global economy was taking hold.
The U.S. central bank decided Wednesday to keep a key interest rate at a record low and said cheap credit would continue for an "extended period" as the world's largest economy struggles to regain its footing after its worst downturn in decades.
For many investors, the news raised doubts about whether the turnaround under way in many economies was strong enough to extend a powerful eight-month rally in global markets. A key U.S. unemployment report due Friday, which could yield clues about the ailing U.S. consumer and demand for Asian exports, also kept traders on edge.
"Around these levels, it's hard to have conviction positions," said Jan Lambregts, head of research of Rabobank in Hong Kong. "There's a big question on investor confidence given issues about the sustainability of the global recovery once stimulus policies fade."
As trading got under way in Europe, benchmarks in Britain and Germany dropped 0.9 percent, while France's market fell 0.7 percent.
Earlier, Japanese shares helped lead Asian stocks lower, with the Nikkei 225 stock average falling 126.87 points, or 1.3 percent, to 9,717.44, as the strengthening yen undermined the competitiveness of the country's exports.
"The Japanese export sector is being killed by the yen, and I think yen strength is here for quite a while," Lambregts said.
South Korea's market pulled back 1.8 percent to 1,552.24, while Hong Kong's Hang Seng was down 0.6 percent at 21,479.08 and India's market shed 0.2 percent. Markets in Indonesia, Singapore and Australia also slid. Chinese shares, though, bucked the downward trend to gain modestly.
Among stocks, Japan's Nissan Motor Co. edged up 0.3 percent after returning to a profit last quarter and predicting a narrower loss for the fiscal year with the help of stronger demand in China.
Wall Street traded largely sideways on Wednesday.
The Dow rose 17.53, or 0.3 percent, to 9,802.14. The broader Standard & Poor's 500 index rose 1.09, or 0.1 percent, to 1,046.50.
U.S. futures augured a lower open on Thursday. Dow futures shed 23 points, or 0.2 percent, to 9,762, while S&P futures lost 3.50, or 0.3 percent, to 1,043.50.
Oil prices fell in Asia, with benchmark crude for December delivery down 57 cents to $79.83 a barrel. The contract gained 80 cents overnight.
Gold, meanwhile, rose $1, or about 0.1 percent, to $1,088.40 an ounce.
The dollar slipped to 90.27 yen from 90.77 yen. The euro fell to $1.4826 from $1.4872.
The U.S. central bank decided Wednesday to keep a key interest rate at a record low and said cheap credit would continue for an "extended period" as the world's largest economy struggles to regain its footing after its worst downturn in decades.
For many investors, the news raised doubts about whether the turnaround under way in many economies was strong enough to extend a powerful eight-month rally in global markets. A key U.S. unemployment report due Friday, which could yield clues about the ailing U.S. consumer and demand for Asian exports, also kept traders on edge.
"Around these levels, it's hard to have conviction positions," said Jan Lambregts, head of research of Rabobank in Hong Kong. "There's a big question on investor confidence given issues about the sustainability of the global recovery once stimulus policies fade."
As trading got under way in Europe, benchmarks in Britain and Germany dropped 0.9 percent, while France's market fell 0.7 percent.
Earlier, Japanese shares helped lead Asian stocks lower, with the Nikkei 225 stock average falling 126.87 points, or 1.3 percent, to 9,717.44, as the strengthening yen undermined the competitiveness of the country's exports.
"The Japanese export sector is being killed by the yen, and I think yen strength is here for quite a while," Lambregts said.
South Korea's market pulled back 1.8 percent to 1,552.24, while Hong Kong's Hang Seng was down 0.6 percent at 21,479.08 and India's market shed 0.2 percent. Markets in Indonesia, Singapore and Australia also slid. Chinese shares, though, bucked the downward trend to gain modestly.
Among stocks, Japan's Nissan Motor Co. edged up 0.3 percent after returning to a profit last quarter and predicting a narrower loss for the fiscal year with the help of stronger demand in China.
Wall Street traded largely sideways on Wednesday.
The Dow rose 17.53, or 0.3 percent, to 9,802.14. The broader Standard & Poor's 500 index rose 1.09, or 0.1 percent, to 1,046.50.
U.S. futures augured a lower open on Thursday. Dow futures shed 23 points, or 0.2 percent, to 9,762, while S&P futures lost 3.50, or 0.3 percent, to 1,043.50.
Oil prices fell in Asia, with benchmark crude for December delivery down 57 cents to $79.83 a barrel. The contract gained 80 cents overnight.
Gold, meanwhile, rose $1, or about 0.1 percent, to $1,088.40 an ounce.
The dollar slipped to 90.27 yen from 90.77 yen. The euro fell to $1.4826 from $1.4872.
Monday, August 31, 2009
Health care than in information technology
(IDG) -- Would-be investors looking for specific tips on how to hit it big on the stock market with Internet companies will have to keep studying the numbers. A recent panel discussing venture capital didn't name names, but did offer general, often amusing observations about market trends and types of investments to beware of.
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The panel of experts in the technology, health, and telecommunications fields spoke on "What's Hot? What's Not?" at a Silicon Valley program sponsored by the nonprofit, public affairs-oriented Churchill Club.
Staying power counts
The recent flurry of Internet company Initial Public Offerings has made many investors wealthy as stock prices have soared. But not all Internet companies are destined for greatness, according to Michael Moritz, a partner in Sequoia Capital, a well-known Silicon Valley venture capital firm.
"We pick companies that are going to be franchise players," Moritz says. To illustrate, he cites two hit films released more than 20 years ago -- Star Wars and The Big Chill. Both were great movies, but only Star Wars established a franchise that's still growing. Similarly, some Internet companies have "hit" IPOs but flounder later when earnings fail to approach heightened expectations. Says Moritz: "Many of the new Internet companies are weaving around like drunken sailors after a week of shore leave."
Sequoia is careful not to overfund the companies it invests in because that can lead to careless spending and less aggressive employees, according to Moritz. One Sequoia success story is its initial funding of Yahoo. A much more recent Sequoia investment was in eToys, an Internet shopping site that went public in May. Its stock has nearly quadrupled since its IPO, giving the startup a market value of more than $8 billion. Eighteen months ago, eToys didn't exist.
California is by far the leading state when it comes to funding Internet companies, according to Sam Colella, a partner in Institutional Venture Partners. California venture capital firms have invested $1.5 billion, compared with $441 million from runner-up Massachusetts, which is followed by New York, Colorado, and Texas.
Technologically fearless
Demographics play a major role in the growth of the Internet and the adoption of new technology. Colella is eyeing a market he calls the "dot com" generation -- people born after 1979. "Every year we're producing children who are technologically fearless," Colella says.
Another example of technological fearlessness is the recent boom in online trading of stocks. But Moritz worries that too many traders don't know what they're doing, and risk losing lots of money. "Online trading has replaced off-track betting as America's favorite sport," Moritz says.
Telecommunications ventures get a bullish thumbs-up from Cliff Higgerson, a partner in Communications Ventures, which specializes in early-stage investments in networking companies. Higgerson says we are on the verge of a bandwidth explosion that will enable a broad array of inexpensive video and audio services via the Internet.
"The gap between what is being done in research labs and what is available to consumers is unbelievable," Higgerson says. "I suspect that what science fiction writers are predicting we'll have in 200 years, we'll have in 15 years in the telecommunications area. Just in the area of TV, the graphics we have today are poor compared with the incredible resolution and gradations of color that are coming."
Health care versus technology
Though it shows no signs of slowing down, perhaps some day the information technology industry will evolve into a more mature, slower-growth field like health care, the panelists suggest. Brian Dovey, a partner in the venture capital firm Domain Associates, gave a humorous top-ten list of reasons why it's better to invest in health care than in information technology. Among them:
You don't have to pay those pesky capital gains taxes.
No sleepless nights worrying about your portfolio crashing.
Single-digit stock prices make it easier to calculate market caps.
Domain invests in technology-based companies focused on life sciences, such as biopharmaceuticals, medical devices, and health care information systems.
Biotechnology was overhyped in years past, Dovey concedes. But recently, biotech companies have made dramatic improvements in discovering new drugs, he says, adding, "Health care is a trillion-dollar industry and remains an attractive investment."
The five-letter clue
Reeling off a list of Sequoia's successful investments -- including Apple, Atari, Cisco, Arbor, Ccube, Yahoo, and eToys -- Moritz jokes that the firm's secret is to find companies with names containing only five letters. Actually, Sequoia has had many non-five-letter investment successes, including Oracle and 3Com.
But faced with trying to explain the explosive run-up of some Internet stocks, Moritz concedes that he really has no answers. "It's all a bit bewildering," he says.
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FileWorld find free software fast
Make your PC work harder with these tips
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Subscribe to IDG.net's free daily newsletter for computer geniuses (& newbies)
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News Radio
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Computerworld Minute
The panel of experts in the technology, health, and telecommunications fields spoke on "What's Hot? What's Not?" at a Silicon Valley program sponsored by the nonprofit, public affairs-oriented Churchill Club.
Staying power counts
The recent flurry of Internet company Initial Public Offerings has made many investors wealthy as stock prices have soared. But not all Internet companies are destined for greatness, according to Michael Moritz, a partner in Sequoia Capital, a well-known Silicon Valley venture capital firm.
"We pick companies that are going to be franchise players," Moritz says. To illustrate, he cites two hit films released more than 20 years ago -- Star Wars and The Big Chill. Both were great movies, but only Star Wars established a franchise that's still growing. Similarly, some Internet companies have "hit" IPOs but flounder later when earnings fail to approach heightened expectations. Says Moritz: "Many of the new Internet companies are weaving around like drunken sailors after a week of shore leave."
Sequoia is careful not to overfund the companies it invests in because that can lead to careless spending and less aggressive employees, according to Moritz. One Sequoia success story is its initial funding of Yahoo. A much more recent Sequoia investment was in eToys, an Internet shopping site that went public in May. Its stock has nearly quadrupled since its IPO, giving the startup a market value of more than $8 billion. Eighteen months ago, eToys didn't exist.
California is by far the leading state when it comes to funding Internet companies, according to Sam Colella, a partner in Institutional Venture Partners. California venture capital firms have invested $1.5 billion, compared with $441 million from runner-up Massachusetts, which is followed by New York, Colorado, and Texas.
Technologically fearless
Demographics play a major role in the growth of the Internet and the adoption of new technology. Colella is eyeing a market he calls the "dot com" generation -- people born after 1979. "Every year we're producing children who are technologically fearless," Colella says.
Another example of technological fearlessness is the recent boom in online trading of stocks. But Moritz worries that too many traders don't know what they're doing, and risk losing lots of money. "Online trading has replaced off-track betting as America's favorite sport," Moritz says.
Telecommunications ventures get a bullish thumbs-up from Cliff Higgerson, a partner in Communications Ventures, which specializes in early-stage investments in networking companies. Higgerson says we are on the verge of a bandwidth explosion that will enable a broad array of inexpensive video and audio services via the Internet.
"The gap between what is being done in research labs and what is available to consumers is unbelievable," Higgerson says. "I suspect that what science fiction writers are predicting we'll have in 200 years, we'll have in 15 years in the telecommunications area. Just in the area of TV, the graphics we have today are poor compared with the incredible resolution and gradations of color that are coming."
Health care versus technology
Though it shows no signs of slowing down, perhaps some day the information technology industry will evolve into a more mature, slower-growth field like health care, the panelists suggest. Brian Dovey, a partner in the venture capital firm Domain Associates, gave a humorous top-ten list of reasons why it's better to invest in health care than in information technology. Among them:
You don't have to pay those pesky capital gains taxes.
No sleepless nights worrying about your portfolio crashing.
Single-digit stock prices make it easier to calculate market caps.
Domain invests in technology-based companies focused on life sciences, such as biopharmaceuticals, medical devices, and health care information systems.
Biotechnology was overhyped in years past, Dovey concedes. But recently, biotech companies have made dramatic improvements in discovering new drugs, he says, adding, "Health care is a trillion-dollar industry and remains an attractive investment."
The five-letter clue
Reeling off a list of Sequoia's successful investments -- including Apple, Atari, Cisco, Arbor, Ccube, Yahoo, and eToys -- Moritz jokes that the firm's secret is to find companies with names containing only five letters. Actually, Sequoia has had many non-five-letter investment successes, including Oracle and 3Com.
But faced with trying to explain the explosive run-up of some Internet stocks, Moritz concedes that he really has no answers. "It's all a bit bewildering," he says.
Tuesday, July 14, 2009
Facebook Company
On February 4th, 2004 Mark Zuckerberg launched The Facebook, a social network that was at the time exclusively for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskowitz and Chris Hughes to help build Facebook, and within four months, Facebook added 30 more college networks.
The original idea for the term Facebook came from Zuckerberg’s high school (Phillips Exeter Academy). The Exeter Face Book was passed around to every student as a way for students to get to know their classmates for the following year. It was a physical paper book until Zuckerberg brought it to the internet.
With this success, Zuckerberg, Moskowitz and Hughes moved out to Palo Alto for the summer and rented a sublet. A few weeks later, Zuckerberg ran into the former cofounder of Napster, Sean Parker. Parker soon moved in to Zuckerberg’s apartment and they began working together. Parker provided the introduction to their first investor, Peter Thiel, cofounder of PayPal and managing partner of The Founders Fund. Thiel invested $500,000 into Facebook.
With millions more users, Friendster attempted to acquire the company for $10 million in mid 2004. Facebook turned down the offer and subsequently received $12.7 million in funding from Accel Partners, at a valuation of around $100 million. Facebook continued to grow, opening up to high school students in September 2005 and adding an immensely popular photo sharing feature the next month. The next spring, Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as previous investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was about $525 million. Facebook subsequently opened up to work networks, eventually amassing over 20,000 work networks. Finally in September 2006, Facebook opened to anyone with an email address.
In the summer of 2006, Yahoo attempted to acquire the company for $1 billion dollars. Reports actually indicated that Zuckerberg made a verbal agreement to sell Facebook to Yahoo. A few days later when Yahoo’s stock price took a dive, the offer was lowered to $800 million and Zuckerberg walked away from the deal. Yahoo later offered $1 billion again, this time Zuckerberg turned Yahoo down and earned instant notoriety as the “kid” who turned down a billion. This was not the first time Zuckerberg turned down an acquisition offer; Viacom had previously unsuccessfully attempted to acquire the company for $750 million in March, 2006.
One sour note for Facebook has been the controversy with social network ConnectU. The founders of ConnectU, former classmates of Mark Zuckerberg at Harvard, allege that Zuckerberg stole their original source code for Facebook. The ordeal has gone to court, and has now been resolved.
Notwithstanding this lingering controversy, Facebook’s growth in the fall of 2007 was staggering. Over 1 million new users signed up every week, 200,000 daily, totaling over 50 million active users. Facebook received 40 billion page views a month. Long gone were the days of Facebook as a social network for college students. 11% of users are over the age of 35, and the fastest growing demographic is users over 30. Facebook has also seen huge growth internationally; 15% of the user base is in Canada. Facebook users’ passion, or addiction, to the site is unparalleled: more than half use the product every single day and users spend an average of 19 minutes a day on Facebook. Facebook is 6th most trafficked site in the US and top photo sharing site with 4.1 billion photos uploaded.
Based on these types of numbers, Microsoft invested $240 million into Facebook for 1.6 percent of the company in October 2007. This meant a valuation of over $15 billion, making Facebook the 5th most valuable US Internet company, yet with only $150 million in annual revenue. Many explained Microsoft’s decision as being solely driven by the desire to outbid Google.
The original idea for the term Facebook came from Zuckerberg’s high school (Phillips Exeter Academy). The Exeter Face Book was passed around to every student as a way for students to get to know their classmates for the following year. It was a physical paper book until Zuckerberg brought it to the internet.
With this success, Zuckerberg, Moskowitz and Hughes moved out to Palo Alto for the summer and rented a sublet. A few weeks later, Zuckerberg ran into the former cofounder of Napster, Sean Parker. Parker soon moved in to Zuckerberg’s apartment and they began working together. Parker provided the introduction to their first investor, Peter Thiel, cofounder of PayPal and managing partner of The Founders Fund. Thiel invested $500,000 into Facebook.
With millions more users, Friendster attempted to acquire the company for $10 million in mid 2004. Facebook turned down the offer and subsequently received $12.7 million in funding from Accel Partners, at a valuation of around $100 million. Facebook continued to grow, opening up to high school students in September 2005 and adding an immensely popular photo sharing feature the next month. The next spring, Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as previous investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was about $525 million. Facebook subsequently opened up to work networks, eventually amassing over 20,000 work networks. Finally in September 2006, Facebook opened to anyone with an email address.
In the summer of 2006, Yahoo attempted to acquire the company for $1 billion dollars. Reports actually indicated that Zuckerberg made a verbal agreement to sell Facebook to Yahoo. A few days later when Yahoo’s stock price took a dive, the offer was lowered to $800 million and Zuckerberg walked away from the deal. Yahoo later offered $1 billion again, this time Zuckerberg turned Yahoo down and earned instant notoriety as the “kid” who turned down a billion. This was not the first time Zuckerberg turned down an acquisition offer; Viacom had previously unsuccessfully attempted to acquire the company for $750 million in March, 2006.
One sour note for Facebook has been the controversy with social network ConnectU. The founders of ConnectU, former classmates of Mark Zuckerberg at Harvard, allege that Zuckerberg stole their original source code for Facebook. The ordeal has gone to court, and has now been resolved.
Notwithstanding this lingering controversy, Facebook’s growth in the fall of 2007 was staggering. Over 1 million new users signed up every week, 200,000 daily, totaling over 50 million active users. Facebook received 40 billion page views a month. Long gone were the days of Facebook as a social network for college students. 11% of users are over the age of 35, and the fastest growing demographic is users over 30. Facebook has also seen huge growth internationally; 15% of the user base is in Canada. Facebook users’ passion, or addiction, to the site is unparalleled: more than half use the product every single day and users spend an average of 19 minutes a day on Facebook. Facebook is 6th most trafficked site in the US and top photo sharing site with 4.1 billion photos uploaded.
Based on these types of numbers, Microsoft invested $240 million into Facebook for 1.6 percent of the company in October 2007. This meant a valuation of over $15 billion, making Facebook the 5th most valuable US Internet company, yet with only $150 million in annual revenue. Many explained Microsoft’s decision as being solely driven by the desire to outbid Google.
Internet Companies spend millions on consultants
Large Internet companies spend millions on consultants and technology trying to get their sites to rank among the highest results on Google. Everyone else has to rely on the poor man's search-engine optimization: the link exchange.
The thinking behind link exchanging is that Google will record links as a vote of confidence for sites.
If you've ever hung up your own shingle on the Web, you've probably gotten an e-mail to this effect at some point: "Dear So-and-so, I believe your site and mine could benefit from exchanging links."
We probably get eight to 10 a week in the CNET News general mailbox, mostly from technology-related companies but occasionally from auto-parts suppliers and watch retailers who either have no idea what we do or few moral qualms about spam.
The idea is that if you can coax a link out of a large site like CNET, Google and other search engines will record that link as a vote of confidence in your site's worthiness and improve your ranking in searches for certain topics, thereby boosting traffic to your site. The technique is quite old, dating back even before Google and its PageRank system emerged as the Web's dominant search engine.
But does it still work? And at what point do two or three sites struggling to get off the ground veer off the road from mutual assistance to a full-blown spam operation designed to game the system?
Evan Duffield, for one, thinks it still works. He contacted us trying to get CNET to exchange links with WarpedAI.com, a site he has launched to promote stock-trading tools for day traders, and says he has been able to slowly build up the PageRank of another site he owns using techniques that don't run afoul of Google's Webmaster guidelines.
"It's kind of a vicious circle," he said. "To start a new business you need PageRank, but to get PageRank you need links to your service. You have to get the ball rolling."
Don't Miss
Latest CNET News videos
CNET News image galleries
More technology news from CNET
PageRank is the currency of the Web. Google's novel approach to site indexing way back when was to evaluate the worthiness of a site based on how many other sites were linking to it, also taking into account the worthiness of the sites passing along the links.
This meant, and still does mean, that a link from a site with a high PageRank counts for way more than a link from a site with low PageRank.
But how do you get a link from one of those sites? Google's official advice: "The best way to get other sites to create relevant links to yours is to create unique, relevant content that can quickly gain popularity in the Internet community." That, of course, sounds like something your mother would say.
In a Web as vast as this one, getting attention for a new site, even one with superb content, is a very difficult undertaking. Bloggers can discuss each other's work and help each other build up a following, but if you're selling a product or service it can be much more difficult to climb the ranks of search results for things like "day-trading software" when you're starting from scratch.
So Webmasters like Duffield turn to solicitations for links. Danny Sullivan, who writes about search-engine optimization for Search Engine Land, says "if you're a new site, absolutely you want to be doing link building. But you need to be doing that in a smart fashion."
Duffield says he's very careful to only solicit links from sites that are related to his product: his pitch for exchanging links that somehow wound up at our doorstep was addressed to computer-go@computer-go.org, a mailing list for hobbyists trying to tackle the difficult chore of building a computer AI system for the ancient game of go.
That was a mistake, he said; the result of prematurely hitting send on an e-mail template. Duffield compiles his targets by searching for sites that are related to finance and stock trading, and attempts to contact a general e-mail address to pass along his site's information and offer a link exchange.
"It's not about the actual links so much as it is optimizing search queries," Duffield said. "When I figure out a query I want from Google, I can see the top three positions have this much page rank and this many positions, and try to beat that out."
As long as people like Duffield are exchanging links without offering payment, or crossing obvious lines such as breaking captchas and posting spam links in guestbooks or comment forums, they're following the spirit of Google's Webmaster guidelines.
"Where it tends to get into tricky issues is where people are doing it primarily for payment," Sullivan said. "Search engines would see links as votes. Google does not like that people would simply be buying links to do better.
While paid links are clearly off-limits, Google appears to ban link exchanges in general, saying it does not allow "excessive link exchanging" but failing to define exactly what constitutes "excessive."
Other practices that are verboten include links to "bad neighborhoods" on the Web and complicated networks of several Web sites with little content but pages and pages of links amongst themselves that Google can usually identify.
For the most part, however, the practice is rampant enough that only the most egregious violations get snagged. "If you start thinking too much about not getting caught, you're probably doing things you shouldn't be doing," Sullivan said.
In an era where SEO is a budding industry unto itself, link exchanges are perhaps the most basic approach. Far below the realm of those dithering over Google's search index are those like Duffield trying to make something out of literally nothing.
While he needs to build PageRank equity to get started, Duffield acknowledges that at a certain point that Google is right: a site will live or die on its content. Link exchanges only work to get one's name out there: the real boost needed to turn a Web site into a business comes when real people start discussing and linking to a service on blogs, message forums, and social-networking sites.
That's when your search ranking (and therefore traffic) really starts to grow, he said. "If you can make Google see that something is being talked about all over the Internet, what choice do they have?"
The thinking behind link exchanging is that Google will record links as a vote of confidence for sites.
If you've ever hung up your own shingle on the Web, you've probably gotten an e-mail to this effect at some point: "Dear So-and-so, I believe your site and mine could benefit from exchanging links."
We probably get eight to 10 a week in the CNET News general mailbox, mostly from technology-related companies but occasionally from auto-parts suppliers and watch retailers who either have no idea what we do or few moral qualms about spam.
The idea is that if you can coax a link out of a large site like CNET, Google and other search engines will record that link as a vote of confidence in your site's worthiness and improve your ranking in searches for certain topics, thereby boosting traffic to your site. The technique is quite old, dating back even before Google and its PageRank system emerged as the Web's dominant search engine.
But does it still work? And at what point do two or three sites struggling to get off the ground veer off the road from mutual assistance to a full-blown spam operation designed to game the system?
Evan Duffield, for one, thinks it still works. He contacted us trying to get CNET to exchange links with WarpedAI.com, a site he has launched to promote stock-trading tools for day traders, and says he has been able to slowly build up the PageRank of another site he owns using techniques that don't run afoul of Google's Webmaster guidelines.
"It's kind of a vicious circle," he said. "To start a new business you need PageRank, but to get PageRank you need links to your service. You have to get the ball rolling."
Don't Miss
Latest CNET News videos
CNET News image galleries
More technology news from CNET
PageRank is the currency of the Web. Google's novel approach to site indexing way back when was to evaluate the worthiness of a site based on how many other sites were linking to it, also taking into account the worthiness of the sites passing along the links.
This meant, and still does mean, that a link from a site with a high PageRank counts for way more than a link from a site with low PageRank.
But how do you get a link from one of those sites? Google's official advice: "The best way to get other sites to create relevant links to yours is to create unique, relevant content that can quickly gain popularity in the Internet community." That, of course, sounds like something your mother would say.
In a Web as vast as this one, getting attention for a new site, even one with superb content, is a very difficult undertaking. Bloggers can discuss each other's work and help each other build up a following, but if you're selling a product or service it can be much more difficult to climb the ranks of search results for things like "day-trading software" when you're starting from scratch.
So Webmasters like Duffield turn to solicitations for links. Danny Sullivan, who writes about search-engine optimization for Search Engine Land, says "if you're a new site, absolutely you want to be doing link building. But you need to be doing that in a smart fashion."
Duffield says he's very careful to only solicit links from sites that are related to his product: his pitch for exchanging links that somehow wound up at our doorstep was addressed to computer-go@computer-go.org, a mailing list for hobbyists trying to tackle the difficult chore of building a computer AI system for the ancient game of go.
That was a mistake, he said; the result of prematurely hitting send on an e-mail template. Duffield compiles his targets by searching for sites that are related to finance and stock trading, and attempts to contact a general e-mail address to pass along his site's information and offer a link exchange.
"It's not about the actual links so much as it is optimizing search queries," Duffield said. "When I figure out a query I want from Google, I can see the top three positions have this much page rank and this many positions, and try to beat that out."
As long as people like Duffield are exchanging links without offering payment, or crossing obvious lines such as breaking captchas and posting spam links in guestbooks or comment forums, they're following the spirit of Google's Webmaster guidelines.
"Where it tends to get into tricky issues is where people are doing it primarily for payment," Sullivan said. "Search engines would see links as votes. Google does not like that people would simply be buying links to do better.
While paid links are clearly off-limits, Google appears to ban link exchanges in general, saying it does not allow "excessive link exchanging" but failing to define exactly what constitutes "excessive."
Other practices that are verboten include links to "bad neighborhoods" on the Web and complicated networks of several Web sites with little content but pages and pages of links amongst themselves that Google can usually identify.
For the most part, however, the practice is rampant enough that only the most egregious violations get snagged. "If you start thinking too much about not getting caught, you're probably doing things you shouldn't be doing," Sullivan said.
In an era where SEO is a budding industry unto itself, link exchanges are perhaps the most basic approach. Far below the realm of those dithering over Google's search index are those like Duffield trying to make something out of literally nothing.
While he needs to build PageRank equity to get started, Duffield acknowledges that at a certain point that Google is right: a site will live or die on its content. Link exchanges only work to get one's name out there: the real boost needed to turn a Web site into a business comes when real people start discussing and linking to a service on blogs, message forums, and social-networking sites.
That's when your search ranking (and therefore traffic) really starts to grow, he said. "If you can make Google see that something is being talked about all over the Internet, what choice do they have?"
Tuesday, June 9, 2009
Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Monday, June 8, 2009
Traditionally, banks have not provided financial services to clients with little or no cash income. Banks must incur substantial costs to manage a client account, regardless of how small the sums of money involved. For example, the total revenue from delivering one hundred loans worth $1,000 each will not differ greatly from the revenue that results from delivering one loan of $100,000. But the fixed cost of processing loans—of any size—is considerable: assessment of potential borrowers, their repayment prospects and security; administration of outstanding loans, collecting from delinquent borrowers and so on. There is a break-even point in providing loans or deposits below which banks lose money on each transaction they make. Poor people usually fall below it.In addition, most poor people have few assets that can be secured by a bank as collateral. As documented extensively by Hernando de Soto and others, even if they happen to own land in the developing world, they may not have effective title to it.[4] This means that the bank will have little recourse against defaulting borrowers.
Seen from a broader perspective, it has long been accepted that the development of a healthy national financial system is an important goal and catalyst for the broader goal of national economic development (see for example Alexander Gerschenkron, Paul Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger etc.). However, the efforts of national planners and experts to develop financial services for their nations' majorities have often failed since World War II, for reasons summarized well by Adams, Graham & Von Pischke in their classic analysis 'Undermining Rural Development with Cheap Credit'.[5]
Because of these difficulties, when poor people borrow they often rely on relatives or a local moneylender, whose interest rates can be very high. An analysis of 28 studies of informal moneylending rates in fourteen countries in Asia, Latin America and Africa concluded that 76% of moneylender rates exceed 10% per month, including 22% that exceed 100% per month. Moneylenders usually charge higher rates to poorer borrowers than to less poor ones.[6] While moneylenders are often demonized and accused of usury, their services are convenient and fast, and they can be very flexible when borrowers run into problems. Hopes of quickly putting them out of business have proven unrealistic, even in places where microfinance institutions are very active.[citation needed]
Over the past centuries practical visionaries from the Franciscan monks who founded the community-oriented pawnshops of the fifteenth century, to the founders of the European credit union movement in the nineteenth century (such as Friedrich Wilhelm Raiffeisen) and the founders of the microcredit movement in the 1970s (such as Muhammad Yunus) have tested practices and built institutions designed to bring the kinds of livelihood opportunities and risk management tools that financial services provide to the doorsteps of poor people.[7] While the success of Grameen Bank (which now serves over seven million poor Bangladeshi women) has inspired the world, it has proved difficult to replicate this success in practice. In nations with lower population densities, meeting the operating costs of a retail branch by serving nearby customers has proven considerably more challenging.
Although much progress has been made, the problem has not been solved yet, and the overwhelming majority of people who earn less than $1 a day, especially in the rural areas, continue to have no practical access to formal sector finance. Microfinance has been growing rapidly with $25B currently at work in microfinance loans.[8] It is estimated that the industry needs $250 billion to get capital to all the poor people who need it.[8] The industry has been growing rapidly and there have been concerns that the rate of capital flowing into microfinance is a potential risk unless managed well
Sunday, May 10, 2009
Nepal is one of the poorest country in the world and the poorest in the South Asia region. Its poverty reduction rate is low. The main reasons for this low poverty reduction rate are: (i) low per capital income, (ii) concentrated urban growth, and (iii) high population growth rate. Out of a population of 23 million, 38% are in below the poverty line. Most of the poor people live in rural areas and have little opportunity. Micro-finance could help poor people who have no collateral, but a willingness to work and a desire to do some business activities from which he/she will acquire employment as well as income.
Although many programmes have been implemented for poverty alleviation in Nepal, only micro-finance programs are seen as a poor targeted and rural based.
InNepalagriculture based co-operatives were initiated in the 1950s as a first step in micro-finance. Poverty alleviation rural based programs were initiated through the small farmers development program (SFDP) on a pilot test basis in 1975 by the ADB/N. The success of the pilot tests in Dhanusa and Nuwakot districts encouraged policy makers to expand formal rural based micro-finance programs.
The SFDP is now being transformed into several autonomous, self-help organizations called Small Farmers Cooperatives Limited (SFCLs), which are managed by farmers themselves. Other micro-finance development programs, such as Priority Sector Lending Program (PSLP), Intensive Banking Programme (IBP), Production Credit for Rural Woman (MCPW) and Rural Self-Reliant Fund (RSF) have been implemented. After studying the pros and cons of various microfinance development programs government began to rethink the delivery mechanisms of micro-finance.
In 1992, government set-up two Grameen Bikash Banks as a replication of the Bangladesh Grameen model of micro-finance delivery. Government also created a situation to encourage participation in the micro-finance by the private sector. Subsequently Nirdhan, CSD, Chhimek and other organisations came into existence. RMDC was also established to support micro-finance institutions by giving wholesale credit, initiating training and other necessary support to the MFIs. Some Government directed Programs (TLDP, Bishweshwor with poor, PAPWT, Community Ground water project, etc.) have been implemented in coordination with NRB.
MFIs are dependent on small savings from group members. As a definition Micro-finance is, as a part of development finance, rural or urban, targeted towards specific groups of people, male or female, falling in the lower bracket of society. Financial services include savings, credit and other services such as micro money transfer and micro-insurance. This service is differentiated by types of service employment and income orientated objectives, target group, target community, target area and credit at home.
In the past decade, micro-finance has been recognized as a particularly effective development intervention for three basic reasons:
The services provided can be targeted specifically at the poor and poorest of the poor.
These services can make a significant contribution to the socio-economic status of the targeted community.
The institutions that deliver these services can develop, within a few years, into sustainable organizations with steadily growing outreach.
In this context, it is important to make a couple of distinctions:
Micro-finance is more than the provision of credit. It involves the provision of other financial services (most usually savings and insurance) and recognizing that even the poor have a variety of needs, not just credit.
Securing sustainable access to micro-finances for low-income communities involves building (or reforming) micro-finance institutions- not just the delivery of time-bound micro-finance programs (such as offering short-term revolving funds)
Although many programmes have been implemented for poverty alleviation in Nepal, only micro-finance programs are seen as a poor targeted and rural based.
InNepalagriculture based co-operatives were initiated in the 1950s as a first step in micro-finance. Poverty alleviation rural based programs were initiated through the small farmers development program (SFDP) on a pilot test basis in 1975 by the ADB/N. The success of the pilot tests in Dhanusa and Nuwakot districts encouraged policy makers to expand formal rural based micro-finance programs.
The SFDP is now being transformed into several autonomous, self-help organizations called Small Farmers Cooperatives Limited (SFCLs), which are managed by farmers themselves. Other micro-finance development programs, such as Priority Sector Lending Program (PSLP), Intensive Banking Programme (IBP), Production Credit for Rural Woman (MCPW) and Rural Self-Reliant Fund (RSF) have been implemented. After studying the pros and cons of various microfinance development programs government began to rethink the delivery mechanisms of micro-finance.
In 1992, government set-up two Grameen Bikash Banks as a replication of the Bangladesh Grameen model of micro-finance delivery. Government also created a situation to encourage participation in the micro-finance by the private sector. Subsequently Nirdhan, CSD, Chhimek and other organisations came into existence. RMDC was also established to support micro-finance institutions by giving wholesale credit, initiating training and other necessary support to the MFIs. Some Government directed Programs (TLDP, Bishweshwor with poor, PAPWT, Community Ground water project, etc.) have been implemented in coordination with NRB.
MFIs are dependent on small savings from group members. As a definition Micro-finance is, as a part of development finance, rural or urban, targeted towards specific groups of people, male or female, falling in the lower bracket of society. Financial services include savings, credit and other services such as micro money transfer and micro-insurance. This service is differentiated by types of service employment and income orientated objectives, target group, target community, target area and credit at home.
In the past decade, micro-finance has been recognized as a particularly effective development intervention for three basic reasons:
The services provided can be targeted specifically at the poor and poorest of the poor.
These services can make a significant contribution to the socio-economic status of the targeted community.
The institutions that deliver these services can develop, within a few years, into sustainable organizations with steadily growing outreach.
In this context, it is important to make a couple of distinctions:
Micro-finance is more than the provision of credit. It involves the provision of other financial services (most usually savings and insurance) and recognizing that even the poor have a variety of needs, not just credit.
Securing sustainable access to micro-finances for low-income communities involves building (or reforming) micro-finance institutions- not just the delivery of time-bound micro-finance programs (such as offering short-term revolving funds)
Monday, March 30, 2009
Every business firm would like to earn profit and it has to carry out various financial activities in order achive the objectives of earning profit. the financial accounting measures the mfinancial performance of a business concern with the help of income statement and financial position is ascertained by preparing balance sheet such statements are popularly known as financial statement. In simple words financial statement means a statement or document which depicts the requred financial information about the business enterprise. Thus financial statement are summerised statement which provides detailed information regarding operating resukts and financial position of an enterprise. Financial position are prepare generally at the end of accounting period i.e. one year. such statements are based up on basic facts and historical cost recorded on the books of an account financial statements normally includes profit and loss account(income statement) and balance shhet (position statement).
Financial stements are written reports of financial affairs of a company. They report and communicate the of its business operations for a particular period of the peried. the results of the company business operation are revalued by the net profit it has earned
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