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The $800 Billion Bank Shot

Dynasty

Hieronymus Bosch, click for closer look

From One Speech to Another

It was. Katie Couric said, the most important speech of his presidency. He delivered it with all the poignancy of voice recognition software in a tone, more somber, without the trademark swagger down the long red carpet to the lectern adorned with the presidential seal, and the surrounding flags. Here, in what was to be a pensive mood, he stood before the book-lined wall of the West Wing library.  On cue, and as if he had just swallowed his cod liver oil,  he stumbled over simple phrases,  mouthing in fits and starts, the words moving across the teleprompter.

After six years of unmitigated blunders, the untouchable frat-boy scion, third in a line of a silk stocking senator, and half-baked son of a president, had finally reached that particularly Potomac moment when it becomes necessary to play the oh so passive "mistakes have been made" gambit. Attempting to evoke comparisons with the haberdashery store owner, main street everyman, Democratic machine politician who had risen to become president  and whose unpopularity stemmed from tough choices, he allowed that the buck stopped with himself!

Cocooned in the time warp of his inner circle, he seemed unaware that the viewers and the public beyond had lost faith in his veracity, that the New Orleans fiasco had reinforced their view of his detachment,  that the elections of 2006 had in fact already taken place and that through a slue of well sourced books, that public knew how he had resonated with the paper hawks, knew that he had placed the aim of an Iraq invasion on the table the day after 911, knew how he had welcomed dubious assertions of an intelligence "slam duck", how he had chosen to overlook the cautions of his own father's wisemen, had silenced the generals that opposed his strategy, recalling how, with that same elevated detachment, he had literally urged would-be Jihadists to come to Iraq to kill Americans even as the first chaos and casualties mounted, and finally, that a long string of his most important assertions, in a void of real explanations, all, without exception, had proven false.

Après Moi, Le Deluge

Now this articulately-challenged man had the unfiltered task of convincing that there was something different in this escalation*, this time.  In order to get any traction from a soured public, he would have to do more than rely on the usual half truths, wallpaper and slogans, to explain here and in carefully chosen media interviews to follow, where the previous strategy had gone wrong and how the new strategy would be different.  For a man used to delivering a simple staccato of faith-based assertions, there were unfamiliar nuances and efforts to deal with:  he needed to explain why it was that nearly 4 years into the program, with all the negative momentum that time span implied, the local army, that supposedly numbered 350,000 US-trained men, and backed by 130,000 Americans was still not able to bring order to the streets of the capital city, itself and that 20,000 more American troops would somehow not just tamp things down 'til he could get through his presidency, as some suspected, but actually tip complex local political scales that preceded this occupation, in some cases, for a millennium and in the case of tribal and ethnic rivalries, from time immemorial..

Hey, Hey, LBJ

In Vietnam`War days, the then President, Lyndon Baines Johnson had to endure the constant pressure of public demonstrations against the increasingly unpopular war.  A particularly biting cry for Johnson was the refrain:  Hey! hey! LBJ, how many kids did you kill today?

This time around, the President has succeeded in keeping the deaths out of sight and in hiding just how much treasure he is dissipating with this war for oil that was supposed to be paid for by that oil.  He has seen the numbers of American deaths, met some of the parents and some of the many who have been maimed for life, but he has been mainly shielded from the hundreds of thousands of human lives that have already been destroyed as a  result of his adventure in which he has used the US military with all the precision of a stick poking a hornet's nest; for, despite the silence in our streets, the upheaval it's set off has been enormous and will become even more so in the years to come, as the consequences play out.

 As for money, the US has directly dispensed 400 billion but a recent NY Times article estimates the real costs, already exceeding $1.3 trillion, will eventually top $3 trillion as long term cost kick in and moneys are spent on the nation building phase, the refugees who have been displaced and the pensions and care of the 10's of thousands of soldiers and families who will need our support for the rest of their lives. As after the Vietnam War, a financial day of reckoning will come when Americans wonder where the buying power of their dollars has gone and add up what they got in return.

Dynasty and Democracy

Our democracy relies of course on all of us.  It is the system we have inherited and despite its weaknesses is, as Churchill said, still better than anything else we know. But, as we've seen, it is constantly endangered by the great imbalances in wealth and power that serve to underpin and weaken the system. For the military contractors, the great petrochemical corporations and the financial services handling the cash flows, the war has been a great bonanza. As one minute barometer of the money that has been set awash, real estate values around Washington DC have soared in the last six years like few other places in the country.

In that regard, as in all wars, these have been the best of times for those in a position to profit from the great sums that are inevitably dispensed. Year-end bonuses in this miserable year of setbacks abroad were so high in some places that even first-year employees became instant millionaires.

The elites gathered around the courts of power had chosen to elevate the brash son of a President who had been one of theirs, not the one waiting in the wings.  In a compromise with an electoral base they needed, they allowed themselves to choose this man known to have a string of bad episodes behind him, an arrogant grown-up, who, having never really suffered any, liked to talk about consequences. To ensure he had a chance of getting in, his DUI's, military foibles, and coke use had to be firmly buried, just as his business failures were papered over. 

The Legacy: A Conservative Nightmare

When George 43 took over, his ascendancy coincided with what seemed in the mind's eye of many Republicans, to be the apotheosis of a new permanent conservative majority. Like a Renaissance painting, Bush 43's ascendancy rested on an allegorical pyramid of permanent national power bases.  For the emboldened, America, the sole superpower standing, with an unchallenged technological and commercial superiority, like an F15 soaring above the radar in an unclouded sky, would assertively forge a New American Century, with family values, religious zeal, unfettered trade, and Western ideals rising to meet the new day. In this historical moment, the effects of the long national trauma of Vietnam were finally put to rest,  the all volunteer, professional military would rely on superior technology and the globalist ambitions of the corporate giants would be unleashed.  For the elites. gods of the universe who mastered this unchallenged dominance,  the fruits of profits would flow back into their hands in an unprecedented way, American might abroad would be universally feared and respected; awestruck, the permanent majority at home would support a move to undo an entire century's social, intellectual and artistic liberties corrupting the body social and politic.

All that was needed to solidify that majority was an amorphous seemingly permanent enemy to replace what had disappeared with the end of the Cold War.

And Like a Godsend!

On 9/11/2001 with the new president in office for little more than half a year, Osama bin Laden delivered to the White House doorstep the perfect new permanent enemy, Radical Islam, or better, Global Terrorism. For the neocons behind the takeover, this might have been called a godsend. Conspiracy theorists would wonder, among other things, how it was that bin Laden's large family in America, were the only people to be flown out in the first few chaotic hours after the attack when the skies were closed to all but military activity. No one denied that the Bushes and bin Ladens had prior business connections and that Osama had been a CIA client during the Soviet/Afghan war.  The public, of course, even many in that majority who had voted for Al Gore, saw their President's steely eyes and thanked God he had been chosen by the Supreme Court.

Now in 2007, with the Iraq adventure gone terribly wrong, with our vital energy supply in real danger, with US prestige and respect at an all time low around the world, with a seemingly unstoppable emerging China holding over a trillion dollars of US debt, with a trade imbalance built in, soaring deficits (Bush has kept the cost of the war off of the books as if it were inconsequential), the old allies unwilling to help, even in a slipping Afghanistan, with that solid gold military now seen to be stretched beyond its capabilities, its fighting capacities and manpower depleted and a public newly skeptical of what their government tells them, new Democratic majorities were being forged in disgust from Virginia, across the Midwest to the depth of the Mountain States.  Conservatives are likely to think they have woken up to their worst nightmare.

To fully gauge the impact, it's now possible to imagine, in the dynamics of Washington politics, that Bush 43 may expect the same kind of treatment from his own party that Richard Nixon got the last time the scenario ran amok.

The World War III Scenario

There is likely to be a hidden power struggle with the President and Vice President pushing for a move up to a war with Iran while the sober establishment that anointed them makes its own moves to pin all their troubles on this chronic failure who had enticed them to drink too deeply out of the cup of  reactionary religious politics.

The debacle in Iraq has proven that great military powers can exert overwhelming forces that can bring down governments. Fighting sectarians on the streets, house to house is another thing, it requires savvy, intelligence and the will to accept the consequences of sacrifice. By changing the subject to Iran, the warhawks get a new list of targets that can be attacked with pushbuttons from the air and sea.

Before Bush and Cheney manufacture a green light to go after Iran, another Tonkin Bay type episode, they should be given the task of proving that they can stroll through a part of the capital city controlled, not by the enemy Sunnis, but by our primary allies, the Shias; say, Sadr City. Having done that, they will have given us something more than their usual words, success and victory, to go by.

Of Democracy and Dynasty

Finally, perhaps in this our still evolving Democracy, we should look twice at the poor precedent that was set many years ago by the Adams family. One of the scourges of monarchy, was the elevation of highly flawed heirs. In that light, too, Democrats also should be taking a hard look at the implications of the Hillary husband/wife precedent they may be willing to set this time around.

*It should be noted that right from the beginning the image managers have worked overtime to keep Vietnamese-era resonating words out of the mouths of the media; rarely are the terms body bags, body count, hearts and minds, collateral damage used, likewise the handlers have fought terms like Sunni, Shiite, insurgency, civil war, quagmire and now escalation is the latest.  In her testimony Secretary Rice would only go so far as to call it an enlargement (she probably doesn't get the same spam we do, or she might have come up with something else). Surge had to be pulled back because it implied a short period and would have undermined support from McCain, Lieberman.etc.

 

Technorati Tags: Bush Speech, Iraq Escalation, Constitution

Is There a Plan?

Detail: Torcello mosaic
The Last Judgement
(click to enlarge)

The Renaissance had hardly spread its way north from Italy, when a Catholic cleric educated in the Polish university city of Krakow published his revolutionary findings indicating that the planet Earth was part of a cosmic system in which it, along with some of the other most well recognized bodies in the night sky rotated in orbit around the Sun. The theory was profoundly revolutionary because the Church to which all Western Europe belonged had decreed as doctrine over a thousand years earlier an entirely different model for the way the universe functioned. In the system allowed, it was deigned by God's infallible representative on Earth, the Papacy in Rome, that the Earth, and by inference, mankind, its inhabitants, was positioned at the very center of the universe, and that the stars, or heavenly bodies, rotated around us, while down below a place was reserved for all those who sinned against God and his representative on earth, that same Holy Roman Church.

Because Poland was far enough away and Nicolas Copernicus little known outside a small circle of astronomers, the theories published in his De revolutionibus orbium coelestium in 1541 caused little stir in the chambers of power. In fact, De Revolutionibus was not officially banned by the Church for 75 years, until the year 1616. By that time the Church's authority was being attacked on a number of fronts. In Rome, itself, the monk Giordano Bruno had to be publicly burned at the stake in 1600 to silence his espousing of views that were derived from Copernicus' work but went even beyond them.

Finally, it was a much better known man, living in Florence at the intellectual center of Italy itself, and famous throughout Europe for his philosophical and scientific findings and the refinements he had made to the telescope --in Galileo Galilei's case, it was a view of the moons of Jupiter he saw through his looking glass-- that caused a festering political crisis in Rome.

As Galileo, who had been formally silenced since before 1616 specifically for his views on the solar system, found himself aging, his patience began to run out. Hoping perhaps that his personal relationship with the new Pope in Rome, Urban VIII, once his sympathetic patron in Florence, might protect him, Galileo decided to publish on some scant assurances, cloaking as a literary satire in a work he called the Dialogue, his forbidden arguments in favor of a non Earth-centric universe. Quite unsubtly, however, he names the churchman defending the accepted Ptolemaic version, Simplicio, or Simpleton.

For his pains to bridge the various sides of the argument, the aging and ill Galileo was summoned to make the journey to Rome where he was first left to cool his heals for several months and finally to be brought back to face the judges of the Inquisition for the second and final time. For publication of his Dialogue, he is sentenced to excommunication and with it, to eternal damnation, unless he publicly renounces before "his betters" his ideas. For the humiliation that terrible act of obedience brought him, he was sentenced to live out his days back in Florence under house arrest.

In an age dominated by nautical exploration that would strategically shape the world to come, the Galileo fiasco was to prove to be a great embarrassment to the Church in its battle to win the hearts and minds of people in the countries along the Catholic Protestant divide. A critical navigation problem of the day was the determination of longitude, a problem that would require a true understanding of the mechanics of solar time. The need for a scientific methodology divorced from theology became a critical element for national prosperity and power.

If Galileo and Copernicus never  felt the need to express doubts in the existence of a divine Presence, they were all too aware of the flaws of those humans who cloaked themselves in the power of divine authority. As far as we know, neither thought there was a need to bridge the gap between the philosophy of matter and the philosophy of divinity  through the use of this newly developing system of scientific methodology based on repeatable proofs. Interestingly, it was one of the greatest and most diligent scientific and mathematical geniuses we know of, Isaac Newton, who it seems, actually tried to prove the existence of God using scientific methodology.  For the pains of nearly 20 years of secret and intense alchemic experimentation, Newton, drove himself into a state of mental breakdown, bringing him close to death.

But for the Enlightenment academics who followed, Newton's studies on alchemy were better left in the closet. It wasn't until several centuries later, in most prosperous and forward Victorian England when Charles Darwin proposed his theories of the origins and species and the dynamic of evolution, that serious public and religious backlash to scientific methodology once again flared. The idea that our species had evolved as part of a long history that led from a primordial mix up through the apes, was too much for many in the public to swallow. If Copernicus had freed them from a medieval straightjacket based on obedience and absolutions doled up by a distant hierarchy, here they preferred what they found in their own mirrors, written in their Bible and painted on church walls and chapels -- that God had created man in his own image. Darwin, it was seen, was not just challenging the religious authorities and the very text of the Bible, itself but the security of mankind's position at the top of the food chain. If evolution could bring us to this point of dominance, could it not just as easily, render us irrelevant?

Like Galileo, the acceptance of Darwin has been a hard pill to swallow for large swaths of the population. Despite all this history, today, in the country that has most prospered from technical and scientific openness, there is a concerted move to confound the spheres of science and theology. The authors of the most credible attempt, challenge Darwin's theory with something they call Intelligent Design. Its proponents seize on several gaps in Darwin's theory, mainly, that DNA, being a common component of even the simplest of life forms, appears to be possibly too complex and elegant to have emerged whole cloth from purely natural phenomenon. They argue, then, that this complexity and elegance is a sure testament of the hand of God in the creation of life process. They replace the dynamic of mutation and survival of the fittest with a celestial blueprint charted by a supreme omniscient architect.

But if intelligent design implies a clockwork universe guided by an invisible hand, as seems to be the argument, there is a much older and bigger problem that then has to be dealt with (Spinoza, anyone?). It sets the stage for the appearance of God's foe, Satan. For, if an omniscient almighty God has put into motion all aspects of the long string of geological and organic changes or mutations that continue to reshape the universe, how do we then deal with the innocent human consequences of serious natural calamities like the recent earthquakes, tsunami and hurricanes that wreak so much sorrow and suffering on vastly different  populations?

At this moment we happen to be looking down the long barrel of a threat as small as a single instance of recombination or mutation. Should it happen, as most experts believe, there will be a slight shift in the tiny clump of protein that makes up the Bird Flu virus H5N1, giving that agent the power to easily pass from human to human, as the influenzas that commonly attack us so efficiently, do. Should this occur, and hundreds of millions of people around the world are stricken and die, shall we have to believe that we are being moved by the great plan or even pawns in a great cosmic struggle between good and evil? Will we be asked to also conclude, as in those medieval times when only "our betters" knew where heaven and hell were located, that we, like the good citizens of Dover Pennsylvania, are being punished for our sins?

At least in medieval times, proven information was not available, people only knew to believe what they were told. Thrown back into ignorance, with the force of a tornado in Kansas, we don't have that excuse today.
 

The Silence of August

SILENT DANCE

In the heat of the Potomac Summer, here at Dymaxia HQ, we sometimes show symptoms typical of the ague. Still, to our surprise, tiptoeing through the code orange ozone sky, a specter has appeared.

We know that in these quiet points, history can tip on single events like the defiance of a fatigued Rosa Parks on a long ago bus ride. This time the story is happening in Crawford TX outside the entrance to the Bush Ranch, where Cindy Sheehan, mother of a soldier killed in Iraq, has managed to draw attention to the mounting feeling of despair that has been stealthily creeping over the country as the toll of war deaths and injuries continues to mount relentlessly.

Why Ms. Sheehan's protest has gathered so much attention (as always, these days, first in the Blogosphere) says much about the way both the Administration and the mainstream Media have up to now danced somewhat macabrely around the entire Iraq narrative, best frozen by the daily presentation of war dead in silence on PBS's News Hour with Jim Lehrer. The must-be in silence metaphor holds not just for the Media but also for the Political Class and public. Most notably leading this silence is President Bush, who,  speech-challenged in the most ordinary sense, has also refused to provide the kind of rallying cry we expect from a leader who has put so much treasure and blood on the line for what can only be called a war of his own choice.

It is said by those who know his heart that the President is a deeply religious man who believes that he has been given his great position and the power inherent in it to serve the will of the Almighty. If this is true, and we have no reason to doubt it, we then can't help but to note that the President has never stood before the American people and shared this belief with the country. We can only imagine that this act of divine will is carried out in reflective silence.

Perhaps this is one reason for his relative quiet on the sacrifices his policy is requiring of a large number of us. On the other hand, and this can only be policy, we as a whole population are not being asked to make any direct sacrifices to ensure a successful outcome for this costly and Earth-moving venture. To date, the burden has fallen almost entirely on the shoulders of the professional military and their families; ... enter Ms. Sheehan.

To the contrary, as regards the rest of us,  it can be argued that the war is providing bounty --at least in the short run-- by fueling a flagging economy.  The 200 plus billions of dollars that is being spent is all off the budget and thus is not being accounted for, something that should be noted as the Administration announces budget deficit projections for the year.  It is a debt that is being run up in a military-industrial shopping spree, that only further speeds up the printing presses. As always, to keep things muddling along, we must rely on the favors of foreign governments to loan us the cash we need.

One of the lessons of the Vietnamese War for the postwar analysts was that a draft greatly exacerbates negative popular feeling during an unpopular war. Perhaps the greatest wall of silence today, in contrast to that turbulent period, emanates from the college campuses. Students, like their parents, run up debt as they go about their daily business unclouded by the thought that they might be called to serve and sacrifice for their country in Iraq and Afghanistan.

When Nightline's Ted Koppel last year at the milestone of  1,000 combat death in Iraq, chose to show the faces of those killed in action, (in silence, of course), he was roundly criticized by the Administration and its backers. ABC was deemed quot;political" for calling attention to this landmark.  In the same regard, one of the great under-told stories of the war has been the enormous number of serious casualties, estimated at some 25,000.

But non-silence can be dear. When Ambassador Joe Wilson spoke up calling the President's bluff on the atomic weapon scare (Niger yellow cake) that he had inserted into his State of the Union Address leading up to the war, "high ups" in \the Administration took the radical step of outing his wife, Valerie Plame, as an agent of the CIA. Factual speech, then, is squelched even as  speech that laid the false pretext of a case for Iraq's weapons of mass destruction (WMD) and links to Osama Bin Ladin (a major critic of Saddam) is left unscathed.

Ironically, silence from Iraq has been achieved through the generally negative situation .  Journalists, fearing for their lives, rely on the reports handed out by the military for their daily news feeds. This has resulted in a situation in which the deterioration has largely been gradual and utterly under reported.  For the most part, we do not know what is going on there on the ground and in the provisional government. We certainly don't know which areas are being controlled by which militias and what the constitutional process may or may not signify. Out of the silence we can surmise that there is a general breaking up of the country, that it is probably impossible to speak of standing up an Iraqi police and military given the mistrust among the Sunnis, Shiites and Kurds --we know this because the Pentagon is hinting that it will have to raise  the level of American troops during a scheduled election on the constitution that is supposed to take place around December and that coincides with the rotation in and out of American forces that allows for an overlap.  If there really was a reliable Iraqi military the extra troops shouldn't be needed. But once again we know this not by what is being spoken but by what is not being said.

The war has gone badly and thus empowered and emboldened neighboring Iran.  The Iraqi Sunnis who along with coreligionist cousins from Saudi Arabia, Syria and Jordan are fighting the Americans will come out with the short end of the stick if the oil fields to the north and south end up in quot;semi-autonomous" federal regions. This will be unacceptable to them and prove a potential danger for the bordering Saudi controlled oil fields of Arabia. It is whispered that Ahmed Chalabi, once the Pentagon's choice to replace Saddam and a leading pre-war player, has established himself near Basra in the South and with Iranian consent is leading a movement to create a semi-autonomous Shiite region that contains the major oil fields and Iraq's only port on the Persian Gulf.

It has become crystal clear there is no good outcome in Iraq.  The US' best hope is that the Shiites backed by the Iranians will somehow be able to box in the Sunnis without requiring too many permanent American troops and that we will be able to put the Iranians in the kind of box we once used against Saddam Hussein. A bad case but much more likely scenario will drive the price of oil to levels that will squeeze a shout of pain out of the silent American backbone. As for the American elites, smiling in silence all the way to the bank as their tax cuts and rising first, second and third home assets have hit the roof, we can expect the loudest calls for relief and subsidy should there be a squeeze. 

Cindy Sheehan has broken the silence, and unless the heat has made us delirious, she's but the first in a roar.

Hen-nyPenny, The Bird Flu Over the Cuckoo's Nest

If, by nature, you are drawn towards gloom and doom, these days you may have begun to believe that you've died and gone to henny-penny heaven. On your checklist you've no doubt got at least the following scenarios: Dirty Bomb, it goes, there's little in the way of stopping someone with knowledge from gathering together from multiple available sources enough radioactive material to create a rather rudimentary "dirty bomb" that could turn any major US city into a Chernobyl like ghost town; Military Quagmire, i.e.; the war in Iraq drags on and as it more fully morphs into a "quagmire" (a winless war of long duration) US military vulnerability becomes more apparent to the rest of the world even as we face potential nuclear threats from Iran and North Korea; Economic Stagnancy, the US and world economies remain stagnant even at the point in which the housing bubble that was created to mitigate the collapse of the stock bubble enters into its own final days, having failed to stimulate jobs and a real recovery; Monetary Collapse, the twin US deficits that keep interest rates artificially low continue to grow resulting in a major sell-off of paper currencies; Jihad, anti-American sentiment spreads and magnifies throughout the Muslim world toppling governments in Saudi Arabia, Egypt and Pakistan (1/4th of the world's population) then spreads to the other 3/4's of the world; Global Climate Change, the global environment relentlessly continues down its path of accelerating climate change within a failed countervailing political system; AIDS?, Genocide in Africa? etc., take you pick!

But according to the World Health Organization, the NIH and other authorities, perhaps none of these match the imminent disaster that awaits us from what appears to be the inevitable spread of the Bird Flu or Avian Virus. In sheer terms of gloom, the facts are staggering. In 1918 right after World War I, the world suffered the worst flu epidemic in modern history. It is estimated that by the time the virus called the Spanish Flu had done its deadly work more people had died from it than had died in history's bloodiest war up to that time. In fact, it's possible to argue that more people died from the Spanish Flu in the course of less than two years than had died in all of the world's wars up to that time. Nobody knows what the mortality figures might be from the coming outbreak of the Bird Flu but it's sobering to note that so far, for known cases where the disease has passed from the poultry host to humans, there has been a death rate of nearly 50%. In contrast, the Spanish Flu killed about 30% of its victims..

In 1918 there were roughly 2 billion people living on Earth. Of those, roughly 22 million died from the great epidemic. Should the Avian Flu have only the same potency as the earlier highly virus, that would mean in today's world of over 6 billion a death toll of some 66 million people. But according to many epidemiologists the death toll this time around will go much higher. This is because of the speed in which the disease will be propelled from country to country and continent to continent via air travel. At any rate, public health resources even in the richest countries will be totally overwhelmed whereas in the poor countries where population density is often the highest, the speed of transmission will completely overrun already frayed civil societies.  In many countries we can expect total collapse as the scourge races through populations

In the looming Avian Flu outbreak scenario, which many of the most credible experts believe is not a question of if but of when (see this month's issue of Nature Magazine), the deaths and ensuing panic will only be the beginning of the suffering. A lasting result of a serious pandemic, will be the kind of economic devastation never before experienced on a worldwide scale. We have to think that in a global economy, many, if not most, of our consumer goods are manufactured in Asia, where the disease is spawning; conversely, we in North America supply many parts of the world with critical food supplies. An attempt to seal our borders from the flow of people and goods in this globally interdependent world, might provide short-term protection  but would lead to unparalleled disruptions in fuel and goods supplies. Massive segments of the US population would be thrown out of work and it's likely that civic disorders would erupt around the country, as shortages and rumors spread even faster than the disease. More than likely, the quarantine would not work for long as the pressures for contraband grew and threatened populations pushed across the border.  For the amount of economic dislocation spawned by a narrow quarantine, we only have to look as far as Toronto during the SARS outbreak there a couple of years ago, which directly affected no more than 500 patients but which brought the city to a standstill.

If you've read this far, you are more than likely to be asking yourself what flavor tobacco we have been smoking here at DW HQ. Surely, this is an overly bleak picture of what such a pandemic can do to a modern society with advanced medical, pharmaceutical and public health capabilities. You may be imagining that in the face of a certain danger, the advanced countries like the US are feverishly building up supplies of vaccines or virus killing drugs.. The picture, unfortunately, harkens back to last year's Asian Flu vaccine shortage. At the time, we all learned a little about the problems associated with vaccine production. It seems, however, that although we can try to get a jump on what we think the virus may look like,  efficient vaccines can be developed only after the precise virus configuration has been determined And that will not happen until the virus that now mainly spreads from bird to bird finds a way not only to leap over to humans and other mammals but mutates in such a way that it can spread directly from human to human. Only then will scientists know the final form. The other piece of the vaccine puzzle is the technique in which vaccines are produced. We also learned last year that flu vaccines require eggs in the production process and that the process itself is highly tricky. Normally, it takes months to get up to full production speed and even then rigorous testing is needed to ensure the vaccine doesn't become just another facet of the problem. Worldwide, there are very few licensed production facilities.

It's clear to us that this peril is as great as humanity has faced in our lifetime including MAD (Mutual Assured Destruction) and the neutron bomb. In perspective, it turns the relatively limited capabilities of the ""terrorists" --as in War on Terrorism-- into a minor diversion. Billions of dollars now being earmarked for military threats that may someday appear on the horizon should be immediately diverted from the Pentagon's budget to that of the Department of Health and Human Services. It would probably take an effort like that of  the Manhattan Project in WWII as the editorial in Nature puts it:

if the next pandemic were to arise five years from now, there would have been breathing space to stimulate our drug and vaccine industries to limit the damage it would cause. But that requires urgent action now. As matters stand, a vaccine against a pandemic flu would not be ready until at least six months after a pandemic starts. Too late: by then the worst of the pandemic would already have happened.

We here at DW, of course, wouldn't know a virus from a spore under a microscope, so we have to take the word of people like Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases but what we do know a little about are the ways of Washington and, sadly, our democracy; The chances of money for true national defense moving from DOD, or any other pocket of the Budget, to HHS or the UN's WHO in time to truly mitigate the crisis are about as big as that virus, or was it a spore?

What's Good for Microsoft is Good for America?

When we saw General Motor's results for the last quarter, we couldn't help remember another America in which it was oft said, "What's Good for General Motors is good for America". A lot's changed since then but we thought it was worth considering the same metaphor in a new light; i.e.; is what's good for MSFT or GOOG or YHOO good for America? And if so, what does that mean?

But first, we'll get back to good old GM. Once upon a time there were three American car companies and then there were two as Chrysler fell first into bankruptcy and then into foreign hands. In those days GM had about a 70% share of the US market and, at least through the rose colored glasses of nostalgia, made some pretty sweet cars. Never mind that the built in clock hardly made it off the sales lot before it stopped or that in the course of three years you could expect your fuel pump, your water pump, transmission and your battery to all need replacement. Of course, if you lived in a northern state, you also had to deal with the body around the wheel wells rotting out.

Today, GM has about a 27% market share and if you want to buy a competitive sedan or convertible from them you have to do some serious research. They, like their major American competitor mainly make pick-up trucks, vans and SUV's. They have, it appears, been particularly hard hit by the recent rise in fuel costs, given the average size of the behemoths in their fleet but their problems go much deeper. Even in the large vehicle area, more and more of their potential customers are choosing autos made by their foreign headquartered foes that often beat them competitively, not on price but on design, quality, fit and finish.

Interestingly, GM hasn't made a profit on the vehicle it makes for several years so that even in years when they showed a profit, it all came from their financing operations. And, as everybody knows, GM has been selling more and more models over the past few years by inducing customers through 0 percent loans and  other incentives. You don't have to be a financial genius to understand that if you are in the finance business loans that pay no interest are bad business. So, it should come as little surprise that as they got all their customers into ever bigger gas slurpers at monthly payments that reflect zero interest and when the price of gas went up, as everybody knew it would, especially with all those guzzlers, GM was looking at customers with less and less disposable income. Money that might have gone to their finance wing, was now flowing  into the pockets of the oil companies and the producer countries.

Are we to be surprised, then, that GM just reported a quarterly loss of over 1.5 billion dollars?

We are, it appears, beginning to see the signs of the coming day of reckoning, when all of the contradictions of the last few years come to roost. What if all that deficit spending, all those tax giveaways that were supposed to spur investment just turned into the stuff of ever greater further deficits? What if Fed Reserve and government policies aimed at stimulating consumption succeeded mainly in stimulating the Chinese economy to build more capacity? What if trade deficits have put the US at the mercy of the foreign countries who hold all our debt? What if we ended up with interest rates so low and creeping inflation that would tie the hands of the Fed? What if we had invested over $300 billion dollars, the lives of 10's of thousands, and the country's prestige on a war that is coming to look more and more like a low level national cancer?

Two weeks ago, as if on prompt --which, of course, is their wont-- the sock puppets of the MSM (mainstream media) all started singing about the improvements in the situation in Iraq. This coincided with the two year anniversary of the "end of major combat". We were to believe that the three warring ethnic groups, Shiites, Sunnis and Kurds had lain down together like proverbial lambs and tigers, that the insurgents were losing interest and thinking about other targets.  What these sock puppets failed to mention is that the cost of taking a taxi the six miles from the Green Zone in Baghdad to the local airport is $35,000. Now, we may be a little old fashioned here in Dymaxia, but 35 grand for a six mile taxi ride in the capital of a pacified country seems a little stiff. Until, of course, as we read yesterday, typically four people a day, even in armored Humvees, die trying to make the trip.

GM, its manufacturer, tried selling the Humvee in civilian form to the US public as the latest in fashionable bigness. Never mind that it gets around 5 miles to the gallon. To help them in their costly marketing campaign, Congress wrote a loophole in the tax code that allows all vehicles above 5 tons to get special tax depreciation treatment.

America's real business, we all agree, is not cars but high tech. Are our leaders fighting about how to get the population educated and trained for the demands of a high tech economy, are we worrying about laying the infrastructure for a high-speed broadband that connects us and leads to the new applications that the world will need, are we encouraging more foreign trained engineers into our graduate schools, are we making connectivity a right rather than a privilege, etc.?

Of course, the answer is no, not in this US  that is still fighting over things that should have been settled when GM really was king. We are buried in arguments over whether pharmacists should be forced to fill prescriptions for people whose habits they don't like, about what equipment is being carried below the belts of people who wish to live legally as couples, whether a person's spouse has the right to make medical decisions against the will of her parents, we are discussing whether our DNA links with other species on the planet means anything in the scientific scheme of things, whether the earth is really more than 5000 years old, whether we should shut down the government in order to potentially determine a woman's right to choose what's good for her body or whether stem cell lines that promise major health benefits should be allowed to come from fetal materials we commonly dispose of.

Maybe there is a reason we are in Iraq that doesn't have to do with oil and Saddam Hussein, maybe in this fixation for the rear view mirror we are really there looking for enlightenment from a society that has deep cultural roots in beliefs little changed in 1500 years.

 

F2C (Freedom to Connect) Post Event Thoughts

David Isenberg, the one-man force behind F2C, deserves everyone's kudos for having delivered a truly important event right here, inside the Beltway. David's, and the tremendous group of attendees and speakers, instincts are right in convening this assembly at this time and in this place. Techno-libertarians may be in denial or dismayed, but to an overwhelming degree, it's the decisions made in the chambers of Washington DC, Brussels and Beijing rather than, say, the boardrooms of Boston, Silicon Valley and Seattle that increasingly set this country's (and the world's) technology directions.

Timely, because for millions of bloggers, social bookmarkers, podcasters, wikiists and vloggers --if we left you out, we didn't mean to-- the Web has begun to live up to its promise of becoming a truly multidirectional, horizontal way to communicate and connect. It, meaning the combination of technological platforms and protocols, has succeeded in profoundly lowering both the barriers to production and distribution for Web communicators. One only has to see that on the Web the New York Times, Fox News and Yahoo have to compete for the same screen space as clever and creative sites run by a single individual or a relatively small group of collaborators. Needless to say, this "long tale" of diverse content and an economic model that can be supported by relatively compact audiences, drives the big content guys nuts. Politicians have also gotten the message: the Web's ability to quickly mobilize supporters and even demonstrators has the potential to overturn the very cozy arrangement they have forged with financial interests in what have increasingly become safe districts where the incumbent has to get caught swimming nude in the tidal basin with a stripper to worry about a potential challenger, and even then, probably a substitute from their own party.

Gut issues: On the Web, all bits and bytes look the same. These can be bits of free flowing creativity, advertisements, hate messages, bets, pornography, purchase orders, music and movies, love notes and plots to blow up buildings. On the Web, they all look alike. Because of this openness, obviously, not everything there meets our approval  Thus, there is a confluence of interests who, for better and worse motives, are tempted to want to somehow regulate, tap into and control that flow by tampering with the very guts of the Internet. In that blueprint, only permitted kinds of bits and bytes might use the channel while all others are shunted, blocked or black-lined. Vint Cert, one of the principal architects of the Internet, spoke eloquently about why we should avoid going down that path.

The delivery system: The Web is more than an integration of technology platforms built on standard protocols.  There is also a physical transport layer. And the business of providing the physical means for transporting all those bits and bytes out to the ends is enormous and consequently requires great investments in infrastructure. Where that infrastructure gets built, who gets to fund and lay it and how these choices get regulated is equally important. Terry Huval, the head of the publicly owned electric utility in Lafayette LA, spoke about his city's efforts to build their own network.

Lafayette, like Philadelphia and some other municipalities are proposing to built out their own Internet access systems and have been facing tough opposition from the telephone and cable companies.  But these cities are in the minority. Although access to the Web is vital to the social and economic wellbeing of a society it is being left mainly to the purely economic considerations of monopolistic conveyors, who in the case of Web access in the US, are the giant Telcos and Cable Operators.

Mark Cooper, one of the panelists, provided the following context by reminding the audience (the event was webcast) of how far back the principal of fair access has been embedded in the law.  Innkeepers in pre-Renaissance Europe at the very dawn of Capitalism were required, in some of the first instances of common law,  to publicly post their tariffs. In such way, for example, the pilgrims in the Canterbury Tales could all be assured the same price for equal bed and board regardless of their station in life. Cooper also pointed to rules requiring canal operators in early America and later the railroads that required them to post their tariffs and make them an equal playing field for transport or trade. It was well understood, that if these regulations were not in place, the monopoly operators of roads, canals and railroads could charge favorites one price and non-preferreds another thereby tipping the competitive balance.

As the F2C website argues in its call for the Conference:

The need to communicate is primary, like the need to breathe, eat, sleep, reproduce, socialize and learn. Better connections make for better communication. Better connections drive economic growth through better access to suppliers, customers and ideas. Better connections provide for development and testing of ideas in science and the arts. Better connections improve the quality of everyday life. Better connections build stronger democracies. Strong democracies build strong networks.
 

Place: By happenstance or not, on Tuesday of this week the Supreme Court heard two cases --MGM v.Grokster and Brand X (Brand X (a California ISP) vs FCC) with the potential of having enormous impacts on the future of technology. In the first case, the judges were being asked to look at whether technologies that can be used for illegal purposes can be banned even if they also have legitimate uses.  In the Brand X case, the Court will decide whether the Cable Companies, like the Telcos have to open up access to their lines into the house to other potential service providers like ISP's.   Later in the year, Congress will be working on a possible update to the Telecommunications Act, which is widely viewed as flawed.  For the last decade the role of the FCC, a group of 5 Commissioners, which once had the fairly sleepy job of regulating a stagnant network system has become a critical battlefield for a multitude of issues.  The Brand X Case, for example, is the direct result of an FCC ruling that said that the Cable Companies were not required to share their lines, a decision that was later overturned by the 9th District Federal Court of Appeals.

And so, against this background, on Wednesday, the F2C Conference opened in the AFI Silver Theatre outside of Washington. Expert speakers like Susan Crawford, Jim Baller, Robert Corn-Revere, John Perry Barlow, Rahul Tongia and Dan Gillmor, to name just a few, talked about First Amendment speech and press issues; alternative network build-out approaches; the need for a neutral, private, transparent, fully accessible network; societal access implications; and potential technology solutions. What couldn't have been made more eminently clear to all who attended in person or via the webcast, was`that the consequences of choices in future directions for the Web are far too important to be left to the politicians and lobbyists to sort out on their own. If they are left to do that, without the direct input and actions of all of us most directly affected, it's highly likely that this dynamic moment in communication history will become something looked back at in nostalgia or anger for what might have been.

War of the Worlds

Did you ever wonder what the Internet looks like from deep inside the Beltway? And, to be perfectly reasonable, is there any reason why you should have?. This week at the State of the Net Conference sponsored by the bicameral Congressional Internet Caucus we got a chance to mix with staffers, Senators and Congressmen, industry (mostly lobbyists) and the odd media attendee. This was Washington meets K Street technology as only Washington can do it.

Luckily, having lived in the neighborhood for a while, we knew enough to doff a dark gray (or blue) suit, and select an equally conservative shirt and tie. And sure enough, among the 300 plus attendees we could spot nary a pair of chinos or a ponytail.  For a brief moment, even armed with our name card, we had the vague sense we had perhaps shown up a day too early or late.

Only coincidentally, the Conference took place on the same day that Carly Fiorina, who was once said to have national political aspirations, was ousted at Hewlett Packard.  Not too long ago, no one in Silicon Valley would have given a rat's backend for what anyone in Washington (or anywhere else except Seattle,) had to say about technology directions. Likewise, in the sea of dark suits in attendance at the Hyatt Regency Washington DC, it's safe to say that there was little more than a spittle of lip service given to the mainly libertarian, entrepreneurial, grassroots passions of the Valley.  Through Left Coast eyes, this Conference could have been held post a takeover from outer space.

Equally interesting none of the co-chairs, Senators Conrad Burns (R-MT) andPatrick Leahy (D-VT), and Congressmen Bob Goodlatte (R-VA) and Rick Boucher(D-VA) are from California. The Keynote speaker was Senator Ted Stevens (R-AK). 

More tellingly, and more than a little inconvenient for anyone hoping to do a live feed, was the lack of wireless connectivity for the event.  This Hyatt, located at the foot of Capitol Hill, does have wireless connectivity but not in the areas where the Conference was held.  For us, this meant shelling out $9.95 to have the privilege of going upstairs to the lobby between sessions.  Imagine sitting at a well funded   --the Planning Board included representatives from Microsoft, the RIAA, Verizon, Time Warner and Verisign --conference on the Internet in 2005 with no live audio or video Internet feed, no web access available and with hardly an attendee even sitting in front of an open laptop. Merge that with the dress code, and you could easily have looked up and thought the clock had been turned back to 1990.

These, of course, weren't the only oddities. The Panel on International Trends, second on the agenda, turned out to be made up entirely of UK Parliament members off on a junket.  Their talking points may not have even mentioned China, Japan and India!

So who's irrelevant, is it us and our readers interspersed in the various tech enclaves spread around the globe, who are hopefully getting a chuckle out of this description, or the black hole that Washington DC has become in 2005.  For that we have to take a closer look at the Conference's agenda and further out on the year's Congressional, Federal Agency and Supreme Court schedules. On the first day of the Year of the Rooster, panelists in the breakout sessions were discussing: Spyware, Spam, and Scams: How Are Consumers Coping?; DRM: How Will Content Be Delivered on the Internet?; Convergence and the Telecom Act; Cyber Security and Enabling the Next Round of Innovation on the Net; Intellectual Property and Innovation; Did the Internet Kill the Telecom Act?; Privacy, Trust, Security; Anticipating Grokster: A Betamax Standard for the Digital Age?; 100 mb by 2010: A Broadband Forecast or Fantasy?

Irrelevant? hardly, when it comes to influencing the flow of money and power, Washington sits like a black hole at the center of the galaxy.  Frighteningly, the five members of the (FCC) Federal Communications Commission will have more to say about how convergence plays out in the coming years than any combination of technology and communications companies.  And by the way, the Commissioner (Powell) and another member have just resigned.  Those slots will be filled by Presidential appointments with the assent of Congress. Decisions regarding the flow of information through the major pipes, the airwaves, and satellite will be made right here in Washington. For instance, do the cable companies and telcos have to share their lines into the house?  Should we be moving to IP6, how and when?  This is, of course, the year of the Grokster case; the Supreme Court will decide whether the landmark Sony-Betamax decision will stand as was affirmed by the much maligned San Francisco based 9th Circuit court of Appeals.  In case you don't recall, the Sony Betamax decision made it possible for VCR's to be sold against the wishes of the entertainment industry.  Once again, the same forces, fattened by the very profits the video industry spawned,  are trying to restrict the use of devices that only might be used to illegally  copy protected materials. Last summer the Senate narrowly pushed aside an attempt to legislate the same restrictions in something that came to be called the INDUCE Act.  INDUCE is sitting ready to be reintroduced and what the Supreme Court has to say in Grokster will greatly affect the outcome.  Washington could also have a say as to whether the states and municipalities can build out their own Wi-Fi networks.  It will be up to Washington to ultimately draw the lines on our rights to privacy on the Net, and on what can be kept out  of the public domain through extended copyright, patents or censorship.

But Washington isn't just the regulator of the spirals in the galaxy, it also molds the shapes of change through the force of its money spigots.  How fast the high speed internet gets built depends on government investment and incentives.  Investments in securing the network and users from fraudulent activities that threaten to bring it down are also mainly in the hands of Congress.

The ways of Washington are indeed strange.  At the post event reception held in the Dirksen Senate Office Building; there was a live IP video hook-up with the Marine base in Fallujah.  Two young marines, pallid and gray on the screen, patiently sat through the event.  All four of the co-chairs when they got to the mike directly addressed them;  it was clear that the war weighs heavy on the minds of the Members who have to deal with its death, displacement, human and fiscal costs on a daily basis. Equally clear, for the hundreds of staffers and guests at the reception, very few wandered over to the screen to say a few words to the two guys. Their gray,distant, slightly jerky presences were little more than a ghostly flicker in the end of the large room full of chatter, tinkling glasses and the swish of passing business cards.

Roseannadanna Revisited

We seem to return often to the subject of viral mendacity; perhaps, it's because we know all too up close and personal, the temptation to use words to cover up for unpleasant deeds.  But like moths to a flame, we are once again drawn by the mischievousness of an Administration that never ceases to amaze when it comes to juking around the truth.

No one's forgotten that just a few years ago as we reeled from the attack on the Twin Towers, the just promoted and present Secretary of State provided us with the refrain that the Administration didn't want "the next smoking gun to be a mushroom cloud" over one of our major cities.  When that threat turned out to be just one of a trio of manufactured legs of the WMD argument, the Administration responded: "Never mind, we got rid of Saddam Hussein, didn't we? We stand for freedom and democracy everywhere".

Never mind, that we have put hundreds of thousands of our fellow citizens in extreme  harm's way along with millions of Iraqis. Never mind, that the US's reputation around the world has been permanently stained. Never mind, that the true cost has already surpassed $300 billion, or $10,000 per Iraqi citizen. Never mind, that we have brought our military back to a post-Vietnam low....

Now, with all of the major domestic problems facing us -- from health care to private pensions, to education, to jobs, to historically high domestic and trade deficits -- the President has decided to use up what precious political capital he and his party have gained in the last decades to tinker with the most successful social program the government has ever carried out.  With the dollar teetering on the overhang of a mountain of debt, and Medicare's financial underpinning mushy, Bush decided to call the long-term problem of funding Social Security after 2042 his single most important domestic "crisis".

When the Social Security "crisis" story began to come undone and the revelation that in order to create personal accounts, several trillion -- that's with a "t": BTW, the entire US economy last year totaled out at $10.5 trillion-- additional dollars would have to be pumped into the system in order to make up for the diverted funds the new program would swallow, the Administration began to look for cover.

Never mind, the word crisis, they said, this is a matter of social justice. Social Security is unfair to minorities and immigrants. Poor people die young so therefore the present Social Security system is, they began to argue, racist. By implication, of course, they were arguing that come 2042 poor people will still be dying of bad medical care and inferior diets. so they need personal savings accounts. Paul Krugman, writing in the NY Timess on Friday pointed out that, contrary to the benefit inequity argument, African Americans actually collect their proportional share (and Latinos do even better) through a combination of pension and Social Security disability payments as well as the progressive nature of the way payments are calculated. But Bush will also argue that SS is unfair to young people, banking on the known bias, that young people don't think too much about things that might happen to them, as the Beatle's song goes, "when [they're] 64."

But the  greatest danger of the personal-accounts-in-place-of-the-basic-SS guaranteed pension argument (and we have no problem with programs that subsidize additional private savings accounts or ones that deal realistically with funding the boomer retirement bulge) is that it's based on a market timing trap.  Might it just happen, that the mid-term prospects for the US economy --and particularly for the US stock market-- are somewhere between anemic and dire, particularly, if you compare our endemic and persistent across-the-board public and private debt levels to countries like Brazil and Argentina that collapsed during the 1990's.  By those terms, the US is a world basket case. Historically, we've seen numerous decade-long periods in which markets go sideways or down. These troughs always occur after stock markets bubbles while excesses in equity prices work their way back to traditional levels. By historical P/E levels, even after the drops that spanned mid-2000 to 2003, we have a long way down to go to get back to what has proved to be the norm. Further, there is no guarantee the drop (slow or gradual) will stop as it approaches the average.  Often, just as markets go excessively up, they keep falling to a low extreme that goes far below the mean.

All this to point out that there couldn't be a worse time to be forcing millions of new investors to get into the market.  The kinds of investments that will be proposed, will be indexes of baskets of stocks and bonds.  In a long term bear market --where good single stock or single sector bets may abound-- there is no worse strategy than putting your money into a broad index.  And we are sure that any scheme for private accounts will be pigeon-holed into broad indexes that have the dual purpose of pumping up the wider market and preventing the new and greater lumpeninvestoriat from getting taken right out of the gate.

But we suppose the answer to all this damage will be, "Never mind, we undermined the present system, never mind, we added a few trillion to the debt (off budget, of course), never mind, we made a lot of fund managers rich," the taxpayer will just have to pick up the tab.  BTW, that's what's happened in Chile and the U.K. where the private account experiment has some history.
But never mind, facts should never get in the way of greater (read, ideological), truths.
 

Written on a Mugwump

Are We Chinese Compatible Yet?

Moore's Law, the doubling of computing power every couple of years, may give way to the greater laws of physics at some point, but for the moment it is an economic metric to be reckoned with.

If we slide the scale back a little more than 12 or so Moore's Law cycles, we find the IBM Corporation at the pinnacle of international business domination, hegemonic leaders of the world's fastest growing industry. At this point on the scale, even IBM watching is a major industry and bookstore shelves are crammed with best selling business tomes lauding the unassailability of the IBM Way. Signs hung on the walls of IBM executives smugly mock the outside world with the company motto: "Think Ahead"

One problem the company faces however is a limited market. Big Blue's big iron is so expensive to lease and maintain that only large corporations, governments and institutions can afford one of their own.

For everybody else, there is "time sharing" on somebody else's mainframe or the outsourcing of specific tasks like accounting and payroll. In the niche left under big iron, companies like Digital Equipment Corp and others supply mid-sized companies and, in some cases, corporate departments, with so called "mini-computers". Mini's and mainframes have the same characteristics: users sit at "dumb non-graphic terminals" logged into central computer servers stored behind closed doors in sterile, specially acclimatized areas tended by white-frocked technicians from the DP (or Data Processing) department.

Back then all access and processing activity on the system was controlled by a DP department regularly serviced by crisply white-shirted, blue-suited, teams of IBM reps and technicians. It was generally a relationship more cozy than strained though everybody recognized, if push came to shove, that the supplier was boss; for instance, should a department in an enterprise want to bring in a mini-system for a particular application, say engineering or word processing (Wang), IBM could usually expect the DP department head to follow IBM's marching orders.

One tactic the company brought to a fine art came to be called FUD; If IBM announced it would be launching a competing engineering application; DP would lead the fight to resist the purchase of the rival machines. Often, Departments, through their own budgets, would have to go around DP to get their own cluster of mini-based workstations. And this could sometimes leave them flying solo, without DP support. In corporate DP pop culture it was oft repeated: "no one ever got fired for buying an IBM"

But there was also emerging a tiny cottage industry in the mid to late 1970's reserved for hobbyists and other genres of nerds working in kitchens, dens and garages. They had perhaps graduated from kits bought at Radio Shack to manufactured monitor-less computers from companies --a keyboard and an attachment to cassette reader-- like Texas Instruments, Commodore, and Atari. By this time also, a start-up out of a small town on the peninsula south of San Francisco had begun shipping the Apple 1.

Around 1980, viewing even this flea speck of a market as a potential opportunity, a small team inside of Big Blue working under the code-name "Acorn" was given the go-ahead to come up with its own version of a "personal computer". The launch of such a machine, we now know, signaled the real starting line for the second computer revolution.

According to Mary Bellis writing in About.Com:

The first IBM PC ran on a 4.77 MHz Intel 8088 microprocessor. The PC came equipped with 16 kilobytes of memory, expandable to 256k. The PC came with one or two 160k floppy disk drives and an optional color monitor. The price tag started at $1,565, which would be nearly $4,000 today. What really made the IBM PC different from previous IBM computers was that it was the first one built from off the shelf parts (called open architecture) and marketed by outside distributors (Sears & Roebucks and Computerland). The Intel chip was chosen because IBM had already obtained the rights to manufacture the Intel chips

That's right, it all started in 1981 with two floppy disks, 16KB of RAM and a 4.77Mhz processor! The PC also came with the programming language BASIC, produced by the same tiny company that supplied IBM with the DOS operating system for the system. But IBM was not the only major company to want to enter into the fledgling small business oriented, desktop personal computer market: the IBM PC was very quickly followed by rivals from DEC and others. There were also ready-made application companies ready to jump into the fray with word processing, spreadsheet and DBMS's. For example, Xerox, which was at the height of its innovative powers in those days, was one of several companies that offered a dedicated word processing system. What they were to find out is that PC-DOS users could easily buy or pirate a word processor called WordStar.

But priced at the equivalent of today's $4- or $5-thousand, when you count in the printer and color ASCII monitor, it's not surprising that the first purchasers of the personal computer were hardly the same hobbyists who bought Ataris. Before not too long, IBM had come out with an upgraded PC it called the XT, with a 5MB hard drive and the real race was off and running. Now it was possible for small businesses to think about installing an accounting or merchandise-tracking package.

What quickly emerged much to the chagrin of players like DEC, HP, Xerox and other rivals with their own proprietary or rival DOS operating systems was the deadly mantra "IBM compatible". Since the IBM PC, to achieve speed-to-market, offered something truly revolutionary: an "open architecture" --a concept that no doubt brought shudders to the mainframe side of the business-- a number of "100% IBM compatible" imitators, like Compaq Computer, began to emerge. Having licensed DOS, done some significant reengineering and built on the Intel 8088 architecture, these companies could claim to be 100% IBM compatible. And so a new standard was born and even though IBM began to face serious competition in the personal computer space from a more agile and innovative Apple Computer, that borrowed heavily from work done at Xerox's expense, IBM could rest comfortably on its reputation in the business world and a growing number of equally creative suppliers in the open computing space for software and hardware products that were, of course, 100% IBM compatible.

What really got the IBM-standard going, however, was the introduction of a product called Lotus 123. Lotus 123 was supposed to combine all three of the major applications, a database or DBMS, spreadsheet and word processor, in one package. Along the way, it greatly improved on a math-driven application, the spreadsheet that was being successfully sold by a company called VisiCalc. Lotus 123 was the first of what we now know of as "killer apps", application software that spawns industries. Lotus 123 had a very primitive but original graphing capability. It could make bar charts and pie charts, for example even though a standard ASCII monitor could not display graphics. But the PC came with expansion slots with open, published, specifications. Soon companies were selling hardware that fit into one of these slots and that could convert a monitor into a graphic display. With an adaptor, PC users could now see their pie charts in color on their IBM-compatible graphic displays.

If the word processor liberated writers from the tyranny of carbon paper and the labor intensity of edits, 123 more significantly made variable but repetitive calculations a thing of the past for bean counters of all stripes. What was creating the first tectonic shockwaves was the growing recognition inside major corporations that Lotus 123, with its graphical capabilities, was far better than any software that IBM offered on its humongously expensive mainframes. Much to the displeasure of the DP department and IBM's mainframe salespeople, IBM PC's were being smuggled in droves through the backdoor into the country's leading institutions.

Around the same time, a tragic airplane accident occurred in which the top level of the Entry Systems Division founding PC team at IBM was lost. For many of the mainframers, this was probably seen as something less than a business setback, since it was already clear that the puny "toy" PC was causing disruptions in mainframe sales. Big iron budgets were being "cannibalized" by a new class of more powerful desktop workstation computers. Something IBM planners had clearly not foreseen.

The next and truly fatal blow to the IBM standard was dealt, of course, by Microsoft, when Bill Gates and company managed to sabotage IBM's plans to establish its next generation OS2 operating system software in place of Microsoft's MS-DOS. Parallel to its efforts to build OS2 for IBM, MSFT hastily built its own Windows operating system. At the same time it developed its new line of Office software for MS-Windows that could closely rival Lotus's and Word Perfect's market leading offerings. The makers of Lotus and Word Perfect, following IBM's marching orders, were busy retooling their products for an OS2 launch.

All Microsoft had to do was drag its feet with OS2 while bringing Word and Excel for Windows to market. In one mere tick of the cycle, Microsoft, of course, had emerged the winner; Word Perfect, Lotus, Ashton Tate and others would fall by the wayside and slowly the IBM-compatible mantra would pass to MSFT and Intel. In one of the greatest coups in business history, MSFT had wrested control of the IBM standard from Big Blue, though it would still take many years for the phrase IBM compatible to die out.

For IBM, the crisis was catastrophic, by this time, it was no longer even the largest seller of PC's. That mantle had been taken over by Compaq. But IBM was not yet ready to throw in the towel in the business they had invented. They still had an enormous business customer base and unrivaled technological resources. Rebounding they regenerated their PC business by way of an impressive, sleek, new line of notebook computers called the ThinkPad.

The Cycle Hits Home

With the sale this week of its PC business including the IBM brand name to the Chinese, analysts might argue that IBM has strengthened its corporate competitiveness and gained an important Chinese partner for the expansion of its integration business in the world's largest country and fastest growing economy. After all, the main business of the company had long ago been reinvented not as a manufacturing party but as a service company providing high priced consulting and integration services to other global entities.

Not insignificantly, as a major systems integrator IBM has also become an important proponent of the Linux operating system. Linux is an open source (meaning, the source code, regulated by a non-profit organization, can be licensed at no cost) product that has benefited from a truly impressive, international volunteer collaboration.