Mark sez, "As you may know in the UK, ID cards are being debated
again. A document with a draft Bill has been produced
and the public consultation process is now underway. I have taken this document and converted it into a
Moveable Type blog, pretty much every parachraph in
the document is linkable, commentable and
trackbackable."
(Thanks, Mark!)
Dymaxion adds: This should catch on big time! Incredible use of interactive publishing. Hopefully, somebody will pick this up for draft bills in the US Congress.
Canada's highest court has just ruled that ISPs cannot be forced to pay royalties on music downloaded by users:
In a unanimous 9-0 decision, the court ruled that although ISPs provide the hardware and technology, they aren't responsible for what people download. The court ruled that companies providing wide access to the web are "intermediaries" who are not bound by federal copyright legislation.
Big name music labels are all set to release a new media format this summer. It is a combination of a DVD and a CD. One side will have the great CD sound that we have all come to know and love while the reverse side will contain video or other types of content needing the large storage capacity of a DVD.
The BBC reports that Indian Railways will be offering their luxury passengers internet access as soon as June 30th. Internet will be accessed both via Wi-Fi and from a kiosk with two PCs located on it. Indian Railways has worked to extensivly computerize most of their operations.
While access to the internet will be free at first, there are plans to start charging after enough time has passed to allow passengers to become accustomed to having internet access while riding the rails.
The BBC has submitted its Charter Renewal documents to the UK Government, outlining its plans for the next ten years. It's a long and comprehensive document, and most excitingly, it describes a free and open Creative Archive intended to provide Britons with access to the material in the BBC's vaults for free viewing, remixing and reuse.
Imagine being able to view and listen -- and even download and own -- extracts from the world's largest television and radio archive.53% of internet users download content for their own compilations 55. For the first time, the BBC will open up its treasure chest of programmes to the public who own it and make its contents available to individuals and to families for learning, for creativity and for pleasure. Two-thirds of current and prospective broadband users say they are interested in the Creative Archive service.
The BBC Creative Archive will establish a pool of high-quality content which can be legally drawn on by collectors, enthusiasts, artists, musicians, students, teachers and many others, who can search and use this material non-commercially. And where exciting new works and products are made using this material, we will showcase them on BBC services.
Initially we will release factual material, beginning with extracts from natural history programmes. As demand grows, we are committed to extending the Creative Archive across all areas of our output.
Update: Check out this quote from new BBC Director General Mark Thompson, from today's press conference: "We want to builld a digital world based on universal access, open standards and unencryption [sic?]. Encryption, subscription and other forms of digital exclusion lead to widespread welfare losses. They may have a role within the total broadcasting ecology, but the idea that they can successfully replace free-to-air public service broadcasting flies in the face both of economic theory and real-world experience." (Thanks, Adam!)
Processor will compete against AMD's Opteron, but has key differences. [PCWorld.com - Latest News Stories]
The consumer 64 bit horse race is officially running. We the consumers are the winners!
...John
LOS ANGELES (Reuters) - Microsoft Corp. will offer as much as $105 million in product vouchers to settle an Arizona class-action lawsuit accusing it of using its monopoly power to overcharge for software. [Reuters: Technology]
Product vouchers are down there with mail in rebates. Getting the money is a sometime thing. Microsoft seems to be embracing and enhancing the Ferengi first rule Rules of Acquisition, "Once you have their money, you never give it back."
...John
During the June 18 Gillmor Gang show, I asked Hummer Winblad's Mitchell Kertzman about open source business models. Kertzman said 1 that the key factor, from his perspective, is the way in which the open source stack frees commercial software companies from the burden of "dragging around an expensive platform." He also questioned the need 2 for the JVM, citing two reasons. First, that Java's portability has become a non-issue now that there are only two platforms that matter: .NET and Linux. Second, that the rise of XML Web services has given a boost to the text-savvy scripting languages: Perl/Python/PHP, the "P" in LAMP.
...
Dave writes "The Mozilla Foundation has just made available interim releases of Firefox 0.9.1 and Thunderbird 0.7.1. Apparently: 'These releases are designed ...
“…Before WLANs, if I were a hacker or virus writer or if I wanted to download or share illegal material, I had limited options. I could use my own account and eventually get caught after the feds tracked the abuse back to me. I could steal an AOL account by phishing until the feds used phone traces to catch me. Or I could wander into a Web cafe, do my evil deeds and flee, leaving closed-circuit TV footage, fingerprints and physical evidence the feds could use to put me behind bars. With WLANs, things have changed. On most streets in big metropolitan areas, a few people have broadband, and at least one uses it with an insecure wireless connection. Perhaps half of those people turn on the Windows XP firewall, but that won’t stop an attacker. They just get within range and connect. There’s no physical evidence, no closed-circuit TV, and the poor schmuck whose broadband connection gets used is the one whom the feds raid.”
“A major security hole discovered in Microsoft’s Internet Explorer last week has become a golden marketing opportunity for alternative browsers such as Mozilla and Opera unaffected by the flaw.”
“Apple previewed Mac OS X version 10.4, code-named ‘Tiger’, during the opening keynote address of its Worldwide Developers Conference at San Francisco’s Moscone Center. Tiger is the fifth major version of Mac OS X. It will ship in the first half of 2005. Apple claims that the forthcoming version has more than 150 ‘breakthrough’ new features, including: Spotlight, a ‘revolutionary’ new way to instantly find any file, document or information created by any application on the Mac; Safari RSS, a new version of Apple’s Web browser that incorporates instant access to RSS (Really Simple Syndication) data feeds on the web; Dashboard, a ‘dazzling’ new way to instantly access a new collection of accessory ‘Widgets’; and a new version of Apple’s iChat instant-messaging client with the industry’s first multi-person audio and video conferencing in a 3D interface.”
“Senator Orrin Hatch’s new Inducing Infringement of Copyright Act
(S.2560, Induce Act) would make it a crime to aid, abet, or
induce copyright infringement. He wants us all to think that the
Induce Act is no big deal and that it only targets “the bad guys”
while leaving “the good guys” alone. He says that it doesn’t
change the law; it just clarifies it.He’s wrong.Right now, under the Supreme Court’s ruling in Sony Corp. v.
Universal City Studios, Inc. (the Betamax VCR case), devices
like the iPod and CD burners are 100% legal - not because
they aren’t sometimes used for infringement, but because they
also have legitimate uses. The Court in Sony called these
“substantial non-infringing uses.” This has been the rule
in the technology sector for the last 20 years. Billions of
dollars and thousands of jobs have depended on it. Industries
have blossomed under it. But the Induce Act would end that
era of innovation. Don’t let this happen on your watch - tell
your Senators to fight the Induce Act!”Read more…
Software lodged in your PC follows your Web wanderings and slings up relevant pitches[Business Week: Technology]
'-- According to advertising agencies, for every 97 people who zap such an ad, three click on it. That's a sky-high hit rate for the $7.2 billion Internet ad industry. --'
...John
We expose the bad advice that wastes your time and money. [PCWorld.com - Latest News Stories]
The "Bogus-O-Meter" rates the myths.
...John
Verisign announced on Monday their new e-mail security service to stop spam and viruses. The service uses heuristic tools, custom blacklists, and fingerprinting to calculate the probability that a particular e-mail message is spam after looking at a pattern of characteristics. The heuristic tools use over 10,000 rules to see if a message is spam. The service also uses three antivirus engines to block malicious mail. VeriSign has started free trials of the service, which will be available on July 12. Pricing details were not announced today.
“…Novell has agreed to make the RealPlayer 10 for Linux the default media player for RealAudio, RealVideo, Ogg Vorbis and Theora codecs.” “Red Hat, Inc. (NASDAQ: RHAT), and RealNetworks, Inc. (NASDAQ: RNWK), today announced an agreement to ship the completely open source Helix Player with Red Hat’s desktop products. Red Hat will also offer a no-cost upgrade to RealPlayer 10 for Linux to Red Hat customers upon their initial installation of the Red Hat Desktop when the player is available later this summer.”
Sun's Java Desktop System 2 edges Red Hat Desktop for enterprise readiness. [Ziff Davis Channel Zone]
'-- Desktop Linux is good enough to supplant Windows in a number of enterprise desktop roles, and it has been for some time now. However, major enterprise Linux vendors—most notably Red Hat Inc.—have been too busy until recently with server-room Linux to produce desktop products with the sort of management frameworks and stable product road maps that enterprises require. That changed with the release last month of two desktop Linux variants from major enterprise players: Sun Microsystems Inc.'s Java Desktop System 2 and Red Hat's Red Hat Desktop. --'
The average PC is 'sick' for more days annually because of virus infection and spam overload than the average human
[ZDNet]
'-- The average UK PC is rendered unusable for the equivalent of around nine working days every year because the owner is cleaning up spam or fighting viruses. This is two days a year more than the average UK worker takes off as sick leave --'
...John
The OECD (Organisation for Economic Development) recently released the results of a study
(See Survey) it did in December 2003 noting broadband access in its member countries. South Korea, it turns out are world bandwidth champions with 23.2 users per 100 inhabitants.
Canada and Iceland vie closely for second and third place at 14.8 and 14.5 respectively followed by Denmark at 13.1. Still in northern Europe, Belgium and the Netherlands trail at close to 12% followed by Switzerland and Sweden in the 11% range.
Where's the US? Well, slightly behind Japan, which rounds out the top 10 at 10.7. The US follows its major Far East economic partner at 9.8 per hundred but, unlike any of the other 32 countries on the list, interestingly, has more subscribers through cable (5.7) than DSL (3.3). Here at DW, we expect that equation to change in favor of the telcos, which appear to have finally caught on.
As part of the antitrust settlement against the RIAA, the record labels are obliged to donate a large number of discs to public libraries. Rather than giving America's libraries decent music, the RIAA is dumping the worst deletes and cutouts in their warehouses, dumpsterloads of reeking liquid shit, and blaming it all on a computer error:
The Des Moines (Iowa) Public Library was on track to take the lead in redundancies, though the identification of the programming bug may come in time to avert what might have been a record overkill. Its crate of 2,647 CDs, due to arrive in the next couple weeks, was listed as containing 430 single-song discs -- 16 percent of the total -- of Whitney Houston singing "The Star Spangled Banner" at the 1991 Super Bowl, according to Steve Cox, of the Iowa State Library.
(Thanks, Jason!)
Tuxedo Jack writes "The Register reports that SBC has begun planning a massive network upgrade which will push fiber connections deeper into subdivisions and ...
squidfrog writes "An AP article reports: 'To encourage drivers to take more frequent breaks, the Texas Department of Transportation wants to set up free ...
Andy Beal writes "According to Australia's The Age, Google plans to reveal some of the code it uses to great success. It says ' "The time has come for Google ...
ArbiterOne writes "SpaceShipOne's flight wasn't as perfect as it seemed, according to Burt Rutan and New Scientist. Apparently, at one point in the descent, ...
Chi-Energy writes "ATi has released their new HDTV Tuner card for the PC today, which allows High Def broadcasts and cable content to be displayed on any PC ...
Dan Gillmor has written an insightful column about Sprint's announcement that it will soon sell camera-free Treo 600 camera phones. Sprint wants to satisfy customers fearful of internal corporate espionage, but Gillmor says resistance is futile:
I suppose it's always better to sell what the customer wants. But I have bad news for Sprint's worried customers: This won't help much, because the pace of technology means cameras will soon disappear from view, embedded in clothing and eyeglasses, not just phones.
Sprint's move highlights one more set of issues we have to confront in a world of digital information. Whether we're talking about photos or videos or documents or just about anything else that can be converted into zeroes and ones, we're entering a changed world.
Go back more than a few years ago and Linux had zero representation among the world's fastest supercomputers, which relied on traditional, monolithic mainframe machines running Sparc, HP-UX, Unix or other operating systems. In the last few years, however, the open source operating system has begun dominating the list, thanks to clustering and Intel hardware in the supercomputing market. [Linux.Com: NewsForge Reports]
Way to go Linux!
...John
The infamous Digital Millenium Copyrights Act may have some of its parts toned down or taked out. The “Digital Media Consumers Right Act of 2003” was introduced by Representative Rick Boucher and has the support of 24 other representatives. The bill is also being supported by The Personal Technology Freedom Coalition, including companies like Intel, Sun Microsystems, Verizon, Qwest, Gateway, and BellSouth. The EFF and the ALA are also supporting the new bill.
“SpaceShipOne has rocketed into the history books to become the first private manned spacecraft to fly to the edge of space and back. The craft, built by aviation pioneer Burt Rutan, went over space’s 100km (62 mile) boundary, said mission control. It was carried to 50,000ft (15km) by its launcher White Knight at which point it was unleashed. It fired its rockets to continue its trip.” The BBC’s servers are being hit hard at the moment - if you can’t get the story, try again later.
“Two new chip sets for consumer PCs will be the centerpiece of one of Intel’s most significant product launches of the year this weekend.”
Wei-Meng Lee writes of his quest for the right DVD writer to buy. After surveying the various DVD recording formats (DVD-R, DVD-RW, DVD+RW, DVD+R, DVD-RAM, and DVD-RW DL), as well as some of the DVD writers currently available on the market, Wei-Meng offers his recommendations. [O'Reilly Network Articles]
Well done summary.
...John
Released just over a month ago, the video recording of this April 2004 seminar held at UC Berkeley, provides some very interesting insight and commentary by a panel of qualified experts of traditional and online journalism: Neil Chase, managing editor...
"A Blogads survey claims that blog readers are more mature and affluent than expected and more prone to click on ads and buy online. Many advertisers think bloggers—and blog readers—inhabit some kind of cyber backwater, full of stagnant, egotistical, overwritten...
Munich confirms Microsoft snub for 14,000 machines [silicon.com]
'-- Munich – the city whose switch to Linux was seen as so significant it attracted a personal visit from Steve Ballmer – has announced that its year-long trial has proved a success and the local government is sticking with open source for its desktops. -- According to a document seen by USA Today, among the concessions the software behemoth was prepared to punt Munich's way were undercutting a Linux bid by $12m; letting Munich license some stripped-down Windows and offering training and support for nothing. --'
Woe is Microsoft when it can't even give it away.
...John
The recording industry on Wednesday asked federal regulators to help make it harder for people to copy and redistribute songs heard on digital radio.
(06/16/2004 02:54 PM PDT) [Silicon Valley: Top of the Wires]
Looks to me like the Hollywood Greed Alliance views anything digital as mortal threats. They seem to be longing for the good old analog days.
...John
The new version of Microsoft's Office has been widely praised, but some say the company will never produce software as good as Word 5.1, which blended power with ease of use. Plenty of fans are still running vintage software on new iron. By Leander Kahney. [Wired News]
Looks like Microsoft product churn doesn't matter to some.
...John
Imagenews gathers images from all over the world on news categories ranging from Business and Financial Information to Science, Technology, Sports and Entertainment. Updated every hour, Imagenews provides direct links from each image to the news story from where it...
An average of one in three PCs scanned in March and April was carrying a system monitor or Trojan horse hidden on its hard drive. [SecurityFocus]
'-- "Based on the overwhelming number of spyware traces identified in just four months, we continue to urge consumers to run an audit as soon as possible to determine if they have spyware on their PCs and then take action to manage it." --'
It's everywhere.
...John
Once upon a time, publishing was the domain of large corporations. Then came desktop publishing and the tools to produce a book shrank from the cost of an aircraft carrier to the price tag of a PT boat. Now, small publishers on the bleeding edge of technology are fomenting a revolution that may change the publishing market forever. Open source publishing tools, long derided as not being ready for battle, are proving themselves in the trenches of small publishing. [Linux.Com: NewsForge Reports]
'-- Anything that brings down the cost of production makes it possible for large publishers to take a few more chances on a few more books. Open source tools mean more opportunity for authors of all stripes. Open source tools lower the barriers to entry. More self-publishers and more small publishers in business -- and profitable because of lower costs -- widens the market for books of all kinds. This is an increase to freedom of expression across the board. Instead of just the same old same old King, Jordan, and Roberts, new voices get heard. --'
...John
“Microsoft Corp. may be poised to repurchase billions of dollars worth of its stock to reduce its huge cash balance and improve its share price, a Goldman Sachs analyst says.”
“Software developer Dave Winer disabled roughly 3,000 Web logs from his former company this weekend, a move that drew sharp criticism from some people in the publishing community. “Read more…
“Microsoft Corp. MSFT.O is still on track to offer an anti-virus product that will compete against similar software offered by Symantec Corp. SYMC.O and Network Associates Inc. NET.N , the world’s largest software maker said late on Monday.”
Sheesh, of all the things they’ve decided to bundle with Windowsfor free, this is what they choose to sell seperately?
“Chicago (IL) - A steering committee of the DVD Forum has approved the final specification of one potential successor of today’s DVD. The HD-DVD-ROM will carry one or two data layers with a total capacity of up to 30 GByte. First drives are expected within the next twelve months.”Read more…
A service disruption at content hosting company Akamai Technologies Inc. cut off access to some of the Internet's major Web sites Tuesday, including Google.com, and Microsoft.com, according to The SANS Institute's Internet Storm Center. [InfoWorld]
'-- An investigation into the problem revealed that Akamai's DNS servers were not responding to requests. The problem appeared to affect the company's worldwide network of DNS servers, suggesting that the problem may have been with caused by a problem within Akamai rather than an external attack on its DNS servers, Ullrich said. -- "It could be anything -- somebody tripping on an power cord. I think an attack is unlikely, unless somebody was able to hit a central control node," he said. --'
If tripping on a power cord brings down Akamai, there seems to be something terribly wrong with their network architecture.
...John
Morale among IT workers has dipped to an all-time low, even though demand for certain skills is rising, according to a new study from Meta Group. [CNET News.com - Front Door]
Well Duh! Offshoring, demanding more with less people, and general management stupidity, will drop morale.
...John
Tim Bray points to Sun's John Clingan who asks the important question (in English, not Latin): Who analyzes the analysts? This bit caught my eye:
I remember back in ~1990 when Windows NT was being talked about taking over the world. My girlfriend at the time (now my wife) saw it on a magazine rack and said "I saw a Byte magazine cover which said, 'Is Unix Dead?'". "Uh oh, are you going to have a job next year?" Ironically, Byte magazine is dead (although byte.com is still around). Is this the enforcement of accountability for journalists and analysts? [John Clingan]
“Saturn’s moon, Phoebe, has been battered for billions of years by interplanetary debris, and the signs of past violence are clear in images snapped by a spacecraft headed for orbit around the ringed planet.”
“Texas Instruments Inc. says it is working on technology to help phone companies offer high-definition television and voice over high-speed Internet lines within about three years.”
My name is Rafael Ebron, I’m a new addition to the Mozilla Foundation and
helping spread the word. We would love to get a mention on your blog.Tomorrow, the Mozilla Foundation is releasing Firefox 0.9, a new preview
release of our next generation web browser. Firefox 0.9 is the “feature
complete” version of Firefox, and includes a number of exciting new features
(new default theme, easy migration from Internet Explorer, new extensions
framework) as well as a big reduction in download size (now just 4.7 MB on
Windows) and numerous bug fixes, security and speed improvements.Later this week, we’ll also be releasing Mozilla 1.7, the lastest version of
our Internet suite (including web browser, mail client, IRC client, HTML
editor) and Thunderbird 0.7 (our new standalone email client). Our friends
at Lindows and Disruptive Innovations also just announced the release of
version 0.3 of their Mozilla-based standalone HTML editing tool, Nvu (more
information about Nvu 0.3 is available www.nvu.com/download.html).
EPOC.Cabir is a new worm that replicates on Nokia Series 60 phones. It drains the users battery by scanning for Bluetooth devices and sending itself to any nearby Bluetooth devices. It is spread as a .SIS file, which installs into the “Apps” directory. Once opened it copies itself to a directory that is not visible by default. It then runs from the new directory and requires a file manager applicated to be installed in order for it to be removed.
Demand for faster Internet connections fueled the sharp spike to more than 28 million broadband lines nationwide, which was led by DSL sales, according to a new FCC report. [CNET News.com - Front Door]
Great! This strong broadband growth is most likely putting more of a dent in the TV industry. I'm wishfully thinking this may be a wake up call that dummy-down TV programming isn't working.
...John
“SBC Communications must sell local phone and broadband services separately in California, state regulators have ruled, forcing a showdown with the telecom giant over forced bundling practices in its largest market. “Read more…
The Fed Gets What It Wants The Employment Numbers:
A Good Story # 14 on Business Week Vancouver,
New York, Orange County, Vacation
Will rising rates cause the hedge fund world to blow up and bring down the economies of the world?
What about the huge recent rise in the money supply? Are the large employment numbers for real? Is inflation coming back? Will the economy continue to grow? All good questions upon which we will muse. (Yes, I know I was supposed to write about the housing bubble, but my associates keep bringing in important new research which must be read. Unfortunately, they are all quite long and written by PhD economists, which is to say, dense and complex. I will get to it, I promise.) The Unwinding of the Carry Trade First, a few thoughts about the risk to world markets caused by highly leveraged hedge funds as interest rates rise. Hedge funds have been some of the prime beneficiaries and users of the carry trade (borrowing at ultra low short terms rates and investing in longer term instruments with higher rates to make the difference in the coupons). Knowing that the Fed was committed to keeping rates low for a "considerable period" of time, hedge funds, major banking houses, active managers and corporations borrowed at very low rates to invest in all manner of investments: longer term bonds, foreign bonds and currencies, commodities, all manner of derivative debt, etc. Corporations swapped out long-term debt for short term debt. Let us be sure that the carry trade in the world was huge as of the middle of March, 2004. Further, the markets only thought that the Fed would raise rates by 50 basis points by the end of the year in mid-March. Count me in that group, as I did not think the Fed would raise rates until after the election. Hedge funds and the groups mentioned above, although their hands were on the trigger, were enjoying the nice spread. Life had been very good for some time and Sir Alan was their best friend. Except that Alan and crew started giving speeches warning about inflation and hinting at the end of low rates. As I wrote then it was a blatant move to get hedge funds to begin to unwind their carry trades. It worked. Then employment started to pick up. Economic numbers continued to look good and a whiff of inflation began to actually appear on the world scene. The facts changed, and the very real suspicion that the Fed would start tightening in June became the theme throughout the investment world. Now, the markets are pricing in interest rate hikes to begin in June and a full 175 basis points by the end of the year. Fed members are still using words like "measured" and "patient" when they talk about hikes, but they are clearly letting people know they are ready to begin the rate raising cycle. Today's employment numbers (more later) were quite good. It has been my contention that the Fed would not raise rates until either strong inflation or solid employment numbers (or both) were evident. Now they are. There are a number of questions we need to think about. Why is the Fed likely to go slowly, raising only 25 basis points at a time? How high will rates ultimately rise? Will such a stimulating go-slow policy, if pursued, result in rising inflation? Nearly everyone agrees that the "natural" rate for Fed funds should be between 3 and 4 percent. Anything less is still stimulating the economy. Such an environment encourages more inflation and is boosting the economy. Normally, when the economy is growing as well as it is now and inflation starts to come back, the Fed starts to tap on the brake pedal to slow things down. A rate of 1.5% or 2% or even 3% in an economy growing 4% with well over 2% inflation cannot be called putting on the brakes. 25 basis point rate increases are very gentle tapping indeed. Why would the Fed risk a return of inflation? A number of bearish observers have written that they expect a financial crisis, if not a meltdown, to result from hedge funds and investment banks all procrastinating and then trying to exit their carry trades at the same time at the last minute. And indeed, if that were the case, we could (probably would) see a crisis.
But that is not what is happening. April was not a good month for most funds involved in the carry trade. For some, it was ugly. The month of May has been better, but only by degree. The early numbers suggest that May will again be a losing month for those funds. My conclusion/observation/conjecture is that the unwinding of the carry trade is in process. The funds which have made so much over the last year on these trades are now paying the price to lock in their profits. Thus, the speculation that drove commodities and all manner of investments to overbought levels is being driven from the market. Thus, you see copper and gold dropping, interest rates rise as speculators sell their long bonds and all manner of market moves as margin clerks require funds to maintain cash levels. They do not care where the cash comes from, so funds that have less liquid derivative positions and also gold exposure may be selling gold to raise cash, as an example. (Why else would gold be dropping as inflation is rising and the money supply is exploding?) Or it could be copper or Russian stocks which get hammered by the margin clerks (could we once again be talking value and Russian stocks in the same breath?). Greenspan and Company recognize that they created the carry trade. It was a side effect of their desire to stimulate the economy with lower rates. They also recognize the dangers of those trades unwinding too fast, causing deep losses and therefore requiring margin clerks, who have neither soul nor an ounce of mercy, to force funds and traders to sell in order to meet minimum cash requirements. The carry trade is so massive that the fears is that a too quick retreat could create a cascade. Think Long Term Capital Management. Thus, Greenspan began to send clear signals in late March. By mid-April the unwinding had begun and is still going on today. Overall, it has been orderly, although some traders have not been happy, there are no major disasters surfacing and so far we do not see a lot of abnormal pressure in the markets. Greenspan (and to be realistic, so do you and I, gentle reader) wants to see this process continue to be orderly. Remember his speech of last August? The first rule of central banking is to avoid taking major risks. The small risk of a cascading implosion in the unwinding of the carry trade is nowhere near as great as a little extra inflation that can be dealt with later. Thus, I think the Fed will raise rates slowly until they perceive the dangers from this unwinding are gone. At that point, they will start to raise rates in earnest, 50 basis points at a time. But when will this be? I do not think it will be as early as August. Maybe not even this year. But then again, if the process continues apace, perhaps they can indeed raise rates faster, getting us closer to that equilibrium level. And perhaps (repeat perhaps) that explains why the money supply is rising at levels usually associated with severe problems, like 9/11 or the summer of 1998. It is just another form of insurance that the carry trade will be unwound in an orderly fashion. As liquidity is being taken off the table in one form (the carry trade) it is being added by the Fed in another. I should note that I do not see the dire predictions of some who think the recent (admittedly large) rise in the money supply herald the end of the world. In reality, we are playing "catch up" for the reversal in the growth of the money supply last year. In a year over year basis, taking into account both periods, monetary growth is not all that large for a period of economic growth like we are currently in. Inflation: The Fed Gets What It Wants One of the smartest observers of the economic world is Martin Barnes of the Bank Credit Analyst. Their forecasting has been as right on as any service I know. Central bankers and major institutions from all over the world read Martin, and well they should. Their June issue just came out, and let me quote from a special study they did on inflation entitled: "Inflation: The Fed Gets What It Wants." "There was too much market complacency about the inflation outlook in late 2003/early 2004, setting the scene for recent price data to catch investors off guard. The underlying inflation rate was never as weak last year as implied by the consumer price index and the recent acceleration partly reflects an unwinding of earlier distortions. The cyclical trend in inflation is up, albeit gradually. The Federal Reserve has been targeting higher inflation by running a hyperexpansionary monetary policy. While interest rates will be normalized over the next 12 to 18 months, policy gradualism will allow inflation to keep rising. The prices of goods and services purchased every day, week and month are rising at a steady pace. Deflation has been concentrated in durable goods, which are purchased infrequently. Moreover, trends in used car prices and owners' equivalent rent have obscured underlying inflation trends. The core inflation rate is headed to 3% or higher and the Fed will eventually have to flatten or invert the yield curve. Stay underweight bonds." (www.bcaresearch.com) Martin brought up some very interesting points in this study. First, exactly how does the consumer price index (CPI) seem to understate an inflation that seems readily apparent to all? One reason is that "nearly all of the deflationary pressures during the past couple of years have been concentrated in durables goods, which account for only 11% of the overall CPI. The core annual inflation rate excluding durables never dropped much below 2% and is now up to 2. 6%." "There is even a twist within the inflation rate for durables. According to the official data, the price of used cars plunged at a 21% annualized pace between June and December of last year, exerting significant downward pressure on the durables inflation rate. The CPI for used cars has started to edge higher this year. A private-industry index of used car prices tells a different and perhaps more plausible story. The Manheim Used Vehicle Index (www.manheimvalueindex.com) is based on a large sample of actual transactions and shows a marked upturn in the inflation rate for used vehicles in the past year. If the Manheim index is used instead of the CPI measure of used car prices, then the annual change in durable goods prices would have been minus 0.5% in April as opposed to the minus 3.5% shown in the published data (Chart III-2 on page 24). The 'truth' is probably somewhere in the middle." Another way in which inflation gets understated is that the rise in owner-occupied housing costs are measured by using an estimate of the rent homeowners would have to pay to live in their homes. This measure accounts for 32.9% of the core CPI. In April, core inflation for the last three months was 3.3%, which is quite the rise from 1.2% for last October. If you exclude the housing costs, core inflation for the last three months has risen 4.5%. It was 3.5% last October. Thus, using equivalent rent costs, which have not risen all that much, as a measure for all housing costs, has the very real potential to understate inflation. Martin has put his finger on the very topic I wrote about last week, and that is what I called the "end game" for the Fed. Just as they are committed to not allowing deflation, they are also not going to allow their recent legacy of controlling inflation to go by the wayside. I have maintained for some time that the Fed will allow inflation to increase more than most observers now believe. I also believe they will work to bring it back down. The trick, the end game, is whether they will be able to do so without causing a recession. Martin suggests: "...the Fed will eventually have to flatten or invert the yield curve." The Fed knows, and their own studies show (I have written about them on more than one occasion) that an inverted yield curve is a pre-cursor to a recession. I have trouble believing that the Fed will actively produce an inverted yield curve. But I can readily see the Fed being forced by the markets to take actions they loathe. The question is whether they can raise rates fast enough to keep inflation from becoming a real problem without also risking a problem in the markets from the unwinding of the carry trade. It is a delicate balancing act. I can envision a scenario where this happens, but it requires a lot of good things all happening in concert. There can be no hiccups or bumps from a lot of problem areas. The trade deficit, the US budget, consumer spending, currencies, etc. Can the housing market stay strong with mortgage rates at 8% and ARMS at 6%? It was only four years ago that ARMS were almost 7%. We tend to forget that only four years ago, short term rates were 6.5%. An eventual rise to a mere 4% is certainly likely. In 1998, when I wrote about mortgage rates going to 5%, most readers thought I was nuts. Some asked me to send them whatever I was smoking, as it was clearly good stuff. In a blatant plug for my book, Bull's Eye Investing, I would suggest that you go to chapters 5 and 6 and see what the dual combo of rising interest rates and inflation do to the stock market. It is not pretty. When the market begins to perceive real inflation and a significant rise in interest rates, you do not want to be naked long the market. Until then, maybe. And it may take a long time for that perception to actually come about. But just as the unwinding of the carry trade started quite rapidly and continued, albeit behind the scenes, the return of the bear market will be quick. Keep your hand on the trigger. The Employment Numbers: A Good Story But let's not leave on a downer note. All those problems are for next year, or maybe in 2006. Right now, the economy is rocking along and creating jobs. We saw pay rise a respectable $.05 in May, and 248,000 jobs were added. The actual rise in temporary jobs was only 2,000. Since May of last year, 1.3 million jobs have been added, the bulk of those in the last four months. Of course, you could throw some water on the wage parade and note that inflation is also up, but let's not. Ok, just one tidbit for the bears so they can feel happy. Last year, the employment numbers started to include an estimate for the birth and death of new businesses. There is a time lag between the time these businesses are created (or die) and when the Bureau of Labor Statistics finds out about them. So they have created some fairly elaborate models for estimating the numbers of new businesses. While this does attempt to show more realism in the actual final number, it also throws some subjectivity into the numbers. As they note on their site (www.bls.gov), "The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend. BLS will continue researching alternative model-based techniques for the net birth/death component; it is likely to remain as the most problematic part of the estimation process." Last month, 195,000 jobs were in that category across the entire spectrum of the employment markets. They estimate over 700,000 new businesses have been created in the last four months alone, or more than double the amount created in the preceding 10 months. Were those 195,000 real, or were they the creation of a government agency desperate to show employment growth? As they note, this model will understate growth at the beginning of recoveries and mask problems at the beginning of downturns. But there is nothing in any of the rest of the economic data which suggests a major change in patterns, so I give some credence to the possibility that 195,000 jobs were created by new businesses. In the US, most new jobs are created by small businesses, and in recoveries, it is normal for lots of new small businesses to be created. The jobs numbers are all guesstimates anyway, and it is the longer term trend and direction which should concern us, and not the month to month numbers. And lately, the trend has finally been good. # 14 on Business Week My publisher sent me a note a few days ago, noting that Bull's Eye Investing is #14 on the Business Week Business Best Sellers list. I wish to thank all of you who have bought the book, and a special thanks for the many kind notes and reviews I have been getting. For those of you who have not yet bought, let me offer you the thoughts from one Mark Lemmons on Amazon.com: "Rarely does a book on the topic of investing and the economy qualify as 'can't put it down' material, but this one does - I finished it in a short weekend. Immensely readable, the book provides a framework for understanding an investment world that seems no longer to play by the rules. So many books of this kind come across as alarmist or naive, but Bull's Eye Investing is rational, methodical and comprehensive in its' analysis of everything from underfunded pensions to global demographic trends. The book left me with a 'bearishly optimistic' outlook for the next decade. Mauldin makes a compelling case for caution as a small investor, but also identifies strategies and analytical approaches that provide the reader with a path forward even in what he calls the 'Muddle Through Economy.' In the end, Mauldin's concise recipe for moving forward as an investor is nothing less than gourmet fare." Another reviewer kindly wrote: "The bottom line on Mr. Mauldin is that over the past few years following the advice contained in his weekly emails has made me a lot of money, even more important I have avoided large losses. Reading his weekly essay is a highlight of my week. Naturally the question comes up: why should I buy the book when I can get the data for free. Well, first is simple fairness: he deserves some pay back for dispensing so much wisdom for free every week. But hey, whose going to buy a book because the author deserves the money? Well, there are several good reasons. First the list of other free sources of investment/economic analysis available on the internet is worth the price of the book by itself. Second, there are several important chapters that have not been made available in his emails, and lastly the book organizes the data in a way that arms the individual investor with a broad intellectual base in which to put in context the daily stream of market data. Buy this book, and put in the time to fully understand it, and the reward will be many times the price of the book." You can read these reviews and others (some not quite as kind) at www.Amazon.com/bullseye. The book is also at your local bookstores. Vancouver, New York, Orange County, Vacation I will be in New York next week, meeting with clients, doing some interviews and appearing Wednesday on CNBC with Ron Insana. In theory, I should be on between 2 and 2:30 Eastern time. I will be speaking the following week at the World Gold Show in Vancouver June 13-14. I am looking forward to it, as there will be lots of old friends there. It is a free conference. For those interested in all things gold and anything to do with mining, you can find more details go to http://www.worldgoldshow.com And speaking of old friends, I will be going June 26 to Orange County to spend an hour with Doug Fabian, whose 3 hour afternoon investment radio show now blankets most of the West Coast and is rapidly getting established in the East. The show is getting great reviews, as well it should Doug is a very smart guy. And speaking of smart, my bride has decided that I need a real vacation, and not the working vacations that I seem to do. Evidently, she is noticing some "stress faults" that need some repair. She has declared that for 10-12 days, I will be somewhere with her and without a computer commanding my day. Aah, but where in this wide, wide world to go? We will look for cool and fun and relaxing. Since my readers are among the smartest of all peoples, I am deferring that question to you. You can send suggestions to Eunice by replying to this letter. Have a great week. Your really needing a vacation analyst, John Mauldin John@frontlinethoughts.com Copyright 2004 John Mauldin. All Rights Reserved If you would like to reproduce any of John Mauldin's E-Letters you must include the source of your quote and an email address (John@frontlinethoughts.com) Please write to Wave@frontlinethoughts.com and inform us of any reproductions. Please include where and when the copy will be reproduced. John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staff at Thoughts from the Frontline may or may not have investments in any funds cited above. Mauldin can be reached at 800-829-7273.
Verizon to offer ?naked? DSL
The company confirms plans to allow customers to buy DSL services
without also buying local phone service.Wed May 26 13:56:00 PDT 2004Read more?
Evolution of the species [the INQUIRER]
'-- online porn sites get about three times more visits than the top Web search engines, including market leader Google --'
Like in most other venues, sex sells.
...John
American colleges and universities are often on the cutting edge of Linux and open source use -- collaborating across campuses, enabling student and faculty open source projects, and providing unique experimentation and testing environments -- but when it comes to teaching Linux and open source development, administration, or other knowhow, it appears higher education has just been accepted for early admission. [NewsForge]
'-- "We tell our students that the software they'll use throughout most of their career hasn't been written yet, so they'd better learn the general principles and learn how to learn details as they go along, not feeling that they're limited to the tools they use in our courses," --'
Sounds to me like a very practical approach to the real world of software.
...John
"Microsoft is flush with $56 billion in cash and short-term investments. Income of $16 billion is expected in fiscal year 2005. It dominates the most profitable segments of the software industry— operating systems and productivity applications. It attracts talented, creative...
"...the elephant in the room: RSS. While INBOX wrestles with the intractable problems of blurred international boundaries, too-complex authentication solutions and too-expensive computational and payment schemes, more and more of us are routing around e-mail for all but the most...
“AVerMedia has created a pocket-sized device, the AverMe3dia UltraTV USB 300, that can capture video and tune in cable or broadcast TV, as well as enabling virtually any decently powered PC desktop or laptop to time-shift television and capture video from other sources, like DVD players and VCRs. Read our full review of this fabulous $120 device.”
SBC announced plans to install Wi-Fi access at 6,000 McDonalds locations. This is part of SBC’s goal to have 20,000 Wi-Fi hotspots built in three years.
Daily access to use the SBC Wi-FI network will cost $7.95 and monthly access will cost $19.95.
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