MikeOz

Natural Gas: Powering the Dubai Overshoot

On Nov 29 02:30 AM Dialectical Materialist wrote:

> The state is California, but China meets a lot of those criteria
> as well... Overbuilt, imports energy, water issues (potable water
> anyway), opaque government, and seems hell bent on growth at any
> cost... They don't seem to expect a bailout, but I think the question
> of what they do think will come of what they are doing is a fair
> one.
>
> Interesting stuff about Dubai's LNG imports... very unexpected.

Yes you are right about those similarities between China and Dubai. BUT there is a major point of difference - China is a net creditor nation.
China allocates a high proportion of its GDP to investment in manufacturing and wealth producing infrastructure, which combined with unlimited cheap labor gives it its high growth rate.
And China suppresses consumer spending by (amongst other ways) artificially undervaluing its currency.

Murdoch’s Bing Bluster Will Hurt News Corp, Not Google

If we are talking just about the newspaper part of Murdoch's business (news + print advertising), we already know where it is all going. Just look to the music industry (and the drop in newspaper subscriptions this year) to see.

Music was an industry where 80%+ of revenue was spent in marketing and distribution. Suddenly, with the internet, consumers could bypass the industry's business model, pay nothing, and still receive the thing they wanted - ie the content (eg one track off an album the industry wanted to charge $15 or $20 for.)

The music industry for years refused to accept that a new distribution system existed for their product - the cost of which is as close to $zero as you can get to the producer.
Instead of setting up a process to sell their content over the internet for what they pay the artists/production plus profit, they pretended the old business model was still viable.

It took companies like Apple (with itunes) - ie people outside the music industry - to actually get realistic about making money from music in the internet age.
In the years my kids were happily paying $1, $2 or more for ring tones for their cell phones, (and would have been happy to pay the same or more for music) the music industry refused to sell to them.

The same now applies to news content. I'd be happy to pay a reasonable sub to get access to current and archive journalism of quality and special interest to me, but
1. organize it on as wide a basis as possible - and distribute my single monthly sub to the organizations that i use
2. don't expect me to pay old business model pricing.

Property Values Set to Fall 43% from Current Depressed Levels

Can you explain how you have calculated the trend line, and over what period the data was sourced from ?

I also follow numbers (it's what I do) and your trend line looks to me like it was calculated over a relatively short period of time (maybe 12 - 15 years ?) and maybe over a period of time when the market was recovering from an earlier property bubble ?
(Your trend line looks like it goes from about 70 in 1987 to maybe 90 in 2009 - ie about 1% per year !)

In most residential property markets in first world countries, the longer term trend seems to average around inflation plus 1.5% (or inflation plus population growth in the view of some), and if you apply that growth rate your trend line would be considerably steeper.

Australian Rate Hike: Looking at the Logic

In addition to the factors you mentioned as reasons for the rate increase, the Australian Government (which had zero net debt one year ago) engaged in some fairly large (deficit) stimulus spending in the first half of this year (eg substantial cash handouts to nearly anyone) - on the basis that they wanted to pre-empt a recession.

Given that most Australians have barely noticed any economic downturn over the past 2 years (as you say - because of Chinese purchases of commodities), history will probably record that the Government over-reacted with the stimulus spending.
My guess is that was also a factor in the RBA's decision - though they wouldn't want to say it out loud.

Jobless Claims Fall to Lowest Level in 37 Weeks

On Oct 09 05:50 AM bbro wrote:

> Anybody consider our fighting in Iraq is costing us 1 million jobs
> here....

and about $1 trillion all up in unnecessary Govt expenditure.
Not sure what was on the positive side of the balance sheet from invading Iraq, but a trillion less of Govt debt right now would be useful.

The Arithmetic of Gold: Why Its Price Has No Ceiling

Gold is simply another inert substance of limited supply.

Apart from jewelery and a few conductive components (which uses are covered several times over by the current annual production), it has no intrinsic value to humanity other than what custom (or fear or greed) attributes to it - unlike a house for example - which fulfills a basic human need for shelter - and accordingly the components which make up a new house (eg copper, timber etc).

Hence the wild fluctuations in price since 1971.

If you can make money out of holding or trading gold (or tulips) by good timing then good luck to you.

I am more interested in rare metals (or their producers) where sound reasoning indicates that demand will rise faster than supply - eg because it is necessary to produce an item which will be manufactured in increasing quantities over the next x number of years, due to changing world demographics and income levels.

Will Windows 7 Resurrect IT Spending?

I think the article's view of the 3 forces at work is optimistic.

1.The IT shop (if its anything like mine) buy their licences and hardware as a package or on subscription. We replaced our 400 Dell desktops in the first half of 2008 (with new Dells) at the end of a 3 year cycle, and decided (after a Pilot with Vista) to stick with XP. I don't think many IT shops will consider an OS upgrade in the middle of their hardware replacement cycle.
As machines need to be replaced, IT shops will probably go for Win7 because there is will be no real choice apart from Apple (not really in the corporate market) or Linux (not viable if you rely on Windows software). And for the record, the XP emulation in Win7 looks to us a potential headache. We want to be able to run all our software native.
AND we are all cautious now about Win7. Vista caused problems - and when you have hundreds or thousands of users, it's better to stick with what you know until you're certain that the new platform will not cause your company to lose productivity.

2. Consumers - also will go with Win7 when they decide to replace hardware. As another poster pointed out above, upgrading the OS from XP currently looks like a difficult exercise.

3. Serious gamers are not a major segment of the market. They are already running Vista on their 64bit 4Gb or 8Gb Ram quad core machines anyway. Some of these guys will upgrade the OS straight away.

Will Chimerica's Demise Take Down Global Economy?

On Sep 15 02:16 PM John Galt wrote:

> > The US and China are not "friends," and aside from the brief WW2
> interlude of cooperation against the Japanese, the two nations never
> have been.
>
> My biggest fear is war. Yes war, like world war. You know, people
> born in American territory shooting, bombing, and attacking people
> born in the Chineese territory.
>

Hold on - just a couple of posts above this you were at your xenophobic best telling us how people in Europe have no freedom !

(Not sure what your background is, but I've lived, worked and done business in the EEC and the USA and while things are done differently in each place, the levels of freedom are really no different. If you are talking about Russia, Ukraine or similar, of course you have a point)

If you really were referring to the EEC, it is people like you who exaggerate the differences between countries who actually allow politicians to whip up public sentiment to the point where war becomes possible.

China Commandeers Australian Commodity Players, Starts to Nibble in Africa

In regard to Australia - there are quite a few other significant mining investments (iron ore, coal, base metals and and others) which have been made or are in the process of being approved which you have not mentioned. Scarcely a week now goes by without another major announcement of major Chinese mining investment in Australia.

In my opinion, there is growing disconnect between the attitude of the Australian Government - which on the face of it seems to be encouraging Chinese resource investment (without any apparent limits) - and the Australian population, which is less sure.

There has always been a (minority) element of Australian society who do not want any asian investment, but this has been added to recently as a result of Chinese central government action.

Currently the Rio Tinto iron ore negotiating team is sitting in a Chinese jail on trumped up charges of industrial espionage. As far as anyone can make out the reasons for this are:
- loss of face by the central government, after the Australian miners did not agree to the 40% reduction in iron are price demanded, and then Chinese provincial factories ignored the central government price guidelines and restarted buying at the price agreed by Japanese steel producers (about 10% over the guide)
- the canceled 15% investment in RIO itself by China. In the darkest days of the share market decline, RIO negotiated a fire sale of 15% of its stock to Chinese interests to reduce debt. When the markets improved, the board decided not to ratify their own agreement. (Personally I'd agree with Chinese on that one - the current RIO board are a disgrace.)

(Also note - there seems to be a cultural disconnect now going on - with Chinese hints that they now just need a small reduction in price (below what was agreed with the Japanese) for which they would give something in return - ie a face saver. This seems to have either been ignored or not picked up on by the Australian / UK boards and management.)

China has been the largest consumer of Iron Ore for about 5 years now, so some investment in the Australian Iron Ore industry makes sense.

BUT there is an increasing number of voices here in Australia who are saying that we should establish some guidelines now as to what the eventual type and size of Chinese mining investment should look like. This would be the best way of avoiding potential future conflicts in an area where both sides should really be winners.

Buying Apple Today: Like Buying Microsoft in 1998?

On Sep 13 04:41 AM Bling Daddy wrote:

> When you use an Apple product, you are using a piece of art. It
> is not just a machine to do work. Apple has a style that transcends functionality.

I've been in IT for 25 years, and to me, and no offense meant here, comments like that sound a little warning bell about over-hype (whether its to products or the share price / expected earnings).

Apple is a company that sold (mainly) good quality desktop / notebook hardware with the better of the 2 main operating systems. With the increase in power of hand held devices in the last 2 or 3 years, they've been able to leverage their operating system knowhow onto the iPhone.

Apple is 2 to 3 years ahead of most of its competitors (including MS and Nokia) in terms of UI for the handheld.
It's also got a major marketing advantage in the consumer area that will last a bit longer than that - it's a "cool" band for everyone under 30 because of its association with music (ipod).

I think they will make big money over the next 2 or 3 years, but as with all technology, when you lose competitive advantage for a minute, and you have nothing else to tie your customers to you, you can end up dead in the water.

Remember - for a short time even Microsoft was cool - I can remember when windows xp was about a year or so old my son aged about 13 refused to even look at an apple computer - all his friends were on MS Chat !

Judge's Message to Rating Agencies: Free Speech Not Freedom to Defraud

Very thoughtful article - thank you. Same also for Chap08's comments.

In regard to the last 3 paragraphs of the article, if you live and do business outside the USA as I do, you do hear opinion at times that the US borrowed for its own low income housing on the basis of false information, US Banks securitised the loans, S&P and Co then give the securities AAA ratings, which were then used to market those securities to foreign pension funds (like mine).

Whether or not it's fair, there's a feeling that the US mortgage industry mugged foreign pensions as well as its own.

Many funds and banks in my part of the world had rules which explicitly stated that AAA rated (and also one or two grades below that) investments did not require additional analysis.

Everyone agrees those rules now look pretty stupid, but I believe the damage done to reputation is permanent.
An S&P rating on a bond will forever more be regarded as a superficial and light-weight analysis.
This seems especially true now in Asia and the ME.

Will Virtualization Undermine Network Equipment Vendors?

On Aug 30 04:39 PM ManAboutDallas wrote:

> The first virtualisation product is still the best: IBM's z/VM
>
very interesting comment - but doesn't that beg another question ?

Which is that a warehouse full of commodity servers cannot be the most efficient way of providing the cloud service, even if it were 10,000 virtual linux boxes on a single z/VM.

As I understand it, google, amazon etc are stuck with their current solution because their software cannot be ported to a mainframe environment. But that might change ...

And in any event I have heard Google managers say that they see no place for virtualisation in their operation - i think they already switch processing around the world to suit with their load distributing systems.

Microsoft: Whistling in the Dark

On Aug 14 08:41 AM User 332757 wrote:

> Apple has two current advantages over Microsoft that should make
> any Microsoft stockholder shudder:
> 1) At any time, Apple could focus on offering an enterprise solution,
> which could be as market altering as their entry into the music or
> phone markets. They currently are not focused on that.
> 2) At any time, Apple could release OS X for all PCs, making Windows
> dominance because of its default placement on PCs highly disruptable.

I really don't think you're right on either point, and the fact that Apple hasn't done either, and probably has no plans to, is testament to that.

1. An enterprise solution presumably means the enterprise locking itself into Apple hardware and software. As an IT manager, I have seen that from around the early 90's with firms of several hundred to maybe a couple of thousand users adopting Apple desktop. I don't think it ended happily for any of the ones I saw - in that they soon felt their upgrade / replacement / software options became too constrained as time went by.

2. OS X for all PC's ? - not without a massive effort both from Apple and many third party vendors. One of the reasons Windows is clunky compared with OS X is that it is compatible with a huge range of hardware - Vista driver issues notwithstanding ! OS X is really only compatible with Apple hardware. If you want to test that, try running OS X in a virtual environment on your PC.

Say what you like about Bill Gates, but he left MSFT with a near monopoly position for corporate desktops and a very large share of the server market (eg about 50% of all corporate Mail servers on the planet).

I'm not saying that's good forever, but it gives MSFT a massive advantage over its rivals for a while to come, even when MSFT tries to commit corporate suicide with a product like Vista.

They can still be extremely profitable despite themselves.

The Mac vs. PC Debate Was Never Clearer

On Jul 24 11:49 AM mlambert890 wrote:

> Apple uses:
>
> Intel processors
> Nvidia or ATI video cards
> Standard RAM matched to the Intel processors
> A standard EFI BIOS
> Basically standard Intel chipsets
>
> This is the reason you can run Windows Vista on your Mac. You can
> also run OSX x86 on a PC.
>

Right on !!!
That Apple "magic sauce" argument doesn't wash with anyone who really knows about computers. Some of the Apple supporters here are just nuts.
The difference is operating system. I'm a PC user (after being mainly Apple in the mid to late 1980's) but I'm happy to admit the Mac OS is better than any of Microsoft's ones.
But with a Mac I pay a bit more, have a bit less flexibility with hardware, have fewer software options, and less upgrade options.

If none of the above limitations will affect you, and the better OS is worth the extra to you, go with the Mac.

The Mac vs. PC Debate Was Never Clearer

This is a nonsense discussion ( and in my opinion a nonsense article also).

If you are a manufacturer, you can always get higher margins from a niche market (eg Mercedes 5%, or Apple's 8% or whatever.)

It's a nonsense discussion because Microsoft aren't a manufacturer. They are software - with large development costs to get the product to market - and then a 95% plus gross margin on ever copy sold.

It's not about hardware - since Apple went to intel the set of possible components is almost the same whether it's Mac or PC.
The difference is operating system.
Apple's OS is the best - because they control both the OS and the hardware it runs on, it's easier to build a great OS.
Also Apple have not always provided full backwards compatibility - which means that it's easier for them to avoid some of the bloat of Windows products.
In the company I am IT manager for, we have PCs, Apples and Linux machines.
The Number of Apples is very few; why ?
1. Price. We can get the same processing power cheaper in a PC, so only a few managers have macs.
2. Some of the programs we run are windows only.

For home - sure I wouldn't mind an apple - if I could be bothered.

If someone wants to donate me a nice new Mac I'll happily trash my PC - but it's hardly going to change my life !!