By Bhagwad Jal Park, on December 18th, 2008
We recently saw that Yahoo had removed the so called “Severance Benefits” that it had planned to implement were it ever subject to a hostile takeover. In this article, we take a closer look at this mechanism as well as how effective “Poison Pills” like this can be.
A Poison Pill is a strategy employed by companies to ensure that the existing managment is not harmed by a hostile takeover. We know that takeovers can be accomplished by more ways than one. In the recent interactions between Yahoo! and Microsoft, there was a threat in the air that Microsoft would either replace Yahoo!’s board members with those more sympathetic to it at the AGM, or buy up a dominating percentage of Yahoo! share.
Image Credit: Steven Fernandez
Yahoo! management has every right to be afraid of something like this since it would be quite likely that Microsoft would want to replace a number of Yahoo! managers with their own people. In order to prevent this from happening (After all, no one likes to lose their jobs), Yahoo! enacted a clause that in the event of a hostile takeover, Yahoo employees could avail themselves of massive benefits by walking away.
These massive benefits would of course financially harm the company effectively raising the cost of the takeover by hundreds of millions of dollars. This “Poison Pill” is like a suicide attempt. The threat is, don’t try and take me over, otherwise I’ll self destruct.
The question is, is this threat credible? In Game theory, a credible threat is one where the person who is making the threats actually benefits by carrying out the said threat. By this logic, if a robber takes hostage a single victim, threatening to shoot him if the police came in, would he actually do it? After all, killing the hostage provides him with no protection afterwards and will probably only increase his sentence! The only reason why he would ever carry out his threat and kill the hostage, was if he was insane. A perfectly rational robber would never kill a single hostage. This is why it is sometimes best to be insane.
The situation is strikingly similar when discussing corporate Poison Pills. It’s reasonable to assume that Yahoo! management holds a considerable stake in the company, and harming the company will harm them too. Moreover, the Poison Pill will be swallowed only if the hostile takeover succeeds. Assuming that the Pill is swallowed, this cannot reverse the acquisition. What then is the purpose of swallowing the pill? It is just a threat, and not a very credible one. The managment doesn’t gain anything by swallowing a pill that hurts the company after the acquisition has taken place.
One can devise a Poison Pill in such a way that it reduces the effectiveness of a hostile takeover by allowing existing shareholders (But not the acquirer) to purchase shares at a discount. This means that having bought a certain percentage of Yahoo! (in this case, 15%), Yahoo! shareholders can then get more shares at a huge discount. This means that the percentage of shares owned by Microsoft will come be less than 15% and may not be enough for a takeover. This is called a Dilution Poison Pill.
Will this be effective? Let’s say that Microsoft has bought 15% of Yahoo! stock for tens of billions of dollars. That money is a sunk cost. Once they’re bought, they’re bought. Microsoft must treat this as a sunk cost, and continue to buy up more Yahoo! shares to gain a controlling interest since the additional cost of buying the shares is much less than the amount already sunk in. So this Poison Pill holds no threat either.
The only way that the management can effectively threaten to swallow the pill, was if they were considered insane. Unfortunately, the Insane argument doesn’t really work in a corporate environment. In fact, an insane management has no right to run the company at all. And thus the Poison Pill threat is negated.
By Stephan Zimmermann, on December 17th, 2008
The Organization of Petroleum Exporting Countries (OPEC) announced Saturday, November 29, that the organization would wait until its next scheduled meeting in Oran, Algeria, to agree on its output reductions, according to Reuters. The Algerian meeting is scheduled for December 17. (www.reuters.com)
OPEC, the cartel producing nearly forty percent of the world’s oil supply, is experiencing significant declines in oil revenues. From the high of nearly US$150/barrel in July, prices have dropped to approximately
US$54/barrel last Friday. A decline in world oil consumption resulting from the general global economic slowdown has fueled the decrease in prices.
Both Saudi Arabian Oil Minister Ali Ibrahim al-Naimi and his sovereign, King Abdullah, cited the figure of $75/barrel as the “fair price” of crude oil “to protect the marginal producer.” OPEC refused to agree to further
production cuts until the Algerian meeting. (www.arabianbusiness.com)
Venezuela and Iran, both OPEC members, called for immediate production cuts after October’s
decrease of 1.5 million barrel/day, The division is a sources for disagreement among cartel members. (www.english.daralhayat.com).
According to various sources, Venezuela is overstating its current production and would benefit by
further mandated OPEC cuts. Anticipating resulting price increases from further production cuts would bring expected economic benefits to the country.
Iran which possesses the world’s fourth largest oil reserves is subject to continuing technological and infrastructure problems. It benefited substantially from last year’s record oil prices. It is, however, also subject to the Iran Sanctions Act, first passed by President Clinton by Executive Order in 1995. It was subsequently renewed until 2011. Among other items, the Act precludes foreign investment in Iran of more
than $20 million per year. Attesting to the overall ineffectiveness of the sanctions, Iran and China signed a multi-year oil and gas supply accord in 2004 potentially worth nearly $200 billion. The country is also eying improved trade relations with India, Russia, and Indonesia.
In a show of bilateral support, Indonesian President Yudhoyono met with Iranian President Ahmadinejad earlier this year. Indonesia, which leaves OPEC at the end of December, is also a non-permanent member of the United Nations Security Council. It was the only member not to condemn Iran’s alleged nuclear research program. Stated in its charter, “OPEC’s objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.” (www.opec.org)
The political troubles within OPEC may presage further short-term cuts in production to reach the target levels suggested by Saudi Arabia to stabilize world prices for consumers and producers alike.
However, it is potentially dangerous to short and long term options to new exploration, drilling or alternative energy development. As global demand shrinks in the short run and oil prices decline, so do potential profits from energy investment.
Last year approximately $77 billion were committed globally by major producers in alternative energy projects, including nuclear, hydroelectric, wind and solar power. British Petroleum (BP) alone is responsible for roughly ten per cent of alternative energy investment. It agreed to provide $8 billion over ten years. The company has already funded $1.5 billion in 2008. Chevron-Texaco invested $2 billion since 2002, and expects additional investments of $2.5 billion through 2009.
Exxon-Mobil, the world’s most profitable company, reportedly spends roughly one percent, or $3 billion, of its annual profits on alternative energy each year. While not investing directly in wind, solar or other different sources of power, the company concentrates mainly on hybrid car development and battery and fuel cell technology.
The recent global financial problems specifically point to the interconnectivity of international economics: continually rising populations (especially in the less developed world) and increasing expectations to achieve
increasing material standards by the world’s populations, face greater knowledge of finite material supplies. This knowledge invariably leads to heightened tensions such as exemplified by OPEC members.
If one is inclined to look at the negative potential of each human crisis, this could be as dismal as Malthus’ incorrect prediction regarding population growth nearly two centuries ago. The short-term impact on the global economy could easily be seen as the decline of civilization.
Yet, allowing for the flourishing of mankind’s intellect and ingenuity and motivation, the current crisis can easily point the way to an even more fruitful, productive and innovative period throughout the coming centuries.
By Moyo Mamora, on December 16th, 2008
Last week, the Fed took a very dramatic step in providing some relief to the ailing economy, by creating money to buy bad assets of the crumbling financial institutions. Last week the Fed bought $5 billion of Freddie Mac, Fannie Mae, and Federal Home Loan Bank corporate debt.
Okay we know the Fed had been printing money, but prior to this, the Fed swapped out bad assets with treasury bonds, which is not an impressive move either. A better way to think about the new scheme is that the Fed magically increased account balances by a couple of billion dollars. You may pause to think why; could the situation be that bad that it calls for a panic? Well the idea was that by doing this, they can create credit that will be loaned out for people to re-finance. How’s that different from all the other credit injection schemes? The difference is this, the old scheme acted as a pawn shop to the financial institutions (well, almost like considering the assets the financial institution owned were worthless), and with this new scheme the Fed is “giving it out”. Now which cash infusion are you likely to spend thoughtlessly, the “free money” or the pawn shop cash? Exactly what I thought, the free money!
So what’s the point here? $50 billion may be a small number giving the size of the Fed, but like everything else that comes from the Fed, it’s a teaser, what happens when that figure is multiplied by 10? Being free money, it is loaned out freely, and economics teaches us that when money becomes cheaply available, everyone wants more for stuff, and then inflation kicks in. The blinding battle now is the battle against deflation, oil prices have crumbled to about a third of its highs last year, CPI numbers show YoY decline, highest level of joblessness seen in years, the Fed is using all its guns to fight “deflation”, but like every monetary policy that comes from the Fed, there is always the issue of latency.
This week we should see the outcome of the last FOMC meeting for the year, and the market expects a 50 basis point cut. Short term treasury yields are sitting at close to zero. Hence, another tool that may be used by the Fed to fight this battle on deflation is by debasing the dollar. By increasing the availability of US dollars, making it very cheap, the US can cause buyers within its market (we saw a little bit of this last year with Europeans flying into the US to shop). So why is this a suspect now, firstly it has been done before, secondly given the recent actions of the government it wont be above them to do so, thirdly the US dollar has been falling steadily for about two weeks now. Bernanke has clearly stated that he will do everything to fight deflation.
Many analyst proclaim that the condition will get much worse, and some make the case that there is the likelihood of some 1930s kind of incident, I don’t have a crystal ball, but I like to be optimistic, so I say that things are going to take a reverse course, and begin to get better in about 6 months, for a more technical view see here, and in this recovery process we just may witness the Fed fighting a new beast next year, well maybe in 2 years.
Lest I forget, the total amount of Federal Reserve bank monetary base has increased twofold in three months, see http://research.stlouisfed.org/publications/usfd/page3.pdf, that’s what you call a printing press!
By Cheryl Grey, on December 15th, 2008
All other things being equal, high productivity growth—a rise in the ability to create more with less of anything—remains the central driver for a nation’s economy, and United States productivity is world renowned (and envied). In the 1990s, productivity growth in many other economically-developed nations remained flat or even decreased; for example, in Spain productivity in service-related industries slowed -1.2% between 1995 and 2004. But in what some economists are calling a productivity miracle, the U.S. managed a 1.3% acceleration in the same field at the same time.
This productivity miracle is even more impressive considering the concept of convergence. Major technological advances generally happen in economically developed regions, particularly the ones such as the U.S. and the Eurozone that sponsor fundamental (non-patentable) research. Because it’s
easier to mimic somebody else’s success rather than create your own, developing countries tend to copy the innovations of their more advanced neighbors and ride on their technological coattails, leading to higher rates of productivity growth. However, as these nations become richer themselves, their growth rates tend to slow to match everyone else’s. So while productivity growth rates are high in China (6.4%), Russia (3.7%), and South Korea (3.2%), it’s because they’re toward the beginning of that convergence pipeline, with a long row to hoe before they begin to slow.
For the U.S. to break out of that mold implied something unusual happened. Many researchers studying the U.S. productivity miracle are claiming it was caused by the concurrent rise in technological innovation,
especially in information technology, communications, and the Internet. Although it’s true that European firms also manufacture computers and produce software, and have equal access to the Internet, the researchers are concluding that U.S. corporations more fully exploited these technologies during the 1990s. Their utilization in business to develop productivity-enhancing manufacturing and management techniques, such as just-in-time inventory control, boosted output per worker at rates unexpected by economists.
Among the rather small number of companies that produce Information Technology, the productivity growth rate between 1995 and 2001 was similar between the Eurozone (1.6%) and the U.S. (1.9%). However, among the sectors of industry that utilize the technology, such as banking, business services, and wholesale and retail trade, the difference was much more pronounced between Europe (0.0%) and the U.S. (3.5%). Across all industries, productivity growth remained lower in Europe (1.0%) than in the U.S. (2.0%).
A discussion paper published by the Centre for Economic Performance in April 2007 (authored by Nick Bloom, Raffaella Sadun, and John Van Reenen), entitled “Americans do IT better: US multinationals and the
productivity miracle,” found that this demographic extends beyond international borders. Within a few years of the transaction, the authors demonstrated, U.K. companies purchased by U.S. corporations became significantly more productive than either U.K. firms purchased by other foreign corporations or their domestically-owned counterparts, which remained the least productive firms within the dataset due
to their dependence upon traditional methods of doing business and low utilization of IT.
So it’s not just the technology, nor is it merely the creation of more powerful computers at lower cost, but something unusual happened to kick U.S. productivity into a higher gear since the mid-1990s. Specifically what was it?
The CEP discussion paper gives special emphasis to the flexibility of the U.S. business model in adopting technological changes to suit its needs and increase its efficiency. Although this characteristic doesn’t
give the U.S. a permanent advantage (nor make it inherently superior), it does provide multiple short-term and therefore temporary advantages over more traditionally inclined or commercially conservative nations.
If flexibility is the key to the U.S. productivity miracle, then there are two possible scenarios for the future: one, other regions of the world, in particular Japan, the U.K., and the Eurozone, may begin registering similar levels of growth as they adopt IT-enhanced business models, perhaps modified to suit their cultural needs; or two, if the world economy remains in a state of technological flux, the more flexible U.S. model could easily retain its advantage or gain another, fresh one as new innovations emerge and are adopted in turn.
As history shows, technological molds are made to be broken.
By Dan McLaughlin, on December 15th, 2008
Basketball fans are in their glory as their heroes take to the court. The season is underway and the stars are making news. They make sinking three pointers look easy, almost effortless.
None of those stars are mechanical engineers. They know enough about the laws of nature, however, to find the basket from twenty five feet out. They instantly processes all of the information necessary to release the ball at the exact moment, at the exact angle and with the exact velocity to find the net. The laws of physics can describe what happens in detail, but that knowledge doesn’t make it happen. Only their experience and decisions from moment to moment make it happen.
In the same way, the laws of economics describe what happens in daily life, but when you go to the market, you don’t need to be an economist to successfully provide for your family. Like our basketball players, you instantly process all of the personal preference and market information needed to make decisions.
Mechanical engineers use their knowledge of cause and effect to understand a certain result, the trajectory of a basketball, for instance. If the same conditions, inputs and processes are used, the result will be consistent and predictable. A basketball, backboards and hardwood floors have strictly identifiable characteristics. They will always react the same way to applied conditions.
Social engineers, on the other hand, try to use the laws of economics to bring about what they think is good. To a certain extent, that is possible, because we can anticipate the general reaction of the markets to external forces. There are multiple problems with this engineering approach, however. Real people have their own goals, ambitions and preferences. They have their own ideas of what is good. They don’t always do what is expected. There will be unanticipated disasters, hurricanes, droughts, business failures and government interventions that can dramatically change people’s perceptions, expectations and needs.
Physical scientists work with known quantities and constants. They can control the inputs and precisely describe the reaction of materials. In the social sciences, however, there are far too many variables and unknowns to arrive at any precise cause-effect relationships. Scientists can’t possibly know and measure all of the far reaching effects of actions on each member of society.
Even if they were able to perfectly direct the society to bring about the desired good results, who’s conception of good should be used? With 300 million people in this country, there is a wide divergence of opinion of what is good and appropriate. The more effective the social engineers are at imposing their own view of what is good, the more offensive and abusive they are to those that oppose them. People have a right to act in their own interest as long as they don’t infringe on the rights of others.
While the primary effects of market manipulation are somewhat predictable, secondary effects are usually hidden, but often just as or more significant than the primary. In the social realm, conditions and preferences can vary minute by minute. Humans are acting beings. They are not controllable, and react in different ways at different times.
In any event, the process of manipulation is necessarily political, and expediency is the rule, rather than what is good or right. The changes are guided by the selfish interests of politically powerful groups, and not by the general good, whether or not that good was known or even knowable. They will emphasize the here and now benefits to themselves or their group and ignore the negative consequences to other groups, or longer term effects. The use of political force to bring about good also assumes selfless leaders that act only in the public interest, an obviously unrealistic expectation to even passive observers of reality.
Many people claim to know what is good for the population, the citizens, the people, but the welfare of a population is maximized only when free people make free decisions without coercion from anyone. Economic freedom correlates with improvement in all measures of well-being. It is a rational consequence of the most fundamental elements of human action.
Scientists are trained to understand cause and effect, to explain what is. They can help individual baseball players or market participants achieve their goals, and players should use whatever knowledge will help them in their achievement. Scientists are, however, no more qualified than any other person to dictate to everyone what those goals should be. Decisions and opinions are not the realm of science but, rather, the realm of human choice. Humanity is always better off when basketball decisions are left to basketball players and market decisions to the market players, that is, you and me.
By J.D. Seagraves, on December 12th, 2008
I really hate shoveling snow. I live on a large corner lot with lots of sidewalk, so the job can take me over an hour. Snowblowers, I’ve found, are overrated. I’ve had two and neither did a very good job and both had maintenance issues. I bought both used, so that might be part of the problem, but when faced with buying a new one (after my 2005 model died this past week), I thought about how much I hated dealing with the snow and questioned the economics of hiring someone to do the shoveling for me.
It’s a little embarrassing. I’m thirty and work from home. I guess I could be considered “lazy” for not doing my own snow removal, but I prefer to think of myself as an ardent believer in the economic concepts of comparative advantage and the division of labor . So I went on Craig’s List and posted a job for “Regular Snow Removal, Good Pay” with all the details. Since there was only one local posting offering snow-removal service, I didn’t know if I’d get a response… But I didn’t have to wait long to find out.
Almost instantly, I got two emails. By the time I woke up the next day, I had ten. By the end of the second day, more than twenty. Two people stopped by my house to introduce themselves. And after about eight inches of snow rained down last night, a third young man showed up, unannounced, to take care of it for me.
I paid him $40 and he did a great job. Was this worth it? Well, consider this: as a freelance writer, I typically earn between $25 and $50 an hour. My average is probably around $40. So, assuming I can find an extra hour of work to do, I just have to think of it this way: would I rather spend an extra hour writing or shoveling snow? It’s an easy decision for me to make. In fact, even if I earned only $20 or even $10 an hour, I still think it’d be worth it — that’s how much I hate dealing with the snow.
The exuberant responses I’ve gotten from people wanting to shovel my sidewalk and driveway have me thinking of other ways I can kill two birds with one stone: help people who are out of work and lessen the number of unpleasant tasks I have to perform. I’m thinking of hiring someone to do my family’s laundry, for example. It’s the type of thing that always seems to get only half done (i.e., all of my clean clothes are still in the basement, not hung up in my closet) for one reason or another. Perhaps picking up an extra hour or two of writing work (which I enjoy) could save me and my wife from having to do the laundry (a constant source of marital strife) and help someone put food on the table too. Capitalism is win-win.
By Dan McLaughlin, on December 11th, 2008
United States Treasury Notes were recently auctioned off for a yield of 0%. That means that very smart people running mutual funds, brokerage houses and other very large organizations were willing to invest lots of money and get nothing in return other than a return of their principal. We can probably rule out the motives of benevolence or Christmas spirit. There must be some other reason.
Those smart people are investment managers, who’s job it is to make money for the organizations through their investing. With the extreme volatility of the stock market, those people would rather sit on their cash than risk it on companies that will likely lose a significant portion of their share value. That is not irrational. However, considering the fact that there are brokerage commissions and fees involved in buying treasury notes, those managers are losing money for their organizations by investing at 0%. Why would they not just keep their cash at 0% and not pay the commissions? It doesn’t seem to make sense.
An organization that has $100 million of cash doesn’t have a room full of twenty dollar bills. They have a bank account with some accounting entries. With all of the turmoil in the banking industry, it is not unreasonable for these money managers to feel a little queasy about leaving that money in a bank. FDIC deposit insurance only covers the first $250,000. The other $99,750,000 is unsecured. If the bank goes belly up, they may or may not get all of their money back, and if they do, they have no idea how long they would have to wait.
With that in mind, it makes sense that large scale investors would rather own treasury notes that appear to have a high level of safety, even if they lose a little money on the transaction. It sounds perverse, doesn’t it? If you understand fractional reserve banking, you can understand why it actually is so perverse.
When you put your money in a checking account at a bank, you do so with the understanding that it is still all your money. You have a right to withdraw it in any amount, at any time. This is opposed to investing in a Certificate of Deposit at the same bank. With the CD, you are actually loaning the bank your money. You do not have a right to withdraw it without penalty before the due date.
Banks have figured out that, on average, their depositors will not be withdrawing all of their money. Only a fairly small fraction will be taken on a given day. The bankers believe that all of that money should not be just sitting around collecting dust. They say “Someone should be making money from it, it might as well be me.” So they take a portion of that money and lend it out to other customers at interest to be paid over time. That’s pretty clever. In any other setting, that is called embezzlement, but in banking it is called generally accepted business practice.
At any point in time, every bank is technically bankrupt. Most of its liabilities, the deposits due to customers, are very short term. Most of its assets are very long term, such as loans. Mortgages that a bank lends out for 30 years are balanced by a checking deposit that is due today. In normal times it is not an issue because people are pretty predictable. In abnormal times, like now, people aren’t so predictable. They may have very valid reasons for pulling out their cash, such as believing that the bankers won’t have their money when they need it.
Unfortunately, that is a very valid concern. The underlying problem has nothing to do with market psychology or confidence or any such nonsense. The core issue is that, due to the bank’s systematic embezzlement, they do not have the cash available to meet their contractual obligations.
Using taxpayer money and the FDIC to secure a portion of deposits against banker fraud is not the solution to the problem. The solution is not to use billions, or even trillions, of taxpayer dollars to bail out banks who did stupid things with the money they embezzled. The solution is to make the embezzlement illegal, to stop the fraud.
The fractional reserve system allows banks to leverage reserves and rapidly expand money and credit. We witnessed that with the current housing bubble, the 1990’s stock bubble and every other bubble market before that. Rapid credit expansion is a two edged sword. Once the bubble bursts, there is a rapid deflation as irresponsible loans go bad and reserves diminish. They can’t hide the embezzlement in the downside of the bubble, because people want their deposits and banks don’t have them to give.
There is a very simple way to prevent future bubbles and economic crises, or at least minimize them. If banks were forced to live by the laws that everyone else must live by, bank runs would be very unlikely, even in the worst economic conditions. People could always get their money because it would always be there. There is a fairly simple cause and effect relationship. A simple policy change of requiring 100% reserves for all banks would prevent a meltdown like we are suffering through today.
It would be a fairly easy policy to implement, if there was the political will to do so. Given that the banking industry is one of the most wealthy and powerful lobbyists in Washington, that is not likely until taxpayers and voters connect the dots, and get fed up with footing the bill and bearing all the pain.
By J.D. Seagraves, on December 10th, 2008
One of the many demonstrably false myths of the official state religion — and by that I mean Keynesian economics — is the notion that we can have perpetual inflation at a “reasonable level” with no adverse affects. In this blog entry, I’ll demonstrate why this is indeed a myth.
Certain types of businesses do better during an inflationary environment, while others would (theoretically, at least) do better under a stable money supply, or even deflation. A clear example of a type of business that does well under inflation is anything connected to government — after all, with the Fed monetizing its budget deficits, the federal government gets new money first and dishes it out to government contractors. The more inflation, the more money there is for these economic rent seekers.
By contrast, a type of business that would do well under a stable money supply, or even better with deflation, would be “hard money” lenders. By this, I mean pawn shops, payday lenders, etc. After all, one of the advantages of being a debtor in an inflationary environment is that you get to pay off your debts with depreciating dollars. By the same token, if you’re a debtor in a deflationary environment, you have to pay off your debts with dollars that are worth more over time. This isn’t a very good deal for you, but it is for the lender.
Now hard-money lenders have a bad reputation in modern America — but they shouldn’t. After all, they’re only providing a service to customers who want loans and who can’t get them elsewhere. Do they charge high rates? Yes, but given that their customers are high credit risks, these rates are warranted. Perhaps the differential between what a poor credit risk is charged by a hard-money lender and what a good credit risk is charged by a Fed bank is larger than it should be, but that’s because Fed banks can create money for loans out of thin air, while hard-money lenders can only lend money that they actually have. If people with good credit did seek out hard-money loans, they’d pay much higher rates than they do with Fed banks.
In fact, the above is an example of what I’m trying to demonstrate. Inflation discourages hard-money lending, in general, though it keeps the business open to poor credit risks that the Fed banks refuse to serve. If we transitioned into a deflationary environment, in which banks did not create as much money to lend, then “higher quality” borrowers would seek out hard-money loans. The market for hard-money loans would thus expand, and with the expansion of the market, more firms would move into this business.
This is precisely why reversing the course on inflation is so politically difficult. As inflation becomes the norm, resources are shifted to businesses that are profitable in that environment. Reversing course would render these businesses unprofitable, and cause unemployment. And no politician likes unemployment — people out of work tend to vote for the other guy. This is why the Fed and the politicians who control it are always pushing for more and more inflation. They all hope that the can keep the corpse of the U.S. economy animated until they’re out of office. But I think they’ve finally pressed their luck too far this time.
While, economic volatility often keeps us on our toes, experienced hedge fund firms like GoldenTree Asset Management and others can provide sound investment decisions even in tough economic climates.
By Bhagwad Jal Park, on December 9th, 2008
Over the Past 10,000 years, mankind has seen technological advances unlike any other age. According to the World Book Mulitmedia Encyclopedia, Homo Sapiens emerged between 300,000 to 400,000 years ago. Compared to that sort of time scale, 10,000 is just the latest generation!
But my opinion is that this technological age is coming to an end. Not because there are no longer any things left to invent. That is far from over. The “technological dark age” will come to pass because of the way things currently are. There are forces in our world whose sole purpose is to maintain the status quo. And technology is a threat to those forces.
Image Credit: greekadman
A few centuries ago, the individual played a very important role in the advancement of Science. The greatest discoveries in the last century itself have all been due to individuals. Alexander Fleming, Heisenberg, Einstein, Dirak and too many more to mention. The greatest inventions all have the names of people attached to them. The light bulb (with a carbon filament), the aeroplane, the telephone, and the printing press.
In the modern day world however, the individual no longer has this claim to greatness. There are two reasons for this. In the first place, there are not many things that are unknown at first glance. Our ancestors could look around them and find questions. How high is the sky? Why is it blue? What are stars? How the heck is lightning formed? These days, all phenomena that is apparent to us is readily explained. There are still things to be discovered to be sure. However, in order to understand what we don’t know itself requires a considerable degree of expertise. For example, I know that we’re all searching for the elusive Higgs Boson. But to really understand why it’s so important and why it’s difficult to find requires a high degree of proficiency in theoretical physics. Simply getting to starting point is difficult enough.
Secondly, most technological inventions have been spurred by laziness. We thought candles were too much of a bother so we needed the light bulb. We thought that manual calculations were too difficult to so we made the computer. Walking is a pain, and so we built the automobile. There are many more things that can make our lives easier, and in that sense, there is certainly scope of innovation. But the rules have changed.
There are plenty of good ideas that we read about every day that will substantially increase the quality of our lives. Imagine for a moment that we find out we can easily harness Solar Energy for our energy requirements. In order to make it technologically feasible, considerable research needs to go into it. This research needs money. I can imagine Oil Companies being very interested in this research. Not in order to further it, but to throttle it. Nothing could be simpler for them, than to talk to one person, buy his or her patent for their latest invention, and let it collect dust on the shelves.
Suppose a new technique of communication was discovered that didn’t require us to use AT&T’s infrastructure? You can be quite sure that AT&T will lobby hard to throttle it pretty soon. Certain technologies take time to mature even though they may not be ideal at first. It took decades for the Airplane to be accepted as a viable way of travel even after the Wright Brothers had demonstrated their feasibility.
Another example is how major corporations like the RIAA are trying to throttle p2p. The RIAA would be exceedingly happy if the entire Bittorrent technology was scrapped, along with all the good that comes of it. But why go so far? The RIAA claims that even ripping CD’s to your harddisk is illegal. They would be happy if that technology was scrapped as well.
Similarly, corporations are trying hard to ensure that DVD’s can’t be copied.
The danger is something like Mark Elivins’ High Level Equilibrium Trap which attempts to describe why China’s technological growth came to an end and missed the industrial revolution. The current situation was just so comfortable that it didn’t warrant any need for future invention.
In my opinion, we are fast heading to a technological stagnation where only incremental changes on existing technology are allowed to flourish by those who benefit from it. Large corporations have every interest to see promising technologies crash and die in order to avoid the inevitable changes that they will bring if allowed to go forward.
By Dan McLaughlin, on December 8th, 2008
December 10th, 2008 will mark the 60th birthday of the United Nations Declaration Of Human Rights (DHR) and kick off a year long propaganda campaign pressing its agenda. The document has 30 articles which purport to catalog the rights that every human has. Most of those rights are what can be called positive rights, things that a person can demand someone provide for them. By contrast, negative rights are the ones that we, as Americans, are most familiar with. They include the rights to life, liberty and property. They say that nobody has a right to take the life, the liberty or the property of any individual without his consent.
The DHR is riddled with inconsistencies and inner conflicts. It begins by saying that all of the listed rights are inalienable. The normal view of “inalienable” means “cannot be alienated” by anyone, including government. The DHR ends with articles describing the circumstances where the stated inalienable rights can be alienated by the United Nations or member governments. Rights are given and rights are taken away. The term “inalienable” in the introduction is an outright fraud.
Many positive rights are granted under the DHR, such as the right to food, water, shelter, education and so forth. Negative rights, such as the right to own property without confiscation, are also granted. Whenever you grant positive and negative rights together, there is an insoluble problem. In order to provide anything to anybody, it must first be taken from someone else. In order to take it from someone else, their property rights must necessarily be violated. The donor has no rights in the confiscated property. Inalienable property rights are a fraud under the DHR.
Compulsory education under the Declaration is to be directed at socializing our children, making good subjects of international government and furthering the activities of the United Nations. The silly notion of educating our children to help them to be more productive and prosperous never occurs to the writers of the DHR. Education under DHR is a fraud.
Article 29 (1) says that “Everyone has duties to the community in which alone the free and full development of his personality is possible.” This manifests itself in calls for compulsory community service for all citizens. There is discussion of that very thing in America today. If a person is compelled to do service against his or her will by anyone, including politicians and bureaucrats, that is a form of slavery or involuntary servitude. It is in direct conflict with article 4 of the DHR: “No one shall be held in slavery or servitude…” Freedom doesn’t exist under DHR.
Article 30 ends the list. It says that “Nothing in the Declaration may be interpreted as implying for any State, group or person any right to engage in activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.” The net effect of that statement is that, if anyone tries to roll back government interference, to limit welfare, unemployment, social security or any other government program, they are guilty of humanitarian crimes under the Declaration. Their rights are not protected. They have no rights, under the DHR, to speak or write about the abolition of those programs, belong to organizations that promote their abolition or take part in rallies or hold seminars that speak out against them.
The bottom line is that the Declaration Of Human Rights is not a statement of inalienable rights, in any sense of the word. It is, rather, a comprehensive manifesto, aimed at promoting world socialism under the United Nations. The U.N. was founded on the idea that national sovereignty is an outdated notion and that an international government is needed to enforce peace and to provide for equitable distribution of the world’s wealth.
Article 22. “Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international cooperation, and in accordance with the organization and resources of each state, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.” As Karl Marx, the father of communism, said, “From each according to his ability, to each according to his need.”
The DHR is the socialist manifesto. This December 10th and for the whole year, people interested in maintaining free societies need to counter the United Nations propaganda with information on the reality of the document and the world socialist agenda of the United Nations.
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