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Saturday 27 February 2010

Expert answers to the global meltdown

Freefall: America, free markets and the sinking of the world economy
Author: Joseph E. Stiglitz
Publisher: Allen Lane
WHAT would the late Ayn Rand, author of Atlas Shrugged, have said about the recent financial crisis and the US government’s massive bailouts of banks and financial institutions?
Rand, a strong advocate of laissez-faire capitalism, believed that the government’s role in an economy was to protect individual rights without intervening in the conduct of free market.

To the dismay of Rand and her cult believers, the US government, in its efforts to subdue the crisis, has done everything that violates her definition of capitalism.

The government has done little to protect individual homeowners from foreclosures but has done a lot for banks. It has sustained them by giving them massive amounts of taxpayers’ money, despite reckless wrong doings.

Worse yet, some of these crooks and undeserving bankers have shamelessly paid themselves fat bonuses with the handouts and continue to serve as executives.

While Rand is no longer present to condemn the mess, Joseph Stiglitz is. In his new book, Freefall: America, free markets and the sinking of the world economy, Stiglitz outlines the crisis, identifies the causes, delineates the impact, fires salvos at bankers, criticises regulators and policy makers, and puts forth solutions for a better future.

Most importantly, he debunks economic theories and provides a historic background of the financial market.

This gives the reader a thorough understanding of the crisis and the economic forces at play.

Stiglitz’s account brings us back to the 1980s when deregulation and privatisation were Ronald Reagan’s top priority. This period also saw the replacement of Paul Volcker by Alan Greenspan as chairman of the Federal Reserve Board.

The formation of this duo, along with Treasury Secretary Robert Rubin, set the stage for rapid deregulation and low interest rates, encouraging banks to engage in risky activities and allowing consumers to spend beyond their means. Hence, the recent crisis did not just happen as bankers claim. “It was created,” says Stiglitz.

Much has been said about the crisis. Written in different formats, from diverse angles, by many people and for different objectives, the crisis has been put under a magnifying glass, analysed and, hopefully, its lessons learned.

But nobody does a more comprehensive job than Stiglitz. Although the material is difficult at times, Stiglitz manages to put things into perspective in a succinct and intuitive manner.

For instance, credit default swap, a type of credit derivative that can put banks and financial institutions in trouble, is cleverly defined in AIG’s context, as the “insurance” that AIG and investment bankers sell to insure investors against the collapse of banks.

But Stiglitz’s full ammunition is aimed mostly at bankers, calling their wheeling and dealings the greatest scam of the century.

Encouraged by lax regulation and tempted by the kind of quick profits that investment banks were making, commercial banks abandoned the conventional role of lending.

They began to make extremely risky loans and engage in securitisation, a process wherein subprime mortgages are bundled up, repackaged and converted into securities to be sold to investors.

As these banks became bigger and bigger, they became confident that the government would rescue them because they were simply to big to fail. And they were right.

Not only did the regulators not pop the asset bubble, they grew it. Alan Greenspan had fuelled the heat of risky trading by continuing to lower interest rates, Ben Bernanke allowed the issuance of subprime mortgages, and Henry Paulson, as a CEO before becoming the Treasury Secretary, led Goldman Sachs to new heights of leverage.

Stiglitz describes them as schizophrenic for refusing to acknowledge the danger looming ahead, let alone taking action to prevent it.

A Nobel laureate professor with stellar practical experience serving the World Bank and former US President Bill Clinton, Stiglitz’s passion in global economics and his decade-long warning on an impending crisis have made him the person the United Nations turned to as chairman of a panel of experts on the global meltdown’s causes.

The answers are in this book; all except Stiglitz’s confidence in President Barack Obama. Stigllitz is evidently doubtful of Obama’s ability to overcome the challenge as he has not taken firm action to restructure the banking behemoth as promised.

Moving forward, Stiglitz thinks economies need a balance between the role of markets and governments. Though that may seem very true in the wake of what we have just experienced, Stiglitz alone will not be able to convince the formidable-looking Rand, I reckon.

Note: Readers interested in Ayn Rand’s view on capitalism can check out her book titled Capitalism: The Unknown Ideal.

Friday 26 February 2010

Cloud Computing: 10 Web Companies That Microsoft Should Fear Most

When it comes time to discuss Microsoft’s intentions on the Web, that discussion always turns to Google. How will Microsoft compete against the search juggernaut? What can it do to stop Google’s rise in Web advertising? They are valid questions that, so far, Microsoft hasn’t been able to adequately address. But there is more to fear on the Web than just Google.

  Microsoft is slowly, but surely, realizing that the Web is the future of its operation. More and more applications are moving to the Internet. Consumers are even going to the Web. At this point, the company has no choice but to compete online in every space it can to ensure that, going forward, it isn’t left behind by Web powerhouses. But as it engages the Web, it’s also faced with more competition. And the idea that Google is the only online company that Microsoft needs to worry about is quickly forgotten.

Here are 10 Web companies that Microsoft needs to fear most as it continues to move its services online.


Google's 'post holiday' Caffeine shot still brewing

Worldwide roll-out in 'coming months'

The web is still waiting for the worldwide roll-out of Google's next-generation search infrastructure, the mysterious indexing system overhaul known as "Caffeine."

A recent Wiredprofile of Google's search team indicates that Caffeine has already been deployed. But it seems the technology is still limited to a single data center, and though Google had planned to roll it out to other facilities after the New Year, this has yet to happen.

According to Search Engine Land, a Google spokesperson says that Caffeine will roll out across the company's global network of data centers "over the coming months." Previously, über-Googler Matt Cutts had indicated that Caffeine would be rolled out to multiple data centers "after the holidays," meaning after first of the year. And we're now two months on from January 1.

In early November, after testing Caffeine in a public sandbox for several weeks, Cutts indicated the platform would soon be rolled out to a single data center for use on the company's live search engine and that the company would follow suit with other data centers in a matter of weeks.

"Caffeine will go live at one data center so that we can continue to collect data and improve the technology, but I don’t expect Caffeine to go live at additional data centers until after the holidays are over," Cutts wrote on November 10. "Most searchers wouldn’t immediately notice any changes with Caffeine, but going slowly not only gives us time to collect feedback and improve, but will also minimize the stress on webmasters during the holidays."

Google did not immediately respond to our requests for comment. But that Google spokesperson tells Search Engine Land that the company expects to "roll [Caffeine] out to all data centers over the coming months." The company operates roughly 36 custom-built data centers across the globe.

"We run lots of tests with this big a change [sic] to our infrastructure,” the spokesperson says. “We want the new system to meet or exceed the abilities of our current system, and it can take time to ensure that everything looks good.”

It should be noted that Cutts never gave an exact date for the roll-out. He merely said it would not happen until after the holidays and - subsequently - "until at least January."

Caffeine continues to run in that single data center. In late November, according to Search Engine Roundtable, Cutts said that the the Google IP address 209.85.225.103 was hitting that single Caffeinated data center 50 per cent of the time, and it appears Google search-engine IPs are still mapping to the same data center.

"The data center remains the same,” the Google spokesperson tells Search Engine Land, “but different IP addresses can map to different data centers at different times due to how Google manages its traffic. Because of how Google employs custom load-balancing, there is not a single IP address that will always reach the Caffeine data center.”

Cutts first unveiled Caffeine - at least partially - in August with a post to the official Google Webmaster Central blog, calling it a "secret project" to build the "next-generation architecture for Google's web search," before pointing users to a sandbox where they could test it. Speaking with The Reg days later, he called it "a fundamental re-architecting" of Google's search indexing system.

"It's larger than a revamp," he told us. "It's more along the lines of a rewrite. And it's really great. It gives us a lot more flexibility, a lot more power. The ability to index more documents. Indexing speeds - that is, how quickly you can put a document through our indexing system and make it searchable - is much, much better."
This is not a change to Google's search philosophy. It's not a change to its famous search algorithms. It's a change to the way the company builds its index of all known websites and the metadata needed to describe them - the index that the algorithms rely on. "The new infrastructure sits 'under the hood' of Google's search engine," read Cutts' original blog post, "which means that most users won't notice a difference in search results."

After interviews with Google's search team, Wired's Steve Levy described Caffeine as something that makes it even easier for engineers to add "signals" - i.e. "contextual clues that help the search engine rank the millions of possible results to any query, ensuring that the most useful ones float to the top."

Cutts confirmed with The Reg that as we had reported earlier, Caffeine includes an overhaul of the company's distributed Google File System, or GFS. A technology two years in the making, the so-called GFS2 is a significant departure from the original Google File System that debuted almost ten years ago and now drives services across the Google empire.

With GFS, a master node oversees data that's spread across a series of distributed chunkservers, - architecture that's no exactly suited to apps that require low latency, such as YouTube and Gmail. That lone master is a single point of failure. To solve this problem, GFS2 uses not only distributed slaves, but distributed masters as well.

Cutts also said that Caffeine uses other back-end technologies recently developed by the company, but he declined to name them. He indicated that these did not include updates to MapReduce, Google's distributed number crunching platform, or BigTable, its distributed database.

Whatever new infrastructure technologies underpin Caffeine, they have not been deployed across other Google services. But Cutts indicated that Google hopes to do so with at least some of them. Google's distributed global infrastructure is designed to operate a like a single machine, running all its online services. Certainly, GFS2 will be deployed across the Googlenet. ®

Source: http://newscri.be/link/1028516

Toyoda 'deeply sorry' for safety flaws

Akio Toyoda, the mysterious scion of the Toyota empire, apologized yesterday before a House committee investigating deadly flaws that sparked the recall of 8.5 million cars.

Toyoda, the automaker's chief executive, accepted "full responsibility" for the halting steps that led to the recall. He said the company grew too fast to keep up with safety controls.

"We pursued growth over the speed at which we were able to develop our people and our organization," Toyoda said in testimony prepared for delivery after press time last night (Beijing time).

"I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced."

Toyoda's statement departs somewhat from Japanese formality. In it, Toyoda made a personal appeal for credibility. He offered his condolences over the deaths of four San Diego, California, family members in a crash of their Toyota in late August.

"I will do everything in my power to ensure that such a tragedy never happens again," Toyoda was due to tell the House Oversight and Government Reform Committee. "My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers."

But an apology won't be enough for the feisty panel of lawmakers on the House panel in a year in which every one faces re-election. Nor will any culture gap; Japanese CEOs typically serve symbolic roles akin to figureheads without much power to control operations.

Toyoda at first declined to appear before the panel but acquiesced last week when he was officially invited.

"I'm naive enough to believe that a global CEO is a global CEO," said Democratic Representative Paul Kanjorski of Pennsylvania, a member of the committee. "He's going to have to say more than that."

In Japan, company chiefs are usually picked to cheerlead the rank and file. As the grandson of the company's founder, Toyoda was groomed to play that role.

The firm was called "Toyota" because its eight strokes were considered luckier than the 10 for "Toyoda".

Japanese corporate royalty or no, Toyoda is familiar with the United States and its corporate culture.

He received his MBA in 1982 at Babson College in Massachusetts. He spent time in California as vice-president of a joint venture between Toyota Motor Corp and General Motors Corp.

Source: China Daily

Thursday 25 February 2010

Does Italy’s Google Conviction Portend More Censorship?

googleitaliaOnline rights activists are divided Wednesday over an Italian court’s guilty verdicts against Google executives who were convicted on privacy charges for not blocking a video that made fun of a child with Down syndrome. All agree the controversial ruling runs counter to longstanding U.S. and E.U. “safe harbor” laws immunizing online service providers for what users do — but the activists are mixed over what the decision means and how much importance should be place on it.

Leslie Harris, the president of the influential Washington, D.C.-based Center for Democracy and Technology, argued the ruling would be used by authoritarian regimes to justify their own web censorship.

“Today’s stunning verdict sets an extremely dangerous precedent that threatens free expression and chills innovation on the global internet,” Harris said in an e-mail statement. “If the conviction is allowed to stand, it will chill the provision of Web 2.0 services that provide user-generated content platforms in Italy, and Italian internet users will find themselves without a powerful forum for free expression.

“Most troubling, what happened in Italy is unlikely to stay in Italy. The Italian court’s actions today will surely embolden authoritarian regimes and be used to justify their own efforts to suppress internet freedom.”
Chief among the concerns is that nations might turn to using criminal laws or threats of criminal prosecutions to force companies to bend to the their political will.

Electronic Frontier Foundation attorney Lee Tien of the San Francisco-based Electronic Frontier Foundation shares Harris’ concern for online rights.

“The threat to internet free speech from nations around the world that don’t have the same laws and attitudes about free speech is absolutely a constant problem and is getting worse,” Tien said.

But he warned against placing too much emphasis on this case, which many see as thinly veiled machinations against Google by Italy’s Prime Minister Silvio Berlusconi, who has nearly monopoly control over Italy’s mainstream media. Italy’s parliament is currently considering a law that would put online video services under the same rules imposed on broadcast stations — legislation intended to stifle online speech.

But the Google case will drag on in appeals for years and it’s not clear it will be anything more than a legal anomaly.

Meanwhile, there are plenty of real and sticky issues around hate speech and pornography — where people have legitimate issues and real public policy has to be worked out, according to Tien.

“I’d prefer people to think about those cases and not focus on show cases,” he said.

Google, for one, called the decision “astonishing.”

“It attacks the very principles of freedom on which the internet is built,” Google lawyer Matt Sucherman wrote on Google’s blog. “If that ’safe harbor’ principle is swept aside and sites like Blogger, YouTube and indeed every social network and any community bulletin board, are held responsible for vetting every single piece of content that is uploaded to them — every piece of text, every photo, every file, every video — then the web as we know it will cease to exist, and many of the economic, social, political and technological benefits it brings could disappear.”

And while it might be tempting for some to dismiss the suit as the work of a crazy Italian justice system, the United States is no stranger to politically motivated legal attacks on free speech and internet freedom.

The U.S. attorney’s office in Los Angeles prosecuted and convicted a Missouri woman on hacking charges for helping put up a fake MySpace profile to harass a neighbor’s teenage daughter, who later committed suicide. The judge in the case overturned Lori Drew’s conviction. He found the government’s contention that violating a website’s terms of service was the same as hacking “unconstitutional.”

And in South Carolina, the Attorney General Henry McMaster threatened to criminally prosecute Craigslist management if the classified listings site didn’t remove its erotic listings category, saying the site was promoting prostitution. A federal judge had to order McMaster to stop his threats.

The Italy decision won’t be published in full for several weeks and will likely be on appeal for years. None of those convicted will likely ever serve their six months of jail time, in no small part since they all live outside of Italy. The video at issue appeared in 2006, on Google Video, a service now replaced by YouTube.

University of Virgina media studies and law professor Siva Vaidhyanathan, meanwhile, sees the Italian case as a very local issue rooted in Italian politics and a sign that Google’s culture of audacious enterprises isn’t as welcome outside the Unite States as it hoped it would be.

“The government in Italy wants to hold Google down in Italy until it says ‘uncle’ for a while,” Vaidhyanathan said. “But it does say a lot about the fact that the globalization of Google is not going well. The ruling comes as cyberliberties are in flux globally and Google is trying to maintain revenues in countries like Egypt and Russia.”

Vaidhyanathan, whose upcoming book The Googlization of Everything tackles the subject of Google as a worldwide cultural force, says that the net’s and Google’s method of doing things first and letting people opt out later is proving to be not a hit everywhere around the globe.

“Google is finding that getting beyond America is difficult,” sad Vaidhyanathan, referring to Google’s hacking showdown in China, privacy issues with its Street View mapping cameras in Germany, and the censorship demands placed on it by China, Turkey, Thailand, Argentina and India.

“I can see the general objection to Google’s way of doing things,” said Vaidhyanathan. “It’s default setting is that it can do whatever it wants and if you have a problem, just let them know, and that opt-out model is not applicable in every case.”

To others, like Tien, the ruling is simply baffling. Clearly, Italy doesn’t want its own service providers to have to meet the burden of approving every forum posting, blog comment or uploaded video — and punishing executives when their companies miss the mark — as was the case of the Google executives in Italy.

That’s akin to making automobile executives personally liable in any automobile accident related to the company’s sticky pedal woes.

Tien said that would be a “massive extension of liability.”

Source: http://newscri.be/link/1027541