Monthly Archives: June 2012

Kodak’s Legacy? Arms Dealer For The Patent Wars?


As many people expected, Kodak has officially moved to sell off its patents to whoever can abuse them the most. Since the company is in bankruptcy, it needs permission to do this, but that’s the easy part. These days, thanks to a totally broken patent and legal system, the patents are incredibly “valuable.” Not because they represent any kind of actual innovation, but because they represent a magic tollbooth that lets the holder force other companies to pay. Of course, some of that magic wore off last month when the ITC noticed that one of Kodak’s key patents — one that it had used to score nearly a billion dollars in licensing revenue, was blatantly obvious and never should have been granted in the first place. Kodak claims it’s going to appeal, but the patent sale will likely happen prior to any appeal going through. Either way, like other companies who failed to keep up with a changing market (hello, Nortel!), Kodak’s final legacy may be supplying weapons to yet another battle in the era of technology patent nuclear war. It’s not something to be proud of.
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Kodak’s Legacy? Arms Dealer For The Patent Wars?
Mike Masnick
Wed, 13 Jun 2012 04:01:00 GMT

Easing by the Fed Seems Likely, But What Form Will it Take?


Easing by the Fed Seems Likely, But What Form Will it Take?

Published on Economist’s View | shared via feedly mobile

Just a quick note to reinforce what Tim Duy said here. Many policymakers at the Fed would like to provide more help for the economy, but fear of inflation among other members of the monetary policy committee — enough to matter — makes it unlikely that the Fed will expand the size of its balance sheet (as another round of QE would do). The way around this is to enact or suggest policies such as “forward guidance,” “Operation Twist,” and “sterilization” that attempt to ease policy without changing the size of the balance sheet. Forward guidance, for example, tries to adjust inflationary expectations — there is an implicit promise of future action to maintain low rates, but it does not require any action when it is announced (and Fed members are den ying it was an explicit promise in any case), while Operation twist and sterilization both exchange short-term for long-term assets (sell short-term, purchase long-term) in an attempt to force long-term interest rates even lower than they already are (and hopefully stimulate investment and the consumption of durables).

If the Fed is inclined to ease more, its instinct will be to look at these types of policies first, policies that try to help the economy without increasing the risk of inflation. But as we’ve seen recently, these types of policies are also limited in their effectiveness precisely because of their cautious nature.

Of course, if Europe falls apart, all bets are off — in that case the Fed may get more aggressive. But for now I expect the Fed to continue to try to find clever ways of doing something without really doing anything at all.

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Rand Paul’s Unnecessary Praise for Romney’s Foreign Policy Is What Makes the Endorsement So Troubling


Dylan Hales’ main objection to the content of Rand Paul’s Romney endorsement is very similar to mine:

It is one thing to say “I am a Republican Senator from he great state of Kentucky and like the majority of my state I will gladly vote for our party’s nominee in November.” It is quite another to tout Mitt Romney as a man with a sensible foreign-policy vision.

That’s exactly right. What makes this part of Sen. Paul’s endorsement so unfortunate is that it was entirely unnecessary. There were several ways that he could have handled his differences with Romney on foreign policy that would have been more satisfactory. The easiest would have been to fall back on the overused line that someone in agreement with you 80% of the time is your ally. That would not have created the impression that Paul believes Romney’s foreign policy to be sound. One has to hope that Paul doesn’t actually think this, but that is what he said. At the same time, it would have avoided emphasizing those differences when the point of the endorsement is to do the opposite. Another way would have been to find some foreign policy issue where he and Romney are more or less in agreement, if there is such a thing. Perhaps he could have found some common ground on foreign aid spending. Failing that, it would have been better to avoid saying anything on the subject.

Sen. Paul’s comments wouldn’t have been quite as worrisome if Romney belonged to the Republican realist tradition. There would still be many disagreements on specific policies, but it wouldn’t be so incredible to conclude that such a person wasn’t unduly reckless. Romney is nothing like that. If anything, his foreign policy views represent the complete repudiation of foreign policy realism inside the GOP. At least Huntsman admirers had a little something to back up their arguments in his favor. Romney has given the public no reason to expect anything but the worst in the conduct of foreign policy by his administration if he is elected.

Rand Paul’s Unnecessary Praise for Romney’s Foreign Policy Is What Makes the Endorsement So Troubling
Daniel Larison
Tue, 12 Jun 2012 23:26:42 GMT

Bits Blog: Verizon Unveils Wireless Plans That Cover Several Devices


The new plans will allow customers to pay monthly fees to share data, voice minutes and text messages across multiple devices, like smartphones, tablets and notebooks.

Bits Blog: Verizon Unveils Wireless Plans That Cover Several Devices
Wed, 13 Jun 2012 01:16:08 GMT

Doom and Gloom maybe not, but a blow to our spirit

A new study has come out as they do maybe every decade or so that we are killing the earth.  The club or Rome in the 70’s said we’d run out of every thing by now, and the world would be worse now.

I think humanity will survive we’ll adapt.  The following elaborates pretty well why; but is that all we want to do?

Nature (an academic journal) is grabbing headlines with a new “big think” piece.  Here is a quote from the LA Times
“A group of international scientists is sounding a global alarm, warning that population growth, climate change and environmental destruction are pushing Earth toward calamitous — and irreversible — biological changes.
In a paper published in Thursday’s edition of the journalNature, 22 researchers from a variety of fields liken the human impact to global events eons ago that caused mass extinctions, permanently altering Earth’s biosphere.
“Humans are now forcing another such transition, with the potential to transform Earth rapidly and irreversibly into a state unknown in human experience,” wrote the authors, who are from the U.S., Europe, Canada and South America.”
These scientists could certainly be right about their predictions about global climate patterns but how do they know that we (both people and creatures) have such limited ability to adapt to the “new normal”?   I don’t see any social scientists involved in this project.   I would like to see these 22 researchers tell a convincing story for how the trends they highlight will decimate our world and that we will be defenseless to protect ourselves in the face of this change.
I would like to see these “crystal ball” researchers explain in nitty/gritty details the “calamitous” scenarios they envision for us and creatures.  If they foresee this tragedy, are there really no pathways to adapt? 
To quote these guys again,
“The swiftness of climate change is likely to outpace the ability of species to adapt, especially as natural habitat becomes more fragmented, Barnosky said.
All this could produce a biologically impoverished Earth that would rob humans of vital ecological services such as insects that pollinate crops, forests that provide clean water, and tropical species that are the source of new drugs.
“We have created a bubble of human population and economy … that is totally unsustainable and is either going to have to deflate gradually or is going to burst,” said co-author James Brown, a distinguished professor of biology at the University of New Mexico. “If it’s going to burst, the consequences are really going to be grim for people as well as biodiversity and the rest of the planet.”
So, take a look at the middle paragraph. If we anticipate that Mother Nature won’t be providing these services anymore, isn’t there a profit opportunity for innovators who can deliver a substitute?
I disagree with Prof. James Brown.  He needs to take a class in econ 101 at the Economics Department at UNM.   Capitalism will be the solution here not the problem.

Doom and Gloom and the Absence of Social Scientists
Matthew E. Kahn
Fri, 08 Jun 2012 22:41:00 GMT

I think we can likely get by with less biodiversity, but you can live without a lot of things, you just might not want to.

The diversity of life on this planet makes it a lovely place.  Maybe it reminds that we are just one species.  Maybe it reminds us to be humble and that we are gifted with out existence by God.  If we as humans come to be kings of a domain with few any subject left, I think we’ll regret that.

Wealth Transfer: Quick Note

This an unusual perspective, as Karl Smith often provides.

Something which I don’t see talked about anywhere but I am pretty sure will be a significant story over the next decade or so is the massive wealth transfer now occurring in the United States towards the young middle class and the young upper middle class in particular.

Its hard to see and so counter intuitive that I think this will be one of those long cases with bunch of “ctd” posts but the basic idea is this.

The young middle class is incurring long term debts at extremely low interest rates, this includes education and housing debts. And, many of them are acquiring assets at extremely high yield rates, this includes housing and equities.

While right now, things look horrible because the return to their primary asset – labor – is very low, that will likely turn around. Yes, we face lots of challenges and yes it is theoretically possible for the Fed to screw this up royally on a Japanese style scale.

However, odds on bets is that this for the middle class this period will continue to be a moderate rather extreme disaster. The working class is another story.

Then once this is over and things begin to normalize, it will still be the case that millions of families will be paying 3.5% interest on house they acquired for $75 – $125 a square foot. Yes, housing are going for that in parts of the country.

This will mean that some folks will continue to live in the house they bought at 22 for the rest of their life. Indeed, I know just out of college regular Janes (not as many Joes) who bought foreclosed three bedroom houses with dirt cheap FHA loans.

Its entirely conceivable that they could live in these places for the rest of their lives. Giving up 3.5% is going to be awfully hard, if interest rates normalize. If inflation and wage growth normalizes this will mean a type of asset security that I am not sure if we have seen in American history.

Not, only are we talking about being mortgage free at 52, but mortgage payment as a fraction of income should decline to a basically nominal cost around age 40.

If you want to know where your bailout money went, ultimately that’s were its going to go – college educated young people who are lucky enough to have a job and cheap home.

Wealth Transfer: Quick Note
Karl Smith
Fri, 08 Jun 2012 18:35:30 GMT

How the “Euro penalty” is damaging the EMU?


via How the "Euro penalty" is damaging the EMU?.

The fundamental issue is that all the major economies are backed by their respective central banks which have unlimited cheque writing powers (atleast technically) and are virtual lenders and insurers of last resort. Markets have realized that with the ECB statutorily barred from lending directly to governments, the Eurozone members face no such backstop facility. If Spain or any other country faces a run on their banks, they cannot count on the ECB to step in with emergency cash assistance. Nor can the countries themselves print Euros. Eurozone members, therefore, face a Euro penalty which reflects in their sovereign debt premiums.

In fact, the importance of this is underlined by the manner in which the last round of such panic was redressed with the second round of Long Term Refinancing Operation (LTRO) loans in March. These unlimited three-year loans by the ECB at low interest rates were quickly lapped up by the Eurozone banks and then used to buy sovereign bonds, which in turn experienced a sudden fall in yields. However, once its effects tapered off, market confidence has dipped and yields have been soaring

Mobile phones to speak, but no water to drink!


David Zetland has this graphic which highlights that by 2008, the number of people in developing countries with mobile phone subscriptions exceeded those with household water connections.

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Mobile phones to speak, but no water to drink! (gulzar)
Sun, 10 Jun 2012 00:43:00 GMT

CARPE DIEM: Cartoon of the Day: Obesity Czar’s Newest Idea

CARPE DIEM: Cartoon of the Day: Obesity Czar's Newest Idea.

Bashing Facebook For All The Wrong Reasons


Bashing Facebook For All The Wrong Reasons

Published on TechCrunch | shared via feedly mobile

So Facebook’s IPO was a disaster. Or maybe it wasn’t. Yes, it was an utter fiasco. No, wait: “The debacle was not the IPO but all the whining by speculators who didn’t make money.” Nope, it was “the flop of the decade“, the worst first week of any IPO in years. Au contraire: “What we have here is an investment banker acting ethically. And the whole financial press is atwitter about it.” Nuh-uh: “The IPO discount is the cost of going public.” Yadda, yadda, yadda, ad nauseum.

Why, what with all these furious alarums and excursions and outraged complains, Benchmark Capital’s Bill Gurley was moved to compare Facebook to another company that immediately dropped below its high-profile IPO issue price and stayed there for weeks and weeks; that well-known loser called … er … You may have heard of it.

Why is anyone paying attention to the this ultimately meaningless pageant? Probably because suckers people used to think tech IPOs were a guaranteed way for those lucky enough to buy at the issue price to make money. Now everyone is shocked — shocked! — that Facebook’s investors may have been treated unequally, and grousing “I’m just extremely skeptical about the ability of a retail purchaser to be able to play on a level field in the market.” Gee, you think? Come on, folks: it’s not like you weren’t warned.

The weird thing is that people actually seem to think that the sinking stock price means Facebook’s prospects are grimmer than they were a few months ago. Now, I can’t stand Facebook — indeed, I’m on record as a regular and frequent Facebook basher myself — but this is nothing but a colossal failure of imagination. Take Henry Blodget’s deconstruction of Facebook’s “natural” value: it’s sharp, it’s incisive, it’s insightful, and it completely misses the poi nt.

Facebook is indeed, as Blodget says, extremely expensive relative to its expected earnings over the next year or two. But, unlike most businesses, Facebook’s long-term upside has nothing to do with its expected earnings over the next year or two. It’s believed by many to be extraordinarily valuable not because of its advertising income but because it has a real chance of becoming a company unlike any that has ever existed before, with the possible exception of pre-breakup AT&T.

Look into the medium and long term, something that the stock market is notoriously bad at. In 10-20 years’ time, everyone on the planet has a smartphone, and/or some even smaller and more ubiquitous form of wireless access. We spend more and more time online. Indeed, the whole notion of “online” disappears, as the Internet is woven into literally every facet of our waking life. As this happens, what company defines our identity, and becomes the gateway to every activity and every service?

Yep. Facebook. Sure, Google+ is arguably better, but that doesn’t matter. Bing search is roughly as good as Google’s, but Google won that land grab; similarly, Facebook has won the identity wars. So their advertising income is (relatively speaking) peanuts. Who cares? They don’t need to invent a new form of monetization. They have one already: Facebook Credits. Right now their income from it is a rounding error. But as years go by, and people slowly get accustomed to buying and using and transferring them, and as Facebook grows more and more intertwined with every online action we take–which is to say, nearly every action we take–it could well become the first global virtual currency … and then ultimately lose that “virtual” disclaimer.

Now, to be clear, I don’t actually think this will happen — and I don’t want it to happen, because I think Facebook is a colossal testament to the triumph of lowest-common-denominator homogenizing mediocrity devoid of any real innovation — but I do believe that they’ve got a legitimate shot at it. (Not least because they’re so paranoid that they decided a twelve-person company with no revenue was an existential threat and spent a billion dollars to buy them out. As Andy Grove always says, “only the paranoid survive.”) That longshot long-term possibility, not potential growth in advertising revenue, is what’s baked into Facebook’s more extreme valuations; and that possibility hasn’t diminished because of the IPO. In fact, with billions upon billions of cold hard cash now sitting in Facebook’s war chest, it has if anything grown.

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