Europe and the volcanic ash: next time, trying checking the air sooner

Found here

WORLD NEWS: "Airlines, in Flight Again, See Lesson in Crisis," by Daniel Michaels, Sara Schaefer Munoz and Bruce Orwall, Wall Street Journal, 22 April 2010.

THE MIDDLE SEAT: "How One Airline Skirts the Ash Clouds," by Scott McCartney, Wall Street Journal, 22 April 2010.

A growing industry consensus: the airlines overreacted some. 100k flights cancelled and $1.7B lost in the biggest air travel disruption since 9/11.

Naturally, Osama bin Laden tried to take credit for the volcano.

The EU's "single sky" program, if it were up and running, would have shortened the shutdown window by at least three days, supporters claim.

Alaska Airlines flies in some of the most dangerous sky in the world, and their years of experience say there are ways to work around volcanoes safely.

In Europe, the gov officials, weather experts and airlines didn't get their heads together effectively to determine where the ash was and wasn't. Instead, blanket closures were put into effect--as in, "No, just shut it all down!" Theoretical models were employed by governments, but no new data was gathered and no real-time tests taken. Once tests began, they found that some areas that were shut down had no ash.

Euro officials get all huffy when that's brought up, declaring pompously about the sanctity of human life. But seriously, no testing is just plain lazy and inefficient--and certainly no way to run an airline.

Bottom line from Alaska Airlines: the more data you have, the better your models, and the more surgical your route planning. Flexibility, as always, is the key.

This time, it seems, Europe was just caught unawares. One assumes a better response the next time.

Enough of the bottom-up peace-plan dream!

WORLD NEWS: "Netanyahu Rebuffs U.S. Please to Stop Building: Israeli Leader Says He Won't Freeze Home Construction in East Jerusalem," by Jay Solomon and Charles Levinson, Wall Street Journal, 22 April 2010.

FEATURE: "The False Religions of Mideast Peace: And why I'm no longer a believer," by Aaron David Miller, Foreign Policy, May/June 2010.

Netanyahu offers some crumbs, but says no to Obama's call for a freeze on settlements.

The bilats here are so dysfunctional that Netanyahu is blowing off special envoy George Mitchell and transmitting directly though Dennis Ross in the White House. Ross is considered a friend and Mitchell is not.

In The Pentagon's New Map, I wrote seven years ago that the Israel-Palestinian issue was more distraction than determinant. More and more experts are coming around to that notion.

The peace will never come from the bottom-up. The demographics just don't support it. What the demographics get you is a Berlin Wall, aka the Israeli security fence.

Instead, the regional peace will come top-down, as it did in Europe--finally--in the early 1970s.

And yeah, nukes will be the driver.

The rest is a meaningless show--a bright bauble that's attracted the eye of many a U.S. president over the decades.

IMF joins chorus on stronger yuan

Found here

U.S. NEWS: "Strong Yuan Key to Growth, IMF Says," by Tom Barkley, Wall Street Journal, 22 April 2010.

The gist:

. . . growth in the U.S. and wealthier nations in Europe may depend on a depreciation of their currencies compared to China and other developing countries.

The West reins in the stimulus spending, depressing consumer demand and exports, and so its currencies should logically weaken. Thus the IMF's chief economist goes on the record saying China's yuan is "substantially" undervalued.

Plus, he says, China needs the yuan to rise to curb inflation at home and spur domestic development even further.

On the brighter, more immediate side, the global economy's growth for 2010 is now projected to be 4.3% (up from the last prediction of 3.9% in January).

China, BTW, is expected to grown 10%, which is most economists' definition of just a bit too fast.

No securitization without taxation!

FRONT PAGE; "IMF calls for taxes on bank balance sheets," by Brooke Masters, Chris Giles and George Parker, Financial Times, 21 April 2010.

U.S. NEWS: "Rifts Imperil Overhaul of Global Banking Rules," by Damian Paletta and David Enrich, Wall Street Journal, 22 April 2010.

REGULATION REFORM: "'Punishment tax' draws fire from industry: Critics say the proposals will hit profits without cutting risk," by Sharlene Goff and Brooke Masters, Financial Times, 22 April 2010.

GLOBAL INSIGHT: "IMF needs no sympathy when it comes to new levies on banks," by Chris Giles, Financial Times, 22 April 2010.

U.S. NEWS: "IMF Says Financial Revamps Could Thwart Global Deal," by Bob Davis, Wall Street Journal, 23 April 2010.

BUSINESS DAY: "G-20 Split on the Need for a Global Tax on Banks," by Sewell Chan, New York Times, 23 April 2010.

The IMF sides with the Europeans in calling for a global tax on big banks to set up a future crisis response fund--as in, you play, you pay.

IMF is suggesting that nations raise the equivalent of 2-4% of their GDP (roughly, what most individuals pay for insurance out of their personal income, so reasonable enough) from their own banks over the long haul. Start with a flat tax and then adjust to revealed risk.

The IMF also advocates an additional tax on companies that pay their exec super-high wages--sort of what like George Steinbrenner has to pay.

Banks, as Giles points out, are about as popular as rich pro-team owners right now. Still, the big economies are hardly united on this issue.

Meanwhile, the G20s squabble over the basics: how much capital each bank must have to cover potential risk, what counts towards that total, what subsidiaries in foreign countries are required to have on hand (per the home-state's rule or the local's?).

Layers upon layers.

Geithner, by some accounts, is obsessed with the cap requirements issue, feeling like he missed an historic opportunity years ago in the NY Fed Reserve job to forge a similar consensus here in the States.

The same danger exists or continues to exist globally: money will flow to the weakest regulatory regime.

The hope of some? The IMF, which does not rely on consensus, may lead where the G20 cannot.

Gymboree: speaking to franchise owners from around the world

Visit the site

Drove up very early Wednesday morning to Chicago, reaching the Hyatt Regency on Wacker (just off the Chicago River and a stone's throw from Lake Michigan) at 0930.

Got into room and starting fine-tuning brief. Then my host, Stuart Ford of Gymboree rings me up and asks if I can go 30 minutes earlier than planned (1030-1200 instead of 1100-1230).

I say sure, suit up, and am down in the ballroom ten minutes later.

Audience is about 50 franchise owners (some master franchise owners, meaning they own all the franchises in the country--like Turkey or China or Ecuador [all of whom I met and conversed with]).

Gymboree, for the uninitiated, is a top-dollar, full-service early childhood development center that handles kids both mainstream and truly challenged. Started in the U.S. and went global. Goes into any country where the middle class starts appearing. Why? The new middle class wants only the best for their kids, and Gymboree is there to do the well-rounding--so to speak. In places like India, where academics is taken very seriously, Gymboree is used primarily for just that--making the kids more than just the sum of their grades.

Audience was all over map. Most were women in their 30s and 40s. Lotsa Latinos and Asians.

At first, I don't think they knew what to expect from me, so I started out with pix of my kids (a first time for me) and explained my family. Then I did the usual tour of the horizon, with a clear emphasis on the emerging global middle class phenomenon. Did 47 slides in 1:25. Then did almost 20 in Q&A, and let me tell you, this bunch was ready!

Then nice lunch with everyone, where Stuart Ford gave me a data dump on the company's worldwide activities, and that was fabulous--an education in an hour. May get column out of it if Stuart sends me all the notes/analysis he promised.

Then back to room to fiddle with brief for several hours. Just felt really warm and focused on it and wanted to use the energy wisely.

Then suit up again and down to ground floor for buses to Spirit of Chicago boat cruise.

That was fun.

First, plenty of Budweisers in bottles.

Second, I signed a ton of books (GP soft), personalizing all for the attendees, who each got one. I would say maybe 30 demanded pictures with me (and yes, I did see the brown spots in my eyes after a while). Everyone was just so friendly, and so pumped, and so gracious. I don't think I've ever had a nicer signing.

Then a great buffet,and wonderful dinner conversation with the senior management team of Gymboree international. The next day the domestic owners were coming (couple thousand), but I really valued being able to do the smaller audience with the international crowd. Each one I had a chance to speak with was truly fascinating.

Then the DJ appeared and the dance floor went crazy. The Gymboree people said their franchise owners were famous for their dance parties when they got together and they weren't lying. These people really like to dance, especially the South Americans, who are just amazing to watch. Then the boat staff did the nightcap group dance and they were even more spectacular. It was a pretty funky night!

Oh, and one of the staff bought my boat picture for me.

I forgot the Hollywood trick of leaning forward. I do just the opposite, which is stupid, and lean my head back, which always gives you that nice double-chin effect. I just wasn't prepared. I'm usually more on top of it when a journalist is shooting a load, but here I was in line, getting onto the boat, and snap! I'm behind this life preserver all of a sudden, feeling oddly alone, so I sort of pulled back with a "I'm not really doing this for real" pose, only to have it later presented to me!

Goes to show you--always respect the camera!

Still, as gigs go, I give it a 10 on the fun/educational scale, which seems appropriate for an experience-economy stalwart like Gymboree.

The infamous PPT slide: much ado about TMI being presented

NATION: "Pentagon's Use of PowerPoint Starting to Slide?" by Sharon Weinburger, AOLNews.com, 27 April 2010.

A minor sensation, this slide:

Click slide for blow-up detail

When presented to him, McChrystal apocryphally replies, "When we understand that slide, we'll have won the war."

Hardly har.

To me, the material on the slide was a good faith effort to map the complex causality of trying to defeat an insurgency.

How good was it? I won't claim to be an expert, but it struck me--at first glance--as only so-so. I've seen better, let's say. The mixing of subjects strikes me as oddly apples and oranges, with some of it almost like a representation of stakeholders' wish-lists, and the rest a more straightforward attempt at strategic goal-listing. In sum, an odd hybrid attempt at causality capture. I can't spot any particular logic in terms of spatial relations, either, and that's worrisome. Give me an X/Y any day, so I at least know why I'm staring at this info in the lower-left corner versus anywhere else.

I also have no sense of sequencing or importance. Is everything of equal value? Should it all occur at the same time? Where is the "We are here" X? And so on. It's a detailed map all right, so detailed that I can't even spot a logical journey.

But since I don't know what the briefer said when presenting this slide, to say anything more is unfair.

The second issue is more clear-cut: the perceived wisdom of presenting the material to that level of detail on a slide. If we're talking the people working the model (or whatever it represents), then yeah, it's okay to do something that dense.

But present it to your 4-star? Hmmm, not advisable.

If presented to me beforehand for fixing, I would have killed all the smaller font stuff and asked for a judgement opinion on each major arrow (reasonably on track or no?), and then I would have demanded from the analysts a sequential logic for presentation. I would have then built the slide, node by node, with animation, presenting the logic of the model's unfolding. To conclude, I would have ID'd THE key bottlenecks in order of--again--logical unknotting. Or, if that wasn't possible, I would have presented (using animation), perhaps two to three choices for tackling the identified obstacles--as in, we focus here first because A, B and C, and then go here next for reasons D, E and F (and so on).

But you NEVER put up a full-up slide of that complexity with no animation. It's just asking for trouble.

Personally, I never present anything that looks like that, and my stuff is often derided--as a result--for being too simplistic. But I find that, if the representation makes sense, it doesn't have to be complex. Audiences will recognize the logic and fill in the blanks as necessary.

As for the larger argument of this piece, which references my WSJ profile of years back, I don't detect any great shift on PPT--per say--in the PNT (Pentagon). Good PowerPoint is almost always welcome and bad PPT is almost always hated.

But that's always been true.

What's also always been true is that most PPT in the PNT is truly awful stuff. They try too hard to do it all on the slide, when it's all in the delivery. It's like pretending the set design is more important than the acting.

There is a fundamental rule I follow: more complex the concept, the simpler the graphics; conversely, the simpler the concept, the more fun you can have with the graphics.

This is a complex subject and an incredibly complex representation--what is commonly referred to (sarcastically) as an "eye exam."

I pity the fool! And the PA Consulting Group for having their logo on the slide. It seems to be a biz/IT-heavy consultancy out of Britain.

Not what you want to be known for.

First comes the shock, then the denial, and then the writedowns

WORLD NEWS: "IMF Warns of 'New Phase' in Crisis," by Tom Barkley and Bob Davis, Wall Street Journal, 21 April 2010

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First, the good news: the bulk of the writedowns (losses admitted and booked) in the Old Core West has been accomplished. For the record: $680B for the US so far, with $205B to go. Europe sees $415B and $250B. UK alone is $355B and $100B. Rest of Europe and Asia are peanuts.

In sum, $1.6T written off so far, and $700B to go.

Next phase (bad news) is the now familiar subject of sovereign risk: Govs did all that bailing out amidst their own vulnerabilities, and now they're frighteningly in debt.

Debt-to-GDP ratios are at levels not seen since WWII. It's all bad: less faith in government, higher interest rates, choked-off private investment, higher taxes--the usual.

For now, the IMF remains sanguine on future bubbles happening in emerging markets.

Everything depends on how the indebted countries signal their plans for the way ahead.

Israel still pondering that attack on Iran

WORLD NEWS: "Israel Weights Merits of Solo Attack on Iran: Officials, Seeing Impending Policy Split With U.S., Debate Prospect of a Military Strike Without Washington's Consent," by Charles Levinson, Wall Street Journal, 21 April 2010.

Yet another story on a now familiar story.

If and when it happens, this will be the least surprising surprise attack in human history.

Naturally, the Iranians put on their own military show in anticipation--a big mil exercise that even involves Hormuz.

Expect to keep seeing these stories. The realization is hitting Israel that Obama knows there is little he can do to stop Iran's acquisition of nukes other than put on the good sanctions show. This is a big part of his logic on promising a world "free of nukes"; he has to cover himself in that would-be glory while accepting this fate. I don't blame Obama any more than I would blame his predecessors. It's just going to come on his watch.

As usual, Israel will do as it sees fit, with its eye on who may be sitting in the White House come Jan 2013--33 months from now. When that number gets smaller than the Israelis' estimates of how many months an attack will set the Iranians back, I expect them to strike.

The fact that Israel hasn't done it yet tells me that a three-year-delay is their maximum hope.

CSI 4 WMD = MAD 2.0

Found here

SCIENCE: "Deterring a 'Dirty Bomb': Why we need nuclear forensics," by Sharon Begley, Newsweek, 26 April 2010

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Nice piece that says the natural successor to MAD is nuclear forensics that says, in effect, the "assured destruction" part is going to be one-sided.

The shame:

The U.S. has not stood out in advancing the cause of nuclear attribution even at home.

Too few experts and too many close to retirement.

Best extant national capabilities? France and Japan, for obvious reasons (lots of nuclear power).

Obama's done nothing to date to rectify this, and, in my opinion, his new Nuclear Posture Review simply advertised our failings by saying we can't risk nuclear threats in situations of unclear attribution.

The truth is, the science is there. Nuclear materials have atomic and chemical properties that survive detonation, ones that can serve to ID specific sources, production processes and/or transit routes, so says Michael Kristo of Lawrence Livermore.

Do these capabilities provide THE smoking gun necessary to justify a strike? In my opinion, when combined with the usual intell methods, they do.

But everybody wants an impossible standard, and so we say otherwise. And now we advertise our chosen uncertainty with our new NPR.

A way ahead? A nuclear library built up and shared by the nuclear powers--both military and civilian (latter group is much larger).

Begley ends with reasonable analogy: you can have DNA fingerprinting technologies, but you need the fingerprint database to catch anybody.

Nice way of distinguishing between our extant capabilities and what's needed to make them more complete--and advertisable.

USA + PRC = CO2 quorum

FEATURE: "The Radical Pragmatist: Energy secretary Steven Chu wants to change the way people think about global warming. And that means changing the way they think about China," by Daniel Roth, Wired, May 2010.

Chu's vision: big-time Sino-American partnership in green technology to reduce carbon emissions. It's very Thomas Friedman-like and very logical.

Per my New-Core-sets-the-New-Rules philosophy, one locates invention where necessity is greatest, like car-crazy and way-too-polluted-already China. Chu simply says, when I add the US to that equation, I've got a 40% answer that will set off a QWERTY-like effect globally (i.e., answers so big the rest of the world must copy).

Alternative is global system, lots of negotiations, etc.--in other words, many future failed Stockholms. It's just simpler to do it bilaterally.

I won't disagree with this notion: it's basically the same one I've been advocating for many years now on global security. Between the world's true Leviathan (US) and the world's true SysAdmin (networking, infrastructure-crazy China), I've got my quorum.

In short, a two-headed lead goose beats a one-headed unilateralist.

Disaster relief: the learning is just beginning

FEATURE: "Organizing Armageddon: What the Haiti earthquake teaches us about the science of coming to the rescue," by Vince Beiser, Wired, May 2010.

Gist:

Despite the massive sale of their operations, only in recent years have the people who deliver disaster aid begun to benefit from the kind of data-driven decisionmaking and rigorous academic study that their commercial and military counterparts rely on.

A mouthful, as they say.

Some stats meant to scare us: a billion people live within 62 miles of the ocean! And 10 million (with an M!) are hit by floods each year. Thanks to global warming, that second number could hit 40 million by 2080.

And do you know what, 40m in 2080 will be a whopping 1 out of every 250 people on the planet (10B divided by 40m). Today 10m out of 6.5B comes to one out of every 650. So yeah, it'll get worse, but incomes will also rise dramatically, meaning those 1-in-250 will have a lot more resources to deal with the anticipated flooding. The West's income is supposed to rise 600% this century, while the rest of the world's will rise an average of 1,200%.

As Lomborg says, it ain't about making the future perfectly safe, but just leaving the next generation will better tools and sufficient capabilities to keep it as safe or safer.

But I digress . . ..

The good news is that the international disaster relief community is growing rapidly (up to over 200k now) and the global community is kicking in $6-7B a year in funding.

Still, as the piece points out, there is vast room for improvement of coordination. The norm is for a flood of well-meaning groups to surge to the environment, tripping over each other in the process of trying to making good things happen. Duplication is rampant.

Story is mostly nice anecdotes and reportage on new players in the field, trying to improve it.

All good stuff.

Remember: the SysAdmin is inevitably more civilian than military, and more private than public sector.

Why isn't malaria still endemic across the US?

Found here

EDITORIAL: "DDT and Population Control," Wall Street Journal, 24-25 April 2010.

COMBATING MALARIA: "Optimism grows as target is in sight," by Andrew Jack, Financial Times, 23 April 2010.

COMBATING MALARIA: "Hopeful results lead to first large-scale trial: Vaccine development," by Clive Cookson, Financial Times, 23 April 2010.

Trio starts off with the WSJ's spirited defense of DDT for combating malaria. The editorial credits Obama will continuing the Bush policy of supporting DDT use in African countries that want it.

Score one for the anti-Malthusians.

The FT survey is optimistic enough: starts off with the malarial netting push, which is nice but band-aid-ish compared to controlling mosquito populations and the promise of new vaccines.

Current estimates, worldwide, say 250m people are infected each year and that 850,000 deaths are caused.

Sounds like a job for the CO2 knob-yankers!

Okay, that was uncalled for--but fun.

Best recent organizational response? The African Leaders Malaria Alliance. NGOs in the field say the effort has been very successful in cutting down cases, by as much as 70% in some instances. Bigger, poorer states like Nigeria and Congo still fall way behind.

Where improvement can be most easily had: the last mile to the users of nets/insecticides/vaccines.

Toughest challenge? Keeping up the effort, because the disease becomes drug-resistant over time. So one you get that big percentage reduction, attention turns elsewhere, and the cycle is restarted.

This is where China's influence in Africa may be most important: the consistent demand for raw materials hopefully translates into consistent income growth that sustains such efforts--just like it did in the West.

Lomborg in Cool It! points out that malaria was still endemic in 36 US states up until the 1940s, including my birthplace of Wisconsin. Through the mid-1930s, the US still had more than tens f thousands of cases each year, in a population about one-third today's size. On the eve of the great eradication effort (1947-1951) that focused on the southeast, America had 15,000 cases in 1947.

Now, we don't really have any local malaria, even though it's much warmer--on average. In 2007, we had 1,505 cases of malaria in the US: 1504 were contracted outside the US and one was contracted through a blood transfusion.

Lesson: money will buy you this form of happiness all right.

So, if you accept that the planet's going to get warmer this century, the key is to raise income rates in Africa--if you want to control malaria.

The new Benjamins

CURRENCY REDESIGN: "Money Makeover: $100 Bill Gets Facelift to Fight Fakes," by Alejandro J. Martinez, Wall Street Journal, 22 April 2010.

WEEKEND JOURNAL: "Outfoxing the Counterfeiters: The new $100 bill is the most sophisticated attempt yet to combat forgery," by Stephen Mihm, Wall Street Journal, 24-25 April.

Pretty fancy looking bill.

I got my lesson in counterfeiting when we adopted Vonne Mei. I was required to carry thousands of uncirculated $100 bills in a belt inside my pant's waist to pay all the necessary fees and make all the necessary donations. That was uncomfortable on too many levels to mention. Reason for the effort? Upwards of 1/3rd of the US bills circulating in China were considered counterfeit, especially the 100s. Word was Kim Jon Il's regime had stolen a US hundred printer and was cranking them out like crazy (the so-called "super-notes" problem) . Let me tell you, whenever you used one back in 2004, the recipients worked them over plenty before accepting.

To find a similar historical period in the U.S., we're talking post-Civil War, when one-third of our bills were considered fake.

And so now we finally have the next-generation $100, and it's loaded with fancy technology all right, like a 3D security ribbon.

As a rule, our currency is redesigned every decade to thwart counterfeiters. There are roughly 6.5B such notes circulating now, with 2/3rds overseas.

The new bills cost almost 12 cents to make. Up from 8.

The "unified" U.S. dollar bill is only about 150 years old. It wasn't created until 1862.

But we beat the euro by a ways.

Iraq's economy reconnects

GLOBAL ECONOMICS: "Iraq's Economy Wakes Up: Investment and products from abroad begin flowing--along with oil; Boosting private investment won't be easy," by Stanley Reed and Nayla Razzouk, Bloomberg BusinessWeek, 26 April-2May 2010.

HSBC moving in. It's country manager puts it plainly: "Iraqis are starting to reconnect to the outside world."

The economy's expected to grow 7-8% in 2010. In 2003, pre-invasion, it barely existed.

Hold-up? The statist mindset of the government, which remains indifferent or even hostile to non-oil private sector development.

Good news: Oil minister Hussein al-Shahristani is pushing the oil sector hard. Last year Iraq attracted less than a billion USD in foreign direct investment, but that number is expected to soar with the many oil deals signed with Western--and Eastern--oil companies.

Pix from Chicago (and no, I have not forgiven the city for the Packer game the season before last)

In Chicago Wednesday to give a speech to a very interesting worldwide franchise company (more on that tomorrow).

Couldn't resist, because on a sunny spring day, this city is truly gorgeous downtown.

Some pix captured:

For people of a certain age and TV viewing habits, this shot needs no explanation.

Spot the building. Name the sitcom and comedian--and the college drinking game.

(meow!)

Shot toward Lake Michigan from 29th floor of hotel, with the Chicago River terminating.

Okay, this one was from the party cruise boat that night. Couple beers in, on a gimpy left leg, and there was so much dancing I think they shook the boat some.

The skyline.

The Federation remains at one

SCIENCE AND TECHNOLOGY: "Cosmic archeology: Signs of life; Is it time for a new approach to finding extraterrestrials?" The Economist, 17 April 2010.

SCIENCE AND TECHNOLOGY: "Extrasolar planets: A trick of the light; Mankind's ability to look for planets like Earth just got five times better," The Economist, 17 April 2010.

Two cool articles.

In the first, scientists start rethinking the notion of searching for life by scanning for radio signals (think, "Contact," the book or movie), because many point out that the radio era for humanity isn't all that long (more and more comms go along fiber optic, for example), so why assume--quite literally--some universality on that?

Better, some suggest, to look for pollution that shows a dominant species' impact.

Second piece says, thanks to a breakthrough method for analyzing light waves from distant suns, astronomers--even amateur ones--now have a far more expansive reach when it comes to detecting small, Earth-like planets near suns. They're very hard to see, because it's like a pin of light next to a giant fireball, so most of the planets that get catalogued are Jupiter-like behemoths, because they're easier to make out.

Up to now, the basic method for seeking an Earth-like planet in the Goldilocks zone (close to sun but not too close) has been measuring tiny fluctuations in gravity WRT the star.

Cool beans!

While globalization reduces inequality globally, it increases it within US

UNITED STATES: "Social mobility and inequality: Upper bound; The American dream is simple: work hard and move up. As the country emerges from recession, the reality looks ever more complicated," The Economist, 17 April 2010.

The essential challenge we face: our success in globalizing our international liberal trade order means we cannot dominate with the same ease. It's a far more competitive landscape. Thus the importance of education to keep the U.S. middle class intact as the world creates its own version of the same.

Between 1947 and 1973, when we were kings of the hill thanks to WWII's destruction, the "typical American family's income roughly doubled in real terms." From 1973 to 2007, it grew only 22%, mostly thanks to second incomes generated by females.

So the average guy today makes less than his dad in real terms. The culprit? Decline of unions? Immigration? Globalization?

... the driving factor, most economists agree, has been technological change and the consequent lowering of demand for middle-skilled workers.

Translation: the high-school degree doesn't cut it anymore.

Best Obama response to date, according to the mag? Promising to overhaul education.

The necessary radical redirect that is coming? "Rather than pay for the consumption of the old, America should invest in the productivity of the young."

Factoid: In the 19th century, the top 1% of the income earners controlled 40-50% of income in major US cities like New York. That was when the concentration was at its highest, not unlike a rising China today. Today, the top 1% control over a third of wealth, the most since the late 1920s, when the share temporarily rose to the mid-40s (Roaring Twenties) before the Great Depression came around.

What China's outreach on nets will eventually mean back home re: censorship

The Tencent mascot

BUSINESS: "Tencent invests in DST: Networked networks; A big Chinese internet firm makes tentative steps abroad," The Economist, 17 April 2010.

COMPANIES & MARKETS: "Facebook to track users' web trail,: Social network site plans new ad system; Move likely to provoke criticism over privacy," by David Gelles, Financial Times, 19 April 2010.

Tencent runs China's biggest social network, complete with its own virtual currency. While most Chinese internet companies are considered knock-offs of Western ones, Tencent is not:

Unlike many Western rivals, it has not only come up with desirable products, but also with reliable means to make money from them. The comparison is all the more pertinent since Tencent is expanding abroad, and will soon own an indirect stake in the biggest social network of all, Facebook.

Tencent has $37B in market cap, making it the #3 internet firm in the world. It's current expansion abroad is being done directly through its stake in the Russian firm, DST, which, in turn, owns a chunk of Facebook. The Tencent/DST combo is said to be interested in buying into other US social nets, and allegedly is willing to help Facebook enter China, where it is currently barred from operating.

The conclusion:

The only certainty is that linkages between such firms are growing almost as quickly as the social networks they run--especially among those looking for virtual means to cut holes through protected borders.

My sense? The more Tencent buys into the world, the more pressure it comes under regarding its cooperation with the government on censorship back home.

If the Chinese want world players in IT, then those players will invariably be forced into playing according to the world's rules and not just Beijing's.

Then again, you read about Facebook's latest tracking plans and you're back to the question of, Who watches the watchers?

The system-perturbing Icelandic volcano

Found here

VOLCANIC DISRUPTION: "Pressure grows on supply chains: Just-in time approach leaves industry vulnerable to disruption," by Robert Wright and John Reed, Financial Times, 21 April 2010.

VOLCANIC DISRUPTION: "Long-term economic impact will be minimal, experts say: Counting the cost," by Tony Barber, Financial Times, 21 April 2010.

LEADERS: "Earthy powers: Disasters are about people and planning, not nature's pomp," The Economist, 24 April 2010.

So we watched, with the usual interest, the System-Perturbing Icelandic volcano eruption and its impact.

The judgments begin to roll in:

As usual, the just-in-time supply chains are declared to be dangerously tight, so we see the standard stockpiling, which will last for a while and then be largely abandoned for costs reasons down the road, only to be rediscovered--yet again--with the next such crisis.

Air freight only accounts for less than 1% of the goods moved for most advanced economies, but it tends to be very high-value stuff (meaning as much as a quarter of overall trade value).

The best response is the resilient sort: having alternatives that can be easily tapped.

Having said all that, most experts say the long-term impact of the volcanic ash will be minimal--as in 0.1% of GDP loss. The scarier scenarios, unsurprisingly, revolve around follow-on eruptions.

This is normal: the one System Perturbation is easily recovered from. The big danger is when you get the steady ding-ding-ding of regular strikes. That way, the knots don't get worked out and the pressure builds.

As the Economist opines, "Very few events are able to perturb an increasingly globalised world." To do so, they'd have to be global in impact and fast, like the sun doing something scary one day (e.g., coronal mass ejection).

The rest, like the volcanoes and the tsunamis, we take in stride.

God bless the New Core consumer!

WORLD RETAILING: "Consumption starts to shift to China, India and Brazil: Consumer spending; The relative importance of the West's shoppers is declining," by Elizabeth Rigby, Financial Times, 21 April 2010.

WORLD RETAILING: "The Wild West with razor-thin margins: China; State-owned companies have left the market to others," by Jamil Anderlini, Financial Times, 21 April 2010.

First story is about luxury labels in Europe seeing recovery come so fast thanks to rising demand in the East and South. This is presented an emblematic of the overall global recovery--leadership by the New Core.

Since there is a new austerity emerging in the U.S., this is viewed as permanent shift, which signals good things for the desired rebalancing of the global economy, yes?

Doesn't mean it's the same old, same old salesmanship to the emerging middle class in the East and South. As China's retail market indicates, it's even tighter-than-normal margins:

"Retailing in China is still highly regional, highly fractured and overpopulated," says Paul French, managing director of retail consultancy Access Asia.

So we're talking a pre-Big Box retail environment.

But the Big Boxes are showing up:

But with the appearance of Best Buy and other more sophisticated western retailers, this model has started to change.

And now, with Beijing's encouragement, it's a race to the bottom of the pyramid--or the countryside, where people will expect even more value for their money.

Follow the growing demand, because it's the most powerful force in the system right now.