Why I Don't Want an iPad for Christmas

Exactly my thoughts.

Why I Don't Want an iPad for Christmas
By BRETT ARENDS

Everyone wants an iPad this Christmas, right?

Apple's tablet computer is this year's hottest adult toy. Sales are booming. James Cordwell, an analyst at Atlantic Securities, expects the company to sell six million this quarter, half of them here in the U.S. It's driving the company toward what will probably be yet another blowout Christmas period.


Apple is expected to sell millions of its popular iPad tablet computer this holiday season but Brett Arends has several reasons why he's not willing to join the masses and buy one for Christmas.

But you can count me out. I don't want an iPad for Christmas, thanks very much.

Sacrilege!

Why? Here are my reasons.

1. It'll be cheaper next year.

How dumb are people? Apple is coming out with iPad II in 2011. (Mr. Cordwell predicts April.) That means fanatics won't be seen dead with this year's model, and you'll be able to get it much cheaper. Try eBay or buy it "refurbished" direct from Apple. Price deflation in technology is a wonder to behold. Remember the first iPhones? The 8-gigabyte models cost $599. A few months later they cost $399. Now they're paperweights. The average middle-class American earns maybe $16 an hour after taxes. So if you save, say, $150 on a product, that's more than nine hours' extra work. Of course, if you love your job so much you like putting in an extra day for free, go ahead.


2. It's going to be better next year.

The next iPad will have new features—allegedly including video conferencing and maybe a better screen. This year's model will be so over. When Steve Jobs unveiled the second iPhone in 2008 he actually made fun of the slow first model—the same product that he had hailed a year earlier as the eighth wonder of the world. The audience yukked it up. Me? I'm not a fan of buying a product for $500 from a guy who's going to deride it a few months later.

3. Check out those profit margins!

OK, I admit it: I've been wrong about Apple stock lately. After correctly turning bullish at $85 two years ago, I turned cautious waaay too early. My mistake? This isn't a technology company. It's a luxury brand, like Hermès or Tiffany. And it's wooed customers so they'll pay almost anything for its products. Last Christmas, Apple's gross margins were 41%. That's incredible. It's good for Apple, good for stockholders—but not so good for shoppers. Me, I don't want to support someone else's 60% markups with my own dollars. Generally speaking, the smarter move is to invest in the Tiffanys of the world—and shop at the Wal-Marts.

4. Competitors are coming.

Right now the iPad has just one serious rival, the Samsung Galaxy Tab. So no wonder it's doing so well. But all that will change in just a few months. New tablets, many running on the Android platform, are expected to hit the market as soon as March. These will give you a much wider choice of size, style and operating system. And when these companies duke it out for market share, you know you'll be able to get a deal. So why would I buy now?

5. No Flash.

Do you want to watch video clips on the Web? On a boring old laptop or PC, you can do that for free. On the amazing new iPad? Only sometimes. Most Web video runs on Adobe Flash, and the iPad can't—or rather, won't—handle Flash. So there are plenty of video clips you won't be able to watch. And plenty of others you will have to pay to watch, either by renting them from Apple's iTunes, or by paying for a subscription service like Hulu Plus. Mr. Jobs had a very public bust-up with Adobe over Flash this year. I have sympathy for his position, as Flash can be unstable. But it's still the software most Web video clips use, and I want that choice.

6. The cost of the add-ons.

The iPad starts at $499 plus tax. That's nearly twice as much as a netbook. And I know if I get the cheapest iPad I'll regret it. It has only 16 gigabytes' storage. And it can only go online when you are in a WiFi hotspot, like at home or in Starbucks. A lot of the iPad's best features need an Internet connection. So if I want to use them wherever I go, I'll want the model with a 3G data plan that works everywhere. And those start at $629, plus at least $15 a month. Total cost: at least $809, plus tax, in the first year, and $989 over two years. This I don't need.

7. The games.

Yes, they're great. But that's the problem. Computer games are as addictive as cigarettes. And this is a habit everyone is taking up, not quitting. This is why I dumped my iPod Touch. Am I alone? Maybe. But I don't think so. I know lots of people with horror stories about addiction to immersive games. Someone I know—now, as it happens, a British member of parliament—once sat down to play Civilization, a role-playing game, on a PC one Saturday evening and didn't finish until three o'clock ... Thursday morning. (He stopped when he ran out of cigarettes.) And that was on an old PC. Games on the iPad are more intense than ever. A friend recently showed me some of the serious news apps on his iPad. I noticed that to get to them he first had to "wave" us past several screens of games. Is he really using his iPad to read that article about the Indonesian economy, or is he playing Angry Birds? Hmmm. You make the call.

8. The waste.

The scarcest resource in life isn't money, land, fresh water or gold. For singles under 25, the scarcest resource is sex, and for the rest of us it's time. And the biggest waste of time I've ever discovered—after games (see above)—is the Web. Nothing comes close. It's a total black hole. Do I want to carry a device that lets me surf the Web endlessly wherever I am? That's easy. It's amazing how much time I have to read now that I never look at Facebook.

9. It'll get boring.

I just read this article on my iPad via my WSJ subscription via 3G sitting in a restaurant listening to some Christmas music on iTunes. Darn this infernal machine!
—Geoffrey Cox

This year's totem is next year's meh. Economists call this "the hedonic treadmill." Human beings quickly get bored of each new item. We always want the buzz from something newer, better, bigger, faster or fancier. But the treadmill never stops. Think of how amazing the first Palm Pilots seemed back in the 1990s. Look at them now. The iPad may look like the eighth wonder of the world today. Soon it will seem so old.

10. The whole Apple cult is starting to creep me out.

OK, I already knew about the fans. Last summer, three-quarters of the people standing in line so they could buy the new iPhone the moment it went on sale already owned an iPhone. But now it's the company, too. Look at how it reacted last spring, when a Silicon Valley blogger scooped an early iPhone 4: Next thing he knew he was being handcuffed on his lawn in front of his wife while police ransacked his house. And think of Steve Jobs, complaining that news coverage of the iPhone 4's troubled aerial had been "blown so out of proportion that it's incredible." Hmmm, out-of-proportion media coverage—you sure you want to go there, Steve? This is the guy marketing a new telephone under the slogan "This changes everything. Again." Maybe this stuff shouldn't matter to me, but I have to confess it's turning me off.

Write to Brett Arends at brett.arends@wsj.com

(BN) My Wife's Cancer Holds Lesson for Health Care: David Klein

We, the human race, have done so much. But not enough.

Bloomberg News, sent from my iPad.
My Wife's Cancer Yields Lessons for Health Care: David H. Klein

Dec. 24 (Bloomberg) -- In July 2008, my wife Linde was diagnosed with advanced squamous cell carcinoma of the oral cavity. Her subsequent treatment has led me to view U.S. medical care from a different perspective. What Linde and I have learned over the past two years has broadened my fundamental beliefs about medicine. In sum, while amazing advances have been made and miracles are occurring, medicine remains very much an art.

I've spent almost 40 years on the business side of the health-care industry, including the last seven as chief executive officer of a health plan. I believed my network of contacts would serve us well. I presumed there were unambiguous answers to questions about the best treatment plan and the best providers.

What I learned was that for uncommon diseases like Linde's, if not all diseases generally, clear answers often don't exist. I will never forget one doctor telling me that the information I sought wasn't available and that I would have to trust my gut. This is pretty incredible when you think about how much as a society we spend on health care.

The new federal health-care reform law promotes the adoption of health-information technology and supports comparative effectiveness research to understand the marginal contributions of new drugs, devices and procedures. But what we learned with Linde's treatment is that data on innovations, especially for less common diseases, isn't sufficient to broadly create evidence-based medicine.

Risk Adjustments

Often medical research, even when coordinated and summed across the industry, doesn't have enough patients suffering with a particular disease to test alternative treatments using scientific -- trial and error -- methods. I can't tell you how many times I heard from physicians that every patient is different.

The same deficiency exists for assessing a practitioner's expertise with a particular treatment for a disease. To evaluate a doctor or treatment, it's necessary to risk adjust for differences in patients. Generally, it's more challenging to care for an older patient than a younger one. Similarly, treating patients with diabetes is more difficult than those without. There are myriad risk factors and standardizing for them is difficult if not impossible.

This has implications for what we consider the best places to receive care and how doctor performance should be reported. We really don't want clinicians to avoid riskier cases to achieve better grades.

Work in Progress

In the face of these limitations, clinicians often rely on their understanding of underlying disease processes to decide the best course of action. Leading medical organizations convene panels of experts to provide opinions about the most effective approach for diagnosis and treatment. The work of these panels is important, but sometimes their opinions are later found to be wrong.

The recently developed human genome provides promise for gaining disease process insight, but it's a work in progress.

Bottom line, there isn't as much hard science as one would like.

So, what do we do? I wish there was an answer that offered real value. After all, I'm a business executive who runs a health plan providing benefits to thousands of employers. I'm also a taxpayer who supports government programs. Unfortunately, there are no such assurances, but there are steps we can take.

Best Course

As a society, we need to be honest about treatment limitations. Patients should be well informed about what the industry knows and doesn't know. There should be candor about the likelihood that care will make them worse instead of better. Patients should be empowered to be the treatment decision makers.

In recognition of the uncertainty patients face, we need to compassionately acknowledge their pain and fear. We need to counsel that aggressive intervention isn't always the best course of action.

I share these conclusions not to suggest dissatisfaction; Linde and I are grateful for her care. Her clinicians included the country's most respected doctors who did what they were trained to do -- aggressively seek a cure.

Rather, these observations are offered to challenge the U.S. health-care industry to be more explicit about medical treatment being as much an art as a science and to provide emotional and spiritual support to improve patient and caregiver experience.

Course of Disease

There may be an economic benefit to this. As patients learn more about the limits of medicine, some may choose less intensive and costly care. As a nation, our health-care spending increases as patients near the end of life.

Since its onset, Linde's cancer has come back twice. The first time, she continued a courageous and valiant fight. The second time, she learned that further treatment would be painful, risky and probably leave her partially disabled and deformed. She was further told that the likelihood of having an extended, high quality life was remote.

With this knowledge, she opted for palliative care favoring quality of life over extending life. My acceptance of her decision, while difficult, was the best way I could show my love and support.

Linde commends her clinicians for being great teachers. They were candid, patient, used non-clinical terms, and shared their uncertainty about the effectiveness of suggested treatment. Their support of her as the decision maker was wonderful.

Linde and I have opted to share our journey because we hope the understanding of medicine we have developed will be helpful to others.

(David H. Klein is president and chief executive officer of Excellus BlueCross BlueShield in Rochester, New York. The opinions expressed are his own.)

To contact the writer of this column: David H. Klein at david.klein@excellus.com

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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When it comes to defining 2010, one story stands out as the most newsworthy: WikiLeaks.

One put his family jewels on the chopping board. The other is just doing something someone else would have done anyway and gotten rich too. You know what I think of TIME's decision.


By Jon Friedman, MarketWatch
NEW YORK (MarketWatch) — When it comes to defining 2010, one story stands out as the most newsworthy: WikiLeaks.

The WikiLeaks furor underscored the dark side of the digital revolution. The mass-scale disclosures of proprietary documents — said to threaten America’s national security — showed us the pitfalls and dangers of the Internet. We understood the chilling implications of a world in which someone — anyone — could easily post highly sensitive information worldwide.

WikiLeaks is, of course, a high-profile example of the Internet serving as the vehicle for spreading classified information about our nation’s diplomatic relations and foreign policies. It is also a case that people can relate to.


Reuters

WikiLeaks founder Julian Assange.
What if someone posted damaging information about you on the Web and you were helpless to stop the distribution, just as the Obama administration is unable to halt the flow of data coming from WikiLeaks founder Julian Assange?

WikiLeaks and its arrogant, don’t-mess-with-me image is personified by Assange.

Then we have the most popular story of 2010: Facebook. It’s largely an inspiring saga. Facebook is terrific. It provides the masses with what the media have provided all these years: news, information, commentary and entertainment. Facebook is a gigantic escape for millions of people.

It does one more thing that the media have failed to do: provide a community for its users. If newspapers and magazines had done this years ago, they wouldn’t be in so much trouble today.

WikiLeaks and Assange versus Facebook and its founder, 26-year-old Mark Zuckerberg, who is so interesting that Hollywood made a successful major motion picture about his rise, “The Social Network.” Facebook versus WikiLeaks. Good versus evil, right?

Time magazine (TWX 31.84, +0.19, +0.60%) , which takes great pride in its annual Person of the Year ballyhoo, made its opinion clear last week. It selected Zuckerberg to be its Person of the Year for 2010.

On the face of it, there’s nothing wrong with the choice. Yes, Zuckerberg sure did have a year that any entrepreneur dreams of. He is a billionaire. He is famous. He is charismatic (well, for a dweeb, anyway). He is a noted philanthropist, too, having donated $100 million to Newark, NJ.


Reuters

Facebook founder Mark Zuckerberg
Zuckerberg is the ultimate feel-good story, and Time likes feel-good tales. It’s ironic how Zuckerberg, who was portrayed as a villain for much of this year because of controversy over Facebook’s privacy policies, has been recast as a good guy in contrast to Assange.

Still, Time blew it this time. Time could’ve and should’ve opted for Assange because he stands for something — yes, it might be sordid, evil, even, but Assange is the more compelling figure. If the digital revolution was the dominant story of the year, Time should have recognized the person behind the news.

Time’s choice says plenty about the way high-profile awards are often handed out in America. Too often, institutions take the safe route. That may be why the traditional media are in such distress today. They have remained stagnant while digital operations have usurped them.

Time did the same thing in 2001, as well. The story of that year, we remember grimly in the aftermath of the Sept. 11 attacks, was terrorism in the U.S. The magazine chose New York City Mayor Rudy Giuliani to personify the story and the news year — not Osama bin Laden, who had masterminded the heinous events of Sept. 11.

Giuliani earned his stripes by energetically rallying New York — and the world — in the wake of the disaster. Time conveniently forgot that Giuliani was a rather unpopular mayor on Sept. 10, 2001 — and the tragedy gave him an opportunity to salvage his reputation.

In 2001, Time made the call to reward good instead of recognizing evil. Does that ring a bell? Light over darkness. (Don’t get me wrong: I’m not comparing Assange, who is being portrayed as a sinister individual, to bin Laden.)


What Net neutrality rules mean
The FCC has approved rules that would give the federal government authority to regulate Internet traffic and prevent broadband providers from selectively blocking Web traffic. WSJ's Amy Schatz explains what the new rules really mean.

You could even draw parallels in other prominent awards, such as, say, the Best Picture Oscar. Take a few examples: “Dances with Wolves” over “Goodfellas” in 1990, “Rocky” trumping “Network” (and “Taxi Driver”) in 1976 and the most galling case of all, “Forrest Gump” topping “Pulp Fiction” in 1994.

To be fair, Time has sometimes made difficult choices. In 1938, it named Adolf Hitler as its most newsworthy subject. Joseph Stalin received the honor twice, in 1939 and 1942. The last time Time went out on a limb was 1979, when it tapped Ayatollah Khomeini. Read more about Time’s past choices.

Time’s editors bristle at any notion that they took the easy way out. Of course, nobody at the magazine truly minds much because a controversy — even a contrived one like this — is bound to be good for business. Any time someone criticizes the Person of the Year choice, he or she implicitly is publicizing the award. As the line goes, all publicity is good publicity.

I realize that I, too, am playing into Time’s hands by writing about the Person of the Year award, even as I criticize the selection here. That’s OK. I just wish Time had gotten it right.

MEDIA WEB QUESTION OF THE DAY: Did Time make the right decision by picking Zuckerberg?

Jon Friedman is a senior columnist for MarketWatch in New York.

Microsoft is just awaiting The Day unless it comes up with a new strategy...

Microsoft needs to develop, urgently, a parallel OS afresh, while it still can. This will not be based on something like Google Chrome. The new OS needs to be clean and using 21st Century development techniques. It needs to be flexible and customisable, like the andriod for PCs.

(BN) Google Aims Twin Daggers at Microsoft's Heart: Rich Jaroslovsky

I'm not a ms fan, but am willing to bet the cloud concept never will cut it. There must be some processing power at the end user side.

Bloomberg News, sent from my iPad.
Google Aims Twin Daggers at Microsoft's Heart: Rich Jaroslovsky

Dec. 17 (Bloomberg) -- Forget about Google Inc.'s struggle with Facebook for eyeballs and programmers. Pay no attention to its fight with Apple Inc. over smartphones, or to any other tech rivalry.

The search giant's war with Microsoft Corp. is The Big One, the confrontation that will determine what kind of future Microsoft has, and maybe if it even has a future. And the two new weapons Google unsheathed last week carry an unmistakable message of mortal peril.

First came the Nexus S, the new Google-labeled smartphone and the first to run "Gingerbread," Google's latest Android operating system. Then came a plain black laptop called the Cr- 48, the first computer to run the company's Web-based Chrome Operating System.

On the surface, neither seems particularly menacing. The Nexus S, made by Samsung, is the successor to one of the most hyped and least successful products of 2010, the lovely and ill- fated Nexus One. And the Cr-48 isn't even for sale. It's a generic prototype that Google is making available to thousands of developers, companies and others to get them familiar with the concept of the new operating system before commercial versions from manufacturers such as Samsung Electronics Co. and Acer Inc. show up next year.

Enormous Threat

Still, the two devices represent an enormous threat to Microsoft and its chief executive officer, Steve Ballmer. The success of Android is rapidly foreclosing Microsoft's growth prospects as more computing is done on mobile devices. Meanwhile, Chrome OS takes dead aim at its great twin cash cows: the Windows and Microsoft Office franchises.

Of the two new offerings, the Nexus S is the one most visible to consumers. The phone went on sale in the U.S. yesterday at Best Buy Co. stores and online for $199 on a two- year contract from Deutsche Telekom AG's T-Mobile USA, and for $529 with no contract.

The phone, a variation on Samsung's popular Galaxy S line, comes with a gorgeous four-inch touch screen, front- and rear- facing cameras for video chatting and a passel of Google apps and services. Its potential killer application is Near Field Communication, a technology that allows it to read encoded information from special chips that can be embedded in signs, on T-shirts or other objects.

Mobile Payments

Putting NFC support into Android is the biggest step yet toward using the mobile phone as a way of paying for things. And it comes at a time when Microsoft is still playing catch-up. Having frittered away its early strength in smartphones, it suffered a series of stumbles, including a line of youth- oriented phones called Kin that it introduced this year and pulled from the market after less than two months. Its latest effort, the Windows Phone 7 operating system, is a great improvement -- but still lacks such basics as cut-and-paste functionality.

It's possible for Google and Apple to both succeed in mobile phones. It's harder to imagine Google and Microsoft both thriving. Google's business model, which calls for getting manufacturers to use its operating system, is far closer to Microsoft's than to Apple's strategy of making money on the sale of proprietary hardware. And, of course, Google offers Android to manufacturers at a price that Microsoft can't beat: free.

While Android is all about limiting Microsoft's future, Chrome OS takes dead aim at its present: the Windows and Office businesses that, in the quarter that ended Sept. 30, earned $6.7 billion of the company's $7.1 billion in operating income.

In the Cloud

At first glance the Cr-48 -- Cr being the symbol for the element chromium -- looks like a basic laptop. The differences become evident once you turn it on. With no large programs or device drivers to load, it boots in 15 seconds. The operating system is, essentially, just a Web browser that you can never close. Forget about a hard drive: Everything you use, all your programs and all your data, reside in the cloud, on Google's distant servers. And it uses not a bit of Microsoft software.

Nor is Microsoft the only one threatened. What kind of chip powers the Cr-48? Who cares? For the record, the Cr-48 has an Atom microprocessor from Intel Corp., but it's no more relevant than what kind of chip powers your smartphone. How about makers of flash memory chips, like Toshiba? A Chrome OS machine needs little -- the Cr-48 has only 16 gigabytes -- since nothing is stored on the computer itself.

Useless Brick

Chrome completely commoditizes the hardware; the only things that count are being connected to the Internet, and at what speed. For now, that's Chrome's biggest weakness. While the Cr-48 works either over a Wi-Fi network or its built-in Verizon Wireless 3G service, you can't always count on getting a connection. On a cross-country flight this week, the Cr-48 was a useless, inert brick.

On the other hand, that isn't likely to be a permanent condition as Internet connections become ever more ubiquitous. Some airlines, such as Virgin America Inc., have already started rolling out onboard Wi-Fi.

Since Chrome OS, like Android, is free, it's logical to ask what Google gets out of it. Company executives talk about the benefits of tying users to Google services and gaining valuable data to help refine its search algorithms. It remains to be seen whether those users will be troubled by the privacy implications and whether Google's business model will work for manufacturers.

You can't help thinking that the real point of Chrome is the threat it poses to Windows. From its founding, Google has defined itself as the anti-Microsoft. Its "don't be evil" corporate mantra never needed to specify what it meant by "evil," because everyone already knew. The fact is, Google doesn't actually need Chrome OS to succeed. Microsoft, though, desperately needs it to fail.

(Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Rich Jaroslovsky in San Francisco at rjaroslovsky@bloomberg.net .

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net .

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(BN) Bureaucrats Score Big at Citigroup, General Motors: David Pauly

I cringe when i read such stuff with absolute lack of any intelligent analysis. Anyone who bought in 08 would have made money.

Bloomberg News, sent from my iPad.
Bureaucrats Score Big at Citigroup, General Motors: David Pauly

Dec. 9 (Bloomberg) -- Turns out the meddlesome bureaucrats whom bailed-out bankers and carmakers complained about so much were pretty good managers.

Intrusive U.S. officials this week sold the last of the government's common shares in Citigroup Inc. -- and now show a profit of about $12 billion from the 2008 rescue of the nation's third-largest bank in terms of assets. Last month, against the odds, these same irksome folks pulled off an almost perfect initial public offering of General Motors Co., recovering about $13.5 billion for taxpayers.

The government's remaining 2.4 billion Citigroup shares were sold for $10.5 billion. The price was $4.35 a share, 10 cents below the market price. The discount proved wise. The bank's stock rose after the sale, easing concern the trade -- totaling 8.3 percent of the bank's shares -- would depress the stock price.

In the end, the U.S. Treasury had sold all of its 7.7 billion Citigroup shares at an average price of $4.14, making about 89 cents a share on the transactions. The total profit on the shares came to $6.85 billion. The U.S. has also received preferred stock dividends and other money from the bank.

Taxpayers stand to make more from their Citigroup investment. The government still owns warrants to buy 465 million of the bank's shares and $800 million of preferred securities.

Pandit's Response

Citigroup Chief Executive Officer Vikram Pandit, who has been working for $1 a year during the crisis, did have the grace to say he was "thankful" for the government's support.

Washington-based bureaucrats handled the GM deal adroitly from the outset though the IPO market was unpromising. GM executives and their government overseers hoped the IPO would raise several billion dollars even though no other public offering this year raised even $1 billion, according to Bloomberg data. In the same week that GM had its stock sale, Harrah's Entertainment Inc. canceled its IPO.

Government officials forced underwriters to cut their fees to less than 25 cents a share. By contrast, the underwriting costs in the IPO of Booz Allen Hamilton Holding Corp., the consulting firm, was a bit more than $1 a share.

Then the folks from Government Motors boosted GM's common price offering to $33 a share, after earlier estimating about $29.

Flippers Squelched

That $33 price was a boon to the taxpayers. It meant they got most of the money rather than speculators who might have benefited from a big gain after the IPO.

The stock rose to $35.99 during the first day of trading last month and closed yesterday at $34.45.

Taking GM public eventually brought in a total of $23.1 billion. The Canadian government and the UAW Retirees Medical Benefits Trust also sold common shares and General Motors itself sold preferred stock.

Not bad for government work. Maybe if these companies had hired some meddlers like these a few years back, disaster might have been averted.

(David Pauly is a columnist for Bloomberg News. Opinions expressed are his.)

To contact the writer of this column: David Pauly in Normandy Beach, New Jersey dpauly@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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Chavez wants Clinton, 'other delinquents' to quit over leaks

well, he will be well advised to start finding some cowdung to hide his face when wikileaks leaks HIS correspondences....




Published December 1, 2010
 
Chavez wants Clinton, 'other delinquents' to quit over leaks


(CARACAS) Venezuela's President Hugo Chavez on Monday called on US Secretary of State Hillary Clinton to resign after the leak of embarrassingly candid US diplomatic correspondence by WikiLeaks.
 
Angry reaction: Mr Chavez (above) says somebody should study the mental stability of Mrs Clinton  
'The empire stands naked . . . Mrs Clinton should resign,' Mr Chavez said in a speech, using his favourite description of the United States.

'It's the least you can do: resign, along with those other delinquents working in the State Department.'

Mr Chavez zeroed in on a diplomatic cable with a request to the US embassy in Argentina for information on President Cristina Kirchner's 'mental health'. The message asked if she was taking medication for 'nerves and stress'.

'Somebody should study Mrs Clinton's mental stability,' said Mr Chavez.

'I believe somebody should resign. I don't mean it should be (US) President (Barack) Obama, but the whole structure over there should fall apart, if only through embarrassment,' he added.

The United States 'attacks . . . disrespects' other governments, including its allies, and keeps tabs on other presidents, Mr Chavez said.

'Whatever was left of its mask has finally dropped away,' he said, praising WikiLeaks for 'its courage'.

Adding her voice to the debate with criticism directed at the US administration, Sarah Palin, the former Alaska governor and 2008 Republican vice-presidential candidate, accused Mr Obama on Monday of not having done enough to prevent the leaks, in a message on her Facebook page.

Of WikiLeaks director Julian Assange, she said: 'He is an anti-American operative with blood on his hands.' - AFP
 

(BN) What to Do When the FBI Raids Your Hedge Fund: Jonathan Weil

What a gem of an article!

Bloomberg News, sent from my iPad.
What to Do When the FBI Raids Your Hedge Fund: Jonathan Weil

Nov. 26 (Bloomberg) -- As if the global capital markets hadn't suffered enough shocks lately -- artillery fire in Korea, meltdown in Ireland, Eva Longoria Parker's divorce filing -- life just threw America's hedge-fund masters a beanball. It appears the government wants to toss many of them in jail.

This week the Federal Bureau of Investigation executed search warrants at three large hedge funds' offices as part of a widening insider-trading investigation. Several other funds, including SAC Capital Advisors, got subpoenas for documents.

What does this crisis mean for the industry? We already can guess the first question that must have leaped to the mind of every self-respecting wealth maximizer: "How can I use this information to make enough money to buy myself a jet?" The answer, of course, is that it pays to be on the inside.

This raises an even more intriguing existential question. Is it possible for a hedge fund to profit off its own imminent collapse? A little role-playing exercise shows it's not only possible -- it's preordained.

Imagine you are a skilled trader at a hedge fund with a few billion dollars under management. You learn that FBI agents have just arrived to raid your firm. Lesser beings might cower under the pressure. You, though, realize that you now possess the ultimate edge: The knowledge of what is happening to you at this very moment. You scan the latest news for headlines about your firm and, seeing none, set about on an action plan.

One Question

Soon the unsuspecting public will be told that financial stocks are plunging on the news that your firm is being raided. You have the benefit of knowing this in advance. The only remaining questions: Do you short Goldman Sachs? Do you short other large banks, too? More importantly, do you short them for your personal account, or for your fund's? Sensing nothing but upside in the downside, you settle on all of the above.

Next comes the due diligence. Brilliantly, you recall a speech in March by Robert Khuzami, the head of the Securities and Exchange Commission's enforcement division.

"The masterminds leave the fewest footprints, and they are often planning their defense at the same time they are committing the fraud," he said. "To take a simple example, those who trade on insider information may well accumulate at the same time a stack of research reports on a company whose stock they just illegally purchased, and point to that file when law enforcement comes knocking."

As you consider whether to send Khuzami a thank-you note, you hit the print button. Piles of bearish research reports churn out, ready to be placed on your desk as if they had been there for weeks. You're probably just being paranoid, though. For all you know, the trades you executed were legal.

Make a Call

Right about now, your attention starts to shift. There's the question of whom to call first about the FBI raid. Personal lawyer? Spouse? Lover? No, you resolve instead to call your fund's top so-called expert-network service. They helped get you in this mess. Surely they can get you out, right?

Past experience tells you the experts' information always falls into one of two categories: Worthless or way, way too good. You hope for the latter. Even if the network can't lure away Khuzami from the SEC to represent you, maybe the experts could dig up some dirt on the pimply FBI agents downloading your firm's e-mails? Suddenly it occurs to you that all your phones probably are tapped. Better hold off on making that call.

Now the waiting game begins. There will be immediate family members to become reacquainted with, and monstrous legal bills to pay. At least you know better than to let your employer pick your law firm for you. Turning state's evidence isn't an option, not yet at least. Eventually, you figure you can stage a comeback. Your firm, though, is toast.

Where You Stand

It's about this time that it dawns on you: Your social standing wasn't what you thought it was. The FBI wouldn't dare raid the headquarters of a too-big-to-fail bank like Citigroup, much less allow the press to photograph the scene. You, though, chose what you thought was the more lucrative path of working for a hedge fund -- which can, and soon will, fail. The government doesn't care if it starts a run on you.

Passing the time, you run across a stock quote for Allied Irish Banks. It still trades for about a dollar in New York, even though its bailout just took down a whole country. "I never took down a whole country!" you scream inside your head. Reality sets in: You're now lower than an Irish banker.

You also start to recognize you're not as rich as you once thought. You recorded your $10 million bonus last year (after taxes) as an asset on your personal balance sheet. What you should have done was put down a contingent liability of equal size for all the money you'll have to pay to get out of this mess. Oh well, live and learn.

All in all it was worth it, you reckon. We'll be lucky if the whole financial system doesn't crumble anyway at this rate. At least you got what you could while the going was good. Still you worry: Where's a safe place to put it all?

The answer will have to wait. You hear a voice. It's an FBI guy. He's asking you to back away from the computer keyboard.

(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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(BN) Bust Is Better Than a Bailout for Irish Patient: Matthew Lynn

A generation? It will be swept under the carpet and forgotten in SIX MONTHS!

What's with the quality of bloomberg's writers nowadays.

Bloomberg News, sent from my iPad.
Bust Is Better Than a Bailout for Irish Patient: Matthew Lynn

Nov. 23 (Bloomberg) -- It's not too late. The request for aid may have been made. The negotiations may have started. But Irish Prime Minister Brian Cowen can still refuse a bailout from the European Union and the International Monetary Fund.

It might sound like madness for a drowning man to refuse a lifebelt. But the decision the Irish make in the next few days will shape the future of their nation for a generation.

Ireland would be better off going bust than taking a loan. The conditions attached to a rescue aren't worth it: Once it takes EU money, it will never get off the hook. And the Irish banks aren't worth saving anyway. Defaulting on your debts is a far less scary prospect than usually portrayed.

The real question is whether Ireland's politicians have the courage to take that step.

Last weekend, the Irish surrendered to pressure to accept an EU- and IMF-led package, similar to the deal hammered out for Greece earlier this year. There was no surprise about that. The markets had grown so nervous about Ireland's finances and the cost of its bank bailouts that yields on 10-year government debt reached almost 9 percent this month.

The final amount of the bailout is still to be determined. So are the terms. This means, of course, that it isn't too late. The deal may still fall through, particularly with a general election looming as support for the government wanes.

Bond Chaos

True, that would cause chaos in the bond markets. Trading in Portuguese, Spanish and Italian debt wouldn't be a pretty sight for the few days after rescue talks collapsed. But the Irish should still say no.

Here's why.

First, the conditions are too onerous. The EU may demand an end to Ireland's low corporate-tax rate. Its 12.5 percent rate has been a cornerstone of the country's economy, attracting numerous businesses to relocate there. In 2008, two major U.K. companies, United Business Media Plc and drugmaker Shire Plc, switched their tax residence to Ireland to cut their tax bills.

Even if it isn't explicitly part of the rescue deal, Ireland will come under pressure over the next few years to raise its corporate taxes, which take companies, government revenue and jobs from Ireland's neighbors. It will be hard to explain to businesses in Dusseldorf why their high taxes are being used to help rescue competitors in Donegal.

Even so, it would be a huge mistake. Low taxes and an open business culture are what made Ireland successful. You don't cure a sick patient by taking out a lung.

'Hotel California'

Second, the EU-IMF rescue looks like financial methadone. It numbs the pain and gets you off drugs, but it's addictive. The cure can be worse than the disease. Months have passed since the Greek bailout, and there isn't much sign of Greece accessing the capital markets. The yield on Greek bonds remains more than 11 percent. It's a "Hotel California" package: You can check out anytime you like, but you can never leave.

Third, this is mostly about rescuing EU financial institutions. It is the Irish banks that are in trouble, and if they go down, it will cause massive losses at other European lenders. But why should the Irish people worry about that? If French, German or British banks suffer big write-downs, let their governments deal with them. Ireland could just close its banks -- such a small country doesn't need its own finance industry any more than it needs its own carmakers.

Emigration Wave

Fourth, Ireland risks tipping into an economic spiral. A key to the Irish economic revival of the last 20 years was reversing emigration. For a century, young Irish people went abroad to make their careers. When they started staying at home, it was a boon to the economy. If a generation is saddled with these debts, why not move to London or New York where the prospects are better? It's already happening: Emigration is exceeding immigration for the first time since 1995. It will be the most highly skilled, energetic people who leave. How exactly is that going to help the nation recover?

Five, going bust isn't so bad. Russia and Argentina defaulted on their debts. It wasn't the end of the world. The financial markets portray it as a catastrophe, but that is mainly because bankers and bond investors stand to lose a lot of money. So long as it is done in an orderly, structured way, a default is often the best solution to a financial mess.

Underneath the property bubble -- which was caused by low euro-area interest rates -- Ireland has a competitive, export- oriented economy. September figures show exports rose 2 percent and the trade surplus increased. In a weak global economy, that's a very decent performance.

If it defaults on its debts, Ireland can bounce back fairly quickly. If it accepts an EU bailout, it will be stuck in recession for a generation.

(Matthew Lynn is a Bloomberg News columnist and the author of "Bust," a forthcoming book on the Greek debt crisis. The opinions expressed are his own.)

To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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(BN) China's State-Planned Economy Is Doomed to Flop: David Pauly

Why, it looks even more convincing when I find and replace ' china' with ' US ' and ' state planned' with 'democracy and liberty'...

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China's State-Planned Economy Is Doomed to Flop: David Pauly

Nov. 23 (Bloomberg) -- The biggest obstacle to China becoming the world's No. 1 economy is China.

The communist nation's determination to keep as tight a rein on its economy as it has on its citizens will lead to failure -- just as it has for other countries that embraced central planning schemes.

China is reversing its flirtation with a type of quasi- capitalism that allowed entrepreneurs to thrive and propelled the economy forward at an annual rate of about 10 percent.

The Chinese now follow the so-called Beijing consensus, a belief that concentrating more control of industry in government hands will avoid the financial debacles caused by free markets.

The nation's state-owned companies are buying up independent businesses in the auto, steel and energy industries. A government-run company even plans its own Internet search business to compete with Baidu Inc., whose shares trade on stock exchanges.

Monopolies in China might appeal to investors who think merged companies can cut costs and maximize profits. Though huge Chinese companies may be well run today, they will die from the inefficiencies, cronyism and corruption that often plague state- controlled enterprises.

Manipulating the Economy

Inflationary pressures springing from China's rapid growth has the government threatening to interfere even more in the economy -- by imposing price controls on items including food and fuel.

Capping prices doesn't stop inflation, it's merely a delaying tactic. China's decision to raise interest rates and this month's order to force banks to increase reserves are better tools to combat the current inflation rate of 4.4 percent.

As it moves away from free markets, China ignores two recent central-planning failures.

Remember Japan Inc.? Thirty years ago, pundits said Japan's economy would rule the world as its bureaucrats allocated capital to key industries, protecting them from foreign competition. The U.S. railed against Japan's manipulation of the yen to keep its exports moving -- just as today it moans about China keeping the yuan low.

Russia's Troubles

Although Japan did become the second-largest economy after the U.S. -- until being dethroned by China earlier this year -- it's been in a prolonged stall. Its peak growth rate in recent years was 3.4 percent in 1997.

The collapse of the Soviet Union starting in 1989 is a more pertinent cautionary tale. The communist nation that controlled everything within its borders down to the barbershops is now defunct. Sadly, Czar Vladimir Putin is reversing Russia's chaotic moves toward democracy and capitalism.

China won't collapse tomorrow. Its exports continue to flood the globe, earning it money to make major investments -- and amass political clout -- abroad. But don't let so-called experts fool you into thinking China has discovered a new and better way to organize an economy. State-run capitalism is an oxymoron.

(David Pauly is a columnist for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: David Pauly in Fort Myers, Florida, at dpauly@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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The US is entirely off the mark in its approach to this issue. There are a few things US MUST recognise:

1. North Korea is a province of China. 

Without China, North Korea is nothing. North Korea will have to listen to China no matter what, and it is clear China will not tolerate nonsense from it. Consider China the father, and North Korea is kid. When the kid misbehaves, the responsibility lies on the father, who has not taught the kid well.

2. Responsibility is China's.

If North Korea launches any attack, it must be clear that China will be responsible for this, because NK will not be doing anything without China's blessings. 

3. It is just NOT A BIG DEAL

Since NK is part of China, it is not at all a big deal if NK has nuclear weapons. It is only a problem if NK exports its weapons, in this case, it is China needs to pick up the pieces also.

4. Who says North Korea is the bad boy?

Korea was born out of Japan and China, and sandwiched in between. NK has its way of doing things, and is still frozen in time. It is clear the world and China are moving towards progress and NK is left in the past. Let time do its work, it is a matter of time SK and NK reunite. But China will need to bring NK into the 21st century else SK will collapse under the malnutrition of NK.

If US can look at this issue from the right perspective, put the responsiblity of NK clearly and squarely on China's hands, and hold it responsible, then it can focus on what works, and have more time on Afghanistan the Middle East and its own economy.

November 20, 2010

North Koreans Unveil Vast New Plant for Nuclear Use

By DAVID E. SANGER

WASHINGTON — North Korea showed a visiting American nuclear scientist earlier this month a vast new facility it secretly and rapidly built to enrich uranium, confronting the Obama administration with the prospect that the country is preparing to expand its nuclear arsenal or build a far more powerful type of atomic bomb.

Whether the calculated revelation is a negotiating ploy by North Korea or a signal that it plans to accelerate its weapons program even as it goes through a perilous leadership change, it creates a new challenge for President Obama at a moment when his program for gradual, global nuclear disarmament appears imperiled at home and abroad. The administration hurriedly began to brief allies and lawmakers on Friday and Saturday — and braced for an international debate over the repercussions.

The scientist, Siegfried S. Hecker, a Stanford professor who previously directed the Los Alamos National Laboratory, said in an interview that he had been “stunned” by the sophistication of the new plant, where he saw “hundreds and hundreds” of centrifuges that had just been installed in a recently gutted building that had housed an aging fuel fabrication center, and that were operated from what he called “an ultra-modern control room.” The North Koreans claimed 2,000 centrifuges were already installed and running, he said.

American officials know that the plant did not exist in April 2009, when the last Americans and international inspectors were thrown out of the country. The speed with which it was built strongly suggests that the impoverished, isolated country, which tested its first nuclear device in 2006, had foreign help and evaded strict new United Nations Security Council sanctions imposed to punish its rejection of international controls.

A delegation of American experts that included Dr. Hecker has already reported that it confirmed satellite photographic evidence of another new advance by the North — a light-water reactor being built on the site of a facility the country had dismantled as part of an agreement with the international community to end its nuclear weapons program.

Dr. Hecker did not initially mention the surprising discovery of the uranium enrichment operation as he left North Korea. He privately informed the White House a few days ago.

The White House is clearly eager to use the new information to show that North Korea, in violation of United Nations mandates, continues to make significant progress toward advancing its nuclear program, even though it remains under international sanctions for its past violations.

American officials were sent to China, Japan, Russia and South Korea, the other members in the moribund “six-party talks.” The Obama administration also hopes to persuade China, by far North Korea’s most important source of political and economic support, to put more pressure on the government of Kim Jong-il, which has shown signs of becoming more militaristic as it undergoes a leadership transition.

China has been hesitant to cut off trade or fuel to the North, and it appears determined to support its longtime, if difficult, ally during its succession process. But in the past China has taken modest steps to support a tougher line when North Korea has tested nuclear weapons or missiles, defying international commitments.

Dr. Hecker said he was forbidden from taking pictures during his tour of the uranium plant on Nov. 12, and was not allowed to verify North Korean claims that it was already beginning to produce low-enriched uranium. He also said he had doubts that North Korea would fulfill its promise to build a light-water reactor to utilize the fuel. “There are reasons to question whether that’s true,” he said.

There are two routes to a nuclear weapon: obtaining plutonium from the spent fuel produced by a nuclear reactor, and enriching uranium to weapons grade.

Since the 1950s, North Korea pursued the first path, and its arsenal of weapons was manufactured from fuel harvested from a small nuclear reactor at Yongbyon. That produced enough for roughly a dozen weapons, but the facility was decrepit, and under an agreement with the Bush administration it was shut down in 2008, with television cameras running as its cooling tower was blown up.

But meanwhile, the North was already well down the second path, uranium enrichment, much the way Iran has pursued its nuclear program. Like Iran, North Korea insists the fuel is intended for a yet-to-be-built experimental reactor to make electricity.

American officials, though, say they think the intent of the enrichment program is to make weapons fuel. Since the North has blocked international inspections, it may be impossible to monitor how much fuel it has made, or if it could be used to produce or improve atomic bombs.

For roughly 15 years, American intelligence agencies have reported evidence the North was seeking to enrich uranium, largely based on technology it bought from A. Q. Khan, the rogue Pakistani nuclear dealer, in a transaction that dates from 1996. There were later reports of North Korean efforts to buy critical centrifuge components, and a suspicious shipment of uranium hexafluoride to Libya that appeared to be of North Korean origin. The Bush administration accused the North in 2003 of secretly pursuing the technology, leading to the ouster of inspectors.

In interviews, administration officials said that they were watching the area by satellite where Dr. Hecker saw the new facility, but they would not say whether they knew about it before he reported back.

“The intel agencies dropped the ball,” said Jack Pritchard, a former State Department official who visited North Korea’s main nuclear complex, Yongbyon, a week before Dr. Hecker’s visit and heard North Korean boasts of a new capability.

A senior intelligence official said Saturday evening that “it is wrong for anyone to assert that U.S. intelligence agencies somehow missed the boat,” adding, “We have been aware of North Korean uranium enrichment activities for years.”

A senior administration official said the North Koreans “very probably have other facilities” that pre-dated the one at Yongbyon and have not been detected.

In interviews, administration officials said they did not want to talk about possible responses to the North Korean action. But their options are limited. North Korea is already a de facto nuclear state; it conducted its first nuclear test in 2006 and another shortly after President Obama took office. Sanctions have crippled some of the country’s ability to do business, but clearly they have not forced it to give up its nuclear ambitions.

Military attacks on Yongbyon have been all but ruled out. In interviews over the past two days, administration officials have described several possible motives for the North to build the facility, and to boast about it.

The most obvious is to create a new bargaining chip to try to force Mr. Obama to pay off the country. “It’s typical of North Korea, to see if we will reward them” for suspending operations or dismantling the facility, said one senior administration official.

But there are other possible explanations. Just as the North used the sinking of a South Korean warship this year to build the credentials of its leader-in-waiting, Kim Jong-un, the son of the current leader and grandson of the country’s founder, this effort could be designed to show that the North must be accepted as a nuclear state along with the major nuclear powers and Pakistan, India and Israel.

Administration officials said they had no intention of reopening negotiations with the North unless it “demonstrated a seriousness of purpose and constructive action” to live up to its past promises to dismantle its nuclear facilities.

Another possibility, which administration officials declined to discuss, is that the North ultimately intends to build a new generation of hydrogen bombs or thermonuclear weapons, far more powerful than anything in its current arsenal.

The North’s current arsenal of 8 to 12 weapons are all based on plutonium. But uranium, enriched to bomb grade, can also be used to drastically increase the destructive power of a nuclear blast, and that is the main use of uranium in modern arsenals, including United States warheads.

Experts caution, however, that true hydrogen bombs are quite hard to make, so it seems unlikely that North Korea would succeed in that anytime soon.

William J. Broad contributed reporting from New York.

Chinese official says no aim to supplant dollar

You can't supplant the dollar unless you SPEND your yuan dude.

November 20, 2010, 2.14 pm (Singapore time)

Chinese official says no aim to supplant dollar WASHINGTON - A senior Chinese official says his nation harbours no aspirations that its currency will someday replace the US dollar as the world's reserve currency. But Zha Peixin, vice chairman of the National People's Congress of China's foreign affairs committee, said on Friday that China is determined to change how exchange rates are maintained so that they 'better reflect the supply and demand of the market'. Mr Zha told reporters while fielding questions at the Chinese Embassy that Beijing is wary of rapid fluctuations in the value of its Chinese yuan, or renminbi as it is also known, that could discourage entrepreneurs. He said the 'goal is to keep the exchange rate relatively stable'. The US accuses China of undervaluing its currency, something Beijing denies. -- AP

(BN) China Acquires Stake in Mall Owner General Growth in Bet on U.S. Consumer

The flesh eating germ devours, bit by bit. Real estate...be careful now...

Bloomberg News, sent from my iPad.
China's General Growth Stake a Bet on U.S. Shoppers

Nov. 19 (Bloomberg) -- China's sovereign wealth fund, in a bet that American real estate and retail spending will recover, has acquired a 7.4 percent stake in General Growth Properties Inc., the second-largest U.S. mall owner.

China Investment Corp. holds 59.3 million common shares and warrants to buy an additional 14.7 million shares, according to a Form 4 filed yesterday with the U.S. Securities and Exchange Commission. The Future Fund Board of Guardians, a manager for Australian government pension funds, holds a 6.4 percent stake in Chicago-based General Growth, documents show.

U.S. consumer spending on Chinese-made apparel and consumer electronics helps drive the trade gap between the two countries, which rose 21 percent to $201.2 billion through the first 10 months of this year. China is using foreign direct investments to capture some of the profits from overseas sales of merchandise that its factories churn out for companies such as Apple Inc., said Dan Rosen, principal at Rhodium Group, a New York-based research firm that specializes in China.

"In addition to making goods, China is getting closer to retailing," Rosen said today in a telephone interview. "The margins that the Chinese enjoy for putting goods together are tiny compared to the profit margins of the Wal-Marts of the world."

General Growth exited the largest real estate bankruptcy in U.S. history on Nov. 9. As part of the restructuring, it spun off Howard Hughes Corp., an owner of master-planned communities and other properties, as a separate publicly traded company.

Brookfield Entities

China Investment and Australia's Future Fund hold their stakes in General Growth through entities created by Brookfield Asset Management Inc., a Toronto-based company founded by members of Canada's Bronfman family. Brookfield and its clients invested about $2.31 billion in the mall unit through the bankruptcy reorganization, with an additional $200 million devoted to Howard Hughes Corp.

Hugh Zwieg, a General Growth officer, didn't return a telephone call seeking comment. Andrew Willis, a spokesman for Brookfield, declined to comment on China Investment's affiliation with the money-management firm.

China Investment, with about $300 billion under management, was created to generate higher returns from the nation's foreign-exchange reserves. China ranks as the world's largest holder of U.S. Treasuries, with $883.5 billion of the securities as of Sept. 30, according to the U.S. Treasury Department.

'Attractive Alternative'

"High-quality U.S. commercial real estate is an attractive alternative for sovereign wealth funds to invest American dollars," said Alex Avery, a real estate industry analyst at CIBC World Markets Inc. in Toronto. "You get the safe-haven currency but you don't have to deal with the low yields of Treasuries."

China Investment committed about $800 million to the $4.7 billion global property fund that Morgan Stanley announced in June, according to Private Equity Real Estate. The fund had also been negotiating to buy some of Harvard University's real estate holdings for several hundred million dollars. That transaction fell through, a person briefed on the matter said in September.

Brookfield formed a $5.5 billion turnaround real estate group in August 2009 to invest in distressed commercial real estate, according to Willis. Under the terms of the arrangement, members had the final say over whether their money was invested in various opportunities identified by the Canadian money manager.

Wealth Funds

When a bidding war to invest in General Growth broke out earlier this year, rival suitors sought financial support from wealth funds in the Middle East and Asia, the Financial Times reported in March. At the time, Brookfield said it might seek financing from investors in the turnaround group including China Investment, the Future Fund and Government of Singapore Investment Corp., the newspaper said.

According to filings, Brookfield received 230.9 million General Growth shares, along with 57.5 million warrants in return for its investment. About a quarter of the stake was allocated to China's sovereign wealth fund, with 64.4 million shares and warrants going to the Future Fund Board of Guardians, which helps oversee about $69 billion of pension assets for the Australian government.

Brookfield was formed by Peter and Edward Bronfman in 1954 after the two brothers cashed out their stake in Seagram Co. Ltd., a Montreal-based spirits company that was ultimately acquired by Vivendi SA in 2000 from other members of the Bronfman family. Brookfield, which specializes in real estate, power and infrastructure investments, has about $113 billion in assets under management, including $20 billion from sovereign wealth and pension funds, Willis said.

General Growth rose 42 cents, or 2.9 percent, to $15.10 at 4:15 p.m. in New York Stock Exchange composite trading. The company issued 135 million shares earlier this week at $14.75 each.

To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story Christian Baumgaertel at cbaumgaertel@bloomberg.net .

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Press freedom: The Singapore grip - My Take

Much is written in English about the Far East by people behind a notebook half a world away. As night in the West is day in the East, many think this East is exotic - they hang and shoot people on the streets, they manufacture, pollute, and have huge surpluses. Even the closest thing to the educated and refined West, Japan, has got umbrella hats, talking bras, and has disgraced CEOs who commit suicide - how strange, this wild, wild East.

But its not difficult to garner support and encouragement when you are in the comfort of a million people around you who think or are brought up the same Western way. Hence, I have little respect for the majority of journalists (or financial analysts) - though not only from the West, but also by those in the East commenting on the West.

Take the death penalty for drug smuggling in Singapore for example. Few people consider that one has actually got to take the effort to smuggle drugs AND be caught. It is an active task. Smuggling drugs and other serious offences, would be no different taking a sharp knife and stabbing oneself repeatedly with it. Yet people continue to take that gamble - they want to take that gamble, and they know the consequences.

Alan Shadrake the focal point here, is a classical old fool. He actively sought publicity, and knew he would get it by visiting Singapore. He could very well continue his slander and throw his tantrums from elsewhere. But no, when people stopped listening, he made the choice of his life - he was old, desperate and needed to make a statement - at least Amnesty would take note, and the British press plus their readers would give him a few hundred, maybe a thousand google hits and Alan Shadrake would go down in history as the man who stood up for his Western ideals in a Singapore dungeon.

On the point of press freedom, Singapore is free - there is freedom to do anything, except stupid things that cause racial or internal divide - and there are no shortage of these type of people. But there are lots to do in Singapore, you could start a pub, teach English,  sell wine online - the tools are all there, easier than another country in the world. Or you could try to tear all these down with freedom to peddle drugs, murder, start a mob, enjoy graffiti and  making a fool of yourself, and be a true free democracy, and land yourself in jail or at the gallows doing it - yet again, you did ask for it didn't you.

If the West wants to learn and do business in the East, one would suggest it learn, or at least understand the culture of the East quickly. Because I've seen with my own eyes, many hoping to succeed by parachuting managers from Australia to Asia - how close is Australia to Asia? proximity - close enough, culturally - a world apart. Companies expanding in China, Korea, Japan, Taiwan, Thailand, Malaysia, Vietnam, without understanding the landscape, and they are genuinely puzzled why they fail.

But this leads to something bigger - everything in Asia exists for a reason - the talking bras, the junta, the opposition to the Tibetan monk, the death penalty, fist fights in parliament. They will always exist, no amount of frustration venting in the West or political pressure will change, nor nobel peace prizes, nor even a war declared unilaterally on basis of non-existent WMDs.

To understand why they exist is the challenge - and a challenge that must be overcome before a prudent investor puts his first penny into this region.



--------------------------------------

Press freedom: The Singapore grip
The country presents itself as a modern liberal democracy yet has an autocratic political culture
Editorial
The Guardian, Wednesday 17 November 2010
 larger | smaller
Singapore is proud of its place near the top of many international rankings. Its school system is by some measures the world's best. The island state promotes itself as diverse, competitive and cultured – an exciting global hub. But there are two league tables which shame Singapore. The first, compiled by the campaigning group Reporters Without Borders, places the country 136th in the world for press freedom – below Iraq and Zimbabwe. The second is the rate at which Singapore executes convicted criminals: arguably higher, per capita, than any other country in the world.
Singapore presents itself as a modern liberal democracy: it has a parliament, elections, courts, a constitutional right to free speech and the consumerist gloss of capitalism. Its citizens are free to become rich and to travel. Many do both. The country has by any measure succeeded since independence. But its autocratic political culture – overseen by the country's founding father and now official minister mentor Lee Kuan Yew – is highly and needlessly restrictive. The media is largely state-owned. Defamation and contempt laws threaten dissent. The latest victim of these is Alan Shadrake, a British-born writer sentenced yesterday to six weeks in prison and a large fine after being found guilty of contempt of court. His book Once a Jolly Hangman questioned the independence of Singapore's legal system, and its use of the death penalty.
It is depressing that a country as successful as Singapore should feel the need for such restrictions on free speech. Singapore argues that, without them, the balance between the country's Chinese, Malay and Indian populations would be upset. But the reality is that other successful parts of Asia – Hong Kong and Taiwan, for instance – have thrived by extending free speech and the rule of law. Singapore is making itself a less significant place by refusing to give its people the sorts of freedoms that are routine elsewhere.
On a practical level, the decision to prosecute Mr Shadrake was also foolish. His book has had far greater attention because of it, and Singapore's reputation has been harmed. Mr Shadrake is quite right to attack a criminal justice system whose victims are often poor migrant workers. His book was legitimate and – despite the court's claim to the contrary – largely accurate. The suspicion is that the Singapore government resented the exposure of a squalid system of routine executions which sits uneasily with the image it likes to present to the world. Singapore wants to be judged as a first-world nation. It must find the confidence to allow its citizens the freedoms that go with that status. Repression is not the route to success. In the end, it will prove its enemy.
guardian.co.uk © Guardian News and Media Limited 2010

Lipper Fund Awards -- Step right up, Everyone's a winner!

Lipper Fund Awards -- Step right up, Everyone's a winner! 
Posted: April 04, 2008, 1:35 PM by Jonathan_Chevreau 
ETFs, MERs, Index Funds, Mutual Funds 

So you’re in the market for a mutual fund and notice Fund Company X has won a bunch of awards. Should you buy one of the winning funds? Depends on who’s giving the award. If it’s a Lipper award, I’d be skeptical. 

The premier tribute to actively managed mutual funds in Canada is the Canadian Investment Awards or CIA, which takes place every fall. Over the years, the number of categories has risen to a ridiculous extent, which has the effect of diluting the impact for the few deserving funds. 

But you’ve not experienced true award inflation until you see what the marketing wizards at Lipper have done. Lipper — a wholly-owned subsidiary of Reuters —  held its second annual “gala” awards in Toronto this week. 

Lipper unveiled a total of 113 awards by my count. They accomplished this dubious feat by breaking the award winners into four groups: those with the best 1-year, 3-year, 5-year and 10-year performance. So while there are about 31 basic categories — ridiculous in itself — this gambit lets Lipper declare four different winners in each category, thereby spreading the wealth around. 

Thus, if you want to buy an award-winning Canadian equity fund, which one you choose will depend on what performance track record you think is important. If you’re so deluded that you think the last 1-year performance record is the most accurate predictor of future returns, then you’ll go for the IA Canadian Leaders Fund, winner of Lipper’s 1-year Canadian Equity award. 

Ah, but if three-year returns are your bag, you’ll buy instead the Desjardins Environment Fund. Or perhaps the 5-year track record would be more prudent? If so, then you’ll want the AltaFund Investment Corp., winner of Lipper’s 5-year Canadian Equity award.   

But why stop there? Go for the 10-year winner, which is the Fidelity True North Fund. 

Not to sugarcoat the situation but this is financial pornography at its most blatant. Heaven help the poor consumer who opens up his daily paper to find four different vendors proclaiming themselves the winner of Lipper’s “prestigious” 2008 Canadian equity award. 

And so it goes for the usual categories, such as U.S. equity, Japanese equity, high yield fixed income and on and on. 

But wait, there’s more, as the hucksters say. If your favorite fund company can’t squeak in a winner through the aforementioned free-for-all, maybe they can win the “Miscellaneous” award, also spread over 1, 3, 5 and 10 years. 

So if you like to invest in stock exchanges over 1-year periods, the Caldwell Exchange Fund is  the 1-year miscellaneous winner. Move to three years and the “miscellaneous” winner is the TD Latin American Growth Fund, which also wins in the 5-year category; for 10 years it’s the AGF China Focus Fund.  Wow, TD won in two of the four categories: better stock up on it now. Gives  new meaning to the term "Latin lover." 

It gets worse. On Thursday, the Toronto Star ran a ten-page advertorial supplement which featured the following banner headline: “Spotlight shines on RBC Asset Management.” Beneath it was another unbylined story headlined “Lipper Fund Award Winners from A to Z.” 

As already noted, there aren’t enough letters in the alphabet to cover all the Lipper awards. The supplement appears to be a raging success for the ad sales people: full-page ads were purchased by Mackenzie Financial, AIM Trimark, Manulife Investments and Dynamic Funds, with smaller ads from other industry players (or is it “payers?”). 

Naturally, all the winners flooded journalists’ inboxes yesterday with breath-taking emails announcing their award-winning funds. Dynamic claims to have “stolen the show” by winning the “greatest number of Fund of the Year” awards, with 19, count ‘em, 19 awards. 

Of course, that’s counting the four-fold inflation factor of spreading the awards over the four performance time periods. Thus, Dynamic was able to tout its Dynamic Power Global Growth Class as the 1-year Global Equity category winner as well as the 3-year and 5-year winner. Alas, the pattern was broken by the 10-year winner though it was still in the family: Dynamic Global Value Fund. 

Not to be outdone in the press release wars, RBC Asset Management announced that for the “second consecutive year” it was named “Best Overall Fund Group” in Canada. It then explained how it had received Lipper awards “over various time periods” in various categories. 

Compared to Dynamic’s winning 19, you’d think CIBC Asset Management would want to hide the fact it won only four of the 113 awards available. And AGF Funds didn’t even blush when it issued its release saying it was “honored with two top prizes.” Nor did AIM Trimark, which also won two. 

Investors Group kept the precise number vague, saying it had “been recognized for industry-leading fund performance” at the “prestigious Lipper Fund Awards ceremony.” Fidelity Canada said it is “very honoured to be recognized” for its seven fund winners and so on. 
  
Go here and if you can navigate your way to the Canadian-specific data you can get a list of the rest of the winners. If you’re a fund company marketing executive, don’t forget to go to the “Certificates” section which lets you “share the good news about your fund’s achievement.” 

Lipper makes it easy for you to “use your certificate and award log in your marketing communications to promote your success throughout the year.” 

Yep, it’s all about marketing. But the final touch is the award trophies, which Lipper describes as “an instantly recognisable symbol of fund performance and success.” 

Now I don’t know about you but when most of us see all those Hollywood actors and actresses clutching their Oscars on TV, don’t we kind of assume they’ve been given the statuettes?   

Lipper’s web site is selling fund companies award trophies so they can  “order as many replica trophies as they need, to display in offices around the world.” In addition, you can order a trophy for “awards not catered for at an Awards evening.”   

So even if you’re such a sad-sack fund company that you couldn’t muster up a single win in the 113 categories, there may yet be hope for you. You can order a large Lipper trophy for just $155, a medium one for $119 or a small one for just $95. 

Manufacturers of index funds or ETFs need not apply. 


Comment: 

From KCM's Adrian Mastracci: Liked your Lipper blog. 

Let's put it this way. Say there are 9,000 funds in Canada of which 113 got the trophy. 

That means about 1 1/4% of them are winners and about 98 3/4% of them are in the non-winner category. 

So given the propensity for investors to load up on winners vs non-winners, they now have nearly a 100% chance of picking the laggards for their future returns. 

I assume that history repeats itself most times where the current winners have a difficult time staying on top of the perch over the next few years! 

Nothing has changed in investing. The same gaffes are repeated, over and over. 

Adrian Mastracci 

Portfolio Manager, R.F.P.,