Moody's Sees Credit Card Stress through 2009

Credit card charge-off rates in the U.S. continued to rise in August and are expected to surpass the peak rate of charge-offs following previous recessions, according to Moody's Investor Services.

The charge-off rate, which measures credit card balances written off as uncollectible as an annualized percent of loans outstanding, rose 48 percent in August to 6.82 percent, compared with 4.61 percent a year ago, said Moody's in a special report.

Moody's said it expects the industry to remain under pressure through the end of 2009 as a result of the worldwide economic crisis and worsening underlying collateral performance as the credit card asset-backed securities market shows signs of increasing stress.

Although the balance sheet strength and liquidity of the sector’s largest credit card issuers remains quite strong, the uncertainty and tempo of the turmoil will test even the stalwarts’ ability to adapt.

In its mid-year report released last month, Moody's forecasted the sharp deterioration in credit card delinquency and charge-off rates. Earlier this month, Standard and Poor?'s highlighted the worsening performance in August of credit card ABS.

Hungry for success

Hungry for success

Honors students attend a graduation ceremony in Ho Chi Minh City last month.
Many among Vietnam’s young workforce say they’re eager to begin rewarding careers but are stymied by poor working conditions and low wages in the public sector. After graduating with top marks from the Hanoi University of Technology’s information technology department, Tuyen’s teacher recommended him for a job at a government-level agency. Accepting the prestigious position was viewed as a good career move by Tuyen’s family and friends. For the first three months, Tuyen had to work as an unpaid apprentice and relied on his parents for financial support. He was then put on a three-month probation at a salary of VND1.2 million (US$73.25). Like many new graduates, Tuyen accepted the low wages viewing it as a temporary hardship on the way to gaining more experience and a brighter future. But the financial struggle was harder than Tuyen had anticipated. Rent, food and petrol cost him nearly VND2 million ($122) per month. Not wanting to ask for more money from his parents, the young graduate took a second job as a part-time tutor. After two years, Tuyen’s monthly salary was increased to a mere VND1.8 million (around $110), despite the fact that he was considered a model employee and an asset to the department. It was at that point Tuyen finally decided to quit, knowing he simply couldn’t afford to live on his wages. He applied for work at a foreign information technology company and was offered a starting wage of VND9.93 million ($600) a month.
In Vietnam’s newly flourishing economy, many domestic and foreign enterprises are willing to pay tens ofmillions of dong to keep good staff. Vietnam’s governmental agencies, however, are seemingly unable to retain good talent due to a pay scale that doesn’t allow for the basic necessities of life.

Quantity over quality

After graduating with honors from Hanoi’s Institute for International Relations (now the Diplomatic Academy of Vietnam), Quynh, who speaks two foreign languages, applied to a ministry-level office. In the beginning, she was paid VND1.2 million ($73.25) per month. Like Tuyen, Quynh said the salary was not as important as the experience she thought she would gain. But Quynh’s expectations of improving her skill set and advancing her knowledge in a professional environment were soon dashed, she said. In the morning, most staff would arrive on time to avoid being entered into the latecomer list, Quynh said. But they would then gather around and chat idly instead of beginning their daily tasks. Most employees would work from 9:30 a.m. until 11:30 a.m. and then break for a two-and-a-half-hour lunch and nap. After returning, most would not begin working again until 3 p.m. and would leave promptly at 5 p.m., Quynh said. The sluggish work environment led Quynh to feel she wasn’t learning or growing and moreover, the low pay wasn’t enough to justify staying in the position. Eventually, Quynh quit the job she had initially been so eager to start. “If governmental agencies don’t change their unproductive and bureaucratic working method, and continue to appraise staff by length of service rather than by their ability and achievements, they will not be able to attract talented individuals and will also lose youths’ faith in the state sector," Quynh said.

Work ethic and nepotism

Thanh, another recent university graduate with dreams of developing a rewarding career, applied to a local research institute. The interview process was intense, she said.
Thanh was made to take several tests in English and had to demonstrate proficiency in translating and essay-writing. Despite the stress of the testing, the rigorous process led Thanh to believe the institute highly valued skills and ability from its employees – a work environment she wanted to be a part of. But when Thanh began working at the agency, she soon realized that she seemed to be the only one made to conform to its high standards. According to Thanh, the institute’s director had appointed several positions to family members, whether they were qualified or not. People’s work ethic was poor and many staff members in high-ranking positions didn’t even speak English, she said.

"It’s not that Vietnamese youth have no spirit of sacrifice but they have [nothing to show] for their contribution," said a former employee of a governmental agency.

Reported by Lan Tuong*

*The writer is a consultant for the Hanoi-based Consultancy on Development Institute, which works to enhance cooperation between public and civil sectors through lobbying policies.

The Great Iceland Meltdown

http://www.nytimes.com/2008/10/19/opinion/19friedman.html?_r=1&hp&oref=slogin

By THOMAS L. FRIEDMAN

Published: October 18, 2008

Who knew? Who knew that Iceland was just a hedge fund with glaciers? Who knew?

If you’re looking for a single example of how the globalization of finance helped get us into this mess and how it will help get us out, you need look no further than British newspapers last week and their front-page articles about the number of British citizens, municipalities and universities — including Cambridge — that are in a tizzy today because they had savings parked in Icelandic banks, through online banking services like Icesave.co.uk.

As Dave Barry would say, I’m not makin’ this up.

When I went to the Icesave Web site to see what it was all about, the headline read: “Simple, transparent and consistently high-rate online savings accounts from Icesave.” But then, underneath in blue letters, I found the following note appended: “We are not currently processing any deposits or any withdrawal requests through our Icesave Internet accounts. We apologize for any inconvenience this may cause our customers.”

Any “inconvenience?” When you can’t withdraw savings from an online bank in Iceland, that is more than an inconvenience! That’s a reason for total panic.

So what’s the story? Around 2002, Iceland began to free its banks from state ownership. According to The Wall Street Journal, the three banks that make up almost the entire banking system in Iceland “grew quickly on easy credit” and “their combined assets rose tenfold in five years.” The Icelandic banks, while not invested in U.S. subprime mortgages, had gone on their own borrowing and lending binges, wooing savers from across Europe with 5.45 percent interest savings accounts.

In a flat world, money can easily seek out the highest returns, and when word got around about Iceland, deposits poured in from Britain — some $1.8 billion. Unfortunately, though, when global credit markets closed up, and the krona fell, “the Icelandic banks were unable to finance their debts, many of which were denominated in foreign currencies,” The Times reported. When depositors rushed to get their money out, the Icelandic banking system had too little reserves to cover withdrawals, so all three banks melted down and were nationalized.

It turns out that more than 120 British municipal governments, as well as universities, hospitals and charities had deposits stranded in blocked Icelandic bank accounts. Cambridge alone had about $20 million, while 15 British police forces — from towns like Kent, Surrey, Sussex and Lancashire — had roughly $170 million frozen in Iceland, The Telegraph reported. Even the bobbies were banking in Iceland!

So think about it: Some mortgage broker in Los Angeles gives subprime “liar loans” to people who have no credit ratings so they can buy homes in Southern California. Those flimsy mortgages get globalized through the global banking system and, when they go sour, they eventually prompt banks to stop lending, fearful that every other bank’s assets are toxic, too. The credit crunch hits Iceland, which went on its own binge. Meanwhile, the police department of Northumbria, England, had invested some of its extra cash in Iceland, and, now that those accounts are frozen, it may have to reduce street patrols this weekend.

And therein lies the central truth of globalization today: We’re all connected and nobody is in charge.

Globalization giveth — it was this democratization of finance that helped to power the global growth that lifted so many in India, China and Brazil out of poverty in recent decades. Globalization now taketh away — it was this democratization of finance that enabled the U.S. to infect the rest of the world with its toxic mortgages. And now, we have to hope, that globalization will saveth.

The real and sustained bailout from the crisis will happen when the strong companies buy the weak ones — on a global basis. It’s starting. Last week, Credit Suisse declined a Swiss government bailout and instead raised fresh capital from Qatar, the Olayan family of Saudi Arabia and Israel’s Koor Industries. Japan’s Mitsubishi bank bought a stake in Morgan Stanley, possibly rescuing it from bankruptcy and preventing an even steeper decline in the Dow. And Spain’s Banco Santander, which was spared from the worst of this credit crisis by Spain’s conservative banking regulations, is purchasing America’s Sovereign Bankcorp.

I suspect we will soon see the same happening in industry. And, once the smoke clears, I suspect we will find ourselves living in a world of globalization on steroids — a world in which key global economies are more intimately tied together than ever before.

It will be a world in which America will not be able to scratch its ear, let alone roll over in bed, without thinking about the impact on other countries and economies. And it will be a world in which multilateral diplomacy and regulation will no longer be a choice. It will be a reality and a necessity. We are all partners now.

YouTube Founder Compares Online Video To Nascent TV Market

http://www.techcrunch.com/2008/10/16/youtube-founder-compares-online-video-to-nascent-tv-market/

by Michael Arrington on October 16, 2008

YouTube Cofounder Chad Hurley spoke at the MIPCOM Conference in Cannes, France yesterday.

In the talk, which is transcribed below, Hurley compares the current state of online video to the nascent years of television. In 1941, he says, “CBS has just launched its new television network amidst cries that it means the death of radio.” Advertisers were hard to come by. Content owners were afraid of alienating their existing audiences. etc.

A Brave New World - The Future of Managing Content

I would like to share with you a quick story that many of you may already know.

A small group of innovators introduce a new technology that has the ability to entertain and engage people on a massive scale. Advertisers willing to risk money on this untested platform are hard to come by. Content owners are reluctant to embrace it for fear of alienating their existing audiences. And experts hail this new platform as signaling the demise of another.

As some of you may have guessed, this is not only the story of YouTube. The year is 1941, nearly 70 years ago, and CBS has just launched its new television network amidst cries that it means the death of radio.

From the printing press to the blog, from the record player to the iPod, and from the stage to the home theater, the way content has been produced, distributed and consumed in the world is constantly evolving.

The challenges we face today are not new. Today, my keynote kicks off the digital portion of this conference. I would argue that the difference between this part and the part that preceded it is semantics. We are all - digital or otherwise - confronting the same challenges and we should all be searching together for common solutions. We must embrace this new chapter, as those that came before us embraced theirs 67 years ago.

The digital age has brought with it great change and great challenges; to some it brings the goal of global content distribution closer. For others it represents a loss of control and maybe the loss of a business model. As this era accelerates – as content moves from controlled to distributed, as we migrate from a single platform delivery model to multi-platform delivery, as the world changes around us – we need to ask ourselves: can and will we adapt to this new paradigm? Are we the drivers of change, or will change drive us?

I am here to say that we want to continue to be your partner. We want to continue to work with you – the content owner – to make smarter, more informed decisions about managing and distributing your content. Many of you have already recognized the power of online digital distribution. Companies like CBS, the BBC, HBO, Sony BMG, North One and AFP just to name a few, have already joined us. In fact, yesterday we announced a major partnership with RAI, one of Europe’s biggest broadcasters. Italians have been passionately embracing our platform, discussing current affairs and enjoying performances from local talent. With RAI on board, users will be able to watch some of the most popular professional Italian content on their computer screens. And today, we are happy to announce a partnership with European powerhouse Panini. We look forward to working with both companies to provide the online content their audiences are demanding.

For those of you wary of this new, decentralized distribution model, understand that the technology exists to give you the control you need. And by opening your content to digital distribution, as so many content providers have already done, you gain unprecedented reach and scope to touch new audiences around the world, anywhere and anytime. If you embrace this opportunity, you will evolve your business model and find new channels and opportunities to deepen engagement, discover new viewers and find new, substantial revenue opportunities.

Ultimately, we all need to embark on this journey together. We cannot retreat from technological advances. Even if YouTube didn’t exist, other platforms would surely be driving this change.

There was a time when a centralized distribution model was relevant and effective. But if you listen to your audience; if you hear what they are telling you; you will understand that the days of the centralized distribution hub are ending. Your audience – today’s consumers – want access to content on PCs, TVs, mobile phones and social networking pages. And contrary to what some believe, the internet doesn’t take viewers away from traditional broadcast. As the President of NBC Research told the New York Times a few months back: “The Internet hardly cannibalizes; it actually fuels interest.” In fact, reacting to a recent Forrester study focused on engaged viewers of online video, executives from ABC, CBS and MTV all agreed that online video was adding to their total viewership rather than taking away from it. So the question before you today is: do you circle ranks and push back against the surge of change? Or, do you open yourselves to the promise and possibilities of globalized content everywhere at anytime on any device?

This world may appear chaotic, but it can be harnessed to your advantage if you’re willing to think outside the single platform delivery model. We need to continue to work together and find ways to open your content to the world, and do so with the standards, protections and strategy in place that gives you control and satisfies your audiences. Opening your distribution will give you a greater presence than ever before. And you will be able to manage your content in a way that generates new channels of revenue and taps into emerging and explosive markets, in the same way that companies like CBS and RCA, under the leadership of visionaries like David Sarnoff, did so many decades ago.

This new world is not without its challenges. The concerns that some of you have are very real. Does digital distribution mean that you lose control? What about the quality of online content?

Does the digital distribution model make sense? These are all valid and familiar questions.

The truth is that the long-anticipated convergence of TV and the computer is happening faster than anybody predicted. It’s happening now. Let’s look at just a few data points on this:

- Around 10 billion videos are viewed monthly online in the U.S. alone
- On YouTube 13 hours of content are uploaded every minute
- The number of people consuming video on their PCs is higher than ever before
- In France over 120 million hours of video content is watched per month while over 3 million mobile phone subscribers use their phone to view a video

So online video is here to stay and evolving faster and in more dynamic ways than anyone imagined, even a few years ago. As for the business questions: the market potential of online video distribution may be in its early stages, but it’s here and growing fast.

- The online video advertising market is set to be worth over a billion dollars by 2010, will reach over $3 billion by 2012, and over $5 billion by 2013

People want solutions for searching, discovering, watching, and interacting with video. And you, as content providers, are looking for new audiences and new revenue channels. Given these demands, how can we take advantage of this massive market opportunity?

Let’s recognize that video captures the visceral, dynamic quality in life and shares it with the world. This has driven YouTube’s exponential growth in the last two years. Again, 13 hours of video are uploaded to YouTube every minute. That’s the equivalent of Hollywood releasing more than 57,000 full-length movies every week. Hundreds of millions of people come to YouTube every month to search, discover and share this content with their friends.

For you, the content owners, online video provides big opportunities across the 4 Rs: Reach, Research, Revenue, and Rights Management

First, online video provides massive and targeted reach to hundreds of millions of viewers. And we’re making those videos and communities even easier to discover. Online video also provides content owners with an opportunity to extend their brand, reach new consumers, and tap new revenue opportunities, which I’ll discuss later. For this group, online video provides the benefit of longer viewer engagement with greater frequency across multiple channels.

In August of this year the International Olympic Committee launched nine Channels on YouTube. Through our platform, the IOC offered this year’s Summer Olympic Games to a truly global audience across 78 territories in Asia, Africa and the Middle East for the first time in Olympic history. Hundreds of millions of people around the world were able to engage and experience the Olympics online, many of whom never had never had the opportunity to see the Games on their televisions. All of this took place while NBC, the broadcaster that owned the rights to the Olympics in the US, effectively used our Video ID technology to monitor and quickly block copyrighted Olympic content uploaded to the site.

Second, research provides a new breed of analytic tools that dive into who, why and where your content is being watched.

The products and features being developed by online video providers continue to evolve. For example, the American rock bank Weezer launched their music video “Pork and Beans” on YouTube resulting in over 4 million views in just two days. Using our sophisticated analytics tool, the band was able to then get an in-depth look at the video’s views. This data provided an online focus group of sorts, enabling them to prepare more effective and powerful marketing campaigns. It even helped Weezer understand where their videos were being watched and then plan their upcoming tour.

And third, global distribution and analytics tools give advertisers and content owners fresh channels of revenue on new and existing forms of content. Advertisers want simplicity with reach. Online video does this by combining reach beyond TV, with the targeting, reporting and accountability of sophisticated online advertising tools and analytics. Online video began as a playground for advertisers where they could test ideas, drive brand awareness and create consumer engagement through clever viral video campaigns. In the current economic climate, this platform also provides advertisers with an affordable distribution channel and metrics to help gauge the success of a campaign and drive engagement numbers up.

As some of you may have heard, last week we announced a groundbreaking deal with CBS to test full-length feature programming on YouTube. We also designed a new video player to provide the best possible user experience when watching this long-form content. With nearly 80,000 subscribers in their Channel and 250 million views, CBS has received a strong, positive response from the YouTube community around the quality of its programming. Under the terms of this latest deal, CBS has added more than 80 full-length shows to their Channel, complementing the more than 9,000 short-form videos already available. CBS will be selling its own advertising inventory on YouTube. This arrangement allows CBS to aggregate their ad inventory across the web to increase their reach and levergae the strength of their sales force.

An then there’s the fourth “R”. And I wouldn’t want you to think I’ve forgotten that one. Of course, I’m talking about rights and rights management. From the very beginning, we’ve been committed to working with content owners to make sure YouTube remains a platform for distribution, not unauthorized uploads. In fact, over 300 media companies, including NBC, RAI, Formula One, the Olympics and Lionsgate are using innovative products like YouTube’s Video Identification tool to better manage their presence on our site. Along with the other tools in our Content management system, Video ID helps content owners decide whether to block, promote, or even generate revenue from their content.

The European Commissioner for information, society and media, Vivian Reding, recently hailed YouTube as a great example of how content producers and service providers can work to benefit each other through our Video Identification technology, saying: “The Youtube platform tells the rights owner if his content has been uploaded to Youtube. He then has a choice: leave it up as it is, add advertising - thus monetizing the content- or requesting that the content be taken down.” I couldn’t have said it better myself. And we will remain committed to introducing these types of protections tools in the future.

Ultimately, the online video experience is about empowerment. Consumers of online video are empowered to be their own content programmers, consuming the relevant mix of mass, niche and personal media they demand. Advertisers are empowered through data to better understand and engage with their audiences. And content owners are empowered, through sophisticated identification tools, to control their content and make smart business decisions with their content.

The proliferation of content will continue exponentially. And as methods for uploading, aggregating, personalizing and distributing digital content develop, content owners will find new challenges and business opportunities. Spurred by technological innovation, people are already looking beyond their laptops to upload, customize and distribute content from and to any device.

Video content delivered to mobile devices will open consumers, advertisers and content creators to a world of opportunity. Everything from movie watching and sharing to hyper-targeting and dynamic, interactive, location-relevant ads are emerging within the mobile market. As the Web grows, so will videos’ presence in it. Accelerated by the power of embeddable video, developers will find new, innovative ways to push the boundaries of how ads are served and watched online. And the jump from the desktop to the TV, or the phone to the TV, or the camera to the TV, will all become seamless.

Gaining control of online video content and discovering effective business models are vital not only for our growth, but for our common survival. Online video is already fully integrated into the fabric of the Web – its presence is universal, inspiring and empowering to all that embrace it. In the very near future, the distribution of online video will soon cease to be seen as a threat, but rather as a fundamental distribution solution that can be personalized on desktops, phones and tv’s alike.

Where we are today is not the YouTube era. It is not the digital content era, or the multi-platform era. Where we are today is an extension of the work you have all done, built on the shoulders of CBS, RCA and the other innovators who came before us. There is no old media. There is no new media. There is one media with one common purpose: to inform, move and inspire the world through information, art and entertainment. Together, we can find a solution that will benefit everyone in this ecosystem, from consumers to advertisers to the content owners alike.

Thank you very much.

YouTube Founder Compares Online Video To Nascent TV Market

http://www.techcrunch.com/2008/10/16/kaixin001-chinas-apple-of-social-networks/

by Guest Author on October 16, 2008

Editor’s Note: This guest post was written by Alan Rutledge, who formerly worked as a developer for Idealab, the startup incubator behind Google Picasa and Yahoo Overture.

---

Kaixin001, the latest newcomer to the Facebook clone wars in China, is China’s fastest growing social network having amassed a staggering 7.5 million users in the first 5 months since it launched in May 2008. The site tripled Twitter’s traffic reach in the month of September alone and is currently the 250th most popular site on Alexa worldwide.

Compared with rival incumbent Xiaonei, which targets college students, Kaixin001 appeals to white-collar office workers with a simpler UI that is more intuitive to older audiences. This is a significant detail in China, where one in four college students does not own a computer and can only access Xiaonei by walking to an Internet Cafe and paying by the minute. White-collar office workers by comparison, spend an average of nine hours a day in front of the computer.

Kaixin001 succeeds simply by cloning only the most successful Facebook applications and bringing them to the Chinese market before anyone else. Examples of viral hits that they have cloned are:

• Friends for Sale: Females have an unfair advantage in this game thanks to China having one of the highest male-to-female ratios in the world.
• Parking Wars: Ironically most people in China can’t afford a real car, which makes this game all the more compelling.
• iLike: Up until recent crackdowns, the Chinese equivalent allowed you to upload and share your entire music collection with your friends.
• Where I’ve Been: This application defaults to a province map of China because most people have never left the country.

A non-clone worthy of note is Online Storage, a cloud-based file sharing application that harks back to Facebook’s early forays into peer-to-peer file sharing, when Sean Parker of Napster-fame was still president of the fledgling startup.

Blatant cloning may be shunned in the Valley, but in China and other parts of the world, cloning is the expectation of financial backers who benefit from the lower investment risk profile. Being too slow to clone has in fact hurt Xiaonei, which is now being overshadowed by Kaixin001’s 90% month-to-month growth rate.

As a fledgling 20-man startup with limited resources, why does Kaixin001 develop all of its apps? At a time when the Western World is embracing open web platforms, this approach strikes us as counter-intuitive and even backwards. Chinese web platforms, however, face several critical issues:

• Limited access to capital: Venture capital is scarce in China. By comparison, close to a quarter billion dollars has been pumped into Facebook applications to-date.
• Weak online ad markets: Chinese web companies rely heavily on virtual goods and micro-transactions; neither model works for most of Kaixin001’s applications.
• Rampant software piracy: There are proportionately fewer developers available to build 3rd party applications in China due to limited job opportunities as a direct result of piracy keeping the market for software stagnant.
• The Language Barrier: Most open source languages and documentation are available primarily in English. Chinese people who would otherwise make good programmers struggle with this additional hurdle.

The 700 third-party applications on Xiaonei have a huge variability in quality. Kaixin001 has only 25 applications, yet it retains complete control over quality and and has the speed and focus needed to bring well-tuned viral hits to the Chinese market faster than its competitors—perhaps the better strategy in hindsight.

Hundreds of thousands of people quite regularly visit kaixin.com instead of the correct kaixin001.com domain name. Recently, Xiaonei’s parent company purchased the kaixin.com domain name with plans to launch a Kaixin001 clone that would steal its rivals users. This effectively makes Kaixin a clone of a clone of a clone. Amazing.

Kaixin001 was founded by a former executive from Sina.com (the Yahoo! of China) and recently closed a $4-5 million first round from Northern Light Venture Capital.

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CrunchBase Information

Xiaonei

Website:	xiaonei.com
Location:	China
Acquired:	October 24, 2006 by Oak Pacific Interactive

Xiaonei.com is a Chinese Facebook clone that was acquired by Oak Pacific, a Chinese internet consortium for an undisclosed sum. The site mimics… Learn More

Kaixin001

Website:	kaixin001.com
Founded:	April, 2008
Funding:	$5M

Kaixinwang (Kaixin001) is a China-based, Facebook-clone social networking site. Kaixin allows for photo uploading, a blogging and micro-blogging platform, music sharing, and a 1G online hard drive. Learn More

Three Years Later, Buying MySpace Looks Like One Of Murdoch’s Smartest Bets

by Erick Schonfeld on October 15, 2008

Three years ago today, Rupert Murdoch bought MySpace and its parent company Intermix for $580 million. That turned out to be money well spent. The last time we ran the numbers, we figured that MySpace alone is worth between $3 billion and $20 billion, depending on how much you value each user. Fox Interactive Media (which is mostly MySpace) accounted for about $850 million in revenues last fiscal year (which ended in June), and is projected to hit $1 billion next year.

It was supposed to hit $1 billion this year, but never mind. Unlike other social networks, MySpace is actually making a profit. The company now employs 1,600 people worldwide, compared to 150 in October, 2005—more than a tenfold increase.

The social network has grown as well. MySpace now has 73 million unique visitors a month in the U.S., according to comScore, compared to 24 million three years ago. (Facebook has 41 million). That means MySpace reaches about 40 percent of the online population, compared to 14 percent three years ago. Those visitors, on average, spend 263 minutes a month each on the site, versus 83 minutes in 2005.

MySpace has definitely evolved since 2005. Just this year it has made major strides in opening up its platform to developers, launching MySpace Music, and pushing new forms of social advertising.

The question is whether rival Facebook can catch up to MySpace in the U.S. (it has already surpassed it worldwide), or whether the two will co-exist and diverge, with MySpace being more music- and media-oreinted and Facebook continuing on its path towards becoming the platform for social software. Of course, MySpace would also like to play that role.

Three years from now, which one will be worth more? And will Rupert Murdoch still be smiling?

Canada is Not China

Quote du Jour: Canada is Not China

Canada is not China.

-- An anonymous ex-Fed official explaining U.S. eagerness to find Canadian buyers for U.S. banks. "Fed Trolls Canada to Rescue U.S. Banks"

Fed, major central banks slash rates

LONDON (MarketWatch) -- The U.S. Federal Reserve, the Bank of England, the European Central Bank and other major central banks all moved to slash key interest rates Wednesday as they struggle to head off global financial turmoil that has threatened to throttle world economic growth.

In coordinated announcements, the Fed said it had cut its key lending rate by a half point to 1.5%.

In similar moves, the Frankfurt-based European Central Bank trimmed its key refi rate to 3.75% from 4.25%, while the Bank of England cut its key rate to 4.5% from 5%.

"Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months," the Fed said, in a statement. "Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

The Bank of Canada, the Swedish Riksbank and the Swiss National Bank also cut rates. The Bank of Japan didn't join in the coordinated move.

The Fed said that while inflation has been high, the rate-setting Federal Open Market Committee believed that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.

The Fed also approved a 50 basis point cut in the discount rate to 1.75%.

FEATURE-Irrigation advances fuel Cambodian rice dream

10.07.08, 8:04 PM ET
Cambodia - By Ek Madra
TRAMKOK, Cambodia, Oct 8 (Reuters) - Sok Sarin flashes a toothless grin as he looks at his newly built house and remembers how the other farmers laughed when he pioneered new rice-growing techniques in his district in southern Cambodia.
Better irrigation, training in how to select seeds and cheap fertiliser made from wild plants and animal or bat droppings have more than doubled the yield from his rice fields to 3.4 tonnes per hectare from 1.5 tonnes.
"No one believed that this idea would work. Now they follow me and they have good harvests," said Sarin, 60.
Cambodia's economy was devastated by civil war from the 1970s to the late 1990s, including four years under Pol Pot's Khmer Rouge, whose dream of transforming the country into a great rice power ended in the nightmare of the "Killing Fields".
Now another agrarian revolution is under way as the government seeks to boost rice exports and cut poverty among its 14 million people, 85 percent of whom are farmers or members of farming families.
Thanks in large part to vastly improved irrigation, Sarin can get two crops a year from his fields, earning him an income of $1,500. Per capita income in Cambodia is around $500.
Sarin's neighbour, Long Yos, 50, said Cambodian farmers were also following methods honed in China, India and the Philippines to breed fish that eat the insects that destroy rice plants.
"The fish eat the insects; we eat the fish when they get bigger," said Yos.
OVER-AMBITIOUS
Better irrigation and the expansion of land use are crucial to government ambitions to produce 15 million tonnes of rice by 2015, more than double the 7 million forecast for 2008/09 and 6.76 million in 2007/08. The main harvest is in November.
According to the U.S. Department of Agriculture (USDA) Cambodia was the world's ninth-biggest rice exporter in 2007 with 450,000 tonnes. Agriculture Minister Chan Sarun says Cambodia could export 8 million tonnes by 2015.
Neighbours Thailand and Vietnam were in first and third places in the export table in 2007 with 9.5 million tonnes and 4.5 million tonnes respectively, according to the USDA.
One rice dealer with a trading house in Singapore estimated Cambodia exported 600,000 to 800,000 tonnes a year, directly or indirectly via Thailand, and could push that up to 1.5 million tonnes in one or two seasons if the government was focused.
"But 8 million tonnes is an entirely different ball game. Obviously, this has to come from increases in area and not just yield," he said.
Another Singapore trader said it would take a lot of money for Cambodia to push yields significantly higher.
"China is the only country in the developing world that has reached 6 to 8 tonnes per hectare. Thailand is at 3.5 tonnes per hectare while India is around 2.5 tonnes," he said.
Analysts in Thailand, while acknowledging how far Cambodia has come already, think its plans are just too ambitious.
"It's possible, but it would not be that easy," Paka-on Tipayatanadaja at Kasikorn Research said of the 2015 target.
"It would take more than a decade to develop not only an irrigation system, but also a logistics system and storage systems," she added.
IRRIGATION
Many Cambodian farmers harvest just once a year because of a lack of water. Vietnam and Thailand, with their superior irrigation, manage two or three crops.
Phnom Penh is investing about $49 million a year on irrigation, said Hang Chuon Naron, an official at the Finance Ministry, but much more is needed.
"Japan and South Korea are helping us but that's not enough," said Chea Chhun Keat of the Water Resources Ministry, adding 1.6 million hectares of 2.6 million under cultivation was irrigated.
Foreign investment is flowing into Cambodia thanks to its cheap labour and the political stability achieved under Hun Sen, prime minister since 1985.
In August, Kuwait agreed loans totalling $546 million, of which $486 million will be invested in irrigation systems and hydro-power on the Stueng Sen river in the northeast of the country.
A Kuwaiti newspaper said Kuwait had leased rice fields to secure food supplies. Qatar also plans to invest $200 million in Cambodian farmland.
"They have the money, we have the land. They wouldn't come if we didn't have agricultural potential," said farm minister Sarun.
Land under cultivation could be pushed up to 3.5 million hectares quite quickly, according to Yang Saing Koma, president of the Cambodian Center for Study and Development in Agriculture.
He pointed to the area round Tonle Sap, Cambodia's biggest freshwater lake with up to 800,000 hectares of potential farm land, much of it unused as a lack of irrigation means farmers can't control water levels: In the rainy season, there's too much, which damages rice plants, in the dry season too little.
There is more land to be worked in the northeast and in the still-mined former battlefields of the northwest.
In all, Saing Koma said, Cambodia had 6 million hectares that might be cultivated for rice and other crops.
The average rice yield per hectare is currently 2.6 tonnes and he said that could be pushed up to 3.5 tonnes -- a yield that Sarin has in his sights thanks to the training, irrigation and bat droppings that have given him two crops a year. (Writing by Alan Raybould; editing by Megan Goldin)

Now the Hard Part - Thoughts from Sam Palmisano, President and CEO of the IBM Group

This is pulled from the the August 2008 edition of the Vietnam Economic Times

The fourth challenge is the toughest of all; winning and hearts and minds. Not primarily of the CEOs and heads of state - they are not the problem. It's not the other management layers, the people who make decisions at the regional and agency levels - and especially the public at large: communities, individuals and populations that do not yet see themselves as the beneficiaries of global integration.

To do that, to make that case, we will need fact-based, reasonable, multilateral approaches. And one other thing: we must recognize that the opposition to global integration really does have a point when it comes to environmental, economic and societal impacts; to job creation, education and skills; to access to connectivity and other resources; and to the inherently global problems of crippling energy costs, unsafe drinking water and pandemic-scale disease. We may differ on the best solutions to these problems, but we can't just keep saying, "Free trade! Free trade!" and think will carry the day. We can't rely on arguments from 1990 or, for that matter, 1890.

This will require multi-disciplinary, cross-boundary dialogue and approaches - not only in business but also in national and geopolitical action and decision making. The problems and the solutions of the global commons, the flattening world, by their very nature cross those old boundaries. We must, too.

Over the past decade we have witnessed a great debate on how societies should deal with competition, conflict and opportunity on a planet that is rapidly integrating. Within policy circles this is often framed as the debate between the so-called "realists" - those who look out and see a future of multiple competing nation-states, where the job at hand is to acheive a "balance of power" - and another view that foresees the rise new superpowers, with one or another of them ultimately achieving dominance.

Neither of those perspectives seems particulary hopeful to me - nor does either of them seem truly global. Happily, over the past few years, a "third way" has emerged. It's often called "soft power" or, more recently, "smart power."

I can attest to the efficacy of this approach. My own company, IBM, was once the paradigm of a business "superpower". We dominated our industry. But such dominance is always fleeting, and outs fled. Yet, unlike most empires that fall, we didn't disappear. Instead, we asked very hard questions, made very hard decisions and reinvented ourselves - becoming far more open, far more collaborative and far less hierarchical.

To me, that's "smart power" within a particular company, and in the world of business.

Google Launches Its Own Memetracker

http://www.techcrunch.com/2008/10/01/google-launches-its-own-memetracker/

by Jason Kincaid on October 1, 2008

Google has just launched a new homepage for its blog search that bears a strong resemblance to Techmeme, Memeorandum and their “memetracker” counterparts. The site displays a listing of the top stories from across a variety of topics including business, politics, technology, and entertainment.

Memetrackers identify emerging trends on the web, especially across blogs. They are often the best way to learn about breaking news stories, as they can automatically monitor hundreds (or more) news sources at once. Major news outlets and user-submitted content sites like Digg often trail memetrackers by days.

Google may well be able to leverage some of the technology it has developed for Google News, which identifies emerging news stories across thousands of sites run by newspapers, television stations, and other media sites. But at this point it’s too early to tell if Google Blogsearch will be more useful than any of the other memetrackers (or if its even in the same league). Much of its utility will lie in how often the listings are updated, how many sources it pays attention to, and how it assesses a blog’s credibility - a memetracker is only as good as the stories it presents.

Google may be able to create a useful tool, but that may not be enough to overcome the established leaders in this space. In 2007 the New York Times launched its own TechMeme killer, which has largely been ignored. There’s something about TechMeme which keeps bringing people back to it.

How The U.S. Government Engineered The Current Economic Crisis

These people (the U.S. government) need to be stopped. Every time we get ourselves into an economic mess, there’s usually some milestone idiocy we can point back to as the government action that made the meltdown inevitable.
Take the current housing crisis that has now spread to the financial markets in general. The cause was too-easy credit that fueled a massive increase in housing prices as people bought houses they couldn’t afford with mortgages they weren’t able to pay off.
In 1999 there was roughly $5 trillion in total U.S. mortgage debt. That number ballooned to $12 trillion by 2007, and we know what happened from there (data is from the U.S. Office of Federal Housing Enterprise Oversight). To put this into perspective, total U.S. GDP is about $11 trillion annually, and U.S. government debt is around $9 trillion. If the housing market really falls apart (meaning more than conservative estimates of a 20% drop), there’s no way the government can simply cover these losses.
Why did it happen? Let’s go back to 1999, when Fannie Mae, the nation’s biggest underwriter of home mortgages, was under pressure by the Clinton administration to find a way to get more loans to “borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans.” A pilot program was launched, which soon became general policy. Money flowed to people who couldn’t afford to pay it back.
These new policies came on top of previous changes in the 90’s that let consumers get zero-down payment loans.
In a 1999 article that now looks absolutely insane, the New York Times reported on the easing of credit terms. Fannie Mae Chairman Franklin Raines, who’s quoted in the article, was all sunshine and roses as he threw away the financial future of millions of Americans. But at least one person. Peter Wallison, had a good idea of how this would all play out:
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
Too bad nobody listened to that guy.

What is That Something? -- Avoiding the trap of average incomes

In his proposal for developing supporting industries in Vietnam, Kenichi Ohno has pointed out that Thailand and Malaysia (currently in the second phase) are more successful than Vietnam because as these countries industrialize, they fleshed out suitable policies to make the optimal use of
FDI however, they have not reaped much success in the second period and have even failed, because of the $1,000 per capita "trap." Despite decades of industrialization, the competitive capacity of their private sector still leaves much to be desired. Excessive reliance on foreign assistance, which has not been translated into their own strengths, has hampered their efforts to "internals" the value and capabilities of domestic supporting industries. There remains a hugh risk that FDI capital will flow out of these countries and pour into China, India and Vietnam instead.

What Vietnam needs to avoid this trap is a slew of judicious policies, as well as a dynamic private sector. The raft of actions which Ohno proposes includes enhancing the capabilities of each enterprise; developing human resources, both general and institutional; offering incentives; establishing linkages between foreign-invested enterprises and domestic businesses; promoting FDI; and building a policy framework for different types of enterprises.

In this action plan small and medium enterprises play a crucial role. At present, Japan is helping Vietnam study the capabilities of each domestic supplier in the next three of five years. Kyoshiro suggests that the Government should identify capable private enterprises and establish a specialized agency to oversee the development. These businesses should receive the same treatment as State-owned enterprises in terms of aid, access to capital sources and other incentives, as they are able to increase the competitiveness of Vietnam's industries. This will also boost the transformation of production mechanisms and task allocation among enterprises, creating a series of links in the domestic production chain and paving the way for Vietnam to join the global value production chain.

Vietnam Stats: Telecommunication Usage

From General Statistics Office - 8/2008

Phone Subscribers - 67.1 million

Internet Subscribers - 6.2 million

Internet Users - 29.7 million

China tainted milk crisis triggers global recalls

http://www.forbes.com/feeds/ap/2008/09/24/ap5467187.html
BEIJING -
An industrial chemical that made its way into China's dairy supplies and that authorities blame in the death of four babies has turned up in numerous Chinese-made exports abroad - from candies to yogurt to rice balls.
British supermarket chain Tesco removed Chinese-made White Rabbit Creamy Candies off its shelves as a precaution amid reports that samples of the milk candy in Singapore and New Zealand had tested positive for melamine - an industrial chemical used to make plastics and fertilizer.
Chinese baby formula tainted with the chemical has been blamed for the deaths of four infants and the illnesses of 53,000 others in China. Health experts say ingesting a small amount of the chemical poses no danger, but melamine can cause kidney stones and lead to kidney failure. Infants are particularly vulnerable.
More than a dozen countries have banned or recalled Chinese dairy products - the latest was France which does not import Chinese dairy products but has halted imports of Chinese biscuits, candy or other foods that could contain Chinese dairy derivatives. The government described the measure as a precaution.
Indonesia on Wednesday also distributed a list of 28 products that it said may contain tainted Chinese milk, including Oreo cookies, Snickers bars and M&M chocolate candies.
U.S. and European consumer safety officials urged Beijing to better enforce product safety standards.
Tesco said that it had withdrawn White Rabbit Creamy Candies off its shelves as a precaution. The candies had been sold in a small number of Tesco's British stores as part of the supermarket's ethnic range.
New Zealand's Food Safety Authority recalled White Rabbit candies after tests showed they contained dangerously high levels of melamine and advised people not to eat them.
"This product contains sufficiently high levels of melamine which may, in some individuals, cause health problems such as kidney stones," deputy chief executive of the authority, Sandra Daly, said in a statement.
New Zealand expected all White Rabbit sweets to be off shelves within 24 hours and was testing numerous other products for melamine contamination, said Food Safety Authority spokesman Geoff Allen.
"We are looking at a wide range of products ... primarily baby formulas as they pose the highest risk, and now we're moving through all the other .... products that may contain adulterated milk," he told National Radio.
Melamine has been found in infant formula and other milk products from 22 Chinese dairy companies. Suppliers trying to cut costs are believed to have added it to watered-down milk because its high nitrogen content masks the resulting protein deficiency.
Singapore's Agri-Food and Veterinary Authority, known as AVA, recalled White Rabbit candies earlier this week and said Wednesday that more Chinese-made food had tested positive for melamine, including Dutch Lady-brand banana and honeydew flavored milk, Silang-brand potato crackers and two kinds of puffed rice balls.
The crackers and rice balls listed milk as ingredients.
The U.S. Food and Drug Administration said White Rabbit candy has been added to its list of products being inspected at ports of entry, but that no melamine-tainted goods from China of any sort have turned up yet. Nonetheless, some ethnic grocers started removing the popular candies from their shelves.
A woman who answered the phone at AsianFoodGrocer.com in San Francisco said the company is no longer selling White Rabbit candies. "Everything has been taken off-line," said the woman, who would not give her name.
In New York Wednesday, China's premier sought to ease the growing concern abroad over the growing crisis over Chinese food exports by vowing to strengthen product safety checks and meet international standards.
China needs to better enforce checks at every stage of production and step up efforts to protect consumer interests, Premier Wen Jiabao said on the sidelines of a meeting of the U.N. General Assembly.
"We want to make sure that our products and our food will not only meet the domestic and international standards, but also meet the specific requirements of the import countries," Wen said at an event organized by American organizations.
Also Wednesday, a Chinese official issued a public apology to consumers in Taiwan as the island's president, who won March elections on a platform of closer economic ties with the mainland, blasted Chinese milk producers.
"I condemn the mainland manufacturers that have produced fake milk and dairy creamer," Ma Ying-jeou said.
Authorities there ordered 160 products containing Chinese milk and vegetable-based proteins off store shelves, saying the goods had to be tested before they can go back on sale.
"We feel extremely painful about the damage that the milk powder brought to people in Taiwan. Our government attaches great importance to it and is taking a series of measures to minimize the damage and influence," said Li Weiyi, a spokesman for the State Council Taiwan Affairs Office.
Speaking in China, where U.S. and European officials were attending seminars on product safety, a U.S. official said China's troubles with contaminated milk highlight the need for better enforcement of product safety standards in manufacturing.
"The melamine situation just underscores the message that we are trying to deliver, and that is you have to know what's coming into your factory and what's going out of your factory," said Nancy Nord, acting head of the U.S. Consumer Products Safety Commission.
The Chinese government has been scrambling to show it is tackling the problem. In recent days, the government announced high-profile arrests and forced resignations of officials.
The dairy at the center of the scandal, Sanlu Group Co., will not be able to recover from the damage it has suffered to its reputation, its New Zealand partner said Wednesday. An investigation into the contamination found Sanlu received complaints about its infant formula as early as December 2007 and covered up the problem for months, state media reported earlier this week.
The Chinese government has taken control of Sanlu, which is 43 percent owned by New Zealand's Fonterra Cooperative, and shut down its operations, Fonterra Chief Executive Andrew Ferrier said at a briefing. Sanlu is based in northern China's Hebei province.
"Sanlu has been damaged very badly by this tragedy," Ferrier told reporters as he announced Fonterra's annual results. "The brand cannot be reconstructed."
There was no immediate response Wednesday from Sanlu. Several calls during the day were answered by temporary workers in the company's media department who took down questions but said it was up to senior company officials to decide whether to reply. The workers refused to give their names, which is common among Chinese employees.
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Associated Press writers Ray Lilley in Wellington, New Zealand contributed to this report