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Blue light emitted from smartphones and laptops accelerates blindness – study — RT US...

Blue light emitted from smartphone and laptop screens speeds up blindness by transforming vital molecules in...

Inside a British prison: Drug smoking inmates brag on smartphones of cushy jail life...

Published time: 11 Sep, 2017 16:35 British prisons are constantly being mocked by inmates who...

US drivers may get ‘locked out’ of smartphones, apps if regulators have their way

US road safety regulators want smartphone makers to “lock out” devices and some apps when users...

US officially bans Samsung Galaxy Note7 smartphones from air transportation

The Samsung Galaxy Note7 has officially been banned from all airplanes due to its tendency to...

App & away: Smartphones could render passports obsolete

A British banknote manufacturer has begun work on technology that can securely store passport details...

‘Weaponizing Vulnerabilities’: New Snowden Doc Reveals Spy Agencies Targeted Smartphones

The 'Five Eyes' alliance exploited weaknesses in popular browser and planned to hijack links to app stores to implant spyware on mobile phones, new...

Secret ‘BADASS’ Intelligence Program Spied on Smartphones

British and Canadian spy agencies accumulated sensitive data on smartphone users, including location, app preferences, and unique device identifiers, by piggybacking on ubiquitous software...

Smartphones ‘remotely wiped’ in police custody, as encryption vs. law enforcement heats up

British police forces have complained that as many as six smartphones seized have been remotely wiped in the past year, potentially killing vital evidence...

Facebook App Soon to Record All Sounds Entering User Smartphones

Joe A. Wolverton A recent “improvement” to the Facebook mobile app is being praised by tech bloggers, but it seems the bigger, more sinister side...

California might be first to mandate ‘kill switch’ for smartphones

The quest to reduce smartphone thefts in the United States is taking a new turn in California, where two state officials plan to introduce...

Smartphones Are Killing Us – and Destroying Public Life

Hey, you -- look up! Our...

NSA Can Access Data on All Smartphones

The United States' National Security Agency intelligence-gathering operation is capable of accessing user data from smart phones from all leading manufacturers. Top secret NSA...

NSA Can Access Data on All Smartphones

The United States' National Security Agency intelligence-gathering operation is capable of accessing user data from smart phones from all leading manufacturers. Top secret NSA...

MIT: Future Smartphones Will ‘Listen to Everything All the Time’

Ubiquitous surveillance to “detect your moods,” “pinpoint the sources of your stress,” and “present relevant information”.

FBI can remotely activate microphones in Android smartphones, source says

Law-enforcement officials in the U.S. are expanding the use of tools routinely used by computer hackers to gather information on suspects, bringing the criminal wiretap into the cyber age.

The NSA Has Inserted Its Code Into Android OS, Or Three Quarters Of All...

Zero HedgeJuly 10, 2013 Over a decade ago, it was discovered that the NSA embedded backdoor access into...

Smartphones To Collect Biometric Data

The U.S. Department of Defense has awarded a $3 million research contract to technology firm AOptix to turn smartphones into devices that collect biometric data.

Smartphones Could Become UK’s New Credit Cards

Most Britons will be able to pay for items using their mobile phone next year.

Banks and financial institutions representing 90% of current accounts have agreed to launch the UK's first industry-wide mobile payment service in spring 2014.

Using a process similar to texting, people will be able to sign up to send and receive payments using their own number.

It will be done without the need to disclose their bank account details.

The  Payments Council , the industry body that is leading the project, said using mobiles to buy goods and services, as well as send money to friends and family, would become a mainstream option due to the popularity of the plan among banks.

Eight financial institutions have already committed themselves to offering the service, and discussions are under way for others to join.

The council pointed out that while there are existing ways to pay using a mobile, the project is the first to have the potential to link every bank account in the country with a mobile number.

Chief executive Adrian Kamellard said: "This new service will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details."

Before the service launches, the financial institutions involved will invite customers to register via their online banking service, mobile app or other approved method.

The Payments Council said more details about the industry-wide registration process and the precise launch date would be announced later.

More than 5,000 consumers took part in Payments Council research, which revealed the service is likely to prove most popular with smartphone users, who accounted for 67% of those surveyed.

One in three smartphone users said they were either "definitely" or "extremely likely" to sign up to the new service when it launches.

Smartphones can secretly create 3D map of your home

Paul Roberts | Researchers say that they have created a malicious Android application that uses the phone’s embedded camera and other spatial sensors to create 3D visual maps...

US Navy turns smartphones into secret big brother

V3 | One of the biggest challenges facing any cat-burglar is knowing where to find the loot once they've broken in. Now US Navy researchers...

Google engineer finds British spyware on PCs and smartphones

Two security researchers have found new evidence that legitimate spyware sold by British firm Gamma International appears to be being used by some of...

‘NewsGuard’ app gives news sites ‘trust’ ratings & targets alternative media. What could go...

Another day, another effort to combat ‘fake news’ online. This time it’s NewsGuard, a new app...

MIT team develop tech that can reduce objects to nanoscale — RT USA News

While it may not be worthy of ‘Honey, I shrunk the kids’ or Marvel’s Ant-Man, MIT...

Prison » Screen Time Changes Structure of Kids’ Brains, ‘60 Minutes’ Says

Smartphones, tablets and video games are physically changing the brains of adolescents, early results from an ongoing $300 million study funded by the National...

Ohio Senate passes bill to reintroduce handwriting into curriculum up to 5th grade —...

The skill of handwriting has become obsolete in the age of smartphones, with many children losing...

‘Get involved physically’ – Met chief urges public to support police under attack —...

The commissioner for London's Metropolitan police has urged the public to “do something physical” and...

How the U.K. and Ecuador Conspire to Deliver Julian Assange to U.S. Authorities

Photo Source Jeanne Menjoulet | CC BY 2.0 The accidental revelation in mid-November that U.S. federal prosecutors had secretly filed charges against WikiLeaks founder Julian...

US military members paid $560k to avoid fake porn charges in ‘sextortion’ scheme —...

Hundreds of US military service members were targeted in a ‘sextortion’ scheme concocted by inmates at...

Democrats and Republicans are both starting to get sick of social media – study...

There are few things these days which unite liberals and conservatives, but according to a new...

Talking About Death While In Decadence

Photo Source Diana Kelly | CC BY 2.0 Gunslinging Our Way to a Terminal Salvation The word “decadence” means extravagance, luxury, and self-indulgence with a sense of moral...

What the Media Isn’t Telling You

Photo Source Tyler Merbler | CC BY 2.0 Google is in the news (again) for creepy surveillance practices.  Google, AP reported, is tracking your physical...

US teens swap books for social media, reading drops from 60 to 16 percent...

Researchers are sounding the alarm over US teenagers’ mental health and abilities, as a new study...

Homeless people given barcodes so they can accept online payments — RT UK News

In an attempt to adapt to the cashless society they now face some homeless people...

Pentagon bars troops from using fitness trackers & geolocation services — RT US News

US military have been banned from using fitness trackers, smartphones and other devices and services over...

‘Quiet Skies’ TSA surveillance team targets Americans on domestic flights without warrant – report...

If you board late or change your appearance before a domestic flight, the TSA might have...

Is It Time for a Post-Growth Economy?

The crowds of protesters that confronted US President Donald Trump during his visit to London last week have channelled the world's outrage at all that he...

It’s not a conspiracy theory – your phone really is watching you, research finds...

If you’ve ever had the sneaking suspicion that your phone might be watching you, new research...

Cocaine fuels soaring violent crime rate as UK set to become Europe’s coke capital,...

The UK is on the way to becoming the cocaine capital of Europe, a government...

To Curb ‘Scary Amount of Power,’ New Campaign Urges FTC to Break Up Facebook

"It's time to make Facebook safe for democracy." "Facebook and Mark Zuckerberg have amassed a scary amount of power... It's time for us to take...

Ivanka and Jared meet Rabbi who called blacks ‘monkeys,’ reportedly get blessed — RT...

Ivanka Trump and husband Jared Kushner, in Israel to open the US Embassy in Jerusalem, have...

Trump’s USDA Proposes Deceptively Cute Images for GMO Labels, But Nixes the Words ‘Genetically...

The public comment period is now open on the U.S. Department of Agriculture's just unveiled proposal for food labeling of products using GMOs—a plan...

Bonfire ‘explosion’ causes panic, injuries at Jewish celebration in London — RT UK News

A huge fireball was set off during a Jewish celebration in London’s Stamford Hill, leaving...

UK companies get MI5 booklet to protect against Russian femmes fatales — RT UK...

MI5 has handed out a booklet for businessmen that could fall victim to ‘honey traps’...

Don’t Let These Drain Your Brain

Clean Energy is Calling. Will Your Phone Company Answer?

There currently is a cavernous lack of leadership in our federal government on tackling climate change. Fortunately, cities, states, universities, and some businesses have...

CNN’s Russian troll hunt digs up goofy Clinton video game — RT US News

The internet appears largely unimpressed by a meticulous CNN investigation linking Russia to an anti-Hillary Clinton...

Tory plans to tackle prison crisis slammed as inmates run riot — RT UK...

The Tories have promised a crackdown in prisons after videos were released showing UK inmates...

US intelligence chiefs warn against Chinese phones — RT US News

The chiefs of six US intelligence agencies have claimed that Chinese phones might be used for...

UK inmates spend all day on phones, drugs & Facebook (VIDEO) — RT UK...

Prisoners are running riot in UK jails in an embarrassing – and very public –...

Dazzling meteor streaks across New England sky, turning night to day (PHOTOS, VIDEO) —...

Published time: 27 Dec, 2017 17:48 A meteor streaked across the sky in northern New England...

AI to flag child porn images… but can’t distinguish between nudes & desert landscapes...

Published time: 19 Dec, 2017 14:41 UK police want artificial intelligence to assume the upsetting...

‘Whether or Not the Presidents Change, the Generals Remain Connected’

Janine Jackson interviewed Suyapa Portillo about the Honduras electoral chaos for the December 8, 2017 episode of CounterSpin. This is a lightly edited transcript.  ...

Phone addiction can mess up brain chemistry, study finds — RT US News

Being addicted to smartphones can create chemical changes in the brain, which may be linked to...

Rushing to Gut Net Neutrality May Leave Internet Providers With No Federal Oversight

FCC Chairman Ajit Pai is interviewed by Stuart Varney of Fox Business Network at FOX Studios on November 10, 2017, in New York City....

‘Assange shouldn’t be confident of protecting WikiLeaks sources’

CIA Director Mike Pompeo said he won’t tolerate secrets purloined by the CIA being stolen from...

Every Friday Is Black Friday: Why Our Addiction to Consumption and Growth Is Killing...

veryone wants everything – how is that going to work? The promise of economic growth is that the poor can live like the rich...

In Defense of Millennial Politics | By Derek Denman, Maria Adelmann

Read it enough, and it starts to seem true: Millennials are too wracked by fear and anxiety, too fragile, too self-absorbed, too distracted by...

Smartphone use among young Brits falls for 1st time, figures show — RT UK...

Published time: 30 Oct, 2017 08:47 Edited time: 30 Oct, 2017 08:56 Young Britons are...

Video: Blade Runner 20XX? Future in AR and VR technology growing

Courtesy: Digital October Center Forget smartphones and tablets! In the future, we'll be wearing that technology over our eyes. Follow RT Play on Facebook:...

FBI director says agency couldn’t hack into nearly 7,000 encrypted devices — RT US...

Federal agents failed to hack into 6,900 mobile devices protected by encryption, the FBI director told...

Squalid conditions in UK prisons ‘a humanitarian crisis,’ whistleblower tells RT (PHOTOS) — RT...

Severe overcrowding, squalid conditions and lax security in England’s jails constitute a “national crisis,” a...

Bad vibrations: Smart sex toys vulnerable to hackers, researchers find

Security researchers have discovered a vulnerability in smart sex toys, including those made in the US,...

Don’t take photos… run! New advice for children caught up in terrorist attacks

Published time: 28 Sep, 2017 13:09 Children and teens who witness a terrorist attack are...

Moscow wonders what Russian flag has to do with BBC story on jihadist propaganda...

Published time: 20 Sep, 2017 10:35 Edited time: 20 Sep, 2017 10:37 The Russian Embassy...

AT&T and Verizon Need to Hang Up On Fossil Fuels

Smartphones are a huge part of our lives. We use them constantly for texts, social media, calls, directions, and finding information online. Even when we’re...

Apple unveils new iPhone, Face ID feature fails in demo (VIDEO)

After detailing all the new bells and whistles that come with their newest iPhone, an Apple...

Republicans Consider Relaxing Constraints on Telecom Giants

Federal Communication Commission Chairman Ajit Pai (2nd right) prepares to deliver remarks and participate in a discussion at The American Enterprise Institute for Public...

Let British kids play video games to ‘save the country,’ ex-spy chief says

British parents should let their kids spend more time online to combat a widespread and...

Mass Arrests of Protesters: Outrageous in Russia, Barely Worth Mentioning in US

Major media’s relative lack of interest in the mass arrests by Metro DC police on Inauguration Day is a fact noted by activists and...

High anxiety: Americans among most tense people in the world, survey finds

A decade-long study shows a disturbing trend of anxiety levels among US citizens. Deep concerns of...

On World Press Freedom Day, Censorship and Repression Reported Globally

Censorship tactics have become more complex, posing new challenges for journalists and non-journalists alike, a new report finds. In its annual "Attacks on the Press" report,...

CIA, FBI Launch Manhunt for Leaker Who Gave Top-Secret Documents to WikiLeaks

.@JulianAssange speaks on Trump’s CIA director threat to “end” @Wikileaks — WikiLeaks (@wikileaks) April 19, 2017 CBS News has...

Innovations in Mobile Gaming

About a decade ago, mobile gaming changed on a massive scale. The introduction of the iPhone to the world in June of 2007 opened...

Half of car crashes involve people distracted by mobile phones – study

Driving data of more than 100,000 vehicle operators show that half of car crashes involved a...

Are selfies art? New Saatchi exhibition says they are

London’s Saatchi Gallery has launched a new exhibition on the evolution of the ‘selfie’ from...

Could it be Russians? Mysterious spike in cell phone hacks hits DC

A pilot program from the Department of Homeland Security has uncovered a sudden rise in suspicious...

#Vault7 hacking leak clearly an 'inside job' – former CIA deputy director

The WikiLeaks could’ve only obtained documents from CIA’s covert hacking program from somebody within the agency,...

#Vault7: Intel Security releases new detection tools following WikiLeaks’ CIA revelations

Published time: 11 Mar, 2017 13:31 In the wake of WikiLeaks’ revelation that the CIA has developed...

‘No such thing as absolute privacy in America’ – FBI Director Comey

FBI Director James Comey has warned that absolute privacy does not exist in the US, noting...

Hello, sailor! Royal Navy bans porn & saucy pin-ups aboard its warships

Published time: 20 Feb, 2017 13:45 The Royal Navy has banned sailors from enjoying porn films and having saucy pictures on board after an official...

Science Isn't Just for Scientists—We Can All Take Part

After he moved to London in his early 20s, Luke Howard became obsessed with the weather. Howard had a day job running a pharmacy...

NYC Taxi Drivers Stage Airport Strike to Protest Trump's "Inhumane and Cruel" Executive Order

President Trump's immigration order prompted the New York Taxi Workers Alliance to halt rides from JFK airport Saturday night between 6 and 7 p.m....

2016 by the numbers: Gallup’s ‘top world findings’ on employment, US image and happiness

As 2016 comes to an end, it’s time to reflect on anything learned over the past...

Eyes on the future: Facebook acquires eye tracking VR technology

Facebook has just acquired Eye Tribe, a Danish tech company that can track eye movements and...

E-cigarette fire forces American Airlines emergency landing

Passengers of an American Airlines flight were in for a spot of panic when a fire...

'Can you hear me now?' Feds may soon allow in-flight calls

Air travel means getting close and personal with the people around you, but it may be...

Want To Protect Your Eyesight?

By Dr. Mercola It wasn’t long ago, relatively speaking, that humans woke and slept along with the rise and setting of the sun. While the invention...

Accra-cadabra: Fake US Embassy in Ghana shut down after a decade of issuing counterfeit...

A fake US Embassy in Ghana operated by organized crime gangs has been shut down after...

Manhattan DA seeks to make iPhones and other gadgets accessible to law enforcement

Manhattan's district attorney wants to "end the sale and distribution of impenetrable mobile devices" through federal...

Too hot to handle: Massive recall of exploding Samsung washing machines (VIDEO)

After the Samsung top-loader washing machine was found to explode when operating at high speed, the...

Southwest flight evacuated after replacement Samsung phone catches fire

A Southwest Airlines flight from Louisville to Baltimore was evacuated Wednesday after the smartphone, issued as...

15 million Britons check their smart devices at night

A third of the UK’s smartphone users—an estimated 15 million people— are waking up in...

Clinton’s aide left classified briefing paper in Russian hotel – FBI documents

The FBI investigation looking into Hillary Clinton’s breaches of professional conduct has made public another violation,...

FAA officially bans ‘exploding’ Samsung phones on flights

The US Federal Aviation Administration has issued new guidance against the recalled Samsung’s flagship Galaxy Note 7 smartphone: The agency officially considers the device...

What’s Behind the Latest Government Scam

“The fact is that the government, like a highwayman, says to a man: Your money, or your life. And many, if not most, taxes...

Nuclear alert: 130 security breaches at UK atomic facilities in last 5 years

Civil Nuclear Constabulary (CNC) officers, charged with guarding the UK’s nuclear sites, admit there have...

Shooting the messenger: Citizen journalists jailed for recording police

Police practices are under fire as more and more recordings of excessive force and racist behavior...

Don’t let propaganda for the ‘looming cashless society’ deceive you

Since its invention in Babylon around 4,000 years ago, money has changed from gold coins, to coins of lesser value; to paper notes/cheques, plastic cards,...

Easy access to online porn is 'damaging' men's health, says NHS therapist

A top psychosexual therapist is warning about a surge in the number of young men suffering sexual health problems because of online...

Remember Blue-Blockers?

By Dr. Mercola You may remember the blue-blocking sunglasses that were popular in the U.S. in the 1980s. The glasses, with their amber-colored lenses, had...

Pokémon GO Is 'Racist'

A new article from the Urban Institute, a Washington-based community-engagement research organization, calls out Pokémon GO's failure to break down barriers and...

Prison chief requires facial reconstruction surgery following attack by inmate

A prison governor had to undergo facial reconstructive surgery after being severely wounded by an...

GMO labeling law is ‘fake’, would not ‘truly’ expose engineered food – experts to...

A new controversial GMO labeling law signed by President Barack Obama would strip US consumers of their right to learn about genetically engineered products...

The NYPD Is Already a Small Army — Now It Is Hyping Terror Threats...

The NYPD's effort is part of a nationwide push by police departments to exploit the massacre at Orlando's Pulse LGBTQ nightclub and...

Navy struggling to recruit submarine crews… because sailors can’t use Facebook underwater

Royal Navy recruiters are a having hard time finding young people to work on Britain’s...

Syrians Use ‘Pokemon Go’ To Depict Their Plight

Syria passed a grim milestone this week. The country now has more displaced people/refugees without homes than people still living in their homes. The only...

Camera police? Apple might soon make it possible to block recording video at concerts

Like recording live shows with your iPhone? A new patent granted to Apple details a new...

Sirin Labs’ Solarin isn’t for pro-privacy bankers. It’s for rich execs who want bling

El Reg got hands-on with the Solarin $14,000 ultra-high-end Android smartphone during a trip to Tel Aviv this week. As previously reported, the Solarin handset...

Anti-Choice Protesters Find a Way to Follow Patients Into Abortion Clinics

An investigative report by Rewire News has found that abortion protesters have finally grabbed the brass ring: They've figured out how to follow...

Ultra-orthodox Israeli rabbi bans girls over five from riding bikes because it is 'provocative'

An ultra-orthodox Jewish leader has reportedly banned girls aged five and older in some areas of Israel from riding bicycles - claiming it is “immodest”. The rabbi of...

Police Nationwide Are Secretly Exploiting Intrusive Technologies With the Feds' Complicity

(Photo: Uditha Wickramanayaka) Can't you see the writing on the touchscreen? A techno-utopia is upon us. We've gone from smartphones at the turn...

Policing the Dystopia

Originally posted at TomDispatch. For 15 years, Americans have been living in a constant state of “wartime” without any of the obvious signs...

Twitter Claims To Block Intel Agencies From Tweet-Mining Service

Twitter Claims To Block Intel Agencies From Tweet-Mining Service Peter Van Buren, May 11, 2016 Twitter claims it does not want...

Kids aren’t washing & can’t converse… but they can unlock an iPhone, says report

Hundreds of thousands of children starting school are lacking basic personal hygiene, communication and social...

’Disaster waiting to happen’: US senator calls to ban smartphone-shaped gun

A new foldable gun that looks remarkably like a smartphone is set to hit the market...

Enforcing UK surveillance powers may cost over £1bn, 7 times original estimate

Online surveillance on the scale proposed in the UK government’s Investigatory Powers Bill could end...

Apple-FBI encryption tensions spiked upon iOS 8 reveal in 2014 – report

The fight between Apple and the FBI over access to iPhone communications escalated when Apple introduced...

Florida sheriff threatens to ‘lock the Apple CEO up’ over dispute with FBI

The sheriff of Florida’s Polk County has strongly sided with the FBI in its battle with...

Secretive food industry jeopardizing public’s right to information

I just don't get it. Over the more than 20 years I have worked as a business journalist, I've always been motivated by a simple...

Video: Das Spyware! Germany approves ‘Trojan Horse’ to monitor suspects

[youtube] Germany's government has approved the use of a so called “trojan horse” software bug to monitor the computers and smartphones of police suspects....

Convincing the Young to Blame the Old, Not the Rich

The Washington Post‘s Catherine Rampell suggests that these Princeton students should be less upset about Woodrow Wilson’s racism and more outraged about old people...

Microsoft’s storage of Windows encryption keys could expose users to hackers, gov’t — report

When it comes to computer security, encryption is key. That’s because encrypted devices or data require a key only accessible to the owner, but...

For Democrats, Debate Night Means Being Quizzed From the Right by Corporate Media

ABC‘s John Muir and Martha Raddatz, questioning Democrats on behalf of the 36 percent of Americans who agree with Donald Trump. The Democratic and Republican...

‘Free market failing cyber security industry,’ warns GCHQ chief

Britain’s electronic spy chief has called on the government to intervene in the cyber security industry after admitting the free market is failing to...

GCHQ handed new smartphone-hacking legal powers

Spy agencies in Britain will be given the explicit right to hack into smartphones and computers as part of a new law being introduced...

BBC’s “Panorama” attacks Edward Snowden

By Robert Stevens Last week the BBC’s flagship documentary show “Panorama” broadcast what it described as the first British TV interview with US whistleblower Edward Snowden. In...

Amazon to help Americans buy more toxic poisons for their home with the touch...

Logistics innovator Amazon, which last year announced a robotic drone concept that cuts out the delivery middleman by shipping goods directly from Amazon warehouses...

Disconnected is the new security feature: How hyperconnectivity is dangerous to human civilization

In the age of hyperconnectivity, people have access to a sea of information with the click of a mouse. While the internet has radically...

Republican Party Gave First Presidential Debate to Fox News as Political Payoff

Eric Zuesse Millions of especially non-Republicans on Thursday night were disappointed to find that they couldn’t access the first Republican Presidential debate because they don’t...

Giant security flaw makes 950 million Android phones vulnerable to texting hack

Android is by far the most dominant smartphone operating system in the world, and it has just been found to be vulnerable to a...

Technology, indoor lifestyles destroying humanity’s eyesight

For a long time, we believed that short-sightedness, or myopia, was largely down to our genes. However, over the past 50 years, myopia has...

UK cyber attacks costs economy billions – and so do corrupt politicians

RINF EDITOR'S NOTE: What's next to blame for the state of the British economy? Yesterday it was societies most vulnerable, and today it's hackers....

Ultra-Secrecy Surrounds Barack Obama’s New Global Economic Treaty

Barack Obama is secretly negotiating a global economic treaty which would destroy thousands of American businesses and millions of good paying American jobs.  In other words, it would be the final nail in the coffin for America’s economic infrastructure.  Obama knows that if the American people actually knew what was in this treaty that they [...]

The post Ultra-Secrecy Surrounds Barack Obama’s New Global Economic Treaty appeared first on The Economic Collapse.

Consumers Want GMO Labels, Not Barcodes

On Wednesday last week (February 25, 2015), the U.S. Secretary of Agriculture, Tom Vilsack, once again floated the idea of consumers using barcodes to...

Why your smartphone records everything you say to it

After controversy earlier this month over televisions recording owners and sending the clips to third parties, smartphone owners are now discovering that companies like...

CIA looks to expand its cyber espionage capabilities

CIA Director John Brennan is planning a major expansion of the agency’s cyber-espionage capabilities as part of a broad restructuring of an intelligence service...

British army creates team of Facebook warriors

The British army is creating a special force of Facebook warriors, skilled in psychological operations and use of social media to engage in unconventional...

Verizon and AT&T Using Undeletable ‘Supercookies’ to Track Customers

Tracking program collects data on users' browsing history to create permanent online profiles to share with advertisers Nadia Prupis Service giants Verizon and AT&T have been...

Mass Surveillance Destroys Freedom

It’s longstanding. It’s institutionalized. It’s lawless. It has nothing to do with domestic or foreign threats. Or anything related to national security. America’s only enemies...

Data Secrecy Company Accused of Sharing Information with Media and Military

Pratap Chatterjee Whisper — a new social network that claims to provide anonymity — has been accused of secretly tracking users. The allegations were made...

BBC spends more than £200,000 on staff iPhone training

The BBC has reportedly spent 200,000 pounds training its staff to use iPhones, according to figures released under the Freedom of Information Act. Over...

Spyware phone app CEO indicted for conspiracy

The head of a company that sells a spyware application for smartphones has been indicted and arrested for conspiracy and other charges related to...

Israel’s Embedded American Operatives Aid the Genocide in Gaza

Donn Marten RINF Alternative News Extremist Israeli Prime Minister Benjamin “Bibi” Netanyahu enjoys an overwhelmingly accommodating media in the United States along with a contemptible Congress...

Smartphone ‘kill switch’ bill moves to California governor’s desk

In an effort to protect personal data from falling into the hands of thieves, a bill that requires mandatory technology on all smartphones sold...

A National Consensus: Cell Phone Location Records Are Private

HANNI FAKHOURY The Fourth Amendment protects us from “unreasonable” government searches of our persons, houses, papers and effects. How courts should determine what is and isn’t reasonable in...

NSA partnering with Saudi regime ‒ Snowden leak

The National Security Agency has increasingly been working hand-in-glove with the repressive Saudi Arabian government since 2013, sharing intelligence and assisting with surveillance, according...

Political Bestiality: The Israeli Pogrom of Gaza

Norman Pollack RINF Alternative News Let’s start with terms: “bestiality,” bestial is marked by base or inhuman instincts or desires, brutal, to which bestiality adds, display...

Israeli’s “Cheer, Whoop and Whistle” as Bombs Rain Down on Palestinian’s in Gaza

Israeli's watch from hilltop being "entertained" as Palestinian's in Gaza are bombed by the IDF, Israeli Defense Force It's been hard following the horrific Israeli...

‘Smart’ Lightbulbs Reveal Wi-Fi Passwords

Researchers have found a way to reveal Wi-Fi passwords by hacking mobile phone controlled LED “smart” lights. Hackers uncover yet another "Internet of things" vulnerability Mikeal...

Rabbi, cop, nurse among 70 arrested in child porn bust

New York City Police and federal authorities have arrested at least 70 people in what’s being billed as one of the largest online child...

British MoD works on ‘quantum compass’ technology to replace GPS

UK scientists say they are three to five years away from creating a new navigation system that would not rely on space-based technologies. A...

The FCC’s Net Neutrality Proposal Is Out: It’s Time to Make Our Voices Heard

The Federal Communications Commission (FCC) today voted to propose open internet rules, in its latest attempt to establish net neutrality regulations. Since February, tens...

My Device Is Me. GCHQ — Stop Hacking Me

Eric King RINF Alternative News Spy agencies have long sought to turn the technologies that improve all our lives against us. From some of the very...

As world opinion turns, Israeli soldiers parade their tyranny

The National – 11 May 2014

Israel is facing its first digital mutiny in the ranks. And the issue fuelling the soldiers’ discontent could not be more revealing about the self-harming character of Israeli society.

This month, a social-media campaign went viral in defence of David Adamov, an Israeli conscript caught on camera pointing his cocked rifle at a 15-year-old Palestinian in Hebron who dared to argue with him. He also threatened to put “a bullet in the head” of another young Palestinian for filming the confrontation.

Outraged by media reports that Adamov had been jailed for 20 days, hundreds of male and female soldiers posted photos on social media sites holding placards in front of their faces – to avoid punishment – expressing support for their comrade in arms.

Within hours, a Facebook page backing Adamov had attracted more than 100,000 likes. A senior government minister, Naftali Bennett, joined the outcry, declaring on his own page that the soldier “did the right thing”.

The ironies mounted as the campaign unfolded. Fellow soldiers have styled Adamov “David of Nahal”, a reference to his army brigade and, it seems, an allusion to the Bible. In his supporters’ eyes, Adamov is the victim-hero of an unlikely ­Goliath – a mouthy, unarmed Palestinian minor.

The military chief of staff, Benny Gantz, has admitted that the incident raises matters of “military ethics”, but only because of the insubordination expressed in the ­social media campaign, not because of Adamov’s misuse of his firearm. And more revealing still, the army responded to the uproar by pointing out that Adamov had not been jailed for abusing the Palestinian youth but because, in an unrelated matter, he assaulted his commanding officer.

The Nahal brigade had been in the news a few weeks earlier. Its soldiers were discovered to have designed and printed a graduation T-shirt with a hate-filled message for Palestinians. The shirt featured an image of a Nahal soldier in the city of Nablus above the slogan “Nablus, we’re coming!” and a warning to Palestinian mothers that their sons’ fate would be decided by the brigade.

The problems at the heart of these two incidents were underscored in a recent Amnesty International report titled Trigger Happy. The human rights group identified a disturbing pattern of behaviour: Israeli soldiers were targeting unarmed Palestinians, including children, with live ammunition, in some cases as they fled. Amnesty called the army’s use of force mostly “unnecessary, arbitrary and brutal”.

Amnesty found that, after a lull in Palestinian deaths following the end of the second intifada in the mid-2000s, the rate of killings and injuries is dramatically on the rise.

Unlike the situation a decade ago, Palestinians were often being killed at largely non-violent demonstrations against land confiscations. Stone throwing, even when it posed no danger to soldiers, was routinely greeted with live ammunition.

Amnesty described army investigations into the killings as “woefully inadequate”. It could not identify a single soldier who had been convicted of the “wilful killing” of a Palestinian in the occupied territories in the past 25 years.

Of course, in no period in its history did the “most moral army in the world” come close to justifying its self-promoted reputation. But the transformation of the occupation into a permanent state of affairs, as well as recent technological innovations, appear to be making a dire situation even worse.

What the Amnesty report highlights is an entrenchment of prejudices shared equally by the higher and lower ranks. It has not helped that over the past decade extremist settlers have come to dominate the officer class.

Palestinians, including children, have become dehumanised in the eyes of Israeli society. And long-standing impunity means soldiers understand that reckless or malevolent behaviour will rarely if ever land them in trouble.

Paradoxically, technology – particularly cameras in mobile phones – has only compounded these ugly trends.

Shortly after the Adamov incident, Israeli prime minister Benjamin Netanyahu used a press conference to deplore young Israelis’ obsession with their phones and the “selfie”, arguing that Israeli youth were “slaves” to technology.

Although he did not set out his reasoning, it is not too difficult to fathom. Israeli soldiers, like teenagers around the world, love to boast online about their exploits. The difference is that some Israelis posing for a selfie may be committing a war crime as they do so.

Young Palestinians are using their smartphones for similar purposes: to document their abuse and humiliation at the hands of armed ­Israeli teenagers. The ensuing photos and videos now feed the outrage of a watching world and regularly embarrass Israel’s image-makers.

Strangely, Israeli soldiers are behaving no more cautiously. In fact, they seem to be exaggerating their cruelty for the reality show that is their military service. And their commanders, faced with endless discomfiting episodes, seem more committed than ever to avoid setting a precedent by punishing them.

Possibly through overexposure, wider Israeli society seems to have rapidly become more inured to this kind of gratuitous violence.

The paradoxes run deeper still. The ever greater transparency of the occupation fuels the soldiers’ sense of victimhood and oppression. If they are now to be denied the title of “the most moral in the world”, then they seem to believe their army ought to be dubbed “the most misunderstood”.

This mirrors a more general ideological shift to the right in Israeli society as global sympathy for the Palestinians grows. The world may consider us oppressors, say Israelis, but we refuse to act the part of the guilty: we will proudly parade our tyranny instead.

Israeli society, like its soldiers, is caught in a self-destructive cycle: its very sensitivity to criticism pushes it ever more resolutely towards outcast status.

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A Chip In The Head: Brain Implants Will Be Connecting People To The Internet...

The Future - Cartoon By WellemanWould you like to surf the Internet, make a phone call or send a text message using only your brain?  Would you like to “download” the content of a 500 page book into your memory in less than a second?  Would you like to have extremely advanced nanobots constantly crawling around in your body monitoring it for disease?  Would you like to be able to instantly access the collective knowledge base of humanity wherever you are?  All of that may sound like science fiction, but these are technologies that some of the most powerful high tech firms in the world actually believe are achievable by the year 2020.  However, with all of the potential “benefits” that such technology could bring, there is also the potential for great tyranny.  Just think about it.  What do you think that the governments of the world could do if almost everyone had a mind reading brain implant that was connected to the Internet?  Could those implants be used to control and manipulate us?  Those are frightening things to consider.

For now, most of the scientists that are working on brain implant technology do not seem to be too worried about those kinds of concerns.  Instead, they are pressing ahead into realms that were once considered to be impossible.

Right now, there are approximately 100,000 people around the world that have implants in their brains.  Most of those are for medical reasons.

But this is just the beginning.  According to the Boston Globe, the U.S. government plans “to spend more than $70 million over five years to jump to the next level of brain implants”.

This new project is being called the Systems-Based Neurotechnology for Emerging Therapies (SUBNETS), and the goal is to be able to monitor the “mental health” of soldiers and veterans.  The following is how a recent CNET article described SUBNETS…

SUBNETS is inspired by Deep Brain Stimulation (DBS), a surgical treatment that involves implanting a brain pacemaker in the patient’s skull to interfere with brain activity to help with symptoms of diseases like epilepsy and Parkinson’s. DARPA’s device will be similar, but rather than targeting one specific symptom, it will be able to monitor and analyse data in real time and issue a specific intervention according to brain activity.

This kind of technology is being developed by the private sector as well.  In fact, according to Scientific American scientists are becoming increasingly excited about how brain implants can be used to “reboot” the brains of people with depression…

Psychological depression is more than an emotional state. Good evidence for that comes from emerging new uses for a  technology already widely prescribed for Parkinson’s patients. The more neurologists and surgeons learn about the aptly named deep brain stimulation, the more they are convinced that the currents from the technology’s implanted electrodes can literally reboot brain circuits involved with the mood disorder.

Would you like to have your brain “rebooted” by a chip inside your head?

And of course this is how brain implants will be marketed to the public at first.  They will be sold as something that has great “health benefits”.  For example, one firm has developed a brain implant that can detect and treat epileptic seizures

The NeuroPace RNS is the first implant to listen to brain waves and autonomously decide when to apply a therapy to prevent an epileptic seizure. It was developed by a company with a staff of less than 90 people, only about 30 on the core electronic, mechanical, and software engineering teams.

A different team of researchers has discovered that it can stimulate the repair of brain tissue in rats using brain implants

Stroke and Parkinson’s Disease patients may benefit from a controversial experiment that implanted microchips into lab rats. Scientists say the tests produced effective results in brain damage research.

Rats showed motor function in formerly damaged gray matter after a neural microchip was implanted under the rat’s skull and electrodes were transferred to the rat’s brain. Without the microchip, rats with damaged brain tissue did not have motor function. Both strokes and Parkinson’s can cause permanent neurological damage to brain tissue, so this scientific research brings hope.

Most of us won’t need brain implants for medical reasons though.

So how will they be marketed to the rest of us?

Well, what if you were told that they could give you “super powers”?

Would you want a brain implant then?

The following is a short excerpt from a recent Scientific American article

Our world is determined by the limits of our five senses. We can’t hear pitches that are too high or low, nor can we see ultraviolet or infrared light—even though these phenomena are not fundamentally different from the sounds and sights that our ears and eyes can detect. But what if it were possible to widen our sensory boundaries beyond the physical limitations of our anatomy? In a study published recently in Nature Communications, scientists used brain implants to teach rats to “see” infrared light, which they usually find invisible. The implications are tremendous: if the brain is so flexible it can learn to process novel sensory signals, people could one day feel touch through prosthetic limbs, see heat via infrared light or even develop a sixth sense for magnetic north.

And some very prominent Internet firms simply take it for granted that most of us will eventually have brain implants that connect us directly to the Internet…

Google has a plan. Eventually it wants to get into your brain. “When you think about something and don’t really know much about it, you will automatically get information,” Google CEO Larry Page said in Steven Levy’s book, “In the Plex: How Google Thinks, Works and Shapes Our Lives.” “Eventually you’ll have an implant, where if you think about a fact, it will just tell you the answer.”

At this point you might be thinking that this will never happen because getting a brain implant is a very complicated and expensive procedure.

Well, according to an article in the Wall Street Journal, that is not actually true.  In fact, the typical procedure is very quick and often only requires just an overnight stay in the hospital…

Neural implants, also called brain implants, are medical devices designed to be placed under the skull, on the surface of the brain. Often as small as an aspirin, implants use thin metal electrodes to “listen” to brain activity and in some cases to stimulate activity in the brain. Attuned to the activity between neurons, a neural implant can essentially “listen” to your brain activity and then “talk” directly to your brain.

If that prospect makes you queasy, you may be surprised to learn that the installation of a neural implant is relatively simple and fast. Under anesthesia, an incision is made in the scalp, a hole is drilled in the skull, and the device is placed on the surface of the brain. Diagnostic communication with the device can take place wirelessly. When it is not an outpatient procedure, patients typically require only an overnight stay at the hospital.

In the future, the minds of most people could potentially be connected to the Internet 24 hours a day.  Imagine sending an email or answering your phone by just thinking about it.  According to the New York Times, this is where we are eventually heading…

Soon, we might interact with our smartphones and computers simply by using our minds. In a couple of years, we could be turning on the lights at home just by thinking about it, or sending an e-mail from our smartphone without even pulling the device from our pocket. Farther into the future, your robot assistant will appear by your side with a glass of lemonade simply because it knows you are thirsty.

Researchers in Samsung’s Emerging Technology Lab are testing tablets that can be controlled by your brain, using a cap that resembles a ski hat studded with monitoring electrodes, the MIT Technology Review, the science and technology journal of the Massachusetts Institute of Technology, reported this month.

The technology, often called a brain computer interface, was conceived to enable people with paralysis and other disabilities to interact with computers or control robotic arms, all by simply thinking about such actions. Before long, these technologies could well be in consumer electronics, too.

So how far away is such technology?

According to a Computer World UK article, Intel believes that they will have Internet-connected brain implants in people’s heads by the year 2020…

By the year 2020, you won’t need a keyboard and mouse to control your computer, say Intel researchers. Instead, users will open documents and surf the web using nothing more than their brain waves.

Scientists at Intel’s research lab in Pittsburgh are working to find ways to read and harness human brain waves so they can be used to operate computers, television sets and cell phones. The brain waves would be harnessed with Intel-developed sensors implanted in people’s brains.

The scientists say the plan is not a scene from a sci-fi movie, Big Brother won’t be planting chips in your brain against your will. Researchers expect that consumers will want the freedom they will gain by using the implant.

And that would only be the tip of the iceberg.  Futurist Ray Kurzweil is actually convinced that we will all eventually have hordes of nanobots running around our bodies monitoring our health and looking for disease…

‘Bridge two (is) the biotechnology revolution, where we can reprogram biology away from disease.

‘And that is not the end-all either.

‘Bridge three is to go beyond biology, to the nanotechnology revolution.

‘At that point we can have little robots, sometimes called nanobots, that augment your immune system.

‘We can create an immune system that recognizes all disease, and if a new disease emerged, it could be reprogrammed to deal with new pathogens.’

Such robots, according to Kurzweil, will help fight diseases, improve health and allow people to remain active for longer.

Are you ready for this kind of a future?

These technologies are being developed right now, and they will be enthusiastically adopted by a large segment of the general public.

At some point in the future, having a brain implant may be as common as it is to use a smart phone today.

And of course the mainstream media will be telling all of us how wonderful it is to have a brain implant.  If you doubt this, just check out the following NBC News report where we are all told that we can expect to have microchip implants by the year 2017…

So are you ready for this brave new world?

Will you ever let them put a chip in your head?

Please share your thoughts by posting a comment below…

Brain Computer Interface

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Researchers Developing ‘Underwater Internet’

Angela Moscaritolo
Oct. 18, 2013

University at Buffalo researchers are developing a deep-sea computer network that may lead to improvements in tsunami detection, offshore oil and natural gas exploration, surveillance, and pollution monitoring.

“A submerged wireless network will give us an unprecedented ability to collect and analyze data from our oceans in real time,” Tommaso Melodia, UB associate professor of electrical engineering and the project’s lead researcher, said in a statement. “Making this information available to anyone with a smartphone or computer, especially when a tsunami or other type of disaster occurs, could help save lives.”

The framework Melodia and his team are developing would transmit data from existing and planned underwater sensor networks to laptops, smartphones, and other wireless devices in real time. It also would allow the many disparate underwater communication systems around the world to communicate with each other, effectively creating a deep-sea Internet.

Read more

This article was posted: Friday, October 18, 2013 at 9:39 am

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Frontrunning: October 18

  • Republican Civil War Erupts: Business Groups v. Tea Party (BBG)
  • Budget fight leaves Boehner 'damaged' but still standing (Reuters)
  • Madoff Was Like a God, Wizard of Oz, Lawyers Tell Jury (BBG) - just like Bernanke
  • Republicans press U.S. officials over Obamacare snags (Reuters)
  • Brilliant: Fed Unlikely to Trim Bond Buying in October (Hilsenrath)
  • More brilliant: Fed could taper as early as December (FT)
  • Russia Roofing Billionaires Seen Among Country’s Youngest (BBG)
  • Ford's Mulally won't dismiss Boeing, Microsoft speculation (Reuters)
  • China reverses first-half slowdown (FT)
  • NY Fed’s Fired Goldman Examiner Makes Weird Case (BBG)
  • Italian protests against Letta government disrupt transport (Reuters)
  • Transit workers strike again, will hamper Bay Area commute (Reuters)

Overnight Media Digest


* SAC Capital and federal prosecutors have agreed in principle on a penalty exceeding $1 billion in a potential criminal settlement that would be the largest ever for an insider-trading case.

* Insurers say the federal healthcare marketplace is generating flawed data that is straining their ability to handle even the trickle of enrollees who have gotten through so far.

* Chinese PC maker Lenovo is actively considering a bid for all of BlackBerry and has signed a non-disclosure agreement with the smartphone maker. ()

* A late surge of cases against low-level offenders will push the SEC's case total close to last year's levels, masking a steep drop in enforcement actions related to the financial crisis. While the total hasn't been announced, it likely will be down at least 5 percent from a near-record high of 734 enforcement cases in fiscal 2012.

* Google posted a 12 percent increase in third-quarter revenue, as it tries to keep pace with its users' shift to mobile devices.

* Video-streaming service Hulu on Thursday named Mike Hopkins as its new chief executive, effective immediately. Hopkins has been president of Fox Networks Group, a division of 21st Century Fox Inc, since 2008 and a member of Hulu's board since 2011.

* A U.S. district judge ordered subprime lender Household International Inc - now part of HSBC Holdings PLC - to pay investors $2.46 billion in a class-action lawsuit, a move that comes several years after a jury found the company liable for securities fraud.

* IBM is shaking up leadership of its growth-markets unit, following disappointing third-quarter results that prompted a critical internal email from CEO Virginia Rometty. She wrote that IBM's strategy is correct, but criticized the company for failing to execute in sales of computer hardware as well as in the growth markets unit, whose sales territory includes markets in Southeast Asia, Eastern Europe, the Middle East and Latin America.


Paul Tucker, the Bank of England's outgoing deputy governor, said regulators need to keep a stronger eye on hedge funds and shadow banks and added it would be disastrous if the economic fragility of banks was recreated outside the mainstream banking sector.

The U.S. Federal Reserve could begin reducing its asset purchases as early as December after the government shutdown sabotaged a crucial month of data and dealt a blow to the world's largest economy.

The next U.S. monthly employment report became a casualty of the U.S. government shutdown with the Department of Labor saying the data would be released after a delay of more than two weeks on Tuesday.

Scottish National Party leader and Scotland's first minister, Alex Salmond was involved in the talks between the management and workers Grangemouth refinery and petrochemicals complex. The management has closed off the refinery demanding that workers accept changes to pay, pensions and union representation in what has turned out to be Scotland's biggest industrial dispute in years.

Google shares rose 8 percent to a record high after the company managed a smooth transition of its advertising business to smartphones and tablets from PCs.

Goldman Sachs managed to protect its profits by slashing the amount of money set aside for year-end bonuses after its fixed-income trading was worse than any other large Wall Street bank's.

Barclays has approached the Court of Appeal to overturn an earlier ruling that allowed Guardian Care Homes, which is suing Barclays over interest-rate swaps, to amend its claim to include Libor-related allegations.

UK Ministers will look at the green measures that have contributed to rising fuel bills after British Gas became the second energy company to increase energy prices.


* Britain said on Thursday that it would allow Chinese firms to buy stakes in British nuclear power plants and eventually acquire majority holdings. The agreement, which comes with caveats, opens the way for China's fast-growing nuclear industry to play a significant role in Britain's plans to proceed with construction of its first new reactor in nearly two decades.

* The hedge fund SAC Capital Advisors is moving closer to a plea deal with prosecutors that would force it to wind down its business of managing money for outside investors, punctuating its decline from the envy of Wall Street to a firm caught in the government's cross hairs. An agreement to stop operating as an investment adviser is one feature of a larger agreement SAC is negotiating as it seeks to resolve insider trading charges, according to people briefed on the case.

* On Thursday Goldman Sachs Group Inc announced that revenue in its fixed-income, currency and commodities division, a powerful unit inside the bank that in better years has produced more than 35 percent of its entire revenue, dropped 44 percent from year-ago levels. The weakness renewed worries about the headwinds that Goldman and other banks are facing in big money-producing areas like fixed-income trading.

* Google Inc impressed investors, but people's changing behavior on mobile phones and even on desktops threatens the company's main business. The results revealed the company's deep challenges: as its desktop search and advertising businesses mature, along with overall business in the United States, its growth rate is slowing and the amount of money it makes from each ad it sells is falling.

* The United States government sputtered back to life Thursday after President Obama and Congress ended a 16-day shutdown, reopening tourist spots and clearing the way for federal agencies to deliver services and welcome back hundreds of thousands of furloughed workers.

* There is a confusion over the text of the deal that Congress just approved and President Obama signed, but it does not kill the debt ceiling. At first glance, the "default prevention" section of the bill seemed to imply that the president would have the authority in the future to increase the country's debt unilaterally, and that Congress could stop him only by passing a bill forbidding it.

* Roughly 1,500 fires burn above western North Dakota because of the deliberate burning of natural gas by companies rushing to drill for oil without having sufficient pipelines to transport their production. With cheap gas bubbling to the top with expensive oil, the companies do not have an economic incentive to build the necessary gas pipelines, so they flare the excess gas instead.

* As European interest in American craft beers begins to mirror the mania for them stateside, the Duvel Moortgat Brewery of Belgium on Thursday announced a deal to buy the Boulevard Brewing Co, a craft brewery in Kansas City, Missouri.



* Canadian provinces have approved the free-trade agreement with the European Union, but key players Ontario and Quebec are insisting the federal government open its wallet to mitigate some of the impact, notably by compensating dairy producers. Prime Minister Stephen Harper arrived in Brussels on Thursday night and plans to meet with Jose Manuel Barroso, president of the European Commission, on Friday afternoon to sign the agreement.

* The shortage of skilled employees in Canada is deepening, and government policies that tightened the rules governing foreign workers have made the situation worse. That is the message of a new study from global recruiting firm Hays Plc, which surveyed the skills gap in 30 developed countries around the world.

Reports in the business section:

* Lenovo Group Ltd is joining the list of suitors considering a bid for BlackBerry Ltd , raising concerns that the Canadian company's ultra-secure communications network for the global elite might end up owned by a firm based in China.

* Imperial Oil Ltd is looking at a major revamp of its Mackenzie gas project that would see the stalled northern venture reborn as part of an expansive liquefied natural gas development, the company's chief executive says. A shift to LNG is under "serious" consideration as the Mackenzie pipeline's economics remain weak due to the flood of cheap shale gas across the continent, CEO Rich Kruger said in an interview at the company's Calgary headquarters.


* The Quebec government has announced that it will contest the latest nomination to the Supreme Court of Canada, adding a new layer of controversy to the process. The provincial government says it is weighing different options to block the Harper government's appointment of Marc Nadon, which is already under attack.


* Canada's campaign to win approval in the United States for the Keystone XL pipeline may seem pricey, aggressive, and perhaps out of character - but it is a drop in the bucket compared with the resources and tactics of those rallying against it.

* Air Canada's chief executive, Calin Rovinescu, says he is pleased investors are starting to get on board with the dramatic transformation underway at his airline, including the near-elimination of its multi-billion-dollar pension funding deficit that has twice threatened to upend the company in recent years. But he said there are still plenty of challenges ahead for the country's largest carrier.



- The China Securities Regulatory Commission approved China Everbright Bank Co Ltd's request to list H shares on Wednesday, according to sources. The bank plans to list in Hong Kong as early as November, but listing is subject to Hong Kong Stock Exchange approval.

- China has started laying the foundations for its fifth-generation mobile telephony network, said Dai Xiaohui, the deputy director of the Ministry of Science and Technology on Thursday at a communications forum.


- China has investigated 129 officials at prefectural level or higher for suspected corruption and bribery from January through August this year, the Supreme People's Procuratorate said on Thursday.


- Chinese officials should not blindly follow customary practices if such practices lead to waste or are not legal, said a commentary in the paper that acts as the government's mouthpiece. The article highlighted extravagance during opening and closing ceremonies as an example of a traditional practice best curbed.


- Beijing will take half the cars off the city's roads and suspend school classes when there are three straight days of heavy pollution, an official said on Thursday. The plan includes measures to increase buses and extend subway operating hours.

Fly On The Wall 7:00 AM Market Snapshot



AMAG Pharmaceuticals (AMAG) upgraded to Outperform from Neutral at RW Baird
Align Technology (ALGN) upgraded to Buy from Hold at Cantor (AMZN) upgraded to Buy from Neutral at UBS
CBOE Holdings (CBOE) upgraded to Buy from Neutral at UBS
Essex Property Trust (ESS) upgraded to Buy from Neutral at UBS
Intuit (INTU) upgraded to Buy from Neutral at BofA/Merrill
Peabody Energy (BTU) upgraded to Outperform from Market Perform at BMO Capital
Union Pacific (UNP) upgraded to Buy from Neutral at Goldman
VMware (VMW) upgraded to Overweight from Neutral at JPMorgan
Verizon (VZ) upgraded to Buy from Hold at Deutsche Bank


AMD (AMD) downgraded to Neutral from Buy at BofA/Merrill
Alpha Natural (ANR) downgraded to Underperform from Market Perform at BMO Capital
Amarin (AMRN) downgraded to Neutral from Buy at Citigroup
Aspen Technology (AZPN) downgraded to Neutral from Overweight at JPMorgan
Baxter (BAX) downgraded to Market Perform from Outperform at Raymond James
Fairchild Semiconductor (FCS) downgraded to Hold from Buy at Canaccord
Home Bancshares (HOMB) downgraded to Market Perform from Outperform at Raymond James
International Rectifier (IRF) downgraded to Market Perform at Wells Fargo
LG Display (LPL) downgraded to Neutral from Outperform at Credit Suisse
Monolithic Power (MPWR) downgraded to Market Perform from Outperform at Wells Fargo
Navistar (NAV) downgraded to Underweight from Equal Weight at Barclays
Qualys (QLYS) downgraded to Neutral from Overweight at JPMorgan
SL Green Realty (SLG) downgraded to Hold from Buy at Cantor
Total (TOT) downgraded to Neutral from Buy at UBS
Ultratech (UTEK) downgraded to Hold from Buy at Canaccord
UnitedHealth (UNH) downgraded to Hold from Buy at Cantor


Clean Harbors (CLH) initiated with an In-Line at Imperial Capital
Covanta (CVA) initiated with a Hold at Stifel
Fidelity National (FNF) initiated with a Neutral at Janney Capital
Finish Line (FINL) initiated with a Neutral at UBS
First American (FAF) initiated with a Buy at Janney Capital
Gaming & Leisure (GLPIV) initiated with an In-Line at Imperial Capital
Masonite International (DOOR) initiated with an Outperform at RBC Capital
New Residential (NRZ) initiated with a Buy at Sterne Agee
Spectrum Brands (SPB) initiated with an Outperform at BMO Capital
Stewart (STC) initiated with a Neutral at Janney Capital
U.S. Cellular (USM) initiated with an Underperform at FBR Capital


Google CEO said 40% of YouTube traffic comes from mobile
Schlumberger (SLB) said global economic outlook remains unchanged
Fitch cut Darden (DRI) IDR to 'BBB-' from 'BBB', outlook stable
LabCorp (LH) board authorized additional $1B share repurchase program
AMD (AMD) sees PC shipments down 10% in 2013 and 2014
Waste Management (WM) to build renewable natural gas facility


Companies that beat consensus earnings expectations last night and today include:
Sensient (SXT), F.N.B. Corp. (FNB), AMD (AMD), Las Vegas Sands (LVS), Capital One (COF), Covenant Transportation (CVTI), WD-40 (WDFC), Google (GOOG), Align Technology (ALGN)

Companies that missed consensus earnings expectations include:
Valmont (VMI), Kaiser Aluminum (KALU), B&G Foods (BGS), athenahealth (ATHN), Greenhill & Co. (GHL), Acacia Research (ACTG), Stryker (SYK), Chipotle (CMG)

Companies that matched consensus earnings expectations include:
OceanFirst Financial (OCFC), Western Alliance (WAL), Werner (WERN)


  • The long-running drama about when the Fed will start scaling back its $85B a-month bond-buying program might now last longer. It isn't clear when the first move will occur. The Fed is unlikely to start curtailing its bond buying at its next policy meeting Oct. 29-30, the Wall Street Journal reports
  • Bank of America (BAC) is considering a checking account that wouldn't permit customers to overdraw their balances at an ATM or when making an automatic bill payment, sources say, the Wall Street Journal reports
  • Ford (F) CEO Alan Mulally would not confirm or deny media reports that he is being sought to join Boeing (BA) and Microsoft (MSFT), Reuters reports
  • Air France -KLM (AFLYY) is open to giving Alitalia its rightful role in a merged entity but only if certain conditions are met, CEO Alexandre de Juniac told French television. He said Alitalia needs deeper restructuring if Air France is to eventually hike its 25% stake and take control, Reuters reports
  • DBS Group (DBSDY) is among banks that have advanced in bidding for Societe Generale’s (SCGLY) SA’s private banking assets in Asia, sources say. The division oversees about $13B, Bloomberg reports
  • JPMorgan Chase (JPM) agreed to sell 1 Chase Manhattan Plaza to Fosun International, the investment arm of China’s biggest closely held industrial group, for $725M, Bloomberg reports


Cinedigm Digital (CIDM) files to sell 7.91M shares of Class A common stock
Crestwood Midstream (CMLP) files to sell 14M common units for limited partners
EV Energy (EVEP) files to sell 5M common units for limited partners
Evercore Partners (EVR) files to sell 3M shares of common stock
Stemline (STML) files to sell $90M of common stock
Voxeljet (VJET) 6.5M share IPO priced at $13.00

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Sharing Rides, Hoarding Profits

 “Disruption” is the zeitgeist of Silicon Valley’s tech industry, especially in the realm of startups. The mythos goes like this: small scrappy hackers with very little capital and a few computers can create new business models that will topple older fossilized companies, even whole industries. In the process the economy will become more efficient and everyone will have more choices. We all win thanks to the new Internet-enabled economy. That’s not at all what is happening in reality, however.

The ideology of disruption goes back a long way in the annals theorizing capitalism, but the current ideology really owes more to Clayton Christensen, a Harvard Business School professor and devout Mormon who has built his academic career on case studies of disruptors. Christensen’s seminal 1998 article in the Harvard Business Review on disruption tells a story about dominant companies atop their industries —Firestone, Xerox, IBM— that were caught flat footed, and in several cases destroyed, by their smaller creative competitors. They failed to innovate and grow beyond their core markets. They failed to recognize the potential of a new technology that would make their existing products and services obsolete. This has fidelity with the actual history of American business.

Christensen, along with his son Matthew, manages a hedge fund that purports to bet on disruptors and short the stock of bumbling giants. Christensen also sponsors a think tank he named after himself, the Christensen Institute, which, according to its web site is, “dedicated to improving the world through disruptive innovation.”

California’s tech entrepreneurs have embraced Christensenian disruption. The big case studies in tech that seem to confirm Christensen’s theory are well known. Digital cameras destroyed film. Personal computers displaced mainframes as the core hardware business, and laptops have since eaten into a huge share of the personal computer market. Now mobile devices are eroding PC sales. None was ever seen as a threat to the existing dominant product and producer, but displacement happened nonetheless. Tapes replaced vinyl, CDs replaced tapes, but MP3s and iTunes-like services have replaced CDs. Cloud is displacing both the idea of storing your data on physical drives you own. Software as a service is chipping away at the idea of buying and owning software. And so on…

In a lot of cases disruption ends up being a battle of big corporations for market share. Consumers and employees within the industry aren’t necessarily better or worse off when the smoke clears and a winner emerges with a new technology and business model.

But the tech boom today is characterized by a another kind of disruption. It’s social disruption. New technologies and business models don’t just attack the existing dominant corporations; they attack social relations and transform non-business spheres of life into methodical instances of economic exchange from which the new tech innovators extract revenue. The tech boom is also characterized by disruption of smaller competitive markets by emergent tech monopolists backed ultimately by huge pools of private equity and giant, monopoly-seeking corporations.

The winners and losers in many cases of disruption are split along existing racial and class lines of inequality. Those with little economic or political power to defend themselves from the disruptors are seeing their livelihoods and communities turned upside down. Their small businesses are being destroyed. Their communities are becoming unaffordable. Those with cultural capital, and access to economic capital have a shot at being disruptive, at skimming some wealth off of deregulated industry and precarious labor. And the wealthy individuals and companies that should be disrupted by a clever tech startup —the tax dodging banks, the Fortune 500, the health care companies and insurance giants— have the resources to defend themselves, fend off the geeks, deploy an equally clever response to retain market share, or to just buyout the scrappy competitor and fold it into their existing empire.

The ridesharing phenomenon reflects all of this and more.

Ridesharing companies like Lyft, Uber, and Sidecar use the ubiquitous ownership of smartphones to connect casual drivers and passenger clients through their proprietary applications. Like any broker they take their cut of the revenue in these transactions, (Lyft, for example, skims 20 percent off each payment made by a passenger through their smartphone.) Ridesharing companies encourage unregulated, hyper-privatized transactions among precarious laborers. Their business model relies on marketizing formerly non-economic spheres of life, like giving a friend a ride in your car, and they have aggressively externalized costs like gas, insurance, payroll, etc. so that profits are maximized and expenses are as close as possible to nonexistent. In doing so they undermine the very existence of the taxi industry, but they also undermine public infrastructure in toto.

Taxis are not just some private sector dinosaur that should be hit from an innovation meteor. Taxis are an integral part of every major city’s transportation infrastructure. Taxis have been strictly regulated to ensure that the industry’s companies and contractor-drivers pay revenue into the city for the infrastructure they use: roads, signals, bridges, signs, sidewalks, etc. In San Francisco taxis generate over ten million dollars each year in revenue for the city to spend on maintaining transport infrastructure. The funds also pay for the costs of regulating the industry through the Taxi Commission. Regulators attempt to shape the industry in important ways to make it more accessible and equitable and therefore democratic. For example, San Francisco’s taxi fleet is 85 percent hybrid or CNG fueled, reducing the fleet’s carbon emissions and improving the health of city residents. This environmental standard is only possible because the industry is regulated, and ridesharing companies like Uber and Lyft undermine this effort. Taxis are also required not to discriminate among passengers, and to serve all parts of the city, among other things that might not be maximally profitable. It’s this public transportation infrastructure, a big part of which is comprised of taxis, that is being disrupted by the ridesharing companies who have inserted themselves as for-profit brokers in the transportation commons.

The people who will lose the most from the unbridled rise of ridesharing are those employed by the taxi industry which is seeing profits disappear. San Francisco’s taxi industry is very decentralized and highly competitive. There are about 31 cab companies today served by 10 dispatch companies, some quite big and some very small. No single firm is dominant. There are about 1,500 cabs authorized to drive within the city. The taxi industry employes several thousand workers. Taxi drivers are predominantly immigrants and people of color, and the average cabbie earns a very low yearly income. In 2000 upwards of 57 percent of San Francisco cab drivers were immigrants, with the largest groups having arrived from South Asia, East Asia, Russia and Africa. Of the 1,540 taxi drivers in the San Francisco, San Mateo, Redwood City metro region the hourly mean wage last year was $14.17, and the annual mean income was a mere $22,440.

When people say the taxi industry is “ripe for disruption,” what they’re saying, besides the real inefficiencies and problems affecting most big city taxi operations, is that it is a decentralized, highly competitive industry, most of whose owners and operators are low-income people of color, many of who are immigrants. They are susceptible because they are marginalized, and because they lack political and economic clout. In San Francisco the cabbies are definitely a noisy political lobby, but up against the tech and venture capital bosses and entrepreneurs, who are most influential in the Mayor’s office, the cab drivers are impotent.

That’s who is being disrupted, a competitive industry that is owned by, and which employes, working class people of color.

So who’s doing the disrupting? Who benefits from this attack on the taxi industry, and more generally on the principle of a regulated transportation sector?

The two biggest ridesharing companies in San Francisco are Uber and Lyft. Although they virtually didn’t exist until two years ago, between them they have raised about $390 million over the past 2 years according to securities filings with the state and SEC. Uber and Lyft are quickly expanding their ridesharing enterprises to New York, LA, Chicago, and other cities far beyond the laboratory of San Francisco.

Where is this money coming from?

Uber’s financial backers include Goldman Sachs, Google Ventures, and four other private equity groups. Perhaps Uber’s biggest financial backer is TPG Capital. Co-founder of TPG, David Bonderman, one of the wealthiest men on earth, is now on Uber’s board of directors. Bonderman’s personal net worth is somewhere in the ballpark of $2.6 billion. TPG reportedly has $55 billion in funds under management making it one of the largest private equity firms in the world.

Uber’s other investors like Menlo Ventures, Benchmark Capital, and First Round Capital are pretty typical of Silicon Valley’s private equity network. The firms are owned and run by mostly white men with Ivy League college pedigrees, places like Stanford, Cornell, Harvard, Yale and other bastions of privilege. The partners at these firms are millionaires, and billionaires are not uncommon. They leverage pension fund, university endowment, and sovereign wealth dollars to invest in speculative ventures as well as established companies (and from their limited partners they extract hefty management fees). To call them members of the 1% would be inaccurate. Many of Silicon Valley’s private equity investors quality as bona fide members of the 0.1% due to the enormous sums of wealth and income at their command. While most are socially liberal, many of them make political investments with influential Democratic and Republican members of Congress to ensure the country’s tax code and business laws allow them maximally build their fortunes.

Lyft’s financial beneficiaries are similarly elite members of the economic hierarchy. Earlier this year Zimride, the ridesharing company that developed Lyft, sold its Zimride ride-sharing application to Enterprise Holdings for an undisclosed sum. (Zimride was the equivalent of a combined craigslist ride-sharing bulletin board and Facebook.) Enterprise Holdings is a giant global corporation that booked $15.4 billion in revenue last year. As a private corporation, Enterprise is owned and controlled by the Taylor family of St. Louis. Jack Taylor, the family’s patriarch, is reportedly worth $11 billion. The Enterprise acquisition of Zimride is an example of how powerful corporate interest often respond to potential disruptors who might undermine their existing product; they purchase them and integrate them into their larger operations. In this case Enterprise, which peddles rental cars it owns, saw Zimride as something that could disrupt their profit stream, so Enterprise gobbled up the disruptor. The way Enterprise does business is changing as a result, but the distribution of economic power isn’t shifting.

Zimride’s Lyft ridesharing product which directly competes with taxi companies and bigger competitors like Uber received $80 million this year, mostly from the Andreessen Horowitz private equity firm. Again, Andreessen Horowitz is about as wealthy and establishment as you can imagine in American business. Marc Adreesseen, who half the firm is named for, got rich from developing one of the first web browsers. From the fortune he obtained doing that he invested in other big tech companies and became wealthy. Today Andreessen is a director of HP and Ebay, two Fortune 500 companies, as well as a director of Facebook.

Ben Horowitz (son of the arch-conservative David Horowitz) was a founder of Opsware, a company Hewlett Packard bought for over a billion dollars back in 2007. Andreessen was a funder of that company. Opsware was possibly a disruptor to established tech companies like HP, so HP devoured it.

Andreessen Horowitz manages probably upwards of $3 billion, and they have dozens of investments. They’re major backers of other disruptive tech startups like Airbnb and Udacity, two companies that are similar to ridesharing in that they are threatening the welfare and livelihoods of low-income communities.

Look across the other smaller ridesharing startups that are competing for market share in this gold rush sector and you’ll see similar stories, fast growing companies with very disruptive business plans backed by very powerful investors. The people who’s lives will be most disrupted are going to be the less powerful working class who toil in the competitive and disorganized taxi and other transit industries. The public sector will be disrupted as it is partially privatized and as regulations are undermined in favor of new rules that allow tech companies to externalize costs as much as possible onto precarious workers. More and more parts of our lives will be transformed into relationships of market exchange. As San Francisco’s recent battles over ridesharing show, this is by no means a “natural” process. It’s politically determined as to what kind of economy we want, and how the rules of the economy will distribute wealth and income and provision for public goods.

Darwin Bond-Graham, a contributing editor to CounterPunch, is a sociologist and author who lives and works in Oakland, CA. His essay on the economic looting of Detroit appears in the September issue of CounterPunch magazine. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion

BlackBerry, erstwhile Canadian high-tech icon, slashing 4,500 jobs


By Mathieu Bessé
18 October 2013

BlackBerry, the manufacturer of BlackBerry smartphones, is slashing a further 4,500 jobs—40 percent of its now much-diminished worldwide workforce—and actively seeking a buyer.

The company, which was previously known as Research in Motion or RIM, has already announced the closure of a customer service office in Bedford, Nova Scotia that employs 350 people and the elimination of 300 jobs in Waterloo, Ontario, where the company is headquartered.

Coming weeks will see the announcement of further job cuts, since BlackBerry management vowed last month, on announcing a US $965 million loss for the second quarter of its financial year, that it will eliminate 4,500 positions by the end of 2013.

These job cuts are on top of the 5,000 layoffs that RIM announced in 2012, with the stated aim of saving $1 billion per year. From a worldwide workforce of 19,000 at the beginning of 2011, BlackBerry will be reduced to about 7,000 employees when the latest restructuring is completed.

Fairfax Financial Holdings Limited, a Toronto-based financial holding company, has made a US $4.7 billion cash offer to purchase BlackBerry and under a tentative-sale agreement has been granted access to the company’s books.

However, many industry observers doubt the purchase will be completed or, even if it does go through, that BlackBerry will long survive as a distinct entity.

Fairfax, which claims to be working in conjunction with an unnamed—and as of yet uncommitted—consortium, has not explained where it will find the money to pay for the purchase.

BlackBerry, for its part, is actively searching for alternate buyers. Mike Lazaridis (a former RIM co-CEO), Google, Cisco Systems, and Microsoft are all rumored to have expressed interest in buying the company.

In 2009 Fortune magazine, pointing to RIM/BlackBerry’s average annual sales growth of 77 percent over the previous three years, named the company the “fastest growing” in the world. And as recently as the beginning of 2010, it still had a 40 percent share of the US smartphone market.

But in the face of competition from Apple, Samsung and other smartphone makers, its North American market share has collapsed, including in the business and government sector, which was the original source of its dominance.

Earlier this week, BlackBerry published full-page or otherwise prominent advertisements in 30 daily newspapers in nine different countries so as to proclaim that customers can “continue to count on BlackBerry”—in other words, with a view to countering mounting fears that the company will soon disappear.

In June 2008, that is some three months before the Wall Street financial crisis, BlackBerry had a stock market capitalization of $83 billion, making it among Canada’s most valuable companies.

Now some analysts argue that BlackBerry’s most valuable asset are its patents and it is widely predicted that BlackBerry’s ultimate fate will be to be sold off piecemeal by speculators in the same way carrion is pecked apart by vultures.

The Fairfax takeover deal calls for BlackBerry to be taken private. In explaining his company’s bid, Prem Watsa, the CEO of Fairfax, claimed it “opens an exciting new private chapter for BlackBerry, its customers, carriers and employees.” Watsa then went on to spell out who would be the principal beneficiaries of a Fairfax takeover, declaring that his company is confident it will make money on the deal and “deliver immediate value to the shareholders.”

While the local newspaper, the Kitchener-Waterloo Record, has tried to downplay the significance of the impending job cuts, there is little doubt they will have a major impact on the Waterloo Region, which is Canada’s tenth largest metropolitan area. Approximately a thousand workers previously employed at BlackBerry and related firms have been able to find employment in the Waterloo Region for lower wages through Communitech, a firm that helps with start-ups and networking for tech companies.

Manufacturing companies, traditionally major employers in this part of southwestern Ontario, have also been decimated, cutting thousands of jobs since the middle of the last decade, and especially since 2008. Major layoffs and closures include the shuttering of the Schneider’s meat packing plant, which eliminated 1,400 jobs, the closure of an A.O. Smith water-heater plant in Fergus that employed 300, and the layoff of 230 workers at Knape & Vogt (formerly Waterloo Furniture).

BlackBerry was until recently the great success of Canada’s high-tech sector. It helped pioneer smartphones and was unique among telecommunications companies in providing secure, encrypted messaging systems.

BlackBerry’s rise served as a counterpoint to the demise of Nortel (formerly Northern Telcom), which unraveled in the years following the collapse of the DotCom boom. Nortel, which once employed more than 90,000 workers worldwide, filed for bankruptcy in 2009, leaving plant closures, mass layoffs and gutted pensions in its wake.

BlackBerry’s sudden reversal of fortune has caused considerable angst in Canadian business and political circles. But the fate of the workers and the Waterloo region hardly matter in all this. The loss of shareholder value and of a strategic position in a key industry are what trouble Canada’s elite.

“As a Canadian, I would like to see a solution that gives me profitability and a viable company,” said Leo de Bever, the CEO of Alberta Investment Management Corporation. “But so far that hasn’t been happening.”

The Conservative government has rejected calls for it to provide direct assistance to BlackBerry, but has said any purchase by a foreign-based transnational would be subject to review on “national security” grounds.

On the pages of Canada’s corporate-owned dailies, various capitalist ideologues have dismissed the impact of BlackBerry’s fall as the inevitable product of “creative destruction.” They celebrate a socially destructive process whereby a tiny elite enriches itself at the expense of workers in Canada and all over the world—at the expense of the BlackBerry programmers, support staff and other workers who are now being thrown onto the street; and at the expense of the workers who make rival smartphones in the factories of Foxconn, where working conditions are so terrible that the company has had to install safety nets so as to prevent suicides.

Meanwhile, Fairfax Financial Holdings, which, as the holder of $18.5 billion in credit default swaps in the US sub-prime market in 2008, benefited directly from the bailout of the financial aristocracy by the US and Canadian governments, stands to reap handsome profits from organizing a further downsizing and more likely the outright asset-stripping of BlackBerry.

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A Failure Analysis of the US Economy


As failure analysis engineers for companies, our job is to find the root cause of failure and recommend changes in design, process, tests, etc. to fix the problem. This type of analysis has become an important part of semiconductor mass production, which makes electronics cheaper and affordable for consumers. At the same time, mass production helps the manufacturer / producer of parts by increasing their profits.

“Workers should be able to work for fewer hours to achieve their production target. They could use their spare time to pursue higher education, leisure, hobbies, vocational training, etc.”

What we need to recognize is that both producers and consumers are vital for the semiconductor industry. Without a healthy demand for the latest electronic gadgets such as smartphones, tablet PCs, hybrid cars, etc. there would be no incentive for global semiconductor firms to keep investing in the research and development of new technologies that improve the quality of life. While we make a living through the failure analysis of modern-day electronics and keep our jobs, pay for mortgages, groceries, utilities, cars, etc., we also contribute to the demand for other goods by spending our wages. We are workers on one side and consumers on the other. Consumer spending helps create jobs for other services and 70% of the US economy depends on consumer spending [1]. It is the consumer’s purchasing capacity that is the best metric of economic performance.

Common Sense Macroeconomics

Producers and Consumers are like two wings of a bird. If either of the wings gets hurt, the bird will no longer be able to fly. If that bird is not nursed quickly and properly, it would be disabled and either die from hunger or fall prey to a predator. With the same analogy, both producers and consumers have to prosper for a robust economy.

Before we get into more details of macro-economics, let us see where the economic profession stands at this juncture. In a recent article in The New York Times, Professor Robert J. Shiller of Yale University and a best-selling author argues that even now we don’t understand what really causes a recession and layoffs [2]. But another best-selling economist, Professor Ravi Batra, seems to have solved the puzzle of recessions by offering a new theory of unemployment. His theory relies on common sense as he argues that recessions and depressions occur when worker productivity keeps rising faster than the economy’s average real wage. He demonstrates that this happened in the 1920s, which were followed by a depression. The same thing also occurred during the 2000s and the world has been in The Great Recession since 2007.

Batra argues that worker productivity is the main source of supply while wages are the main source of demand. If productivity rises faster than wages, then supply rises faster than demand. This results in overproduction and forces the manufacturer to fire workers. Producers are the suppliers of goods, and consumers generate the demand for these goods. Consumer demand, being dependent on wages, is sustainable only if the consumers as workers earn higher salaries. If the wages of consumers do not catch up with increased supply of goods, the supplier of goods is unable to sell all that he/she has manufactured.

Let us take an example of the semiconductor industry where the semiconductor wafer foundries manufacture tens of thousands of wafers per month. These facilities supply silicon for the semiconductor industry. For a wafer fabrication facility to be profitable, it has to be able to produce as many wafers as possible that meet the Statistical Process Control (SPC) stability metrics and customers’ quality requirements when it comes to DPPM (Defective Parts per Million). This ability to mass produce is measured by the productivity of the work force. A wafer foundry, like every other company, wants its employees to be highly productive to maintain a high supply of wafers for its customers. The wafer fab management pays incentives based on productivity.

Now, where does the need come for wafer fab to hire more workers? This occurs only if wafer fab customers demand more goods. Where does the customer demand come from? It comes from the wages of the people. When we have an economy where employed people have high wages or high purchasing capacity, they are able to generate a high demand for goods. Hence, the wages of the workers have to catch up with their productivity. If employees are very productive, that is they work hard and efficiently, they are able to increase the supply of goods into economy with their productivity. Now, what happens if the wages of the productive workers fail to catch up with their productivity? As a result of the growing gap between wages and productivity, eventually the purchasing capacity of the workers is not able to catch up with the amount of goods that are being manufactured by them. Hence this correlates to a gap between the supply of goods and the sustainable demand for them. In other words, the wage-productivity gap causes a supply-demand gap.

In my previous analogy, this hurts one of the two wings of a bird. In other words, the imbalance between oversupply of goods and weak demand for them leads to layoffs at the wafer fabrication facility. This is how an economy is so closely connected to maintaining a sustainable supply and demand of goods. Thus layoffs occur when people’s purchasing capacity falls short of the goods that workers produce due to their high productivity.

Consumer and National Debt

Some brilliant minds have devised a way to keep the wages of workers to remain the same or even fall, i.e. not letting wages catch up with their high productivity, but still maintain a high consumer demand. They do this by creating ‘consumer debt’. When a consumer is unable to buy much out of their real salary or wage, he/she can buy it using a credit card or by going into debt with a loan from financial institutions. While relatively stable consumer debt is good for the economy as long as the borrower is able to repay his/her debt within the allotted time frame with interest, what can consumers do when they lose their jobs in a recession, and are not able to find other employment soon? If the consumer is not able to repay his/her debt in time, the increase in interest on the credit card loan wipes out his/her savings, thereby resulting in bankruptcy.

It should be clear that when wages trail productivity, the overall economy suffers because of the reduced purchasing capacity of unemployed workers. If you follow this logic, then it is evident that consumer’s purchasing capacity is critical for sustainable demand. Hence, I consider a strong consumer purchasing capacity to be the chief source of high consumer demand, which acts as an engine for economic growth. Thus, the real job creators in a free market economy are not only the producers of goods but also the consumers of goods. Every company estimates its consumer base prior to manufacturing in order to avoid the over-production of goods. Hence, if consumer demand keeps on weakening, then the economy goes into a recession. In that case to avoid a depression, the government has to step in and increase its own spending that makes up for the loss in demand due to lost wages of the laid off workers. The government may also cut tax rates to boost consumer demand. In either case, the budget deficit rises, and may rise very sharply if the wage-productivity gap and hence the supply-demand gap are very high. This is the main reason why the budget deficit rocketed after 2007, so much so that it almost tripled from about $500 billion in 2007 to $1.3 trillion in 2011.

Now, if government spending creates jobs, then these workers can jump start the engine of economic growth by paying off their debts and boosting consumer demand through their real wages. The higher the wages of these workers, the higher will be their purchasing capacity and the higher the consumer demand. This would act as an incentive to the producers/manufacturers to make further investments.

However, if increased government spending does not boost consumer demand and instead goes into the pockets of manufacturers, the manufacturing sector may hire a few more workers because of the extra money it receives from the government stimulus, but that growth will not be sustainable. In fact, a case can be made that the high budget deficit of recent years has mainly helped the manufacturer. For instance, in 2011 the economy generated 1 million new jobs with the help of a budget deficit of $1.3 trillion. If you divide 1.3 trillion with 1 million, you get 1.3 million. In other words, the government spent an extra $1.3 million to create one job in the economy. Is this not absurd, given the fact that the average wage is only $50,000 per year? Thus, the government deficit is now mainly helping the manufacturers, who must be getting the difference between $1.3 million and $50,000 for each person they hire.

As Batra shows, this is what the continued rise in the wage-productivity gap does to an economy. Just 15 years ago, in 1999, we had a budget surplus along with an unemployment rate of less than 5 percent. Today, we have a trillion dollar deficit along with an unemployment rate close to 8 percent.

Free Trade vs Fair Trade

An economy is sustainable when it is able to balance its trade and budget. If any country has a trade deficit (where imports are larger than exports), it leads to a fall in the country’s FOREX (FOREign eXchange) reserves (which eventually depreciates its currency). The value of a country’s currency is a deciding factor in the standard of living. Hence, a country cannot run year-over-year trade deficits if it wishes to maintain the standard of living of its citizens. Also, high trade deficits result in loss of FOREX reserves, which are important as they determine the buying power of the country’s currency.

Let us take an example of a country ‘A’ where its population has sufficient purchasing power and can buy everything produced in the nation. But there are some products that are not produced at home and have to be imported from another country ‘B’. Hence country ‘A’ has to pay money [its currency] to buy country B’s goods. Either country ‘A’ has to balance its trade by getting country ‘B’ currency from a third country ‘C’, or go on printing its own currency. But there is a limit that country ‘B’ will accept country ‘A”s money. After that country ‘A’ will have to produce the items within the country, causing huge inflation due to depreciated value of its currency resulting from excess money printing. It is possible to avoid trade deficits through balanced trade policies. Fair trade is more important than Free trade. Free trade implies no import duties imposed by a country on its imported goods. While Free trade works great when trading with countries having nearly similar value of their monetary currencies, it results in high trade deficits when multinational corporations (MNCs) from a rich country make goods for cheap in another country with a significantly lower value of its currency. The MNCs in the United States prefer to manufacture things in low wage countries with cheap currencies, as it is highly profitable. However, in addition to increasing trade deficits, this practice also leads to massive job losses in the home country, especially when jobs are also outsourced.

As a result of this free trade policy, the U.S. economy has been running over half a trillion dollar trade deficit for the past four years [3].While such a deficit results in higher corporate profits for MNCs in the United States, it results in depreciating FOREX reserves. This threatens the economic independence of the U.S. as a country.

Figure 1 below shows the FOREX reserves of BRIC (Brazil, Russia, India and China) in USD over ten years. According to Dr. Richard Haas, Chairman of the Council of Foreign Relations, China’s ownership of trillions in FOREX is a great threat to the United States, as China, with vast FOREX reserves, is in a position to influence US foreign policies through its control over the value of US currency [4].This is similar to the way the United States was able to dominate the foreign policies of Britain and France after World War II and forced their troop withdrawal during the Suez crisis purely because of its ownership of British and French debt [5].

030213-6aFigure 1: World Forex reserves in billions of USD as per International Monetary Fund (IMF), April 2009 [6]

During the Reagan years, the trade deficit started to increase at a rate not seen in the last 60-70 years [7]. The Reagan administration then had to pressure Japan to sign the 1985 Plaza Accord to devalue the U.S. dollar at the expense of the Japanese yen in order to increase U.S. exports [8]. As a result of yen’s appreciation, Japan experienced an economic crash and lost a decade of growth. The Nikkei average went up to about 39,000 in December 1989, but after the crash it hovered around 15,000 during the lost decade of the 1990s. In the last several years it has dropped even more, hovering around 10,000 [9].

Looking at the fate of what happened to Japan as a result of the yen appreciation; China has refused to appreciate its currency significantly in spite of the pressure by the Obama administration, which hopes to boost U.S. exports to China [10]. This should be a great concern for the United States because it would not be able to export significant amount of goods to China to balance its trade.

Counterfeit Electronics as a Threat to US National Security

In addition to nearly 600 billion dollars in trade deficit due to free trade policies, the counterfeit electronics from China entering into the U.S. supply chain have become a national security threat [11]. Initially, the United States manufactured all defense-related products at home. However, consumer electronics were being built in China due to its low cost of labor. As technology progressed to advanced transistor technology, it required a large investment from defense contractors, who work for profit, to manufacture semiconductor wafers in the United States. Hence, several defense contractors started to use Chinese built ICs for military weapons like missiles and machine guns. Along with the state-of-the-art infrastructure, the technical know-how to make advanced technology products has also been transferred to China.

So now China is flooding the U.S. defense supply chain with counterfeit ICs [12]. It has become very costly to prevent this, which is also eating away profits of U.S. defense contractors. The free trade policies of the United States are creating a perfect storm for its semiconductor industry. According to Professor Ravi Batra, “Free trade has done to the United States what Hitler and Imperial Japan could not do during the war.” He characterizes free trade as the ‘Agrification syndrome’ by which Americans continue to lose manufacturing jobs, and continue to work harder at the jobs they do have, but suffer declining wages, despite increases to their productivity [13].

If the United States had adopted fair trade instead of free trade, it would have imposed tariffs on the cheap goods that are dumped in this country by China. As people prefer to get the best value for their money, U.S. consumers would have preferred to buy U.S. made goods as tariffs would make them competitive with Chinese goods. This way manufacturing jobs would have been preserved. Simple math shows that by just eliminating the 600 billion dollar annual trade deficit would create 6 million jobs paying a $100,000 salary every year. This is a simple job creation strategy, as the country faces the highest unemployment rate since the Great Depression.

030213-6bFigure 2: BLS, BEA Census- Productivity and real income index from 1964-2008 relative to 1970 (Source: David Ruccio: Graph of the week: USA productivity and real hourly wages 1964-2008 [14])

Economic Reforms

If you observe Fig. 2 above, real wages have failed to keep up with productivity since the 1970s. The productivity of American workers has been consistently increasing. However, the average household median income has not increased at the rate at which productivity has increased. The real hourly wages have remained fairly constant. The United States needs to reform its current economic model so that wages keep track with the productivity of workers [15]. Professor Batra argues that this can happen only in a free market system, where companies are small and unable to control prices. In such a system, there would be no need for the government budget deficit, and it would raise the living standard for every individual in society.

Under this system, the majority of shares of corporations would be owned by its employees rather than by a few investors on Wall Street. When workers become majority shareholders, they know that they are part owners of the company and will be fairly rewarded for hard work. By being highly productive, these workers would receive a fair share of corporate profits.

The system would still preserve the incentive for growth because hard work would bring higher incomes. At the same time, it would avoid severe recessions and depressions caused by poor consumer demand (due to a huge gap between wages and productivity resulting in poor purchasing capacity of the majority of consumers). Also, in economic downturns, it will be possible to cut back the working hours of the workers and reduce their wages across the board rather than lay off some workers. This would minimize, if not eliminate, the problem of high unemployment [16].

Modern economic thinkers blame automation as a major cause of job losses. Technology could be productively utilized in such a way that the manufacturing sector could cut back on work hours while paying workers a high wage due to their high productivity. This is because automation enables a worker to be very productive through use of machines to manufacture products. High worker productivity significantly increases the supply of goods in an economy. As a result workers would be able to work for fewer hours to achieve their production target. They could use their spare time to pursue higher education, leisure, hobbies, vocational training, etc. This way it is also possible to minimize, if not eliminate, the problem of high unemployment resulting from automation while still keeping the supply of goods proportionate to consumer demand.

Employee guided firms will also be able provide health insurance and pension benefits to workers and the government would not need to spend money for this purpose. This way the budget deficit would fall to zero and the national debt could be retired over time.
Additionally, it would also avoid undue pressure from Wall Street to ship jobs overseas under pressure of delivering maximum profits to Wall Street investors. This would minimize speculation, malpractices and economic bubbles through economic self-regulation with minimal government interference.



2. Robert J. Shiller: “The Mystery of Economic Recessions”, New York Times, 4 February 2001. p. 17

3. Martin Crutsinger: “US deficit tops $1 trillion for fourth year,” Associated Press, 12 October 2012.–finance.html

4. Justin Webb, “Don’t be distracted by Greece : Americans must also face financial facts, ” Telegraph (UK), 25 June 2011.

5. Laurie Milner, The Suez Crisis, 03 March 2011.


7. Alex Seitz-Wald: 10 Things Conservatives Don’t Want You To Know About Ronald Reagan, 5 February 2011.



10. China seeks to learn from mistakes of 1985 Plaza Accord, The Japan Times, 9 September 2006.

11. Richard Dudley: Counterfeit Electronics in DoD are Widespread and Threaten National Security, 3 June 2012.

12. Joseph Farah: Fake Chinese electronics threaten U.S. Defense. 29 May 2012.

13. Sean Fenley: Barack Obama, What’s Wrong with Protectionism?, 21 September 2008.

14. David Ruccio: Graph of the week: USA productivity and real hourly wages 1964-2008.

15. Ravi Batra: The New Golden Age : The Coming Revolution against Political Corruption and Economic Chaos, New York, Palgrave Macmillan, 2007. Also see for Batra’s other writings.

16. P.R.Sarkar : PROUT in a Nutshell, AMPS.

What the Government Can Get From Your iPhone

What the Government Can Get From Your iPhone

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Posted on Feb 27, 2013
Johann Larsson (CC BY 2.0)

A court document obtained by the ACLU reveals the kind of data federal agents are able to pull off of a seized iPhone using “advanced forensic analysis tools.”

“The list,” writes electronic privacy expert Chris Soghoian, “starkly demonstrates just how invasive cell phone searches are—and why law enforcement should be required to obtain a warrant before conducting them.”

The iPhone was seized from a suspect’s bedroom during a drug bust. In a single sweep, Immigration and Customs Enforcement agents were able to extract call activity, contact lists, voice mails and text messages, photos and videos, apps, eight different passwords and 659 “geolocation points,” including connections to 227 cellphone towers and 403 Wi-Fi networks.

Before smartphones arrived, Soghoian writes, police had to gain a warrant to access such information, which would be stored in a suspect’s home or office. “Our pockets and bags simply aren’t big enough to carry paper records revealing that much data. We would have never carried around several years’ worth of correspondence, for example—but today, five-year-old emails are just a few clicks away using the smartphone in your pocket. The fact that we now carry this much private, sensitive information around with us means that the government is able to get this information, too.”

Although the ICE obtained a warrant to search the phone in this case, courts are divided about whether one is necessary in these circumstances, and no law requires it. Police officers have claimed they don’t need a warrant during moments of lawful arrest and at U.S. border crossings.

—Posted by Alexander Reed Kelly.

Chris Soghoian at ACLU:

The police should not be free to copy the contents of your phone without a warrant absent extraordinary circumstances. However, that is exactly what is happening. Last year in California, for example, Governor Jerry Brown vetoed a common-sense bill that would have required the police to obtain a warrant before searching seized phones, despite the bill’s broad bipartisan support in the state legislature.

Intrusive cell phone searches are becoming ever easier for law enforcement officers to conduct. Companies such as Cellebrite produce portable forensics machines that can download copies of an iPhone’s “existing, hidden, and deleted phone data, including call history, text messages, contacts, images, and geotags” in minutes. This type of equipment, which allows the government to conduct quick, easy phone searches, is widely available to law enforcement agencies—and not just to federal agents.

While the law does not sufficiently protect the private data on smartphones, technology can at least provide some protection. All modern smartphones can be locked with a PIN or password, which can slow down, or in some cases, completely thwart forensic analysis by the police (as well as a phone thief or a prying partner). Make sure to pick a sufficiently long password: a 4 character numeric PIN can be cracked in a few minutes, and the pattern-based unlock screen offered by Android can be bypassed by Google if forced to by the government. Finally, if your mobile operating system offers a disk encryption option (such as with Android 4.0 and above), it is important to turn it on.

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Divers find Russian meteorite craters in Chebarkul Lake

Published time: February 27, 2013 17:40

An ice hole in Lake Chabarkul, Chelyabinsk Region, where pieces of a meteorite could allegedly fall December 15. (RIA Novosti)

Divers searching Chebarkul Lake in Russia’s Urals region have found several craters that may be the impact zones of fragments of the now-famous meteorite that exploded over the area on February 15.

The underwater hunt for the rare stones was hampered by cold weather and light-obstructing mud stirred up from the bottom. The divers used powerful lights and probes to uncover several potential sites where meteorite fragments may have landed.

On Thursday, a team from Ekaterinburg will join in the search by conducting a magnetic survey of the prospect locations; the initial results could be ready as early as that evening.

Some fragments of the meteorite were retrieved in the Chelyabinsk region, which endured the bulk of the spectacular cosmic event. The biggest meteorite chunk discovered was about 1 kilogram. It is hoped that the fragments inside the lake could be much bigger, weighing dozens of kilograms.

Grigory Yakovlev, engineer at the Research and Educational Center of Nanomaterials and Nanotechnologies of Ural Federal University, with fragment of the meteorite found during the expedition in the Chelyabinsk region. (RIA Novosti / Pavel Lysizin)

Videos of the meteorite streaking across Russia’s sky proved to be not only awe-inspiring for YouTube, but also served a scientific purpose: Two groups of researchers used the clips to calculate the meteorite’s trajectory.

Colombian astronomers from the University of Antioquia in Medellin are believed to be the first to report their preliminary results last week at the scientific publishing website A similar work by researchers at the Astronomical Institute of Czech Academy of Sciences came days later on Monday.

Both teams used the proven method of analyzing video footage of the meteorite’s descent through a little bit of trigonometry. This time, however, the footage was taken by CCTV, car cameras and smartphones, rather than precisely calibrated observatory recorders.

The Russian meteorite was determined to be an Apollo-class asteroid, one of an estimated 5,000 near-Earth bodies orbiting the Sun and occasionally crossing the Earth’s orbit. Most of these objects are spread out between the orbits of Venus and Jupiter.

Russian astronomers will report their findings later in March, but have already confirmed that the results published by the Columbian and Czech researchers correspond with their findings.

The trace of a flying object in the sky over Chelyabinsk. (RIA Novosti / Photo courtesy of Nakanune.RU)

The Chelyabinsk Zinc Plant after the meteorite fall. (RIA Novosti / Photo courtesy of Nakanune.RU)

Google may go retail by end of the year

image from flickr by Scott Beale

image from flickr by Scott Beale

On a wave of fresh rumors about Apple’s future products, the news has emerged about Google’s plans to enter the retail business. By next holiday season Google is rumored to open a chain of stores to showcase its growing collection of products.

­Rumors lit the tech blogs and forums ablaze Friday when an “extremely reliable source” revealed Google’s plans to have retail stores by the end of this year to 9to5Google’s Seth Weintraub.

“I wouldn't put it past Google to do this,” said Ben Bajarin, principal analyst with Silicon Valley-based Creative Strategies.

The stores will likely feature Google’s latest phone, the Nexus 4, Chromebooks, Google powered Samsung and Android smartphones, and other Google gadgets that are currently sold from retailers, and not directly from Google itself.

Currently, many wireless carriers do not carry Google’s Nexus 4. And since it is priced at $500, it is a large enough sum of money that customers may want to ‘test drive’ the device before the purchase.

Google already has ‘pop-up’ kiosks in BestBuy stores, where Google employees can sell the Nexus phone and answer product questions.

The stores will also be a showcase for Sergey Brin’s latest, Google Glass, motion-censored reality glasses, which are set to hit the market sometime in 2014, starting at $1,500. Customers will certainly want to play with these before laying down the dough.

Google founder Sergey Brin poses for a portrait wearing Google Glass glasses (Reuters / Carlo Allegri)
Google founder Sergey Brin poses for a portrait wearing Google Glass glasses (Reuters / Carlo Allegri)

Google will likely borrow heavily from Apple’s successful in-store retail model, the highest grossing US retailer.

Apple opened its first retail store on May 15, 2011 outside of Washington D.C. Bright, minimalistic, and simple, the store offered a space for customers to test-drive products.

One of the big elements of Apple’s retail success is its Genius Bar. This idea was not revolutionary by any standard – Circuit City, Best Buy, Radioshack, and dozens of others electronic outfitters offered in-store customer care when Apple opened its doors. 

The Apple Genius bar is straight forward. The customer brings in the faulty product, and the ‘Genius’ fixes it on site, or places an order for a replacement from the depot. But so much of the Google brand is digital so where will Google draw the line on its customer care? Will Gmail customers be able to set up a Genius appointment to find out how to activate an out-of-office reply or how to recover lost files on their cloud?

Even if the Google store chain does not reach sales of Apple proportion, it will at the very least function as a showcase that creates customer awareness around the product.

“Google does not have as many products as Apple, but it has enough to justify a physical retail presence,” said Greg Sterling, a senior analyst with Opus Research.

Until recently, the Google Brand has been digital- engines, ads and clouds. Two thirds of search engine requests are keyed in on Google, and in December 2012 it served as the platform for 114.7 billion searches, according to the latest comScore engine rankings for January 2013. And 'going retail' is of course a risky maneuver, even for an industry giant like Google.

US college student creates blueprints for a drone-proof city

Asher Kohn isn’t an urban planner, but he has managed to draw up designs for an entire city — and a drone-proof one, at that. But according to Kohn, a town that’s impermeable to the newest instruments of war isn't just a novelty. It's a necessity.

“Architecture against drones is not just a science-fiction scenario but a contemporary imperative,” says Kohn, a 25-year-old American-born law student who is currently living in the Netherlands. And although architecture and urban planning are rarely core classes of most law school curriculums, earlier this year Kohn handed in a simple blueprint for an assignment offered by a professor at the Sam Fox School of Design in St. Louis, Missouri.

“I was assigned ‘military architecture’ and realized that for every huge military advance that made it easier to blow up urban areas, there was usually a passive response invented within a generation,” he tells Britain’s Daily Mail. “So I was wondering what the response would be for drones if drones are the next great advance like artillery and airplanes were.”

A hypothetical answer is presented in Shura City, a fictional compound that Mr. Kohn’s drew up earlier this year and published online, garnering a fair share of attention from bloggers and reporters in the weeks since. But since Kohn isn’t exactly a trained architect — and says he wasn’t even taking the Sam Fox class for credit — his blueprint is one that doesn’t necessarily examine the most aesthetically pleasing building options. Instead, Kohn favors components that could keep a small civilization in tack as the use of drones escalates and the unmanned aircraft launch missiles around the world on a daily basis.

“As a law student, I am fascinated by drones’ existence in a post-legal world,” he writes in his report. “Architecture can adapt, and this project clearly aims to show just those adaptations, but American jurisprudence is simply not capable of making clear, comforting, adjudications on drones and the sorts of crimes they have been created to deter. Architecture as a discipline has a long history of being capable of developing within the cracks left by law.”

"In the case of drones, the current legal regime is just wholly unprepared for warfare by algorithm," he explains. "Architecture can work where law cannot by giving dignity and safety to people physically when they are not afforded those privileges legally."

Kohn’s explanation could be considered quite the bummer, but it isn’t without reason. With the United States governments largely defending the extrajudicial killings of American citizens with drones as the program expands overseas, the bad guys in the eyes of Uncle Sam aren’t just al-Qaeda’s top-guns anymore. In late 2011, a drone strike in Yemen killed Abdurahman al-Awlakis, the 16-year-old American son of a suspected al-Qaeda operative. The White House stands by the killing. Speaking of Shura, Kohn says, “Such creations are not needed for the John Connors but for the Abdurahman al-Awlakis.”

By using minarets and wind-catching cooling towers called badgirs, aerial drones would ideally be kept out of the Shura city limits because navigating through a series of obstacles would create a nuisance for the drone pilot, who could be located as far as thousands of miles away, in the case of the US drone wars. But those structures wouldn’t even be a starting point. From Kohn’s report:

“Somewhere between the figurative embrace of the St. Peter’s Square and the chain-link fortification of Pablo Escobar’s compound, there has to be a happy medium. Shura City needs a roof because without one it is just a gesture, a Disney-ified attempt at safety. An open sky is an invitation for the patient masters of the air, and those drones feel no need to RSVP.”

Within the city, he also calls on specially-made windows, ones that beam self-destruct codes at drones that have managed to enter Shura from the outside. By implementing QR codes — the same kind of technology that sends commands to smartphones with a single glimpse — he says he’d have yet another form of fortification. That isn’t to say, though, that there’d be no escape.

“The city is a ‘black box’ impenetrable to data miners and military-trained individuals but it is not a prison. It is instead a gated community, providing its society with sunshine and safety from the scary world outside,” he writes.

In other words, though, Kohn suggests that the need for a drone-proof city might soon be imperative. With the right planning, Shura could exist as a city that serves as a safe-haven and not a prison-walled facility where a step outside means guaranteed execution.

"If people are going to create new and exciting ways to kill people, I think there's no harm in pushing the envelope of peace technology,” he tells Sarah Goodyear of The Atlantic Cities.

“I wanted to create a vibrant, colorful, fun and peaceful place for the populations victimized by drone warfare. I wanted to give them the opportunity to create their own community far from the invasive eyes, nose, and tongue of otherwise-faceless robots. I wanted to create the same gated community I was fortunate enough to grow up in and export it to people facing far worse fears than small drugs and sleazy parties.”

Speaking to RT, though, Kohn says his dream might not be a reality anytime soon. The odds of having his design implemented in real life are “pretty much slim-to-none,” he says.

“The relationship between drones/warfare-by-algorithm in cities is way too complex to allow this sort of thing to happen in urban areas,” says Kohn. “And there's no way the sort of people who have a 24/7 eye in the sky would let something like this to be built in the rurality, which was where my idea was.”

“Technology will always out-pace [architecture],” he adds. “But what I think is interesting is how much can be done without technology. The assumptions of human behavior drone warfare relies on is simply not actual human behavior; thus the disconnect, thus the (literally) uncountable dead, the mistaken identities and ‘double-taps’ and ‘military-age males.’ And the State Theory the war has relied on also is remarkably disconnected from lived reality.”

Global Mobile Phone Sales Post First Decline Since 2009

One of the fundamental creeds held by the proponents behind every new technology and gizmo market, including cell phones, smart phones, tablets, Sony Walkmen, 8-tracks, VHS tapes, juice extractors, tape rewinders, etc., is that their growth rate (and by implication the consumers' discretionary income), is completely dissociated with gravity and will grow at a far faster pace than global economic growth virtually in perpetuity. This is the case until empirical evidence reminds them, and everyone else, that gravity eventually always wins. Which is precisely what happened with global mobile phone sales, which in 2012 posted their first decline since the cataclysmic 2009. Gartner reports that the global cell phone market declined by 1.7% in 2012, down from 1.78 billion devices sold in 2011 to 1.75 in 2012. "Tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year," the report says.

More on the findings:

Samsung and Apple continued to dominate the market, with the Korean giant selling 385 million phones in 2012, of which 53.5 per cent were smartphones, with Apple selling 130 million smartphones.

Chinese company Huawei was third spot in worldwide smartphone sales for the first time in the fourth quarter, Gartner said, selling 27.2 million smartphones in 2012, an increase of 74 per cent.

Gartner said it expects sales of feature phones – ie any phone that is not a smartphone - to continue falling this year.


Another reason for the drop is the weakening demand for feature phones, which possess some smartphone abilities but are limited. While smartphones had record sales and were up 38.3% for the fourth quarter of 2012, feature phone sales fell by 19.3% -- and that decline is expected to continue.

Before smartphone proponents argue this is merely rotation out of a commodity into a premium space, read this:

Gartner said while the demand for iPhones in the fourth quarter, consumer demand favoured the less expensive iPhone 4 and 4S. It added the arrival of the iPad Mini also created a dilemma for some users when deciding if to upgrade an iPhone 4 or iPhone 4S to an iPhone 5, or buy the new tablet.

So while there is an element of conversion into ever more feature rich offerings (aka margin compression), the fundamental gating factor is no longer coolness, or hipness, but the simplest one of all: the bottom line.

This also means that the margin compression that has been haunting firms such as Apple will not only continue but accelerate, as the peak growth phase has passed, and now, just like in the sovereign arena, it is a race to the margin bottom.

Finally, since the preservation of optimism is key, Gartner leave on a slightly bullish note:

As a whole, however, the report predicts the mobile market will do better next year. Gartner says it expects mobile sales to reach 1.9 billion in 2013 -- with a 1 billion coming solely from smartphones.

It also says 2013 will be the year of the third ecosystem, as carriers try to break free from the influence of Apple and Google Android while Microsoft's Windows Phone 8, BlackBerry 10 and others duke it out.

"Alternative operating systems such as Tizen, Firefox, Ubuntu and Jolla will try and carve out an opportunity by positioning themselves as profitable alternatives,” the report says.

Alas, Gartner's forecast is surprisingly reminiscent of what it said a year ago, when it too forecast a continuing growth in sales. Sadly, for both Gartner, and the entire human race, what happens next nobody can see, as whatever will be, will be purely a function of the unintended consequences of the actions of a few select central planners who do everything in their power to convert fiat into wealth (by dilution).

Your rating: None Average: 5 (1 vote)

Shoppers tempted by winter sales

Beleaguered retailers weathered the snowstorms that swept Britain last month after sales were boosted by shoppers tempted out with new year offers and promotions, figures have shown. The British Retail Consortium (BRC) said like-for-like January retai...

Frontrunning: January 31

  • Risky Student Debt Is Starting to Sour (WSJ)
  • Political scandal in Spain as PP secret accounts revealed (El Pais)
  • New York Times claims Chinese hackers hijacked its systems (NYT)
  • Spain's Rajoy, ruling party deny secret payment scheme (Reuters)
  • Iran crude oil exports rise to highest since EU sanctions (Reuters)
  • BlackBerry 10’s Debut Fizzles as U.S. Buyers Left Waiting (BBG)
  • Costs drag Deutsche Bank to €2.2bn loss  (FT)
  • And the gaming of RWA continues - Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (BBG)
  • More fun out of London - Barclays, RBS May Pay Billions Over Improper Derivatives Sales (BBG)
  • Hagel to face grilling by Senate panel on Mideast, budget (Reuters)

Overnight Media Digest


* Israel bombed a suspected shipment of anti-aircraft missiles in Syria on Wednesday, according to regional and U.S. officials, in its most ambitious strike inside its neighbor's territory in nearly two chaotic years of civil war there.

* Research in Motion Ltd executives excused more than a year of delays by saying they wanted the next BlackBerrys to be just right. But the smartphones that took more than two years to develop won't be available for the key U.S. market until mid-March, when carriers are expected to complete their tests.

* The U.S. economy shrank for the first time in more than three years in the fourth quarter, underscoring the halting nature of the recovery. But the strength of consumer spending and business investment suggested that the economy will grow, albeit slowly, this year.

* The U.S. Treasury for the first time auctioned holdings in U.S. banks that had missed a series of dividend payments, allowing the government to close out financial-crisis era investments only at steep discounts.

* Facebook reported a 40 percent fourth-quarter revenue jump as it ramped up its mobile business and offered new tools to advertisers, but the firm's shares slipped in after-hours trading.

* Boeing Co executives said it was business as usual despite the crisis surrounding its 787 Dreamliner, though airlines worldwide made preparations for an extended grounding of the aircraft.

* Illinois took the rare step Wednesday of postponing a bond auction just hours before it was expected to launch, as concerns grew among investors over the state's deep pension hole.


FLEE 'SAFE' SOVEREIGN DEBT, SAYS HASENSTAB - The man who oversees 175 billion dollars in bonds for Californian asset manager, Franklin Templeton, says its time to get out of government debt now before it is too late.

UNION REQUESTS IAG MEETING ON IBERIA - The chief executive of International Airlines Group, Willie Walsh will reject a request from a pilots' union to discuss the restructuring of Iberia.

MPS ATTACK BARCLAYS OVER BONUS CULTURE - The parliamentary commission on banking standards accused Barclays of empty rhetoric, tearing into the bank's remuneration committee.

FACEBOOK MOBILE AD GROWTH DRIVES SALES - An aggressive advertising drive by the Facebook during the U.S. presidential elections and shopping season saw the website post its first quarterly revenue growth since going public.

DEUTSCHE BANK CHIEFS MAINTAIN COURSE - To the dismay of analysts and some investors, Deutsche Bank's Anshu Jain and Jurgen Fitschen are firmly rejecting the need for the bank to raise more capital.

RIMLESS BLACKBERRY HOPES TO REGAIN TOUCH - The struggling handset maker Blackberry is taking a gamble by launching two touchscreen smartphones in a direct challenge to Apple and Samsung.

ÇUKUROVA WINS RIGHT TO CONTROL TURKCELL - A court decision by the UK Privy Council will allow one of Turkey's richest men, Mehmet Karamehmet, the chance to regain control of the country's biggest mobile phone operator, Turkcell.


* For the last four months, Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees.

* Research in Motion Ltd introduced a new operating system and a new generation of phones, along with a new corporate name, with the hope of restoring its products' status as a symbol of executive cool.

* The U.S. government played a role in slowing the economic recovery as cuts in military spending and other factors overwhelmed the Federal Reserve's expanded campaign to spur growth.

* Despite two serious safety failures and new questions about the reliability of its lithium-ion batteries, Boeing Co's chief executive said Wednesday that he saw no reason to retreat from using the new but volatile technology on its 787 jets.

* Chrysler, the smallest of the American automakers, on Wednesday reported a big increase in 2012 earnings that helped its Italian parent company, Fiat SpA, become profitable for the year as well.

* Time Inc joined the many news organizations trying to tighten their belts in a tough advertising climate by announcing layoffs and offering employees buyout packages on Wednesday.

* In a legal dispute that had been closely watched by multinational companies and environmental organizations, a Dutch court dismissed most of the claims brought by Nigerian farmers seeking to hold Royal Dutch Shell accountable for damage by oil spilled from its pipelines.



-- Livzon Pharmaceutical Group Inc said in a statement it will become the third company to move its dollar-denominated B shares to the Hong Kong H-share market.

-- Metallurgical Corporation of China Ltd said it expected to book a loss of 7.2 billion yuan ($1.16 billion) in 2012.


-- Galaxy Securities could give up its plan for a dual listing of yuan-denominated shares in Shanghai and Hong Kong, but it still expects to list H-shares in May.


-- The State Council, China's cabinet, has approved an energy consumption target as part of efforts to correct overuse and foster greener growth. The government aims to keep total energy consumption below 4 billion metric tonnes of standard coal equivalent by 2015, with electricity consumption below 6.15 trillion kwh.

-- Domestic and foreign inbound mergers and acquisition deals by strategic investors fell to a five-year low last year, but activity will rebound in 2013, a report by accounting firm PricewaterhouseCoopers said.

Corp Fin

* Germany plans a modest reform of its banking sector that would put a cap on risky activities but not lead to the breakup of banks or significantly impair big institutions like flagship lender Deutsche Bank, according to a draft law seen by Reuters.

* Prosecutors are investigating the former management of Italy's troubled Monte dei Paschi bank for bribery and fraud, judicial sources said on Wednesday, as pressure grew on the Bank of Italy and bourse watchdog Consob.

* Endo Health Solutions Inc has held talks in recent weeks with drugmakers potentially interested in buying the maker of pain relief medication, people familiar with the matter said.

* Russian state technology firm Rusnano is planning to sell through a private placing of 10 percent of its shares between March and June, its chief executive Anatoly Chubais said in an interview with the Interfax news agency.

* Quintiles Transnational Corp, the largest provider of testing services to drugmakers, has chosen Morgan Stanley, Barclays Plc and JPMorgan Chase & Co as joint bookrunners for a planned initial public offering, people familiar with the matter said.

* Germany's second-biggest lender Commerzbank by 2015 plans to shed half of the workforce at its mortgage unit Hypothekenbank Frankfurt, formerly known as Eurohypo, according to an internal paper obtained by Reuters

Fly On The Wall 7:00 AM Market Snapshot



Arthur J. Gallagher (AJG) upgraded to Buy from Neutral at BofA/Merrill
Arthur J. Gallagher (AJG) upgraded to Outperform from Market Perform at Keefe Bruyette
AudioCodes (AUDC) upgraded to Outperform from Perform at Oppenheimer
Citrix Systems (CTXS) upgraded to Buy from Neutral at BofA/Merrill
Core Laboratories (CLB) upgraded to Outperform from Market Perform at FBR Capital
MB Financial (MBFI) upgraded to Outperform from Market Perform at Keefe Bruyette
Vale (VALE) upgraded to Buy from Neutral at BofA/Merrill


Comerica (CMA) downgraded to Underperform from Market Perform at Bernstein
Endo Health (ENDP) downgraded to Perform from Outperform at Oppenheimer
Facebook (FB) downgraded to Hold from Buy at Stifel Nicolaus
Facebook (FB) downgraded to Market Perform from Outperform at BMO Capital
Facebook (FB) downgraded to Neutral from Buy at Citigroup
Fusion-io (FIO) downgraded to Neutral from Outperform at Credit Suisse
Fusion-io (FIO) downgraded to Neutral from Overweight at JPMorgan
Fusion-io (FIO) downgraded to Neutral from Overweight at Piper Jaffray
KeyCorp (KEY) downgraded to Underperform from Market Perform at Bernstein
Netgear (NTGR) downgraded to Equal Weight from Overweight at Barclays
Regions Financial (RF) downgraded to Underperform from Market Perform at Bernstein
Seagate (STX) downgraded to Underweight from Equal Weight at Barclays
Velti (VELT) downgraded to Market Perform from Outperform at Wells Fargo
Zions Bancorp (ZION) downgraded to Underperform from Market Perform at Bernstein


Cubist (CBST) initiated with a Buy at Janney Capital
Depomed (DEPO) initiated with a Buy at Janney Capital
Forest Labs (FRX) initiated with a Buy at Janney Capital
NPS Pharmaceuticals (NPSP) initiated with a Buy at Janney Capital
Salix (SLXP) initiated with a Buy at Janney Capital
Santarus (SNTS) initiated with an Outperform at Leerink


Apollo (APO), Metropoulos acquired majority of Hostess snack cake business for $410M
Annaly Capital (NLY) to acquire CreXus (CXS) for $872M
ACI Worldwide (ACIW) acquired Online Resources (ORCC) for $3.85 per share or $263M in cash
Facebook (FB) said mobile driving greater engagement
Said search could be “meaningful” business in the future
Said more clients using the site for “new launches”
Capital Southwest (CSWC) sold Heelys for $2.25 per share to Sequential Brands
Las Vegas Sands (LVS) said U.S. market saturated or near saturated
Cabot (CBT) remains cautious in near-term, cited mixed results across portfolio
Lucas Energy (LEI) cut staff by 40%, to cut 2013 expenses by 40% vs. 2012
Cardinal Health (CAH) reorganizing medical segment organization
AstraZeneca (AZN) said no share repurchases will take place in 2013


Companies that beat consensus earnings expectations last night and today include:
Dunkin' Brands (DNKN), Time Warner Cable (TWC), Whirlpool (WHR), AstraZeneca (AZN), ConocoPhillips (COP), Ameriprise (AMP), Silicon Graphics (SGI), Quantum (QTM),  Owens-Illinois (OI), Facebook (FB), Qualcomm (QCOM), Electronic Arts (EA)

Companies that missed consensus earnings expectations include:
Destination Maternity (DEST), Aetna (AET), Regis (RGS), Ball Corp. (BLL), Murphy Oil (MUR), Cabot (CBT), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
Callaway Golf (ELY), Knight Transportation (KNX)


  • Investors in Chesapeake Energy (CHK) cheered when it announced that CEO Aubrey McClendon will leave, but its problems won’t end there. Chesapeake cannot count on rising natural prices to help bail it out, and the company still needs to sell at least $4B in assets in 2013 to keep afloat, the Wall Street Journal reports
  • The yen's recent drop is giving hard-hit corporate Japan its biggest break in years, raising hopes of a long-awaited earnings recovery. Daiwa Securities estimates that profit growth at the top 200 Japanese companies will nearly double to 13% for the fiscal year through March, reversing a 16% decline in the previous year, assuming exchange rates remain roughly at current levels for two months, the Wall Street Journal reports
  • Glencore (GLNCY) is becoming a Russian oil trade leader from an outsider by mending fences in just one year with Rosneft, and is extending its grip to a sector where it played second fiddle to companies such as rival trader Vitol or Royal Dutch Shell (RDS.A), Reuters reports
  • Citigroup (C) is looking to pull out of consumer banking in more countries in an effort to lower costs and boost profits, sources say, Reuters reports
  • Diminishing rubber supplies and record car sales are extending a five-month bull market that’s poised to raise costs for tire makers (GT, BRDCY, CTB), Bloomberg reports
  • Johnson & Johnson (JNJ) President Andrew Ekdahl told jurors the company recalled 93,000 all-metal hip implants because they “did not meet the clinical needs for the product” and not because they were unsafe, Bloomberg reports


Adecogro (AGRO) 13.9M share Spot Secondary priced at $8.00
AmeriGas (APU) files to sell 29.57M common units for holders
Fleetmatics (FLTX) 7M share Secondary priced at $25.00
Golar LNG Partners (GMLP) announces offering of 3.9M common units
Idera Pharmaceuticals (IDRA) files to sell 9.08M shares of common stock for holders
Keryx (KERX) 6.58M share Spot Secondary priced at $8.49
TRI Pointe Homes (TPH) 13.689M share IPO priced at $17.00
Towerstream (TWER) to offer common stock
Vanguard Natural (VNR) commences offering of 8M common units

Your rating: None

Frontrunning: January 25

  • Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
  • Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
  • China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
  • BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
  • Merkel Takes a Swipe at Japan Over Yen (WSJ)
  • Wages in way of Abe’s war on deflation (FT)
  • Italian PM under fire over bank crisis (FT)
  • Senior officials urge calm over islands dispute (China Daily)
  • Spain tries to peel back business rules (FT)
  • Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
  • Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)
  • Deutsche Bank Debt Salesmen Said to Go Amid Pay Overhaul (BBG)
  • Cameron pitches new deal as good for EU (FT)

Overnight Media Digest


* U.S. President Barack Obama nominated a former prosecutor turned white-collar criminal defender, Mary Jo White, as his choice for top U.S. securities regulator.

* Microsoft's quarterly earnings slipped 3.7 percent as the software giant reported weaker sales in its business and entertainment divisions, though revenue in its core Windows business strengthened.

* Citigroup Inc's private bank has decided to pull its $187 million investment from SAC Capital Advisors LP, the latest in a string of client defections that have occurred amid scrutiny of the hedge-fund firm.

* JP Morgan will not be trying 'staple financing' in the potential Dell deal, a possible ramification of a court decision criticizing what was once a common practice on Wall Street.

* Samsung Electronics Co on Friday said its fourth-quarter profit rose 76 percent to a record high on strong smartphone sales and higher margins in its chip business.

* Morgan Stanley Chairman and Chief Executive James Gorman is expected to take a second straight annual pay cut for 2012, as the securities firm continues to struggle to get back on track.

* Casino operator Las Vegas Sands Corp has stopped executing international money transfers for its high-rolling customers and is overhauling its compliance procedures as it faces scrutiny from U.S. and international regulators, people familiar with the matter said.

* Bristol-Myers Squibb Co agreed to pay $80 million to settle cases involving 15 patients killed or hurt during company-sponsored testing of an experimental drug for hepatitis C.


BARCLAYS EXECUTIVES FACE MOUNTING LIBOR PRESSURE Top executives at Barclays were aware the bank was manipulating its submissions to Libor rate-setting panel in November 2011, almost a year earlier than previously disclosed, emails suggested. (

OSBORNE STICKS TO AUSTERITY PLAN Finance minister George Osborne will not be diverted from his austerity plan even if data on the strength of British economy disappoints. (

GOVERNMENT TO DELIVER CHILDCARE BOOST Britain's coalition government is planning to spend 1.5 billion pounds on a package of measures to help families cope with nursery fees. (

FEARS RAISED OVER ECB FUNDING SCHEME Senior bankers are becoming increasingly concerned about the European Central Bank's special longer-term funding scheme, saying that it could encourage the creation of a two-tier banking market. (

RETAILERS MAKE APPEAL ON TAX AVOIDANCE High street retailers said the government needed to take action to stop tax avoidance by multinational companies. (

RIM BOOSTED BY LENOVO INTEREST Lenovo has signalled it could be interested in buying Research In Motion, lifting the shares in the troubled Canadian maker of BlackBerry smartphones


* U.S. President Barack Obama tapped Mary Jo White, a former United States attorney turned white-collar defense lawyer, to lead the Securities and Exchange Commission. He also renominated Richard Cordray as director of the Consumer Financial Protection Bureau.

* Jill Sommers, a Republican regulator overseeing the investigation into MF Global's collapse, has abruptly decided to depart the Commodity Futures Trading Commission, the agency said.

* After a year of mixed financial performance at Morgan Stanley, the firm's chief executive, James Gorman, is expected to take a second annual pay cut.

* AT&T sold a record number of smartphones over the holiday season, but its quarterly earnings took a hit from pension costs and Hurricane Sandy.

* Microsoft's biggest product in decades, Windows 8, helped lift sales of the company's flagship operating system business, but not enough to rejuvenate overall growth.

* Greenhill reported a 4 percent drop in advisory revenue last year, a week after larger rivals JPMorgan Chase & Co and Morgan Stanley posted much larger declines.

* HCA Holdings, the largest profit-making hospital chain in the United States, was ordered to pay $162 million after a judge ruled that it had failed to abide by an agreement to make improvements to dilapidated hospitals that it bought in the Kansas City area several years ago.

* A federal appeals court in the United States tossed out $172 million in damages that Mattel had been ordered to pay MGA Entertainment, the maker of Bratz dolls. It was the latest move in a bitter nine-year legal dis



* An executive from a Quebec engineering firm has testified that many of the province's top engineering companies, including the troubled giant SNC Lavalin Group Inc, colluded to pay political kickbacks and to win fixed construction contracts.

Michel Lalonde, the president of Genius Conseil, told Quebec's construction inquiry on Thursday that a list of top companies were complicit in the scheme to secure road and sewer design and construction surveillance contracts by sending bribes and kickbacks to the political party headed by the city's mayor.

* Shawn Atleo, national chief of Assembly of First Nations, said any divisions in the aboriginal community are trumped by shared objectives, including ending "the status quo", and that many of the community's goals are similar to those of the rest of Canadians.

Reports in the business section:

* Talisman Energy Inc plans to slash its general and administrative (G&A) costs by "at least 20 per cent over all", Helen Wesley, the company's executive vice president of corporate services, told the CIBC Whistler Institutional Investor Conference on Thursday.

* Agrium Inc raised its fourth-quarter earnings estimate based on robust grain and oilseed prices that are helping boost demand for its fertilizers and other products. The Calgary-based company said it expects fourth-quarter earnings to be slightly above C$2 per share, compared with its previous guidance of C$1.50 to C$1.90.


* Facing drastically falling oil revenue, Alberta Premier Alison Redford set the stage for serious spending cuts and possible tax hikes during a televised fireside chat on Thursday.

Redford blamed a "bitumen bubble" and warned Albertans about austere times to come. The government has forecast a deficit in the current fiscal year of C$3 billion.


* At least one Calgary oil executive is appealing to Canadian pocket books as the U.S. state department decides the fate of TransCanada Corp's Alberta-to-Texas Keystone XL pipeline. Export constraints on Alberta heavy oil production are costing each Canadian C$1,200 per year, Cenovus Energy Inc CEO Brian Ferguson said on Thursday.

* Canadian wireless carriers must make changes to their networks and systems to support 911 emergency text messages from hearing and speech impaired persons, the federal telecom regulator said on Thursday. The service would only be provided to the hearing and speech impaired who have pre-registered for it with their wireless carrier, the Canadian Radio-television and Telecommunications Commission (CRTC) said.



-- China will build six control standards, including PM2.5, in 113 cities and will release the monitoring data before the end of December this year, Environment Minister Zhou Shengxian said.

-- The number of Chinese mobile phone users reached 1.11 billion as of the end of 2012, according to Ministry of Industry and Information Technology data released on Thursday.

-- China Financial Futures Exchanges has approved the application of account opening from several QFII institutions.


-- Alibaba Group Holdings, China's largest e-commerce company, plans to join hands with partners to build a logistics network across China that can support 100 billion yuan worth of transactions a year within the next decade.

-- China is expected to lead emerging economies in spending on consumable products, with an estimated average annual increase in total consumer spending of 15 percent every year to 2016, according to a report released by the Economist Intelligence Unit and U.K. research firm Mintel.


-- Shanghai expects to set up China's first free trade zone in Waigaoqiao in Pudong New Area as the city bids to become a global trade hub by 2020, a senior official said. Unlike a bonded area, a free trade zone offers businesses lower taxes, a more liberal currency exchange and better efficiency due to less supervision.


-- New bank loans in January are expected to reach between 1 trillion yuan and 1.2 trillion yuan as the economy rebounds, according to market participants. Total new loans for 2013 are expected to reach 8.5 trillion yuan to 9 trillion yuan.

Fly On The Wall 7:00 Market Snapshot



AMC Networks (AMCX) upgraded to Equal Weight from Underweight at Morgan Stanley
Autodesk (ADSK) upgraded to Conviction Buy from Sell at Goldman
eBay (EBAY) upgraded to Outperform from Market Perform at Bernstein
EQT Midstream Partners (EQM) upgraded to Outperform from Neutral at Credit Suisse
Horizon Bancorp (HBNC) upgraded to Outperform from Market Perform at Raymond James
JPMorgan (JPM) upgraded to Buy from Hold at Deutsche Bank
KLA-Tencor (KLAC) upgraded to Hold from Sell at Deutsche Bank (NTES) upgraded to Buy from Neutral at UBS
QLogic (QLGC) upgraded to Equal Weight from Underweight at Morgan Stanley
STMicroelectronics (STM) upgraded to Outperform from Neutral at Exane BNP Paribas
Sony (SNE) upgraded to Buy from Neutral at BofA/Merrill
Tiffany (TIF) upgraded to Overweight from Neutral at HSBC
Union First Market (UBSH) upgraded to Outperform from Neutral at RW Baird


Canadian Pacific (CP) downgraded to Sell from Hold at Canaccord
City National (CYN) downgraded to Neutral from Buy at SunTrust
Dime Community (DCOM) downgraded to Equal Weight from Overweight at Barclays
Flextronics (FLEX) downgraded to Neutral from Buy at UBS
Flowserve (FLS) downgraded to Buy from Strong Buy at CL King
Ford (F) downgraded to Equal Weight from Overweight at Barclays
Goldman Sachs (GS) downgraded to Hold from Buy at Deutsche Bank
Goldman Sachs (GS) downgraded to Neutral from Buy at Citigroup
Hanmi Financial (HAFC) downgraded to Market Perform from Outperform at FBR Capital
IAMGOLD (IAG) downgraded to Neutral from Buy at BofA/Merrill
Janus Capital (JNS) downgraded to Sell from Neutral at Citigroup
Janus Capital (JNS) downgraded to Underperform from Neutral at Credit Suisse
Medtronic (MDT) downgraded to Hold from Buy at Wunderlich
Noble Corp. (NE) downgraded to Hold from Buy at Jefferies
Scripps Networks (SNI) downgraded to Underweight from Equal Weight at Morgan Stanley
Select Comfort (SCSS) downgraded to Equal Weight from Overweight at Barclays
Skullcandy (SKUL) downgraded to Neutral from Overweight at Piper Jaffray
United Continental (UAL) downgraded to Underperform from Neutral at BofA/Merrill
Virginia Commerce (VCBI) downgraded to Market Perform from Outperform at FBR Capital


Accenture (ACN) initiated with an Overweight at Evercore
Actavis (ACT) initiated with an Overweight at Morgan Stanley (AMZN) initiated with a Buy at ISI Group
Aon Corp. (AON) initiated with a Market Perform at Wells Fargo
BioMed Realty (BMR) initiated with a Neutral at Goldman
BioScrip (BIOS) initiated with a Buy at SunTrust
Boston Properties (BXP) initiated with an Overweight at Evercore
Brown & Brown (BRO) initiated with a Market Perform at Wells Fargo
Forestar Group (FOR) initiated with a Buy at DA Davidson
Marsh & McLennan (MMC) initiated with an Outperform at Wells Fargo
Park-Ohio (PKOH) initiated with an Outperform at Imperial Capital
Red Hat (RHT) initiated with an Outperform at Northland Securities
Starz (STRZA) initiated with a Sell at Stifel Nicolaus
Starz (STRZA) initiated with an Underweight at Evercore


AT&T (T) sees FY13 EPS growth to be upper-single digits or higher
Consensus for FY13 revenue is $128.3B
Sees FY13 consolidated margins to be stable
Starbucks (SBUX) targets opening of about 1,300 net new stores globally in FY13
Expects to open 1,500 new stores in U.S. over next five years
Said China a ”significant market opportunity,” expects to have 1,500 stores there by 2015
Court of Appeals agreed with Mattel (MAT), verdict, damages on MGA's claims reversed
Belkin to buy Cisco's (CSCO) home networking unit
Juniper (JNPR): Trends driving network investment in cloud/mobility intact
Sees improved momentum in routing in 2013 in Europe and U.S.
Expects to expand FY13 operating margins
City National (CYN) expects net income to grow 'very modestly' in 2013
US Airways (LCC) reached tentative agreement with flight attendants


Companies that beat consensus earnings expectations last night and today include:
KLA-Tencor (KLAC), Synaptics (SYNA), QLogic (QLGC), ResMed (RMD), Rambus (RMBS), Tempur-Pedic (TPX), Juniper (JNPR), Microsoft (MSFT), Cirrus Logic (CRUS)

Companies that missed consensus earnings expectations include:
Key Technology (KTEC), E-Trade (ETFC), Sterling Financial (STSA), AT&T (T)

Companies that matched consensus earnings expectations include:
Western Alliance (WAL), IBERIABANK (IBKC), Starbucks (SBUX)


U.S. electricity producers have increased their use of natural gas now that technological advances have unlocked vast amounts of the fuel in shale rock formations. But executives at some top utilities are wary of relying too heavily on natural gas to make electricity, concerned that its current low price may not last, the Wall Street Journal reports
As Samsung Electronics (SSNLF) and Apple (AAPL) attempt to defend their dominance in the smartphone market, the latest data show China’s Huawei Technologies Co. ranked third in terms of market share for the first time, an indication that a rapid increase of smartphone users in China and other emerging markets may be starting to alter the global landscape, the Wall Street Journal reports
Innovation Network Corp. of Japan, a Japanese state-backed fund, wants a Nissan Motor Co. (NSANY) and NEC Corp. JV to buy Sony’s (SNE) lithium-ion battery unit to prevent rivals in China and Taiwan from getting its technology as the TV maker looks to offload non-core businesses, the Daily Yomiuri said, Reuters reports
Lockheed Martin (LMT) is challenging the U.S. government in court over $13.6M in research tax credits in a case that tests the often unclear line between research and production, with future R&D claims by other companies possibly at stake, Reuters reports
Fed Chairman Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3T as he shows no sign of softening his effort to bring down 7.8% unemployment, Bloomberg reports
Over half of the $18T in national daily trading of energy swaps has moved to futures exchanges from the over-the-counter market in response to the U.S. regulatory overhaul aimed at increasing transparency--Dodd-Frank--following the 2008 financial crisis, Bloomberg reports


Adecogro (AGRO) files to sell 8.7M shares of common stock for holders
Anthera Pharmaceuticals (ANTH) files to sell common stock
ArrowHead Research (ARWR) files to sell common stock and warrants
BG Medicine (BGMD) enters $12M common stock purchase agreement with Aspire Capital
Bright Horizons (BFAM) 10.1M share IPO priced at $22.00
Chuy's (CHUY) 4.5M share Secondary priced at $25.00

Your rating: None

Frontrunning: January 18

  • Foreign Hostages Die in Algeria’s Battle With Terrorists (Bloomberg)
  • The latest bank to soon join the currency wars: McCafferty Says BOE Must Keep Open Mind on New Policy Tools (Bloomberg)
  • US debt talks complicated by timing (FT)
  • BOJ eyes open-ended asset buying, agrees new inflation goal (Reuters)
  • AmEx Says U.S. Card Income Fell 42% as Loss Provisions Increased (BBG)
  • Call to raise age for US’s Medicare (FT)
  • Obama Promise to Raise Middle Class Living Already Seen in Peril (BBG)
  • China Exits Slowdown as Quarterly Growth Tops Forecasts (BBG) - actually, as new Politburo says to make it appear that way
  • Britain to drift out of European Union without reforms (Reuters)
  • Republicans weigh interim debt-limit hike (FT)
  • Abe's aide says Japan shouldn't fret if yen falls to 100 vs dlr (Reuters) ... and it was 90 just a few days ago
  • PBOC May Seek More Liquidity Operations (Dow Jones)

Overnight Media Digest


* Former professional cyclist Lance Armstrong told the world Thursday
evening that he used performance-enhancing drugs to win seven Tour de
France titles.

* Algeria's military launched a raid on Thursday
to free about 40 foreigners held by militants at a remote natural-gas
complex, leaving some hostages dead, surprising and angering several
governments and putting leaders across the world at a loss to determine
the fate of their citizens.

* In his final days as U.S. Treasury
secretary, Timothy Geithner reflected on the financial crisis and the
response he helped craft, in an interview with The Wall Street Journal.
Among other things, he said the government's rescue of the financial
system was doomed to be unpopular.

* In approving Boeing Co's
787 Deamliner to start carrying passengers in 2011, the Federal Aviation
Administration relied extensively on data generated by Boeing that
indicated the plane's advanced lithium-ion battery systems -- never used
before on a big jetliner -- featured redundant safeguards that were
essentially foolproof.

* Rio Tinto Chief Executive Tom Albanese
agreed to step down on Thursday, the latest in a string of leaders
toppled by shifting fortunes at the world's biggest mining companies.

Quarterly earnings reports released on Thursday underscore the
lingering illnesses afflicting some of the largest, best-known U.S.
banks and the comparatively ruddy health of some smaller regional

* Sony Corp has reached a deal to sell its U.S.
headquarters at 550 Madison Avenue for $1.1 billion, the company said on
Thursday, a strong price that shows how investors are bidding
aggressively for top Manhattan properties.

* Toyota Motor Corp
has settled what was to be the first in a group of hundreds of pending
wrongful death and injury lawsuits involving sudden, unintended
acceleration by Toyota vehicles.


In a drive for transparency, authorities in the Cayman Islands are planning on creating a public database of funds domiciled in the British territory for the first time.

Videogames seller Game Group is interested in acquiring stores from collapsed music retailer HMV, the CEO said.
As their mega-merger continues to go through regulatory clearance, Glencore and Xstrata are set to extend the deadline for the deal for a third time.

The British banking industry wants a deadline of May 2014 to be imposed for claims from customers who say they were mis-sold payment protection insurance, says one senior executive.

Barclays is considering whether it should recoup some or all of the 290 million pounds it was fined for Libor-rate rigging from the bonuses it is due to pay investment bankers in 2012.


* Hours after Algerian forces raided a gas facility, there was still no official word on the number of hostages freed, killed or still held by their Islamist kidnappers.

* In a televised interview with Oprah Winfrey, Lance Armstrong admitted to using banned substances but did not say how he did it or who helped him.

Thomas Weisel, who bankrolled Lance Armstrong through seven Tour de France wins, said in his first public comment on the matter that he never personally saw an instance of doping on the team.

* Most banks have recovered from the recent financial collapse, but two companies, Bank of America and Citigroup have reported continuing effects on earnings.

* AT&T warned that it would take a fourth-quarter charge of about $10 billion because of bigger-than-expected pension obligations.

* The Chinese economy picked up steam during the last few months of 2012, closely watched data from Beijing on Friday confirmed. But at the same time the figures underlined the view that the pace of future growth is likely to remain well below that seen in recent years.

* E*Trade Financial named Paul Idzik, a former executive at Barclays, as its new chief, ending a five-month search for a new leader.

* Norwegian Cruise Line Holdings has sold shares in itself at $19 apiece, a person briefed on the matter said, reaping about $446.5 million in proceeds.



--The State Electricity Regulatory Commission of China (SERC) said China's power consumption could reach above 9 percent in 2013 from 5.5 percent in 2012.


--Fears over intellectual property lawsuits by foreign train technology companies will not derail exports of Chinese bullet trains, Vice Minister of Science and Technology Cao Jianlin said in an interview, dismissing copycat claims by Japan's Kawasaki as "nonsense."

--A former Japanese leader visited a memorial site to victims of Japanese wartime aggression, but analysts were quick to reject ay suggestion that Tokyo will change its policies toward China.


--China's Railway Ministry said investment in railway could hit 650 billion yuan and that it will set a National Railway Development Fund as soon as possible.



* Two class action lawsuits were filed against the federal government in Canada after the human resources and skills development department lost a portable hard drive containing personal information about more than half a million people who took out student loans.

The department said last week the device contained data on 583,000 Canada Student Loans Program borrowers from 2000 to 2006.

* The federal ethics commissioner wants to talk to Finance Minister Jim Flaherty about his letter to the Canadian Radio-television and Telecommunications Commission (CRTC) after it was revealed that he wrote to the arm's-length broadcast regulator in support of a constituent's bid for a radio licence.

Reports in the business section:

* More Canadians went online to do their Christmas shopping this year, according to a new report by MasterCard Advisors.

Canadian consumers spent C$2.8 billion ($2.84 billion) shopping online in December, up 26 percent over the previous year and representing about 6.6 per cent of the month's total retail sales.


* Three Quebec City teens have been arrested over charges of planning a shootout at their high school.

The three teens, two boys aged 14 and 15 and a 16 year old girl, who have pleaded not guilty, face charges of conspiracy to commit murder and will remain detained until a bail hearing on Monday.


* The blowout in price between Alberta's heavy oil and the North American benchmark price is a "longer term issue" with no quick fix, Alberta Investment Management Corp (AIMCo) CEO Leo de Bever said.

Fly On The Wall 7:00 Market Snapshot


Upgrades (AMZN) upgraded to Outperform from Sector Perform at Pacific Crest
Cornerstone OnDemand (CSOD) upgraded to Buy from Neutral at Goldman
Credit Suisse (CS) upgraded to Overweight from Equal Weight at Morgan Stanley
Expeditors (EXPD) upgraded to Outperform from Neutral at Credit Suisse
Fabrinet (FN) upgraded to Overweight from Neutral at JPMorgan
Las Vegas Sands (LVS) upgraded to Outperform from Market Perform at Wells Fargo
Movado (MOV) upgraded to Buy from Neutral at Citigroup
Netflix (NFLX) upgraded to Buy from Neutral at Janney Capital
Qlik Technologies (QLIK) upgraded to Buy from Neutral at Goldman
Research in Motion (RIMM) upgraded to Buy from Hold at Jefferies
Tyson Foods (TSN) upgraded to Outperform from Market Perform at BMO Capital
Wynn Resorts (WYNN) upgraded to Outperform from Market Perform at Wells Fargo


Alterra Capital (ALTE) downgraded to Neutral from Buy at Sterne Agee
Ball Corp. (BLL) downgraded to Hold from Buy at Jefferies
CSX (CSX) downgraded to Neutral from Outperform at Credit Suisse
Capital One (COF) downgraded to Neutral from Buy at Janney Capital
Carrizo Oil & Gas (CRZO) downgraded to Underperform from Neutral at Credit Suisse
Clarcor (CLC) downgraded to Market Perform from Outperform at William Blair
Finisar (FNSR) downgraded to Underperform from Hold at Jefferies
MGM Resorts (MGM) downgraded to Market Perform from Outperform at Wells Fargo
NetSuite (N) downgraded to Neutral from Conviction Buy at Goldman
Ultimate Software (ULTI) downgraded to Neutral from Buy at Goldman
Visa (V) downgraded to Neutral from Outperform at RW Baird
Westamerica (WABC) downgraded to Underperform from Market Perform at BMO Capital


Geron (GERN) initiated with an Overweight at Piper Jaffray
Halcon Resources (HK) initiated with a Hold at Stifel Nicolaus
Harry Winston (HWD) initiated with a Buy at Nomura
Inovio Pharma (INO) initiated with an Overweight at Piper Jaffray
Intuitive Surgical (ISRG) initiated with a Buy at Janney Capital
Marathon Oil (MRO) initiated with a Buy at Stifel Nicolaus
Oncothyreon (ONTY) initiated with an Underweight at Piper Jaffray
Threshold Pharmaceuticals (THLD) initiated with a Neutral at Piper Jaffray
Tronox (TROX) initiated with a Buy at B. Riley Caris
Ziopharm (ZIOP) initiated with a Neutral at Piper Jaffray


GE (GE) on target to achieve dougle-digit earnings growth in 2013
Said outlook for developed markets remain uncertain
Sees growth in China, resource rich countries
Weiss family raised American Greetings (AM) offer to $17.50 from $17.18 per share
Moody's changed Rite Aid (RAD) outlook to positive from stable
Schlumberger (SLB) said global macroeconomic environment remains uncertain
Sees 2013 global oil demand similar to 2012
Liberty Media (LMCA) bought 50M shares of Sirius XM (SIRI), control above 50%
Intel (INTC) ”excited about strong pipeline of products coming to market”
Sees little growth in wireless in 2013
Capital One (COF) sees average quarterly revenue levels in 2013 like Q412
Sees reduction in loan balances in 2013
Sony Corporation of America (SNE) sold 550 Madison Avenue building for $1.1B
AZZ Inc. (AZZ) sees FY14 margins remaining strong
ONEOK Partners (OKS) announced $465M-$500M project investments through 2015
NuPathe's (PATH) Zecuity approved by FDA


Companies that beat consensus earnings expectations last night and today include:
General Electric (GE), Schlumberger (SLB), Xilinx (XLNX), Bank Mutual (BKMU), Intel (INTC), Wintrust Financial (WTFC)

Companies that missed consensus earnings expectations include:
Matthews (MATW), People's United (PBCT), Capital One (COF)

Companies that matched consensus earnings expectations include:
Wipro (WIT), Associated Banc-Corp (ASBC), American Express (AXP)


GE (GE) is the world's top producer of aircraft engines and medical-imaging equipment, but as far as its profits are concerned, it’s very much a bank. GE Capital is expected to account for nearly half the company's 2012 profit, the Wall Street Journal reports
Dell’s (DELL) potential $23B leveraged buyout could also be the deal that finally gets the leveraged-buyout machine going again, showering financiers in fees and potentially yielding big returns for investors, the Wall Street Journal reports
Americans are more confident in the future and are increasingly striking out to set up their own homes, a move that is helping propel the housing recovery, Reuters reports
When U.S. natural gas producers release their 2012 annual reports, many companies may have to significantly reduce a key indicator of their financial health: reserves. The SEC
requires companies to calculate and report year-end oil and gas reserves using 12-month average prices, Reuters reports
With the worst flu outbreak since 2009 gripping the U.S., vaccine makers (GSK, AZN) are determined to do better next season. They’re developing powerful vaccines that hold the promise of cutting incidences of flu by the thousands, Bloomberg reports
Franklin Templeton Investments (BEN) reduced its holdings of Apple (AAPL) last year to 4.2% from 7% in 2011 on concern the maker of the iPhone lacks a strategy to sell cheaper smartphones in emerging markets such as China and India, Bloomberg reports


CyrusOne (CONE) 16.5M share IPO priced at $19.00
Northern Tier (NTI) Energy 10.7M share Secondary priced at $24.46
Norwegian Cruise Line (NCLH) 23.529M share IPO priced at $19.00
SunCoke Energy (SXCP) 13.5M share IPO priced at $19.00
Trius Therapeutics (TSRX) files to sell common stock

Your rating: None

Data ‘to show retail sales growth’

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Dell may leave the floor, as personal computers lose allure

Reuters / Brendan McDermid

Reuters / Brendan McDermid

Dell, once the world’s biggest producer of personal computers, is now about to stop trading its stock and go private. The company is looking for a new direction as tablets are replacing conventional PCs.

Dell Inc. is reportedly in talks with private – equity firms Silver Lake Partners and TPG about the buyout, according to The Wall Street Journal (WSJ).The have been going on for the last two or three months, and the talks could turn into a deal within the next 6 months, according to the media sources. Other investors including pension funds could also join the deal, with an exact list of the bidding group remaining unfinalized.

Dell's "valuation is off the charts low," WSJ quotes one industry executive.

The shares of the PCs producer lost above 30% during last year, as it’s suffering a painful shift in the industry.

In 2006 Dell lost its market championship, which was coupled with brand new gadgets such as smartphones and tablets grabbing consumer attention.

So – called new era gadgets have never been the focus of Dell’s operations, as PC sales still produce more than a half of the company’s revenue at a time when conventional computers seem to be going into oblivion. PC shipments fell 4.9% year on year in 4Q 2012, with Dell’s alone suffering a 20.9% decline, according to research firm Gartner.

The drop ate the into Dell’s bottom line, as its profit fell 47% year on yearin the quarter ended November 2.

At a meantime, other technological companies like Apple and Samsung that have led the tablet and smartphone boom and are boasting record high financials.

Experts agree that tablets are now winning the market, with conventional PCs likely to be abandoned altogether.

"Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC," says Mikako Kitagawa, senior analyst at Gartner.

Investors were upbeat about Dell’s plans to go private, as its shares jumped on the news the company held talks of a buyout.

‘Red October’: Global cyber-spy network uncovered by Russian experts

Picture by Kaspersky Lab’s Global Research & Analysis Team

Picture by Kaspersky Lab’s Global Research & Analysis Team

A sophisticated cyber-espionage network targeting the world's diplomatic, government and research agencies has been uncovered by the Kaspersky Lab, whose experts say the malware's complexity could rival that of the notorious Flame virus.

­The system's targets include a wide range of countries, with the primary focus on Eastern Europe, former Soviet republics and Central Asia – although many in Western Europe and North America are also on the list.

In addition to attacking traditional computer workstations, Rocra – a shortened name for Red October, the name given the network by the Kaspersky team – can steal data from smartphones, dump network equipment configurations, snatch files from removable disk drives, including those that had been erased, and scan through email databases and local network FTP servers.  

Unlike other well-known highly automated cyber-espionage campaigns like Flame and Gauss, the Rorca's attacks all appear to be carefully chosen. Each operation is apparently driven by the configuration of the victim’s hardware and software, native language and even habit of document usage.

The information extracted from infected networks is often used to gain entry into additional systems. For example, stolen credentials were shown to be compiled in a list for use when attackers needed to guess passwords or phrases.

The hackers behind the network have created more than 60 domain names and several server hosting locations in different countries – the majority of those known being in Germany and Russia – which worked as proxies in order to hide the location of the “mothership” control server.

That server's location remains unknown.

Experts have uncovered over 1,000 modules belonging to 30 different module categories. While Rocra seems to have been designed to execute one-time tasks sent by the hackers’ servers, a number of modules were constantly present in the system executing persistent tasks. For example, retrieving information about a phone, its contact list, call history, calendar, SMS messages and even browsing history as soon as an iPhone or a Nokia phone is connected to the system.

The hackers' primary objective is to gather information and documents that compromised governments, corporations or other organizations and agencies. In addition to focusing on diplomatic and governmental agencies around the world, the hackers also attacked energy and nuclear groups and trade and aerospace targets.

No details have been given so far as to who the attackers could be. However, there is strong technical evidence to indicate that the attackers have Russophone origins, as Russian words including slang have been used in the source code commentaries. Many of the known attacks have taken place in Russian-speaking countries.

Click to enlarge
Click to enlarge

The hackers designed their own authentic and complicated piece of software, which has its own unique modular architecture of malicious extensions, info-stealing modules and backdoor Trojans. The malware includes several extensions and malicious files designed to quickly adjust to different system configurations while remaining able to grab information from infected machines.

These included a ‘resurrection’ module, which allowed hackers to gain access to infected machines using alternative communications channels and an encoded spy module, stealing information from different cryptographic systems such as Acid Cryptofiler, which is known to be used by organizations such as NATO, the European Parliament and the European Commission since 2011.

The first instances of Red October malware were discovered in October 2012, but it has been infecting computers since at least 2007, according to Kaspersky. The Kaspersky Lab worked with a number of international organizations while conducting the investigation including the US, Romanian and Belorusian Computer Emergency Readiness Teams. 

The EU has attempted to counter the huge rise in cyber-espionage by launching the European Cybercrime Center, which opened on Friday.

Picture by Kaspersky Lab’s Global Research & Analysis Team
Picture by Kaspersky Lab’s Global Research & Analysis Team

Apple cuts orders for iPhone 5 parts, as demand lags

Apple has reduced orders for components for its iPhone 5, as the gadget hasn’t prove to be as popular as expected. Simultaneously inexpensive smartphones from its closest rival – Samsung – are gaining in popularity.

Apple’s orders for iPhone screens between January and March were almost half the number it had been previously planned, as The Wall Street Journal quotes its sources.

Competition from other Android – based smartphones, with Samsung models being the strongest rival, ate into the demand for iPhones. South Korea’s Samsung has already left Apple behind in terms of smart phones sales. Inexpensive gadgets by Chinese Huawei Technologies Co is also taking away part of the demand from Apple.

As for 3Q 2012 Apple had 14.6% of world smartphone shipments, which is well below its all – time high of 23% registered in 4Q 2011, according to International Data Corporation. Meanwhile, Samsung shares have skyrocketed by 31.3% in 3Q 2012 from 8.8% a year earlier, with the company expecting to set another record operating profit in 4Q 2012 on the back of strong sales of its Galaxy smartphones.

Released in September 2012, the iPhone 5 marked Apple’s effort to retain its strong market position amidst growing competition. The latest iPhone comes with a longer four -inch screen, which compares to the previous 3.5 inch version.

Most recently, Apple was reported it is to launch a budget version of the iPhone, which is expected to help gain a foothold in developing markets. The price tag will reportedly be between $99 and $149, which is approximately a third the price of current models costing $650 without a contract in the US, as Bloomberg reports. The smartphone would be smaller than current models and would be made from cheaper parts.

France to debate charging Google, other content providers for traffic

(AFP Photo / Rainier Ehrhardt)

(AFP Photo / Rainier Ehrhardt)

Thousands of HD videos uploaded and downloaded daily, traffic streams are turning into data tsunamis. So French ministers are now to debate whether content providers should also pay for the ever-growing burden on internet networks.

­“What solutions do Internet providers have when faced with content providers who use their networks but don’t invest in them?” France's Digital Economy Minister Fleur Pellerin said Monday.

Times appear to be changing for internet content providers in France.

The previous week, France’s second-largest internet service provider Free began blocking web advertising for its customers. The company has been updating user software with an ad-blocking feature as a default setting.

Though such tools are widely accessible for internet users (Mozilla add-ons can build a similar firewall), the move sent panic across companies that base their business on web-advertising. If the practice becomes a general trend, it could spell the end for many companies that derive their revenue from ads.

Free has not given the exact reason it’s decided to block ads. But the company’s head, Xavier Niel, has often complained that Google’s content, and particularly YouTube video traffic, put his network’s capacity under constantly increasing pressure.

The pipelines between Google and us are full at certain hours, and no one wants to take responsibility for adding capacity. It’s a classic problem that happens everywhere, but especially with Google,” he told Nouvel Observateur magazine in 2012.

On Monday, however, the French government ordered Free to stop blocking online advertisements, saying the company had no right to edit the contents of its users.

An Internet service provider cannot unilaterally implement such blocking,” Pellerin said at a news conference after meeting the feuding parties. Advertising should not be treated differently from other kinds of Internet content, she added.

However, the issue of who should pay for growing traffic remains on the agenda, the minister said:  We need to ask serious questions about how Web companies can put some money into networks.”

Pellerin and Industry Minister Arnaud Montebourg are set to host a debate on the issue on January 15. The minister also said they would try to convince Google, which did not attend Monday’s meeting, to participate in the debate.

Global Internet traffic is expected to grow 32% per year till 2015, Network World counted in their 2012 report, which puts internet service providers under a constant need to improve their networks capacity, or bandwidth. The new traffic mostly comes from more videos streaming through web lanes and smartphones or tablets proliferation. But while the IP traffic grows exponentially, budgets for network equipment are growing at less than 10 per cent.

So for smaller companies, or those who like France’s Free offer extremely cheap service, constant technology update could be a strain. This has already made phone companies reassess their business models. Companies as France Telecom SA are charging some content companies extra for a fast lane on the Internet.

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