Thank you for making the World a better place and inspire millions of people.
Thank you for making the World a better place and inspire millions of people.
It is easy to be against nuclear in the middle of the Fukushima crisis following the earthquake in Japan. It seems opportunistic. But it is not. It is just that a nuclear accident HAS happened.
If anything can go wrong, it will. When we deal with nuclear, that means disaster.
The nuclear plant was designed to resist an 8.2 quake. A magnitude 9 quake happened. One month ago ,the probability of a 9 quake followed by a 10 meter high tsunami may have seemed low. But it HAS happened. And the consequences are terrible. It is enough to deal with a natural disaster of this magnitude, to add a nuclear catastrophe on top.
It is not worth it.
There are other types of energies available. Those are less cost-effective today. Mankind has demonstrated that when enough brainpower is put to a task, we can send a man to the Moon. There is no reason why the same engineering genius that made nuclear power possible, can not make clean energy one day cheaper than nuclear. It is a matter of priorities.
It is time to phase out nuclear power. It is too dangerous. Sadly, we now have the proof… once more.
Goodbye nuclear. We CAN afford something better.
Distributed computing is part of the essence of Internet. The network of networks is built around distributed routing nodes (routers), that route IP packets with no central intelligence nor control. Internet protocols are “distributed” by design, and that is what gives Internet the power to scale without limits. P2P is also a showcase of the power of distributed architectures, where the client and server decentralization is taken to a extreme.
The Fuel Cell Boxes, like those of Bloom Energy in the CBS video clip above, will bring to power generation the same kind of revolution that Internet continues to bring to telecommunications. If the promise of the Bloom boxes at reasonable prices in 5 years turns true, power utility companies are going to go through a big transformation and we are going to have a much greener planet.
The video is worth watching, but if you are outside of US (the clip might not play), you can read a good summary of it here.
By the way, The Federal Energy Regulatory Commission issued an order last week giving Google the authority to buy and sell wholesale electricity just like a utility. Google was the first customer of Bloom Energy. Any connections?
Via Martin Varsavsky, I find a WSJ article where Steve Forbes gives a provoking view on the roots of the Banking Crisis. Mark-to-market or “fair value” accounting for financial institutions was re-established in 2007 in USA. The Financial Accounting Standards Board (FASB) rules that the balance sheet must reflect the “market” value of the financial assets.
With the market value of financial assets falling after the system credibility crisis, banks are dragged close to bankruptcy only due to the need to account for assets at today’s market valuation.
Quoting Mr. Forbes:
Regulatory capital by its definition should take the long view when it comes to valuation; day-to-day fluctuations shouldn’t matter. Assets should be kept on the books at the price they were obtained, as long as the assets haven’t actually been impaired.
Mark-to-market accounting does just the opposite. When times are good, it artificially boosts banks’ capital, thereby encouraging more investing and lending. In a downturn it sets off a devastating deflation.
Mark-to-market accounting is the principle reason why our financial system is in a meltdown. The destructiveness of mark-to-market — which was in force before the Great Depression — is why FDR suspended it in 1938. It was unnecessarily destroying banks.
And a proof point of this thesis can be that while American banks like Citibank are near-bankrupt, other banks in Europe like Santander, less exposed to American accounting rules, seem healthier even though the fundamentals of Spanish economy are much worse than in US.
Markets are so volatile that the idea to use them for accounting is a recipe for system instability.
Take Santander stock price as an example. Why Santander PER is currently 4 (with a 11% yield), when during last 7 years it had always been above 20, with a mere 2% yield? Which valuation is “fair” for accounting? the one of last 7 years? or that of last 7 months? Isn’t the valuation just reflecting how optimists or pessimists are investors? should “optimism” be accounted in the books??
Economics is far from exact science, and it is remarkably incapable of predict, sometimes even explain a posteriori, events such as the current crash. What we know from economists is that people expectations are the most reliable indicator to predict the growth or slow down of economic activity. The credibility of the financial system is now below limits. Fear (panic) to a banking system collapse is reducing consumer spending, companies forecasts are revisited and unemployment surges as companies prepare for the downturn. A vicious circle that the accounting rules strangely help accelerate.
An accounting system based in market valuations, under the current gloom, makes the simple possibility of bankruptcy a self-fulfilling prophecy.
One year has passed since we started this blog with Steve Job’s famous commencement address.
Less than one month later a post on LinuxMCE made it to the front page of Digg, and got 25.000 visits in one day!
Since then, we have spoken about iPhone, Android, Mobile Internet, Mobile TV, IPTV, Internet TV, the economy of free, netbooks, WiMAX, clouds, pipes and even nanotechnology. We have also echoed from great entrepreneurs as Guy Kawasaki, Tim Ferriss or Martin Varsavsky.
It has been close to 200 posts, 250 comments, 139.000 visits and 260.000 pages.
Thank you for being there.
Note: Did I mention we also wrote about iPhone?
Financial Crashes and Bubbles are opposite expressions of how absurd and irrational markets can behave. Markets over-react irrationally, driven by the irrational sentiments of fear and greed. Panic drives the Crashes and over-enthusiasm drives the Bubbles.
As Martin Varsavsky said to Tim O-Reilly at the Web 2.0 Expo:
“Markets are bipolar, and they over-emphasize good times and bad times. […] Entrepreneurs need to distinguish Price and Value […] (and) steer in the middle of the tremendous swings of the Market, which are unreal in both ends.”
As “unreal” as Crashes and Bubbles might be, unfortunately they have a real impact in the economy. Stock market prices, or how much companies are valued, should not worry anyone but investors. The reality is different. Stock prices reflect the expectations of how companies are going to perform in the future, more than how they financially perform now. With stock prices plummeting irrationally driven by fear of crash (not by current performance), companies quickly adjust forecasts and cut investments and jobs. Companies show investors how well they anticipate to the changing cycle. This is usually rewarded with a 5% price increase as the measures are announced, followed by 15% down once the downturn is confirmed.
Investment cuts have an immediate effect on the forecast of suppliers that in return also cut investment and jobs in a domino effect that extends throughout the value chain. With more unemployment, no industry is safe from reducing forecasts, and the downturn generalizes, bringing even more pessimism to the Markets. A Crash becomes a self-fulfilling prophecy driven by fear.
Bubbles are just the other extreme, where market irrationally foresee (and analyst justify) exaggerated growth, sometimes even infinite. The gains in stock prices only signal to companies that they need to invests more and grow more. And with everybody foreseeing a bright future, everyone spends more, invests more and take more risks to outpace competition and by doing the stock market goes up and up. It is when price-earning ratios reach 20 for a mature industry and 100 to 1000 for the most trendy industries, that one can sense that the bubble is ready to burst.
Market over-reaction and short-term speculation also amplify the drama. A few weeks ago we had a headline in Spanish newspapers with the biggest loss in history of Madrid’s IBEX down 10% in a day. The next trading day, we had a headline with the biggest ever win of IBEX up 10% in a day.
Analyst are quick to explain the crash and predict apocalypse: 1) Seeing Google stock going down, Om Malik writes “The Sky is Falling” where not only he echoes some analysts concluding that the downturn will hit online ads, but also Om predicts they will find it hard to attract talent!!? 2) TechCrunch on their side echos a VC-rating site that explains that VCs will not make money soon. I wonder why they did not advice it one year ago. It would have been more helpful.
Analysts and economists are great at explaining the future aposteriori (when it is past). At predicting the future apriori (before it happens) they are as accurate as a monkey shooting darts.
Forget analysts, forget economists. Go find the next dream. Hope and work will do.
Larry Page, co-founder of Google, just landed in Spain to receive the Principe de Asturias Prize, the Spanish version of the Nobel Prize. In his dialog with the press, Larry said that, working in Search, Google aims to be more and more intelligent, know more and more, gather more information and develop more intelligent computers. Artificial Intelligence is their next target.
Is this funny video an exaggeration or is it what Larry and Sergei really aim at?
Know everything about you and those around you.
Decide and act on your behalf.
Suggest new initiatives.
Isn’t life so much easier thanks to Google?