Archives for August 2012

Bits Blog: The China-U.S. Smartphone Gap Grows Larger

August 31, 2012 by NewsMaker Leave a Comment

Smartphones are so popular here that it’s difficult to avoid seeing one, and in China, these devices are poised to become even more widespread.

This year, China will account for 26.5 percent of all smartphone shipments, compared to 17.8 percent in the United States, according to a forecast by the International Data Corporation, a research firm.

China has surpassed the United States in smartphone sales in the past. However, only in the first quarter of this year did it become clear that the smartphone gap between China and the United States would become a “long-lasting gulf that won’t be bridged,” said Kevin Restivo, a senior research analyst with IDC.

What’s driving the spike in China? Cheaper Android smartphones priced below $200, like those made by Huawei, according to IDC. Apple’s iPhone has also been a big hit among Chinese customers — during Apple’s fiscal second quarter, sales of the iPhone there accounted for 20 percent of the company’s revenue. However, over all, Android phones are outselling the iPhone by about eight times in China, according to Mr. Restivo, which you would expect because Google’s operating system is available on a wider array of products at lower prices.

China’s overtaking of the United States in smartphones doesn’t mean sales here are grinding to a halt, says Ramon Llamas, a senior research analyst at IDC, in a statement. Smartphones already account for the majority of phone sales in the United States, so a slowdown was expected, he said.

Article source: http://bits.blogs.nytimes.com/2012/08/30/china-smartphone-sales/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: llamas, slowdown, spike

Bits Blog: Apple Rejects App Tracking Drone Strikes

August 31, 2012 by NewsMaker Leave a Comment

This month, the British newspaper The Guardian ran an interactive map of American drone strikes, pinpointing the locations in Pakistan where missiles from the unmanned aerial vehicles struck suspected terrorists. The map, which was based on data from the Bureau of Investigative Journalism in Britain, was available through The Guardian’s app for the iPhone, as well as its Web site.

A graduate student at New York University, Josh Begley, recently took the same data on drone strikes from the same source that The Guardian used and put it into an iPhone app of his own creation that featured an interactive map. While The Guardian’s map was part of a much broader newspaper app featuring all manner of stories, the app by Mr. Begley, called Drone+, was dedicated exclusively to the drone strikes.

On Monday evening, Apple rejected Mr. Begley’s software from its App Store because, the company said, it ran afoul of Apple standards on objectionable content within apps.

How does that compute?

Information about drone strikes was used both in an article in the Guardian’s app, left, and in an app created by a graduate student at New York University.

Mr. Begley appears to be the latest developer to fall down the rabbit hole of Apple policies that determine what can and cannot be distributed through the App Store for iPhones and iPads. Most of the time, Apple’s system for approving apps seems to work pretty smoothly, considering the huge volume of apps the company has to deal with. But when it goes awry, it can lead to some real head scratching.

In a phone interview, Mr. Begley said Drone+ had been rejected twice before by Apple’s App Store team for violations of its policies, first because the app was “not useful or entertaining enough,” according to a copy of his e-mail correspondence with Apple supplied by Mr. Begley. The developer added some features, including the ability to push alerts to users of the app whenever a new drone strike was reported. Apple later had another objection related to the placement of Google’s logo on the map within the app.

It wasn’t until this week that Apple notified Mr. Begley that Drone+ had again been rejected, this time for violating provision 16.1 of its App Store guidelines, which bans software that presents “excessively objectionable or crude content.” Drone+ did not contain any graphic images showing the aftermath of drone strikes, Mr. Begley said. It merely presented their locations on a map.

“I wanted to have a more granular sense of what drone strikes really did look like out of genuine curiosity,” Mr. Begley said, describing his motivations for creating the app.

Tom Neumayr, an Apple spokesman, confirmed that Drone+ had been rejected for violating Apple’s policy on objectionable content, but he declined to comment further on the decision. Wired News first reported news of Mr. Begley’s saga on Thursday.

Apple caused a stir in 2010 over its decision to reject an app featuring a satirical political cartoon because of a policy against ridiculing public figures. Apple later accepted the app. The incident created concerns about Apple’s gatekeeper role as more media is distributed through its smartphones and tablet devices.

The case of Drone+ is especially puzzling, though, because the material Apple deemed objectionable from Mr. Begley was nearly identical to the material available through The Guardian’s iPhone app. It’s unclear whether Apple is treating the two parties differently because The Guardian is a well-known media organization and Mr. Begley is not, or whether the problem is that Mr. Begley chose to focus his app only on drone strikes.

Article source: http://bits.blogs.nytimes.com/2012/08/30/apple-rejects-app-tracking-drone-strikes/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: guardian, phone interview, rabbit

DealBook: Barclays Picks One of Its Own as Chief

August 31, 2012 by NewsMaker Leave a Comment

8:27 p.m. | Updated
Barclays, which has been tarnished by scandal, appointed a new chief executive on Thursday, as the British bank looks to restore its reputation and overhaul its culture.

By selecting Antony Jenkins, Barclays seemed to steal a line from the comedy series “Monty Python”: “And now for something completely different.”

Mr. Jenkins, 51, an Oxford-educated Briton with a soft-spoken demeanor, started his career 30 years ago as a cashier at a local Barclays branch. Over the last three years, he has overseen the sleepy consumer retail and banking business at Barclays.

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Even as concerns emerged about the bank’s ability to make money under a potentially more reserved approach, regulators and analysts viewed the appointment as a safe bet during a tumultuous time. The selection signals a return to the British banking roots of Barclays, as it aims to bolster its credibility. In addition to the rate-rigging inquiry, the bank also faces questions about its capital-raising efforts during the 2008 financial crisis.

Mr. Jenkins made the legal woes — and broader concerns about the bank’s culture — a central focus on his first day as C.E.O. Appearing at a town hall at Barclays’ London headquarters that was broadcast to thousands of employees across the world, Mr. Jenkins, in suit and tie but no jacket, emphasized the need to repair a tarnished reputation.

“The key point is to rally the organization of Barclays,” he said in an interview on Thursday. “We’ve obviously been through a very difficult time, but we need now to move on from that and focus on the future.”

Early on, Mr. Jenkins emerged as a favorite for the job. As the search process gained steam this month, he met with the bank’s board. The board also pursued William T. Winters, a former senior investment banking executive at JPMorgan Chase.

Marcus Agius, the board’s chairman, said on Thursday that Mr. Jenkins “stood out among a very competitive field of internal and external candidates because of his excellent track record transforming” the retail and business banking unit. Mr. Agius, who is stepping down in November, will be succeeded by an outsider, David Walker.

In picking Mr. Jenkins, the board was drawn to his knowledge of the bank’s inner workings.

The first member of his family to attend university, Mr. Jenkins started at Barclays in 1983 as a trainee. He left six years later for Citigroup, but rejoined Barclays in 2006 to lead its credit card business, Barclaycard. In November 2009, he was named chief of the retail and business banking group, and joined the executive committee.

Mr. Jenkins learned of his latest promotion days ago while he was on vacation in his London home. The bank held off announcing its choice until it was approved by the Financial Services Authority.

Two months ago, regulators urged the board behind the scenes to replace Mr. Diamond. During his tenure, Mr. Diamond came to personify the riskier pursuits of investment banking and the eye-popping pay packages on Wall Street.

The bank on Thursday said Mr. Jenkins could earn up to £8.6 million, or $13.6 million. By contrast, Mr. Diamond last year received £17 million, or $26.9 million, in pay and perks, which prompted heckling at the annual shareholder meeting in April.

Some shareholders, as well as British regulators and politicians, have blamed the culture of risk-taking under Mr. Diamond for the bank’s ethical lapses.

In June, Barclays agreed to pay $450 million to settle accusations by American and British authorities that it tried to manipulate the London interbank offered rate, or Libor, a key benchmark. Regulators accused the bank of reporting false rates to bolster profits and make its financial position appear healthier, the first case stemming from a multiyear investigation into more than a dozen global banks. Just days after the settlement, Mr. Diamond resigned.

Mr. Jenkins will have to clean up the mess left behind.

The Justice Department is still investigating Barclays traders as part of the broader Libor case and could bring criminal charges. The bank is also facing private litigation over rate manipulation.

Other government inquiries focus on the bank’s capital-raising efforts during the depths of the financial crisis. On Wednesday, Barclays disclosed that the Serious Fraud Office, the British government agency that investigates and prosecutes white-collar crime cases, “has commenced an investigation into payments under certain commercial agreements between Barclays and Qatar Holding.” Last month, the bank also confirmed that the Financial Services Authority was investigating Barclays over a related matter.

Unlike its peers, the Royal Bank of Scotland Group and the Lloyds Banking Group, Barclays managed to avoid a government bailout in the dark days of 2008, turning instead to sovereign wealth funds in Abu Dhabi and Qatar for an infusion of capital. Barclays raised a total of $7.1 billion from Qatar in July and October 2008. Qatar Holding is currently the largest shareholder in Barclays, with a 6.65 percent stake, according to Bloomberg data.

As the bank confronts the various investigations, analysts generally hailed the selection of Mr. Jenkins, with Citigroup analysts calling it “a safe appointment.”

“It’s very important that they brought in someone who was a safe hand,” said Shailesh Raikundlia, an analyst at Espírito Santo Investment Bank. He noted, however, that some investors “wanted a clean slate” — meaning an outside candidate.

The main test for Mr. Jenkins, analysts say, will be to bolster the bank’s credibility and address its myriad legal liabilities. In an interview, Mr. Jenkins acknowledged that the challenge was steep but “doable.” “There are many elements of Barclays’ culture that are strong and good, but clearly there are elements that have to change,” he said.

Despite the scandals, the bank’s financial footing looks better than many rivals. Barclays emerged from the crisis relatively unscathed, picking up pieces of Lehman Brothers. In the first half of the year, net profit rose 9 percent, to $4.86 billion, from $4.43 billion in the period a year earlier, excluding an accounting charge and other one-time costs.

Some investors worry that the selection of Mr. Jenkins, who lacks experience in the investment banking business, will crimp profits. The investment bank, which includes parts of the old Lehman empire, dominates the company’s operations. The unit generated 32 percent of Barclays’ revenue last year, while producing half the bank’s profits before taxes.

While questions remain about its future under Mr. Jenkins, the new chief assured his staff on Thursday that his appointment “does not signal any change in strategy or lack of commitment to the investment bank.”

Instead, he is focused on fixing the bank’s reputation. “We have a tremendous opportunity to change Barclays in a way that will better serve all of our stakeholders — customers, clients, colleagues, shareholders and broader society,” he said in a letter to employees. “Barclays can, and will, be a better bank.”

David Jolly and Michael J. de la Merced contributed reporting

Article source: http://dealbook.nytimes.com/2012/08/30/barclays-names-c-e-o-amid-new-investigation/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: demeanor, robert e diamond, t rowe price

Pogue’s Posts Blog: How to Propose the Pogue Way

August 30, 2012 by NewsMaker Leave a Comment

Two weeks ago, I proposed. To the sweetest, funniest, wisest woman I’ve ever known.

I wanted my children to feel a part of this life-changing event, so one night last spring, I asked them for their suggestions for a fantastic proposal. My two teenagers informed me that the most epic and unforgettable proposal would be a fake movie trailer. It would start out like any other romantic-comedy preview, but gradually reveal itself to be a thinly veiled version of our love story.

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I persuaded the movie theater at a summer resort to slip it in among the real movie previews, on a night when both Nicki’s family and mine were in the audience. You can watch the finished product here.

After its “premiere,” people kept asking if I’d be posting it online so they could show their friends. With Nicki’s encouragement, I did — and to my astonishment, the video went viral. It also generated a lot of questions.

Here, then, are the answers.

Q. Nice job on Pogue’s Proposal. But not all of us have thousands of dollars to spend on making full-blown movies for our girlfriends.

A. I had to laugh at this one. If you only knew how cheaply that movie was made! The whole thing was shot in two days, with a huge amount of planning but practically no budget.

If it looks professional, that’s a testament to the skill of Zach Kuperstein, the recent N.Y.U. film school grad I hired as cameraman.

He used an ordinary Canon S.L.R. to record the video. That’s it — a still camera. No Hollywood gear, no key grips or best boys. We used special lighting in only one shot, and it was the cheapie video light I wrote about last year.

I also paid the two stars — both talented Broadway actors — but all the others involved were friends and neighbors who just wanted to help out. I wrote, directed and edited the movie, and I gave myself a huge discount.

Q. Wait a minute — what about the opening shot? You clearly had a crane rig for that.

A. Nope. Zach stood on the roof of my Prius with his tripod as I drove slowly along the street. The resulting footage was a little bumpy from the pavement, but the Analyze for Stabilization feature in Final Cut Pro X smoothed it out quite nicely.

For nighttime scenes, Zach duct-taped blankets over the windows. For the scene where “I” am hosting a Nova TV show, look closely: the “cameraman” is actually holding a 1985 VHS camcorder I found in the basement.

We didn’t have a dolly, either. To film the jogging scene, Zach tied his tripod into the back of my car, like this:

To film a jogging scene, a tripod was tied into the back of a car.

As the car rolled, I sat next to him and held the microphone “boom” — a broom handle with an audio recorder duct-taped to the end of it. (For the second day of shooting, I hired a sound man with an actual boom.)

Q. In the YouTube version, we can see your girlfriend’s reaction as she watches, picture-in-picture style. How could she not know she was being filmed?

A. I hid a Nikon S.L.R. in a ficus plant just beneath the screen. After the movie began, a friend moved a Sony NEX-5, on a tripod, to the back of the aisle, to record the actual proposal moment. And my daughter sat behind and across from Nicki, filming her from the side with an old Flip camera.

I was hoping that, despite the darkness and lack of rehearsal, one of those cameras would capture something usable.

Incredibly, all three did.

Q. At the end, you stand up in front of the movie audience and pop the question — and the characters on the screen seem to react. When she says “yes,” for example, they all start cheering. How could you be sure that the timing of her live reaction would work with what you’d already filmed?

A. I couldn’t!

The onscreen characters interact with the live me four times. First, they encourage me to get out of my seat and bring Nicki to the “stage.” Second, when I lose my nerve, they hoot for me to continue. Third, they gasp when I bring out the ring. And finally, they explode into cheers when Nicki says yes.

To film the on-screen sequence, I had the cast look out at a smiley face I’d taped to the tripod leg — a stunt double for where I’d be standing in the actual theater. To make sure their interruptions came at the right times, the cast reacted to the audio playback of my speech, which I had pre-recorded on my phone.

Then I spent a week rehearsing my live speech with that video, so my own timing would be right. As long as Nicki didn’t say anything while I spoke, I would be golden.

Until, that is, I actually asked the question. At that point, timing was no longer in my control.

I wasn’t actually worried that she’d say no; she’d dropped a few sweet hints over the months. The real problem was that I had left her enough time to say exactly one syllable.

What if she made a joke (“I’ll have to think about it!”)? What if she were too overcome to speak? What if I was too overcome to speak?

In all of those cases, the music would swell anyway, the actors would cheer inappropriately — and I’d look like the world’s biggest idiot.

I worried about that moment for weeks. There was nothing I could do but hope.

As you can see in the video, my prayers were answered. Yes, I had left Nicki the time to utter one syllable — but that’s all she needed.

She said “YES!”

Article source: http://pogue.blogs.nytimes.com/2012/08/30/how-to-propose-the-pogue-way/?partner=rss&emc=rss

Filed Under: Business News Tagged With: friends and neighbors, school grad, technology columnist

Bucks Blog: Thursday Reading: Severe Diet May Not Prolong Life

August 30, 2012 by NewsMaker Leave a Comment

August 30

Thursday Reading: Severe Diet May Not Prolong Life

The severe diet that didn’t extend monkeys’ lives, a food star’s fitness plan, why September makes parents crazy and other consumer-focused news from The New York Times.

Article source: http://bucks.blogs.nytimes.com/2012/08/30/thursday-reading-severe-diet-may-not-prolong-life/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: diet, fitness plan, monkeys

Bucks Blog: Employers That Forbid You From Telling Others What You Make

August 30, 2012 by NewsMaker Leave a Comment

I was surprised earlier this month when I tuned in to a Marketplace report that noted that there are employers that contractually forbid employees from telling anyone how much money they make.

It’s a free country, and private employers can do what they wish in this respect, though plenty of companies (and many public employers) make a point of sharing salary data so there is no question about who is making the most (and, hopefully, why).

I doubt that a clause in an employment agreement mandating salary silence would be a deal killer for anyone in this economic environment. But doesn’t this sort of mandated vow of silence raise suspicions in the eyes of people who work for these employers? What are they hoping to hide from their employees, and why?

If you work (or have worked) for such an employer, please name it below and tell us a bit about why you think the rule came to be and whether it was a good or bad thing.

Article source: http://bucks.blogs.nytimes.com/2012/08/30/employers-that-forbid-you-from-telling-others-what-you-make/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: how much money, marketplace, private employers

Bucks Blog: Which Bug Repellent Is Best?

August 30, 2012 by NewsMaker Leave a Comment

European Pressphoto Agency

If your family is like ours, you’ll be spending time outdoors this Labor Day weekend. And if you’re a mother like me (read: a worrier), you’re well aware of news reports about the abundance of ticks this year, and about an increase in cases of West Nile virus in some parts of the country.

That means we’ll be spraying ourselves and our children with bug repellent, to ward off both ticks and the pesky mosquitoes that carry West Nile. (Generally we avoid slathering our offspring with chemicals. But we make an exception in this case, if they’re going to be out in nature for extended periods of time). But which repellent is best?

Consumer Reports has updated a test of widely available repellents that work on both deer ticks and mosquitoes that carry West Nile, along with cost information on a per-ounce basis. The six top-rated products are $2 an ounce or less. The data on costs is from 2010, according to Consumer Reports, but all the products are currently available. (And a quick check online suggests prices are about the same, or in some cases, lower.)

Just how much chemical you are comfortable exposing yourself and your children to is up to you. The four top-ranked brands — Off Deep Woods Sportsmen II, Cutter Backwoods Unscented, Off Family Care Smooth Dry, and 3M Ultrathon Insect Repellent — all contain DEET in varying concentrations from 15 percent to 30 percent, and were able to repel mosquitoes for at least eight hours.

DEET is effective, and the Environmental Protection Agency says it is safe when used as directed, but you shouldn’t use it on babies under 2 months old. The American Academy of Pediatrics advises against using products with more than 30 percent DEET on children.

The fifth- and sixth-ranked products — Repel Plant Based Lemon Eucalyptus and Natrapel 8-hour with Picaridin — don’t contain DEET, but provided long-lasting protection as well.

The lower-ranked products also repelled mosquitoes effectively, but generally for shorter periods of time, and some had other drawbacks, like a tendency to stain clothing.

The upshot, Consumer Report says, is that “most of the tested products will do the job if you’re going to be outside for only a couple of hours, but look for a highly rated product to protect you on longer excursions.”

The E.P.A. has information on its Web site to help you choose a repellent based on your specific needs, although it doesn’t include cost data. General information about West Nile is available from the Centers for Disease Control and Prevention.

Are you stepping up your use of bug repellent due to West Nile?

Article source: http://bucks.blogs.nytimes.com/2012/08/30/which-bug-repellent-is-best/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: academy of pediatrics, consumer reports, mosquitoes

Economix Blog: Jobs Outlook Remains Tepid

August 30, 2012 by NewsMaker Leave a Comment

Jobs and the Election

A weekly tracker.

This week’s economic data has come in broadly as expected, leaving the forecasters at Moody’s Analytics to continue to forecast that job growth will be slower in August — but still faster than it was in the spring. The latest post on Moody’s Dismal Scientist blog explains:

Labor market data over the past week confirm that August has been a sluggish month for job creation. We still look for a 145,000 increase in nonfarm payrolls, not far from July’s 163,000 gain and above the second quarter average of 73,000. The unemployment rate likely edged down to 8.2% this month from July’s 8.3%. While improving slowly, the U.S. job market is generating little wage income growth, which will be felt as rising gasoline and food prices test consumers’ resilience.

The Moody’s assessment, however, goes on to cite “reasons for concern that the August numbers could undershoot our forecast,” including a rise in the four-week moving average of continuing claims for unemployment benefits, a weakening index of consumer confidence and a region-by-region Fed report (known as the beige book) that was “not upbeat about the health of the job market.” It adds:

Each employment report is important, but this month’s will be especially so, as it comes as the Fed considers new round of quantitative easing. If the numbers are notably weaker than expected, the odds of near-term Fed action will rise.

Moody’s projections continue to indicate that the presidential election will remain close. As we’ve written previously, history suggests that average job gains between 100,000 and 175,000 in the six months before an election tend to lead to a close race.

Article source: http://economix.blogs.nytimes.com/2012/08/30/jobs-outlook-remains-tepid/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: employment report, index of consumer confidence, quarter average

Today’s Economist: Simon Johnson: Why Are the Big Banks Suddenly Afraid?

August 30, 2012 by NewsMaker 1 Comment

Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

Top executives from global megabanks are usually very careful about how they defend both the continued existence, at current scale, of their organizations and the implicit subsidies they receive. They are willing to appear on television shows – and did so earlier this summer, pushing back against Sanford I. Weill, the former chief executive of Citigroup, after he said big banks should be broken up.

Today’s Economist

Perspectives from expert contributors.

Typically, however, since the financial crisis of 2008 the heavyweights of the banking industry have stayed relatively silent on the key issue of whether there should be a hard cap on bank size.

This pattern has shifted in recent weeks, with moves on at least three fronts.

William B. Harrison Jr., the former chairman of JPMorgan Chase, was the first to stick out his neck, with an Op-Ed published in The New York Times. The Financial Services Roundtable has circulated two related e-mails “Myth: Some U.S. banks are too big” and “Myth: Breaking up banks is the only way to deal with ‘Too Big To Fail’” (these links are to versions on the Web site of Partnership for a Secure Financial Future, a group that also includes the Consumer Bankers Association, the Mortgage Bankers Association and the Financial Services Institute).

Now Wayne Abernathy, executive vice president of the American Bankers Association, is weighing in – with a commentary on the American Banker Web site.

These views notwithstanding, mainstream Republican opinion is starting to shift against the megabanks, as former Treasury secretary Nicholas Brady makes clear in a strong opinion piece published in The Financial Times.

Mr. Brady was Treasury secretary under Presidents Ronald Reagan and George H.W. Bush, and to the best of my knowledge, no one has ever accused him of being any kind of leftist.

Yet Mr. Brady’s thinking in his Financial Times commentary is strikingly similar to the reasoning that motivated the Brown-Kaufman amendment (supported by 30 Democrats and three Republicans) in 2010, which would have put a hard cap on the size and leverage of our largest banks, i.e., how much an individual institution could borrow relative to the size of the economy. (See this analysis by Jeff Connaughton, who was chief of staff to Senator Ted Kaufman; Senator Sherrod Brown, Democrat of Ohio, is still pushing hard on this same approach.)

Mr. Brady also stresses that we should make our regulations simpler, not more complex. Senator Kaufman made the same point repeatedly – and capping leverage per bank (Mr. Brady’s preferred approach) would be one way to do this.

Mr. Brady is not alone on the Republican side of the political spectrum. A growing number of serious-minded politicians are starting to support the point made by Jon Huntsman, the former governor of Utah and a Republican presidential candidate in the recent primaries: global megabanks have become government-sponsored enterprises; their scale does not result from any kind of market process, but is rather the result of a vast state subsidy scheme.

As Paul Singer, a hedge fund manager and influential Republican donor, says of the big banks, “Private reward and public risk is not what conservatives should want.”

A second problem for the bankers is that their arguments defending big banks are very weak.

As I made clear in a point-by-point rebuttal of Mr. Harrison’s Op-Ed commentary, his defense of the big banks is not based on any evidence. He primarily makes assertions about economies of scale in banking, but no one can find such efficiency enhancements for banks with more than $100 billion in total assets – and our largest banks have balance sheets, properly measured, that approach $4 trillion.

Similarly, the Financial Services Roundtable e-mail on “Some U.S. banks are too big” is based on a non sequitur. It points out that United States trade has grown significantly since 1992, and it infers that, as a result, the size of our largest banks should also grow.

But the dynamism of the American economy and its international trade after World War II was not accompanied by striking increases in the size of individual banks, and our largest banks did not then increase relative to the size of the economy, in sharp contrast to what happened since the early 1990s.

In 1995, the largest six banks in the United States had combined assets of around 15 percent of gross domestic product; they are now over 60 percent of G.D.P., bigger than they were before the crisis of 2008.

The Financial Services Roundtable is right to point out that banks in some other Group of 7 countries are larger relative to those economies. But which of these countries would you really like to emulate today: France, Italy or Britain?

The Financial Services Roundtable also asserts, in its other e-mail, that the Dodd-Frank financial reform legislation and the Basel III new capital requirements have made the banking system safer. That may be true, although the evidence it presents is just about cyclical adjustment; after any big financial crisis, banks are careful about funding themselves with more equity (a synonym for capital in this context) and holding more liquid assets.

The structure of incentives in the industry hardly seems to have changed, as witnessed, for example, by the excessive risk-taking and consequent large trading losses at JPMorgan Chase recently.

We need a system with multiple fail-safes, and making the largest banks smaller and less leveraged would achieve precisely that goal.

Mr. Abernathy’s article takes a much more extreme position. He contends that banks are already unduly constrained – by Dodd-Frank and Basel III – and this is holding back economic growth.

Mr. Abernathy goes so far as to say that if the banks were to raise $60 billion in additional equity capital, this “holds back $600 billion of economic activity.” In other words, strengthening the equity funding of banking would cause an economic contraction on the order of 4 percent of G.D.P.

Such assertions are far-fetched, not based on any facts and have been completely discredited (see the work of Anat Admati and her colleagues on exactly this point). Mr. Abernathy was assistant secretary for financial institutions under George W. Bush. If he has any evidence to support his positions – a study, a working paper, a book? – he should put it on the table now.

To make such assertions without substantiation is irresponsible. (A document from a lobbying organization would not count for much, in my view, but let’s see if he has even that.)

The big banks and their friends should be afraid. Serious people on the right and on the left are reassessing if we really need our largest banks to be so large and so highly leveraged (i.e., with so much debt relative to their equity). The arguments in favor of keeping the global megabanks and allowing them to grow are very weak or nonexistent. The arguments in favor of further strengthening the equity funding for banks grow stronger – see the recent letter by Senators Sherrod Brown and David Vitter, which I wrote about recently.

The views of sensible people like Secretary Brady, Senator Kaufman, Governor Huntsman and Senator Brown are spreading across the political spectrum.

Article source: http://economix.blogs.nytimes.com/2012/08/30/why-are-the-big-banks-suddenly-afraid/?partner=rss&emc=rss

Filed Under: Business News Tagged With: national debt, sanford i weill, treasury secretary

Bits Blog: Cloud Computing for the Poorest Countries

August 30, 2012 by NewsMaker Leave a Comment

Divyakant Solanki/European Pressphoto AgencyMany people in the developing world do their computing on battery-powered phones.

In Tuesday’s article on Amazon Web Services, I wrote about lots of different data-crunching companies, mostly in the developed world.

In the long term, however, as companies like Amazon, Google and Microsoft sell computing everywhere, the most dramatic changes may be in places most of us do not now see. Already, places without clean water, decent sanitation or steady electricity are using supercomputers.

Cheki is a used car classifieds business that serves up about a billion page views a month, mostly in Kenya and Nigeria. Most of the one million people using the site are looking at it with Android-based smartphones that cost about $70, according to Thomas Shaw, the company’s information technology manager. Imagine things in a few years, when Huawei, which makes most of the devices, gets those phone prices even lower.

This appears to be changing markets in several other countries as well. “There are people in Malawi, Rwanda and Ethiopia looking at the cars, too,” he says. Tariffs on cars are often high in these places, and a big market in another country may be a better way for them to buy.

Unlike the developed world, where speed, agility and cost are factors that make Amazon Web Services attractive, in the developing world it’s good to be on battery-powered phones and servers in California, instead of relying on an often-brittle electric grid. “For Westerners,” Mr. Shaw says, “the whole thing is a little bizarre.”

Jobberman, Nigeria’s largest jobs and careers Web site, also runs on Amazon Web Services. So does M-Pesa, the mobile payments division of Safaricom, a mobile phone provider based in Kenya. Mobile money has become so big that the Africa Development Bank says the new money may be causing inflation. In South Africa, a luxury goods company called 36Boutiques uses Amazon’s service for e-commerce

In India, there is an online nationwide cab-booking service called Getmecab that uses Amazon servers, though the closest ones are in Singapore. There are consultants that teach other businesses to use Amazon.

Amazon itself holds seminars for start-ups in India, Indonesia and many other countries, hoping to foster more consumption of advanced technology among the developing economies. So does Google, for its business applications, and it will very likely do more once its cloud computing offering, part of Google Cloud Platform, gains traction.

It’s quite possible that there are even Amazon Web Services being used in the Amazon. Amazon Web Servicesoperates several large data centers in Brazil.

Article source: http://bits.blogs.nytimes.com/2012/08/29/cloud-computing-for-the-poorest-countries/?partner=rss&emc=rss

Filed Under: Business News Tagged With: developing world, electric grid, mobile phone provider

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