Yesterday marked the 20th anniversary of the Tiananmen Square massacre. Today, The Big Picture, the Globe's photo blog, put up a touching remembrance. The changes—the disconnect, the growth—between these two pictures, 1989 and today, are striking:
When I was last in China, my blog was blocked by the great firewall. That's me, a rabble rouser. I rouse rabble.
I have been silent, I know. Both work and life keep me busy. At work, we released Android 1.1, which added voice search, Latitude, and paid apps. We continue to advance the platform, with exciting upcoming releases including the anticipated cupcake milestone. And of course there will be more phones.
In life, I spend most of my blogging cycles on my food blog (feed), knocking out several posts a week—that is not just a lot of blogging, but quite a bit of braising, infusing, roasting, and even foam making.
I find myself again with pen to paper—nothing anytime soon—and am happy to announce two new translations of Linux Kernel Development: Korean and Simplified Chinese. These new, updated, translations reflect the latest printing of the second edition. Find them at your local bookseller.
Also, I got engaged.
But the largest reason for the radio silence is that a lot of my blogging is on economics and I do not have any insight into our current situation. It is disingenuous to blog otherwise. I don't have a great hold on what is going on, and neither do most commentators, including many economists. If the top macroeconomists are without agreement, I am not sure what a trade economist can add, let alone I.
That said, I did say this, seven months before AIG's liquidity crisis:
The problem: As CDS contracts are not collateralized or otherwise guaranteed, their real value depends on the creditworthiness of the involved parties. The CDS contracts are being marked to market as sizable profit, but if a series of defaults hit, can the reinsuring parties pay the hedgers?
Six months ago, I wrote that while the societal and economic situation is not as bad as during The Great Depression, the financial situation is worse. I believe that continues to be true. But therein lies our problem: This is largely a financial, not an economic, mess, thus our tonic is financial, not economic. Few outside of Wall Street fully understand the esotericism that led us here. Yet few inside of Wall Street are trusted by the public. The Obama administration, led by Secretary Geithner, continues to balance that opposition with a "fix" rather than "replace" Wall Street approach. That is my policy prescription, too.
Let's hope it works.
This New Year's Eve, while you drink and dine and dance, as sapping as this roller coaster of a year has been, never take for granted what you have and who you are.
I'm luckier than most.
The Big Picture, The Globe's beautiful photography blog, features an amazingly well composed photo tour of Israel and Hamas's deterioration after six months of relative but illusive calm.
Even they are luckier than some.
I have long argued, partly in jest, mostly serious, that America should just get out of the car industry altogether and focus our capital on things we are good at, such as the service sector, software, or torts. The cost issue was secondary, I would say, if the cars themselves aren't competitive. (Does everyone at GM have huge fingers? Why are the interiors filled with over-sized plastic buttons?)
My bafflement continues with this latest bailout—unlike the financial package, I am against bailing out the US auto industry—and these comments from Ford's chief on the necessity of action:
Ford said in its plan that it could survive through 2009 with its current cash levels and by tapping its credit line with private banks, and that it could return to profitability by 2011. Even though it is better prepared for the downturn, Ford said it wanted $9 billion in loans to draw upon if necessary.
Ford’s chief executive, Alan R. Mulally, said the prospect of a failure of G.M. would cascade through the entire domestic auto industry and put millions of jobs at risk.
"We are very, very concerned, and that’s why we went with G.M. and Chrysler to Congress even though we think we have sufficient liquidity," he said in an interview.
Mulally is saying Ford is financially secure and does not need the bailout to meet payments, but he is worried about the second stage effects from a GM or Chrysler failure.
That seems backwards to me. Ford—and every other car manufacturer—would assuredly benefit from two of its competitors going under. There would be a small drop in demand as supply falls and prices rises, but that drop would be significantly smaller than the decrease in supply. Moreover, the substitution from GM to other manufacturers would overly favor Ford, in contrast to Mulally's statements, as "buy American" types swap one Detroit icon for another. The converse has the government funding a broken GM, propping up supply to the detriment of Ford. I don't get it.
I suppose Mulally could be bluffing, hoping to look good in the eyes of Wall Street and Ford's creditors but still get government help—to have his cake and eat it too. But somehow I doubt his posturing is worth the risk.
I will be live-twittering tonight's election results.
As I wrote four years ago: If you are informed and have an opinion, please vote. Laziness is not an excuse. Although voting for Ralph Nader is.
The Economist endorses Senator Obama for President.
The why is summed up in part by the endorsement—"if only the real John McCain had been running"—and in part by last week's Conservatives for Obama, so-called Obamacon:
The biggest brigade in the Obamacon army consists of libertarians, furious with Mr Bush’s big-government conservatism, worried about his commitment to an open-ended "war on terror," and disgusted by his cavalier way with civil rights.
Of course, the endorsement should be no surprise. The Economist has a history of endorsing the other party: Governor Reagan in 1980, Governor Clinton in 1992, Senator Dole in 1996, Governor Bush in 2000, and Senator Kerry in 2004.
With this heady endorsement, the Illinois senator might just win.
Via my coworkers at the Android Developers Blog: Android is now open source.
Android is the first free, open source, and fully customizable mobile platform. Android offers a full stack: an operating system, middleware, and key mobile applications. It also contains a rich set of APIs that allows third-party developers to develop great applications.
Across my career, I am most proud of Android—as a platform, as a family of phones, and as a catalyst for change in an otherwise closed industry. But the most exciting part is what's next. Download the SDK and start hacking.
Download the Android SDK 1.0 release 1.
Walt Mossberg: "The first real competitor to the iPhone ... the software is slick ... the G1 is a powerful, versatile device."
But the sui generis: Android is open to developers, open to consumers, and open to handset manufacturers. Cannot wait to see what's next.
The Journal has a great primer on this morning's compromise bailout bill.
Do read the article, but the gist is this: The Treasury will initially have $250b, and up to $700b, to buy either directly or via auction bad loans and assets from financial institutions, in return for warrants for equity. Compromise language includes disincentives for high CEO pay, additional congressional oversight, and a surprising requirement for the president "to submit a legislative proposal to seek reimbursement from the financial institutions that participated" if the value of the purchased assets yields a net loss.
The best analogy I can come up with to describe the crisis is the lemon problem, exasperated by mark to market accounting: Balance sheets are full of mortgage-backed or otherwise related assets, the popping of the housing bubble resulted in a revaluation of these assets, and capitalization requirements are driving banks to liquidate the assets. Enter the lemon market. Is the bank selling the assets because it needs cashflow, or because the assets are full of subprime contagion? Is this the firm's best or worst assets? The information asymmetry has snowballed to the point of credit market implosion. Thus the government's first solution, improving lending opportunities. When that was found insufficient, as the last few weeks have witnessed, we enter this second round, where the government actually buys the troubled assets.
It is hard to comprehend how dire this situation is as the economy still "feels" okay. Gas prices might be high, but unemployment is not at 30%. Yet while the societal ramifications are not as bad, the financial conditions are worse than those that kicked off The Great Depression.
