Circumcision Rates of Newborns Drop Dramatically Worldwide, Except in the US

Circumcision rates of newborns worldwide has dropped dramatically since World War II, except in the US where the rate has dropped from 64 percent of newborn males to 57 percent of newborn males. Doctors fear this is a serious public health issue since circumcision defends against many forms of sexually transmitted diseases, including HIV/AIDS. Arguments against the procedure include fear of desensitization of the penis, which doctors claim has never been demonstrated clinically.

Rates of Newborn Circumcision Have Dropped Dramatically Since WWII, Except in the US

Source: NewScientist, "Cut!", July 19-25, 2008

Female genital circumcision (mutilation) showed a drop from 35% to 20% in Ghana at the War Memorial Hospital from 1995 to 2003.

Prevalence of FGM among mothers delivering at the WMH (1996–2003)

Ghana Med J. 2006 September; 40(3): 87–92.

The WHO says that 3 million girls a year undergo female genital mutilation (FGM) in Africa.

"Prevalence of female genital cutting in Upper Egypt: 6 years after enforcement of prohibition law."

The objective of this study was to evaluate the prevalence of female genital cutting (FGC) in Upper Egypt, after 6 years of putting prohibition law into action. A total number of 3730 girls between the ages of 10-14 years were recruited to participate in this study. They were mainly preparatory school students (three urban and three rural areas). Social workers interviewed them as to whether they had undergone circumcision within the last 6 years or not. Subsequently, a questionnaire was sent to parents of girls who were positive for circumcision as to the circumstances surrounding the procedure. The prohibition law of FGC seems not to have altered the prevalence of this procedure. The majority of girls (84.9%) had had circumcision within the last 6 years with high prevalence in rural areas (92.5%). Circumcision was done for a combination of reasons, according to parents, with high rates of non-medical personnel participation (64.15%). This study's results indicate that the practice of FGC in Upper Egypt remains high despite enforcement of law. Extensive efforts are needed both to revise public awareness and to change attitudes regarding FGC.

PMID: 18348787 [PubMed - indexed for MEDLINE]

Employer Health Care Insurance Costs Trend - up 5% in 2008

Employer health care insurance cost trends continued their upward march in 2008, rising an average of 5% from 2007. This is a far cry from the 13% to 14% increases of five years ago, but it still makes employer paid health care one of the greatest benefits to employees in the US. The costs for family coverage in 1999 were an average of $5,900. In 2008 family health care insurance coverage averaged $13,000, an increase of 54% in nine years. But employers and employees are paying more for less, because today's insurance packages come with much higher deductibles, in some cases as much as $1,000 or more per year.

Estimated Average Annual Premiums of Employer Sponsored Health Benefits

Source: WSJ

Interest Rates & Consumer Price Infaltion - US & EU

Interest rates in the US remain 2 1/4 points lower than those in the EU, despite greater consumer price inflation in the US. The Federal Reserve in the US is charged with both keeping inflation under control and stimulating the economy, while the EU central bank's mandate is only to keep inflation in check.

Interest Rate and Consumer Price Inflation Trends - US & EU

Source: WSJ

Bank Failures - Then and Now

Over 3000 banks failed during the savings and loan crises, and the run up to it, in the '80s and '90s. By comparison, bank failures post the S&L crisis of the '80s have been minuscule by comparison. But the ones of late have been gigantic in size.

Bank Failures during the S&L Crises of the '80s and Now

Source: WSJ

Housing Woes Grows

At the core of the Wall Street crisis lies unresolved issues with the housing market in the US. This is the rot at the core of investment banks' holdings. Unfortunately, the data still does not paint a pretty picture about the housing market. The inventory of unsold, previously owned homes stands at a high approaching 12 months. This means there is a pipeline of 12 month's worth of sales in currnt back inventory of unsold homes. Since large numbers of people are probably postponing their home sales if they can, due to the lousy housing market, this backlog is probably a dam behind which lie many more months of unsold inventory just waiting for a sign of improvement before it gets dumped onto the market, depressing housing prices once again.

There was a brief uptick in the median price of homes in the first quarter of '08, but the trend resumed its downward course in the second quarter of '08. Meanwhile, the delinquency rate shot up in the second quarter of '08, now above 5 percent on first mortgages, and the default rate on first mortgages approached 2% in the second quarter of '08.

None of this reflects added woes that may come from the loss of jobs on a related to the Wall Street melt down. For example, economist James Hughes, dean of Rutgers' Edward J. Bloustein School of of Planning and Public Policy, said that he expects New Jersey to suffer economic difficulties and job losses well in excess of the 16,000 that the state has already lost since the beginning of the year. In a worst case scenario, 100,000 jobs could be lost, he fears.

Inventory of Unsold Homes; Median Home Sales Price Trend; Delinquencies & Defaults Trend

Source: WSJ

Links: Mortgage Foreclosures in the US

A Brief History of Investment Banking Firms in the US

Goldman Sachs and Morgan Stanley - End of the Line


Source: WSJ

"It Was Leverage Killed the Beast"

Police Lieutenant: Well, Denham, the airplanes got him.
Carl Denham: Oh no, it wasn't the airplanes. It was beauty killed the beast.

--- Last lines, King Kong (1933) ---

Morgan Stanley and Goldman Sachs Group, the remaining independent Wall Street brokerages, threw in the towel today and converted to traditional bank holding companies, placing themselves under the regulatory supervision of numerous federal regulatory agencies. Instead of being overseen just by the Securities and Exchange Commission, Goldman Sachs and Morgan Stanley will now face much stricter oversight from numerous federal agencies. The Federal Reserve will regulate the parent companies, the Comptroller of the Currency will oversee the national bank charters, and the Federal Deposit Insurance Corp. will likely play a bigger role because the companies are expected to seek much higher volumes of federally backed deposits, and the entities may seek to take customer deposits, instead of depending on short-term borrowing to finance their investments.

The firms will reduce their leverage ratios -- a measure of a firm's risk in relation to the equity on its balance sheet -- over the next two years from current levels to something more in line with that at commercial banks. Investment bank ratios now stand above 20, with commercial banks closer to 10. The combination of easy money, interest rates kept lower than the real inflation rate by the Fed after the dot com bust, Fannie Mae and Freddie Mac incentives to make housing affordable to more Americans, and finally the housing bubble burst, at the core of the problems, that all contributed to the rapid deleveraging of investment banks as their underlying assets crashed in value.

Quarterly Leverage Ratios Trend for Morgan Stanley, Goldman Sachs, Lehman Brothers

Morgan Stanley and Lehman Brothers had leverage ratios above 30 in Q1 2008, while Goldman Sachs had a leverage ratio of 27. For comparison purposes, Bank of America has a leverage ratio of 11, giving it far more assets to back up any troubled investments it makes. Having more assets on their balance sheets allowed the commercial banks to ride out the storm, since they had more resources to fall back on, without having to raise more capital, as their investments declined in value. Much of the investments banks out-sized profits came from this leverage - investing borrowed money in the hopes of getting a great return before having to pay it back. This fueled the out-sized returns of the investment banks during their salad day, and fuled their death pyres during the housing crash. They will be safer in the future, but also have smaller returns, as their ability to bet large amounts of someone else's money has now come a'cropper.

Newspaper Readership Continues Decline; More Newspapers on the Ropes

The Newark Star-Ledger, New Jersey's largest newspaper, expects to loose $30 million to $40 million this year, while its sister newspaper, the Trenton Times expects to loose $5 million. Both papers are properties of Advance Publications, owned by the Newhouse family. The Star-Ledger is attempting to negotiate voluntary buy-outs of 225 non-union workers, which would leave its workforce with 500 employees. The Trenton Times is attempting to achieve 25 voluntary buy-outs. The Star-Ledger's circulation has shrunk to fewer than 300,000 subscribers.

The Pew Research Center for the People and the Press has released its Biennial News Consumption Survey. The survey shows that all old media news viewership and readership has been steadily loosing ground since 1993.

News Readership Trends: Newspaper, Radio, Cable TV, Nightly Network News, Morning Network News, Online/Internet News

Source: Pew Research

Only network morning news has held fairly steady at around 20%, while Internet news readership and viewership has grown smartly from 2 percent in 1996 to 37 percent in 2008.

Newspaper Readership Declines
Internet News Increases

Source: Pew Research

This morning (Sept. 22, 2008) Internet entrepreneur Mark Cuban told newspaper executives to give up and declare bankruptcy. It's not that people won't continue reading newspapers, its that they won't continue reading them in the numbers they have. The handwriting is on the wall and newspapers need to start over again. Some, such as the Wall Street Journal, have made yeoman efforts to reinvent themselves on line. A few, with such herculean efforts, will probably survive. But for the most part, newspaper online sites are disappointing at best, hard to use, and merely repurpose their print editions with an online edition.

The Google-Yahoo Search Advertising Partnership: Good? Bad? For Whom?

Google has delayed its search advertising partnership with Yahoo for three months to give government regulators a chance to examine their deal on the fear that it might lead to anti-competitive developments in search engine marketing. Google and Yahoo together control over 80% of the lucrative and fast growing search engine advertising market (SEM).

Percent Spend on Search Engine Advertising
Google, Yahoo Microsoft

Source: SearchIgnite Whitepaper

But now Google CEO Eric Schmidt says the companies cannot wait any longer and will move forward with their partnership. Search marketing company SearchIgnite has published a whitepaper, Potential Impact of Google-Yahoo! Partnership & Cost to Marketers, which purports to show that Google's keyword prices are as much as 22% higher on average than Yahoo's. This could result, SearchIgnite says, in advertisers paying more for keywords on Yahoo than they otherwise would, if Yahoo chooses a revenue maximization strategy for its Google partnership. Google claims that its search keyword prices are set by auction, as are Yahoo's, and that no collusion between the companies on setting prices can result. Google also claims that there are methodological errors in the SearchIgnite research that make its results questionable.

While no one outside the companies has seen the agreement, Yahoo has described it as providing supplemental results to its own search advertising. As Cnet describes Hilary Schneider, Executive Vice President of Yahoo, saying:

She [Schneider] showed a specific example to bolster her case. A search for "red roses in Birmingham Alabama" yields no advertisements on Yahoo's search engine and 11 on Google's. Under the deal, Yahoo can show Google's ads when it chooses, sharing the resulting revenue.

This is a long-time and established relationship in the search and online advertising industry referred to as "backfill". It is quite common for a search site A to have an arrangement with a partner B to display B's results, either search results or search ads or both, as a supplement to A's. This provides A with more paying inventory and better results to display, B with greater distribution of its results, B's advertisers with broader reach, and visitors to the site with better results. It is generally held to be an all-around win for all parties.

In this case "A" is Yahoo and "B" is Google. It would seem that this arrangement benefits all parties concerned. Users of Yahoo's search engine will get more and better ads. Advertisers on Google will get broader reach to another audience of highly qualified searchers (Yahoo's search engine users). Google will derive additional revenue from displaying its ads to a broader audience (Yahoo's search engine users), and Google advertisers will have broader reach to another audience without the trouble of running multiple search advertising campaigns on multiple search engines.

Yahoo has said that it expects $800 million in revenue and $250 million to $450 million in incremental cash flow from the first year of the deal. Google offered the deal to Yahoo to keep the company and its search engine out of the hands of Microsoft, who had made a bid to buy Yahoo for as much as $47.5 billion, or $33 per share. Yahoo shares fell 44 cents to $18.82 on Wednesday, September 17, 2008.

The fear by advertisers, who have been the most vocal opponents of the deal, is that this arrangement will somehow boost their advertising costs. But Google and Yahoo will not be commingling their keyword auctions in this arrangement, nor will either company be able to see the price of the other's keywords, although Yahoo will know it after thte fact, that is after a user clicks on one of Google's keyword ads. Yahoo could use this after-the-fact knowledge to cherry pick higher-paying Google ads that perform better than their own lower-paying ads.

With respect to SearchIgnite's claim that keyword prices could rise as much as 22% as a result of this deal, this seems unlikely. Assume that it is true that Google's keywords are, on average, 22% more expensive than Yahoo's. Even if Yahoo could see the Google price on each keyword (which it can after the fact), and even if it decided to pursue a profit maximization strategy by replacing each of its cheaper keywords with a more expensive keyword (which it says isn't the nature of the agreement), Yahoo would still have to pay the affiliate fee for each Google PPC ad so used. This could range from a Yahoo/Google revenue split of 70%/30% to 90%/10%. While Yahoo has alot of clout due to the size and quality of its search traffic, 70/30 seems on the low end while 90/10 seems on the high end.

Based on the agreements I have been privy to I would speculate that the revenue split between Yahoo and Google is on the order of 80%/20%. With just a hypothetical 22% premium on Google search ads, Yahoo essentially breaks even on this profit maximization strategy. The only way Yahoo makes money from this deal is if it uses Google PPC ads to supplement its own, not replace its own.

There is one other area of concern that none of the above addresses, and that is the fear of the concentration of power in the hands of just two players of over 80% of the search advertising on the Internet. This advertising is extremely desirable and likely to continue growing strongly in the future. The idea of just two players controlling so much of this market has to be unsettling, despite any demurrals by the principals and admonishments to "do no evil" from Google. This is an issue that cannot be addressed by the facts of the deal. Internet advertising technology is likely to continue to change rapidly and the partnership between Google and Yahoo may grow tighter. If it is any consolation, historically such deals have usually ended with the partners at odds with each other, rather than closer to each other. The interests of the two parties eventually diverge so that they cannot sustain the relationship. The Internet is the most dynamic environment, technologically and business-wise, we have ever created. What seems like a good idea and a threat today can just as quickly go sour tomorrow.

Google now provides its advertisers control of which of its affiliate networks, even down to the particular web site, they want their ads to appear on. I would hope that Google extends this control to its advertisers for this Yahoo partnership. If an advertiser is afraid that it will be charged too much when its ads appear as backfill on Yahoo, or if they don't like the resulting ROI in such an arrangement, they should be able to opt out of having their ads appear on Yahoo. It is something that advertisers now can do on Google anyway, and it should ease concerns over rising advertising prices for those who are worried, even theoretically, about such things.

Link: Google Public Policy Blog: The SearchIgnite study on ad prices and the Yahoo-Google deal
Link: ANA Recommends Against Google-Yahoo Search Advertising Partnership in Letter to Department of Justice
Link: Facts about the Yahoo-Google Deal

Total Retail and E-Commerce Sales Q1 2000 - Q2 2008

Total retail sales and total e-commerce sales have been leveling off, since Q2 2006 for straight retail and since Q4 2007 for e-commerce. So, the e-commerce slow down has lagged the retail sales slow down by six quarters, but it is finally here. Q1 2008 e-commerce retail sales were up only .3% from the previous quarter and retail sales were up only .2% quarter over quarter. In Q2 2008 total retail sales were up just .9% from Q1 2008, but e-commerce sales did better, up 2.9% from Q1 2008. Still, e-commerce sales growth has sunk to its lowest level since the recession of 2001 when sales fell .5% in Q2 2001.

Total Retail E-Commerce Sales Change, Quarter-over-Quarter

Source: US Census Bureau

Total e-Commerce Sales by Quarter

Source: US Census Bureau

Total Retail Sales by Quarter

Source: US Census Bureau

The Commerce Department reported that retail sales in August were weak across the board, falling .3% from July. This despite lower gas prices which left more discretionary income in consumers' pockets. The continued crisis in financial markets, the housing bust, disappearing credit, and higher unemployment with attendant uncertainties continue to be a drag on consumers' spirits.

Leica Camera - Sales and Profit Fiscal Year 2008

Leica, always very conservative in its design approach, was very late to the digital camera market. Leica even resisted incorporating a light meter into its film cameras until the M6 was introduced in 1986, over a decade behind its Japanese competitors. Despite this, the quality and feel of its cameras has created a devoted and fanatical following. Leica introduced its first digital rangefinder, the M8, in 2006. Its price was high compared to other digital cameras, $4500 then, $5400 now for the M8. The M8's successor, the M8.2 was announced in September 2008 at $6500. The main new features were resized finder lines for more accurate framing, a "point and shoot" mode, and a quieter shutter. These mean something to some rangefinder aficionados, but on the whole are a disappointment after a nearly two year wait for the successor to the M8.

There is always alot of speculation on Internet photography forums on Leica's finances, which are hard to come by because the company was taken private by Mr. Andreas Kaufman, the current acting CEO, in 2005. However, Mr. Kaufman owns just 96.5% of Leica Camera. The remainder is thinly traded on the Frankfurt Exchange. In today's WSJ an article reported on Leica's finances, something worth keeping for future reference on Leica's business.

The annual revenue for its last fiscal year was 150 million euros, or $213 million dollars. Sales for its first fiscal quarter, ended June 30, were 26.999 million euros, less than half of the previous year's first quarter. The company had a loss of 3.85 million euros for FY 2008, ended March 2008. It anticipates a loss approaching 10 million euros for the fiscal year ending March 2009. Mr. Kaufman estimates that sales have to grow by about 66 percent to 250 million euros to finance the R&D spending Leica needs to stay competitive in digital markets.

It is hard to see this happening based on the new products and prices Leica has announced. Without the money to finance R&D not enough new products can be introduced to reverse Leica's death spiral. This is why I believe we see such a disappointing set of features in the M8.2: not enough money to invest in anything more spectacular. And the fall in Leica's quarterly revenue shows that it is not immune to weakening retail markets around the world, nor that its cachet is enough to carry it through lean times.

Because of the short back-focus distance of the rangefinder camera design, Leica needs a custom digital sensor for its digital rangefinder camera. This must be quite a large R&D expense for a camera maker as small as Leica with its small unit volume. The current sensor has a 1.33x crop factor, as it is referred to in digital circles, meaning the focal length of a lens made for a standard 35mm camera is 1.33x longer than it would otherwise be. This upsets alot of photographers, especially the film-loving Leica aficionados. But to create a new "full frame" sensor, as it is called, with a 1.0x crop factor, is a tall order for Leica, both because of the technical challenge, it might not be possible yet, and the high cost of R&D to create such a beast that would sell in small volumes. The resulting camera price might be prohibitive even for Leica collectors who are used to nose-bleed prices.

There may also be a business case for Leica not to make a full-frame sensor. The 1.33x crop factor sensor requires new, shorter focal length lenses to give the same field of view as the older lenses designed for 35mm film. Leica is introducing a whole slew of these new lenses at astonishingly high prices. They are also designs that have never been seen before, such as very fast and very wide lenses, 21mm @f1.4. One of Leica's big problems is the cannibalization of its sales by its own older equipment, some of it 50+ years old that is still perfectly usable on its cameras. But there are no such older lenses that can be used on the digital M8. Hence, if buyers want them they have to get them new from Leica - they can't turn to the used market to buy them cheaper there. For this reason alone, I believe that it will be a long time before Leica introduces a full frame M8 successor. It servers its business interests better to have the 1.33x crop factor M8 and make more money selling lenses than the one time charge for a full frame camera body that would rekindle the cannibalization of its new lenses by old.

Leica Camera Quarterly Sales in Millions of Euros

Mortgage Foreclosures in the US, April 2007 - August 2008

Total home foreclosures in the US have grown 105.7 percent from April 2007 to August 2008, growing to 303,879 from 147,708.

Mortgage Foreclosures in the US, April 2007 - August 2008

Source: Thomson Financial; RealtyTrac

3D Coming to a Theater Near You

Major movie theater chains and independent movie houses are trying to make the jump to 3D pictures to entice couch potatoes out of their 50-inch screen, THX powered homes. The leader in this technology area is RealD Corp., of Beverly Hills, California. In order to run 3D pictures a theater first has to upgrade to digital projection, then add the RealD 3D system to it.

Major theater chains such as Regal Entertainment Group and Cinemark USA Inc. have signed deals to outfit 1500 screens with RealD 3D projection technology. The Cinema Buying Group LLC, which represents 643 small theater owners in the US and Canada, has said it plans to add 3D equipment to 1,000 of the 8,000 screens it represents.

Digital 3D Theater Factoids

Cost to upgrade reel-based projector to digital projector: $50,000 - $70,000 per screen
Cost to license RealD 3D technology: $20,000 per screen over 10 years
Theaters with RealD screens in North America: 1200
Theaters with RealD screens in North America by the end of 2008: 3200

Premium charged for 3D ticket: $2 - $5

Movie tickets sold in US in 2002: 1.6 billion
Movie tickets sold in US in 2007: 1.4 billion

Source: Motion Picture Association of America

Unit sales of Video Games in Japan

Nintendo Wii:
Launch date: November 2006
Units sold in Japan: 6.7 million

Sony Playstation 3:
Launch date: December 2006
Units sold in Japan: 2.3 million

Microsoft Xbox 360
Launch Date: December 2006
Units sold in Japan: 700,000

Size of Japanese Video Game Market: $6.6 billion

Source: Enterbrain

Japanese video game players tend to like less-violent role playing games.

Piracy Threatens Oil Transit through Gulf of Aden

Bab el-Mandab, the strait connecting the Red Sea with the Gulf of Aden and the Indian Ocean, has come under the attack of pirate vessels. Ships have been captured and their crews held for ransom. This threatens some 3.3 million barrels of crude, or 3.9% of daily world supply, that moves through the strait headed east for the Suez Canal.

Oil Transit Points Through Middle East Straits and
Percent of Daily Oil Demand Carried

Source: Energy Information Administration

Daily percent of oil carried:
Straits of Hormuz (Persian Gulf): 19.4% of daily demand
Bab el-Mandab (Gulf of Aden): 3.9% of daily demand
Suez Canal (Red Sea): 5.3% of daily demand

Links:
Somali Pirates Grab Ukranian Ship Loaded with 30 Tanks

Pirates from the failed African state of Somalia have attacked at least 61 ships in and around the Gulf of Aden this year (2008), 17 of them in the first two weeks of September (2008) alone, according to the International Maritime Bureau's piracy reporting center in Malaysia. That compares with 13 attacks in the area for all of 2007.

Somali Pirates Demand $20 Million to Release Ship

Navy Boats Monitor Hijacked Ship

Update: Developed Nations Push Back on Piracy

Somalia

Source: LonelyPlanet.com

A Brief History of the Federal Budget Deficit and Surplus (Such as it Was)

The Congressional Budget Office (CBO) has issued its September 2008 budget and economic update. The CBO estimates that the deficit in 2008 will be over twice the shortfall of 2007, rising from $161 billion in 2007 (or 1.2% of GDP) to $407 billion in 2008 (about 2.9 percent of GDP). The CBO says:

The significant expansion in the deficit is the result of a
substantial increase in spending and a halt in revenue
growth. In 2008, CBO estimates, federal spending will be
8.3 percent higher than it was in 2007; at the same time,
total revenues will be less than they were in 2007.

Total Federal Budget Deficit (Surplus) 1967 - 2008 (actual) - 2018 (projected)

Source: CBO

The only time in recent history the Federal budget has run a surplus was for four years (1996 - 2001) of the Clinton administration. Although the economy has soured due to stagnating wages, layoffs, the credit crunch, and the housing debacle, the Federal deficit is in no where near as bad shape as it was during the stagflation era of the '70s and early '80s.

We will have to wait and see about the CBO's prognostications. As Yogi Berra said, "Prediction is very hard, especially about the future."

Defense outlays comprise nearly 66 percent of Federal discretionary outlays. It costs alot to be the policeman of the world:

Federal Discretionary Budget Authority: 2002 - 2008

Source: CBO

Contributing to the run-up in the record price of oil, the CBO report shows that demand for oil has far outpaced the supply since 2005, and year-over year demand growth has also outstripped supply growth since 2005.

World Oil Supply and Demand: 2002 - 2008

Source: CBO

Data shows that the great oil price run-up of the '00s, not seen since the early 1980s, dates from the beginning of this mismatch in oil supplies and oil demand. Tell me again why Congress needed to hold hearings on this issue? Couldn't they just have read their own report?

Oil Price Trend: 1976 - 2008

Source: WSJ

US Unemployment Levels and Rate: 1998 - 2008

The US unemployment rate among those 16 and older rose in August 2008 to 9.376 million unemployed, a nearly 30% year-over-year increase and the highest number in over 10 years.

US Unemployment Level: 1998 - August 2008 (Millions)

Source: Bureau of Labor Statistics

In August 2008 the US unemployment rate stood at 6.1%, only .2% short of the level reached during the 1991 recession.

US Unemployment Rate: 1998 - August 2008

Source: Bureau of Labor Statistics

Musical Piracy - 1770s Style

In 1770 the then 14-year old Wolfgang Amadeus Mozart came to Rome from Salzburg with his father during Holy Week. He attended concerts of the Sistine Chapel Choir, whose signature masterpiece was Allegri's Miserere, sung only on three days during Holy week, a piece so sublime and coveted with its soaring voices that the Holy See forbade publishing the music, lest it fall into hands other than those of the Sistine Choir. Mozart heard it once, maybe twice, went back to his hotel room and wrote it down from memory.

Word got out that the music was now available and the guards of the Holy See showed up in Mozart's hotel room demanding to know how he had gotten hold of the music. When he told them, the guards didn't believe him, so he sat down and wrote out the first twelve measures again from memory. They finally believed him. The secret was out. And so began one of the earliest chapters of musical piracy.

What once required a 1000-year genius can now be done by anyone. This is how technology becomes the great leveler.

Cost of Shipping a Standard Container from China to the U.S.

Cost of shipping a standard 40-foot container of goods from China to the US:

2000 -- $3,000
2008 -- ~$8,000

Increase: 266% over eight years, caused largely by the increase in the price of oil from around $20/barrel to triple digits today. The result has been a dimming of appeal among manufacturers to outsource manufacturing to China and other Asian countries. The price of oil is making the world round, again.

Newspaper Advertising Expenditures Continue Falling

The Newspaper Association of America (NAA) today reported Q2 2008 advertising expenditures for newspapers. The results were not good. Total print expenditures were down 16.07% to $8.8 billion from $10.5 B in Q2 2007. Total online expenditures, showing declining growth for the past 5 quarters, shrunk for the first time quarter over quarter from $795 million in Q2 2007 to $776 million in Q2 2008, a growth rate of -2.4 percent. The combined quarter-over-quarter growth rate for newspaper advertising expenditures is now -18.47%.

Newspaper Advertising Trend: Total Print and Total Online 2000 - Q2 2008

Classified advertising expenditures continued showing the greatest loss, down 27% from Q2 2007. Classified advertising has shown the deepest losses for newspapers starting in Q2 2006. Retial and national advertising expenditures were down 9.56% and 13.90%, respectively. The Internet has done a job on classified newspaper advertising with sites like eBay (revenue model: auction) and Craig's List (revenue model: free) having taken a big bite out of this important newspaper advertising category. The undeclared recession of 2007-2008 has also not been kind to advertising expenditures.

Newspaper Advertising Trend: Classified, Retail and National 2000 - Q2 2008

Browser Wars - This is Where I Came In

Google's introduction of its new browser "Chrome" is the first serious challenge to Microsoft's Internet Explorer since the end of the Netscape browser wars in, what was it?, 1999. The culmination of those wars was ultimately the break-up and sale of Netscape, the software division going to Sun Microsystems, the Netscape browser and Netscape portal going to AOL and eventually AOL-Time Warner, and the creation of the Mozilla Foundation to shepherd the open source version of the next generation Netscape browser. Of all the outcomes, perhaps only the Mozilla Foundation's Mozilla browser had any staying power, now representing almost 20 percent of the browser market.

Today Internet Explorer has the dominant market position with about 72% share of the desktop browser market. There seems little doubt that Microsoft's bundling of its browser with its operating system resulted in this dominant position. Microsoft was taken to court for monopolistic behavior, but any outcome was moot as to the destiny of the desktop browser. The wheels of justice grind too slow for Internet time. Google's introduction of a new browser will have to take this into account. It seems hard to imagine that Google can gain a market share greater than that of Firefox, the most popular alternative browser today, with almost 20% market share.

That acknowledged, one of the reasons given for Google's development of a browser, to be free of Microsoft control, seems difficult to believe. All browsers are pretty much compatible with one another. They have to be since no one is used to the exclusion of the others, no matter how dominant one of them has become. The Internet really is, pretty much, application independent. So, for Google to go its own way and create any large incompatibility between Chrome and IE would be difficult to imagine. On the other hand, being the proprietor of its own browser does give Google the opportunity to have a large say and stake in discussions around browser standards. Perhaps it hopes to be able to throw its weight around in such venues. But with browsers, as with other software, the de facto reality of the market place can count more than anything else. Here even a 20 percent de facto reality would be hard to move the market. It seems to me that Microsoft has been in the position of setting browser standards since it vanquished Netscape. Google will need all of its mojo if it hopes to get more than Firefox's 20% share and create de facto standards on the desktop.

Internet Browser Market Share

Source: Market Share by Net Applications

Internet Browser Market Share:

Microsoft IE: 72.15%
Firefox: 19.73%
Safari: 6.37%
Opera: 0.74%
Netscape: 0.72%
Mozilla: 0.10%

A Brief History of the Minimum Wage

The best time to have been on the minimum wage was the mid-'60s, when the minimum wage had the greatest buying power - $10.11 in 2008 inflation adjusted dollars. Since the mid-60s, the inflation adjusted value of the minimum wage has been dropping steadily, with an uptick in 2008 from its adjusted increase to $6.55. Another increase to $7.25 is scheduled for 2009, but that still keeps its buying power far below historical amounts. Minimum Wage
1938	$0.25
2008	$6.55
2009	$7.25
Highest value of the minimum wage in 2008 inflation adjusted dollars was in 1968	$10.11
Number of US workers paid hourly	75.9 million
Percentage of workforce paid hourly	58.50%
Percent making minimum wage	2.30%
Number of workers making minimum wage	1,748,000

Minimum Wage Adjusted for Inflation 1938 - 2008