Sunday, January 31, 2010
WASHINGTON – Getting to space is about to be outsourced.
The Obama administration on Monday will propose in its new budget spending billions of dollars to encourage private companies to build, launch and operate spacecraft for NASA and others. Uncle Sam would buy its astronauts a ride into space just like hopping in a taxi.
The idea is that getting astronauts into orbit, which NASA has been doing for 49 years, is getting to be so old hat that someone other than the government can do it. It's no longer really the Right Stuff. Going private would free the space agency to do other things, such as explore beyond Earth's orbit, do more research and study the Earth with better satellites. And it would spur a new generation of private companies — even some with Internet roots — to innovate.
But there's some concern about that — from former NASA officials worried about safety and from congressional leaders worried about lost jobs. Some believe space is still a tough, dangerous enterprise not to be left to private companies out for a buck. Government would lose vital knowledge and control, critics fear.
Proponents of private space, an idea that has been kicking around for nearly 20 years, point to the airline industry in its infancy. Initially the Army flew most planes. But private companies eventually started building and operating aircraft, especially when they got a guaranteed customer in the U.S. government to deliver air mail.
That's what NASA would be: a guaranteed customer to ferry astronauts to the International Space Station through 2020. It would be similar to the few years that NASA paid Russia to fly astronauts on its Soyuz after the Columbia accident in 2003.
"With a $6 billion program you can have multiple winners. You'll literally have your Blackberry, your iPhone and your Android phone all competing for customers in the marketplace," said John Gedmark, executive director of the Commercial Spaceflight Federation. The White House has said it will be adding $5.9 billion to the overall NASA budget over five years; Gedmark believes most or all will go to commercial space.
Mike Gold, corporate counsel at Bigelow Aerospace, which is building the first commercial space station and is a potential spacecraft provider, believes the government should have privatized astronaut launchings decades ago.
"It will force the aerospace world to become competitive again and restore us to our glory days," Gold said.
Last year as part of the stimulus package, NASA said it would give out $50 million in seed and planning money for the idea of a commercial spaceship. Several firms expressed interest and NASA will soon pick a winner or winners.
American University public policy professor and space expert Howard McCurdy said this is not as radical as it seems. The shuttle was built not by government workers but by Rockwell International, a private company. Then in 1996 the Clinton administration outsourced the shuttle's day-to-day launch and other operations to a private company.
"This is something that NASA has been drifting toward in the last 25 years," McCurdy said.
But the Aerospace Safety Advisory Panel, created after NASA's first fatal accident, warned that the existing private rockets are not rated by the government as safe for people to fly on. That has to be addressed with testing and study before jumping into commercial space, the panel said.
It's not that it is impossible to certify these rockets as safe enough for astronauts but it is a long process that is not spelled out, said former NASA associate administrator Scott Pace, now a space policy professor at George Washington University.
Peter Diamandis, founder of the X Prize Foundation, which sponsored a competition in suborbital spaceflight, dismissed safety worries: "We don't fly on U.S. Air Government. We fly on Southwest and JetBlue."
The Federal Aviation Administration, which has a commercial space division, would regulate private space safety and other issues.
Pace cautioned that Clinton era efforts to privatize parts of the National Reconnaissance Organization, which builds and operates U.S. spy satellites, as a failure and this could be similar. He added that there's such strong support in Congress for the current space program a change may be difficult to get through Capitol Hill.
New York University government professor Paul Light said: "My general caution is be careful about what you give away. It's awful expensive to get it back."
But there should be a lot of interest in giving astronauts the ride if the price is right, Gedmark said.
The leading contenders — most are mum at this point — to build private spaceships include established aerospace giants, such as Boeing Co. of Chicago and Lockheed Martin of Bethesda, Md., which built most of America's rockets and capsules. Boeing and Lockheed Martin have existing rocket families in Delta and Atlas, which launch commercial and government satellites regularly and reliably, but for the moment aren't rated by the government to be safe enough for humans. That may change.
But it's the newer space guard that brings some excitement to the field. PayPal founder Elon Musk may be ahead of most. His SpaceX already has a Falcon rocket and Dragon capsule. Other companies being mentioned include Orbital Sciences of Dulles, Va., Bigelow Aerospace of Las Vegas and Sierra Nevada Corp. of Sparks, Nev.
In the 1980s, Tiffany Montague grew up wanting to get into space and figured she had to work for the government to do that. She joined the Air Force and was a high-altitude pilot. But now she works for Google, running a $30 million prize to encourage private companies to build a rover that can run around the moon.
"We're broadly interested in opening up space to everyone," Montague said in a phone interview Friday. She said Google is "supportive of commercial spaceflight, we're enthusiasts. But we're not space entrepreneurs — at least not yet. Who knows what we might do in the future."
Wednesday, January 27, 2010
This is the 45,000 ton Bagger 288 digger built by Krupps in Germany, and it is the largest land based machine built by humans on the face of the planet.
It’s not fast, moving at about 2 meters a minute, but boy can it shift rubble.
It can dig up 240,000 cubic meters of dirt a day. That’s about the same as a football field sized hole that’s 30 metres deep.
And why do you need a machine so absurdly big? So we can strip mine coal out of the ground, transport it hundreds of miles on massive trains and take it to power stations where we burn it to make electricity. And where does quite a chunk of this electricity go? Strangely back to the digger, as it requires 16.56 megawatts of electricity to operate. You’re not going to find a lot of solar panels on this leviathan.
Once it starts digging, it literally will not stop. Anything in its path will be chewed up, including this 60 ton bulldozer. How, I ask you, do you miss a 60 ton bulldozer?
Sunday, January 24, 2010
Head Concierge Simon Thomas once was asked to purchase a house and all of its contents for a loyal guest — sight unseen. A Middle Eastern traveler once asked him to ship 21 live deer to Kuwait — a 21st birthday surprise for his daughter. Another guest requested two golden pheasants — live, not stuffed. A celebrity once asked Brown to choreograph a very elaborate transfer from her cruise ship to the hotel via helicopter. The star was very specific about what color and make the cars should be for meeting her and her entourage at the ship and then driving them 100 yards to a waiting helicopter.
Hotel Adlon Kempiniski
When a family vacationing from Hanover, Germany, realized they had left their 4-year-old daughter's stuffed bunny at home, they asked the concierge, Raffaele Sorrentino, to remedy the situation since she could not fall asleep without it. When it was clear no substitute would do, the concierge arranged for a bellhop to drive the five hours round trip to retrieve the beloved bunny from the family's residence. Another time, Sorrentino jetted a staffer to Paris to buy a particular handbag that was not available in Germany, for the birthday of a guest's wife.
The Sagamore Resort
Lake George, N.Y.
Sometimes a guest's requests are so outrageous they cannot be fulfilled, no matter how dedicated the concierge. At this Victorian-era resort a guest asked the concierge to promptly "send engineering to my room to change my fireplace from gas-burning to wood-burning."
Another guest who was getting poor cellphone reception urged the concierge to have a cell tower installed at once. Another guest begged the concierge to find an all-day sitter for his 4-year-old son on Christmas Day; the concierge found not one, but two.
A few years ago, a loyal (and extremely wealthy) guest of the hotel wanted to watch a film, privately, on the beach fronting the hotel. However, the guest did not like sand and asked the concierge to "cover it up somehow." A team was dispatched to Mexico City to buy a panoply of rugs that were carefully rolled out on the beach. (Fortunately, this happened before the resort's recent $71 million "beach recovery" project that added 300 feet of pristine beach to the deluxe property.)
Le Saint-Sulpice Hotel
A pop star staying at this boutique hotel during the making of a movie insisted on drinking raw milk — straight from the cow — first thing every morning as part of a strict dietary regimen she was following.
Then concierge Patrick Huynh made regular trips in the middle of the night to a farm a couple of hours outside of the city in order to be back in time for the guest's breakfast. He'd worked out a barter with the dairy farmer: free raw milk in exchange for a night's stay at the snazzy boutique hotel. Huynh even opted to milk the cow himself — in his concierge suit.
Saturday, January 23, 2010
As recently as the 1970s, the little village of Sagaponack in New York's Long Island was little more than a stretch of dusty potato farms connecting the relatively plutocratic communities of East Hampton and Southampton. In addition to indigenous farmers, it was home to such writers as George Plimpton and Kurt Vonnegut, who were happy to take advantage of its low real estate prices, laid-back charm, and easy access to the Atlantic Ocean.
In 2009 the median home sale price in Sagaponack was $4,421,458, according to real estate site Zillow.com. The median home price in the U.S. last year fell to $174,100, according to the National Association of Realtors.
Sagaponack is not the only rarefied real estate market, no matter how poorly the country's housing market is doing. Long Island's two counties, Nassau and Suffolk (where Sagaponack is located) account for more than half of the 50 most expensive small towns in America. Nearby Water Mill (No.6) and Bridgehampton (No. 8) command median sale prices of $2,238,676 and $2,081,717, respectively.
Prices in a Few Top-50 Towns Rose
While Long Island may win honors for hosting the most concentrated cluster of high-priced homes in the U.S., it is not alone in attracting super-rich buyers. Jupiter Island, Fla., home to Fields, Fords, and other old-money families, as well as newer wealth such as golfer Tiger Woods, is the U.S.'s second-most expensive small town, with a median sale price of $3,620,310.
Jupiter Island is also one of a few communities that saw prices rise last year. Zillow.com estimates that prices there climbed 19.4% in 2009, while average sale prices elsewhere were falling by as much as 80%, according to NAR. Some additional top small towns (those with a population of 10,000 or less) saw an increase, with further gainers including Los Altos Hills (No.4) and Woodside (No.7), both in California, and Wainscott, N.Y. (No. 13).
The median decrease in home value across the country's 50 most expensive towns in November 2009 was -5.4%, compared to -5% nationally. "Home sales volume reached a low point in early 2009 and I think [it] will continue to increase or stay flat," says Stan Humphries, Zillow's chief economist.
Wealthy homeowners may be in for good news in 2010: NAR's monthly data shows that home sales in all price ranges nationwide showed year-on-year increases in November. Sales of homes costing more than $1 million increased in every region but the Midwest. They represented 1.1% of total sales.
2009: "Nerve-Racking for Everyone"
If Wall Street's bonus season is as generous as many expect, the Hamptons should be primed for a buying surge. Marilyn Clark, an agent for Sotheby's International Realty, says that in the past four to five months, activity in Sagaponack has rebounded for both homes and land sales, ranging from oceanfront homes and historic homes to new construction and parcels of vacant land. "During the early part of 2009 when everyone was more uncertain about the economy, there were price adjustments, but since the Sagaponack market has proved strong, prices are currently holding," Clark writes in an e-mail.
In Hunts Point, Wash., the country's third-most expensive small town, a property's average time in the market jumped to 149 days, from 83 days before the recession, estimates Randi Brazen, co-owner of Brazen Sotheby's International Realty in Bellevue, Wash. While home prices in the area have fallen more than 20% in some cases, Brazen says they typically hold their value in the long term because few are available in a region that remains attractive to the rich.
Saying that 2009 was "nerve-racking for everyone," Brazen expects the real estate market in Hunts Point to rebound as employment opportunities in nearby Seattle improve. "That doesn't mean prices will snap back up, but it will stop the downward spiral we've seen in the past year and a half," she says.
In Sagaponack, Jupiter Island, and America's other most expensive small towns, it seems that wealthy homeowners can look forward to even higher prices down the road.
Top 5 Most Expensive Small Towns
1. Sagaponack, N.Y.
2. Jupiter Island, Fla.
3. Hunts Point, Wash.
4. Los Altos Hills, Calif.
5. Fairbanks Ranch, Calif.
Thursday, January 21, 2010
Château de Castelnaud
Castelnaud — la-Chapelle, France
This impressive fortress, located on the limestone rocks above the Dordogne River, overlooks a former enemy, the Château de Beynac. During the Hundred Years' War, the English held Castelnaud and the French controlled Beynac, with both nations hoping to control this sensitive border region. These days Castelnaud is known for its Museum of Medieval Warfare, which includes reconstructions of giant crossbows and trebuchets, the huge slings used to hurl rocks at castle walls.
Château de Chillon
Lake Geneva, Switzerland
As with most real estate, it's often location, location, location that makes all the difference with castles. On an island near the edge of Lake Geneva, Château de Chillon is no exception. Excavations here have turned up evidence of a Bronze Age settlement, but the castle as it now stands was created between the 12th and 18th centuries. Its popularity got a huge boost in 1816. That year, following a visit, Lord Byron published his long poem "The Prisoner of Chillon"; the work refers to the "seven pillars of Gothic mold" that stand in "Chillon's dungeons deep and old."
Ludwig II of Bavaria — a.k.a. Mad King Ludwig — commissioned a set designer to create Neuschwanstein. Engineers broke ground in 1869, but King Ludwig didn't get much chance to enjoy his over-the-top palace. In 1886, as the castle was nearing completion, he died under suspicious circumstances; his body was found floating in a lake, with the body of his physician nearby. Despite this unhappy ending, Neuschwanstein remains the quintessential fairy-tale castle: It was a major inspiration for Sleeping Beauty's Castle at Disneyland.
More than 900 years old, this moated castle regularly hosted that much-married Tudor, Henry VIII. Its current success as one of England's most popular tourist attractions is due to the work of the blue-blooded Olive Wilson Filmer, who outbid William Randolph Hearst to buy the castle for $873,000 in 1926 (that's over $10 million in today's dollars). Filmer used the rest of her fortune to restore and beautify the structure and its surroundings. On the grounds are several mazes, a display on falconry, and a dog-collar museum
Dating back to the 1420s, Kronborg is one of the best-preserved Renaissance castles, despite the various alterations it's undergone since then. Positioned next to a strait separating the Danish island of Sjælland from Sweden, it had great strategic power over the sea traffic—not enough, however, to prevent the persistent Swedes from conquering it in 1658. Kronborg gained more lasting fame as the castle in Shakespeare's Hamlet.
Fortifications have stood on this rocky outcrop near the North Sea since the 5th century. In the 12th century, King Henry II acquired the structure, and later it was snapped up by William Armstrong, a wealthy Victorian industrialist. Still owned by Armstrong's descendents, the castle has served as the location for several movies, including Roman Polanski's 1971 version of Macbeth. After you tour the castle, which is open to the public from March to October, hop over to nearby Holy Island for a visit to Lindisfarne Castle. This stunner also overlooks the sea and is accessible only at low tide (the causeway connecting it to the mainland floods at high tide)
Planted on an island in the middle of a loch, Scotland's most famous castle looks as if it's been there forever. It does date back to 1220, but the original structure was destroyed in 1719 and lay in ruins for two centuries. In 1919, Lieutenant Colonel John Macrae-Gilstrap bought it and began restoration. He was helped by the stonemason Farquar Macrae, who claimed to have seen in a dream how the original castle looked in earlier times. The castle was rebuilt according to Macrae's specifications; later, plans found at Edinburgh Castle proved his vision correct. The "new" castle was finished in 1932.
Tuesday, January 19, 2010
The largest ancient castle in the world is Prague Castle in Prague. Built in the ninth century, it is an oblong irregular polygon with an average diameter of 420 feet and a total surface area of 18 acres. At times, it has housed the kings of Bohemia as well as Holy Roman emperors and presidents of Czechoslovakia. After Czechoslovakia split into the Czech Republic and Slovakia in 1993, the castle became the seat of the head of state of the new Czech Republic.
Saturday, January 16, 2010
Already this year, international rating agencies have warned about unsustainable budget deficits in Greece and Ireland, and most members of the euro zone have sailed past the 3% budget deficit cap required for membership in the common European currency. Government debt ratios in the U.S. and Britain could take decades to return to normal levels.
Read on to see how indebted some of the world's largest countries are—and who are the deepest in the red—as well as what they're doing to deal with the problem.
Sovereign Credit Rating: BBB-Debt-to-GDP Ratio (2009*): 310%Current Account Balance, 2010 (Estimate**): 0.7%GDP Growth, 2010 (Estimate): –2.0%Budget Deficit Ratio, 2010 (Estimate): –9.9%Iceland made headlines in 2009 as the world's first "subprime nation." The implosion of the country's financial-services industry left it with debt three times domestic GDP, and forced Iceland to go cap-in-hand to the International Monetary Fund for a $2.1 billion bailout. Yet when President Olafur Grimsson vetoed legislation on Jan. 6 that would have repaid $6 billion to British and Dutch authorities for covering their local depositors in a failed Icelandic bank, the country's international financial lifeline was put in jeopardy.* Latest available figure** All 2010 figures here and subsequently are forecasts.
Sovereign Credit Rating: BBB+Debt-to-GDP Ratio, 2010: 124.9%*Current Account Balance, 2010: –9.0%GDP Growth, 2010: –0.1%Budget Deficit Ratio, 2010: –9.0%With the largest debt burden relative to the size of its domestic economy in Europe, Greece is viewed as the sick man of the region. Not helping matters, the European Commission criticized the country on Jan. 12 for publishing false economic numbers. That comes after local policymakers were forced to revise the 2008 budget deficit figure to 12.7%—three times an earlier forecast. To get the country's books in order, politicians want to raise an extra $6.5 billion this year through pay freezes for government workers and new taxes.
* Source: European Commission
Sovereign Credit Rating: AAADebt-to-GDP Ratio, 2010: 93.6%Current Account Balance, 2010: –2.2%GDP Growth, 2010: 1.5%Budget Deficit Ratio, 2010: –9.9%The $787 billion economic stimulus package and the further billions of dollars pumped into the financial-services sector have pushed America's debt burden to almost 100% of annual GDP. That's unsustainable in the long term, but expected 1.5% growth in the domestic economy this year has reassured investors that debt levels remain manageable. While no widespread tax increases are on tap this year, the Obama Administration is planning some targeted taxes to fill the gap. But health-care reform currently working its way through Congress could add billions of dollars to the federal budget.
Sovereign Credit Rating: AAADebt-to-GDP Ratio, 2010: 81.7%*Current Account Balance, 2010: –1.9%GDP Growth, 2010: 0.9%Budget Deficit Ratio, 2010: –13.2%With one of the worst budget deficits in the European Union, Britain must tighten its belt or face dire fiscal problems. No definite plans are expected before a national election later this spring, although all major political parties agree government spending must be cut and taxes will increase. The official retirement age also may rise to ease the country's financial woes, which are particularly dire due to the British economy's reliance on the financial-services industry.* The European Commission pegs the ratio at 80.3%.
Sovereign Credit Rating: AADebt-to-GDP Ratio, 2010: 66.3%*Current Account Balance, 2010: –4.7%GDP Growth, 2010: –0.7%Budget Deficit Ratio, 2010: –12.3%After Spain's credit-fueled construction and real estate sectors imploded, the country's once prosperous economy turned into one of the worst performers in Europe. A large budget surplus before the crisis began will likely turn into a 12% deficit this year, and Spain's uncompetitive workforce has exacerbated the country's current account deficit. To turn things around, analysts reckon the Iberian country must overcome its many structural problems, such as a low caliber of tertiary education and relatively high labor costs.* Source: European Commission
Sovereign Credit Rating: AADebt-to-GDP Ratio, 2010: 82.9%*Current Account Balance, 2010: 0.6%GDP Growth, 2010: –2.5%Budget Deficit Ratio, 2010: –13.5%Once known as the Celtic Tiger, Ireland had the wind knocked out of its sails by the credit crunch. The local housing market contracted 19% last year and the economy shank 7.5%. In response, the Irish government has slashed $5.8 billion from its 2010 budget, including pay cuts for government workers and reductions in subsidies for parents of young children. Affected workers haven't taken the belt-tightening lying down: Thousands took to the Dublin streets in late 2009 to protest.* Source: European Commission
Saturday, January 9, 2010
Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.
As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 -- or worse," he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.
"Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.
As America's pre-eminent short-seller -- he bets big money that companies' strategies will fail -- Mr. Chanos's narrative runs counter to the prevailing wisdom on China. Most economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.
Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Mr. Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal, steel and iron ore.
Mr. Chanos, 51, whose hedge fund, Kynikos Associates, based in New York, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal.
For all his record of prescience -- in addition to predicting Enron's demise, he also spotted the looming problems of Tyco International, the Boston Market restaurant chain and, more recently, home builders and some of the world's biggest banks -- his detractors say that he knows little or nothing about China or its economy and that his bearish calls should be ignored.
"I find it interesting that people who couldn't spell China 10 years ago are now experts on China," said Jim Rogers, who co-founded the Quantum Fund with George Soros and now lives in Singapore. "China is not in a bubble."
Colleagues acknowledge that Mr. Chanos began studying China's economy in earnest only last summer and sent out e-mail messages seeking expert opinion.
But he is tagging along with the bears, who see mounting evidence that China's stimulus package and aggressive bank lending are creating artificial demand, raising the risk of a wave of nonperforming loans.
"In China, he seems to see the excesses, to the third and fourth power, that he's been tilting against all these decades," said Jim Grant, a longtime friend and the editor of Grant's Interest Rate Observer, who is also bearish on China. "He homes in on the excesses of the markets and profits from them. That's been his stock and trade."
Mr. Chanos declined to be interviewed, citing his continuing research on China. But he has already been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.
"The Chinese," he warned in an interview in November with Politico.com, "are in danger of producing huge quantities of goods and products that they will be unable to sell."
In December, he appeared on CNBC to discuss how he had already begun taking short positions, hoping to profit from a China collapse.
In recent months, a growing number of analysts, and some Chinese officials, have also warned that asset bubbles might emerge in China.
The nation's huge stimulus program and record bank lending, estimated to have doubled last year from 2008, pumped billions of dollars into the economy, reigniting growth.
But many analysts now say that money, along with huge foreign inflows of "speculative capital," has been funneled into the stock and real estate markets.
A result, they say, has been soaring prices and a resumption of the building boom that was under way in early 2008 -- one that Mr. Chanos and others have called wasteful and overdone.
"It's going to be a bust," said Gordon G. Chang, whose book, "The Coming Collapse of China" (Random House), warned in 2001 of such a crash.
Friends and colleagues say Mr. Chanos is comfortable betting against the crowd -- even if that crowd includes the likes of Warren E. Buffett and Wilbur L. Ross Jr., two other towering figures of the investment world.
A contrarian by nature, Mr. Chanos researches companies, pores over public filings to sift out clues to fraud and deceptive accounting, and then decides whether a stock is overvalued and ready for a fall. He has a staff of 26 in the firm's offices in New York and London, searching for other China-related information.
"His record is impressive," said Byron R. Wien, vice chairman of Blackstone Advisory Services. "He's no fly-by-night charlatan. And I'm bullish on China."
Mr. Chanos grew up in Milwaukee, one of three sons born to the owners of a chain of dry cleaners. At Yale, he was a pre-med student before switching to economics because of what he described as a passionate interest in the way markets operate.
His guiding philosophy was discovered in a book called "The Contrarian Investor," according to an account of his life in "The Smartest Guys in the Room," a book that chronicled Enron's rise and downfall.
After college, he went to Wall Street, where he worked at a series of brokerage houses before starting his own firm in 1985, out of what he later said was frustration with the way Wall Street brokers promoted stocks.
At Kynikos Associates, he created a firm focused on betting on falling stock prices. His theories are summed up in testimony he gave to the House Committee on Energy and Commerce in 2002, after the Enron debacle. His firm, he said, looks for companies that appear to have overstated earnings, like Enron; were victims of a flawed business plan, like many Internet firms; or have been engaged in "outright fraud."
That short-sellers are held in low regard by some on Wall Street, as well as Main Street, has long troubled him.
Short-sellers were blamed for intensifying market sell-offs in the fall 2008, before the practice was temporarily banned. Regulators are now trying to decide whether to restrict the practice.
Mr. Chanos often responds to critics of short-selling by pointing to the critical role they played in identifying problems at Enron, Boston Market and other "financial disasters" over the years.
"They are often the ones wearing the white hats when it comes to looking for and identifying the bad guys," he has said.
Friday, January 8, 2010
1. Fastest GDP growth
With the world still haunted by recession, China seems to be the promise land with a 7.7 percent year-on-year economic growth rate in the first three quarters.
The figures outperform all the other countries, including India, China’s old rival in terms of economic growth rate, ensuring China an annual GDP growth over 8 percent in 2009.
China’s year-on-year GDP growth stood at 6.1 percent, 7.9 percent and 8.9 percent respectively for quarter one to quarter three, according to the National Bureau of Statistics, showing a robust but stable recovery.
China, together with other emerging economies, plays an important part in leading the world out of the economic downturn, analysts said.
2. World's No 1 exporter
China will "very probably" surpass Germany to become the world's largest exporter this year, the Ministry of Commerce said on December 27.
According to the World Trade Organization, during the first half of 2009, China had, for the first time in the past seven years, edged narrowly ahead of Germany in exports. During the January-June period, China exported goods worth $521.7 billion, slightly more than Germany, which exported $521.6 billion worth of goods.
Economists predicted such momentum will be sustained during the second half of 2009 and the years ahead, especially with the toll the financial crisis has taken on developed countries, including Germany.
Although the figure for December has not yet been announced, Zhong Shan, vice-minister of commerce, predicted that China’s exports for the whole year in 2009 will drop by 16.5 percent year-on-year to $1.19 trillion. Given the drops in China’s exports that have already taken place this year, that actually means that exports for December will likely grow by 9.6 percent compared to last year, to $121.86 billion.
3. Top IPO destination
Companies raised more capital through initial public offerings (IPOs) on Chinese stock exchanges, including in Hong Kong, than in the US this year – the first time the US has not been the top IPO destination since 2006.
Companies raised $51.6 billion in China, including $27.2 billion in Hong Kong and $24.4 billion on the mainland. In the US, companies only raised $26.5 billion, according to statistics from the British research company Dealogic.
Companies from the mainland accounted for 46 of the 66 new listings on the Hong Kong exchange this year. China Minsheng Banking Corporation raised the most, with HK$30.2 billion ($3.89 billion), and eight of the top ten largest IPOs were mainland companies.
4. World's biggest auto market
China sold 7.22 million new vehicles in 2006, overtaking Japan as the second-largest auto market after the US. In January 2009, China sold 735,500 home-made vehicles, surpassing US as the world’s top auto market.
China’s auto sales hit 10.9 million in the first ten months of this year, up 37.8 percent over the same period last year, breaching the 10-million barrier for the first time ever.
Boosted by government stimulus measures such as tax cuts and subsidies for trade-ins, sales of all automobiles for the whole year are set to break the 13 million barrier, which has consolidated China’s top position in the global automobile market.
5. Best performing air transport industry
China’s air transport industry made a total profit this year of 11.8 billion yuan ($1.73 billion) as of November, defying a forecast by the International Air Transport Association (IATA) that the industry would lose $11 billion globally this year.
"The performance of China's air transport industry is the best in the world," Li Jiaxiang, head of the Civil Aviation Administration of China（CAAC）, told China Central Television.
The figure, which includes profits from both airlines and airports, released by CAAC on its website on December 14, shows that China’s airlines have weathered the global financial crisis without too much turbulence.
A strong domestic market and the government's policy support have contributed to the profits, analyst said.
6. World's longest natural gas pipeline
A new “Silk Road” linking China and Central Asia was opened on December 14: a 1,833-km natural gas pipeline, that starts in Turkmenistan, and winds its way through Uzbekistan and Kazakhstan before reaching China's Xinjiang region. It is the world’s longest natural gas pipeline ever constructed.
Chinese President Hu Jintao and his counterparts from Turkmenistan, Kazakhstan and Uzbekistan jointly opened the pipeline at a ceremony in Turkmenistan. Hu said the China-Central Asia natural gas pipeline is a model of solidarity and mutually beneficial cooperation among the four countries.
Once it reaches full capacity between 2012 and 2013, it will be able to deliver 40 billion cubic meters of gas each year. That is more than half of China's current annual gas consumption.
China consumed 77.8 billion cubic meters of gas in 2008.
7. World's largest gold consumer
China is set to overtake India as the world's No 1 gold consumer this year.
Metals consulting firm GFMS projects that China's gold demand will total 432 tons this year, and that India's will total 422 tons.
Gold demand in India fell by more than half in the first nine months of this year through September, according to the World Gold Council. In contrast, China's demand was up 8 percent in the same period.
8. China leads in nuke capacity
With 24 nuclear power blocks under construction and a planned capacity of 25.4 gigawatts, China now has the world’s largest nuclear power capacity under construction, according to a December 26 report of the National Development and Reform Commission.
China recently started constructing the Taishan nuclear plant in Guangdong province, which is expected to be the world’s largest after completion. A total of 50.2 billion yuan ($7.35 billion) was invested in the first-phase project, whose unit capacity can amount to 1.75 million kilowatts.
According to China’s nuclear power plants long and mid-term development plan, the installed capacity is expected to reach 40 million kilowatts by 2020 generating 260 billion to 280 billion kilowatt hours of electricity each year, accounting for 4 percent to 6 percent of the country's total.
China now has 11 nuclear reactors in operation, with a total nuclear power installed capacity of 9.08 gW.
9. China's average housing prices top the world
China’s average housing prices have topped the world when compared to average incomes, Xie Guozhong, board member of Rosetta Stone Advisors said.
According to statistics of the first three quarters of this year, the average annual income of Beijing residents amounted to 26,720 yuan ($3,913.18). If a couple wanted to buy a 100-sq m second-hand apartment on loan they needed to save money for 49 years without spending a penny as the price would now be two million yuan.
The same situation is happening in other first-tier cities.
Research held by the Beijing News showed 80 percent of the 50 main buildings being sold in Beijing this year had a price rally of more than 50 percent.
The loose monetary policies of the Chinese government have spurred a record of $1.27 trillion in loans this year and the huge liquidity had created serious bubbles in China’s stock and real estate markets that threaten the economy.
China’s real estate market will not show a downward trend unless the US Federal Reserve increases the interest rate, which will lead to the appreciation of the dollar and obvious inflation expectations.
10. World's largest wind turbine market
China is overtaking the US as the world’s largest market for the installation of wind turbines in 2009, People’s Daily reported, citing Arthouros Zervos, president of European Wind Energy Association.
In the first half of this year, China had new wind turbine installations producing 4.5 million kilowatts of power, surpassing the US, which had new wind turbine installation of 4 million kilowatts of power in the same period.
The data of China’s total wind turbine installation of 2009 is yet to be announced, but it is predicted to overtake the US as the world's largest market for wind turbines this year.
The government’s encouraging policies are seen as the main driving force to help create huge market demand for wind turbines. As a result, manufacturers propped up and investment flocked into the sector.
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Tuesday, January 5, 2010
What's it like when your grandpa is the richest man in the world? For Nicole Buffett, it means forgoing cable TV and health insurance and making do on $40,000 a year. Here, she dishes on her upbringing and why her grandfather Warren Buffett disowned her.
Nicole Buffett is at home among the neo-hippies who shuffle along the laid-back, tree-lined streets of Berkeley, CA. At an elfin 5 feet tall, clad in a flowing peasant dress and sandals adorned with peace signs, her long hair cascading in ropy dreadlocks to her waist, the 32-year-old abstract painter is just another of the city's free-thinking, granola-crunching denizens. And yet, she's a walking oddity. "The first thing most people think of when they hear my last name is money," she laughs.
Not just money — gobs of it. Nicole Buffett's grandfather is the legendary investor Warren Buffett, whose $58 billion fortune made him the richest man on the planet, a mantle he seized from Bill Gates last fall. So deep are Buffett's pockets that when the financial markets cratered in September, the so-called Oracle of Omaha single-handedly buoyed Wall Street (at least for a day) by plunking down $5 billion on troubled investment bank Goldman Sachs. ("Canonize Warren Buffett," cried one headline on CNBC's Website.) But there's a bitter irony to Buffett's beneficence. Wall Street's white knight is also an unforgiving hardhead when it comes to his own granddaughter, whom he cut off two years ago after a falling-out. "For him to discard me like that was devastating," Nicole says matter-of-factly. "It permanently divided our family."
When Nicole was 4, her singer-songwriter mother married Warren Buffett's youngest child, Peter, a composer for commercials and films. He later adopted Nicole and her identical twin sister, who were embraced as kin by the larger Buffett family — especially Susan, Warren's first wife, an avid music lover and cabaret performer. "A lot of people don't realize that my family is full of artists," says Nicole. (Susan Buffett, who died in 2004, was an early buyer of Nicole's art and named Nicole one of "my adored grandchildren" in her will.)
As a child, Nicole made regular visits to "Grandpa's" modest home in Omaha, where he still lives, purchased in 1958 for $31,500. Despite the humble digs, Nicole remembers the occasional spoils of Buffett's wealth. At Christmas, when she was 5, he gave her a crisp $100 bill from his wallet. Once, she was invited on a private tour of the See's Candies factory he owned. And twice yearly, Peter Buffett packed up his brood for a vacation at his father's compound in Laguna Beach. Nicole also remembers once tiptoeing into her grandfather's study to fetch something, careful not to disturb him while he read the Wall Street Journal. Just as she turned to slip out, Buffett cleared his throat and said, "Nicole, I just want you to know that your grandmother and I are very proud of all that you've accomplished as an artist." "It's a really big deal for him to communicate on such an emotional level," says Nicole, her eyes welling. "So it was a big deal for me."
Nicole was clueless about the scope of the Buffett fortune until she was 17, when her grandfather appeared on the cover of Forbes for having topped the magazine's annual list of the richest Americans. Her classmates nearly stampeded her at school with the news. "I called my dad, and he said, 'Yeah, Grandpa is going to be getting a lot more press, and we're going to have to get used to that. But we'll be living our lives the same way and doing what we always do,'" Nicole says.
In fact, the national media debut only intensified Buffett's efforts to preserve his unaffected lifestyle. Aware of the unfairness of what he calls "the ovarian lottery," Buffett made clear to the family that there'd be no handouts. "For most people, your life is largely determined by the wealth you were — or weren't — born into," Nicole explains. "But our family was supposed to be a meritocracy." That philosophy translated into a near-fanatical devotion to living like regular Joes. Buffett's kids went to public schools and, when they were old enough to drive, shared the family car. "You wouldn't guess it, but I grew up in a household with my parents saying, 'If you're fortunate enough to find something you love, then do it,'" says Peter Buffett.
Committed to instilling those homespun values in his grandkids, Buffett agreed to pay for their college educations — and nothing more. He picked up the six-figure tab for Nicole's art school tuition. Once, Nicole called her grandfather's office to ask if he'd help her buy a futon when she moved to an off-campus apartment. "You know what the rules are: school expenses only," his secretary told her.
Four years ago, following Susan's death, Buffett showed up for his family's annual Christmas gathering clad in a garishly over-the-top red tracksuit and Santa hat, a gift from "Arnie" (California governor Arnold Schwarzenegger). Everyone laughed at the absurdity of it all. When the holiday ended, Nicole raced into Buffett's arms. "We're not a touchy-feely family, so when I did it, the rest of the family seemed a little surprised," Nicole says, beaming. "But he gave me this great big hug back."
It was the last time the pair would share an embrace. Two years later, Nicole agreed to appear in The One Percent, a documentary by Johnson & Johnson heir Jamie Johnson about the gap between rich and poor in America. "I've been very blessed to have my education taken care of, and I have had my living expenses taken care of while I'm in school," she states on camera. None of the Buffetts, a famously press-averse bunch, had ever before appeared in so public a forum to dish about their upbringing. Though Nicole informed her father of her role in the film and he had no objections, she failed to give her grandfather a heads-up. Asked in the film how he'd react to her interview, Nicole responds, "I definitely fear judgment. Money is the spoke in my grandfather's wheel of life."
Nicole concedes that the remarks may have sounded brusque. "I meant that my grandfather is like a Formula One driver who only wants to race — he just loves the game and wants to be the best," she says. But Buffett was galled. He had for some time felt ambivalent about Nicole and her sister's claim to his fortune — though Peter had legally adopted them, he divorced their mother in 1993 and remarried three years later. To make matters worse, while plugging the film on Oprah, Nicole confessed, "It would be nice to be involved with creating things for others with that money and to be involved in it. I feel completely excluded from it."
The perceived sense of entitlement and Nicole's self-appointed role as family spokesperson prompted Buffett to tell Peter that he'd renounce her. A month later, the mega-billionaire mailed Nicole a letter in which he cautioned her about the pitfalls of the Buffett name: "People will react to you based on that 'fact' rather than who you are or what you have accomplished." He punctuated the letter by declaring, "I have not emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin." Nicole was devastated. "He signed the letter 'Warren,'" she says. "I have a card from him just a year earlier that's signed 'Grandpa.'"
But Buffett's decision was irrevocable. "I don't have an easy answer for where my father is coming from," says Peter Buffett, who speaks to Nicole regularly. "But I know I can't change the spots on a leopard." Jamie Johnson convinced Nicole to tape a follow-up interview, which he added as an emotional postscript to his film. "To pretend like we don't have a familial relationship is not based in reality. I've spent years of my life at his home in Omaha. I'm shocked and hurt," Nicole says.
Now, despite her sterling surname, Buffett is getting by on $40,000 or so a year, largely on the sale of her paintings (collectors include Shirley Temple's daughter Lori Black and Hollywood special-effects guru Scott Ross). There's no denying that the Buffett name piques interest in the art world, where Nicole's pieces have fetched as much as $8000. One of her techniques is to leave unfinished works outside, exposed to the elements. "I like to see what happens," she says, hovering over canvases mottled with sunbursts of color.
Nicole supplements her income by working at a San Francisco boutique, but still can't afford cable or health insurance. Since their falling-out, Buffett has begun mailing sizable Christmas checks to his grandchildren, despite his no-freebies rule. Even so, Nicole vigorously insists that she has no regrets. "I think it shows he's trying to reach out to his grandkids in a more personal way," she says, before pausing. "And probably he's rewarding them for behaving."
In the two years since they last spoke, Nicole has been besieged by her grandfather's image. "I can't turn on the TV or read the paper without seeing him," she says, referring to his role in the Wall Street bailout and as Barack Obama's adviser during his presidential bid. She dreams about a reconciliation, however unlikely. Still, she says she'll never stop being a Buffett. "I will always be self-reliant," she says, curled up on her couch, her dreadlocks draping her body like a quilt. "Grandpa taught me that, and it has set the tone for my life."
Buffett and Munger Play the Main Stage: Views on Newspapers, Triple-A Ratings, Complex Math and More
Here are some highlights of Warren Buffett's and Charles Munger's remarks at the Berkshire Hathaway Inc. shareholder meeting this past weekend.
Mr. Buffett on Newspapers
Mr. Buffett has long held himself out as a newspaper man. As a child, one of his first jobs was delivering newspapers. An Omaha newspaper Berkshire owned, Sun Newspapers, won a Pulitzer Prize in 1973 based in part on a tip Mr. Buffett provided. One of Berkshire's biggest investments in the 1970s was the Buffalo News, which it still owns.
But his view on the future of the newspaper industry is dismal. "For most newspapers in the United States, we would not buy them at any price," he said. "They have the possibility of going to just unending losses."
As long as newspapers were essential to readers, they were essential to advertisers, he said. But news is now available in many other venues, he said.
Berkshire has a substantial investment in Washington Post Co. He said the company has a solid cable business, a good reason to hold on to it, but its newspaper business is in trouble.
Mr. Munger called newspapers' woes "a national tragedy....These monopoly daily newspapers have been an important sinew to our civilization, they kept government more honest than they would otherwise be."
A Washington Post Co. representative couldn't be reached for comment.
Mr. Buffett on Insurance
In response to a question about the worst possible development for Berkshire Hathaway's vast insurance operations, Mr. Buffett responded: nationalization.If inflation jumped and insurance policies became extremely expensive, pressure could rise on the government to nationalize the insurance industry, he said. "When people get outraged, politicians respond," Mr. Buffett said. It's highly unlikely that such a development would happen, he added. But he did note the example of Social Security, which is a form of a nationalized annuity.
Mr. Buffett on Housing
"In the last few months you've seen a real pickup in activity although at much lower prices," Mr. Buffett said, citing data from Berkshire's real-estate brokerage business, HomeServices of America Inc., which is one of the largest in the U.S.
In California, medium and lower-price homes -- under $750,000 -- have been selling more, though there hasn't been a bounce back in sale prices, Mr. Buffett said. "We see something close to stability at these much-reduced prices in the medium to lower part of the market."
Mr. Buffett on Moody's
Mr. Buffett was asked about Moody's Investors Service, which gave a triple-A rating to billions of dollars of mortgage securities that subsequently lost value. Berkshire has a 20.4% stake in the company.
"Basically, four or five years ago, virtually everybody in the country had this model in their heads, formal or otherwise, that house prices could not fall significantly," Mr. Buffett said. He later added that "it was stupidity and the fact that everyone else was doing it."
He said that if Moody's had started to take a negative view on residential real estate, the ratings provider would have been hauled before Congress to testify about why it was hurting the U.S. economy with its bearish ratings. "They made a huge mistake, and the American people made a huge mistake," he said.
A Moody's representative couldn't be reached for comment.
Mr. Buffett on Treasurys
Berkshire Hathaway had only one slide at this year's annual meeting. It displayed a Dec. 19 trade ticket showing a Berkshire sale of $5 million of Treasury bills. They were coming due on April 29 this year, roughly four months after Berkshire sold them. Berkshire sold the bills for $5,000,090.70. If that buyer had instead put their money in a mattress, by April 29 they would have been $90.70 better off, he said. Negative yields on Treasury bills show how tumultuous last year was, Mr. Buffett added. "We may never see that again in our lifetimes," he noted.
Messrs. Buffett and Munger on Math and Theories
Messrs. Buffett and Munger made clear their complete disdain for the use of higher-order mathematics in finance.
"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."
Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something."
Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics my be dangerous and lead you down pathways that are better left untrod."
Mr. Munger on the Future
"As I move close to the edge of death, I find myself getting more cheerful about the economic future," Mr. Munger said.
Mr. Munger sees "a final breakthrough that solves the main technical problem of man," he continued.
By harnessing the power of the sun, electrical power will become more available around the world. That will help humans turn sea water into fresh water and eliminate environmental problems, Mr. Munger explained. "If you have enough energy you can solve a lot of other problems."
Energy breakthroughs could be the next big thing, but how many jobs can they generate?
SAN FRANCISCO (AP) -- Our economy sure could use the Next Big Thing. Something on the scale of railroads, automobiles or the Internet -- the kind of breakthrough that emerges every so often and builds industries, generates jobs and mints fortunes.
Silicon Valley investors are pointing to something called cleantech -- alternative energy, more efficient power distribution and new ways to store electricity, all with minimal impact to the environment -- as a candidate for the next boom.
And while no two booms are exactly alike, some hallmarks are already showing up.
Despite last fall's financial meltdown, public and private investments are pouring in, fueling startups and reinvigorating established companies. The political and social climates are favorable. If it takes off, cleantech could seep into every part of the economy and our lives.
Some of the biggest booms first blossomed during recessions. The telephone and phonograph were developed during the depression of the 1870s. The integrated circuit, a milestone in electronics, was invented in the recessionary year of 1958. Personal computers went mainstream, spawning a huge industry, in the slumping early 1980s.
A year into the Great Recession, innovation isn't slowing. This time, it's better batteries, more efficient solar cells, smarter appliances and electric cars, not to mention all the infrastructure needed to support the new ways energy will be generated and the new ways we'll be using it.
Yet for all the benefits that might be spawned by cleantech breakthroughs, no one knows how many jobs might be created -- or how many old jobs might be cannibalized. It also remains to be seen whether Americans will clamor for any of its products.
Still, big bets are being placed. The Obama administration is pledging to invest $150 billion over the next decade on energy technology and says that could create 5 million jobs. This recession has wiped out 7.2 million.
And cleantech is on track to be the dominant force in venture capital investments over the next few years, supplanting biotechnology and software. Venture capitalists have poured $8.7 billion into energy-related startups in the U.S. since 2006.
That pales in comparison with the dot-com boom, when venture cash sometimes topped $10 billion in a single quarter. But the momentum surrounding clean energy is reminiscent of the Internet's early days. Among the similarities: Although big projects are still dominated by large companies, the scale of the challenges requires innovation by smaller firms that hope to be tomorrow's giants.
"Ultimately IBM and AT&T didn't build the Internet. It was built by Silicon Valley startups," says Bob Metcalfe, an Internet pioneer who now invests in energy projects with Polaris Venture Partners. "And energy is going to be solved by entrepreneurial activity."
The action is happening at companies like GreatPoint Energy in Cambridge, Mass., which has developed a technique for turning coal into natural gas more cheaply and efficiently than previous methods.
GreatPoint plans to break ground next year on a power plant in Houston that will cost $800 million and create thousands of construction jobs, says its CEO, Andrew Perlman. Dow Chemical Co. and energy giants AES Corp., Suncor Energy Inc. and Peabody Energy are all GreatPoint investors.
"The opportunities," Perlman says, "are staggering."
A123 Systems, a Watertown, Mass., maker of lithium-ion batteries for electric cars, had one of the most lucrative public stock offerings this year, raising $437.5 million. Its stock price jumped more than 50 percent on the first day of trading in September, with investors willing to overlook that the company has yet to make money.
The Obama administration's promises about cleantech funding have galvanized the industry, reassuring entrepreneurs that they will have paying customers. The administration has said it will focus on putting more hybrid cars on the road, boosting the amount of electricity from renewable sources and investing in ways to cut pollution from coal.
One target is "smart grids." As utilities install digital meters in homes and Americans buy appliances that can communicate with the electric system, individual power consumption can be monitored more closely. People could be cued to dial down appliances such as refrigerators and air conditioners when electricity is in highest demand. Such fine-tuning in millions of homes can reduce the need for new power plants.
At Tendril Networks Inc. of Boulder, Colo., which makes software that links utilities to smart-grid devices in homes, the staff has tripled over the past five months to 90. CEO Adrian Tuck says Tendril could grow even more if some of the $4.5 billion earmarked for smart grids in this year's federal stimulus goes to Tendril's clients.
"What we're about to see is every bit as big as the telecom revolution that gave birth to the Internet and cell phones," Tuck says. "It's going to create as many jobs and as much wealth for this country, if they get it right. Big, Google-sized companies are going to be born in this era, and we hope to be one of them."
The government's push for these developments parallels the expansion of railroads in the 19th century, when the government granted blocks of land to companies laying track, says Jack Brown, an associate professor in the University of Virginia's Department of Science, Technology and Society.
One difference, Brown points out, is that clean energy is such a vast field that government could make the wrong choice in backing one type of technology over another.
It's not just startups getting in the game. General Electric Co. plans to string transmission lines to deliver solar or wind power. Hewlett-Packard Co. is adapting techniques for printer cartridge chips so digital sensors can send data to smart grids.
But how much of an economic boost does all this add up to? It's hard to tell -- at least at this stage, without products people actually want to buy.
The laser, for instance, was a big innovation, but it wasn't clear at first what it could be used for. That's why there wasn't an economic boom in the 1960s from the advent of lasers, even though they ended up driving everything from medical devices to CD players for four decades.
Sung Won Sohn, an economics professor at California State University, Channel Islands, believes upgrading electric grids and finding new sources of power will provide steady job growth -- but won't be an economic powder keg.
Clean energy projects could simply replace old jobs and functions, like meter-readers. And there's no guarantee new jobs won't shift to countries with cheaper labor.
Some innovations take longer to reveal their economic effects. There are big booms based on specific innovations -- along the lines of railroads, automobiles and the Internet -- and then there are technologies that grow slowly, spawning offshoot industries for entrepreneurs to exploit over decades.
For example, the emergence of the integrated circuit led to the development of computer microprocessors, which enabled the PC revolution and in turn the Internet age. There's every reason to believe energy technology will fall into the same category, Brown says, but he adds: "It depends on how the bets actually play out."
Monday, January 4, 2010
Friday, January 1, 2010
DUBAI, United Arab Emirates – Dubai opened the Abu Dhabi — the oil-rich sheikdom which came to its rescue during the financial meltdown.Monday, and in a surprise move renamed the gleaming glass-and-metal tower Khalifa in a nod to the leader of neighboring
A lavish presentation witnessed by Dubai's ruler and thousands of onlookers at the base of the tower said the building was 828 meters, or 2717 feet, tall.
Dubai is opening the tower in the midst of a deep financial crisis. Its oil rich neighbor Abu Dhabi has pumped billions of dollars in bailout funds into the emirate as it struggles to pay its debts.
Sheik ruler of Abu Dhabi and serves as the president of the , the federation of seven small emirates, including Dubai and Abu Dhabi.is the
Analysts have questioned what Dubai might need to offer in exchange for the financial support it has received from Abu Dhabi, which controls nearly all of the UAE's oil wealth. Abu Dhabi provided direct and indirect injections totaling $25 billion last year as Dubai's debt problems deepened.
Dubai's hereditary ruler,, in recent months has increasingly underscored the close relationship between the two emirates. Sheik Mohammed serves as vice president and prime minister of the UAE federation.
The developer of the newly opened tower said it cost about $1.5 billion to build the tapering metal-and-glass spire billed as a "vertical city" of luxury apartments and offices. It boasts four swimming pools, a private library and a hotel designed by Giorgio Armani.
The Burj's developers say they are confident in the safety of the tower, which is more than twice the height of New York's Empire State Building's roof.
Greg Sang, Emaar's director of projects, said the Burj has "refuge floors" at 25 to 30 story intervals that are more fire resistant and have separate air supplies in case of emergency. And its reinforced concrete structure, he said, makes it stronger than steel-frame skyscrapers.
"It's a lot more robust," he said. "A plane won't be able to slice through the Burj like it did through the steel columns of the World Trade Center."
Dubai was little more than a sleepy fishing village a generation ago but it boomed into the Middle East's commercial hub over the past two decades on the back of business-friendly trading policies, relative security, and vast amounts of overseas investment.
Then property prices in parts of sheikdom collapsed by nearly half over the past year. Now Dubai is mired in debt and many buildings sit largely empty — the result of overbuilding during a property bubble that has since burst.
Despite the past year of hardships, the tower's developer and other officials were in a festive mood, trying to bring the world's focus on Dubai's future potential rather than past mistakes.
"Crises come and go. And cities move on," Mohammed Alabbar, chairman of the tower's developer, told reporters before the inauguration. "You have to move on. Because if you stop taking decisions, you stop growing."
Dubai, which has little oil of its own, relied on cheap loans to pump up its international clout during the frenzied boom years.
But like many overextended homeowners, the emirate and its state-backed companies borrowed too heavily and then struggled to keep up with payments as the financial crisis intensified and credit markets froze up.
Meanwhile, speculators who had fueled Dubai's property bubble disappeared along with the easy money, revealing a glut of brand-new but empty homes and crippling many of the emirate's property developers
The sheikdom shocked global markets late last year when it unexpectedly announced plans to reorganize its main state-run conglomerateand sought new terms in repaying some $26 billion in debt.
It got some succor from a $10 billion bailout provided by its richer neighbor and UAE capital Abu Dhabi last month. That was on top of $15 billion in emergency funds provided by Abu Dhabi-based financiers earlier in the year.
Burj developer Emaar is itself partly owned by the Dubai government, but is not part of struggling Dubai World, which has investments ranging from Dubai's manmade islands and seaports to luxury retailer Barneys New York and the oceanliner Queen Elizabeth 2.
Emaar's Alabbar said the landmark Burj is 90 percent sold in a mix of residential units, offices and other space, offering a counterpoint to Dubai's financial woes.
The developer has only said the spire stands more than 2625 feet (800 meters) tall. Alabbar said Dubai's ruler will announce the height at the inauguration ceremony.
At a reported height of 2,684 feet (818 meters), the Burj Dubai long ago vanquished its nearest rival, the Taipei 101 in Taiwan.
But the tower's record-seeking developers didn't stop there.
The building boasts the most stories and highest occupied floor of any building in the world, and ranks as the world's tallest structure, beating out a television mast in North Dakota.
"We weren't sure how high we could go," said Bill Baker, the building's, who is in Dubai for the inauguration. "It was kind of an exploration ... A learning experience"
Baker, of Chicago-based architecture and engineering firm Skidmore, Owings & Merrill, said early designs for the Burj had it edging out the world's previous record-holder, the, by about 33 feet (10 meters). The Taiwan tower rises 1,667 feet (508 meters).
Work on Burj Dubai began in 2004 and moved ahead rapidly. At times, new floors were being added almost every three days, reflecting Dubai's raging push to reshape itself into a cosmopolitan urban giant packed with skyscrapers.
During the busiest construction periods, some 12,000 workers labored at the tower each day, according to Emaar. Low-wage migrant workers from the Indian subcontinent provided much of the muscle for the Burj and many of Dubai's other building projects.
The tower is more than 50 stories higher than Chicago's Willis Tower, the in the U.S. formerly known as the .
At their peak, some apartments in the Burj were selling for more than $1,900 per square foot, though they now can go for less than half that, said Heather Wipperman Amiji, chief executive of Dubai real estate consultancy Investment Boutique.
She said some buyers may struggle to find tenants at going rates once the tower's expected high service charges are factored in.
"The investment community is quite divided," she said. "They're not sure how it's going to play out."
The Burj is the centerpiece of a 500-acre development that officials hope will become a new central residential and commercial district in this sprawling and often disconnected city. It is flanked by dozens of smaller but brand-new skyscrapers and the Middle East's largest shopping mall.
That layout — as the core of a lower-rise skyline — lets the Burj stand out prominently against the horizon. It is visible across dozens of miles of rolling sand dunes outside Dubai. From the air, the spire appears as an almost solitary, slender needle reaching high into the sky.
An observation deck on the 124th floor opens to the public Tuesday, with adult tickets starting at 100 dirhams, or just over $27 apiece. The ride to the top took just over a minute during a visit for journalists early Monday morning.
Dubai landmarks like the sail-shaped Burj al-Arab hotel and the manmade Palm Jumeirah island were visible through the haze.
The Burj itself cast a sundial-like shadow over low-rise houses and empty sand-covered lots stretching toward the azure Persian Gulf waters. And yes, Dubai is still open for business: there are gift shops at the base and the top.