Edmund W. Schuster

Important Radio Program

2012-02-18T17:35:00.001-05:00

I encourage folks to listen to this excellent radio program:

Hacking America's Future

It is important.

Page Views for my Blog

2012-02-18T16:29:00.002-05:00

Since switching over to the dynamic views template provided by Blogger, the number of page views per day has averaged about 2,500. The peak day was near 3,000 page views.

This implies nearly a million page views per year.

According to Blogger, the dynamic views template measures every page view where the other templates available do not.

I am sure some of the page views are via bots. However, it might be that this is not a large part of the total for each day.

The downside, page views for an individual post are not accurate. In addition, search is so-so for dynamic views.

I look forward to expanding the page views for my blog.

For search, it is best to use Google and my full name "Edmund W. Schuster" along with the topic of the search.

Once again, I would like to thank the readers of by blog.

Global Growth Worries?

2012-02-18T11:33:00.002-05:00

This is an excellent article just now published int he WSJ:

Fung, Esther, Back, Aaron, 2012. China signals concern over growth with bank move. The Wall Street Journal, Feb. 18.

Bottom line, China is cutting its reserve requirement ratio for banks. The anticipated effect is an injection of $63.5 billion into markets. This is probably in response to a typical slowdown during Chinese New Year.

Of course, all government released statistics must be questioned. The same is true for businesses.

Perhaps the bigger story is that similar monetary injections, though using different methods, are taking place.

This quote provides details:

"On Tuesday, the Bank of Japan announced a sizable ¥10 trillion ($129 billion) expansion of its asset-purchase program by buying more long-term government bonds.

The BOJ action followed the Bank of England's vote last week to increase its government-bond purchases and the European Central Bank's move last week to expand aspects of its program of making cheap three-year loans to European banks.

In a move similar to the PBOC's, at a Jan. 24 meeting, the Reserve Bank of India lowered the cash reserve ratio—the percentage of deposits that banks must hold as cash with the RBI—by half a point."

These moves will weaken currencies for respective countries.

This might be a reflection of slowing economies in specific areas of the world.

The Fed is considering Quantitative Easing III, a move to inject even more money into the American economy. However there is disagreement about going forward with round 3. I think the Fed will be a cautious with these moves, relying on ultra-low interest rates to spur the economy forward.

More on the Editorial by McConnell, Chertoff, an Lynn

2012-02-18T10:47:00.001-05:00

The following paragraph puts forth the savage reality of what America faces in terms of an emerging global reality:

"The report is a summation of the catastrophic impact cyber espionage could have on the U.S. economy and global competitiveness over the next decade. Evidence indicates that China intends to help build its economy by intellectual-property theft rather than by innovation and investment in research and development (two strong suits of the U.S. economy). The nature of the Chinese economy offers a powerful motive to do so.

According to 2009 estimates by the United Nations, China has a population of 1.3 billion, with 468 million (about 36% of the population) living on less than $2 a day. While Chinese poverty has declined dramatically in the last 30 years, income inequality has increased, with much greater benefits going to the relatively small portion of educated people in urban areas, where about 25% of the population lives."

McConnell, Mike, Chertoff, Michael, Lynn, William, 2012. China's cyber thievery is national policy - and must be challenged. The Wall Street Journal, Jan. 27.

I was told that that the number of Chinese classified as "peasants" equals about 800 million.

With the confusion in the country over "household registration" the total population of China is somewhat a mystery. Maybe the real number of people living in the country is between 1.4 to 1.6 billion.

In any case, there is ample evidence that the issue of espionage will perhaps get progressively worse.

I think the above article is a bit soft. Some of the anecdotal information that I receive is concerning.

Apple's Huge Effect

2012-02-18T08:47:00.005-05:00

In looking at the financial news, there are many things that point to a brightening outlook for the American economy. Though I do not think there will be an explosion in GDP growth, the chances of slipping into a double-dip recession are less. This is mainly driven by an improving job market and the perception that the problems regarding sovereign debt in Europe will work out to a happy result.

The stock market is advancing in a broad way. However, the following should be a consideration to anticipating future growth:

"To gain some context, fourth-quarter S&P 500 index earnings growth of about 6% turns into a much more pedestrian 3% when Apple's profits are excluded, according to Zacks Investment Research."

Racanelli, Vito J., 2012. Dow rallies 1.2% to 52-week high. Barron's, Feb. 18.

Apple has become so successful that it is distorting the market!

Lack of an Economic Response

2012-02-17T18:48:00.001-05:00

A theme of this blog is that since the Financial Crisis of 2008 the American economy has undergone structural changes.

There are several theories that put forth reasons for the change. However, no one knows for sure what is happening.

I have great respect for the research viewpoint of Gluskin Sheff.

This quote from the online edition of Barron's highlights what few economists, politicians, or people in business talk about:

"The only real surprise is that this revival in the economy only now is coming and is even worthy of comment. Observes David Rosenberg, chief economist at Gluskin Sheff, given the extreme monetary and fiscal stimuli injected into the U.S. economy in the form of zero interest rates, an explosion of the Federal Reserve's balance sheet and successive $1 trillion-plus budget deficits, one might expect the economy to grow 8% instead of two and change."

Forsyth, Randall W., 2012. Bulls favor stocks and obama. Barron's, Feb. 17.

This "leakage" in stimulus generates much debate about the causes.

My take is that there was a great deal more money destroyed than many anticipated or accept as a fact today. Currency pegging by China is another concern.

I think many Americans have lost perspective on the size of the fiscal and monetary stimulus programs, and the lack of an acceptable result.

A Change in Market Behavior?

2012-02-17T18:28:00.002-05:00

I agree with this statement:

"The steady recoveries in the market and Obama's chances have come in the face of the unrelenting parade of bad news from Europe in dealing with Greece's debt crisis. Remember when first images of rioting and Molotov cocktails in the streets of Athens precipitated the so-called Flash Crash of May 2010? Now the videos of uncivil unrest in cities of Greece and other European capitals, not to mention the Occupy Wall Street crews across the U.S., have lost any impact on the markets."

Forsyth, Randall W., 2012. Bulls favor stocks and obama. Barron's, Feb. 17.

I link this market behavior to directly related to an overall loss of moral hazard.

There is a belief that no matter what happens, the leaders of the EU will not let Greece default.

I have no quantitative way of determining if this is true. However, over the long-run, the loss of moral hazard usually means sharply lower economic growth.

"Hacking America's Future"

2012-02-17T16:39:00.000-05:00

I have not had a chance to listen to this radio program:

"Hacking America's Future"

This is a quote from the page:

New York Times “What might have once sounded like the behavior of a paranoid is now standard operating procedure for officials at American government agencies, research groups and companies that do business in China and Russia — like Google, the State Department and the Internet security giant McAfee. Digital espionage in these countries, security experts say, is a real and growing threat — whether in pursuit of confidential government information or corporate trade secrets.“

"China's Cyber Thievery"

2012-02-17T08:38:00.002-05:00

This opinion article published in the WSJ is spot on the mark:

McConnell, Mike, Chertoff, Michael, Lynn, William, 2012. China's cyber thievery is national policy - and must be challenged. The Wall Street Journal, Jan. 27.

Though I know of no specifics, I agree with this statement:

"Evidence of China's economically devastating theft of proprietary technologies and other intellectual property from U.S. companies is growing. Only in October 2011 were details declassified in a report to Congress by the Office of the National Counterintelligence Executive. Each of us has been speaking publicly for years about the ability of cyber terrorists to cripple our critical infrastructure, including financial networks and the power grid. Now this report finally reveals what we couldn't say before: The threat of economic cyber espionage looms even more ominously."

I will be writing more about this article soon.

The visit to the U.S. by Vice President Xi has to be reported in the context of the above statement, which there is every reason to believe is true.

"Preserve MIT's Financial Resources"

2012-02-16T11:04:00.001-05:00

I have worked at MIT in various positions since 2000.

I find this statement about President Hockfield interesting to read:

"Hockfield’s tenure has been marked by her energetic response to two seemingly competing imperatives: to keep MIT at the forefront of research universities by continuing its history of bold action, to the benefit of its students and in service to the nation and the world; and to preserve MIT’s financial resources in the midst of the most pronounced economic downturn in United States history since the Great Depression. Despite the difficult global economic context, Hockfield’s presidency has featured the most successful period of fundraising in MIT history, during which MIT has raised nearly $3 billion."

From, Susan Hockfield to Step Down

The "energetic response" to "preserve MIT's financial resources" is an version of perspective about the reality of what has happened.

Eating an Apple in China

2012-02-16T10:20:00.000-05:00

In reading the following article, I am amazed at what is happening in China:

Sherr, Ian, Back, Aaron, Woo, Stu, 2012. Amazon removes resellers' iPads from sale in china. The Wall Street Journal, Feb. 16.

At issue is the "authorization" of various distributors and online merchants to sell Apple's products, namely the iPad. It is widely accepted in global business that a company has the right to determine who is authorized to distribute their products. I find it remarkable that this right would receive any question of legitimacy from within China.

However, the deeper issue is Apple's rights to the product name iPad within China. The company purchased the naming rights just prior to the introduction of the iPad. Now this agreement is being questioned.

This is the situation:

"But the development also comes as the Cupertino, Calif. company is embroiled in a legal spat with a Shenzhen, China-based subsidiary of Proview International Holdings Ltd., a computer display maker, which claims it has the exclusive rights to the iPad name in China. The conflict intensified Tuesday, when Proview said it has filed a request with China's customs bureau to block the import and export of iPads across China's borders. Proview earlier this month attempted to bar the sale of iPads within China through a complaint filed with a Shanghai court, alleging that an earlier deal with Apple for the iPad trademark didn't include the China market."

The basic principles of property and a contract appear to mean nothing within China. The current attitude, by tradition and fueled by Chinese nationalism, is so firmly ingrained in Chinese society that I believe the prospects for change are low even in spite of a transition of power to President Xi scheduled to happen this year. If anything, I believe the situation will become worse.

Further, the following information is alarming ...

"The conflict with Proview and the removal of iPads from storefronts both illustrate challenges that foreign companies face in trying to tap China's huge market of increasingly affluent consumers, including weak intellectual property protections and an underdeveloped legal system. Besides having to keep an eye on online merchants, Apple must also contend with old-fashioned scalpers, several of whom can be found outside its flagship stores in Beijing and Shanghai on any given day hawking Apple devices of unknown origin."

The continued uninhibited ability to sell non authentic, counterfeited products near the entrance way to Apple stores in China is a believable practice and represents action with impunity toward the company and America.

Important News from the MIT President, Susan Hockfield

2012-02-16T09:14:00.000-05:00

I have just received an email that Susan Hockfield is stepping down as President of MIT.

She will continue to act as President until a successor is determined by the search committee.

President Hockfield has been at MIT for seven years.

I am a bit surprised that she is stepping down.

An Attack in Cyberspace

2012-02-16T08:49:00.002-05:00

Today, the WSJ has published an interesting opinion piece on cyber attacks.

Clarke, Richard A., 2012. Cyber attacks can spark real wars. The Wall Street Journal, Feb. 16.

The theme of the article is that there needs to be communication infrastructure setup so that countries can maintain a high level of contact much like what was in place during the cold war when the possibilities of an accidental nuclear exchange were a major concern for America and the U.S.S.R.

This is the idea:

"If, as happened last month, Saudi Arabia's stock market is again knocked offline by a cyber attack originating in Israel (or vice versa), the Saudis should be able to call an international center and seek assistance. Israel, as a member of the international center, should be able to act promptly to see the attack and shut it down. All of that should happen in a few hours. Implicit in such a system would be an 'obligation to assist' other members of the international system and to identify and prosecute the culprits. Failure to assist should have consequences such as financial damages or even outside filtering of message traffic to search for attack programs."

For many countries like China and Iran, it is likely the case that "obligation to assist" would not be forthcoming under any circumstances.

Of course the bigger risk is a cyber or conventional retaliation.

From the article, an extremely important paragraph to note:

"The recent hacker exchange should also remind us that just as hacking could escalate to the use of conventional force in the Middle East, the reverse is also true. Bombing Iran, for example, could unleash an Iranian government cyber attack. Israelis say they could handle that, despite the recent evidence to the contrary. Unfortunately, much of the critical infrastructure in the U.S. is still not ready for a sophisticated nation-state cyber attack either."

Though I do not have specific information of threats, I think Mr. Clarke's assessment is correct. America needs more preparation to deal with a cyber attack from another country. It will happen.

My concern is that a cyber attack upon the U.S. will be initiated in such a way that it will not be clear if it is a government or military action versus a group of citizens taking action in relation to some cause.

This type of threat is consistent with modern warfare policy by other countries, which focuses on indirect attacks rather than visible assaults. Urban warfare, terrorism, piracy, and potential cycler attacks all focus on surprise and the inability to connect a perpetrator to a sovereign country.

America needs to be prepared for all types of cyber attacks!

A New Research Paper in Spatial Sampling

2012-02-16T08:00:00.001-05:00

The MIT Field Intelligence Lab (FIL) has many ongoing research projects in diverse areas.

One area of particular interest is determining where to place sensors to get a representative understanding of some sort of spatial phenomena.

The following is a paper that will be presented in Jun. by a member of FIL. As the use of sensors grows in providing useful data and information, I think this research will gain a high profile. It is base technology of great importance in advancing the technology of sensing.

Kumar, S., Deshpande, A, Sarma, S, 2012. Stable arrangements of mobile sensors for sampling physical fields. American Control Conference: Montreal, Jun. 27 - 29.

Abstract—Today’s wirelesssensor nodes can be easily attached to mobile platforms such as robots, carsand cell phones enabling pervasive sensing of physical fields (say oftemperature, vibrations, air quality and chemicals). We address a sensor arrangement problem, i.e. when and where sensors should takesamples to obtain a good estimate ofa field using mobile sensors. In particular, we focus on incidentally mobile sensors that move passively under the influenceof the environment (e.g. sensors attachedto floating buoys, cars and Smartphones carried by humans). We model the fieldas a linear combination of known basis functions. In the forward estimationproblem, we use a linear estimator to find unknown coefficients of the basisfunctions. We formulate the sensor arrangement problem as one of findingsuitably characterized classes of sensor arrangements that lead to a stable reconstruction of the field. Weconsider a family of multidimensional delta-dense sensor arrangements,where any square disc of size delta contains at least one sample, and derivesufficiency conditions for the arrangement to be stable. Delta-dense sensor arrangementsare geometrically intuitive and are easily compatible with the incidentalmobility of sensors in many situations. We present simulation results on thestability of such arrangements for two-dimensional basis functions. We alsopresent an example of constructing basis functions through proper orthogonaldecompositions for a one-dimensional chemical diffusion field in aheterogeneous medium, which are later used for field estimation through delta-dense sampling.

The Fed's Balance Sheet

2012-02-15T17:04:00.001-05:00

This is an important question that was raised at the beginning of governmental efforts to stimulate the American economy in 2008 & 2009 through fiscal and monetary policy ...

After completing Quantitative Easing I & II, when would the Fed begin to sell the large inventory of U.S. bonds that it had acquired?

Though I need to check on the specifics, I think the Fed also took the extraordinary move of purchasing other quasi government and private debt.

If the Fed begins to sell from its inventory of bonds, then the money supply decreases in aggregate causing a stronger dollar, less inflation, and less economic growth.

Of course if the Fed does not sell its store of bonds the money supply remains higher, potentially a good thing for economic growth (and employment). The risk; inflation could accelerate.

The answer to this question seems to be in the notes of the most recent Federal Reserve meeting:

"Fed officials did make clear, however, that they have no intention of shrinking their holdings any time soon. Most participants expected the central bank would begin selling agency securities 'no earlier than 2015.'

The Fed's portfolio has more than doubled since the financial crisis of 2008 and 2009, as the central bank bought mortgage-backed securities and government bonds to help keep interest rates low and stimulate the economy. The Fed held $2.931 trillion in assets, as of the week ended Feb. 8."

Peterson, Kristina, Sparshott, Jeffrey, 2012. Fed officials divided on more action. The Wall Street Journal, Feb. 15.

There might be about $1.5 trillion in bonds that will need to be sold at some time in the future (assuming no further quantitative easing); by current consensus sales would be after 2015.

If anything this would probably mean slower economic growth beyond 2015, something that does not bode well for long-run employment growth.

In addition, the Fed can control the Federal Funds Rate charged on overnight interbank loans. The rate has been "trading between zero and 0.25% since December 2008."

With an extremely sluggish economic recovery and expansion since the Financial Crisis of 2008, it is clear that further quantitative easing and ultra low interest rates are of little effect in stimulating aggregate growth and may actually be distorting naturally occurring economic signals. Organic economic growth happens best when price signals flow freely. This is the most efficient way of allocating scarce resources and is a consistent basis for business decision-making.

More Quantitative Easing combined with ultra low interest rates might extend the current period of sluggish growth.

Perhaps the bigger question ... what will happen when large out front budget deficits will need to be financed at a future time when the Fed will be under pressure to sell from its bond inventory?

In this scenario, the money supply would shrink just at the time that the Federal government would be selling more bonds to finance operations.

The outcome - higher long-term interest rates, more downward pressure on growth, and perhaps high unemployment.

My conclusion, Americans need to pay attention to the expanding balance sheet of the Fed in conjunction with large out front federal budget deficits.

More Breaking News - The Greek Situation

2012-02-15T10:04:00.000-05:00

Another breaking news story today ... the WSJ is reporting that some creditors are "considering curtailing the country's (Greece) second bailout package."

Bottom line, I do not think creditors will except a "haircut" that would mean perhaps 50% losses on maturing Greek bonds.

This news report seems to indicate as much but everything is speculation at this time.

It is a turbulent situation, just the thing that bond markets historically dislike.

Combined with the possibility of restricted oil imports from Iran, Greece faces a critical situation.

Innovations in Harvest Risk

2012-02-15T09:16:00.001-05:00

Recently, we have been doing more work in the area of harvest risk.

My vision is that the Big Data movement will affect agriculture in a big way, providing more spatial data for analysis and prediction.

Inevitably, this will change the way futures markets operate. The change could be as big as the high frequency trading movement on Wall Street that began about a decade ago.

These are a few blog posts on the topic:

New Abstract on Harvest Risk

Important Development in American Agriculture - A Shortage of Seed Corn

More on Data-Driven Agriculture

The Florida Orange Crop

Less Oil for Europe

2012-02-15T08:23:00.001-05:00

In a breaking news story, the WSJ is reporting that Iran is cutting oil exports to 6 European countries in response to sanctions related to the Iran's nuclear program.

Brent crude oil price has jumped to $120/barrel in futures trade today.

According to the following article, the announcement was made on Iranian television:

Faucon, Benoit, 2012. Iran cuts oil exports to europe. The Wall Street Journal, Feb. 15.
Published at 7:49 A.M. ET

The situation is not clear.

At a time when Europe is partially in recession, a cut in oil supplies will be a further economic disruption.

Counterfeit Cancer Drugs in America

2012-02-15T00:06:00.002-05:00

A shocking article appears in the Wed. edition of the WSJ. It reports on an incident of counterfeit Avastin, a cancer drug that interferes with the development of new blood vessels associated with tumors.

The article reports uncertainty regarding how much of the drug reached the U.S. market from overseas, and if anyone was adversely affected by the drug.

One thing for certain, the counterfeit Avastin did not contain the intended active ingredients.

The reference for the article is as follows:

Rockoff, Jonathan D., Weaver, Christopher, 212. Fake cancer drug found in u.s. The Wall Street Journal, Feb. 15.

The uncertainty about the counterfeit Avastin is apparent in this paragraph:

"It isn't clear how much of the counterfeit product was distributed in the U.S. or whether it has caused any harm. A Genentech spokeswoman said the company doesn't know if any patients were given the fake drug."

The mere thought that any cancer drug might be counterfeit and lack active ingredients is deeply concerning to me.

Counterfeiters and cyber attackers target the most vulnerable and trusting people in society. I find this practice particularly vicious.

Part of the problem with counterfeit medicine is the handling by secondary wholesalers. With several exchanges, it is easy to slip in counterfeit during supply chain movements. In my book titled Global RFID I go into great detail concerning the pharmaceutical supply chain and its weak points with regard to counterfeit. At Auto-ID Center in 2002 and 2003 I conducted detailed, unfunded research into the problem that culminated in the publication of a paper by MIT. This work extended through the transition to Auto-ID Labs in 2003 & 2004.

Those interested in the means to combat counterfeit drugs should consult the following blog posts:

The Foundation for TRack and Trace Technology in the Supply Chain

Important News on Food Safety: the Listeriosis Outbreak

Securing the Pharmaceutical Supply Chain

Unbelievable Recant of Published Research

Bottom line, counterfeit drugs are a consequence of globalization. I think few Americans find this acceptable. A solution must be found and implemented.

The Greek Fall

2012-02-14T21:33:00.000-05:00

This is one of the best editorials that the WSJ has published in a long time:

Review & Outlook, 2012. The chaos of greece. The Wall Street Journal, Feb. 14.

A single paragraph explains how the mess started"

"To top it off, the technocrats in Brussels and at the IMF have misdiagnosed the crisis from the beginning. First, they thought Athens had a liquidity problem that could be eased by large infusions of loans, rather than a fundamental solvency problem. Second, they believed that what Athens needed most was a balanced budget and a smaller debt load, to be solved arithmetically with less spending and higher taxes. But Greece's real problem is the lack of economic growth, itself a product of policies that discourage private enterprise. That's why Greece ranks 100th on the World Bank's most recent rankings of "ease of doing business"—right behind Yemen."

As the editorial mentions, too much debt and slow economic growth are things that could affect America in the future if changes are not made now.

CSCMP 2012 Distinguished Service Award

2012-02-14T14:44:00.001-05:00

I am nominating a person that I have known for a long time to receive the 2012 Distinguished Service Award given by the Council for Supply Chain Management Professionals. The award is given once per year and dates to 1965.

I have known and worked with several DSA winners during my career. With this experience as a guide, my professional judgement is that the person I am nominating has more than enough qualifications for the award.

Important News Regarding Greece

2012-02-14T13:30:00.004-05:00

Listed as "breaking news," the WSJ is reporting that euro-zone finance ministers have cancelled a meeting planned for Wed. to consider the second financial bailout for Greek sovereign debt.

There are no other details.

If this is true, the chances of avoiding a Greek default have increased dramatically!

A Cyber Attack in PA?

2012-02-14T13:01:00.001-05:00

The WSJ should start devoting a special section to cyber attacks.

The paper reported another attack today.

AP, 2012. Hackers claim attack on tear-gas company. The Wall Street Journal, Feb. 14.

This is amazing!

"The hackers also claimed to have stolen and published personal information belonging to clients and employees of the Jamestown, Penn.-based firm. Allegedly intercepted emails were pasted onto the bottom of the statement; one of them appeared to be a warning that Combined Systems' site had been sabotaged."

The overall issue of cyber security has to be near the top of the policy-making agenda. It now has become an issue of day-to-day safety!

Big Decline in Greek GDP

2012-02-14T11:20:00.002-05:00

The sovereign debt crisis has a new development; a worsening economy for Greece and Portugal.

Earlier, there were hints at a fall-off in GDP as Greece recorded a larger budget deficit than expected.

These are the details:

"Greece's gross domestic product contracted by an annual rate of 7% when adjusted for inflation, according to preliminary data reported by the Greek government statistics office Tuesday. The dire number was far worse than forecasts of a decline of up to 5%, and showed an accelerating contraction from the 5% year-to-year fall clocked in third quarter."

Bouras, Stelios, Stamouli, Nektaria, 2012. Greek economy shrinking rapidly. The Wall Street Journal, Feb. 14.

The situation has the appearance of being out of control. Delays by the EU in formulating an effective policy have made matters worse.

I wish the best to my friends in Europe.

The New iPad - Mar. Intro.

2012-02-14T11:01:00.000-05:00

These are some details about the new iPad:

"The move comes as Apple is preparing to announce a new iPad in early March, according to people familiar with the matter. That device is expected to have a higher resolution screen than the iPad 2 with a similar screen size, according to people familiar with the matter. A version will run on fourth-generation wireless networks from Verizon Wireless and AT&T Inc."

Luk, Lorraine, 2012. Apple, suppliers test tablet with smaller screen. The Wall Street Journal, Feb. 14.

The article also states that Apple is testing an iPad with a 8 inch screen.

I own a iPad, and I lie the 9.7 inch screen.

If the company does introduce an iPad with a smaller screen, perhaps as an alternative, then I think there will not be much difference between the 9.7 inch divide and Mac Book Air in terms of market segmentation.

More on the Nortel Hack

2012-02-14T10:40:00.001-05:00

I think the WSJ did an excellent job in analyzing the details of the hacking incident at Nortel.

This story is outstanding.

Gorman, Siobhan, 2012. Chinese hackers suspected in long-term nortel breach. The Wall Street Journal, Feb. 14.

However, some of the important details that are excluded hint at wider implications.

The method that the Chinese hackers obtained the passwords of senior executives remains unexplained. I can only speculate as to what happened in 2000.

I published the following post in Jan.:

International Cyber Attacks

This issue needs to rise to the forefront of public attention and debate. There is a new generation of leaders in China. Their viewpoint toward the U.S. has changed.

China and the Computer Hacking of Nortel Networks

2012-02-14T05:57:00.000-05:00

On page 1 of the digital edition, the WSJ has published an interesting article about a frightening topic; long-term hacking of corporate computers apparently originating from China.

It is no coincidence that the WSJ is publishing this article as Vice President Xi is making a high profile visit to the United States. He is expected to become President of China in a power transition scheduled to take place this year.

My opinion is that the transition in power will embolden China. The country will become more extreme especially with regard to trade issues with the U.S.

In summary:

"For nearly a decade, hackers enjoyed widespread access to the corporate computer network of Nortel Networks Ltd., a once-giant telecommunications firm now fallen on hard times.

Using seven passwords stolen from top Nortel executives, including the chief executive, the hackers—who appeared to be working in China—penetrated Nortel's computers at least as far back as 2000 and over the years downloaded technical papers, research-and-development reports, business plans, employee emails and other documents, according to Brian Shields, a former 19-year Nortel veteran who led an internal investigation."

Gorman, Siobhan, 2012. Chinese hackers suspected in long-term nortel breach. The Wall Street Journal, Feb. 14.

The article goes into much detail about the entire episode. However, it lacks an important piece of information; how did the hackers get access to the passwords of Nortel's seven top executives?

I have opinions on how the theft was achieved. However, this is only speculation.

Based on this incident alone, there is a great deal of justification in severely restricting access to high tech markets in the U.S. by China.

Anyone who believes that apparent large-scale theft of information from a leading corporation like Nortel is not a major issue ... is being naive at minimum or perhaps foolish. If anything, the number of attacks will skyrocket.

What is alarming about Nortel's case is that the hacking took place for so long. There was evidence of deep intrusion into computing systems. It is impossible to know the exact volume of information obtained by the hackers, however, it must have been massive.

The hacking took place at a time when telecommunication equipment suppliers were quite focused on doing business in China. We had a seminar at MIT in 2001 where one executive stated that the size of the telecommunications equipment market in China was at least $800 million dollars. There was so much attention during the .com boom in making sales that other issues like security were given much lower priority. This may have played into the hackers hands. Often vulnerabilities are exploited ruthlessly.

Based on this one case alone, the implications for the basic infrastructure of the U.S. are significant.

As a final note, I remain concerned about the number of intrusions from China that have not been detected. This is a major issue for all organizations that store information to consider. The Nortel case is a chilling reminder of that cyber attacks are massive, sometimes long-term, and well organized.

More Downgrades for Sovereign Debt

2012-02-13T22:52:00.001-05:00

Important news from today is a clear indication that the sovereign debt crisis is far from being over. Markets and people from all over the world need to listen to this news and understand it.

The third major debt rating agency has lowered its assessment for sovereign bonds and has placed other AAA countries on notice for a potential downgrade.

From the WSJ,

"Moody's downgraded its ratings on six European nations including Spain and Italy, and warned that its top ratings on Austria, France and the U.K. could be at risk, citing the weakening prospects for an overhaul in Europe.

While the ratings cuts dampened the positive mood stemming from the Greek Parliament's approval of key austerity measures Sunday, many investors were not surprised as Standard & Poor's and Fitch Ratings took similar actions last month. The spotlight largely remained on Greece as investors awaited a key meeting of European finance ministers in Brussels Wednesday over the ratification of a second bailout for Greece."

Phillips, John, 2012. Asian shares down. The Wall Street Journal, Feb. 13.
Published at 9:09 P.M. ET

The rating agencies are sending strong signals that their analysis shows a weakening position within Europe.

Investors should take notice!

Big Data is a Big Reality

2012-02-13T17:33:00.000-05:00

An interesting article published inthe NYT came to my attention yesterday.

This is the reference,

Lohr, Steve, 2012. The age of big data. The New York Times, Feb. 11.

We initiated the study of Big Data in 2003 with the advent of the MIT Data Center Program.

At the time, we correctly anticipated that the flood of data available from RFID applications and sensors would overwhelm current approaches to analysis and modeling. Add data from social media and the issue of data analysis has become a big time academic area of research and a new industry for business to explore.

In 2004, we won the E. Grosvenor Plowman Award given by the Council for Supply Chain Management Professionals (CSCMP) for best research.

The article resulting from the initial research ideas is linked below:

Brock, David L., Schuster, Edmund W., Allen, Stuart J., Kar, Pinaki, 2005. An Introduction to Semantic Modeling for Logistical Systems. Journal of Business Logistics 26, 97 - 117.

The NYT article quotes a widely read study regarding the number of jobs that the explosion of data will create:

"To exploit the data flood, America will need many more like her. A report last year by the McKinsey Global Institute, the research arm of the consulting firm, projected that the United States needs 140,000 to 190,000 more workers with “deep analytical” expertise and 1.5 million more data-literate managers, whether retrained or hired."

Further, there is great value in data:

"At the World Economic Forum last month in Davos, Switzerland, Big Data was a marquee topic. A report by the forum, “Big Data, Big Impact,” declared data a new class of economic asset, like currency or gold."

This is a definition from the article:

"What is Big Data? A meme and a marketing term, for sure, but also shorthand for advancing trends in technology that open the door to a new approach to understanding the world and making decisions. There is a lot more data, all the time, growing at 50 percent a year, or more than doubling every two years, estimates IDC, a technology research firm. It’s not just more streams of data, but entirely new ones. For example, there are now countless digital sensors worldwide in industrial equipment, automobiles, electrical meters and shipping crates. They can measure and communicate location, movement, vibration, temperature, humidity, even chemical changes in the air."

An an insightful comment from MIT,

"To grasp the potential impact of Big Data, look to the microscope, says Erik Brynjolfsson, an economist at Massachusetts Institute of Technology’s Sloan School of Management. The microscope, invented four centuries ago, allowed people to see and measure things as never before — at the cellular level. It was a revolution in measurement.

Data measurement, Professor Brynjolfsson explains, is the modern equivalent of the microscope. Google searches, Facebook posts and Twitter messages, for example, make it possible to measure behavior and sentiment in fine detail and as it happens."

This is a great article. However, it does not address the important issue of how to connect data and mathematical models together. This is a must to achieve the goals of Big Data.

I continue to maintain that an auxilary language for the Internet will achieve data and model connections in practice.

I look forward to doing more research and writing in this area. MIT should take the lead in this area.

Page Views for the Dynamic Template by Blogger

2012-02-13T12:20:00.003-05:00

From reading notes online, it appears the aggregate page views per day measured by Blogger AFTER installation of dynamic views are closer to the real traffic for a website.

Unfortunately, it is also true that "statistics" with Blogger does not accurately capture individual views of a particular post. I am looking into other options to capture this information.

My "real" traffic for http://ingehygd.blogspot.com/ is about 8 - 10 x greater than I thought was the case!

This makes the blog much more successful than I had envisioned!

MIT Course Announcement - Green Supply Chain

2012-02-13T09:30:00.003-05:00

I have received this information today from ESD. The course looks interesting! I think MIT students should consider taking the course!!

We are offering a new half-term course ESD.S43 Green Supply Chain Management starting April 5, 2012. Please share with interested students.

SPRING 2012 COURSE ANNOUNCEMENT

For more info (including syllabus): http://edgarblanco.mit.edu/sustainability/esd-s43-spring2012/

ESD.S43 – Green Supply Chain Management
4 Units (2-0-2), H-Level
2nd Half Spring 2012
Thursdays, 10-noon (April – May)
Room E25-117

Instructors

Dr. Edgar Blanco & Prof. Eva Ponce

Course Description

Fundamental tools and techniques required to analyze and design environmentally sustainable supply chain systems. Topics covered include: closed-loop supply chains, reverse logistics systems, carbon footprinting, water footprinting, life-cycle analysis and supply chain sustainability strategy.

All students will work on a course-long team project that critically evaluates the environmental supply chain strategy of an industry or a publicly traded company.

Dynamic Views for Blogger: Search using Flipcard

2012-02-12T22:37:00.002-05:00

An important thing to note about "dynamic" views and blogger:

To do a search within the blog, first scroll down to include as much history as needed.

Then enter the search terms into the box in the upper right hand corner.

The search only acts on the posts that are visible in Flipcard.

Eventually, I hope this changes to include all of the posts on the blog!

Of course a Google search using my full name in quotations plus the search term will query the entire blog, ingehygd.blogspot.com.

As an example:

"Edmund W. Schuster" and globalization gives,

Edmund W. Schuster: Clockspeed and Changes in Globalization
ingehygd.blogspot.com/.../clockspeed-and-changes-in-globalization...
4 days ago – In many ways, the forces of globalization might have a similar pattern; the forming of zones of economic specialization with a reliance on supply ...
America and the Decay of Globalization | Edmund W. Schuster
ingehygd.blogspot.com/.../america-and-decay-of-globalization.html
12 hours ago – It is my viewpoint that the next 20 years will bring a totally different perspective regarding globalization. There are powerful forces that are ...
Edmund W. Schuster
ingehygd.blogspot.com/
1 day ago – Posted by Edmund W. Schuster at 12:03 PM 0 comments · Links to this..... Clockspeed and Changes in Globalization · "Greece is a Sidebar" ...
You've visited this page 10699 times. Last visit: 2/12/12
Edmund W. Schuster: The Beginning of the End of Globalization? (II)
ingehygd.blogspot.com/.../beginning-of-end-of-globalization-ii.html
Dec 18, 2011 – My post from several days ago titled "The Beginning of the End ofGlobalization" has received an enormous amount of interest. The topic affects ...

PLUS MANY OTHER POSTS AUTHORED BY ME!

Political Transition in China

2012-02-12T21:21:00.000-05:00

I have consistently written that the next political regime in China might become increasingly extreme in contrast to the practice of the last 10 years.

While there has not been much if any advancement in liberalism, the Chinese government has grown its economy with occasional skirmishes between citizens and authorities. The policy of "harmony" put forth by President Hu has brought about conformity within Chinese society in return for higher salaries and political favors.

Now there are what appears to be political and social cleavages forming. The extent is impossible to know given the closed nature of the Chinese political system.

However the possible political detention of Mr. Wang Lijun, the popular police chief of Chongqing, leads to many unanswered questions.

The size of the operation to detain Mr. Wang should give China observers pause:

"Witnesses say Mr. Wang's visit to the consulate sparked a major police operation. Large numbers of police vehicles converged on the area, and officers cordoned off the road outside the consulate to civilian traffic. Curious passersby stopped to watch. Inside the building, Mr. Wang met with U.S. diplomats, although U.S. officials haven't revealed what was discussed.

By the time Mr. Wang emerged, more than 100 elite Chinese police, some carrying semiautomatic rifles, awaited him. He has since vanished from public view."

Spegele, Brian, 2012. China risks a bumpy transition to xi's leadership. The Wall Street Journal, Feb. 12.

As I understand, Chongqing is a very important city in Chinese history. It exerts a great degree of influence in the national identity of China.

Last summer, an article about Chongqing was published by the WSJ (see China and Surveillance).

From my blog post; referencing the cost of the new surveillance system:

What strikes me about the Chongqing effort is the cost, which is $2.4 billion. This seems like a huge amount of money to spend on a single city. The use of such a system almost certainly extends to political observation and other surveillance needed to coordinate activities such as "IP acquisition." Folks are naive to think otherwise.

This new effort was perhaps a showpiece for the policy of harmonious society.

Now Mr. Wang, surely the main mover behind the Chongqing surveillance project, is in undetermined detention.

What is truly happening in China?

Austerity, Riots, and Greek Politics

2012-02-12T20:14:00.002-05:00

Today, austerity measures needed to receive a second bailout from the EU have passed the Greek Parliament by a vote of 199-74 with 27 abstentions.

On the face of things this is a major step forward to stem a Greek default and chaos within the EU.

However, there are stipulations that are concerning:

"But in a sign of the intense public pressure facing Greek politicians, Antonis Samaras, leader of New Democracy and likely the next prime minister, said the measures should be renegotiated after national elections expected in April.

'I ask you to vote in favor of the new loan agreement today and to have the ability to negotiate and change the current policy, which has been forced on us,' he said before the measures passed."

Granitsas, Alkman, Stevis, Matina, Stamouli, Nektaria, 2012. Greece passes sweeping cuts. The Wall Street Journal, Feb. 12.
Published 7:32 PM ET

I am not sure this vote is meaningful in the big picture of the sovereign debt crisis that is gripping Europe.

In response to the vote, there was a demonstration:

"In the city's main Syntagma Square, tens of thousands of protesters gathered and played music, banged drums and hoisted banners decrying the cutbacks and calling for revolution.

Many chanted 'thieves, thieves' at the Parliament building, which was guarded by some 4,000 riot police."

The WSJ is reporting that there were at least 70 injuries.

Greece has experienced 5 years of recession. People are tired.

There is nothing good that can come from the situation.

By 2014 - Dow at 15,000?

2012-02-12T15:39:00.000-05:00

Barron's has published a provocative article about long-term trends and the probability of the DJIA reaching 15,000 within two years.

It seems that Gene Epstein always authors these types of articles.

The gist of the article,

"Based on cyclical patterns of market history, the odds are better than two chances in three that the Dow Jones Industrial Average will reach 15,000 or higher over the next two years. Based on the same cyclical patterns, there's about a 50-50 chance that the Dow could hit 17,000 or more."

Epstein, Gene, 2012. Enter the bull. Barron's, Feb. 11.

The data for the analysis, done by Prof. Jeremy Siegel of Wharton, date to 1871. He has additional data back to 1801. His book is titled Stocks for the Long Run.

It is hard to argue against these trends. However, the last 10 years of returns for stocks have been close to negative when adjusted for inflation.

Some feel that America is moving into a new stage when it comes to the role of equities as part of business. Certainly, there has been a shift toward debt as a means of financing. Ultra low interest rates have facilitated this shift in corporate thinking. Of course debt is thought to be a much less flexible way to finance a business.

Another concern is that the financing needs of the U.S. government might crowd out private investment, thus diminishing the opportunity for equities to snap back in price according to historical norms. Hue out front Federal budget deficits will have a negative effect on investor sentiment.

This argument is a bit strained because a large percentage of U.S. Federal debt is purchased by investors from overseas.

If markets move away from a primary consideration of macroeconomic factors, then there is a chance of equity price appreciation based on the following analysis published by Mr. Epstein:

"In 2011, earnings per share on the Dow grew 12%. Assume a slowdown to half that rate over the next two years, or 6% per year, which is lower than consensus estimates of 9% per year. Since Dow 15,000 from the Thursday's close requires an annual increase of just 8%, the price-earnings ratio on the index would only need to edge up, from the current 13.1 to a still-modest 13.6. Also, if earnings were to grow at consensus expectations, Dow 15,000 could be reached with a P/E of 12.8."

This is a reasonable analysis.

What is missing in this line of thought includes the following:

1. The rate of credit growth during the next five years.

2. Industrial competition from overseas .

3. Perhaps of greatest importance, fiscal an monetary stimulus has elevated the current valuation of the DJIA. In the absence of stimulus, 2012 might be a year of great pressure on corporate earnings.

In conclusion, while the data compiled above is an excellent body of academic work, I feel that current economic conditions and global trends in government policy must take a role in the analysis. These types of things have happened in the past, hence history is an extremely valuable guide but not a consistent predictor. As some note, history never accurately repeats itself.

America and the Decay of Globalization

2012-02-12T09:35:00.003-05:00

It is my viewpoint that the next 20 years will bring a totally different perspective regarding globalization.

There are powerful forces that are reshaping the feasibility of economic specialization as we know it today.

These developments will have a profound effect on the American way of life, maybe for the better.

I will be publishing much more about this idea soon. The title will perhaps be the same as the title for this post.

IoT2012

2012-02-12T07:54:00.003-05:00

The 3rd International Conference on the Internet of Things (IoT2012) will be held in Wuxi, China on October 24-26, 2012.

The deadline for submitting a paper is May 1.

More details can be found at the following link:

IoT2012

Wuxi is about 1 hour by train from Shanghai.

Apple vs. Samsung - Round II

2012-02-12T07:22:00.000-05:00

The legal battle between Apple and Samsung seems to be moving to a new level of intensity. Market share for the two companies is about the same for the smart phone business.

A new set of law actions is underway in California:

"Apple's suit, filed Wednesday in U.S. District Court in San Jose, Calif., accuses Samsung of violating patents that are distinguishing features of the iPhone. The suit contrasts with Apple's original case against Samsung, filed in the same court last April and expected to go to trial this summer, by concentrating on technical patents rather than design-oriented ones."

Sherr, Ian, Vascellaro, Jessica E., 2012. Apple seeks injunction against samsung's 'galaxy nexus' smartphone. The Wall Street Journal, Feb. 12.

The article does not indicate exactly how Samsung acquired the technology that Apple has under patent protection.

The law action is a major development for the smart phone market. As I have commented previously on this blog, various technology acquisition efforts undertaken by Asian companies (and governments) are much more aggressive than anything American business has experienced in the past. This has created a new form of competition that is not widely understood in America (see A New Type of Foreign Competition).

At the base of the issue is the competitiveness of the smart phone market:

"Apple's latest efforts highlight the big stakes and tightening competition in smartphones. During the fourth quarter, Apple inched out Samsung, with 23.5% of global smartphone shipments compared to Samsung's 22.8%, according to market research firm IDC. In the third quarter, Apple's share had dropped to just 14%, compared to Samsung's 23%, as consumers held off to buy a rumored new iPhone."

Overall, the bigger trend is the transition of modern society to a new form of communication, the smart phone and social networking.

As a final note, Apple is making a sophisticated legal argument based on an entire ecosystem of suppliers rather than just the company alone. Though I am not an expert in this area, the ecosystem argument might be a first for a law action. It represents the power of the supply chain in modern business.

The New Dynamic View for my Blog

2012-02-12T06:41:00.001-05:00

I have changed over to the new dynamic template forBlogger. This gives an interesting lookto my blog. I think it is easier to scanthe many posts that I write. The new template has been available for about one month.

My goal isto write three new ideas per day. Usually, I make about 900 posts per year.

Blogger still needs to enable gadgets. However, I think there are advantages tochange now. In 10 hours, I have had over800 individual page views with the new format. It is cool.

There are many dynamic views possible. I have as a default the view that I think isbest for readers to scan my blog to find something of interest.

I should add that the default view I have chosen allowsvisitors to scroll through all of the posts on the blog, back to 2006. It is a bit slow though.

Mention of "Fundamentals" in "The Trader"

2012-02-11T10:09:00.004-05:00

I think this past week marks perhaps a turning point for the American economy.

Things still are not good. Almost everyone in America is struggling financially. There are some mild indications of improvement in the employment picture. However, there is no sign that the housing market will improve anytime soon.

The tremendous amount of fiscal and monetary stimulus that has been injected into the American economy, perhaps as much as $2.5 trillion, undoubtedly has led to increased stock and bond prices and the distortion of markets. Many have mistaken the recent five-week positive price run for equities as a sign of a repaired economy preparing for accelerated expansion.

The glimmer of hope that America has turned the corner is in the following statement from "The Trader" published by Barron's:

"It wasn't a great week, but investors still appear to be gaining confidence in a more 'normal-acting' market, or one at least where not all stocks rise and fall together, last year's bugaboo. Trading activity remains unspectacular."

Racnelli, Vito, J. (2012). Five-week win streak ends as dow slips 0.5%. Barron's, Feb. 11.

While I believe that it is far to early for fiscal stimulus and monetary expansion to completely work its way through various markets, the behavior of stock prices noted above is encouraging.

Further,

"A precipitous drop in stock price correlations this year suggests a market in which shares move more on company fundamentals than on global macroeconomic news, he [Brian Belski, CIO at Oppenheimer] avers. After last year's persistently high correlations, over 0.9 at times, a reversion to the mean will assure that low correlations will continue, he predicts."

I find it hard to recall (since 2007) anyone stating the word "fundamentals" in the same sentence as references to stock appreciation. It is refreshing.

The business press has focused so much on high frequency trading, dark pools of liquidity, and macroeconomic decisions as the general forces moving markets that the mere mention of "fundamentals" is worthy of note.

This is not the start of a trend ... but it is evidence of a shift in thinking.

Of course markets can turn quickly.

This is an excellent summary:

"Sentiment can be fickle, but last year's worries—the European financial crisis and the U.S. economy—no longer appear to be scary enough to usher in more than a routine pullback in the short term. The Greek boogeyman isn't going away, but the market doesn't seem so easily spooked. It's up to the bears to prove it otherwise."

In any market, fear can return quickly.

The Sentiment of America

2012-02-11T09:17:00.004-05:00

As many know, I have often taken a position of healthy disregard when it comes to survey results. However, once in a while a survey result is so overwhelming that it is hard to ignore.

For example, a survey by AlixPartners in 2009 foretold of deep changes in consumer spending patterns. This has proven true.

A recent poll is staggering to ponder:

"A survey by Gallup conducted early this month showed that only 10% of Americans gave their chosen representatives a thumbs-up. Frankly, we find the 10% figure hard to believe because we had no idea there were that many disoriented unfortunates loose in the population. The previous low, in case you're keeping score, was last December, when all of 11% of the population liked the way Congress was operating, or more accurately, not operating."

Abelson, Alan, 2012. Right on the money. Barron's, Feb. 11.

Since 1974 when Gallup began taking the poll, the highest approval rating was 34%.

I know that in New Hampshire there is more talk than ever about people participating in the state primaries to determine who will run for U.S. Congress during the fall election.

All to often there is a viewpoint that members of congress area elected and then the job of the citizens is done.

Nothing could be further from the truth.

The political process is ongoing. Everyone needs to participate.

I think if more became involved in the political process then approval ratings for congress would increase and more things that are good for America would get done.

Being an American means taking an active role in the political system.

The Greek Timeline

2012-02-11T08:53:00.006-05:00

The feasibility of bailing out Athens appears to have reached a level of absurdity, at least for the weekend.

This quote highlights the compressed timeline for reaching important political agreements that will have a major effect on Greek citizens:

"After sober assurances by Athens that a deal was in the making, everything came apart—again. At a meeting in Brussels, the euro-zone finance ministers ruled that proposed cuts to the Greek budget weren't big enough, and unless and until they were, no fresh loans would be forthcoming.

So at this writing the Greek pooh-bahs, grimacing all the way, have staggered back to the drawing board, hoping to cobble together still another package of concessions that will satisfy their potential paymasters. And they have until Wednesday to do it."

Abelson, Alan, 2012. Right on the money. Barron's, Feb. 11.

Given the reaction on Fri. of the Greek unions, the chances of reaching an agreement for money to flow from the EU thus stanching a default in Mar. seem low.

The scary part is that this developing scenario could play out for other countries in Europe. During the next several months, Italy has a great deal of debt to finance and to pay off.

So much public and government attention remains focused on Greece that I can't help but to think that simmering problems with public bond financing in other countries will explode to the forefront. The chances that such events could be intense enough to overwhelm European decision-making appear worth considering.

Things could spin out of control.

Leninism vs Mass Politics in China

2012-02-10T15:34:00.002-05:00

There is a great deal of speculation around what is happening in Chongqing, China. At issue ... the method that the Communist Party of China picks its leaders.

The WSJ has published the following:

"The sudden disappearance of Wang Lijun, Chongqing's erstwhile police chief, is the hottest topic in the Chinese online world. And no wonder. Mr. Wang appears to be a pawn in the national leadership struggle, so the personal and political stakes are high. This is a case that pits forces in the Communist Party who want to preserve the Leninist mechanisms for choosing leaders against the forces of mass politics."

Review & Outlook, 2012. Live tweeting china's poeer struggle. the Wall Street Journal, Feb. 10.

Overall, this unauthored opinion piece articulates the conventual idea that there is a struggle between Communist Party Mechanisms and mass politics involving basic political decision-making.

For awhile, I have followed the situation in Chongqing.

It is a bit hard for me to believe that Bo Xilai would feel strong enough based popular support alone to challenge the communist party leadership in Beijing.

If anything, this approach, if reality, would produce a huge political cleavage betweent he forces of tradition and the mergence of populism.

I am sure there are much deeper things going on in China, perhaps more complex, rather than tension between the long-standing doctrine of Lenen and the mass politics.

My View on Writing

2012-02-10T14:19:00.003-05:00

The artistic aspects of writing (even scientific and engineering writing) are dependent on three things; sensitivity, observation, and memory.

All three are important. A fourth might be experience, however, this is not always needed.

Rapid recall supplements memory.

Some of the best writers have deep impressions from everyday things, and can recall these in great detail.

Reality and Potential Sovereign Debt Deals

2012-02-10T14:10:00.002-05:00

American stocks remain in the red in today's trade.

This quote is a nice summary of sentiment:

"'There's a feeling that [a Greek debt deal] is further from reality that some people thought yesterday,' said Bob Gelfond, chief executive of MQS Asset Management in New York. 'Put that on top of the fact that the stock market has had a pretty good run for weeks and maybe it's entitled to take a day off.'"

Berthelsen, Christian, Dieterich, Chris, 2012. U.S. stocks slump on greece woes, data. The Wall Street Journal, Feb. 10.

If anything, the reality of the decisions put forth by the EU during the past several years have consistently not been able to meet the test of practicality. This is the reason that the sovereign debt crisis continues. The level of political intensity is rising and it is causing deadlock within the EU. Rich countries do not want to pay for poor countries.

I do not know how the situation will be resolved.

I wish the best to my many friends in Europe.

The Situation in Greece

2012-02-10T11:39:00.004-05:00

The violence in Greece today has driven the Euro down.

This is a nice assessment of what is happening in Greece:

"Greek political leaders agreed Thursday to stringent spending cuts required by international creditors, but euro-zone finance ministers have demanded these measures are approved by parliament before they finally sign off on the deal. Their demands set the stage for a further week of uncertainty over the country's long-awaited bailout and debt-restructuring package. But for now, a Greek bailout to stave off a messy debt default remains elusive, with another euro-zone meeting called for next week, the country gripped by a nationwide strike and the small nationalist Laos party already indicating it will not vote for the deal."

Fletcher, Alexandra, 2012. Euro slides on greece fears. The Wall Street Journal, Feb. 10.

Published 10:14 AM EDT

There are absolutely no signs that the violence in Greece will spread to other countries. However, tensions are running high in Europe. The Balkan area is well known as being the "tinder box" of Europe. Many wars have been sparked from this area.

Investors (and everyone else) should watch closely the developments in Europe today.

Major Conf. at MIT during Fall 2012

2012-02-09T14:22:00.004-05:00

Details are taking shape for a major conference to be held during Fall 2012 at MIT. Auto-ID Lab is the main sponsor form MIT, along with an important non-profit organization working in the standards area and several high-level professional organizations.

The topic will be an innovative area that is important to industry.

Look for more details within the next month.

I think this will be a global event.

New Certification Program for Supply Chain Management

2012-02-09T13:46:00.003-05:00

At the 2011 Annual Global Conference, the Council for Supply Chain Management Professionals (CSCMP) has announced a new certification program.

Recently, I have received a presentation that provides some of the highlights. It can be downloaded from the following link:

SCPro

Further details can be found at the following web site:

CSCMP Certification

I very much support these types of certification programs. There is a long record of success in industry. CSCMP has put together a high quality certification experience.

I encourage professionals to check out this new initiative!

"A New Trade War?"

2012-02-08T19:19:00.005-05:00

The WSJ has published an editorial to appear on Thurs. that criticises the recent decision by the EU to charge airlines extra to cover the cost of carbon.

This is part of the editorial:

"Does the world need a new trade war? Probably not, though our friends in Brussels seem to think so: Over intense international protest, they've plowed ahead with a new tax that requires airlines to purchase carbon emissions permits for the entirety of any flight that lands in or takes off from Europe. That goes even if only a fraction of, say, a Chicago to Frankfurt flight cuts over European airspace.

So here we go. On Monday, Beijing forbade its carriers from complying with this frequent-flyer-in-reverse scheme. Brussels immediately responded by insisting that noncomplying airlines will face large fines, and even bans on operating in Europe. The next day a Chinese Foreign Ministry spokesman told reporters that unless the EU backs down, 'China will consider taking necessary steps in accordance with the way things develop to protect the rights of our nationals and our companies.'"

Review & Outlook, 2012. Europe's carbon trade war. The Wall Street Journal, Feb. 9.

This escalation might reflect deeper trade tensions between the EU and China. Recently, the President Hu has made public comments summarized as "China will not buy Europe," implying that the country would not use its vast trade surplus to buy high profile European companies. The fact that he made such a statement indicates underlying tension between the two countries.

The WSJ was right to publish the editorial.

Book Distribution

2012-02-08T17:52:00.004-05:00

According to WorldCat, our book titled Global RFID is now in 395 libraries. This includes all editions (6 in total).

Global RFID

There is only a single edition in terms of content, however, the book is now available in hardback, softback, electronic, and as part of several collections of ebooks sold by Springer.

An Outcome at Diamond Foods

2012-02-08T16:57:00.003-05:00

Just now, the WSJ is reporting that Diamond Foods has "removed its CEO and CFO" and will "restate two years of financial results."

There was an internal probe that "found it wrongly accounted for payments to walnut growers."

Somehow, I am not surprised by this outcome. However, it is a bit surprising that an internal probe came to this conclusion.

Of course this news continues to raise general questions about the internal audit and control systems in all types of organizations.

Clockspeed and Changes in Globalization

2012-02-08T16:36:00.004-05:00

One of the central themes of Charles H. Fine's book titled Clockspeed is that supply chains tend to vertically integrate and then break apart into a horizontal form of organization. This process continues in a cyclic way over time and comprises a long-term trend.

In many ways, the forces of globalization might have a similar pattern; the forming of zones of economic specialization with a reliance on supply chain management for efficient exports to other countries only to give way to regional economic diversity and a lesser reliance on specialization and export.

The "onshoring" trend that seems to be emerging in American manufacturing is an example of such a transition.

The theory that such a cycle exists needs additional proof. If the theory is correct, there are significant effects for equity investing and the future of emerging markets.

"Greece is a Sidebar"

2012-02-08T11:08:00.003-05:00

I notice that the DJIA is taking a bit of a dip today in spite of some good news on earnings. The issue, again, is the potential for a Greek default on sovereign bonds.

Evidently, there is a reluctance for Greek political leaders to accept painful spending cuts that will enrage constituents.

This quote, published at 10:34 AM ET, is a nice summary:

"'There seems to be a degree of hope that things in Europe will have to work themselves out, but that may turn out to be a little overoptimistic,' said Ron Altman, portfolio manager for the Aston/M.D. Sass Enhanced Equity Fund. Though the market is focused again on developments in Athens, Mr. Altman said: 'Greece is a sidebar. The major issue is what happens if there's another run on Italy. In the next few months, there is a lot of debt needs to be rolled over. This thing is not going away.'"

Cheng, Jonathan, 2012. Stock market hits pause. The Wall Street Journal, Feb. 8.

I think everyone should keep a close watch on developments in Europe. The American economy is slowly gaining strength. Yet issues in Europe and China could dampen growth everywhere.

As always, I wish my friends in Europe the best in dealing with the situation.

New England Patriots and Butterfingers

2012-02-08T10:24:00.006-05:00

Boston Sports talk radio (98.5 The Sports Hub) continues to discuss the crushing loss that the New England Patriots experienced in the Super Bowl. This seems a bit over the top to me. Every play is being analyzed and second guessed. The coach is under fire for many of his game decisions. The players seem to be backtracking a bit and focused on placing the best spin on the situation. Several of the players partied shortly after the loss, enraging loyal fans.

This is an interesting article about a prank played on a New England player yesterday:

Welker, Boston Pranked by Dumped Butterfingers

It is only a game!

Big Trend in Manufacturing: The On Shore Movement

2012-02-08T09:33:00.007-05:00

The trend of American manufacturing companies taking a closer look at operations over seas perhaps began in 2010. In some cases lack of profitability, the cost of global supply chains, and the difficulty of working 24/7 has led many corporate managers to question the value manufacturing overseas as compared to the U.S. We have had a major presentation on the subject at MIT (see Tesla Motors).

I encourage folks to the following article published today:

Linebaugh, Kate, Hagerty, James B., 2012. U.S. market shines brighter. The Wall Street Journal, Feb. 9.

From the article:

"With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery."

Further, the article highlights some concerning news regarding the Chinese economic situation:

"While the impact of the European slowdown has been muted, analysts have noted how China's slowdown has eaten into profit. United Technologies Corp. said its Otis Elevator unit sales in China dried up in the fourth quarter compared with swift sales the quarter before. 3M Co. expects below-trend China growth for the first half of this year, after sales slowed markedly at the end of last year."

Given the lack of transparency for the Chinese economy, this type of news on demand, while anecdotal, does give some idea of what is happening. The pegging of the Yuan makes the situation even worse.

In general, my observation that there are huge forces ripping at the fabric of globalization continues to be true. How much these forces will change global trade patters is unknown at this time.

Coca-Cola's Profit Report

2012-02-07T09:06:00.003-05:00

Coke is reporting a big decrease in profitability, however, this is because of special circumstances. Volumes are up, a good sign.

This statement should bring pause regarding an essential, emerging issue ... profit margins for major U.S. companies:

"Coca-Cola's North America sales have been challenged by a struggling economy while a stronger U.S. dollar has pressured its margins of late."

Warner, Melodie, 2012. Coca-cola's profit slides. The Wall Street Journal, Feb. 7.

I think foreign currency transactions are going to be a major issue for 2012.

The New England Patriots

2012-02-07T00:37:00.002-05:00

The Boston media continues to place a great deal of spin on the New England Patriots loss in the Super Bowl.

The bottom line is that the team suffered a horrendous loss and had a breakdown in many aspects of the game during the 4th quarter.

The 4th quarter should have been the team's best.

Expectations were set high for a win over the Giants.

In the aftermath, I know many in the area seem sad over the loss.

This seems unrealistic; it is only a game.

From some of the comments that I have heard on the radio by family members of Patriot players, tensions are high.

This also seems unrealistic; fans will say what they will given that the players accept the job and make large amounts of money.

Overall, I think big time football both professional and college is becoming too much of a distraction.

The Global Dow

2012-02-06T11:11:00.002-05:00

The Global Dow is about 2,000. Lat 2007, the index surpassed 2,800.

There is a long way to go to build up equity prices.

Given the situation in Europe and China, chances of re-achieving 2,800 during 2012 look dim to me.

The best business strategy, stay positive and build year by year.

A Quote from Adam Smith

2012-02-06T09:42:00.005-05:00

One of his most famous quotes:

"Till there be property there can be no government, the very end of which is to secure wealth, and to defend the rich from the poor."

Phillipson, Nicholas, 2010. Adam Smith: an Enlightened Life. Yale University Press, p. 174.

This was also a strong theme for Thorstein Veblen's economic writing and system to explain society.

Sometimes, I think we forget the importance of the concept of property.

The Situation in Europe

2012-02-06T08:06:00.003-05:00

European stocks are down today on news of further difficulties by Greece to achieve the austerity measures needed to ensure the flow of bailout money from the EU.

As I understand, March is the timing for a default on Greek sovereign bonds if no deal happens.

The fact that the entire situation has been strung along for many months is deeply concerning. A Greek default will surely increase the chances for a deeper recession in Europe and perhaps shake the global financial system. Such an event would put a great deal of pressure on other countries like Italy, Spain, and Portugal regarding the cost of financing. In addition, the condition of European banks is somewhat in question.

This is a critical week for equity trading and could set the tone for 2012.

I wish my friends in Europe the best in dealing with the situation.

The Patriots

2012-02-06T07:56:00.005-05:00

I follow the Patriots closely throughout the football season though I seldom watch the games.

I have found that Boston sports media is over the top, especially 98.5 The Sports Hub.

The radio station does so much hype and very little journalism. Some of the announces have journalism credentials and do good analysis on occasion. However, others are nothing more than ex athletes reliving the past. They are hot dogs.

The Super Bowl was a close game. It was a bad sign when the NY Giants had a fast start.

The lack of a strong secondary by the Patriots might have been the difference in the game. I sometimes wonder if the Patriots are too close on the dollar to get the quality players needed on defense to win the Super Bowl.

Even with the devastating loss yesterday, I am sure the team is extremely profitable. Maybe this is the main goal of ownership.

The Tech Boom and Profits

2012-02-05T18:40:00.003-05:00

As I have written several times, rapid technological advancements do not always translate into immediate profits.

A typical case is a famous article in Barron's that I discuss in the following post:

"The Long Boom," An Article from 1997 Briefly Revisited

Publication of "The Long Boom" had a big effect on equity markets. It might have been one of the important sparks for the .com boom.

However, the rise of the NASDAQ to 5,000 and its plunge in 2000 foretold a lost decade in stock investing. At 2,900 today, the NASDAQ has recovered a bit more than half its value of the late 1990's. The Internet became the major focus for almost everyone in America and the world, yet the overall effect in terms of stock prices was muted.

Bottom line, technological advances do yield profits but only after the real work of application has taken place. Many in the technology industry and at universities underestimate the value of application.

Have Corporate Profits Peaked?

2012-02-05T17:54:00.008-05:00

In a WSJ article that has some good analytics, the picture seems clear: the cycle of increasing corporate profits has reached a stage where the advantages of being lean must give way to increasing the top line (sales).

This is the history,

"After hitting a low of $4.42 a share in the fourth quarter of 2008, earnings at S&P 500 companies are on track to hit $24.20 a share for the fourth quarter of 2011, according to Brown Brothers Harriman, a New York-based investment bank and wealth-management firm. The surge highlights just how much profit growth companies have been able to wring out of a modest economic recovery."

Cheng, Jonathan, 2012. Shaky profits threaten u.s. stock rally. The Wall Street Journal, Feb. 6.

Increasing the top line is far from assured. Massive numbers of home foreclosures, an ongoing weak job market, the tenuous situation regarding the sovereign debt crisis, and indications of a sharp slowdown for China all combine to make top line growth difficult whether it be from domestic or international sales.

Margins are always key. Oil prices are stable (or increasing) and are a major reason why margins are decreasing as the following indicates:

"In the second quarter of 2011, the profit margin for the S&P 500 companies, excluding financials and utilities, hit 8.95%, the highest since at least 2006 and up from a low of 5.77% in early 2009.

But since then, the S&P 500 profit margin has fallen back to 8.23% for the companies in the index that have reported fourth-quarter 2011 profits so far, according to Brown Brothers, which had been expecting at least 8.60%."

Of course as profits increase stock prices go up.

Another important thing to note relating to stock prices:

"Since falling to its crisis lows in March 2009, the Dow Jones Industrial Average has rocketed 95% higher, thanks in part to a surge in corporate earnings that is now entering its fourth year. On Friday, the Dow hit its highest level since May 2008 after unemployment numbers that pointed to a faster-than-expected economic recovery."

This quote does not mention several things,

1. I do not think that the American economy remains in recovery. All of the the GDP losses have been made up. Essentially, GDP level today is about the same as pre Great Recession levels. Hence, America is now in "expansion" (though very slow) rather than "recovery."

2. The effect of TARP, the stimulus programs, and QE 1,2, and maybe 3, are not mentioned. These programs might have injected at least $2.5 trillion into the American economy since Fall 2008. In addition, interest rates are near zero for short-term debt. Taken all together, the monetary expansion has mostly benefited the stock market, perhaps inflating equity prices. While America is not experiencing asset price inflation, we may be realizing equity price inflation on a scale seldom experienced in history.

3. There is no mention in the article of foreign currency adjustments. If the dollar strengthens against the Euro, there will be further hits to profits causing margin decreases. It is worth mentioning that the market with the largest population on earth, China, pegs its currency. If American companies are making profits there the weak Yuan means a currency transaction hit.

In conclusion, while it is important to note that profit margins have likely peaked, the bigger story for stock prices might be monetary expansion and currency adjustments. In addition, energy in relation to profit margins is going to be a major story worth tracking during the next decade.

"The Long Boom," An Article from 1997 Briefly Revisited

2012-02-04T22:32:00.008-05:00

The editorial recently published in the WSJ titled "The Coming Tech-Led Boom" has generated some interesting perspectives.

Some think the basic ideas of the editorial are somewhat flawed. However, this viewpoint misses important historical antecedents.

I think it is incredibly arrogant to make a pronouncement of success or failure for specific technologies without understanding larger forces in the historical realm of economies, scientific advancement, engineering innovation and practice, and political science. The current lack of perspective in these areas by many leads to a hubris that causes failure.

Technological booms are not as dramatic as a rocket blasting off into space.

The following article articulates this reality (an interview with Peter Leyden and Peter Schwartz).

"The Long Boom"

Barron's, Sept. 1, 1997

As Mr. Leyden and Mr. Schwartz mention, Paul Romer puts forth that many fundamentally important scientific breakthroughs leading to technology innovation often take a generation to gain a foothold.

The important aspect is the ability to find an application in practice. This is a trial and error process combined with creative thinking, which often leads to a unique mental model of what might be possible.

"The Long Boom" goes into detail about the innovation of the electric motor as a replacement for steam power. The first applications were large motors, centrally located with mechanical systems (pulleys and belts) transmitting the power.

However, the big jump in productivity came when electric motors became smaller in size. This advancement led to distributed power systems where small motors could power individual machines and eventually appliances.

This was a huge boom for the industrial revolution in America but it took several decades, starting before the turn of the century (1900) and spanning thirty years or more.

Between 1910 and 1930 in Chicago, demand for industrial electricity expanded at a rate of 68% per year.

Booms are sometimes preceded by long periods of sluggish economic growth.

From this blog:

"I am surprised that Prof. Krugmen apparently did not mention about the time between the 1873 crash and about 1898. Although there was some growth, the overall period of time equalling 20 years was noted for rapid technological advancement and modest economic growth overall.

The 'Panic of 1873' lasted at least four years. The 'Panic of 1893' saw unemployment estimated at 12% or more even with an agrarian society!"

See 1937 from ingehygd.blogspot.com

In other situations, the bio tech boom predicted during the late 1990's with the imminent decoding of the human genome never has taken off. There have been only a few new drugs from this advance.

Booms happen, are hard to forecast, and do create a great deal of wealth and economic growth. To rule out a particular technology as a source for a boom is narrow minded.

A 2012 Stock Market Rally?

2012-02-04T20:56:00.005-05:00

Even in spite of the weak GDP growth experienced in 2011, the current stock market seems to have some strength. The recent good news of reasonable job growth for Jan. has revitalized interest in stock investing.

However, the after effects of Quantitative Easing II along with the tail end of stimulus programs have injected a great deal of money into the financial system. Much of this "cheap" money has gone toward buying stocks, thus elevating various stock indexes. It remains unclear that this is a healthy thing for economic growth. Businesses have to turn the cheap money into profits, something that America has historically been able to do better than any other country or economic system in the world.

In recent times there are questions about the ability to turn profits during times of an expanding money supply. Certainly the run up to the Financial Crisis of 2008 was not a good thing as cheap money sloshed around the U.S. economy and created a housing bubble and an unbelievable situation in mortgages and derivatives.

The current stock market situation is summed up by the following quote:

"The market's overall mood has brightened remarkably from last fall. The surprising and marked improvement in sentiment has come almost exactly with the calendar turn to 2012 and looks more and more like a flip of the proverbial Rally On switch."

Racanelli, Vito J., 2012. Nasdaq hits an 11-year high as stocks rally. Barron's, Feb. 4.

On the broader front, the upward movement of stocks is less certain:

"The S&P 500 is now at levels approaching last year's high of 1365, and it is going to take some incremental news to push through that, says Michael Purves, chief market strategist at BGC Financial. News that the European sovereign-debt crisis isn't deteriorating and that the U.S. economy is expanding won't be enough, he predicts."

This appraisal is consistent with a viewpoint that economic growth will be muted for the first half of 2012, with an accelerated expansion in Q3&4.

My viewpoint is that the U.S. economy remains in transition. It is too early to know if the structural forces that are dragging on growth have been overcome by changes in the American and global economies.

The effects of fiscal and monetary policy are too significant to ignore. As well, 2012 is a presidential election year, usually good for the economy.

If a true stock market rally happens, it might be short-lived unless other issues like the massive federal budget deficits projected for the next 10 years are significantly reduced. This issue has completely fallen from public attention.

Top 10 for the past Seven Days

2012-02-03T18:26:00.000-05:00

The Ultra Low Interest Rate Effect

2012-02-03T13:21:00.004-05:00

I have a great deal of respect for Bill Gross, CEO of PIMCO.

As readers know, for a while I have been questioning the merit of ultra low interest rates.

Recently, the U.S. Dept. of Treasury began issuing some types of government bonds priced at negative yield. This is a way to get the most possible from the offering, however, there are unanticipated consequences as the following quote indicates:

"As in the sub-atomic world, interest rates of zero or below can have unexpected effects. Bill Gross, Pimco's co-chief investment officer and Barron's Roundtable member, observes in his February missive that interest rates pinned at or near zero can have unexpected effects. In particular, he observes, 'Money can become less liquid and frozen by 'price' in addition to the classic liquidity trap explained by 'risk.'

The theory behind pushing down short-term rates is that it will force investors and lenders to look for other, riskier opportunities to earn a return. The liquidity trap refers to the 'pushing on a string' syndrome, where borrowers are unwilling to borrow, even for virtually nothing, and the money just sits there."

Forsyth, Randall W., 2012. Negative interest rates - a minus for growth. Barron's, Feb. 3.

I have never been in favor of government policy determining that more investors should take a greater amount of risk in financial markets. Further, it is not clear that greater risk always results in aggregate financial reward. After all, there is a difference between risk and all out gambling, something that happened in the lead-up to the Financial Crisis of 2008.

While ultra low interest rates are likely to re-inflate the American economy, this policy will limit growth if taken to an extreme.

As an example, post 9/11 ultra low interest rates funnelled a great deal of money into the housing industry. At the time, I was surprised that more new businesses did not form using apparent ultra low cost money.

I very much question the current policy of ultra low interest rates.

The Jan. 2012 Jobs Report

2012-02-03T12:58:00.003-05:00

A nice boost for employment in Jan. It is still too soon to make this a trend.

It is good that more people are back at work, at least what various statics indicate, however the real measure will be consumer spending. If people become less afraid and begin to spend again there might be real progress in getting to normal economic growth rates.

One thing to note, the stimulus programs, TARP, and QE I and II have expanded the money supply a great deal. There is no surge in inflation. The money seems to be going into stocks and bonds.

This will not last forever.

"Ohio State U. Gets $25-Million for Deal With Bank"

2012-02-02T17:01:00.006-05:00

February 2, 2012, 12:23 pm

"What’s it worth to a bank to get exclusive rights to market its products to 600,000 Ohio State University students, employees, and alumni? $25-million. As The Columbus Dispatch reports, that’s the amount Huntington National Bank will pay Ohio State for 15 years of exclusive marketing rights. The bank pledged an additional $100-million for loans and investments in redevelopment projects the university is promoting around its campus."

From The Chronicle of Higher Education.

600,000 !!!! Wooow

A New Institute for Medical Engineering and Science (MIT)

2012-02-02T16:09:00.002-05:00

This is the formal announcement:

IMES

We received several letters yesterday about this new initiative.

I think this is a good thing!

Understatement by the Fed Chair

2012-02-02T10:28:00.003-05:00

I have just had a chance to read Mr. Bernanke's comments that were part of testimony to congress. Overall, the comments are downbeat regarding the economy.

This is a sobering statement that every American should take to heart:

"Setting U.S. fiscal policy on a sustainable path that ensures debt to national income is at least stable if not declining should be a 'top priority' of Congress, Federal Reserve Chairman Ben Bernanke told lawmakers Thursday.

Testifying before the House Budget Committee, the Fed chief pointed to the sovereign-debt crisis that has consumed Europe for more than a year. He warned of the importance of the need to address the fiscal challenges facing the U.S., saying 'interest rates can sour quickly if investors lose confidence in the ability of a government to manage its fiscal policy.'"

Boles, Corey, Sparshott, Jeffrey, 2012. Bernanke:u.s. must address fiscall issues. The Wall Street Journal, Feb. 2.

Published 10:10 AM

Equal to the issue of economic growth and job creating, the amount of debt accumulation since the Financial Crisis of 2008 is staggering. Other major issues for the Presidential campaign are national security and perhaps social issues.

The long-term projections show trillion dollar deficits for 10 years out front. This is not a sustainable situation.

In my opinion, Mr. Bernanke is far too understated regarding the risks of an accumulating national debt.

Further, a third round of quantitative easing is distressing to me. Cheap money is not getting the job done of stimulating the economy.

I think economic historians will review the reappointment of Mr. Bernanke as a milestone in the aftermath of the Financial Crisis of 2008 and the Great Recession.

Major MIT Announcement - "A New Institute for Medical Engineering and Science"

2012-02-01T15:05:00.006-05:00

We have received several letters via email just now with a pending announcement. This is a major step forward for MIT and for the world.

Innovative Logistics Course at MIT

2012-02-01T14:45:00.003-05:00

This is a good thing.

SPRING 2012 COURSE ANNOUNCEMENT

For more info: http://humanitarian.mit.edu/education/esd283-humanitarian-logistics

ESD.283 Humanitarian Logistics

6 Units (2-0-4)
Spring Semester 2012
Wednesdays 4-6pm (8 Feb – 9 May)
Room E51-395

The MIT graduate course on Humanitarian Logistics (ESD.283) explores how logistics management principles apply when responding to humanitarian crises. After an overview of humanitarian operations, class sessions dive into the strategies, technologies, and management approaches organizations use for effective logistics performance. Class sessions combine interactive presentations, case discussions, exercises to practice applying concepts, and guest speakers. All students participate in a team project that utilizes data and information directly from UN, government, NGO and private sector sources. Grades will be based on class participation, completion of practical exercises (in-class and take-home), two individual graded assignments and the team project.

The course is designed to accommodate students from various backgrounds, including those with limited logistics and supply chain experience. Last spring the class included a diverse group of students from 10 different schools across MIT, Tufts and Harvard. The webpage listed at the top of this email has more information to help Harvard and Tufts students register.

Below is a preliminary schedule. Note that the case mentioned is part of a class that integrates other exercises and content, i.e. discussion will not be limited to that case alone.

2/8/12 1 Humanitarian Context, Supply Chain Fundamentals

2/15/12 2 Forecasting (Guest Speaker: Red Cross Climate Center)

2/22/12 3 Needs Assessment, Distribution Tracking (Case: Haiti Earthquake)

2/29/12 4 Procurement, Mobilization (Case: Haiti Earthquake)

3/7/12 5 Inventory Management (Guest Speaker: Partners In Health)

3/14/12 6a [MIT, Tufts students] Integrated Supply Chain (Case: Plumpy'Nut in East Africa)

3/28/12 6b [Harvard students] Integrated Supply Chain (Case: Plumpy'Nut in East Africa)

4/4/12 7 International Transportation (Case: Djibouti Port, Port au Prince airport)

4/11/12 8 Inland Transportation (Case: WFP Ethiopia)

4/18/12 9 Warehousing (Case: WFP Ethiopia)

4/25/12 10 Coordination & Prioritization (Case: UN Logistics Cluster)

5/2/12 11 Performance Measurement (Guest Speaker: International Rescue Committee)

5/9/12 12 Technology and Information Management

TBD 13 Project Presentations

Last spring, the team projects focused on data from the 2010 Haiti Earthquake:

- Three teams analyzed needs assessment survey data collected over 4 months in Port au Prince.
- Three teams mapped specific distributions of shelter by dozens of organizations over 6 months.
- Two teams examined Port au Prince airport operations using distinct datasets from tarmac operations & traffic control.
- One team scanned thousands of text messages from Haitians to identify actionable information.
- One team designed the concept of a new logistics response center for Partners In Health.

This year we may revisit some of the data from Haiti, but I anticipate datasets from other responses and we will definitely ask new questions.

If you have any questions, please contact Jarrod Goentzel (goentzel@mit.edu).

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Transportation.Seminars@mit.edu
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The Foundation for Track and Trace Technology in the Supply Chain

2012-02-01T14:31:00.001-05:00

[PDF] Securing the pharmaceutical supply chain

[PDF] from racoindustries.com

R Koh, EW Schuster, I Chackrabarti… - Auto-ID Center MIT, …, 2003 - racoindustries.com

Edmund W. Schuster has held the appointment of director of the Affiliates Program in
Logistics at the Massachusetts Institute of Technology and is currently working on MIT Auto-
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Neil Young and Crazy Horse - New Jam - Very Good!

2012-01-31T21:44:00.004-05:00

This is an interesting video released recently,

www.neilyoung.com

Evidently there will be some new music soon.

Semantic Modeling - Big Increase in Citations

2012-01-31T21:06:00.007-05:00

In reading Google Scholar, I am surprised to see that an article that we published in 2005 has recently had a big boost in citations to a total of 20.

By MIT standards, 20 is a modest number.

This is the article,

Brock, David, L., Schuster, Edmund W., Allen, Stuart J., Kar, Pinaki, 2012. An introduction to semantic modeling for logistical systems. J. of Bus. Log., 26:2, pp 97 - 117.

I think this is classic writing.

I remain convinced that the essential ideas and philosophy of what we called at the time semantic modeling will be the basis for cloud (Internet) computing. These ideas include the concept of an auxiliary language for the Internet.

Machine understandable semantics can not be ignored.

There remains a long way to go to get these ideas into widespread practice.

[PDF] Global Understanding Environment: Applying Semantic and Agent Technologies to Industrial Automation

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V Terziyan… - … Topics and Technologies in Information Systems …, 2009 - cs.jyu.fi

Industry pushes a new type of Internet characterized as the Internet of Things, which
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Business potentials of ubiquitous computing

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U Sandner, JM Leimeister… - Managing Development and …, 2006 - Springer

The term ubiquitous computing was coined by Weiser (1991) and focuses on the increasing
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A Supply Chain Management Approach to Logistics Ontologies in Information Systems

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J Leukel… - Business Information Systems, 2008 - Springer

Logistics models in information systems describe activities, organi-zations, transportation
means, goods, and services being involved in logistics processes. The problem with most
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An inventory of theory in logistics and SCM research

Full text - MIT Libraries

CC Defee, B Williams, WS Randall… - International Journal of …, 2010 - emeraldinsight.com

Purpose–Theory is needed for a discipline to mature. This research aims to provide a
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Servicing individual product variants within value chains with an ontology

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Today companies have to satisfy manifold and changing customer demands. However, the
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[PDF] Value network analysis and configuration within turbulent environments using simple vector-based modeling approaches

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European supply chain study

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D Simchi-Levi, M Puri - 2009 - dspace.mit.edu

I thank my thesis supervisor Dr. David Simchi-Levi for the opportunity to work on this
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We live in a world filled with data. The underlying success of business depends on the flow
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Machine-to-machine communication for agricultural systems: An XML-based auxiliary language to enhance semantic interoperability

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This paper puts forth an Internet-based architecture for machine-to-machine communication
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[PDF] Access

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2 Semantic Modeling of Logistics Services

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información que se debe complementar para realizar procesos de análisis, predicción y ...

Evaluación de zonas de amenaza por avenidas torrenciales utilizando metodologías cualitativas. Caso de aplicación a la quebrada Doña María

[PDF] from udem.edu.co
Full text - MIT Libraries

LJ Montoya Jaramillo… - Revista Ingenierías …, 2011 - revistas.udem.edu.co

Resumen En este artículo se presenta la aplicación de una metodología para la evaluación
de zonas de amenaza por avenidas torrenciales, implementada en la cuenca de la
quebrada Doña María. Para esta evaluación de amenazas se utilizaron sistemas de ...

[CITATION] A case study on interoperability between geographic information systems

Full text - MIT Libraries

CM Zapata Jaramillo… - Revista Ingenierías …, 2009 - Universidad de Medellín

A New Development

2012-01-31T20:18:00.002-05:00

I find this quote alarming:

"Mr. Clapper warned in testimony on Tuesday that 'there is more to unfold here,' when he was asked about Iranian activities in the West. 'They're trying as well to penetrate and engage in this hemisphere,' he said, without elaborating."

Gorman, Siobhan, 2012. Spy chief sees iran threats in u.s. The Wall Street Journal, Feb. 1.

More from Carl Jung

2012-01-31T19:14:00.001-05:00

I live by this ...

“I am not what happened to me, I am what I choose to become.”

Carl Jung

The Best Quote from Carl Jung

2012-01-31T19:08:00.002-05:00

I think this is the most significant insight that he has written:

“Until you make the unconscious conscious, it will direct your life and you will call it fate.”

Housing Prices Decline Again

2012-01-31T09:38:00.003-05:00

Extremely bad news regarding home prices:

"For November, the Case-Shiller index of 10 major metropolitan areas and the 20-city index both fell 1.3% from the previous month. David M. Blitzer, chairman of the index committee at S&P Indices, also noted that 19 of the 20 major U.S. metropolitan markets covered by the indices in November saw prices decline from October."

Lamar, Mia, 2012. Home prices tumble. The Wall Street Journal, Jan. 31.

Modest economic growth will not boost home prices.

Florida has been hit hard by the housing downturn. It will be interesting to observe the results of the Republican primary today.

Top Ten Countries by Page Views for my Blog

2012-01-29T23:53:00.003-05:00

1. United States

2. Germany

3. Russia

4. United Kingdom

5. Switzerland

6. Canada

7. South Korea

8. France

9. Singapore

10. Japan

Edmund W. Schuster

Important Radio Program

Page Views for my Blog

Global Growth Worries?

More on the Editorial by McConnell, Chertoff, an Lynn

Apple's Huge Effect

Lack of an Economic Response

A Change in Market Behavior?

"Hacking America's Future"

"China's Cyber Thievery"

"Preserve MIT's Financial Resources"

Eating an Apple in China

Important News from the MIT President, Susan Hockfield

An Attack in Cyberspace

A New Research Paper in Spatial Sampling

The Fed's Balance Sheet

More Breaking News - The Greek Situation

Innovations in Harvest Risk

Less Oil for Europe

Counterfeit Cancer Drugs in America

The Greek Fall

CSCMP 2012 Distinguished Service Award

Important News Regarding Greece

A Cyber Attack in PA?

Big Decline in Greek GDP

The New iPad - Mar. Intro.

More on the Nortel Hack

China and the Computer Hacking of Nortel Networks

More Downgrades for Sovereign Debt

Big Data is a Big Reality

Page Views for the Dynamic Template by Blogger

MIT Course Announcement - Green Supply Chain

Dynamic Views for Blogger: Search using Flipcard

Political Transition in China

Austerity, Riots, and Greek Politics

By 2014 - Dow at 15,000?

America and the Decay of Globalization

IoT2012

Apple vs. Samsung - Round II

The New Dynamic View for my Blog

Most Popular Blog Posts (week ending 2/11/12)

POPULAR POSTS (LAST 7 DAYS)

Mention of "Fundamentals" in "The Trader"

The Sentiment of America

The Greek Timeline

Leninism vs Mass Politics in China

My View on Writing

Reality and Potential Sovereign Debt Deals

The Situation in Greece

Major Conf. at MIT during Fall 2012

New Certification Program for Supply Chain Management

"A New Trade War?"

Book Distribution

An Outcome at Diamond Foods

Clockspeed and Changes in Globalization

"Greece is a Sidebar"

New England Patriots and Butterfingers

Big Trend in Manufacturing: The On Shore Movement

Coca-Cola's Profit Report

The New England Patriots

The Global Dow

A Quote from Adam Smith

The Situation in Europe

The Patriots

The Tech Boom and Profits

Have Corporate Profits Peaked?

"The Long Boom," An Article from 1997 Briefly Revisited

A 2012 Stock Market Rally?

Top 10 for the past Seven Days

The Ultra Low Interest Rate Effect

The Jan. 2012 Jobs Report

"Ohio State U. Gets $25-Million for Deal With Bank"

February 2, 2012, 12:23 pm

A New Institute for Medical Engineering and Science (MIT)

Understatement by the Fed Chair

Major MIT Announcement - "A New Institute for Medical Engineering and Science"

Innovative Logistics Course at MIT

The Foundation for Track and Trace Technology in the Supply Chain

[PDF] Securing the pharmaceutical supply chain

Neil Young and Crazy Horse - New Jam - Very Good!