Friday, October 10, 2008

Bad, or worse

Bad, or worse

Oct 9th 2008 | WASHINGTON, DC
From The Economist print edition

A global recession is almost certainly on the way


DEPRIVE a person of oxygen and he will turn blue, collapse and eventually die. Deprive economies of credit and a similar process kicks in. As the financial crisis has broadened and intensified, the global economy has begun to suffocate. That is why the world’s central banks have been administering emergency measures, including a round of co-ordinated interest-rate cuts on Wednesday October 8th. With luck they will prevent catastrophe. They are unlikely to avert a global recession.

According to the IMF’s most recent World Economic Outlook, published on Wednesday, the world economy is “entering a major downturn” in the face of “the most dangerous shock” to rich-country financial markets since the 1930s. The fund expects global growth, measured on the basis of purchasing-power parity (PPP), to come down to 3% in 2009, the slowest pace since 2002 and on the verge of what it considers to be a global recession. (The fund’s definition of global recession takes many factors into account, including the rate of population growth.) Given the scale of the financial freeze, the fund’s forecast looks optimistic. Other forecasters are convinced that a global recession is inevitable. Economists at UBS, for instance, expect global growth of only 2.2% in 2009.

The rich world’s economies were either shrinking, or close to it, long before September. Recent weeks have made a rich-world recession all but inevitable. America’s economy lost steam throughout the summer. Temporarily buoyed by fiscal stimulus and strong exports, output grew at a solid 2.8% annualised rate between April and June. But as the stimulus wore off, the job market worsened, credit tightened and consumer spending slid.

That slide became a rout in September. The economy lost 159,000 jobs, the most in a month since 2003. Car sales fell to a 16-year low as would-be buyers were unable to get credit. The economy may already have shrunk in the third quarter. The rest of the year is likely to be worse. Some economists expect consumer spending to fall at its fastest pace since the 1980 recession. Add in other gloomy evidence, such as a survey of purchasing managers that suggests manufacturing is extremely weak, and it is clear that output is now falling. America’s recession may not yet be official, but it is well under way.

In Europe the outlook is equally grim. The British economy, which stalled in the second quarter, is now unmistakably falling into recession. The IMF’s forecasts suggest that Britain will see the worst performance of any big economy in the year to the fourth quarter of 2008. The economies of the euro area, too, are struggling badly. Figures released on Wednesday showed that output in the euro area fell at an annualised rate of 0.8% in the second quarter. GDP shrank in the currency zone’s three largest countries—Germany, France and Italy. The fourth largest, Spain, barely grew.

As elsewhere, the most recent figures have grown grimmer still. Business confidence has turned down and a closely watched survey of purchasing managers points to a further contraction in activity over the summer months. Even the European economies that are less directly affected by housing busts, such as Germany, have been hard hit. The big hope for the euro area was that German shoppers, relatively free of debt and with scope to save a little less, would make up for weakness in debt-laden economies such as Spain. But household spending in Germany has been falling since the end of last year.

Japan, too, is looking weak. Its economy shrank at an annualised rate of 3% in the second quarter as exports fell, investment slowed and high food and fuel prices dented consumer confidence. Japanese banks are less embroiled in the financial crisis than those in Europe and America, but with other economies falling into recession and the yen soaring, the prospects for Japan’s exports and economy are dark.

This gloomy backdrop explains why the co-ordinated rate cuts were so essential. Even without the financial seizure, the case for cheaper money was becoming abundantly clear. With commodity prices falling sharply (the price of a barrel of crude was down to $88 on October 8th) and economies suffering, inflation risks are evaporating in the rich world. If oil prices remain at around today’s levels, headline inflation will be below 1% in America by next summer. Deflation is an increasing risk. That suggests more rate cuts will be needed, particularly in Europe.

All told, the IMF expects the rich-world economies to grow by only 0.5% in 2009. Its forecast of 3% global growth depends on reasonably robust expansion in emerging economies. The fund expects developing countries, as a group, to grow by 6.1% in 2009, more slowly than their blistering 8% pace of recent years, but far from recession. That would imply an unprecedented growth gap between the rich and emerging world (see chart).

Some emerging economies, notably China, have shown remarkable resilience to the financial storm. Many other markets, however, are being hit hard as investors flee risk. Analysts at Morgan Stanley estimate that capital flows to emerging economies could fall to $550 billion in 2009 from around $750 billion in 2007 and 2008. Such a sharp drop would hit economies that rely heavily on foreign finance: more than 80 developing countries are likely to run current-account deficits of more than 5% of GDP this year.

The links in the real economy could also be stronger than many imagine. Exports will be hit as recession grips the rich world. Falling commodity prices bode ill for the countries that produce them, notably in Latin America. The Brazilian real has fallen by more than a quarter against the dollar in the past month. Thanks to more disciplined macroeconomic policies and large cushions of reserves, many emerging economies have strong defences against a rich-world downturn. But they will not escape unscathed. A mild global recession is the best that can be hoped for.

Ensuring Chip Stability

Wednesday, October 08, 2008

Ensuring Chip Stability

Hardware bugs could be avoided by limiting chips to tested behaviors.

By Rachel Kremen

Researchers from the University of Michigan have developed a new approach to handling bugs on computer chips. The system, known as the semantic guardian, only allows a chip to work in ways that have been tested by the manufacturer. All other scenarios are automatically disabled by the guardian, to help ensure that the computer runs smoothly.

Testing, testing: Researchers at the University of Michigan will test their system for eliminating the impact of buggy computer processors, using the hardware shown above. This field-programmable gate array platform allows the researchers to study the way that the system works with different processors.
Credit: Catherine June, University of Michigan

"Companies spend lots of effort, time, and money trying to make sure the chip design is as [good] as possible before they send it to the market," says Valeria Bertacco, an assistant professor of computer science and electrical engineering at the University of Michigan. But chip manufacturers don't have time to test every possible scenario, so rare configurations are sometimes overlooked. "There always are some additional bugs that are found after market release," Bertacco says. These bugs can lead to computer crashes and expensive product recalls. They could present a security risk as well: if properly exploited, a design bug on a computer processor could allow hackers to take control of computers from a remote location.

Chip manufacturers can solve some basic problems by providing downloadable software, known as a microcode patch, to consumers. But such patches can only correct bugs caused by a single command. The semantic guardian developed by Bertacco and her doctoral student Ilya Wagner can also handle bugs caused by the interaction of multiple instructions.

So far, Bertacco has been working with software-based simulations of the guardian and processors. If the processor needs to work in an untested way, the guardian directs the chip to use an approved process instead. The chip runs in a safe mode very briefly while the process is completed and then automatically switches back to functioning in its regular mode. The researchers say that the guardian will have no impact on performance while the process is in regular mode.

"The monitoring process does not hinder the chip at all if no bugs are encountered," Bertacco says. "But there is a small slowdown when a bug is encountered." Still, she says that the slowdown should be imperceptible to consumers, assuming the chip manufacturer tested all the commonly used scenarios. The power consumed by the guardian, which will ultimately be a piece of hardware that resides on the processor, should also be minimal, she says.

Wagner says that they still need to make the system work on commercial processors, which are far more complicated. Daniel Sorin, an assistant professor of electrical and computer engineering at Duke University, who designs fault-tolerant chips, notes that additional research will also be required to allow the system to deal with multicore processors. But Sorin, who is not involved in the semantic-guardian project, says that he's impressed by the research so far. "I hope it has a big impact because the potential is there."

Wagner and Bertacco hope to improve the performance of the semantic guardian by developing a system that uses multiple guardians spread out over the same chip. "It can take a long time to get a signal from one area to another" on a chip, says Wagner. Including guardians in multiple locations should decrease the transmission time and decrease the lag caused by the guardian. But to make this approach palatable to manufacturers, Bertacco says, the researchers will need to decrease the size of each guardian.

Wednesday, October 08, 2008

What goes up…

What goes up…

Oct 8th 2008
From The Economist print edition

The great commodity-price slump

AFTER climbing to record heights earlier in the year, most commodity prices have fallen sharply in recent months. As the financial crisis chokes off borrowing, investors are pulling out of commodities to release much-needed cash. Demand has slumped as the world's big economies dice with recession. Oil, which had peaked at over $151 per barrel in July, is now below $90, less than at the beginning of the year. Platinum has seen a particularly drastic drop. Demand for the precious metal, used in catalytic converters, has slumped as car sales have fallen. It is trading at just over $1,000 a troy ounce, less than half its peak. Gold is faring better. After dropping from a high of over $1,000 a troy ounce, investors are once again putting their faith (and money) in the yellow metal, seen as a safe haven in troubled times, with prices rising by some 4% on Wednesday October 8th alone.


Ins All geschickt: Erster Pakettransport in den Weltraum

Ins All geschickt: Erster Pakettransport in den Weltraum


Bonn. DHL bringt Pakete ins Weltall: Mit einer Sojusrakete startet am 12. Oktober vom russischen Weltraumbahnhof Baikonur das erste Paket in den Weltraum. Zieladresse ist die internationale Raumstation ISS.

In dem Paket enthalten ist ein eigens entwickeltes Experiment, mit dem untersucht wird, in welcher Reihenfolge Modell-Pakete unterschiedlichen Gewichts in der Schwerelosigkeit ihr Ziel erreichen. Bei diesem Versuch stehen Jugend forscht, der europäische Jugendwettbewerb im Bereich Naturwissenschaften, Mathematik und Technik, und das Deutsche Zentrum für Luft- und Raumfahrt (DLR) Pate. „Bei diesem Experiment werden mechanische Abläufe getestet. Das geschieht nur sehr selten im Weltall, da bewegliche Teile – wie diese Paketmodelle – sehr schwierig zu handhaben sind“, erklärt Wilfried Tost vom Deutschen Zentrum für Luft- und Raumfahrt. Zuvor haben dreizehn Teilnehmer des diesjährigen Bundeswettbewerbs Jugend forscht Prognosen zum Verlauf des Weltraumversuchs durch physikalisch-mathematische Berechnungen abgegeben, die mit dem tatsächlichen Verlauf abgeglichen werden.

„Mission to Space“ – Versuchsanordnung

DHL Paket hat gemeinsam mit dem Deutschen Zentrum für Luft- und Raumfahrt ein Experiment entwickelt, das die Gesetze und Zusammenhänge von Geschwindigkeit, Fliehkraft und Rollreibung in der Schwerelosigkeit testen soll. Beteiligt an der Weltraummission ist darüber hinaus die Stiftung Jugend forscht.

Zwei Paketmodelle mit unterschiedlichem Gewicht treten in einer Art Wettrennen gegeneinander an. Um das Experiment im Weltall durchführen zu können, sind beide Pakete an einer eigens dafür entwickelten Schienenkonstruktion befestigt. Unter den Bedingungen der Schwerelosigkeit hat die Masse keinen Einfluss auf die Geschwindigkeit der Paketmodelle und beide müssten gleichzeitig im Ziel ankommen. Die Modelle bewegen sich aber auf einem Schienenweg mit Looping, wodurch wahrscheinlich die Zentrifugalkraft und die Rollreibung den Lauf der Pakete beeinflussen werden. Voraussetzung für die Durchführbarkeit und die Genauigkeit des Experiments ist, dass beide Paketmodelle exakt die gleiche Beschleunigung erfahren. Dafür sorgt ein mechanischer Schieber mit vier Beschleunigungsstufen. Um bei der Durchführung auf der sich im Weltall bewegenden Raumstation zuverlässige Ergebnisse zu erhalten, wird die Versuchsanordnung innerhalb der ISS befestigt. Der Astronaut Richard Garriott wird das Experiment jeweils einmal mit jeder Beschleunigungsstufe durchführen und die Ergebnisse dokumentieren – auch filmisch. Wenn es die Gegebenheiten erlauben, soll das Experiment auch einmal schwebend durchgeführt werden. Dazu wird die Schienenkonstruktion aus ihrer Befestigung gelöst. Die Versuchsanordnung wird in Einzelteilen in einem DHL Paket zur Raumstation ISS befördert und vor Ort für das Experiment zusammengebaut.

Details zur Versuchsanordnung

+ Die beiden Versuchskörper bestehen aus identischem Material (Holz und Aluminium)
+ Die beiden Versuchskörper haben eine identische Größe, aber unterschiedliche Masse
+ Die Versuchskörper wiegen 43 g und 37,6 g
+ Die Feder beschleunigt beide Versuchskörper gleichzeitig
+ Die Beschleunigung erfolgt kontinuierlich und in kurzer Zeit, aber nicht als Impuls
+ Der Federweg ist kurz im Verhältnis zur Gesamtlänge der Loopingbahn
+ Es gibt vier Beschleunigungsstufen
+ Die Versuchsanordnung hat folgende Maße: 65 cm lang, 8,5 cm breit, 16 cm hoch

Experiment und wissenschaftlichen Fragestellung

Dem Experiment liegt eine wissenschaftliche Fragestellung zugrunde, die vom Deutschen Zentrum für Luft- und Raumfahrt entwickelt wurde. Sie berücksichtigt die unterschiedlichen Phasen, denen die Paketmodelle bei ihrer „Fahrt" durch die Schienenkonstruktion ausgesetzt sind.

Der Versuch besteht aus mehreren Phasen: Start, Fahrt, Looping, Fahrt, Stopp:
a) In welchen Phasen wirken welche Kräfte auf die Versuchskörper?
b) Wann sind sie schwerelos, wann sind sie es nicht?
c) Wird der leichtere oder der schwerere Versuchskörper als Erster das Ziel
erreichen (für jede Beschleunigungsstufe)?

Die internationale Raumstation ISS

Das Großforschungslabor ISS wird derzeit gemeinsam von den USA, Russland, den Mitgliedsstaaten der Europäischen Weltraumorganisation ESA, Kanada und Japan betrieben.

Die wichtigsten Daten und Fakten
Spannweite 109 Meter
Länge 80 Meter
Tiefe (mit ATV/Progress) 88 Meter
Höhe 45 Meter
Masse 450 Tonnen
Wohn- und Arbeitsraum 1.200 Kubikmeter

Bahnhöhe circa 360 Kilometer
Bahnneigung 51,6 Grad
Umlaufzeit 90 Minuten
Bauphase 1998-2010
Betriebsdauer (min.) 15 Jahre

Umlaufbahnkorrektur circa 5 pro Jahr
Astronautenaufenthalt circa 6 Monate
Mannschaft seit Juli 2006, 3 Personen
ab 2009, 6 Personen
Die ISS ist überall auf der Welt regelmäßig mit dem bloßen Auge erkennbar.
Weitere Informationen unter

Deutsche Verbraucher sind gut über RFID informiert

Deutsche Verbraucher sind gut über RFID informiert

Kunde durchquert RFID-Lesetor bei Galeria Kaufhof (Foto: Metro)

Köln. Acht von zehn Verbrauchern in Deutschland würden mit RFID-Funkchips versehene Produkte kaufen. Besonders wichtig sind ihnen dabei zwei Aspekte: Mit der Funktechnologie erhalten sie mehr Informationen zum Produkt, und der Kassiervorgang wird deutlich beschleunigt, was dem Sicherheits- und dem Conviniencebedürfnis der Verbraucher entgegen kommt. Das geht aus einer aktuellen länderübergreifenden GfK-Studie im Auftrag von GS1 Germany hervor. Befragt wurden Konsumenten in Deutschland, England, Frankreich und den USA zu ihrer Einstellung und ihrem Wissensstand in puncto EPC/RFID.

Nur 26 Prozent der Deutschen geben an, die Technologie nicht zu kennen oder sich nicht dafür zu interessieren. Das sieht im internationalen Maßstab ganz anders aus. So haben sich 44 Prozent der US-Amerikaner, 58 Prozent der britischen Verbraucher und sogar 60 Prozent der Franzosen noch nicht mit RFID auseinandergesetzt. Die deutschen Konsumenten sind im Vergleich dazu nicht nur besonders gut informiert, sie haben auch genaue Vorstellungen davon, welche Vorteile die Technologie bietet. Der Einsatz der Technologie darf die Produkte nicht verteuern. Darüber hinaus steht auf der Wunschliste auch der Datenschutz – für 37 Prozent der Verbraucher in Deutschland ist die Sicherheit der Daten entscheidend.

„Die weitere Verbreitung der RFID-Technologie hängt ganz wesentlich von der Akzeptanz der Verbraucher ab“, sagt Jörg Pretzel, Geschäftsführer von GS1 Germany. „Wir setzen uns gemeinsam mit Handel und Industrie für eine umfassende Aufklärung der Konsumenten ein. Dabei zeigen wir die Chancen der neuen Technologie auf, nehmen aber auch die Bedenken ernst und führen einen offenen Dialog mit allen Beteiligten aus Wirtschaft, Politik und Verbänden.“

Auf Initiative von GS1 Germany und der internationalen Organisation EPCglobal verpflichten sich bereits heute zahlreiche Unternehmen der deutschen Konsumgüterindustrie im Rahmen einer Selbstverpflichtungserklärung zu einem „transparenten und verantwortungsvollen Umgang mit der Funktechnologie“, so GS1. (ak

Wind turbine projects being delayed due to lack of parts.

Wind turbine projects being delayed due to lack of parts.

The Boston Globe (10/8, Ailworth) reports that "a new wind turbine at the Otis Air National Guard Base on Cape Cod was supposed to" begin operating "soon, generating enough electricity to save about $660,000 a year. But the $4.6 million turbine in limbo because key parts of the machine have yet to arrive." The Globe "blame[s] a worldwide parts shortage." Wind turbines "can't be made fast enough to meet growing demand," and "as a result, projects are being delayed for up to two years. The problem is particularly acute in the United States, the world's fastest growing wind-power market." According to General Electric Co. and Vestas Wind Systems, two leading turbine makers, "wind projects worldwide are being delayed by a lack of parts for the machines, which have about 9,000 components." Furthermore, "the delays in getting turbines online compound an already lengthy approval process for such projects, which often face complicated permitting procedures or legal action taken by those" who are concerned about the effects of turbines on property values.

LKW-Maut wird teurer

LKW-Maut wird teurer

Kompromisslösung beendet Maut-Streit zwischen Bund und Ländern (Foto: ddp)

Dessau-Roßlau. Bund und Länder haben sich auf einen Kompromiss zur Erhöhung der Lastwagen-Maut geeinigt.

Die Abgabe für große LKW soll zum 1. Januar 2009 erhöht und der Maut-Tarif nach Schadstoff-Ausstoß stärker als bisher gestaffelt werden. Das teilten der Vorsitzende der Verkehrsministerkonferenz, Sachsen-Anhalts Ressortchef Karl-Heinz Daehre (CDU), und Bundesverkehrsminister Wolfgang Tiefensee (SPD) am Mittwoch nach der Konferenz der Verkehrsminister in Dessau-Roßlau mit. Vorgesehen ist, dass die Anhebung des Mautsatzes in der LKW-Schadstoffklasse S 3 für zwei Jahre um 2 Cent niedriger ausfällt als von Tiefensee geplant. (dpa/sv)

Tokyo Shares Lose 9.4 Percent as Other Asian Markets Slide

Tokyo Shares Lose 9.4 Percent as Other Asian Markets Slide

PARIS — Another wave of relentless selling washed over global markets Wednesday, with stocks plunging in Europe and Asia. The Tokyo market had its worst decline since the 1987 crash.

The British government’s announcement of a plan to bail out the country’s foundering banks with about $88 billion of new capital did little to restore market confidence, with banks again leading indexes lower Wednesday after the Dow Jones industrial average fell 5.1 percent in New York Tuesday.

“It was a horrible session in New York and a horrible session in Tokyo,” Jim Reid, head of fundamental credit strategy at Deutsche Bank in London, said. “The momentum is negative.”

“I think there are probably more bank failures and forced consolidation to come in the financial sector,” Reid said. “Whatever day of the week you wake up, it’s another country having problems.”

Japanese stocks plunged 9.4 percent Wednesday, leading the Nikkei 225 to at 9,203.32, the lowest since 2003. It was the biggest single-day loss in the index since October 1987. The selloff followed Tuesday’s drop of more than 3 percent. The index is now down 40 percent in 2008.

Toyota Motor, Nissan Motor and Honda Motor all fell more than 10 percent on expectations that the global downturn, and particularly the faltering U.S. economy, would hit their results.

In European morning trading, the DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 7.2 percent. The FTSE 100 index in London declined 6.7 percent, the CAC-40 in Paris fell 8.2 percent, and the DAX in Frankfurt fell 7.5 percent.

In Moscow, the Micex index plunged 15.5 percent at the opening and exchange officials suspended trading until Friday.

Britain on Wednesday announced a three-part multibillion-dollar bailout for its beleaguered banks, and Spain moved to mount a separate rescue of its own banking sector.

In Hong Kong, where markets were closed for a holiday on Tuesday, stocks slumped 8.2 percent, despite news that the Hong Kong Monetary Authority had lowered its benchmark interest rate in an effort to bolster bank lending. The move followed interest rate cuts around the world as central banks and governments struggle to contain the spreading financial crisis.

The Shanghai composite index fell 3 percent, and in Seoul, the Kospi fell 5.8 percent. James Chirnside, who manages $65 million at Asia Pacific Asset Management in Sydney, said that investors feared corporate profits would fall and many companies would fail if banks do not resume lending soon. Only a coordinated round of interest rate cuts by central banks around the world is likely to unfreeze interbank lending markets and cause banks to lend more to each other and industrial borrowers as well, he added.

“Without that sort of global coordination, we’ll still be hostage to these violent moves in the market,” Mr. Chirnside said.

There is as yet little sign of an internationally coordinated interest rate move designed to shore up slowing growth and restore market confidence. But pressure for further easing is growing by the day, and the U.S. Federal Reserve chairman, Ben Bernanke, on Tuesday signaled a readiness to cut rates further, given that the market turmoil could cause U.S. economic activity to be subdued into 2009.

Hans Genberg, the executive director for research at the Hong Kong Monetary Authority, said that even if the Federal Reserve pushes down its overnight interest rate — the Federal Funds rate — financial markets might keep falling and harm to the global economy would not be contained.

“Rate cuts, Federal Funds cuts, are not going to be enough,” at a time when banks are reluctant to lend to each other, he said, adding that considerable academic research suggests that the United States must find a way to restore the capital bases of its banks.

Olaf Unteroberdoerster, the International Monetary Fund’s representative in Hong Kong, was similarly gloomy about the potential of interest rate cuts to stop the problems. “The key lesson is when you face a confidence issue where the market participants no longer trust each other, the conventional macroeconomic tools are not as effective,” he said.

Economists have been gradually reducing their forecasts for economic growth in Asia, and warn that further reductions may be coming soon. “All the risks to those numbers are very much on the downside,” said Michael Buchanan, Goldman Sachs’ chief economist for Asia except Japan.

Mounting difficulties in European economies are starting to spill over into Asia, where many companies had been trying to step up sales to European consumers before the euro started falling sharply in recent weeks. “For a long time, I think Asia was hoping exports to Europe would make up for a shortfall in the U.S.,” Mr. Buchanan said.

Robert Cardarelli, a senior International Monetary Fund economist, said at a press conference in Hong Kong on Wednesday that the fund’s recent research showed that during financial crises in which banks are particularly affected, “we are in for a much more severe and protracted downturn.”

U.S. crude oil for November delivery fell $2.10 to $87.96 a barrel in electronic trading on the New York Mercantile Exchange.

Plunges in Asian stock markets caused many investors to buy yen, as Japan’s well-capitalized banking system appeared to be a refuge from turmoil in financial markets even as the Japanese stock market took heavy losses. The dollar fell at one point below 100 yen — a level that will further hurt the profits of many Japanese industrial companies like Sony and Toyota that depend heavily on sales in the United States.

In Paris morning trading, the dollar had recovered to 100.27 ye but was still down from 101.49 late Tuesday in New York.

The euro rose to $1.3607 from $1.3590 late Tuesday, while the pound rose to $1.7530 from $1.7457.

Indonesia’s stock exchange halted trading after a morning plunge of 10.4 percent. The main floor of Jakarta’s benchmark stock exchange building fell quiet at about 11 a.m. Wednesday after officials there suspended trading for the first time in eight years. The main Jakarta stock index, the JSX, fell more than 10 percent for the second day in a row, making this one of the worst weeks in 20 years. The last time trading had been suspended here was in 2000, when a car bomb exploded outside the stock exchange building.

“I don’t think anyone has seen anything like this in a long time,” said Eugene Galbraith, president commissioner of Bank Central Asia.

Exchange president Erry Firmansyah told reporters the suspension would likely last only through the end of the day and was necessary to give investors time to calm their nerves as worldwide economic fears strike Jakarta.

Indonesia has a large export-driven economy closely tied to the economy of the United States. But analysts said despite the current panic here they expected the market to simmer in the coming days.

“Across the board, people are trying to rotate out of the stock market and into a more safe haven,” said Gita Wirjawan, the former president director for JPMorgan in Indonesia. “It is to some extent attributable to a bit of panic, the market has some exposure to risk, but it won’t be to the extent of China, India or Japan.”

Bettina Wassener and Keith Bradsher reported from Hong Kong. Peter Gelling contributed reporting from Jakarta.

Dax fällt unter die Marke von 5000 Punkten

Dax fällt unter die Marke von 5000 Punkten

8. Oktober 2008, 06:10 Uhr

Panik an den Aktienmärkten: Der Dax hat zu Handelsbeginn 8,4 Prozent verloren, der japanische Nikkei-Index erlebte den schlimmsten Crash seit 20 Jahren. Zuvor hatte der Dow Jones in New York 5,1 Prozent nachgegeben – trotz einer dramatischen Rede von US-Notenbankchef Bernanke.
Foto: AP

Panik an den weltweiten Börsen: Dieser Händler in Frankfurt kann das Elend nicht mehr sehen. Der Dax rutschte unter die Marke von 5000 Punkten.

Schwarzer Mittwoch für den deutschen Aktienmarkt: Der Deutsche Aktienindex (Dax) ist am Mittwochvormittag unter die Marke von 5000 Punkten gefallen. Im Handelsverlauf notierte er bei 8,4 Prozent im Minus – und einem Stand von 4875. Die Kursverluste zogen sich durch alle Branchen. Unter Verkaufsdruck standen erneut Finanzwerte und Autowerte. Auch der TecDax rutschte dramatisch ab – um fast zehn Prozent.

Auch Tokio erlebte einen der schlimmsten Abstürze aller Zeiten: Der Leitindex Nikkei fiel um mehr als 9,4 Prozent oder 952 Punkte auf 9203 Zähler. Das ist der tiefste Schlussstand seit Juni 2003 und der höchste Tagesverlust seit mehr als 20 Jahren. In den vergangenen zwei Wochen büßte der Index damit insgesamt 24 Prozent ein.

„Die sich verschlechternden Wirtschaftsaussichten und die immer tiefer gehende Finanzkrise bringen nahezu überbordende Sorgen mit sich“, sagte der Fondsmanager von Ichiyoshi Investment Management Mitsushige Akino. „Niemand kauft, auch wenn die Aktien billig bewertet sind.“ Angesichts eines weiterhin starken Yen gaben Exportwerte besonders stark nach. Papiere des Autoherstellers Toyota verloren 6,7 Prozent. Die Aktie wurde zusätzlich durch Medienberichte belastet, denen zufolge der Jahresgewinn wohl um 40 Prozent zurückgehen werde.

Die indonesische Börse hat nach einem Einbruch von mehr als zehn Prozent den Handel ausgesetzt. „Diese Maßnahme soll einem weiteren Sturz der Aktienkurse vorbeugen und den Markt beruhigen“, zitierte der seriöse Online-Nachrichtendienst Detik-com den Handelsdirektor der Börse, MS Sembiring.

Schlechte Vorgaben aus den USA

Zuvor hatten auch die US-Börsen ihre Talfahrt fortgesetzt. Ungewöhnliche Finanzhilfen der US-Notenbank Fed konnten die Sorgen der Händler um die US-Wirtschaft am Dienstag nicht zerstreuen. Auch ein Signal von Fed-Chef Ben Bernanke für eine Zinssenkung brachte auf dem Parkett keine Erleichterung, weil an den Märkten damit ohnehin gerechnet wurde. Da Bernanke aber vor immer größeren Konjunkturrisiken warnte, bauten die Börsenbarometer ihre Verluste noch deutlich aus. Besonders kräftig abgestraft wurde der Branchenriese Bank of America, der mit einem drastischen Gewinnrückgang als unliebsamer Vorbote der Bilanzsaison galt.

Der Dow-Jones-Index der Standardwerte pendelte im Handelsverlauf zwischen einem Hoch von 10.124 und einem Tief von 9436 Punkten. Er schloss mit einem Minus von 5,1 Prozent bei 9447 Punkten. Der breiter gefasste S&P-500-Index gab 5,7 Prozent auf 996 Zähler nach. Der Index der Technologiebörse Nasdaq sank um 5,8 Prozent auf 1754 Stellen. Der Dax baute zum Ende des Xetra-Handels seinen gut siebenprozentigen Vortagesverlust um 1,1 Prozent auf 5326 Punkte aus.

Die US-Indizes stellten neue Negativrekorde auf: Der Dow Jones verlor in den vergangenen fünf Handelstagen mehr als 1400 Punkte. Das ist soviel wie noch nie in einer vergleichbaren Zeitspanne. Der S&P verlor in derselben Zeit 14,6 Prozent an Wert, soviel in fünf Tagen wie seit dem Börsencrash von 1987 nicht mehr. Zum ersten Mal seit September 2003 notierte er zudem unter der Marke von 1000 Punkten.

Bernanke sagte, die Fed müsse abwägen, ob die gegenwärtige Haltung der Geldpolitik angemessen bleibe. Der Ausblick für das US-Wachstum habe sich verschlechtert und der Inflationsausblick verbessert. Börsianer sind mittlerweile fest davon überzeugt, dass die Fed spätestens bei ihrer Sitzung am Monatsende die Zinsen senkt. Die Fed will zudem künftig auch sogenannte Commercial Papers, unbesicherte kurzfristige Anleihen, kaufen. Die Papiere gelten als Mitauslöser der aktuellen Turbulenzen, Ihre Märkte sind inzwischen weitgehend zusammengebrochen. Der jüngste Schritt der US-Notenbank zur Liquiditätsversorgung der kriselnden Geldmärkte ist dramatisch, da Zentralbanken normalerweise nur gut besicherte Wertpapiere akzeptieren.

„Mir gefällt diese Commercial-Paper-Initiative der Fed“, sagte Marc Pado von AT Cantor Fitzgerald in San Francisco. Aber die Märkte wollten gemeinsame Anstrengungen der Zentralbanken sehen. Ähnlich äußerte sich auch Peter Kenny von Knight Equity Markets. Der Markt bleibe auf seinem Weg der Selbstzerstörung, solange es keine konstruktiven und bedeutenden Nachrichten der anerkannten Stellen gebe, sagte Kenny.

Die Aktien von Bank of America brachen um mehr als 26 Prozent auf 23,77 Dollar ein. Die Geschäfte größten US-Bank wurden von der Kreditkrise noch stärker in Mitleidenschaft gezogen als befürchtet. Das Institut teilte zwei Wochen früher als erwartet mit, dass sein Gewinn im dritten Quartal um 68 Prozent auf 1,18 Milliarden Dollar geschrumpft ist.

„Die Anleger machen sich wirklich darauf gefasst, dass das dritte Quartal enttäuschend ausfällt und die Prognosen für das vierte Quartal extrem enttäuschend sein werden“, sagte Fred Dickson von D.A. Davidson. Nach Börsenschluss in den USA legte der Aluminiumhersteller Alcoa seine Quartalszahlen vor. Alcoa-Papiere lagen zuvor 7,7 Prozent im Minus.

Großbritannien will Banken teilverstaatlichen

Großbritannien will Banken teilverstaatlichen

8. Oktober 2008, 08:37 Uhr

Die europäischen Regierungen überbieten sich mit Rettungsplänen: Nun hat Großbritannien angekündigt, die wichtigsten Banken des Landes in Teilen zu verstaatlichen. Zu ihnen gehören Branchengrößen wie Barclays und HSBC. Zudem soll es einen Notfallkredit geben – über eine Viertelbillion Euro.

Foto: DPA

Londons Finanzwelt steht Kopf: Die Regierung will die größten Banken des Landes verstaatlichen

Zur Wiederherstellung von Stabilität auf dem Finanzmarkt will die britische Regierungen Banken teilverstaatlichen. Dies erklärte das Finanzministerium in London vor Öffnung der Börse.

Bei den acht Banken handelt es sich um Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland und Standard Chartered. Der sogenannte Rekapitalisierungsplan bietet bis zu 50 Milliarden Pfund (64,5 Milliarden Euro) in Form von Vorzugsaktien.

Zudem will die Regierung den Banken einen Kredit von 200 Milliarden Pfund (250 Milliarden Euro) zur Verfügung stellen.

Finanzminister Alistair Darling sagte, die Regierung reagiere damit auf außergewöhnliche Umstände. Zugleich erklärte er, dass der Prozess Zeit brauche. „Es ist keine sofortige Änderung, sondern eine Restrukturierung“, sagte Darling im Fernsehsender Sky News. Das System werde damit stabilisiert, und dies sei sehr wichtig.

In den vergangenen Tagen büßten einige der großen britischen Banken nahezu die Hälfte ihres Börsenwertes ein. Einige Investoren befürchten gar deren Zusammenbruch, wenn ihnen nicht mit einem Multi-Milliarden-Pfund-Programm unter die Arme gegriffen wird.

Die EU-Kommission erklärte, sie sei über den britischen Plan informiert und werde eine rasche Entscheidung treffen, sobald die Einzelheiten bekannt seien. Die EU muss staatlichen Hilfsprogrammen zustimmen.

Bucket-brigade assembly lines

Bucket-brigade assembly lines

What are "bucket brigades"?

"Bucket-brigades" are a way of organizing workers on an assembly line so that the line balances itself.

Here is how it works. In an assembly line, products are progressively assembled as they move down the line, from worker to worker, toward completion. This is a familiar organization in manufacturing, but assembly lines are found in all types of industries, wherever work is passed from person to person in sequence.

A classic challenge in the management of assembly lines is to balance the assignment of work so that there are no bottlenecks in the flow. This is hard to do because it requires, first, knowing how much work is inherent in assembly; and then dividing that work appropriately among the workers. Balancing an assembly line is typically done by engineers and represents a significant project. But because bucket brigades are self-organizing, the need for such centralized engineering is reduced or even eliminated. Furthermore, bucket brigades are able to achieve better balance than any engineering team because bucket brigades redistribute the work based, not on estimates (time-motion studies), but on the time it actually took a particular worker to perform a particular task.

This idea may be found in the social insects, such as ants or bees, which are highly effective at organizing themselves even though without blueprint, plan, or management. Instead, global coordination emerges spontaneously, through the multiple interactions of many participants, each following simple rules. Similarly, when workers on an assembly line are organized into bucket brigades, they can function as a self-organizing system that spontaneously achieves its own optimum configuration, without special equipment, time-motion studies, work-content models, management, or software control systems.

The operation of bucket brigades is simple: Each worker carries a product towards completion; when the last worker finishes his product he walks back upstream to take over the work of his predecessor, who walks back and takes over the work of his predecessor and so on, until, after relinquishing his product, the first worker walks back to the start to begin a new product. If, in addition, workers are sequenced from slowest to fastest, then we call the system a "bucket brigade" and the workers will spontaneously gravitate to the optimal division of work so that throughput is maximized.

In this, the simplest version of bucket brigades, workers must maintain their sequence: No passing is allowed and so it can happen that one worker might be blocked by his successor. In such case we require that the blocked worker simply wait until his successor has moved out of the way, so he can resume work. (This waiting is not necessarily bad because it is the means by which the workers migrate to their optimum locations.)


  • There is a reduced need for planning and management because bucket brigades make the flow line self-balancing.
  • Production becomes more flexible and agile because bucket brigades "tune" themselves, without time-motion studies or the other cumbrous endeavors of assembly-line balancing.
  • Throughput is increased because bucket brigades spontaneously generate the optimal division of work.
  • Secondary labor is reduced and quality improved because bucket brigades operate with the absolute minimal work-in-process.
  • Training and coordination are simplified because it is easy for workers to know what to do next.

See for yourself

In the simulation below, three workers assemble product as they move from left to right. Whenever the fastest (rightmost, red one) finishes a product (reaches the right end of the line), he leaves it and walks back to take over the work of his predecessor, who walks back and so on, until the first worker walks back to start a new product.

Note that the last, fastest worker sets the pace by "pulling" work into the system; and the slowest worker is always the one who starts new work.

The workers begin at arbitrary positions far from balance; but you will observe that they quickly gravitate to the optimum partition of work (indicated by the tick marks). Click anywhere on the simulation to restart the workers at random positions and observe how balance is quickly reestablished.

Here is a video of order-pickers in a warehouse operating under the bucket brigade protocol: Stream RealPlayer or download an mpg file (45MB). (You will see order-pickers pressing buttons on the flow rack; this is to communicate with the pick-to-light system and has nothing to do with bucket brigades.)

Here is a simple explanation of the self-balancing mechanism of bucket brigades.

Who is using bucket brigades?

Currently, bucket brigades are used mostly in distribution warehouses to organize order-pickers, in the apparel industry to organize garment-sewers, and in simple assembly processes.

We believe bucket brigades to be more widely applicable but feel that the greatest economic significance is in order-picking, which is very labor-intensive. A typical high-volume distribution warehouse employs hundreds of workers to pick orders and the work must be rebalanced daily, and sometimes more often.

Here is a list of some current users of bucket brigades. (Note, however, that implementations of bucket brigade sometimes differ in local ways depending on the context, so not all of these operate strictly "by-the-book" as we have described.)

  • McGraw-Hill:Order-pickers in distribution centers
  • The MusicLand Group: Order-pickers
  • Time Warner Trade Publishing/Little, Brown: Order-pickers
  • Bantam-Doubleday-Dell Distribution: Order-pickers
  • Harcourt-Brace: Order-pickers
  • Blockbuster Music: Order-pickers
  • Coach Leatherware: Much sewing is done by bucket brigade
  • Champion Products: All sewing is done by bucket brigade. Read about it here.
  • Subway: Corporate headquarters now recommends to their 13,000 franchises that they assemble sandwiches by bucket brigade. Read about it here.
  • Tug Manufacturing: Manufacturing airport tractors. Read about it here.
  • Mitsubishi Consumer Electronics America: Assembling large-screen televisions, packaging cellular phones. Read about it here.
  • United Technologies Automotive: Assembling automotive harnesses. Read about it here.
  • Revco Drug Stores, Inc. (now CVS): Order-picker in their national distribution center increased pick rates by 34%. Read about it here.
  • Anderson Merchandisers: In a two-week trial order-pickers increased production rate by 20% and reduced variance in pick rates by 90%. Furthermore, each order-picker set a career best. Read about it here.
  • Readers Digest: Order-pickers realized an 8% increase in pick rates and a 35% reduction in errors over their first picking season. Read about it here.
  • Wawa Convenience Stores, Inc.: Their (unionized) distribution center began using bucket brigades in an operation that picks full-cases to pallet jack. Order-pickers averaged a 25% increase in pick rates the first week. Read about it here.
  • Ford Customer Service Division: The most popular products were moved out of carousels and into flow rack and picked by bucket brigade. The pick rate increased over 50%. Read about it here.
  • The Gap: The Gap Distribution Centers supply three chains of retail stores: Old Navy, The Gap, and Banana Republic. They report a 25% improvement in throughput by using bucket brigades in their pick modules. Read about it here.
  • Walgreen's: Walgreen's uses bucket brigades in their distribution centers, supplying almost 4,000 retail stores. Details to follow.
  • Radio Shack: Radio Shack uses bucket brigades to coordinate order pickers in its distribution centers. Look for a mention in an upcoming issue of National Geographic in an article on "swarm intelligence".
  • Mother Nature: Amazingly, some species of ant have been reported to use bucket brigades to coordinate the transfer of food to the nest. Read about it here

Primary references

Most of the following are technical publications and will be of interest primarily to academics. Material of more general interest may be found here.

  • A production line that balances itself by J. Bartholdi and D. Eisenstein, in Operations Research 44(1):21-34 (1996), special issue on new directions in operations management. This is the original paper introducing bucket brigades and is the key academic reference. It includes a precise mathematical model of a bucket brigade as a dynamical system, analyzes its asymptotic behavior, and proves that production rate is maximized. Also includes a detailed justification of the appropriateness of the mathematical model.
  • Dynamics of 2- and 3-worker `bucket brigade' production lines by J. Bartholdi, L. Bunimovich, and D. Eisenstein, in Operations Research 47(3):488-491 (1999). Primarily for academics: A catalogue of all possible dynamic behavior of small bucket brigade lines plus mention of some open mathematical questions. Among the results: Evidence for the existence of mathematical chaos for some pathologically mis-configured lines.
  • Performance of bucket brigades when work is stochastic by J. Bartholdi, D. Eisenstein, and R. Foley (2001), Operations Research 49(5):710-719. Mathematical proof that bucket brigades are expected to perform well even when the work has an element of randomness to it.
  • Using Bucket Brigades to Migrate from Craft Manufacturing to Assembly Lines by J. Bartholdi and D. Eisenstein (2005), Manufacturing and Service Operations Management 7(2):121-129. A case study describing how a manufacturer of tractors used bucket brigades to migrate from craft assembly (one person assembles one tractor) to a semi-automated assembly line.
  • Bucket brigades on in-tree assembly networks by J. Bartholdi, D. Eisenstein, and Y. F. Lim (2006), The European Journal of Operational Research 168(3):870-879, special issue on balancing assembly and transfer lines. This shows how to use bucket brigades on a "tree" of merging sub-assembly lines so that all the sub-assembly lines are balanced and, moreover, they are all synchronized so that the assembly network produces product at regular, predictable intervals.
  • Deterministic Chaos in a Model of Discrete Manufacturing by J. Bartholdi, D. Eisenstein, and Y. F. Lim, submitted. A mathematical analysis showing that if a special type of bucket brigade is configured pathologically then fully chaotic behavior is possible.

Related publications

  • Task partitioning in insect societies: bucket brigades, Insectes Sociaux 49 (2002). In 1999 two Spanish biologists reported a species of ant that carries seeds back to the colony by passing each seed from slower to faster ants--bucket brigades! This paper analyzes how bucket brigades can form spontaneously if each ant simply grabs the first seed it can and carries it back to the nest.
  • D. Armbruster and E. Gel of Arizona State University have explored the dynamics of bucket brigades in which worker skills are changing or are multi-dimensional. With J. Murakami, they show that bucket brigades are robustly optimal in the presence of worker learning. In another paper they study a model in which a worker may be faster at one portion of the work but slower at another portion.
  • R. Villalobos of Arizona State University and his colleagues have written several papers about how bucket brigades can be especially effective in the presence of high labor turnover. They have also done some nice work implementing a bucket brigade production line at a United Technologies Automotive site.
  • Recovering cyclic schedules using dynamic produce up-to policies by D. Eisenstein, Operations Research 53(4):675-688 (2005). This uses the ideas behind bucket brigades to schedule a manufacturing resource amongst competing products. A simple rule tells what to manufacture next and for how long; the result is that the system gravitates to a sustainable and efficient manufacturing schedule.
  • A survey of the self-balancing production lines (“bucket brigades”) by A. Bratcu and A. Dolgui, Journal of Intelligent Manufacturing 16 (2005).

Other references, citations, discussions

  • A nice summary article in Supply Chain Digest by D. Gilmore (July 2007). (Subsequent to this, a reader wrote in to say that he had set up bucket brigades in his shipping area and “this has helped us considerably”.)
  • “The bucket brigade: a new approach to order-picking”, in Warehousing Tips by K. Ackerman, Ackerman Publications (2002).
  • Bucket brigades are discussed in the article “Swarm intelligence: A whole new way to think about business” by E. Bonabeau and C. Meyer, which appeard in the Harvard Business Review, May 2001, pp 107-114.
  • “Give productivity a boost without any investment in equipment” by S. Estersohn, in Distribution Channels magazine, May 1998, pp 51-54.
  • “Self-organization will free employees to act like bosses”, in the weekly column "The Front Line" by Thomas Petzinger, Jr., The Wall Street Journal, January 3, 1997. Petzinger writes "The new model for organizations is the biological world, where uncontrolled actions produce stunningly efficient and robust results, all through adaptation and self-organization."
  • The Center of Business Innovations at Ernst and Young LLP has sponsored colloquia on complexity science and business and have published books about each. You can read about bucket brigades in the book describing the second conference.
  • “Call out the bucket brigade!”, in The WERCsheet (a publication of the Warehousing Educational and Reseach Council), July/August 1996. A journalist's summary of our presentation on order-picking by bucket brigade, given at the national WERC conference in San Francisco, 1996. It does not quite get the fine points right but is a reasonable summary, with some second opinions.
  • Two students at the University of Canterbury in New Zealand have done an excellent honors project predicting how bucket brigades could improve manufacturing at a local company.
  • Two graduate students at the University of Lund in Sweden won a prize for their masters thesis, Evaluation of bucket brigades - a next generation order-picking strategy. The work was done with collaboration of Consafe Logistics.
  • Here is a lecture by John Bartholdi on self-organizing logistics systems.
Copyright © John J. BARTHOLDI, III, Georgia Tech, and Donald D. EISENSTEIN, University of Chicago. All Rights Reserved.
Last modified: Thu Dec 20 21:54:09 EDT 2007

Cheap, Off-Grid Cooling

Friday, October 03, 2008

Cheap, Off-Grid Cooling

A hybrid refrigerator will bring efficient, cheap cooling to India.

By Prachi Patel-Predd

A startup based in Cambridge, MA, has developed a new solar-powered refrigeration system for food storage in Indian villages that are off the grid. Promethean Power Systems' design is a hybrid of conventional compressor-based refrigeration and thermoelectric materials--semiconductors that convert electricity into cooling and vice versa.

The chilling units will be cheaper than what is currently used in Indian villages, most of which are off the grid. In such villages, food distributors and processors store raw food products in traditional compressor-based cooling units that run on diesel generators. These cost about $12,000, says the company's cofounder Sorin Grama. And that cost, says Grama, doesn't include the escalating cost of diesel needed to run the units. During a month spent in India a year ago, Grama and his cofounder, Sam White, identified a crucial niche. "Customers kept asking for a cooling system that has low maintenance and operation cost," White says.

Grama says that even including the expense of the photovoltaic (PV) panels, his design would cost about the same as or slightly less than the diesel-powered refrigeration units. More important, it would have no fuel costs, and almost no maintenance costs. According to the company's initial calculations, using a compressor combined with thermoelectric modules would use 20 percent less power to generate the same cooling as a compressor alone.

Chilling in the sun: A conceptual illustration of a solar-powered refrigeration system that could be used in off-grid villages in India. Promethean, based in Cambridge, MA, plans to make the system efficient by combining thermoelectric- and compressor-based cooling.
Credit: Promethean Power Systems

The design uses off-the-shelf components: silicon PV panels, thermoelectric modules, and a compressor-based refrigeration unit. The company's control system directs the two cooling components to work together so that they squeeze as much juice out of the solar panels as possible, Grama explains. Early in the morning and late in the afternoon, when the amount of sunlight is low, the solar panels won't generate enough power to run the compressor. But there will be enough solar power to run the thermoelectric modules, which would generate cooling until the compressor kicks in. Around midday, when the solar panels are working full throttle, the thermoelectric modules will use the extra juice that the compressor doesn't need to provide additional cooling.

Since Promethean was founded in 2007, it has built a laboratory-scale 60-liter chiller. Last week, the company secured funding with which it plans to build a 500-liter prototype that it hopes to test in India in 2009.

The company had toyed with the idea of using only thermoelectric modules hooked up to PV panels. In a thermoelectric module, voltage applied across a thermoelectric material sandwiched between two ceramic plates makes one side hot and the other cold. However, existing thermoelectrics (which are used in temperature-controlled car seats, lasers, and portable picnic coolers), typically bismuth or lead telluride, are not efficient enough for large refrigerators.

Gang Chen, a professor of mechanical engineering at MIT, says that the efficiency of a cooling unit depends on its size. "As you shrink the size to a hotel refrigerator, the compressor itself becomes less efficient," he says. "In those cases, thermoelectric becomes increasingly more attractive." Promethean's approach to combining thermoelectrics with compressors sounds like a logical argument to increase cooling efficiency in commercial-scale systems, Chen says.

The company's 60-liter prototype used bismuth-telluride modules from Dallas-based Marlow Industries. That is the most efficient cooling material known so far, says Boston College physics professor Zhifeng Ren. But there is still room for improvement, and Grama says that the company is on the lookout for new, possibly more-efficient materials.

The startup company might be in luck. Many advances in thermoelectric materials have come out of laboratories recently. MIT's Chen, for one, has increased the efficiency of bismuth antimony telluride by 40 percent by using nanocrystalline materials. Researchers are also tinkering with lead telluride and are starting to use silicon nanowires and silicon-germanium composites. Chen and Ren have founded a company called GMZ Energy, headquartered in Newton, MA, to commercialize their nanocomposite material, and they're expecting commercial thermoelectric modules within one year.

Tech Firms Prepare for the Worst

Wednesday, October 08, 2008

Tech Firms Prepare for the Worst

Technology companies and venture capitalists are bracing themselves for tougher times.

By Michael Fitzgerald

Ripples from the financial crisis on Wall Street are already being felt across the technology industry, with CEOs, entrepreneurs, and venture capitalists bracing themselves for much tougher times and considering how best to ride out the economic downturn.

Recent market turmoil has seen the technology-heavy NASDAQ drop almost 14 percent over 30 days. The fact that upheaval has hit even big technology stocks hard reflects concerns that an economic downturn will hurt these companies' bottom line.

But a more immediate pinch could be felt across the industry as a result of the tightening credit, says Andrew Lo, a professor of finance at MIT's Sloan School of Business. The difficulty of obtaining credit will "affect innovation," Lo predicts. "The capital is not there, and all investors will have a harder time raising funds."

The credit squeeze could prompt large technology firms that need plenty of capital to start looking elsewhere for extra investment, perhaps to countries with substantial foreign-currency reserves. An example of this approach came on Tuesday, when microprocessor maker Advanced Micro Devices said that it would spin off its manufacturing operations to reduce costs, using $6 billion from investors in Abu Dhabi.

Expect more deals like that one, says Paul Saffo, a seasoned Silicon Valley analyst and pundit. "Remember Japan buying America? This time, China's going to be coming in with the checkbook," he says. Such deals might stoke political controversy, but there will be little alternative for the businesses concerned. "When the white knights in the U.S. have no horse to ride, you know the deal's going to go through," Saffo adds.

Iain Cockburn, a professor of finance and economics at Boston University, notes that technology companies are normally more resistant to credit problems. "Tech tends to be less reliant on short-term credit," he says, adding that smaller tech companies and startups are relatively well placed to weather the impact of a downturn over the short term.

Even so, "if the short-term credit crunch doesn't get sorted out," Cockburn says, "projects that involve investments in new technologies [will] get postponed." He adds that established companies that have significant capital needs, like semiconductor firms and manufacturers, will also run into trouble.

Even small firms are already preparing for a much rougher ride. "The odds are for a big slowdown, so we're tying to conserve cash," says Dave Grannan, CEO of Vlingo, a speech-recognition company based in Cambridge, MA. Although the company has seen no drop in interest for its products, the economic outlook has forced Grannan to implement a hiring freeze (he had been planning to hire 15 new staff this month). He also hopes to raise $6 million to $8 million in extra funding from investors to help shore up the business.

Some businesses may be able to batten down the hatches, but venture capitalists still need to find a return on investments, so they are keen to play down the worsening climate. "Ultimately, money is always looking for a return," says Sim Simeonov, a technology partner at Polaris Ventures. "If you can show a great new company which is growing, then there may be a reverse dynamic of capital wanting to flock to it."

"We don't expect anything to affect startup funding in the short term," adds Isaac D. Barchas of Austin Technology Incubator. "But I am literally touching wood as I say this."

Greg Blonder, a partner at Morgenthaler Ventures, says that any recession will be tougher on middle- and late-stage companies, which need to raise money for growth. And he adds that the outlook remains foggy at best. "I don't think anyone knows the future well enough to say IT managers are going to cut back more than advertisers."

Some investors will refocus their attention on areas that are more resilient to the downturn. One example, according to Boston University's Cockburn, may be health-care technology. "Health care is kind of recession proof," he says. "If you've got cancer, you can't really tighten your belt and put it off for six months."

However, Steve Burrill, a venture capitalist specializing in biological sciences, is less sanguine. "This is a massive reorganization of capital market structures," he says. "Over the last 40 years, capital has been reasonably available, reasonably cheap, and reasonably consistent. In the future, none of that is going to be true."

Fabless future: Struggling AMD spins off factories

Tuesday, October 07, 2008

Fabless future: Struggling AMD spins off factories

By Associated Press

SAN FRANCISCO (AP) _ For years, Advanced Micro Devices Inc.'s scrappy image was best summed up by an insult that founder Jerry Sanders lobbed against rivals: "Real men have fabs."

Sanders meant that while many chip companies design semiconductors and outsource the manufacturing, AMD enjoyed the relatively rare advantage of owning its factories, known as fabrication plants, or fabs.

Times have changed, though, and now so has AMD's commitment to hanging onto those facilities, which have become a cash drain on a struggling company. The world's No. 2 maker of microprocessors said Tuesday it is spinning off its manufacturing operations in a deal with an investment arm of the Persian Gulf state of Abu Dhabi.

Advanced Technology Investment Co., AMD's partner in the joint venture, has promised to contribute up to $8.1 billion over the next five years to upgrade AMD's factories in Germany and help build another one in New York. Those factories will be absorbed into the new company, called Foundry Co.

The unusual deal, which will likely face U.S. government scrutiny since semiconductors are considered sensitive technologies, allows AMD to unload $1.2 billion of its $5.3 billion in debt onto the new company and focus on chip design. Foundry Co. will produce chips for AMD and other customers.

The move should help shore up AMD's finances, but it also highlights the company's recognition that it can't compete dollar-for-dollar on manufacturing against Silicon Valley rival Intel Corp., the world's biggest semiconductor company.

Building ever-more sophisticated computer chips requires billions of dollars in factory upgrades every few years. With a market value more than 30 times that of AMD, Intel has vastly more resources to pour into developing new manufacturing technologies.

That dynamic pushed AMD in 2002 into a partnership with IBM Corp. to jointly develop new chip-making technologies, a relationship that will continue under AMD's new structure.

"This isn't sleight of hand -- this is a very hefty investment that helps clean up AMD's balance sheet," said JoAnne Feeney, senior research analyst with FTN Midwest Securities Corp. "This is the beginning of turning AMD around."

AMD shares were up 49 cents, 12 percent, to $4.72 in afternoon trading Tuesday.

AMD also announced that the Mubadala Development Co., an investment company whose sole shareholder is the government of Abu Dhabi, will pay $314 million to increase its stake in AMD to 19.3 percent from 8.1 percent.

Mubadala will get 58 million newly issued AMD shares and warrants for 30 million more. It also gets the right to nominate someone for AMD's board of directors.

Between that deal and $700 million in cash from Advanced Technology Investment Co., AMD's assets will balloon by more than $1 billion.

The deals illustrate a broader trend of strapped American companies reaching out to foreign investors, particularly in oil-rich countries, for cash infusions at a time when the financial crisis in the U.S. has made big loans from traditional lenders hard to come by.

Mubadala in particular has emerged as one of the world's most active government-run investment vehicles in recent years. It's based in Abu Dhabi, capital of the United Arab Emirates and the largest and richest of the Persian Gulf country's seven semiautonomous sheikdoms.

n July, for example, General Electric Co. agreed to a joint venture in which Mubadala promised to pump $4 billion into GE's weakened commercial finance business.

Mubadala spokesman Richard Mintz declined to comment on the pending federal review of the AMD deals. But he predicted that U.S. officials would have a better understanding of the United Arab Emirates than they did when a political firestorm broke out over a proposed deal with a Dubai-based port operator in 2006.

Dirk Meyer, who took over as AMD's CEO after Hector Ruiz stepped down in July amid intense shareholder pressure, called the announcement a "hugely significant" deal for AMD.

"It really changes the financial model around how we pay for leading-edge semiconductor technology," Meyer said in an interview.

Meyer said he'd thought a lot about Sanders' "real men" remark and concluded that: "The times have changed. The economics have changed. And now smart men have foundries, and that's what we have through our ownership of Foundry," he said.

Foundries are factories that make chips for other companies, freeing them to focus on design and development only. Such "fabless" semiconductor companies include graphics chip maker Nvidia Corp.

While the spinoff is good for AMD's finances, it could set up a showdown with Intel over a cross-licensing agreement the two companies have covering the so-called x86 architecture, which is the heart of PC chips and many server chips. That agreement contains confidential parts that Intel could claim AMD violated if the new investors were given access to them.

Intel spokesman Chuck Mulloy said the company is evaluating the deal.

"Given the confidential provision, even AMD's new investors could not know the confidential terms of the contract," he said. "We're curious about whether the new investors made this commitment without even knowing the terms of AMD's license with Intel."

An AMD spokesman did not have a comment about the licensing deal.

John Barton, an analyst with Cowen and Co., said he was skeptical of the new manufacturing strategy, partly because the spinoff company's management will be coming from AMD.

Foundry's board will be equally comprised of executives from AMD, which will own 44.4 percent of the company, and Advanced Technology Investment, which will own 55.6 percent.

An AMD senior vice president, Doug Grose, is to become chief executive of Foundry, and Ruiz, who had been AMD chairman, will step down to take on that post at Foundry.

The transaction is expected to close at the beginning of 2009, pending regulatory approvals. Foundry Co. will start operations with about 3,000 employees from AMD facilities in Silicon Valley, New York, Dresden, Germany, and Austin, Texas. If "commercially justified," AMD said, Foundry might add new factories in Abu Dhabi.

Copyright 2008 The Associated Press.

In der Schweiz tragen Weihnachtsbäume Schlaufenetiketten

In der Schweiz tragen Weihnachtsbäume Schlaufenetiketten

Das Etikett verrät neben den Preis auch die Baumart und die Größe des Weihnachtsbaumes

Etikett verrät neben den Preis auch die Baumart und die Größe des Weihnachtsbaumes

Hirschhorn. Die Schweizer Weihnachtsbaumzucht Bächtold Christbaumkulturen aus Rain bei Luzern kennzeichnet ihren Tannenbestand mit Schlaufenetiketten von Sato.

Eigens für die Kennzeichnung von Produkten im Gärtnerei- und Pflanzenhandel entwickelt und produziert der Auto-ID-Anbieter diese kundenindividuellen und wetterfesten Etiketten: Die Weihnachtsbaumzucht Bächtold hat in dieser Saison 26.000 Nordmann-, Rot- und Weißtannen sowie Blaufichten mit den Schlaufenetiketten ausgestattet. Das spezielle Schlaufenetikett enthält Informationen zur Baumart, zur Größe des Baums und zum Preis. Um die unterschiedlichen Preiskategorien auf einen Blick erfassen zu können, wurden die Etiketten für Bächtold in fünf Farben gestaltet.

„Die Etiketten von SATO haben uns dadurch überzeugt, dass sie außerordentlich wetterfest und langlebig sind“, begründet der Inhaber der Weihnachtsbaumzucht Heinrich Bächtold seine Entscheidung. „Da wir die Bäume, die Ende des Jahres gefällt und verkauft werden, schon im Juni und Juli auszeichnen, sind die Etiketten fast ein halbes Jahr lang allen erdenklichen Wetterlagen ausgesetzt. Da ist es natürlich sehr wichtig, dass sie weder bei Hitze noch bei Nässe oder Frost Schaden nehmen und weiterhin lesbar bleiben.“ (sv)

Monday, October 06, 2008

Stock Indexes Recoil From 5-Year Lows

Stock Indexes Recoil From 5-Year Lows

Published: October 6, 2008

Stocks took an even sharper dive late in the afternoon on Monday, as stricken investors sent the Dow Jones industrials down more than 700 points before recovering slightly.

Brendan McDermid/Reuters

A trader on the floor of the New York Stock Exchange on Monday.

Markets around the world spiraled downward on Monday as the banking crisis tightened its grip on the global economy. For the time since 2004, the Dow was trading below 10,000, a psychological milestone that came after the index lost more than 500 points in the first hour of trading alone.

“Today is watching the sky fall,” said T.J. Marta, a fixed income strategist at the Royal Bank of Canada.

Selling intensified throughout the morning as investors reeled from a series of high-profile bank bailouts in Europe, where governments scrambled over the weekend to save several major lenders from collapse.

By 3:30 p.m., the Dow was down 430 points or 4.1 percent. The broader American stock market fell 4.44 percent, as measured by the Standard & Poor’s 500-stock index.

The Dow has lost more than 1,100 points — or about 10 percent — in slightly more than a week. The S.&P. has lost more than 15 percent in the same period.

The sharp slides came despite more reassurances from President Bush and a morning announcement from the Federal Reserve that it would significantly expand the amount of money it made available to major banks. The Fed will now lend up to $900 billion in credit, an enormous sum that officials hope will reassure banks that the government will provide them with adequate capital.

The moves were aimed at resolving a problem at the center of the current credit crisis: the reluctance of banks to lend. The healthy functioning of the world’s economy is dependent on the easy flow of short-term loans among banks, businesses and consumers, a stream that has been cut off as banks become more fearful of giving out cash.

Those fears have persisted despite a $700 billion bailout package passed by Congress last week. The package was supposed to help restore some liquidity to the credit markets.

Borrowing rates remained very high on Monday despite last week’s Congressional approval of the $700 billion bailout package, although proponents of that package argue that its longer-term benefits will take time to carry out.

“That’s a longer-term solution; it will help once things have calmed down,” Mr. Marta said.

“But right now, things aren’t calm. Right now, the fire’s kind of burning out of control.”

Events over the weekend in Europe only intensified investors’ anxieties. European stocks fell by the biggest amounts in decades. Major indexes in London and Frankfurt lost more than 7 percent; stocks in Paris fell by 9 percent.

On Wall Street, energy stocks dropped by more than 10 percent as a whole after oil prices dropped below $90 a barrel, reaching their lowest levels since February. Crude oil was trading just over $89 a barrel in New York after 2 p.m.

Shares of financial firms, manufacturing outfits, and industrial companies all fell sharply. Only six companies in the entire S.&P. 500 were up for the day, including Wrigley, the chewing gum giant, and Monster, the parent company of job-seeking Web site

Some gauges of anxiety in the market again reached record highs as the week began, and a benchmark overnight borrowing rate, the Libor rate, moved higher. A measure of volatility, the VIX index, jumped to its highest intraday level ever.

“It’s not just a question clearing problem assets,” said Bob McKee, chief economist for Independent Strategy, a research consultancy. “If banks don’t have enough capital they will be paralyzed.”

President Bush made an unscheduled stop on Monday morning to speak about the crisis with owners of small businesses in San Antonio — and the television cameras that follow him there.

“It’s going to take a while to restore confidence in the financial system,” the president said at Olmos Pharmacy, an old-fashioned soda shop and lunch counter.

“We don’t want to rush into this situation and have the program not be effective,” Mr. Bush said, calling the package “a big step” toward fixing the economy.

Falling oil prices provoked a decline of just over 1,000 points, or nearly 9.9 percent, on the Toronto Stock Market. The drop brought the S.& P./TSX index below 10,000 points for the first time since May 2004.

Energy stocks drove the decline, falling 13 percent. Financial industry shares were down 7 percent in midmorning trading, with the Royal Bank of Canada, the country’s largest bank, down 8.43 percent. That drop came despite the fact that the Royal Bank, like most of Canada’s major banks, has relatively little exposure to troubled debt in the United States.

Strong prices for oil and gas as well as commodities like metals have allowed most of Canada to escape the economic downturn in the United States. But the Bank of Nova Scotia report released on Monday said that weakness in the manufacturing sector, which relies heavily on exports to the United States, would most likely push Canada into a recession.

In Europe, governments worked over the weekend to prevent the collapse of two lenders, Hypo Real Estate in Germany and the Belgian operations of Fortis. The German government also said it would guarantee all private bank deposits as it sought to avert the spread of the financial contagion.

The FTSE 100 index in London fell 7.8 percent; the Frankfurt DAX was down 7 percent and the CAC-40 in Paris lost 9 percent.

A similar sell-off occurred in Asia, the Nikkei 225 stock average in Tokyo fell 4.3 percent, while the Kospi index in Seoul fell 4.3 percent. The Standard & Poor’s/ASX 200 index in Sydney fell 3.3 percent, while the Hang Seng index in Hong Kong was down 5 percent.

“People are really disappointed by the inability of Europe to react on a concerted basis,” said Andrew Popper, a fund manager at SG Hambros in London. “It’s still very much a country-by-country approach. There is also a realization that we haven’t seen any effects on economic growth so far but that now is starting and that’s having an effect on nonfinancial shares.”

Steps by some European governments over the weekend to guarantee deposits may avoid a panic among consumers but will not help banks cope with their financing problems, said Adrian Darley, a fund manager at Resolution Asset Management in London.

“There are still a lot of issues out there,” Mr. Darley said. “Deposit guarantees are just a short-term solution. It does not necessarily help with interbank loans or if you have bad loans on your books. It will take a lot more than that.”

In Iceland and Russia, trading on banking shares was halted after indexes fell more than 14 percent.

Shares of industrial companies were hammered in Europe with EADS, the parent ofAirbus, falling 7.5 percent. ArcelorMittal, the world’s biggest steel maker, dropped 8.6 percent, and the German automaker Daimler was down 5.8 percent. British Airways slid 10.3 percent.

Nicholas Bibby, an economist in the Singapore office of Barclays Capital, said that falling share prices showed that many investors were still worried that banking difficulties might spread even after the passage of the financial bailout plan in Washington. “It’s a fear of contagion,” he said, while adding that Asian banks were better positioned than most to withstand the current problems because the region’s high savings rate tends to mean that Asian banks are net lenders in international money markets.

Concerns about Asian exports have also been rising for months, because the region’s high savings rate means that its spending on consumption is weak and it remains heavily dependent on overseas demand.

CFC Seymour, a Hong Kong securities firm, pointed out in an investment newsletter on Monday that even before recent problems in financial markets, the combined trade balance of Japan, South Korea, Taiwan, Thailand, Indonesia and the Philippines had gone from a surplus of $19 billion as recently as last October to a deficit of $2 billion in July. Only China is still running consistently large trade surpluses.

The realignment in the currency markets that has lifted the dollar and yen against the euro continued, as investors worried about Europe’s banks and economic health and continued their flight to the apparent stability of Japan’s financial system.

The euro fell to $1.3609 in Paris morning trading, from $1.3772 in New York late Friday. The dollar fell to 103.42 yen, from 105.32, and the euro declined to 140.74 yen, from 145.07.

The Shanghai stock exchange, closed for the last week for China’s National Day holiday, reopened on Monday with the Shanghai A-share market down 3.5 percent. The China Securities Regulatory Commission announced on Sunday that it would experiment with the introduction of short-selling and trading on margin on a limited basis, but did not say when the trial would begin.