SILENT DANCE

In the heat of the Potomac Summer, here at Dymaxia HQ, we sometimes show symptoms typical of the ague. Still, to our surprise, tiptoeing through the code orange ozone sky, a specter has appeared.

We know that in these quiet points, history can tip on single events like the defiance of a fatigued Rosa Parks on a long ago bus ride. This time the story is happening in Crawford TX outside the entrance to the Bush Ranch, where Cindy Sheehan, mother of a soldier killed in Iraq, has managed to draw attention to the mounting feeling of despair that has been stealthily creeping over the country as the toll of war deaths and injuries continues to mount relentlessly.

Why Ms. Sheehan's protest has gathered so much attention (as always, these days, first in the Blogosphere) says much about the way both the Administration and the mainstream Media have up to now danced somewhat macabrely around the entire Iraq narrative, best frozen by the daily presentation of war dead in silence on PBS's News Hour with Jim Lehrer. The must-be in silence metaphor holds not just for the Media but also for the Political Class and public. Most notably leading this silence is President Bush, who, 

speech-challenged in the most ordinary sense, has also refused to provide the kind of rallying cry we expect from a leader who has put so much treasure and blood on the line for what can only be called a war of his own choice.

It is said by those who know his heart that the President is a deeply religious man who believes that he has been given his great position and the power inherent in it to serve the will of the Almighty. If this is true, and we have no reason to doubt it, we then can't help but to note that the President has never stood before the American people and shared this belief with the country. We can only imagine that this act of divine will is carried out in reflective silence. Perhaps this is one reason for his relative quiet on the sacrifices his policy is requiring of a large number of us. On the other hand, and this can only be policy, we as a whole population are not being asked to make any direct sacrifices to ensure a successful outcome for this costly and Earth-moving venture. To date, the burden has fallen almost entirely on the shoulders of the professional military and their families; ... enter Ms. Sheehan.

To the contrary, as regards the rest of us,  it can be argued that the war is providing bounty --at least in the short run-- by fueling a flagging economy.  The 200 plus billions of dollars that is being spent is all off the budget and thus is not being accounted for, something that should be noted as the Administration announces budget deficit projections for the year.  It is a debt that is being run up in a military-industrial shopping spree, that  only further speeds up the printing presses. As always, to keep things muddling along, we must rely on thefavors of foreign governments to loan us the cash we need.

One of the lessons of the Vietnamese War for the postwar analysts was that a draft greatly exacerbates negative popular feeling during an unpopular war. Perhaps the greatest wall of silence today, in contrast to that turbulent period, emanates from the college campuses. Students, like their parents, run up debt as they go about their daily business unclouded by the thought that they might be called to serve and sacrifice for their country in Iraq and Afghanistan.

When Nightline's Ted Koppel last year at the milestone of  1,000 combat death in Iraq, chose to show the faces of those killed in action, (in silence, of course), he was roundly criticized by the Administration and its backers. ABC was deemed "political" for calling attention to this landmark.  In the same regard, one of the great under-told stories of the war has been the enormous number of serious casualties, estimated at some 25,000.

But non-silence can be dear. When Ambassador Joe Wilson spoke up calling the President's bluff on the atomic weapon scare (Niger yellow cake) that he had inserted into his State of the Union Address leading up to the war, "high ups" in the Administration took the radical step of outing his wife, Valerie Plame, as an agent of the CIA. Factual speech, then, is squelched even as  speech that laid the false pretext of a case for Iraq's weapons of mass destruction (WMD) and links to Osama Bin Ladin (a major critic of Saddam) is left unscathed.

Ironically, silence from Iraq has been achieved through the generally negative situation .  Journalists, fearing for their lives, rely on the reports handed out by the military for their daily news feeds. This has resulted in a situation in which the deterioration has largely been gradual and utterly under reported.  For the most part, we do not know what is going on there on the ground and in the provisional government. We certainly don't know which areas are being controlled by which militias and what the constitutional process may or may not signify. Out of the silence we can surmise that there is a general breaking up of the country, that it is probably impossible to speak of standing up an Iraqi police and military given the mistrust among the Sunnis, Shiites and Kurds --we know this because the Pentagon is hinting that it will have to raise  the level of American troops during a scheduled election on the constitution that is supposed to take place around December and that coincides with the rotation in and out of American forces that allows for an overlap.  If there really was a reliable Iraqi military the extra troops shouldn't be needed. But once again we know this not by what is being spoken but by what is not beingsaid.

The war has gone badly and thus empowered and emboldened neighboring Iran.  The Iraqi Sunnis who along with coreligionist cousins from Saudi Arabia, Syria and Jordan are fighting the Americans will come out with the short end of the stick if the oil fields to the north and south end up in "semi-autonomous" federal regions. This will be unacceptable to them and  prove a potential danger for the bordering Saudi controlled oil fields of Arabia. It is whispered that Ahmed Chalabi, once the Pentagon's choice to replace Saddam and a leading pre-war player, has established himself near Basra in the South and with Iranian consent is leading a movement to create a semi-autonomous Shiite region that contains the major oil fields and Iraq's only port on the Persian Gulf.

It has become crystal clear there is no good outcome in Iraq.  The US' best hope is that the Shiites backed by the Iranians will somehow be able to box in the Sunnis without requiring too many permanent American troops and that we will be able to put the Iranians in the kind of box we once used against Saddam Hussein. A bad case but much more likely scenario will drive the price of oil to levels that will squeeze a shout of pain out of the silent American backbone. As for the American elites, smiling in silence all the way to the bank as their tax cuts and rising first, second and third home assets have hit the roof, we can expect the loudest calls for relief and subsidy should there be a squeeze.

Cindy Sheehan has broken the silence, and unless the heat has made us delirious, she's but the first in a roar.

1:23:05 PM    

Once upon a time there was Wonder Bread. Wonder Bread and its competitors were the ultimate short tail product. Americans liked the idea of getting a packaged good that was fresh and didn't go stale in a day; they also liked the colorful and hygienic packaging and the convenience that came with a pre-sliced and uniform format. Judging from common parlance, it might be safe to say that they found sliced white bread to be a great thing. To make things even better, everybody went out and bought electric toasters. And thus toasted white bread became for many the second greatest advance of the Twentieth Century.

What happened in bread was matched in other daily pursuits. Where once there were Hudson, Packard, Studebaker, Kaiser, Jeep etc., there remained Ford, Chrysler and GM And for a while these giants manufactured a wide range of brands and models but, alas, over time, and consistent with a new bean-counter logic, they'd reduced that choice to a few simple bodies and chassis differentiated by a little chrome, and a lot of hype boosted by tailfins and leaning girls in shorts, one hand on the hood ornament.

But lowest common denominator marketing didn't stop with molecules. The spectrum was also consolidated as thousands of local stations were marshaled into the columns of three major networks. Likewise for print, so whereas a city might have had 5 daily papers, the count dwindled down to one or two.

Market-share dominators, it seems, like first and foremost the idea of managed, predictable choice for their customers. From this perspective it's good that at the multiplex this week you were choosing, say, among Wedding Crashers and the Island or going back to see War of the Worlds for the third time. Quite simply, the supply side dominates this equation.

But this long, hot summer, after a string of good money years, there's a cold shadow hanging over Hollywood and once again we hear talk of a crisis in the industry. Could it be that Hollywood, long shielded from real competition, has become the last of the "white bread" or short tail industries? Like white bread, with Hollywood you always are supposed to know what you are getting-- sometimes they throw in raisins and cinnamon, sometimes a dose of poppy seeds, sometimes the loaf is round, sometimes it's square but the proven formula stays true.

For people in the biz, the quality of the product is not the problem they most often cite in the face of declining seat sales. In a TV interview with one of the producers of the Island, this week, pirating and its impact on time to DVD were given as the main reasons for the slump. She might as well have got her talking points from the music arm of one of the studios.

Concurrently, virtual DVD store, Netflix, announced that it now has available more than 45,000 titles for its customer base. Netflix subscribers pay a monthly fee for the privilege of being able to choose among those 45,000 titles and to have a certain number of DVD's on hand at any given time --at Netflix you can keep a disc for as long as you want; when you are finished with it you mail it back to them and they send you out another. Given the reliance on choice, in contrast to Hollywood and the Network owners (BTW,one, Viacom, owns brick and
mortar competitor, Blockbuster), Netflix is the ultimate new economy or long tail company. If you feel like hunkering down with a season of Tony Soprano, just let them know by putting those discs at the top of your queue. Netflix's policy is to have what you want on hand by the time you are ready to have them sent out. Netflix has clearly learned a lot from Amazon,
another long tail success story.

The customer chooses from this wide variety, and importantly, rank what they've seen. Mining this feedback, Netflix can then let one customer know what other people with similar tastes have also recommended or rented. Recommendations lead to other recommendations and as you browse, you find yourself adding ever more films, you may have known little about, to your queue.In perspective, with all of its 45,000 titles, Netflix has been able to gather and retain a subscriber base of little over 3 million people. Their recently reported quarterly gross revenues came to just over $146 million, the typical three week gross of a single semi-successful film. Clearly, Netflix, in its present form, resembles more the fly in the ointment than the 800 pound gorilla in the room. But there are also rumblings that Netflix is busy this summer building the technical infrastructure to pave the way for its holy grail, the downloading of films on demand. What this opens up to is something more broadly called IPTV, or, TV over the Internet. At present day Internet speeds, even the fastest DSL, IPTV is mainly a novelty, no more relevant, say, than VOIP, or voice over the Internet was, back in the early days of dial-up Internet access. But what it will mean eventually for the cable companies, is real competition. Nonetheless, at present network speeds, we are far from IPTV. Still, that hasn't stopped a rapid acceleration in activity lately.

So much so, that long before we get to the high speed broadband that makes it really fly, there's already a flurry of activity: thousands of regular video bloggers (vloggers) turn out original content in all forms and shapes, streaming video is a regular feature of NYTIMES.com coverage of major events, eyewitnesses capture video on their mobile phones and upload it to grassroots news sites that scoop the network, regularly providing the most striking shots of dramatic events as they unfold; and most recently major players like the BBC, the Associated Press, CNN and CBS have all announced streaming video services on their websites. And just last week, a record number, nearly 450,000 people watched the launch of Challenger via live streaming video And for the two companies that most profit from a long tail world, Google and Yahoo, it was no time too soon to announce extensive additions to their video search and play services. In typical Google fashion, this ia a Beta site http://video.google.com but it also includes a downloadable video viewer. Google video not only locates
potential videos but lets the searcher know if the actual video is available on line as part of the search result.

Other groups, in a race to gather content, have announced that they will host downloadable video files on their servers at no cost to the content owners. And formats like Bit Torrent have
been developed that help to speed up downloads of (more compact) higher definition video formats. On university campuses where 2nd generation high speed broadband networks
are available, pirated and copyright-free long films are being distributed. The other day, for instance, someone made available, legally, the silent German expressionist film the Cabinet of Dr. Caligari,which apparently is old enough (1918) to escape the long fingernails of the Sonny Bono copyright extension act.

The history of the Internet is the story of the long tail. Analysts often forget that Google, EBay, Amazon and Yahoo (the four great dotcoms still standing), owe their success to the long tail. Google, of course, devours content as fast as it appears and spits it out in small, manageable doses. Their business model goes: you supply the content and we deliver it decorated with paid ads-- we get paid, you get traffic. EBay, of course, no longer just sells the long tail remains of old attics, closets and cellars. Buyers often nowadays go on it looking for items so new they haven't yet been imported much less hit the shelves of stores. The Internet works even in its most mundane manifestations because it is the anti supply-driven channel. Can't find a handle you are looking for in Restoration Warehouse, Expo or Lowe's, just go onto the web. It's there somewhere, just Google it and off goes UPS.

IPTV requires next generation bandwidth. Right now, that means the cable guys and the telephone guys, period. Maybe IP over electric lines will work, who knows. Maybe high bandwidth across spectrum will function and there will be some sort of competition, though as we noted above, even three players, isn't usually enough. There is also a role for Congress in pushing to speed up Internet 2.

If it stays at only two, Hollywood will eventually be forced to team with those two main future high-speed distributors, Cable and Telco. Yes, cabin fever will always be with us, especially for the young, but as we can see already today in the percentage of business DVD now delivers, big screen, surround-sound, home-entertainment centers will provide more and more of the seats for the movie industry and video on demand will become the main source of paid entertainment. It should be noted that already Cineplex seat sales represent only about 50% of the revenue that a movie brings in. Not too long ago, that number was 85%. High price tickets, the string of in-theatre ads, baby-shit smelling popcorn, kinky babysitters and choked roads make getting out of the house less and less of a viable alternative for many people. Hollywood will have to look past the pox-faced kids in the multiplexes and try to figure out what the Gen X,Y and boomers at home will want to download. The year of IPTV? No, not quite but the decade of the long tail, you bet!

So where does IPTV (or, better, the future) leave Netflix? Netflix faces the perennial middleman problem, owning neither the content they move nor the distribution channels. Their real value is in knowing who their customers are (not terribly important in a two player broadband world, where the Cable and Telco's own the customers) and in the original content they have gathered from their customers through their rating and buying patterns. There's value there, but not a home run. In our eyes that makes Netflix a buyout target and the future of the long tail, guaranteed. If Rumsfeld can understand it's time to switch business models in Iraq and start pulling the troops out, Hollywood will probably get the message, too. That's the real value of being a dinosaur, you don't have to be too sharp. Most of the time, you can count on the other guy screwing up and as you finally do swing around your tail, that most critters have no choice but to duck and get out of the way. Tune in later for more on tail.

6:26:39 PM    

Spectrum and the Last Granny

On January 1, 2009, television as we know it, will go dark forever if proposals
now before both houses of Congress are approved. The final Bill will most
directly impact that 19% of the population who get their TV through direct
broadcast without the mediation of Cable or Satellite delivery. It's estimated,
however, that as many as double that number of households still tune in directly
through sets located in areas away from wall attachments or reception boxes.

What's at stake here, however, is more than the last granny or what is
commonly seen in the hi-tech world as the unshakable legacy customer who won't
upgrade until forced to do so. Granny or gramps may not have very good eyesight
or a long attention span and therefore couldn't give a hoot whether the picture
on their sets has 480 lines or 20 million. The trouble is that granny and gramps
aren't alone when it comes to not lusting after that crisp and bright
picture. Long before good ol' TV gets
its final pink slip from Congress, the supply
of new non-digital capable sets will be cut off. A way back, Congress passed a
law that directs manufacturers to outfit all sets under 32 inch sold after July 2007
with HDTV receivers. The law also set January 1, 2007 as the date in which all broadcasters have to
transmit in HDTV as well as traditional NTSC. That law, after some muscular
lobbying, however, left a gaping loophole for the local broadcasters. It is
unenforceable unless 85% of the sets in a given viewing area are HDTV ready.

In a political elite that professes to worship at the altar of "market forces"
you also have to wonder what is going on that has Congress, fresh from taking a
shellacking on Social Security, battling the old folks over their TV sets.
Clearly, there's a
whole bunch more at stake here.

At the heart of it is valuable unreal estate that happens to belong
to the public. It turns out that back in the dark ages when TV was being invented, nobody gave two hoots for spectrum. It was nothing you could
see, feel, smell, much less bottle. Spectrum was just there and the only people who
wanted it were broadcasters, civil aviators and the military. And there was so
much of it to go around there was no need for efficiency or to put much of a
value on it. As a legacy, radio and TV broadcasters to this day don't pay a
single penny to the government for the privilege of using the airwaves and when
their licenses come up for renewal they are asked to give back even less today
--in public service air-time-- than they once did for the privilege.

Traditional TV, it turns out, is a huge spectrum hog. Getting the TV stations
onto a digital signal that can be highly compressed and thus take up less
spectrum space will allow the broadcasters to pack much more programming onto a
much tinier band. As a result, highly desired bandwidth --something that in the
age of cell phones and Blackberries can be auctioned off for an estimated 20-30
billion dollars and undoubtedly foster a whole slew of new businesses and
applications-- will be freed up.

Not surprisingly, the military and police also want their share of this surplus
bandwidth. From our perspective, there's a pretty easy way to get around the
legacy problem. Hand out to granny and gramps as many free converter boxes as they want.
That would probably drive the price of a converter down to about $20, while siphoning
less than $100 million for the multiple billions that the spectrum auctions will yield.

HDTV can be good for everybody. So let's look at what's really interesting
here. What is it about the market in this case that just isn't working? After
all, the consumer gets a better picture and more services, the broadcasters get
the opportunity to package more content into their signals, the set-makers get
to sell more TV's, the cable companies get to package DSL and telephone into their services,
the government gets money for nothing and the citizens get police and firemen
able to communicate with each other.

But it turns out that on the ubiquitous smaller sets there isn't that great a
difference in the picture. Sure, everybody looks at those HDTV-ready LCD and
Plasma sets in the stores and likes the crisp and bright
pictures they see. The problem is that as nice as the newer sets are, thus a
no-brainer for anybody who can afford the $3,000 plus price-tags, once you get
them home there's a major gap in what HD programming you get. Even the major broadcasters
have not yet switched over all their new programming to HDTV, local stations are
lagging even further behind in their efforts and in some communities the cable
companies can't support digital broadcasts even if they originate in HDTV. To
make matters worse, DVD's, the big home theatre motivator, do not meet HDTV specifications.

So what's the takeaway? People like improvements in technology, and if the pain to gain ratio is reasonable,
will move along with the crowd. So the problem with HDTV emigration is not that
nobody notices the difference but that, most importantly, the move is still too
costly. Finally, there's far too much confusion and far too little information. Take the set-making industry's refusal to bundle receivers
into the sets they sell. Sure the typical gal who goes out and spends
$3,000 and up is probably going to subscribe to Cable or Satellite or both, so
she only needs a "monitor'. That is, until the day her cable service goes
down and she finds out she can't just switch over to her antenna. Put an HDTV receiver into every set you sell, folks!
The price will come down to nothing and you won't notice the difference. Michael
Dell, it appears, has got this message.

Next, the confusion: somebody has to get honest with people and tell them
why this is going on. For example, "straight-shooter" Senator McCain, who
recently introduced a Bill that sets the digital transition deadline --cutting
off granny and gramps-- for December 31, 2008, cited homeland security concerns,
according the WSJ. It's hard to expect Congress to level on their interests for
the money and those of the lobbyists around them and this is an area where the
MSM (mainstream media) have a big stake, too. But who's left to help us sort
this out? Maybe we should also be debating just what it means to lease or
auction off this public resource and where the money will go from the receipts.
The public has to wake up, too, every once in a while.

When the market refuses to budge for all the reasons we mentioned above, there's always the big stick of
lawmaking. Maybe Microsoft ought to take heed of this when they finally get
around to rolling out their new operating system, Longhorn. Left to their own
devices, it may take a long time to wean the public off of XP. And if there is too much pain, some
folks, not granny and gramps, for sure just might take the opportunity to switch
over to a nicely bundled Linux product. It's a long shot but MSFT might just get
the horns. Bill, rev your lobbyists!







2:31:19 PM    

Last week we got President Bush's Iraq War status report. True to form, Bush
evoked 9/11 and “terrorists” wherever he could. Ironically, neither petroleum
nor WMD was mentioned once.

It's little wonder that Bush clings to 9/11 and the War on Terrorism. Prior to
9/11, his court-decided presidency was floundering. Since that defining event
he has managed to sustain a highly successful across-the-board attack on civil
society shifting balances in wealth, health, education, intelligence, the
courts, information flow and civil liberties. From the perspective of analyzing
a situation by "cui bono", or who gains?, 9/11 might take on sinister overtones.

Let's start by filling in the boxes: The box Saddam Hussein was in back then,
was, of course, the boycott imposed by the UN and enforced by the US and UK air
forces. What most rankled the Neocons at that time was the failure of the
boycott to topple Hussein and in essence, put into play the huge oil reserves
that lie underneath Iraq's territory.

Ironically, one of the major problems US rebuilding efforts have faced in Iraq
is the sorry state of Iraqi infrastructure. From hospitals, to electric plants,
to water purification systems, Americans tasked right after the invasion with
getting things back to pre-war levels complained that Saddam had basically
jerry-rigged a system woefully lacking boycotted replacement parts. In other
words, the blockade had actually worked more efficiently than is given credit.
The boycott also hamstrung Saddam’s military and all of his WMD projects. No
wonder he was reduced to the lowly profession of writing fanciful novels to
occupy his time.

Another irony is that through Bush’s efforts, Saddam's Iraq, once anathema to al
Qaeda has now become a bono fide front in the War on Terror. According to a
recent CIA report, Iraq today is a center for terrorists who get daily real-life
training in waging an urban battle against the most modern equipment and
techniques developed for countering these types of insurgencies. This could have
dire consequences later on when the front moves to Saudi Arabia, bin Laden’s
stated target.

The box that Bush has put us in now, of course, is the “status quo” in Iraq.  In the most important way Iraq is not like Vietnam. A pullout from “Vietnam was traumatic for the United States, domestically, but Vietnam was not strategic then and is not strategic today. But the Persian Gulf is strategic. It’s where the oil is.

Bush was adamant the other night that he would not pull out of Iraq during his
presidency. Still, implicit in what he said about US troop levels –no measurable
increase in the footprint—is that the enterprise depends on getting something
called a united Iraqi nation in place that can command a loyal army of several
hundred thousand native soldiers, policemen and paramilitaries from various
regions of the country.

But that will be a Herculean task. People living within the Iraqi borders see
themselves primarily as members of tribes, sects and major religious and
nationalistic divisions. Beyond direct tribal affinities they are Sunnis,
Shiites and Kurds. And among these groups they break down into a wide spectrum
of Islamic religious affiliations that go from urban and rural fundamentalists
to secularists.

In such circumstances, something like a loyal all-Iraqi army will be extremely
hard to field. The true dynamic of the country is to spin apart into small well
defined, armed militias. The Sunnis and their pan-Arab allies are fighting the
insurgency. But the Kurds in the North have not disarmed nor have the various
Shiite militias, including the fundamentalist militias under al Sadr.

Another box is the political timetable. In a little over a month, Iraq is
supposed to have agreed upon a constitution that will define the country going
forward. In this vortex of colliding secular and political interests, a
committee that only recently got its final membership is supposed to agree on
the most fundamental aspects of the new country's shape and makeup . The August
15 deadline was part of the timetable Bush did offer in his speech. In reality,
it probably deserves as much merit as his list of the "coalition's 30 allies and
the pool of foreign financial contributors. It's as if saying it makes it true.

For our next box, let's follow the oil. It’s no coincidence that according to
the NYTIMES, people surrounding Ahmed Chalabi, former main supplier of ginned up
intelligence and Pentagon favorite to replace Saddam Hussein, have now moved
their activities into the oil rich southern Iraq area around Basra. They have
begun a political push to create a “state” with the same degree of autonomy that
the Kurds have established in the North, which also just happens to control the
Kirkuk oil fields.

And so it seems, in this box there already is a plan B in play. In this
“federation” scenario --something that could never be agreed to in the proposed
constitution--the bulk of the population in Sunni and religious-Shiite
controlled areas get the sand, heat and broken down infrastructure and the guys
most closely aligned to the US in the North, and who split the difference
between Iran and the US in the South, end up getting the oil. Chalabi's
abilities to work both ends against the middle successfully are not to be
underestimated.

So much for the spreading of democracy and freedom box. The fight for Iraqi oil
has only just begun.

4:12:37 PM    

No one, certainly no one here in Dymaxia, can argue that in some important ways,
the range of content available to consumers today, is broader than at any time
in history thanks mainly to what's come to be called the long tail of the
Internet. Even within the limited scope of our BlogDrome section, we are able to
consistently reblog meaningful, thoughtful, sometimes jarring, sometimes
amusing work being freely circulated by dedicated bloggers on the isthmus of
media, technology, economy and politics.

Grassroots or Citizen Journalism, as it has come to be called, is a powerful
means for getting information amplified and out into the public forum. The
advent of powerful and diligent search engines that constantly troll the
Internet for updated content and RSS feeds that notify consumers when their
favorite sites have new content to offer, have made a major contribution to the
speed and depth of the stream. Diligent consumers can also use their browsers to
access content provided world wide by media organizations once found only in the
largest of libraries, days old. Large organizations like the NY Times, the
BBC and others make available video and audio feeds, podcasters offer a wide
range of talk out of the control of the near monopoly radio broadcast networks.

Yet, against this backdrop of expansive long-tail content availability, it's not
hard to argue that the big picture is darker, and far from a golden age. Take
the dominant force in content production, the US entertainment/media complex.
"The business", appears to be suffering a crisis of its own
making. For years, it has increasingly tweaked its products in its successful
attempt at ever wider audiences and near-complete hegemony. Time-Warner, the
largest of these conglomerates, Disney, Viacom, Fox and the media wing of GE
carefully manicure the distribution and cross-marketing of their products.

And just as the US has achieved sole superpower status by outspending the rest
of the world, developing the most technically sophisticated military ever
fielded --able, at least on paper, to take on foes anywhere in the world and near space
with Rambo-like impunity-- Hollywood has built a bulllet-proof product line that is designed to span a wide range of markets with a
common denominator for nearly every taste. The ideal product, in this formula,
is a movie that has enough testosterone and estrogen stimulation for the
teenagers who flock the live screens, a simple enough plot line and character
pool familiar enough to be recognizable from Auckland to St. Petersburg and a
secret blend of contemporary camp sauce to pique the appetites of the ever
growing stay at home DVD aftermarket.

In so doing, Hollywood has succeeded --some would say, perhaps too well for
their own good (especially, since most recently year over year box-office numbers are down for
the last 20 weeks running)-- in chasing out the competition. Only India has been
able to sustain a thriving domestic film industry. Countries, that played major
creative roles in early film history, like Italy, France, Germany, Britain,
Japan, Sweden, Russia, etc. have, for all practical purposes, gone out
of business. Only tiny Denmark seems to have managed to avoid annihilation.

Italy, for just one example, turned out more movies annually in the early 60's
than Hollywood now produces in a decade. It is impossible to imagine our
cinemateque minus the likes of Eisenstein, Tarkovsky, Bunuel, Lang, Dreyer,
Fellini, Rossolini, Bergman, Visconti, Vigo, Resnais, Godard, Losey, Wenders,
Fassbinder, Misoguchi, Kurosawa, etc., not to mention the many great American
directors who first learned their trade abroad, people like Wilder, Hitchcock
and Von Stroheim.

On the broad information front, the situation is equally bleak: the network nightly news
has become such a tepid shadow of itself that its sometimes impossible to
distinguish it from shows like Entertainment Tonight. Does anyone still tune
into 60 Minutes expecting to see them to break a story on the level of the Enron
or MCI ponzi schemes? In today's atmosphere, can we really expect to see the
Washington Post able to take the heat of pursuing a story of the scope of
Watergate? Can we be sure that the NY Times would have the guts to release the
equivalent of the Pentagon Papers this time around? In the past they had to
resist the accusation of being anti-American, pro-communist; today they will
surely be accused of being anti-Christian.

In the lead up to the ongoing war, all of the leading news-breaking media
organizations --the number of these is unfortunately quite limited-- have
acknowledged burying critical stories that questioned assumptions that were the
main rationale for the invasion. Would anyone seriously argue today that minus
the threat of WMD and a terrorism link with OBL and the promise of a cakewalk, a
majority of Americans would have gone along with the invasion plans? Noticably,
although Americans and Iraqis die every day from bloody attacks, there appears
to be some sort of ban on photo coverage of these gory events. We do know that the Pentagon has made it
impossible to cover through images the stream of coffins returning to the country.

But how seriously has this same MSM taken the revelations coming out of the Air
Force Academy. In the wake of stories about fundamentalist Christian control of
the Academy's leadership, and even manifested bizarrely by its football team, the Academy's
Lutheran chaplain resigned this week and took the charge onto Nightline that
it's common practice in the Institution to deny the existence of a
Constitutional separation of church and state. When the training ground for the
elite officer corps of the US Air Force, the guys that command the flight of the
fighters and bombers and the missile launchers, is challenged on Constitutional
grounds by its own Christian chaplain, this has got to be worthy of in-depth
reporting! Hopefully, MSM editors will prove us wrong and have already assigned top journalists to a story
that the Pentagon felt needed a press conference during the week.

With major newspaper readership in a downward spiral, many Americans get their
news in short bursts from the radio and television or by taking quick glances at
their local dailies. The all news channels tend to parade their rosters of
talking heads who generally spout talking points listing canned party line positions, which, of course
is really most useful for people trying to read the tea leaves of inside-the-beltway
Washington.

The format on NPR's Morning Edition, All Things Considered and
talk venues like the Diane Reim Show, Talk of the Nation,
Science Friday etc. provide opportunities for a wide variety of
beyond-the-sound-byte discussion. On television, PBS's News Hour with Jim
Lehrer has little competition in the time it takes to treat four or five
major daily stories. Another program that can often be counted on for in-depth reporting and some guts in
taking on tough issues has been ABC's Nightline, which unfortunately
appears to be in its death throes.

Given the preponderance of public broadcasting programs on our short list, it
should come as no surprise that the entire public broadcasting system is under
attack by the Administration and the conservative right. The campaign against
public broadcasting has been multi-pronged this time around, which makes it a
much more deadly strike than in the past when Congressional funding, alone, was
put under attack. Deservedly, public broadcasting has a large and vocal audience
that has been successful in pushing back the funding attack. This time around
the Administration has appointed an ally, Kenneth Tomlinson, to head the
Corporation for Public Broadcasting, the parent organization for PBS and NPR.
Behind the scenes, Tomlinson has fought what conservatives call bias on NPR and
PBS, managing first to get Bill Moyers removed from his program Now.
Moyers, an experienced and passionate journalist and one of the founding fathers
of public broadcasting, was punished, it seems, for offering, among other
things, the kind of pro-immigrant and labor stories that have disappeared from
media coverage but would hardly have raised an eyebrow 40 years ago, when PBS
was founded. For "balance", PBS was convinced to run a Tucker Carlson show and
one featuring the Wall Street Journal Editorial Board, a group that consistently
takes conservative positions in contrast even to stories published by WSJ's own
journalists. This week, in typical fashion, it distinguished itself with a long
piece denying once again the validity of the role atmospheric carbon dioxide
plays in global warming

Thursday, Tomlinson managed to get Patricia S. Harrison, the assistant
secretary of state for educational and cultural affairs, selected as the new
President of CPB, after three days of closed meetings by the corporation’s board
of directors. She was co-chair of the Republican National Committee from 1997 to
2001.

The attempted funding cuts for public broadcasting were meant to go very deep. They were aimed across the board at stations but also at particular programs. One irony, from this "conservative" Congressional attack is their focused aim at PBS's children's programming. In the cultural wars that have pitted the Bible Belt against Hollywood, it might have been assumed that PBS, the home of Sesame Street, et al. would be supported by parents offended by the Saturday morning fare coming from an industry they oppose.

But in a longstanding inside the Beltway tradition most recently exemplified by
uber-lobbyists Jack Abramoff and Mike Scanlon, official Washington particularly
relishes an opportunity to please their big contributors while hiding behind
their culture war cloak. In the case of Abramoff and Scanlon, it was Christians and Indian
tribes being played against an exceedingly profitable middle, while in the case
of weakening PBS, that same vilified entertainment industry, itself a major
contributor, could hope to eliminate competition via the lobbying capital of
conservative groups. The coincidence that NPR's Morning Edition, the most
listened to early morning radio program in the country, and that competitor in
every market, Clear Channel -- a major contributor to conservative causes-- is
nothing to snicker at. Neither, does it go unnoticed in a very competitive TV
advertising climate, that PBS has the ability to consistently attract a
prime-time TV audience of affluent trendsetters away from the major networks.

America's economic problems flowing out of the massive trade deficit (see,
China's unsolicited bid to buy Unocal this week, as just the latest wrinkle), the out-of-control housing
market, the accelerating exportation of manufacturing and service jobs, the
growing budget deficit, looming problems in the health system, etc. not to
mention a way out of the Iraq quagmire, are going to boil out of the mud at some
point. After years of happy talk, Americans are going to have to face very
likely a combination of grave issues with very complex solutions at some point
soon. They are going to need well sourced information that may not please
anyone. Only a very tiny portion of that will come from citizen
journalists.

When it comes to overemphasizing the power of the long tail, we might
be reminded of the ancient Chinese parable of the blind men and the
elephant. In the tale, the blind man who hangs onto the tail, declares with
great assurance that the beast is like a rope.

5:02:42 PM    

Here at Dymaxion Web HQ we recently had to take time out to handle a problem
with the floor in one of the bathrooms in our more than century old townhouse.
We could have waited, even as floor tiles began to pop loose revealing a water
damaged sub-floor layer. Happily, we could determine there was not yet apparent
serious damage to the structural joists. In other words, nothing was about to
fall in. Still, we decided it was past high-time to go after the problem despite
the inconvenience.



We don't pass this bit of domestic trivia along for local color but rather, to
make a point: It takes a long time to rip down a structure that has been
constructed on solid building principles. We say this, because it came to mind
as we  listened to the Mago, Allan Greenspan, as he led Congress to the
well of wishful thinking. "Frothy" was the word he used to describe the housing
market, evoking images of a soothing summer milkshake at the local Dairy Queen.



Since the 1980's, when supply side policy first got traction, real wages for the
bottom half of society have remained level while those in the uppermost cohorts
have increased to plateaus last seen in the days of Louis the XVI. To compensate
for this gap in buying power, earners below the pinnacle, with Greenspan's
guiding hand, have greatly increased the amount of debt they've taken on. We
have, it seems, progressed from a supply side economy theoretically based on
increased production to a debt-side economy based on greater borrowing.



Contrary to the original theory, private investors who received the greatest
subsidies through a series of personal and corporate tax breaks and government,
treasury and fed policy have not reinvested in more production capacity,
certainly not in the US. Since 2001, when the present debt bubble began to form,
the US has lost 16% more of its manufacturing jobs. Investors during this period
have looked increasingly for profits in financial markets and the ever growing
pool of hedge funds.

On the make side of the equation, General Motors, once our leading employer,
has not turned a profit in its core business of manufacturing automobiles for
the past few years while its mortgage lending arm has prospered. In concert, in
a few short years, US big-three's market share has fallen, probably
irrecoverably, from 43% to 35%.



Every bubble, and economic history has plenty of them, like every good scam, is
based on some plausible argument: In the 90's we were experiencing a shift away
from the military spending that had drained the Treasury during the Cold War
while entering into a new age of worldwide communication and globalization ,
which would, as its proponents argued, radically change the economic equation.
No doubt, the Internet has caused a great deal of change but in hindsight, we
can also see that of all the thousands of companies with millions of employees
that were once valued in the trillions of dollars by naive investors looking at
a market with no upper limits, one can count on one's fingers the number
prospering less than ten years after. Over $5 trillion dollars in assets went up
in smoke when the stock bubble finally collapsed in 2001.



All that remains of those trillions, are great piles of tee-shirts yellowing in
many a dot-comer's closet. Pawing through them, it's impossible to make out what
these companies offered as their "value proposition" other than the magic
".com". The only thing we remember is that they did IPO's and within a number of
days their stock sold for over a hundred dollars a share. Here, for instance, in
our drawer, is a white blue and yellow one that says: "add content and shake".



With all eyes on Silicon Valley, the real story during those years and after was
the dramatic changes going on in Southeast Asia, particularly China and India.
Communication and computing power was being turned into jobs and capacity not in
the US but in Southeast Asia. But American attention had turned elsewhere. First
there was the predictable near total collapse of the market, then the attack on
the World Trade Towers, then the ill-fated invasion.



Even without counting the costs of the Wars in Iraq and Afghanistan --kept "off
the books"-- the government, to stimulate activity and reward wealthy backers,
went into debt mode borrowing heavily from countries only too eager to take
great chunks of US consumer market share in return.



With the government spending well beyond the amounts it collects in taxes and
fees another method had to be found to cover the gap between spending and
revenues. Enter countries like China, Japan, South Korea and Saudi Arabia that
are happy to run hundreds of billion dollar trade surpluses with the US. China,
alone, this year is expected to rack up a two hundred billion dollar trade
surplus. In figures out today, China's month over month surplus widened a
further 14% in April alone. Overall for April, the US bought $57 billion more
than it sold to foreigners, or about $2 billion dollars a day that has to be
borrowed from those same foreigners. Foreign debt has reached unprecedented
heights. The trade deficit this year will represent over 6% of GDP.



The result of all this official and consumer borrowing is a situation contorted
enough to inspire a carny side show operator. This dollar recycling has resulted
in keeping long-term interest rates at historically low rates even as the Fed
now raises short-term rates. At some point, if this continues, we may see a day
when short term rates actually exceed long term rates. That has happened before
and, BTW, has always preceded a recession.



But low long term rates and an excess of capital, has set off another bubble in
the US, this time in housing. The concurrence of historically low interest rates
with the migration overseas of industrial production and better paying
manufacturing and service jobs, investors and the financial services providers
have turned their attention to the housing market. With all stops removed
--check out no money down, interest only loans-- the housing bubble has probably
now reached the same point as the NASDAQ when it peaked in early 2001. Like any
Ponzi Scheme, the last guys in get left holding the bag. The rates are variable
and also timed to increase at a certain point, which means that when long term
rates finally start to move up with all the bottled up inflationary forces
pushing up consumer prices, many home buyers will be left stranded with houses
that they can't sell at the price they paid and much higher monthly requirements
than they can meet.



Curiously, the Bush Administration is pushing hard for a revaluation of the
Chinese Yuan --China has up to now kept its currency pegged to the dollar and
thus has ridden down with the dollar. Since the US is entirely reliant on the
good will of the Chinese to continue financing US deficits, the Administration
lacks any great levers but if it succeeds it may not like what happens. A higher
priced Yuan will mean higher prices in Wal-marts and Target and that will fuel
inflation in this country. This jump of prices across the board on consumer
goods may just be the trigger that kicks long term rates up thereby pricking the
housing bubble while causing a further erosion in US jobs --home building, being
one of the few bright spots.



The Chinese have said they are quite happy with the Yuan as it is but in the
background, again according to the WSJ, they have begun moves to create the
mechanisms that would allow controlled trading in their currency. It's expected
by many that some time this year they will begin experimenting with the currency
market. If the US economy continues its pattern of hobbling along without
picking up steam --and with an ever decreasing manufacturing base, it's hard to
imagine otherwise-- then the Yuan move just might be the straw that bust the
housing bubble.



This is a great time for American consumers, who have dropped their savings rate
to less than 1% of income while at the same time increasing plastic and mortgage
debt to unprecedented heights. Every once in a while, all you have to do is go
back to the well and borrow even more from willing lenders offering ever more
creative financing tools. After all, we're a rich country with a massive
economic base, why would it collapse now?

12:27:54 PM    

If, by nature, you are drawn towards gloom and doom, these days you may have begun to believe that you've died and gone to henny-penny heaven. On your checklist you've no doubt got at least the following scenarios: Dirty Bomb, which goes, there's little in the way of stopping someone with knowledge from gathering together from multiple available sources enough radioactive material to create a rather rudimentary "dirty bomb" that could turn any major US city into a Chernobyl like ghost town; Military Quagmire, i.e.; the war in Iraq drags on and as it more fully morphs into a "quagmire" (a winless war of long duration) US military vulnerability becomes more apparent to the rest of the world even as we face potential nuclear threats from Iran and North Korea; Economic Stagnancy, the US and world economies remain stagnant even at the point in which the housing bubble that was created to mitigate the collapse of the stock bubble enters into its own final days, having failed to stimulate jobs and a real recovery; Monetary Collapse, the twin US deficits that keepinterest rates artificially low continue to grow resulting in a major sell-off of paper currencies; Jihad, anti-American sentiment spreads and magnifies throughout the Muslim world toppling governments in Saudi Arabia, Egypt and Pakistan (1/4th of the world's population) then spreads to the other 3/4's of the world; Global Climate Change, the global environment relentlessly continues down its path of accelerating climate change within a failed countervailing political system; AIDS?, Genocide in Africa? etc., take you pick!

But according to the World Health Organization, the NIH and other authorities, perhaps none of these match the imminent disaster that awaits us from what appears to be the inevitable spread of the Bird Flu or Avian Virus. In sheer terms of gloom, the facts are staggering. In 1918 right after World War I, the world suffered the worst flu epidemic in modern history. It is estimated that by the time the virus called the Spanish Flu had done its deadly work more people had died from it than had died in history's bloodiest war up to that time. In fact, it's possible to argue that more people died from the Spanish Flu in the course of less than two years than had died in all of the world's wars up to that time. Nobody knows what the mortality figures might be from the coming outbreak of the Bird Flu but it's sobering to note that so far, for known cases where the disease has passed from the poultry host to humans, there has been a death rate of nearly 50%. In contrast, the Spanish Flu killed about 30% of its victims..

In 1918 there were roughly 2 billion people living on Earth. Of those, roughly 22 million died from the great epidemic. Should the Avian Flu have only the same potency as the earlier highly virus, that would mean in today's world of over 6 billion a death toll of some 66 million people. But according to many epidemiologists the death toll this time around will go much higher. This is because of the speed in which the disease will be propelled from country to country and continent to continent via air travel. At any rate, public health resources even in the richest countries will be totally overwhelmed whereas in the poor countries where population density is often the highest, the speed of transmission will completely overrun already frayed civil societies. In many countries we can expect total collapse as the scourge races through populations In the looming Avian Flu outbreak scenario, which many of the most credible experts believe is not a question of if but of when (see this month's issue of Nature Magazine), the deaths and ensuing panic will only be the beginning of the suffering. A lasting result of a serious pandemic, will be the kind of economic devastation never before experienced on a worldwide scale. We have to think that in a global economy, many, if not most, of our consumer goods are manufactured in Asia, where the disease is spawning; conversely, we in North America supply many parts of the world with critical food supplies. An attempt to seal our borders from the flow of people and goods in this globally interdependent world, might provide short-term protection but would lead to unparalleled disruptions in fuel and goods supplies. Massive segments of the US population would be thrown out of work and it's likely that civic disorders would erupt around the country, as shortages and rumors spread even faster than the disease. More than likely, the quarantine would not work for long as the pressures for contraband grew and threatened populations pushed across the border. For the amount of economic dislocation spawned by a narrow quarantine, we only have to look as far as Toronto during the SARS outbreak there a couple of years ago, which directly affected no more than 500 patients but which brought the city to a standstill.

If you've read this far, you are more than likely to be asking yourself what flavor tobacco we have been smoking here at DW HQ. Surely, this is an overly bleak picture of what such a pandemic can do to a modern society with advanced medical, pharmaceutical and public health capabilities. You may be imagining that in the face of a certain danger, the advanced countries like the US are feverishly building up supplies of vaccines or virus killing drugs.. The picture, unfortunately, harkens back to last year's Asian Flu vaccine shortage. At the time, we all learned a little about the problems associated with vaccine production. It seems, however, that although we can try to get a jump on what we think the virus may look like, efficient vaccines can be developed only after the precise virus configuration has been determined And that will not happen until the virus that now mainly spreads from bird to bird finds a way not only to leap over to humans and other mammals but mutates in such a way that it can spread directly from human to human. Only then will scientists know the final form. The other piece of the vaccine puzzle is the technique in which vaccines are produced. We also learned last year that flu vaccines require eggs in the production process and that the process itself is highly tricky. Normally, it takes months to get up to full production speed and even then rigorous testing is needed to ensure the vaccine doesn't become just another facet of the problem. Worldwide, there are very few licensed production facilities.

It's clear to us that this peril is as great as humanity has faced in our lifetime including MAD (Mutual Assured Destruction) and the neutron bomb. In perspective, it turns the relatively limited capabilities of the ""terrorists" --as in War on Terrorism-- into a minor diversion. Billions of dollars now being earmarked for military threats that may someday appear on the horizon should be immediately diverted from the Pentagon's budget to that of the Department of Health and Human Services. It would probably take an effort like that of the Manhattan Project in WWII as the editorial in Nature puts it:

        if the next pandemic were to arise five years from now, there would have been breathing space to stimulate our drug
        and vaccine industries to limit the damage it would cause. But that

requires urgent action now. As matters stand, a vaccine against a
pandemic flu would not be ready until at least six months after a
pandemic starts. Too late: by then the worst of the pandemic would
already have happened.

We here at DW, of course, wouldn't know a virus from a spore under a microscope, so we have to take the word of people like Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases but what we do know a little about are the ways of Washington and, sadly, our democracy; The chances of money for true national defense moving from DOD, or any other pocket of the Budget, to HHSor the UN's WHO in time to truly mitigate the crisis are about as big as that virus, or was it a spore?

11:45:37 AM