March 2008 – Page 2 – artdiamondblog.com

Mexico Supplies United States Aerospace Industry

Source of map: online version of the WSJ article quoted and cited below.

(p. A2) Mexico has felt the downside of globalization in recent years as cheaper Asian manufacturers of everything from electronics to auto parts have undercut the advantages provided by looser North American trade barriers.
Now, Mexican officials are turning to another sector they hope will put down deeper roots: The booming North American aerospace industry.
Mexico has moved to make it even easier for foreign companies to do business south of the border. Already, big names in aerospace such as Goodrich Corp. of the U.S. and Bombardier Inc. of Canada have set up facilities there.
The nation offers proximity and easy reach at a time when aerospace giants are under pressure to hit deadlines and deliver new aircraft to customers. Aerospace officials also say they are impressed by Mexico’s deep talent pool. And if Mexico successfully bolsters its aerospace industry, it will demonstrate that skills burnished servicing the automotive sector can be transferred to higher-end industries.
. . .
Mexico’s biggest advantage may be its location. For years, major aerospace manufacturers such as Boeing Co. have farmed out a growing share of their work to suppliers in Japan, China and elsewhere. But these arrangements can make it a challenge to get finished components back to the companies’ main factories for final assembly. The choice often boils down to waiting weeks for delivery by ship or paying for costly space on a cargo jet.
With demand for new jetliners and other aircraft at record levels, however, companies are under greater pressure to cut shipping time and increase production. Many U.S. aerospace companies already have built up considerable capacity in Mexico to feed the industry’s production hub in Southern California.

For the full commentary, see:
JOEL MILLMAN and J. LYNN LUNSFORD. “THE OUTLOOK; Mexico Seeks a Lasting Share Of Aerospace Boom.” The Wall Street Journal (Mon., November 26, 2007): A2.
(Note: ellipsis added.)

Less Inflammation, Longer Life

The passage below is from a WSJ summary of an article that appeared in the December 2007 issue of Discover:

(p. B12) Scientists are increasingly hopeful that controlling inflammation will allow them to turn back the clock on aging, writes Kathleen McGowan in Discover magazine.
Inflammation is already a well-established predictor of many chronic illnesses, such as diabetes, atherosclerosis and Alzheimer’s disease. . . .
. . .
Many prominent gerontologists reason that if these chronic diseases are the product of an overactive immune system, then they can be countered with the right anti-inflammatory drug. . . .
“The research is really to prevent the chronic debilitating diseases of aging,” says Nir Barzilai, a molecular geneticist and director of the Institute for Aging Research at the Albert Einstein College of Medicine in New York. “But if I develop a drug, it will have a side effect, which is that you will live longer.”

For the full summary, see:
“The Informed Reader; Health; How Scientists Hope to Shrink Aging Effects.” Wall Street Journal (Weds., Nov. 14, 2007): B12.
(Note: ellipses added.)

Southwest Airline Manages Risk Through Oil Price Hedges

Source of graphic: online version of the NYT article quoted and cited below.

(p. C1) Southwest Airlines, in danger for much of this year of losing its quirky dominance in the domestic airline industry, could soon be standing, once again, head and shoulders above the competition.
Better service? Happier and more productive workers?
Not this time. The reason for Southwest’s rapidly increasing advantage over other big airlines is much simpler: it loaded up years ago on hedges against higher fuel prices. And with oil trading above $90 a barrel, most of the rest of the airline industry is facing a huge run-up in costs, and Southwest is not.
Southwest owns long-term contracts to buy most of its fuel through 2009 for what it would cost if oil were $51 a barrel. The value of those hedges soared as oil raced above $90 a barrel, and they are now worth more than $2 billion. Those gains will mostly be realized over the next two years.
Other major airlines passed on buying all but the shortest-term insurance against high fuel prices, allowing Southwest executives a bit of schadenfreude.

For the full story, see:
JEFF BAILEY. “An Airline Shrugs at Oil Prices.” The New York Times (Thurs., November 29, 2007): C1 & C10.

‘A Southwest Airlines worker fueled a plane. Southwest’s chief said the hedges against rising fuel costs “bought us time to retool our company.”” Source of caption and photo: online version of the NYT article quoted and cited above.

Bill Clinton’s Role in “Fueling the Mother of All Housing Bubbles”

The author of the lines quoted below won the Nobel Prize in economics in 2002.

(p. A20) The joint housing and mortgage-market crisis once again reminds us that all financial implosions stem from the same cause: borrowing short and lending long without enough equity to weather periodic storms in the gap between.
But this bubble was different. Besides being fueled by housing purchases and repackaged loans, each with inadequate equity — doubling down with other people’s money — at the end of the capital-gains rainbow was the right to take up to $500,000 of profit, tax free.
Thank you President Bill Clinton for your 1997 action, applauded by the banks, the realtors and all citizens in search of half-millionaire status from an investment they could understand and self deceptively believe to be low risk; thank you for fueling the mother of all housing bubbles; thank you for enabling so many of us who bought second or third homes, and homes before construction began, which we then sold to someone else who dreamed of riches from owning homes long enough to sell to another fool.
Once again, try as we might and in spite of our political rhetoric, we have failed to help the poor in applauding government action intended to help ourselves.

For the full commentary, see:
VERNON L. SMITH. “The Clinton Housing Bubble.” The Wall Street Journal (Tues., December 18, 2007): A20.

Huge Oil Field Discovered Offshore of Brazil

“The Petrobras 54 platform was in Niteroi, Brazil, last August, before its deployment.” Source of the caption and the photo: online version of the NYT article quoted and cited below.

(p. C1) RIO DE JANEIRO — While some of the world’s largest oil producers, including Mexico and Iran, are struggling to remain exporters, Brazil is moving in the opposite direction. A huge underwater oil field discovered late last year has the potential to transform South America’s largest country into a sizable exporter and win it a seat at the table of the world’s oil cartel.
The new oil, along with refining projects under way by Petrobras, the national oil company, could eventually make Brazil a larger exporter of gasoline as well, adding to supplies in the United States and other countries where it is all but impossible to build new refineries.
The subsalt basin that contains Tupi, the new deepwater field estimated to hold the equivalent of five billion to eight billion barrels of light crude oil, is creating a buzz among the world’s largest oil companies. They have struggled lately to find global-scale projects worth investing in, even with oil touching $100 a barrel. Tupi is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan.

For the full story, see:
ALEXEI BARRIONUEVO. “Hot Prospect for Oil’s Big League.” The New York Times (Fri., January 11, 2008): C1 & C4.

“The Tupi deepwater field.” Source of the caption and the map: online version of the NYT article quoted and cited above.

Motive Power Really Does Matter: More on Why Africa is Poor

“A crowded train traveling through Katanga Province. Goods and people are crammed in, and bathrooms are used for storage.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A4) In large swaths of Congo, a vast country the size of Western Europe, roads are impassable or nonexistent, large riverboats no longer ply the waterways and air travel is prohibitively expensive, leaving many people to rely on an increasingly dangerous railway system long past its prime.
Fresh from its first democratic elections in nearly 50 years and still struggling to emerge from civil war, Congo is trying to get its trains running again. But it has a long way to go.
. . .
The bathrooms in first class become filthy soon after a trip begins. In second and third class, the bathrooms are used for storage. In one car, five large bags of charcoal were stuffed into a bathroom, and people relieved themselves in buckets or out windows.
The railway employs over 13,000 people, but the last time paychecks were sent out was in May, and that was payment for the spring of 2005. So many employees do not go to work, and bribes are widespread.
“Sometimes it’s difficult to resist temptations,” said Agustín, the police chief at the Kamina station, who gave only his first name. “I do bad things.”
“I haven’t been paid in 29 months,” he added. “How am I supposed to send my children to school?”
Léon, a conductor and machinist who gave only his first name, thinks the problem begins in Kinshasa, the capital. “This is a state-owned company,” he said. “It’s bankrupt because of the government. The way things are going, we won’t last two years.”

For the full story, see:
WILL CONNORS. “Congo by Rail: Filthy, Crowded and Dangerous.” The New York Times (Tues., September 4, 2007): A4.
(Note: ellipsis added.)

“A train controller relays the position of a train to another station. Because pay is so infrequent, many employees do not go to work and bribes are widespread.” Source of caption and photo: online version of the NYT article quoted and cited above.

Co-Working in the Free Agent Nation

“Web entrepreneur Alex Hillman got together with a group of work-at-home businesspeople to create a hip space to work in Philadelphia.” Souce of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1D) “I always felt an obligation to the coffee shop. I was taking up precious space,” Hillman said. “I was definitely drinking more coffee than I should have, so I wasn’t sleeping.”

Even before he left his job, he had begun to learn about co-working, not to be confused with job-sharing, where two people take turns in the same stall in the cube farm.

Instead, think of co-working as an entrepreneurial version of parallel play, with owners of their own small businesses working side by side in a drop-in place that looks like a coffee cafe, minus the barista, with all the accoutrements of what’s hip: high ceilings, beer fridge, pool table and Internet access.

Paying as little as $175 a month, they mostly work on their own. But they also trade ideas, help solve problems, and move in and out of loose collaborations.

Today’s technology — wireless access, cell phones, BlackBerries and laptops — makes a mobile work force possible.

“I think when people work at home they have to come up with new ways to interact with people,” said Daniel H. Pink, one of the first authors to write about independent contractors in his 2001 book “Free Agent Nation.”

For the full story, see:

THE PHILADELPHIA INQUIRER. “Workplace; A step up from working in pj’s.” Omaha World-Herald (Monday, September 17, 2007): 1D & 2D.

The refererence to the Pink book is:

Pink, Daniel H. Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Columbus Absolved of Bringing Lice-Borne Disease to Indians

“Braided hair is intact on a Peruvian mummy like those used in a study. Scientists say lice in the Americas predated Columbus.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) When two pre-Columbian individuals died 1,000 years ago, arid conditions in the region of what is now Peru naturally mummified their bodies, as well as the lice in their long, braided hair.

That was all scientists needed, they reported Wednesday, to extract well-preserved louse DNA and establish that lice had accompanied their human hosts in the original peopling of the Americas, probably as early as 15,000 years ago. The DNA matched that of the most common type of louse known to exist worldwide now and also before Europeans colonized the New World.

The findings absolve Columbus of responsibility for at least one wrong unintentionally wrought on the people he found in the Americas and called Indians. The Europeans who followed Columbus to America may have introduced diseases, namely smallpox and measles, but not the most common of lice, as had been suspected.

For the full story, see:
JOHN NOBLE WILFORD. “Scientists Say Mummies’ Lice Show Pre-Columbian Origins.” The New York Times (Thurs., February 7, 2008): A10.

Controversial Patent Reform

Source of graph: online version of the WSJ article quoted and cited below.

(p. A3) The sweeping patent initiative — backed by a business coalition dominated by technology companies such as Cisco Systems Inc. and Microsoft Corp. — would . . . shift the balance of power of the U.S. patent system. It would make it a bit harder for holders to protect patents. Advocates of the legislation contend the current system encourages patent litigation and costly judgments against infringers — and stifles innovation. They say the proposals are designed to bring patent rules in line with the rapidly changing U.S. economy, where inventions often reflect hundreds of potentially patentable ideas.

Mark Chandler, Cisco’s general counsel, dismissed concerns that non-U.S. companies might gain some advantage by the bill. He said the proposed changes would strengthen companies at “the heart of innovation in the American economy,” better positioning them to compete at home and abroad.

Opponents of the legislation argue that it would make it easier for foreign competitors to legally copy patented methods and products.

For the full story, see:
GREG HITT. “Patent System’s Revamp Hits Wall; Globalization Fears Stall Momentum in Congress; AFL-CIO Sends a Letter.” The Wall Street Journal (Mon., August 27, 2007): A3.
(Note: ellipsis added.)

Bolivia Sells More Brazil Nuts Than Brazil

(p. A4) Throughout the 20th century, most of the Brazil nuts consumed around the world came from the jungle surrounding this bustling river market town in the eastern Amazon. But the bitter joke here these days is that the only place you can still find a Brazil nut tree is on the municipal seal.
To the chagrin of Brazilians, exports of the nuts that bear their country’s name have fallen precipitously to about 7,000 metric tons in 2003 from nearly 19,000 metric tons in 2000, allowing neighboring Bolivia to become the market leader. Groves of Brazil nut trees are disappearing all over the Brazilian Amazon, and the question of who bears responsibility for that sharp decline and resulting deforestation has become the subject of a heated and growing debate.
Economists, scientists and other scholars tend to point to a single family, based here, that has dominated the industry for three generations and controls hundreds of thousands of acres in this region at the junction of the Araguaia and Tocantins rivers. But members of the influential clan, called Mutran, say they are being unjustly attacked and complain of unfair competition and contraband.
. . .
”At their peak, the Mutrans had a monopoly on everything connected with the Brazil nut industry, from harvesting to transport to exports,” said Marilia Emmi, a professor at the Nucleus for Amazon Research at the Federal University of Pará. ”Much of their own production occurred on public lands that belonged to the state but were initially leased to them for a pittance as the result of backroom political deals.”
. . .
”Because of their monopoly, the Mutrans paid a price so low that production dropped off the map,” said Zico Bronzeado, a former Brazil nut harvester who now represents Acre in the lower house of Congress. The low prices drove growers to abandon the business, the critics say, selling their lands to loggers and cattle ranchers in a process that deforested vast stretches of the Amazon and further enriched the Brazilian elite.

For the full story, see:
LARRY ROHTER. “Marabá Journal; Brazil’s Problem in a Nutshell: Bolivia Grows Nuts Best.” The New York Times (Thurs., August 26, 2004): A4.
(Note: ellipses added.)

Kibbutzim Abandon Socialism

“Once for communal use, the Kibbutz Yasur swimming pool is now run as a private business.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) KIBBUTZ YASUR, Israel — For much of Israel’s existence, the kibbutz embodied its highest ideals: collective labor, love of the land and a no-frills egalitarianism.

But starting in the 1980s, when socialism was on a global downward spiral and the country was mired in hyperinflation, Israel’s 250 or so kibbutzim seemed doomed. Their debt mounted and their group dining halls grew empty as the young moved away.

Now, in a surprising third act, the kibbutzim are again thriving. Only in 2007 they are less about pure socialism than a kind of suburbanized version of it.

On most kibbutzim, food and laundry services are now privatized; on many, houses may be transferred to individual members, and newcomers can buy in. While the major assets of the kibbutzim are still collectively owned, the communities are now largely run by professional managers rather than by popular vote. And, most important, not everyone is paid the same.

. . .

(p. A4) The kibbutzim were once austere communes of pioneers who drained the swamps, shared clothes (and sometimes spouses) and lived according to the Marxist axiom, “From each according to his ability, to each according to his needs.”

Today, most are undergoing a process of privatization, though kibbutz officials prefer a more euphemistic term: renewal.

. . .

Mr. Varol was born on a kibbutz in the far north, but he left at 18. He is at peace in his new home, but bitter about the past. “My parents worked all their lives, carrying at least 10 parasites on their backs,” he said. “If they’d worked that hard in the city for as many years, I’d have had quite an inheritance coming to me by now.”

For the full story, see:

ISABEL KERSHNER. “The Kibbutz Sheds Socialism And Regains Lost Popularity.” The New York Times (Mon., August 27, 2007): A1 & A4.

(Note: the online version of the article had the title: “KIBBUTZ YASUR JOURNAL; The Kibbutz Sheds Socialism And Regains Lost Popularity.”)

(Note: ellipses added.)

“The dining room in Kibbutz Nachshon charges members $4 per meal. While kibbutzim once paid all members equally and provided food, today many have adopted a system of varying wages and require payment for many services.” Source of caption and photo: online version of the NYT article quoted and cited above.