Tuesday, May 27, 2014

D-Wave: Is $15m machine a glimpse of future computing? - BBC NEWS

http://www.bbc.com/news/science-environment-27264552

19 May 2014 Last updated at 23:37


D-Wave: Is $15m machine a glimpse of future computing?


By Paul RinconScience editor, BBC News website

D-Wave is headquartered in the small tech hub of Burnaby, near Vancouver

A Canadian firm has courted controversy with its claim to have built a practical quantum computer, a feat thought to be decades away. Now, independent researchers are trying to understand whether it really can tap the strange world of quantum physics.
For the modest sum of $15m (£9m), a start-up near Vancouver will sell you a black box the size of a garden shed with its logo emblazoned on the side in white neon.
Not sold yet?
What if I told you the contents of the box were around 150 times colder than interstellar space?
You still need some convincing - I get it.
How about this: The box contains a machine that can solve some of the thorniest mathematical problems and could revolutionise computing.

Well, the company's sales pitch has worked on some big names - likeNasa, Google, and defence giant Lockheed Martin.
The Canadian start-up in question is called D-Wave and their monolithic machine is - they claim - nothing less than a real, working quantum computer. But not everyone is convinced.
Quantum computing exploits the weird physics that takes hold at tiny (atomic or sub-atomic) scales. Computers that tap the quantum realm could carry out complex calculations much faster than their conventional - or classical - counterparts.
While the basic units of information in classical computers are called "bits" and are stored as a string of 1s and 0s, their equivalents in a quantum system - qubits - can be both 1s and 0s at the same time.
This phenomenon would enable multiple calculations to be performed simultaneously. But the qubits need to be synchronised using a quantum effect known as entanglement, which Albert Einstein termed "spooky action at a distance".
Scientists have struggled to entangle more than a handful of qubits, and to maintain them in their quantum state. Lab devices suffer from drop-out, where the qubits lose their ambiguity and become straightforward 1s and 0s. This has ensured that quantum computers remain confined to the lab - proofs of principle capable of solving only elementary problems.
Headquartered in the small tech hub of Burnaby, on Canada's west coast, D-Wave has raised upwards of $100m in venture capital from the likes of Amazon founder Jeff Bezos and In-Q-Tel, the venture capital arm of the Central Intelligence Agency (CIA).
A refrigerator cools the chip to a temperature around 150 times colder than interstellar space
"The original vision of the company was simple: build a commercially useful quantum computer as soon as possible," Vern Brownell, D-Wave's chief executive, tells me.
"We just want to provide quantum computing resources to researchers and businesses around the world so they can solve really hard problems, better than they can today."

So when, in 2007, D-Wave staged a demonstration of a quantum processor called Orion that could solve Sudoku puzzles and search a public database of drugs to find the closest match to a specific molecule - both impressive achievements in this field - it was greeted with deep scepticism.
Four years later, the company unveiled the "first commercially available quantum computer", a 128-qubit machine called the D-Wave One, and this time its claims weren't so easily dismissed. The announcement coincided with the publication of a study supporting the machine's quantum credentials in Nature, one of the most prestigious peer-reviewed journals in the world.
This tempered some of the criticism, but fell short of winning over vocal sceptics like Scott Aaronson of the Massachusetts Institute of Technology (MIT). He thinks the firm's computers show "pretty good" evidence for entanglement at a local level, though not necessarily on a large scale. But he sees no evidence that this is helping boost the performance of D-Wave's machines.
Prof Aaronson told BBC News: "The questions about 'the explanation for the speedup' haven't even been activated yet, since so far there's no speedup to explain!"
Mr Brownell comments: "What I think is really interesting is that scientists and researchers are no longer arguing about whether it works, it's how fast does it work? What's the scalability going to be?"


What is quantum physics?

There are things we take for granted about the world around us. Let go of your smartphone and it will fall to the ground. Pull the handle on a drawer and it will open. These familiar rules can be described by the principles of classical mechanics.
But in the late 19th and early 20th Centuries, scientists were beginning to realise that classical physics could not explain certain phenomena seen at very large and very small scales.
This spawned two revolutions: one was relativity and the other quantum mechanics. Early experiments suggested light was a wave, rather than a stream of particles. In quantum theory, light can be both a particle (the photon) and a wave.
One principle central to quantum mechanics is that a particle, such as an electron, can exist in all of its possible states simultaneously - known as superposition. Another important idea is that of entanglement, a phenomenon whereby objects become linked, even if they lie far apart.
The company's first commercial machine was followed in 2013 by the D-Wave Two, powered by a 512-qubit chip called Vesuvius. Like its predecessor, this computer is not for conventional use, but was designed for solving optimisation problems, a particular class of mathematical challenge that entails finding the best solution from all the possible solutions.
Lockheed is using its D-Wave computer - housed at the University of Southern California - to verify and validate flight software. Google's machine, which is shared with Nasa at the space agency's Ames Research Center, is being used for machine learning, a branch of artificial intelligence with applications in areas as diverse as voice recognition and detecting credit card fraud.
The big name buy-in has generated serious buzz, but sceptics have not been swayed.
"I don't care if the Messiah has come to Earth on a flaming chariot, not to usher in an age of peace but simply to spend $10m on D-Wave's new Vesuvius chip," Scott Aaronson wrote on his blog, adding that the considered opinion of an academic expert of his choice "would mean more to me than 500,000 business deals".
Quantum analogy: Standard computers "walk" across a landscape to find the lowest point (the "optimal" solution to the maths problem), whereas D-Wave's computers "tunnel" through the mountain range
D-Wave was founded in 1999 as a University of British Columbia spin-out by Rose - who holds a PhD in physics and a light-heavyweight world title in Brazilian Jiu-Jitsu - and his academic mentor Haig Farris.
"The team spent about five years, with collaborators in various kinds of academic environments, coming to a view on the fastest way to come to market with something useful," says Mr Brownell.
The so-called gate model underpins the vast majority of academic research into quantum computing. This idea is based on developing the quantum equivalents of the logic gates that form the building blocks of circuits in classical computing.
Continue reading the main story

Quantum computing: A brief timeline

  • 1981 - Richard Feynman of Caltech proposes a basic model for a quantum device
  • 1985 - David Deutsch of Oxford University describes the first "Universal Quantum Computer"
  • 1994 - Peter Shor devises algorithm that could allow quantum devices to defeat cryptography
  • 1998 - First working two- and three-qubit quantum computers are demonstrated
  • 2006 - Scientists develop first working 12-qubit platform
  • 2009 - First universal programmable quantum computer unveiled
  • 2012 - D-Wave Systems reveals a 512-qubit adiabatic quantum machine
But D-Wave settled on an approach called quantum annealing. Outlined in a seminal 2000 paper by Eddie Farhi of MIT, and others, this technique is fundamentally different to the theory of quantum gates.
In Rose's chosen martial art of Brazilian Jiu-Jitsu, opponents start off on their feet and typically end up grappling on the mat. The aim in quantum annealing is also to reach the "ground state" - in this case, the lowest energy point.
One common analogy is that of a cross-section through a mountain range. The altitude of the landscape describes the energy, or cost, of the solution. The aim is to find the lowest point on the map and read the coordinates, as this gives the lowest energy, or "best", solution to the problem.

"The way you would do it in classical computing is to walk up and down the valleys and hills until you've found it," said Prof Alan Woodward, a computing expert from the University of Surrey.
"What the quantum annealing process does for you is effectively to tunnel through the mountain... until it announces: 'The lowest point I found was X'."

"It shortcuts everything, and that's how it speeds up."
Experts say quantum annealing can't offer the performance boost theoretically possible with gates, but proponents of D-Wave's approach point to innate advantages, such as greater robustness to the "drop-out" problem that plagues gate model quantum computing.
Dr Rose has even branded quantum gates the "single worst thing that ever happened to quantum computing".
The firm's chips are "superconducting", generating no heat of their own
Whatever the route taken, efforts to build a quantum computer must overcome daunting engineering hurdles. The circuits in D-Wave's processors are superconducting, which means they have zero electrical resistance and generate no heat. In order to get quantum effects, liquid helium is used to cool the chip to 0.02 Kelvin, a shade above the temperature known as absolute zero.
The whole system is enclosed in a so-called Faraday Cage, which blocks external electrical fields that could interfere with quantum mechanical behaviour.

Prof Andrew Steane, from the department of physics at Oxford University, says: "If you go back five or 10 years, the initial statements coming out of D-Wave - before they had a device to look at - were seen as something you could ignore, because it just didn't seem credible.

"Then they produced this device, so they came up with the goods. And it's a non-negligible device - it has serious computing power. It's just a question of whether what it's achieving is beyond what could have been done with a system based on classical physics."
Significant academic effort is now being thrown at this question. Last year saw the publication of several scientific studies favourable to the company's case, including indirect evidence for entanglement of qubits and research by Catherine McGeoch, a professor of computer science at Amherst College, that found the system performed 3,600 times faster on some tests than did a standard desktop machine.
But in January 2014, a team led by Matthias Troyer, of ETH Zurich in Switzerland, published results of its benchmarking of Lockheed's unit. Team members won't comment publicly until the work is published in a peer-reviewed journal, but in some tests devised by them, the D-Wave machine was found to perform no faster than a classical computer.
However, company executives counter that the tests used were not the sort where the quantum computer offers any advantage over conventional types.
Lockheed Martin is using its D-Wave computer to validate flight software
Then in February, a team led by Prof Umesh Vazirani, of the University of California, Berkeley, published a study concluding that a simple, classical computing model of interacting magnets could explain behaviour in D-Wave's machines.
In his response to an unfavourable blog entry about the paper penned by Dr Rose, Prof Vazirani suggested that key questions might be answered if D-Wave were to grant researchers access to its hardware, which is proprietary. However, not everyone thinks this would shed much light on the matter.

"At a high level, we know what the machine is doing: namely, it's doing annealing to the ground state, with superconducting Josephson junctions (paired superconductors) at 20mK (milliKelvin) temperature, in a way that's 'mostly classical' but that has some quantum effects present, at least at the local level," says Prof Aaronson.
"I think this research has actually reached some pretty firm conclusions: most importantly, that the current device is not getting a speedup on the problem distributions currently being tried," he explains.
Andrew Steane says the computers show promise, but on the question of whether they are exploiting quantum effects for performance gains he says the studies by Troyer and Vazirani "suggest they can't yet really make that claim".
But the company points to ongoing benchmarking of its machines by Google and cites other academic papers from recent months that support their case.

Mr Brownell comments: "How many trillions have been invested in classical computing? How many innovations and iterations of hardware since John Von Neumann and the Bletchley Park folks?
"How much algorithm work and research around software and applications and compilers and efficiency? We've come up with something in 10 years that performs just as well, and maybe outperforms in some narrow cases that entire ecosystem."
Nasa and Google share time on a machine at the Ames Research Center in California
Geordie Rose told BBC News: "Scepticism implies a healthy and unbiased doubt about new technological capabilities or scientific advancements. Much of that has gone away as we've continued to advance our technology so far beyond what anyone else has done."
"The negativity against pioneering companies though comes from small but vocal groups concerned about losing access to funding, and from commercial competitors. I believe the former will go away once these folks realise that our success means more money for their basic science, not less."

D-Wave's next chip, consisting of 1,024-qubits, is currently undergoing calibration ahead of its planned release later this year. In addition to its aforementioned customers, D-Wave has others it won't name. The firm is now looking to expand into other potentially lucrative markets.

"As we get some more internal resources to support customers adequately, we would like to branch out into other areas like bioinformatics, energy exploration, finance," says Vern Brownell. "We know already there are huge applications in each of these areas for quantum computing."
Could the world of finance also benefit from quantum computing?
Documents leaked by Edward Snowden reveal that the US National Security Agency (NSA) has been conducting "basic research" to determine whether it was possible to build a quantum computer that would be useful for cracking encrypted communications.
But D-Wave's quantum annealing approach isn't well suited to this application. Cryptanalysis is an area where researchers seem to agree that the logic gate model offers more promise.
Of the company's efforts, Alan Woodward says: "The engineering difficulties [of building quantum computers] are enormous, because of susceptibilities to interactions from the environment and so on. What Geordie said was - let's build what we can, instead of always thinking about things that are out of reach. And you've got to admire that.
"I suspect it's something that's helping to move on the state-of-the-art from an engineering perspective, even if it turns out not to be the ultimate shape of things to come."

Andrew Steane comments: "I'm gently pleased by their boldness, to have a go and make the thing.
"It's a bit like 'Make it and they will come'. They haven't quite got to 'they will come'. But they've made something."

Monday, May 26, 2014

Africa’s Middle Class Is at the Crossroads - TIME

http://time.com/90621/nigeria-missing-girls/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

May 7, 2014
    
People holding signs take part in a protest demanding the release of abducted secondary school girls from the remote village of Chibok, in Lagos, May 5, 2014.Akintunde Akinleye—Reuters

Nigeria's 8% growth and 233 missing girls pinpoint the continent's challenges


The World Economic Forum’s annual Africa meeting is starting today in Abuja, Nigeria. The story here was supposed to be an optimistic one–last week, the World Bank upgraded the country’s GDP numbers by 89 %, making it the number one largest economy in Africa. Yet the fact that there are still 233 missing girls that have been abducted from their homes in the northeast of the country by the Islamic radical group known as Boko Haram is casting a large shadow on that story. Standard & Poor’s rating agency recently downgraded the country’s credit based on rising terrorism (a car bomb last week outside Abuja, the second in recent weeks, killed 19 people), and corruption (the central bank head was put on suspension a few weeks ago after $20 billion was found unaccounted for in the Treasury).
On the shuttle buses and in the halls of the WEF meetings here in Abuja, I hear Western business people recalibrating their notions of political risk in this country, and fretting about whether a country that can’t keep girls safe in their schools can turn itself into the sort of middle class consumption society that everyone here hopes it can.
A big part of the problem has been misleading statements, delays and half-hearted efforts on the part of government. President Goodluck recently told local media that the government was doing “everything it can,” including taking help from the U.S, which has offered up a counter-terrorism team to track the abductors. But the general feeling amongst participants here at the WEF is that the lack of urgency around the issue represents the failure of government to provide the sort of basic security that is crucial to both African growth, and Western investment.
“There’s a good news story and a bad news story here,” says Rajiv Shah, the administrator of USAID, here attending the WEF meeting in Abuja. “The good news is that Nigeria is thriving economically. But the bad news is that this [incident with the girls] cuts to the heart of the continuing problems with safety and security here. Boko Haram has displaced 500,000 people in northern Nigeria. The president has instructed Secretary Kerry that we will do everything we can to help.”


Yet at the end of the day, the impetus for managing the crisis has to come from Nigerian leaders themselves–and so far, most seem much more interested in discussing foreign direct investment and GDP growth and privatization of the country’s various industries rather than security, and particularly the missing girls. But the two are linked. Research shows that countries don’t rise economically unless they can assure education and economic empowerment for women. Until Nigeria can protect its school children, it may find inclusive growth illusive.

Sunday, May 25, 2014

Your Airfare Is a Bunch of Lies - TIME

http://time.com/108106/airfare-lies/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

May 21, 2014
    

And the Department of Transportation wants to do something about it

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The Department of Transportation (DOT) has upped the ante in the battle over making the total cost of an airline trip transparent. And it may be taking on Congress in the process.
DOT is proposing a rule that would force carriers to disclose upfront the fees for the first checked bag, second checked bag, one carry-on item, and advance seat assignment. Since so much travel booking has shifted to online sites, DOT also wants to extend the definition of a ticket agent to include such aggregator sites such as Kayak or Google so that they too have to disclose these fees when consumers click on flights and fares. Additionally, the agency wants travel sites to come clean about any deals they have with the carriers that give some airlines preferred treatment, such as being at the top of the list. “Knowledge is power, and our latest proposal helps ensure consumers have clear and accurate information when choosing among air transportation options,” said U.S. Transportation Secretary Anthony Foxx in a statement.
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DOT’s latest attempt to bring more clarity is a direct clash with a bill introduced in March by Pennsylvania Congressman Bill Shuster called the Transparent Airfares Act of 2014. Contrary to the title, though, the bill would trump existing DOT rules about transparency and instead allow airlines to advertise “base” fares. That is, “excluding government-imposed taxes and fees.” The bill’s proponents say it allows passengers to see exactly what the airlines are charging them, before the government adds its take.
That’s not the case, according to some passenger rights groups, such as the Business Travel Coalition, who argue that the legislation would undo regulations that DOT put in place in 2011 that forced airlines and ticket agents to post fares that included all mandatory fees and taxes. To passenger advocates, an airfare is what actually comes out of your pocket at the end of the transaction; how it’s divided up doesn’t really matter. DOT clearly agrees with that point of view. According to a spokesperson: “The full-fare advertising rule in the “Consumer II” regulation went into effect on October 24, 2011. We have no complaint category or subcategory for “air fare transparency,” but consumers have consistently confirmed that advertising of prices below the total cost of travel causes confusion. DOT’s full fare advertising rule requires airlines to state the entire price to be paid by a consumer but the carrier remains free to describe the charges included within the single total price such as government taxes and carrier fees (e.g., fuel surcharges).”
The clashing rules and legislation are both a response to the ongoing trend by the carriers to “unbundle” airfare pricing while at the same time offering premium price services such as early boarding or extra frequent flier points. Unbundling allows the carriers to set a price for a seat, and then to start adding fees: for checked bags, overhead space, roomier or preferred seats. DOT is responding to a rising chorus of complaints by passengers about hidden, or at least unanticipated, fees that drive up the final price they pay to travel. Although you can find these fees on most airlines’ web sites, they are not necessarily being featured.
The new regulations would also require smaller carriers such as Spirit to report their flight operations stats such as on time arrivals and departures. These ultra-low cost carriers (ULCCs) are growing fast, but they are currently under the reporting limit since that they represent less than 1% of domestic scheduled passenger revenue. DOT is dropping that threshold to .5%, which will capture the ULCCs. The agency also wants to require large travel agents to respond promptly to complaints and to let passengers place a 24-hour hold on a quoted fare without payment and be able to cancel without penalty if the reservation is made a week or more prior to departure date. The agency also wants to require carriers and ticket agents to disclose any code-share arrangements on initial itinerary displays on their websites—although most already do so.


These new rules changes, if they stick, will certainly give passengers a better picture of what they’re buying when they book a flight. But until that happens—and it won’t be before 2015—it’s safe to assume that quoted fare you see isn’t necessarily what you are going to pay. That’s why it may take some extra digging when you are trying to compare prices; make sure you understand all the fees you are likely to pay. Because if you are expecting to pay the quoted fare, you are going to be disappointed

Saturday, May 24, 2014

11 Surefire Ways to Turn Your Dreams Into Reality - TIME

http://time.com/112280/make-dreams-real/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

7:41 AM ET
    

This post is in partnership with Inc., which offers useful advice, resources and insights to entrepreneurs and business owners. The article below was originally published atInc.com.

The loftiest goal I ever set in the early stages of my professional career was to become a Navy SEAL. Achieving that milestone gave me a new perspective and set the foundation for the rest of my life. Nothing seemed too far from my grasp.
The first six months of training, called Basis Underwater Demolition/SEAL, is designed to identify those not solely committed to the mission of becoming a Navy SEAL, separate them from the herd, and force them to quit. Unless you quickly identify what you personally need to be successful, you will fail. Here are 11 importanttactics I learned during that journey that I use every day in the constant pursuit of personal and professional success.

1. Get the simple things right.

During training, Sunday was always depressing, because you knew the inevitable torture that Monday would bring. Monday was inspection day. To be successful as a SEAL, your attention to detail must be unwavering. So you start with the little things, like making your bed and cleaning the floors. I used to keep my bed impeccably made and sleep on top of the covers with a sleeping bag. If everything wasn’t perfect, you paid for it. And sometimes when it was perfect, you paid anyway. The lesson: If you can’t get the simple things right, you can’t expect to successfully tackle more daunting tasks.

2. Set both realistic and unrealistic goals.

Successful people are relentless goal setters. They break down larger milestones into smaller, more achievable tasks. One of the most unrealistic goals a SEAL candidate can set is completing Hell Week. You don’t sleep for a week. You run countless miles with boats, logs, and backpacks. You swim dozens of miles in the frigid ocean. You run the obstacle course daily and do more pushups and pull-ups than you can count. All while battling second-stage hypothermia, sores, and often fractures. Some students quit just minutes into Hell Week. You can’t allow yourself to imagine what the end will look like. So you make–and achieve–one small goal at a time and pray for the sun to come up the next day. A series of near-term realistic goals will help you get closer to your big audacious ones.

3. Work hard.

This one seems obvious, but many people underestimate the level of effort it takes to be successful and achieve aggressive goals. It astonishes me that some of the guys showing up to SEAL training put no real time or effort into preparation. If you don’t work hard preparing for potential success, you won’t change that behavior when things get really tough.

4. Get others to work with you.

A SEAL training class is broken down into boat crews of seven guys each: three on either side of the boat and a coxswain in the rear steering. During the first phase of training, you take the boats out through the surf and paddle miles up and down the beach every day. I was in a winter class, where the swells can be up to 10 feet or more. It takes every man digging in and paddling hard just to get through the surf zone without getting tossed upside down. When setting goals and pursuing success, you must sometimes lead and get others to paddle with you. You can’t do it all alone. The minute you realize that you don’t know everything and need help along the way, the better off you will be.

5. Don’t make excuses.

Successful people don’t make excuses for failure or shortcomings. They acknowledge their strengths and weaknesses and seek feedback from trusted advisers. The longer you sit around making excuses, the further you will drift from the possibility of achieving your goals.

6. Don’t underestimate others.

One of the most fascinating things about SEAL training is that out of the couple hundred guys who start a training class, you could never hand pick the 30 or so who will graduate. Rarely is it the Rambo types who make it. Usually they are the first to go. Underestimating people, whether peers or competitors, is one of the worst things you can do. People who go far in life measure others by qualities such as integrity and strength of heart. Empower those around you, and you will be surprised by the outcome.

7. Be willing to fail.

When entering this phase of my life, I knew that statistically, the odds were not in my favor. I also knew that if I didn’t try, I would never forgive myself. I decided that I would rather try and fail than be the guy who says, “I was thinking about trying that.” You simply can’t look at life through a lens of fear. If you take a calculated risk and fail, at the very least you have a valuable learning experience. Get back up. Dust off. And never, ever, be out of the fight.

8. Embrace the repercussions of your actions.

On your path to success, you will make mistakes. One of my early mistakes was slacking off on my pushups after the obstacle course during the first day of the third phase of training. An instructor was looking through the rearview mirror while sitting in the truck. He was counting to see if I did the required 50. I decided to do 30-ish. That mistake earned me a spot with the “cheaters” the following week while at the shooting range. Each day, before we started, during lunch, and between drills, the cheaters would line up and sprint to the top of a nearby mountain in full gear. If you failed to make the cutoff time, you ran it again. It was torture. But the week after, I miraculously cut my four-mile run time by three minutes. Learn from your mistakes and turn the consequences into something positive.

9. Don’t back down.

My favorite passage from the Navy SEAL creed reads: “I will never quit. I persevere and thrive on adversity. My Nation expects me to be physically harder and mentally stronger than my enemies. If knocked down, I will get back up, every time. I will draw on every remaining ounce of strength to protect my teammates and to accomplish our mission. I am never out of the fight.” Enough said.

10. Laugh when you want to cry.

Staying positive seems like an obvious trait for successful people, but it’s easier said than done. Your character is defined by what you do when things get tough. During Hell Week, one of the fun tasks is called “steel pier.” After spending some time in the cold water of San Diego Bay, you strip down to your undershorts and lie down on the freezing metal pier while the instructors spray you with hoses. Your body convulses uncontrollably as it reaches stage-two hypothermia. But the guys who found the strength to laugh (partly because of delirium) during this event were the ones standing proud at graduation. When things get rough and are out of your control, don’t forget to laugh.

11. Make sacrifices.

Success comes with sacrifice. Let selfish ways fall by the wayside, and know that you can’t have your cake and eat it, too. The most successful people in the world have made significant sacrifices along the way. To become a SEAL, you give up comfort, and the discomfort only increases the further you go. But you get used to it, because you know what you are doing is worth it.
The path to success is paved with seemingly insurmountable obstacles, but you can’t lose heart. Stay strong, be humble, and lean on others for support when necessary.

Friday, May 23, 2014

Thailand Is Doing a Great Job of Screwing Up Its Potential - TIME

An antigovernment demonstrator cries before she leaves a protest site after soldiers staged a coup in Bangkok on Thursday, May 22, 2014.Sakchai Lalit—ASSOCIATED PRESS

And it's not alone. The coup in Thailand, and turmoil elsewhere, shows how developing nations are currently excelling at one thing: being their own worst enemies


For more than a half year now, Thailand has been gripped by chaos. Protesters from both sides of the political spectrum — the antigovernment Yellow Shirts and progovernment Red Shirts — have clogged the streets of Bangkok. The country’s highest court ousted the still widely popular Prime Minister, Yingluck Shinawatra. And, on Thursday, the military took control of the government.
The past six months of factional violence have seen some 28 deaths and 700 injuries. But there have been even wider casualties of another sort. The turmoil is sapping the nation’s economic strength, and everyone is hurting.
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Months of uncertainty and effectively no functioning government have taken a toll on Thailand’s economy. GDP in the first quarter contracted by 2.1%. Investment, consumption and government spending were all down. Some $15 billion of fresh investment projects are on hold. Foreign tourists, a key source of jobs and income for many Thais, are being scared off.
Without a return to political stability, the situation may not improve. Research firm Capital Economics slashed its GDP forecast for 2014 to a mere 1% this week. Though the military’s intervention could prevent further violence, the outlook for Thailand’s political situation remains anything but clear.
“The military’s seizure of power does nothing for Thailand’s reputation among global investors or, indeed, tourists,” lamented Mark Williams, Capital’s chief Asia economist.
Thailand is representative of an alarming trend: politics are undermining the economic prospects of some promising emerging nations. Only a couple of years ago, the developing world seemed set to swamp the developed one. While the U.S. and Europe suffered through the fallout from the 2008 financial crisis, emerging economies like China, India, Brazil and Indonesia surged from strength to strength. But not anymore. The performance of the emerging world has tapered off. The IMF recently downgraded its forecast for growth in developing economies to 4.9% in 2014.
There are many reasons behind the slowdown. After years of rapid expansion, some economies have developed serious flaws that are dragging them down. In China, for instance, a distorted financial sector, rising debt and excess capacity are all weighing on growth. But politics are making matters much worse. Vietnam’s government has been left pleading this week with foreign companies to maintain their operations in the country after many factories were damaged in anti-China riots, sparked by a territorial dispute in the South China Sea. Without such foreign investment, Hanoi will have a harder time creating jobs and raising incomes. Russia’s aggressive designs on Ukraine have forced the U.S. and Europe to slap sanctions on the country, threatening to scare off much-needed investment in an economy already struggling with feeble growth. In Egypt, constant political upheaval since the start of the Arab Spring in 2011 has undermined growth, gutted the important tourism sector and left the government dependent on foreign aid.
The causes of all this upheaval are many, and in some cases, quite honorable — such as the quest of Egyptians for their proper democratic rights. Yet ultimately the fallout is the same. Businessmen won’t invest in startups or factories that spur growth and create jobs without security, confidence and clear policy direction. A paralyzed government like Thailand’s can’t provide any of that, while the significant geopolitical risk created by a regime like Russia’s often convinces executives to place their capital elsewhere.
For the poor, this is bad news. There has always been a link between good governance and accelerated development in the emerging world. Periods of exceptionally high economic growth in less-developed nations are often associated with periods of political stability and sound macroeconomic management. Sadly, too often that stability has been enforced by coercion — as in China. As the 25th anniversary of the crackdown on protesters in Tiananmen Square approaches in June, Beijing’s leaders still believe economic reform can only be achieved under an unreformed political system. Yet democracies have proved that they, too, can deliver the economic goods. India, Indonesia and, increasingly, the Philippines have shown that when democratic leaders display political will, build consensus and implement smart policies, they can generate growth rates that match the best produced by the toughest dictatorships.
The point is that the governments that have successfully raised incomes tend to put economics ahead of politics. But both democrats and autocrats are guilty of doing the opposite these days. Putin clearly possesses the power to implement much-needed reforms, but he’s chosen to pursue the foreign adventures that could undermine the economy rather than the foreign investment that could bolster the nation’s growth. The sad story of India over the past three years has been a government led by economic reformers that got too caught up in coalition politics and too divided on the direction of policy to press ahead with key reforms.
This week brought some hope that at least some political gridlock can be broken. The landslide election in India of a coalition led by the Bharatiya Janata Party has raised expectations that incoming Prime Minister Narendra Modi will be able to press through badly needed liberalization and restart India’s economic miracle. But such hopes can be dashed in a flash. In Bangkok, there had been optimism that the military would broker a settlement between the opposing Yellow and Red Shirts — then the coup squashed that hope.

The danger to the developing world is that its leaders will continue to place their narrow interests over the greater goal of economic progress. Improving the welfare of the common man is hard enough. Politicians shouldn’t spend their time making it even harder.

Thursday, May 22, 2014

Google Edges Out Apple as World’s Most Valuable Brand - TIME

http://time.com/108547/google-most-valuable-brand-apple/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

4:09 AM ET
    
A Google trademark is reflected in Apple logo in this photo illustration taken in Berlin.Pawel Kopczynski—Reuters

The search giant's innovative spirit saw it rise to the top of the annual Millward Brown study, edging out three-year-incumbent Apple, which according to study authors has "slowed down a bit" from its heyday as a revolutionary brand

Google now tops Apple as the world’s most valuable brand, according to the annual BrandZ Top 100 Most Valuable Global Brandranking by Millward Brown.

The study found that Google’s brand value rose 40% to $159 billion while Apple, which has held the premier spot for the past three years, dropped 20% to $148 billion.

“I think the world is looking at Apple as a brand that created an Earth-shattering revolution, and I think that has slowed down a bit,” Oscar Yuan, vice president at Millward Brown Optimor, told AdWeek.
Google, meanwhile, has continued to reap the benefits of its search engine and popular Android mobile operating system, while Google Glass has set the bar for wearable technology, and experiments such as a self-driving car have underscored the Mountain View-company’s ambitious imagination and appetite for innovation.



Tech-companies ruled the ranking, with IBM and Microsoft grabbing the third and fourth spots, leaving McDonald’s as the only non-tech brand to round out the top 5.

Wednesday, May 21, 2014

Russia and China Reach Major Gas Deal - TIME

http://time.com/107241/chinese-media-russia-and-china-reach-major-gas-deal/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

7:29 AM ET
    
Mikhail Klimentyev—Presidential Press Service/AP

A major Russia-China gas deal comes at a propitious time for the embattled President Putin


Updated at 9:35 a.m. ET
Beijing and Moscow reached along-awaited natural gas dealWednesday that would supply hundreds of billions of dollars of Siberian gas to China, Chinese media reported, as Russian President Vladimir Putin seeks reorients his gas sales toward the East.
A $400-billion deal for a 30-year supply of natural gas has been negotiated for nearly a decade, with Russia hesitant to concede a lower price for China than its European customers, the New YorkTimes reports. Russia would invest $55 billion in infrastructure for transporting the gas to China, Gazprom CEO Alexei B. Miller said.
The contract is for 38 billion cubic meters of gas each year, the Wall Street Journal reports, implying a price of about $350 per thousand cubic meter—at the low end of what Gazprom currently charges clients.
“Russia needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it’s taking a step that’s economically profitable and that it’s found a new market for its gas,” said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.

Putin has sought to sell gas in China and diversify out of stagnant European markets, particularly now in the face of sanctions and political tensions in the West. Experts said Putin’s meetings with German chancellor Angela Merkel and President Obama in June were a key motivator in completing a deal with the Chinese.

Monday, May 19, 2014

AT&T to Buy DirecTV for $48.5 Billion in Move to Expand Clout - New York Times

http://dealbook.nytimes.com/2014/05/18/att-to-buy-directv-for-48-5-billion/?_php=true&_type=blogs&emc=edit_th_20140519&nl=todaysheadlines&nlid=56381892&_r=0

AT&T agreed on Sunday to buy the satellite television operator DirecTV for $48.5 billion, trying to tilt the balance of power with media companies as the market for broadband Internet and video shifts.

With the acquisition, AT&T becomes the latest telecommunications giant seeking to establish an even greater reach.
Comcast agreed in February to buy Time Warner Cable for $45 billion, a bid to become the country’s dominant provider of cable TV and high-speed Internet access. And Sprint, which is controlled by the Japanese telecom company SoftBank, has made no secret of its desire to merge with T-Mobile USA, creating a serious rival to Verizon and AT&T.
“The media chessboard is moving more this year than it has in the past decade,” said Richard Greenfield, a media analyst with the brokerage firm BTIG. “You’re seeing major shifts. Everyone is jockeying for position.”
The newest round of consolidation may weigh heavily on the minds of government regulators, who have expressed growing concern that the nation’s television and Internet services are increasingly controlled by just a few corporate behemoths.
For consumers, the acquisition may change little, at least at first, since AT&T and DirecTV share little overlap. AT&T said on Sunday that it planned to bundle its new acquisition’s services with existing offerings like broadband Internet and cellphone service.
To some analysts, AT&T’s latest acquisition seems questionable. The pay television business is considered a mature market whose subscriber growth has slowed sharply in recent years.

Still, the company has been trying to compensate for slowing growth in its own core businesses, including by moving into home security offerings and mobile data for cars.

Randall L. Stephenson, AT&T’s chief executive, said in an interview on Sunday that he had discussed the possibility of buying DirecTV with his counterpart at the satellite TV provider, Mike White, for some time.
By acquiring the country’s biggest satellite television operator, AT&T would gain more clout in negotiating with media companies as it increasingly focuses on video offerings. Through the deal, AT&T would become the country’s second-biggest pay TV provider, behind only Comcast. AT&T has about 5.7 million TV customers through its U-verse service, while the satellite TV operator has about 20.3 million customers in the United States.

The acquisition would also bring to AT&T DirecTV’s existing content at a time when AT&T has made video services a priority. DirecTV’s offerings include the National Football League’s “Sunday Ticket,” and it owns minority stakes in the Game Show Network and MLB Network.

It would also help get AT&T into new markets like video and data services inside airplanes.

“If you think about what we’re trying to accomplish, we’re trying to get way down the road to get content across multiple devices,” Mr. Stephenson said. “The more we peeled the onion back, frankly the better we felt about this.”

DirecTV would also bolster AT&T’s financial resources as it continues to invest in wireless-broadband capabilities, an effort that is expected to include bidding at least $9 billion for wireless network spectrum in a forthcoming government auction. The satellite TV company generated about $2.6 billion in free cash flow last year. Buying DirecTV would also expand AT&T’s presence in Latin America, where the satellite company already has more than 18 million customers and expects to grow substantially as more households subscribe to pay TV services.
Under the agreement’s terms, AT&T would pay $95 a share in stock and cash — roughly 10 percent higher than DirecTV’s closing stock price on Friday and about 30 percent higher than where its shares were trading before word of a potential transaction began to emerge.
Including the assumption of DirecTV’s debt, the deal is worth about $67.1 billion. Existing DirecTV shareholders would own 15 to 16 percent of the combined company after closing, which is expected in a year’s time.

The deal is the biggest in years for AT&T, which has long looked to acquisitions for growth. It is the largest transaction the company has announced since its aborted $39 billion offer for T-Mobile three years ago, a takeover fiercely opposed by antitrust regulators because it would have cut down on the number of wireless phone service providers.

This time, some analysts believe the company will face less heat from the federal government. By their reckoning, regulators are likely to look favorably upon a deal that creates a bulwark against a strengthened Comcast.

“They want wireless to compete with wires,” Mr. Greenfield, the media analyst, said. “The only way to complete that is to allow these deals to occur.”

AT&T has also learned from the botched deal. It will not have to pay DirecTV a breakup fee if the deal does not go through. It had to pay T-Mobile $6 billion.

Mr. Stephenson, the AT&T chief, argued that the deal should be approved since it would not meaningfully reduce competition in the pay TV industry.

“We became very comfortable that this is a deal that should pass regulatory muster,” he said. Referring to Comcast’s bid for Time Warner Cable, he added, “Our deal is a very different deal.”

At the same time, by moving forward with its DirecTV deal now, AT&T will probably complicate regulatory approvals for the cable television merger, according to several investment bankers.

But it is unclear whether investors and others will show enthusiasm for the DirecTV takeover, questioning the strategic fit.
“When I first heard the news, I was scratching my head,” said Jim Nail, an analyst with Forrester Research. “Satellite is kind of a doomed technology. I don’t see it being a long-term proposition.”

AT&T intends to pay for the deal with cash on hand, debt and the sale of some assets. To help ease regulatory concerns in Latin America, the company plans to sell its roughly 8 percent stake inAmérica Móvil, the telecommunications giant controlled by the billionaire Carlos Slim Helú.

The pace of consolidation, meanwhile, may prompt Sprint and SoftBank to proceed with a bid for T-Mobile, a deal that has already faced vocal opposition from several officials at the Federal Communications Commission. In that view, a merger would shrink an already consolidated industry to an unacceptable three major players.

But Sprint and SoftBank have argued that such a deal would create more competition in the fast-growing wireless space, creating a more formidable opponent to Verizon and AT&T.

AT&T’s move also raises questions for the country’s other major satellite television provider, Dish Network. That company’s chief executive, Charles W. Ergen, has made noises about striking acquisitions to become a true broadband service provider, while also hinting that he may be willing to sell.

But AT&T was concerned that buying Dish would invite more regulatory scrutiny because of both its broadband ambitions and its existing trove of wireless spectrum, according to a person briefed on the matter.

Brian X. Chen contributed reporting.

Sunday, May 18, 2014

In Taking Crimea, Putin Gains a Sea of Fuel Reserves - New York Times

http://www.nytimes.com/2014/05/18/world/europe/in-taking-crimea-putin-gains-a-sea-of-fuel-reserves.html?emc=edit_th_20140518&nl=todaysheadlines&nlid=56381892&_r=0

EUROPE

In Taking Crimea, Putin Gains a Sea of Fuel Reserves

By WILLIAM J. BROADMAY 17, 2014
    Photo
    Vladimir V. Putin of Russia visiting a Lukoil oil platform in the Caspian Sea in 2010.CreditRIA Novosti/Alexei Druzhinin, via Pool, via Reuters

    When Russia seized Crimea in March, it acquired not just the Crimean landmass but also a maritime zone more than three times its size with the rights to underwater resources potentially worth trillions of dollars.
    Russia portrayed the takeover as reclamation of its rightful territory, drawing no attention to theoil and gas rush that had recently been heating up in the Black Sea. But the move also extended Russia’s maritime boundaries, quietly giving Russia dominion over vast oil and gas reserves while dealing a crippling blow to Ukraine’s hopes for energy independence.
    Russia did so under an international accord that gives nations sovereignty over areas up to 230 miles from their shorelines. It had tried, unsuccessfully, to gain access to energy resources in the same territory in a pact with Ukraine less than two years earlier.
    “It’s a big deal,” said Carol R. Saivetz, a Eurasian expert in the Security Studies Program of the Massachusetts Institute of Technology. “It deprives Ukraine of the possibility of developing these resources and gives them to Russia. It makes Ukraine more vulnerable to Russian pressure.”
    Gilles Lericolais, the director of European and international affairs at France’s state oceanographic group, called Russia’s annexation of Crimea “so obvious” as a play for offshore riches.
    In Moscow, a spokesman for President Vladimir V. Putin said there was “no connection” between the annexation and energy resources, adding that Russia did not even care about the oil and gas. “Compared to all the potential Russia has got, there was no interest there,” the spokesman, Dmitry Peskov, said Saturday.
    Exxon Mobil, Royal Dutch Shell and other major oil companies have already explored the Black Sea, and some petroleum analysts say its potential may rival that of the North Sea. That rush, which began in the 1970s, lifted the economies of Britain, Norway and other European countries.
    William B. F. Ryan, a marine geologist at the Lamont-Doherty Earth Observatory of Columbia University, said Russia’s Black Sea acquisition gave it what are potentially “the best” of that body’s deep oil reserves.
    Continue reading the main story

    Redividing the Black Sea

    Russia’s annexation of Crimea also gives Russia control of a large swath of the Black Sea, including deep oil reserves.
    BEFORE ANNEXATION
    UKRAINE
    Sea of
    Azov
    RUSSIA
    CRIMEA
    ROMANIA
    Sea claimed
    by Ukraine
    Sea claimed
    by Russia
    BULGARIA
    GEORGIA
    Black Sea
    TURKEY
    AFTER ANNEXATION
    UKRAINE
    RUSSIA
    CRIMEA
    New claim
    by Russia
    100 MILES
    Source: Lamont-Doherty Earth Observatory of Columbia University
    Oil analysts said that mounting economic sanctions could slow Russia’s exploitation of its Black and Azov Sea annexations by reducing access to Western financing and technology. But they noted that Russia had already taken over the Crimean arm of Ukraine’s national gas company, instantly giving Russia exploratory gear on the Black Sea.
    “Russia’s in a mood to behave aggressively,” said Vladimir Socor, a senior fellow at the Jamestown Foundation, a research group in Washington that follows Eurasian affairs. “It’s already seized two drilling rigs.”
    The global hunt for fossil fuels has increasingly gone offshore, to places like the Atlantic Ocean off Brazil, the Gulf of Mexico and the South China Sea. Hundreds of oil rigs dot the Caspian, a few hundred miles east of the Black Sea.
    Nations divide up the world’s potentially lucrative waters according to guidelines set forth by the 1982 Law of the Sea Treaty. The agreement lets coastal nations claim what are known as exclusive economic zones that can extend up to 200 nautical miles (or 230 statute miles) from their shores. Inside these zones, countries can explore, exploit, conserve and manage deep natural resources, living and nonliving.
    The countries with shores along the Black Sea have long seen its floor as a potential energy source, mainly because of modest oil successes in shallow waters.

    Just over two years ago, the prospects for huge payoffs soared when a giant ship drilling through deep bedrock off Romania found a large gas field in waters more than half a mile deep.

    Russia moved fast.

    In April 2012, Mr. Putin, then Russia’s prime minister, presided over the signing of an accord with Eni, the Italian energy giant, to explore Russia’s economic zone in the northeastern Black Sea. Dr. Ryan of Columbia estimated that the size of the zone before the Crimean annexation was roughly 26,000 square miles, about the size of Lithuania.
    “I want to assure you that the Russian government will do everything to support projects of this kind,” Mr. Putin said at the signing, according to Russia’s Interfax news agency.
    A month later, oil exploration specialists at a European petroleum conference made a lengthy presentation, the title of which asked: “Is the Black Sea the Next North Sea?” The paper cited geological studies that judged the waters off Ukraine as having “tremendous exploration potential” but saw the Russian zone as less attractive.
    In August 2012, Ukraine announced an accord with an Exxon-led group to extract oil and gas from the depths of Ukraine’s Black Sea waters. The Exxon team had outbid Lukoil, a Russian company. Ukraine’s state geology bureau said development of the field would cost up to $12 billion.

    “The Black Sea Hots Up,” read a 2013 headline in GEO ExPro, an industry magazine published in Britain. “Elevated levels of activity have become apparent throughout the Black Sea region,” the article said, “particularly in deepwater.”
    When Russia seized the Crimean Peninsula from Ukraine on March 18, it issued a treaty of annexation between the newly declared Republic of Crimea and the Russian Federation. Buried in the document — in Article 4, Section 3 — a single bland sentence said international law would govern the drawing of boundaries through the adjacent Black and Azov Seas.
    Dr. Ryan estimates that the newly claimed maritime zone around Crimea added about 36,000 square miles to Russia’s existing holdings. The addition is more than three times the size of the Crimean landmass, and about the size of Maine.
    At the time, few observers noted Russia’s annexation of Crimea in those terms. An exception was Romania, whose Black Sea zone had been adjacent to Ukraine’s before Russia stepped in.

    “Romania and Russia will be neighbors,” Romania Libera, a newspaper in Bucharest, observed on March 24. The article’s headline said the new maritime border could become a “potential source of conflict.”
    Many nations have challenged Russia’s seizing of Crimea and thus the legality of its Black and Azov Sea claims. But the Romanian newspaper quoted analysts as judging that the other countries bordering the Black Sea — Georgia, Turkey, Bulgaria and Romania — would tacitly recognize the annexation “in order to avoid an open conflict.”
    Most immediately, analysts say, Russia’s seizing may alter the route along which the South Stream pipeline would be built, saving Russia money, time and engineering challenges. The planned pipeline, meant to run through the deepest parts of the Black Sea, is to pump Russian gas to Europe.
    Originally, to avoid Ukraine’s maritime zone, Russia drew the route for the costly pipeline in a circuitous jog southward through Turkey’s waters. But now it can take a far more direct path through its newly acquired Black Sea territory, if the project moves forward. The Ukraine crisis has thrown its future into doubt.
    As for oil extraction in the newly claimed maritime zones, companies say their old deals with Ukraine are in limbo, and analysts say new contracts are unlikely to be signed anytime soon, given the continuing turmoil in the region and the United States’ efforts to ratchet up pressure on Russia.

    “There are huge issues at stake,” noted Dr. Saivetz of M.I.T. “I can’t see them jumping into new deals right now.”
    The United States is using its wherewithal to block Russian moves in the maritime zones. Last month, it imposed trade restrictions on Chernomorneftegaz, the breakaway Crimean arm of Ukraine’s national gas company.
    Eric L. Hirschhorn, the United States under secretary of commerce for industry and security, said sanctions against the Crimean business would send “a strong message” of condemnation for Russia’s “incursion into Ukraine and expropriation of Ukrainian assets.”

    Alexandra Odynova contributed reporting from Moscow.