Vermont pushing to become the “virtual” Delaware

Vermont hopes to become the home of choice for virtual corporations.

From the link:

A bill signed into law earlier this month positions it as a leader in incorporating so-called virtual firms — those without a physical headquarters, actual paper filings, and directors’ meetings (they’re all online.) If it succeeds, it could emerge with the nation’s first virtual tech corridor.

The bid to attract companies with infrastructures as diaphanous as Vermont’s moonlight aims to offer far-flung groups working on collaborative projects the benefits of working with a corporation — without the costs that come with commuting and using centralized office space. Officials hope the law will replicate the success that Vermont has had as an “offshore” haven for captive insurance arrangements. That effort has drawn more than 500 companies to set up entities in the state.

“Like with captive insurance, we’re changing with the times,” Mike Quinn, commissioner of Vermont’s Department of Economic Development, tells CFO.com. “We expect to see some activity from this.”

Is the SEC growing instead?

This post is a follow-up to one earlier this week about a Wall Street Journal article stating the SEC is on its way out and the way the Bear Stearns debacle was handled is a symptom of the disease within the commission.

Christoper Cox, current chairman of the SEC, has vehemently fired back (albeit internally) in response to Monday’s WSJ story.

From the second link:

Rarely in its 74-year history has the Securities and Exchange Commission been so squarely on the griddle, with new reforms seeming to target its very existence and Chairman Christopher Cox personally being criticized as “peripheral,” in the words of a critical Monday profile on the Wall Street Journal’s front page.

Cox has said little publicly about the criticism, much of which relates to his and the SEC’s role in dealing with the collapse of Bear Stearns and its later bailout managed by the Fed. But in internal memos made available to CFO.com, the chairman clearly seems to be simmering close to the boiling point.

In a 17-paragraph memo to the entire SEC staff that started with a note that he was “very disappointed” by the Journal story, Cox defended the SEC’s role in dealing with Bear as “one of a high degree of inter-agency cooperation.” And he noted that the SEC’s position in the case of the bailout was legally limited because the agency could not be “cast in the role of regulator of the merger and also potentially enforcer of the laws against fraud in connection with the transaction.”

Is the SEC on its last legs?

According to one former commissioner, no.

From the link:

Some suggest that the Securities and Exchange Commission is hurtling toward extinction. On Monday, for example, a Wall Street Journalfront-page analysis of Chairman Christopher Cox’s “low key leadership” — especially during the Bear Stearns crisis — described Treasury Secretary Henry Paulson’s recent blueprint for regulatory reform as containing a proposal “to eliminate the SEC and shift responsibility for Wall Street to the Fed.”

Not likely, says former SEC Commissioner Arthur Levitt, now a senior advisor in New York for The Carlyle Group. In a telephone interview with CFO.com, Levitt noted that there have been a range of interpretations of the Treasury secretary’s comments about the future of the SEC. “Rest assured. Congress will have the last word, and the SEC is not likely to go away,” said Levitt, who served as commissioner from July 1993 to Februrary 2001.

Federal accounting report card? F-plus

The latest Government Accountability Office report on federal agency internal controls finds the situation a bit lacking.

From the link:

A new Government Accountability Office report on material weaknesses in federal-agency internal controls notes such persistent deficiencies as failure to use proper accounting standards, although the GAO acknowledges some improvement since the last in a series of criticisms the watchdog group has issued on government reporting.

The report, titled “Material Weaknesses in Internal Control over the Processes Used to Prepare the Consolidated Financial Statements of the U.S. Government,” highlighted control deficiencies corrected and uncorrected since a GAO report on the subject issued last July. Deficiencies such as poor documentation and the inability to assess the effectiveness of internal controls are among those that have yet to be resolved, according to the latest study. It adds 10 new recommendations that the agencies may use to improve their process for consolidating.

Global M&A down 30 percent

Globally mergers and acquisitions are down almost 30 percent, although activity is strong in emerging markets.

From the link:

Given the current wave of economic uncertainty and the instability of stock markets in wealthy nations, it’s not too surprising that merger-and-acquisitions activity is down so far this year.

Total global deal volume weighed in at $1 trillion during the first 19 weeks of 2008, down nearly 30 percent from $1.4 trillion during the same time last year, according to a new analysis by Ernst & Young LLP’s Transaction Advisory Services group.

Nevertheless, deal activity remains strong in emerging markets. So far in 2008, total transaction volume surged more than 14 percent, to $90.7 billion in the so-called BRIC countries (Brazil, Russia, India, and China). “Transactions in emerging markets tend to be smaller, minority investments that are less reliant on the credit markets,” explained Steve Krouskos, Leader of Americas Accounts for Ernst & Young’s M&A advice unit. “This has helped sustain deal activity in these markets through the current market cycle.”

FAS 141(R) cools dealmaking

Here’s a CFO.com article covering a Deloitte survey that found a six-month-old FASB rule is having a negative effect on mergers and acquisitions.

From the link:

Just six months after the Financial Accounting Standards Board issued its revised rule on business combinations, corporate executives are saying the technical pronouncement will change the way they do business.

In a recent survey, 40 percent of 1,850 executives said FAS 141(R), Business Combinations, would cause them to “rethink” deal strategy and affect planned deal activity, according to Deloitte Financial Advisory Services, which conducted the online poll.

Only 4 percent of the respondents said their companies have already finished assessing the valuation impact of the new rule.

“The finance and accounting, business development, tax and legal departments of companies are working to understand the implications of Statement 141(R), as the process for how a deal is consummated and reported will require significant preliminary and ongoing analyses,” noted Stamos Nicholas, Deloitte’s national business valuation leader.

FAS 141(R) is the first global standard to be issued since FASB and its overseas counterpart, the International Accounting Standards Board, began their joint rulemaking convergence project in 2002. One aim of the project is to harmonize international standards with U.S. generally accepted accounting principles to better meet the demands of global investors. It’s also intended to cut complexity and costs from the financial reporting process, particularly for multinationals that are forced to record results using several different local standards

Strong dollar, weak dollar — a primer

There’s a lot of talk in the news these days about our “weak” dollar. If you haven’t taken Econ 101 (and maybe even if you have) the concept of a strong dollar, or a weak dollar may be not be all that clear.

AccountantsWorld.com has posted a nice little Q&A covering the basics of the issue. There are positives and negatives to both states for the US dollar, and either extreme is not good. The primary consequence of our current weak US dollar that most everyone is feeling and talking about is its direct relationship to the cost of gas at the pump.

From the link:

Q: What is the relationship between a weak dollar and oil and gasoline prices?

A: It is a direct one, since oil generally is bought and sold in dollars. The more the value of the greenback goes down, the more it costs to buy a barrel of oil.

Of course, there are other factors involved in today’s roughly $4-a-gallon (€0.64-a-liter) gasoline prices. They include soaring demand from China and India, political turmoil in some oil-producing regions, the inability or refusal of major oil-exporting countries to increase production, and market speculation.

The weaker dollar has been a major factor, and one that could threaten the chances of a U.S. economic recovery.

Q: How long has this been going on?

A: The dollar has been on an extended slide against other major currencies, especially the euro and the Japanese yen, for about five years, during which the U.S. trade deficit with the rest of the world generally continued to widen. That required more borrowing from abroad and further weakening the dollar. At the same time, the economies of Europe expanded, driving up the value of the euro against the dollar. And recent sharp interest cuts by the Fed to deal with the U.S. housing and credit crises also have served to push down the dollar’s value. The dollar has fallen sharply against the euro in the past year.

Q: What is the U.S. government’s position on the dollar?

A: U.S. officials, usually the treasury secretary, have long repeated the mantra that a strong dollar is in the nation’s best interest. Yet the administration did nothing to back up its assertion with action, and many policy-makers clearly welcomed the slide, mainly because it helped to keep U.S. exports expanding, a rare bright spot in a troubled economy.

During the last week, however, officials have signaled that they do not want further declines. Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have issued statements backing the need for a strong dollar and expressing misgivings about the economy.

“A strong dollar is in our nation’s interests. It is in the interests of the global economy,” Bush said Monday as he embarked on a European tour.

Peter Thiel invests in libertarian micronations

From KurzweilAI.net — I’ve recently blogged about PayPal founder, Peter Thiel. He’s making news again by investing in offshore communities destined to become libertarian strongholds. Pretty cool idea if you ask me …

Peter Thiel Makes Down Payment on Libertarian Ocean Colonies

Wired, May 19, 2008 With a $500,000 donation from PayPal founder Peter Thiel, a Google engineer and a former Sun Microsystems programmer have launched The Seasteading Institute, an organization dedicated to creating experimental ocean communities “with diverse social, political, and legal systems.” Artist’s conception of a large seastead based on the spur design (Valdemar Duran) The seasteaders want to build their first prototype for a few million dollars, by scaling down and modifying an existing off-shore oil rig design known as a “spar platform.”   Read Original Article>>

Self repairing planes

This is a damn cool technology …

From the link:

The technique works like this. If a tiny hole/crack appears in the aircraft (e.g. due to wear and tear, fatigue, a stone striking the plane etc), epoxy resin would ‘bleed’ from embedded vessels near the hole/crack and quickly seal it up, restoring structural integrity. By mixing dye into the resin, any ‘self-mends’ could be made to show as coloured patches that could easily be pinpointed during subsequent ground inspections, and a full repair carried out if necessary.

This simple but ingenious technique, similar to the bruising and bleeding/healing processes we see after we cut ourselves, has been developed by aerospace engineers at Bristol University, with funding from the Engineering and Physical Sciences Research Council (EPSRC). It has potential to be applied wherever fibre-reinforced polymer (FRP) composites are used. These lightweight, high-performance materials are proving increasingly popular not only in aircraft but also in car, wind turbine and even spacecraft manufacture. The new self-repair system could therefore have an impact in all these fields.

(Hat tip: KurzweilAI.net)

Q&A with George Soros

The May 15, 2008, New York Review of Books had an interesting interview with financier George Soros. They covered financial regulation, currency, the housing crisis and the global economy. The interview even touches briefly on politics.

This interview is a great read to hear a highly educated opinion on all those subjects. For those who see the name “George Soros” and only think of the man who pumped tens of millions into the 2004 election to attempt and unseat Bush 43, this interview might open your eyes a bit.

He’s not Democratic ideologue. Maybe for a bit more market regulation than I prefer, but after these last few years beginning with the Enron debacle it’s hard to argue for a completely free market. And he’s certainly made a whole lot more money out of all the markets he discusses than I have – and most other people for that matter.

Here’s two samples from the interview.

… on the 2004 election:

Woodruff: A larger question on the campaign—you gave, I believe, something like $23 million in 2004 to various Democratic efforts: MoveOn.org and candidates. Far less than that so far this year—why the change?

Soros: Well, because I think that was a unique time when not having President Bush reelected would have made the situation of this country and of the world much better. I think now it’s less important. And, in any case, I don’t feel terribly comfortable being a partisan person because I look forward to being critical of the next Democratic administration.

… on his philosophy of market regulation:

Woodruff: What of your book and the philosophy that comes of it?

Soros: In human affairs, as distinguished from natural science, I argue that our understanding is imperfect. And our imperfect understanding introduces an element of uncertainty that’s not there in natural phenomena. So therefore you can’t predict human affairs in the same way as you can natural phenomena. And we have to come to terms with the implication of our own misunderstandings, that it’s very hard to make decisions when you know you may be wrong. You have to learn to recognize that we in fact may be wrong. And, even worse than that, it’s almost inevitable that all of our constructs will have some kind of a flaw in them. So when it comes to currencies, no currency system is perfect.

So you have to recognize that all of our constructions are imperfect. We have to improve them. But just because something is imperfect, the opposite is not perfect. So because of the failures of socialism, communism, we have come to believe in market fundamentalism, that markets are perfect; everything will be taken care of by markets. And markets are not perfect. And this time we have to recognize that, because we are facing a very serious economic disruption.

Now, we should not go back to a very highly regulated economy because the regulators are imperfect. They’re only human and what is worse, they are bureaucratic. So you have to find the right kind of balance between allowing the markets to do their work, while recognizing that they are imperfect. You need authorities that keep the market under scrutiny and some degree of control. That’s the message that I’m trying to get across.

Tell me …

… we’re not in a recession.

Yeah, I went to b-school and learned all the signifiers and markers, and if you knocked me down I might remember some of them. And, yes, I know we don’t meet the classic standard for a “recession.”

I argue that facts override academic models any day.

From the link:

The foreclosure crisis is hitting yet another American locale: the self-storage center.

As they lose their homes, people are turning to these humble cinderblock and sheet-metal boxes to store their stuff. But some people cannot keep up with their storage bills any better than they could handle their mortgage payments, and storage companies are auctioning off their property for a pittance.

30 second ad in 2009 Super Bowl?

Starting price a mere $3 million.

From the WSJ link:

The Super Bowl has always been a tough ticket, but now NBC is telling advertisers it will cost them $3 million just to get into the game — for 30 seconds.

NBC Universal, a unit of General Electric Co., plans to announce next week that $3 million will be the entry price for a commercial at the 2009 Super Bowl. While individual slots have sold at that level before, it’s never been the starting point for negotiations for the dozens of 30-second ads sold for the game. It represents a price increase of more than 10%, roughly double the usual annual rise.

Reason mag interviews Peter Thiel

Here’s an interesting Reason interview with Peter Thiel, co-founder of PayPal and angel investor of Facebook. They discuss libertarianism, The Singularity and the ongoing progress of science.

From Ronald Baily’s introduction:

I first met Peter Thiel—co-founder of PayPal, angel investor in Facebook, founder of the hedge fund Clarium Capital Management, adviser to the Singularity Institute for Artificial Intelligence, and self-described libertarian—at a party in his San Francisco home last September. Perhaps 100 digerati wandered through Thiel’s sleek Marina District townhouse, chatting amiably over wine and canapés in rooms filled with up-to-the-minute abstract art.

The party launched the second annual Singularity Summit, held at the nearby Palace of Fine Arts during the ensuing two days. The Singularity, a term coined by the science fiction writer Vernor Vinge in 1983, refers to the eventual technological creation of smarter-than-human intelligence. Just as our model of physics breaks down when it tries to describe the center of a black hole, Vinge observed, our attempts to model the future break down when we try to foresee a world that contains smarter-than-human intelligences. The Singularity Institute takes it for granted that exponentially accelerating information technology will produce such artificial intelligences; its chief goal is to make sure they will be friendly to humans.

In 1987, while studying philosophy at Stanford, Thiel helped found the libertarian/conservative student newspaper The Stanford Review. As a law student at Stanford he was president of the university’s Federalist Society. After working briefly for the law firm Sullivan and Cromwell in New York, Thiel switched to trading derivatives for Credit Suisse Financial. In the mid-1990s, Thiel transformed himself into a venture capitalist and a serial entrepreneur. He returned to California, where he has backed a number of startups. In addition to PayPal and Facebook, Thiel has invested in the social networking site LinkedIn, the search engine company Powerset, and the Web security provider IronPort.

Thiel also joined the culture wars by co-authoring The Diversity Myth: Multiculturalism and the Politics of Intolerance at Stanford (1996), and was an executive producer for the 2005 feature film Thank You for Smoking, based on Christopher Buckley’s politically incorrect novel of the same name. Besides backing the Singularity Institute, Thiel pledged a $3.5 million matching grant in 2006 to the Methuselah Foundation to support its anti-aging research agenda.

I interviewed Thiel between sessions at the Singularity Summit.

Those dirty hippies …

… are at it again.

Actually it’s trendy to rail against hippies, and on the other hand the “love generation” of the 60s is still idealized and glamorized as a time of peace, love and happiness.

Too bad most people don’t understand the realities of those days. A lot of peaceful “hippies” were nothing more than predators working over a bunch of naive, and somewhat affluent, kids. And don’t get me started with the ridiculous sense of entitlement to goods and services “hippies” of yore and today hold dear.

“You have two blenders? Wow, you don’t need two and I don’t have one. I’m taking one with me, okay?” — actual paraphrased statement from a neo-hippie.

The response (from a friend of mine) to this less-than-casaul aquaintance who had the nerve assume they were walking out with my friend’s blender was something along the lines of, “Maybe you should get off the smack so you can stay employed for more than a week at a pop. And stay out of my kitchen.”

The anti-hippie rant doesn’t really have much application to the link, but it sure felt good.

From the linked CFO.com article:

A former CFO of the Haight Ashbury Free Clinics — established in the 1960s to serve the population of Hippie “flower children” migrating to San Francisco — was sentenced to seven years in prison for embezzlement.

The former finance chief, Carl Gill, pleaded guilty to stealing $773,000 from the citywide health care provider for the poor, which has evolved from those roots in San Francisco’s famous “summer of love.” The plea included two felony counts of grand theft and six counts of tax evasion, the San Francisco Chronicle reported.

 

Putting a thumb on the scales …

… a bit, AT&T?

From KurzweilAI.net:

AT&T: Internet to hit full capacity by 2010

CNET News.Com, April 18, 2008 AT&T has claimed that, without investment, the Internet’s current network architecture will reach the limits of its capacity by 2010, due to the increasing amounts of video and user-generated content being uploaded. “In three years’ time, 20 typical households will generate more traffic than the entire Internet today,” said AT&T vice president Jim Cicconi, and that a new wave of broadband traffic would increase 50-fold by 2015, driven by high-definition video, which is 7 to 10 times more bandwidth-hungry than typical video today. He said that at least $55 billion worth of investment was needed in new infrastructure in the next three years in the U.S. alone, with the figure rising to $130 billion to improve the network worldwide.   Read Original Article>>

If you want to blow …

… $100 dollars just buy a four pack of these outlet covers.

From the link:

Machina Dynamica’s Tru-Tone Duplex Cover is a special audiophile-grade cover for all duplex wall outlets; they are intended to replace all types of duplex covers - steel, plastic, wood, etc. - in the listening room — including non-audio outlets and unused outlets. We suggest a baseline of 3-4 Duplex Covers in the room to see what these covers will do.

The gullibility of audiophiles is both constantly surprising and quite embarrassing. if these people spent a fraction of the money put into cables, interconnects and apparently outlet covers, into education on basic acoustics and auditory biology they’d be able to see through the inane claims of companies like Machina Dynamica.

And probably enjoy the sounds emanating from their systems quite a bit more as well.

(Hat tip: JREF’s SWIFT)

James Fallows on air taxis

Just got around to reading a good chunk of the print May Atlantic magazine. James Fallows has a great article on “air taxis” covering what is happening right now in the US Southeast and the overall feasibility of the concept.

Very cool stuff and an interesting article. Overall it looks like a promising way to get around at a reasonable price for consumers.

From the link:

How could a brand-new company in the chronically troubled aviation business have come so quickly to the point where its main challenge is growing too fast? And this through a period when security concerns of all sorts have risen, fuel prices have soared, environmental doubts about aviation have intensified, and airports and airways have become more congested by the day—and the economy of the company’s home area, in southern Florida, has been through a real-estate crash?

The answer involves an odd assemblage of talents and disciplines that includes American computer scientists who call their specialty “ant farming”; Russian mathe­matical prodigies who made their way from Minsk and Moscow to Florida, via Jerusalem; Internet-business pioneers; and, yes, pilots and maintenance experts and dispatchers, including many refugees or retirees from the troubled airlines. Plus Bruce Holmes himself, who joined the company a year ago, after NASA radically cut back its airplane-related activities to shift its resources to space exploration.

DayJet’s success to date has also depended on the confluence of several technologies that all matured at once. Indeed, the most startling aspect of its story is the insistence from top to bottom that at heart, it is not an aviation company at all. “You could think of us as really a software company,” Jim Herriott, one of the ant farmers, told me. What he meant was that the Internet has become an unimaginably refined and powerful tool for routing packets of data from place to place. “We are about developing an Internet for stuff”—the stuff in this case being passengers in seats.

The Straight Dope on the federal income tax

For the edification of US readers facing the tax man today, here’s Cecil Adams on income tax and the Thirteenth Amendment.

The shortest verdict from the link:

Despite judicial rejection of every imaginable antitax argument, the protesters keep trying them anyway.

Dallas’ VanDuzen — “World’s Best Technology” 2008

Dallas-based VanDuzen, a 3D visualization and modeling company I provide communications services for, won “Best of Show” at the 2008 WBTshowcase. A great honor for a great company creating cutting edge technology. Congratulations!

The WBTshowcase release:

Texas Company Named 2008 “World’s Best Technology”

VanDuzen is First Texas Firm to Win WBTshowcase Top Honors

March 27, 2008 | Arlington, TX – The nation’s leading technology commercialization experts, venture investors and Fortune 500 licensing scouts today named a Texas software technology the best emerging technology of 2008.

Dallas-based VanDuzen Inc.’s software system, affiliated with the UT Southwestern Medical Office of Oral and Maxillofacial Surgery, won the “Best of Show” award today at the 2008 WBTshowcase

The WBTshowcase, representing the largest collection of undiscovered technologies emanating from the world’s leading universities, labs and research institutions, was held March 26-27 at the Hilton Arlington.

“2008 marks the first year ever that our judges have awarded our top prize to a Texas technology,” said Paul Huleatt, WBTshowcase CEO. “We look forward to watching VanDuzen take their award-winning technology to market and beyond.”

VanDuzen’s software technology was among the over 75 world-class deals presented this year to more than 450 attendees, including over 100 venture investors and Fortune 500 licensees.

At tonight’s award ceremony, VanDuzen was awarded a $10,000 cash prize presented by private equity fund manager Cimarron Capital Partners.

“This award will help take us to the next level,” said Nancy Hairston, Van Duzen CEO. “The knowledge I gained from the WBTshowcase was exactly what I needed as an entrepreneur.”

VanDuzen’s licensed technology allows surgeons to digitally sculpt and then manufacture custom implants matched to patients’ facial anatomy.

2nd place went to Deerfield, Michigan’s Hybra Drive System LLC. Hybra-Drive is developing a novel fuel-efficient Hydraulic Hybrid Power Train (HHPT) for the light and medium truck markets.

“With great mentors you can do a lot of interesting things in life,” said Rick Goldstein, Hybra-Drive President and CEO.

Kinetic Research & Development from South Elgin, Illinois, took 3rd place with its high power density internal combustion engine technology.

“This award gives us credibility and, I hope, potential funding,” said Michael Boruta, Kinetic’s President & CEO. “We interacted with so many people, from VCs to potential licensors, at this extremely well-run event.”

“Innovation leading to new technologies is the primary driver of economic development,” said Wes Jurey, President and CEO of the Arlington Chamber of Commerce. “It is critical for the US to link discoveries with the funds to develop tomorrow’s revolutionary products. The WBTshowcase does precisely this.”

ABOUT WBTshowcase
The WBTshowcase is the nation’s premier event showcasing the largest collection of high-potential technologies emanating from top universities, labs and research institutions from across the country and around the globe. The WBT is produced by Development Capital Networks, LLC in cooperation with the Federal Laboratory Consortium for Technology Transfer (FLC) and the National Association of Seed and Venture Funds (NASVF). www.wbtshowcase.com

Massive job loss one more recession red flag

I’ve posted on the US recession in the past. Here’s a story from AccountantsWorld.com (free registration req.) on March’s massive job loss being one more signal a recession is here and looks to be significant.

There’s no reason to go around preaching doom-and-gloom, but it is important to be realistic about the current economic situation. Something the administration in DC has had some measure of difficulty with.

From the second link:

It is no longer a question of recession or not. Now it is how deep and how long.

Workers’ pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs, the most in five years, and the national unemployment rate climbed to 5.1 percent. Job losses are nearing the staggering level of a quarter-million this year in just three months.

For the third month in a row total U.S. employment rolls shrank _ often a telltale sign that the economy has jolted dangerously into reverse.

At the same time, the jobless rate rose three-tenths of a percentage point, a sharp increase usually associated with times of deep economic stress.

The grim picture described by the Labor Department on Friday provided stark evidence of just how much the jobs market has buckled under the weight of the housing, credit and financial crises. Businesses and jobseekers alike are feeling the pain.

“It is now very clear that the fat lady has sung for the economic expansion. The country has slipped into a recession,” said Stuart Hoffman, chief economist at PNC Financial Services Group. Indeed, there is widening agreement that the first recession since 2001 has arrived. Even Ben Bernanke, in a rare public utterance for a Federal Reserve chairman, used the “r” word, acknowledging for the first time this week that a recession was possible.

M&A at lowest point in four years

First quarter merger-and-acquisitions are at the lowest point since 2004. The economic downturn is blamed for the low level of activity.

From the link:

It’s been clear for a while that merger-and-acquisition activity has been weak in the U.S. But volume in the first quarter has now fallen to the lowest level in four years.

“The slowdown’s key drivers are the credit market’s problems and the economic downturn in the U.S., and potentially global, economies,” Mark Shafir, chairman and global co-head of M&A at Lehman Brothers, told the Financial Times, which reported on the level of inactivity. Private equity firms, for example, seem to have nearly evaporated in the market due to the credit crunch. In fact, many seem busier trying to rework or walk away from previously agreed upon deals. Indeed, the FT pointed out that deals announced by financial buyers plunged 71 percent, to $52.6 billion, the lowest volume since the first quarter of 2004.

With the credit markets all but shut down, PE firms are unable to obtain financing to do deals.

New FASB rule on derivatives

Little heard about before recently, and still pretty arcane, derivatives reporting must now meet a Financial Accounting Standards Board disclosure rule.

From the CFO.com link:

Under the new rule, issuers must disclose the fair values of derivatives they use, as well as their gains and losses from the instruments, in tables accompanying their financial statements. Perhaps with a nod to the current credit crunch — FASB was in the last stages of hatching the standard as the subprime crisis deepened — the standard requires companies to reveal features of their derivatives that are related to credit risk.

To be sure, the standard changes nothing about the accounting for derivatives. But it does make the often-cloudy reporting of them much more transparent to the users of financial statements, Mulford thinks. “With these tables, derivatives can’t be hidden from view in a way they were on, say, Enron’s balance sheet and income statement,” he told CFO.com. “Investors will be better able to assess the contribution of derivatives to earnings and financial risk, and in the process, they’ll be better able to judge earnings sustainability.”

The new standard requires employers to reveal where they put the results of their derivatives investments on their financial statements and spell out how much they are; how derivatives are accounted for; and how derivatives affect their balance sheet, income statement, and future cash flows. (While 161 requires companies to disclose where they report derivatives’ effects on their income statements and balance sheets, it doesn’t require such reporting in cash-flow statements. FASB plans to address disclosures of derivatives’ location on cash-flow statements in the context of its ongoing project on financial-statement presentation.)

Nano, solar and other KurzweilAI.net news

Different format today for the KurzweilAI.net newsletter highlights. There is so much good stuff I’m dropping bits directly from the newsletter. Today features solar, stretchy silicon, quantum computing news, self assembly, electricity producing nanotubes, and a possible successor to silicon — graphene.

Do follow the links.

From the newsletter:

*************************
More-Powerful Solar Cells
Technology Review Mar. 27, 2008
*************************
An MIT researcher has found a way
to improve the efficiency of
multicrystalline silicon solar cells
by 27 percent without raising costs,
making them as efficient as the more
expensive single-crystal cells. The
first cells incorporating the new
technology are predicted to cost
$1.65 per watt, compared to $2.10
per watt today….
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8278&m=39667

*************************
Stretchy circuits promise elastic
gadgets
NewScientist.com news service Mar. 27, 2008
*************************
University of Illinois at
Urbana-Champaign researchers have
made stretchable and flexible
silicon and plastic integrated
circuits that are just one
crystal–1.5 microns–thick. The
circuits are designed so that the
plastic, not the silicon, absorbs
most of the stress when the chips
are bent. Until now, integrated
circuits have been limited by…
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8277&m=39667

*************************
Silicon chips for optical quantum
technologies
KurzweilAI.net Mar. 28, 2008
*************************
Bristol University researchers have
demonstrated the world’s smallest
optical controlled NOT gate–the
building block of a quantum
computer–fabricated from silica
wave-guides on a silicon chip. The
team generated pairs of photons,
each encoding a quantum bit or qubit
of information. They coupled these
photons into and out of the…
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8276&m=39667

*************************
Nanomaterial turns radiation
directly into electricity
NewScientist.com news service Mar. 27, 2008
*************************
Two researchers–a former Los
Alamos National Laboratory engineer
and an Alabama A&M University
researcher–have developed highly
efficient nanotube-based tile
materials that can convert
radiation, not heat, from nuclear
materials into electricity. The
tiles are made of carbon nanotubes
packed with gold and surrounded by
lithium hydride….
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8275&m=39667

*************************
Self-Assembled Materials Form Mini
Stem Cell Lab
KurzweilAI.net Mar. 28, 2008
*************************
Northwestern University researchers
have built self-assembling thin-film
sacs able to hold human stem cells
for four weeks in culture, keeping
the cells separated while allowing
proteins to cross the membrane. This
new mode of self-assembly from a mix
of peptide amphiphiles and
biopolymers also can produce thin
films whose size and shape can be…
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8273&m=39667

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Is Graphene the New Silicon?
KurzweilAI.net Mar. 28, 2008
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University of Maryland physicists
have found that graphene conducts
electricity at room temperature with
less intrinsic resistance than any
other known material. Graphene, a
new material that combines aspects
of semiconductors and metals, is one
of the materials being considered as
a potential replacement for silicon
for future computing. The…
http://www.kurzweilai.net/email/newsRedirect.html?newsID=8271&m=39667

Finance exec predicts long and deep recession

More bad omens for the US economy.

Jerry York, a man with strong finance credentials in the business world, is predicting a “very ugly recession.” He adds it will be lengthy and deep. In a speech he specifically mentions the derivatives market, the problems private equity firms are enduring because of lack of leverage, and says more bank failures are not, “off the chart at all, especially for smaller banks.”

From the CFO.com link:

Speaking at the CFO Rising conference in Orlando, former IBM and Chrysler Corp. finance chief Jerry York predicted a lengthy and deep recession for the American economy.

Addressing the topic of what boards are demanding from CFOs, York said if he had only five minutes to give his speech, he would tell finance chiefs that: “CEOs and boards are just going to expect you to get these companies through the mess,” emphasizing that, “I think this is going to be a very ugly recession, I think it is going to be lengthy, I think it is going to be deep.”

York, who is currently CEO of Harwinton Capital, a private equity firm he founded in 2000, is also a corporate director at Tyco International and Apple Inc. During the conference, which has run annually for the last 15 years, York told CFO.com: “It’s going to be a very bad recession, perhaps the worst I’ve seen in the 46 years I’ve been working.”

He described a “perfect storm” of economic calamity, including rising energy prices, rising commodity prices, credit markets in turmoil, credit losses in which “no one knows where the bottom is,” and a housing market in crisis. “We have too many sectors going south all at once, he told the website. What’s more, York can’t find a silver lining: “I frankly don’t see many positive signs right now, we are looking at a really nasty economic situation.”

Pre-Edison sound recording found

A recording of “Au Clair de la Lune” dating back to 1860 has been found. This recording predates Thomas Edison’s earliest recordings by an (even after the edit, still) astounding 28 17 years.

Meet the father of recorded sound, Edouard-Leon Scott de Martinville.

From the link:

For more than a century, since he captured the spoken words “Mary had a little lamb” on a sheet of tinfoil, Thomas Edison has been considered the father of recorded sound. But researchers say they have unearthed a recording of the human voice, made by a little-known Frenchman, that predates Edison’s invention of the phonograph by nearly two decades.

Isabelle Trocheris

The audio historian David Giovannoni with a recently discovered phonautogram that is among the earliest sound recordings.

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 The Phonautograph Recording from 1860 of ‘Au Clair de la Lune’ (mp3)

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 An Audio Excerpt from a 1931 Recording of the Same Song (mp3)

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The 19th-century phonautograph, which captured sounds visually but did not play them back, has yielded a discovery with help from modern technology.

The 10-second recording of a singer crooning the folk song “Au Clair de la Lune” was discovered earlier this month in an archive in Paris by a group of American audio historians. It was made, the researchers say, on April 9, 1860, on a phonautograph, a machine designed to record sounds visually, not to play them back. But the phonautograph recording, or phonautogram, was made playable — converted from squiggles on paper to sound — by scientists at the Lawrence Berkeley National Laboratory in Berkeley, Calif.

“This is a historic find, the earliest known recording of sound,” said Samuel Brylawski, the former head of the recorded-sound division of the Library of Congress, who is not affiliated with the research group but who was familiar with its findings. The audio excavation could give a new primacy to the phonautograph, once considered a curio, and its inventor, Édouard-Léon Scott de Martinville, a Parisian typesetter and tinkerer who went to his grave convinced that credit for his breakthroughs had been improperly bestowed on Edison.

Scott’s device had a barrel-shaped horn attached to a stylus, which etched sound waves onto sheets of paper blackened by smoke from an oil lamp. The recordings were not intended for listening; the idea of audio playback had not been conceived. Rather, Scott sought to create a paper record of human speech that could later be deciphered.

NIST preps bridge to molecular electronics

From KurzweilAI.net:

NIST team proves bridge from conventional to molecular electronics possible

KurzweilAI.net, March 19, 2008Researchers at the National Institute of Standards and Technology (NIST) have set the stage for building an “evolutionary link” between the microelectronics of today (built from semiconductor compounds) and future generations of devices, made largely from complex organic molecules, by assembling the devices on the same kind of substrate used in conventional microchips. Side and top view of NIST molecular resistor The ability to use a silicon crystal substrate compatible with the industry-standard CMOS (complementary metal oxide semiconductor) manufacturing technology paves the way for hybrid CMOS-molecular device circuitry. This, in turn, is a necessary precursor to a “beyond CMOS” totally molecular technology. National Institute of Standards and Technology News Release

Bear Stearns reaches for bailout

The media may be reporting mixed signals, but the US economic crisis is going nowhere.

From the linked NYT article:

Bear Stearns, facing a grave liquidity crisis, reached out to JPMorgan on Friday for a short-term financial lifeline and now faces the prospect of the end of its 85-year run as an independent investment bank.

With the support of the Federal Reserve Bank of New York, JPMorgan said in a statement that it had “agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days.”

Update — Here’s a CFO.com article with more on this issue and about government financial regulation in general.

From the CFO.com link:

Treasury Secretary Henry Paulson, now dealing with his very own horror show in the melting credit markets, can probably relate.

Paulson, the former chairman and CEO of Goldman Sachs, has strived to regulate the financial markets with a light touch. Yet the most recent report of the President’s Working Group on Financial Markets, which Paulson chairs, shows financial regulators are being pulled inexorably by the worsening credit crisis to use a heavier regulatory hand, or even to intervene directly in the market.

Indeed, today, just one day after the report was released, the Federal Reserve was forced to back a bailout of Bear Stearns. And earlier in the week, the Fed poured some $200 billion of liquidity into the market. The report of the President’s Working Group itself contains recommendations that translate into increased regulatory oversight of everything from credit rating agencies to banks to institutional investors to mortgage brokers. The report also recommends that regulators intervene with other standard-setting bodies, notably the Financial Accounting Standards Board and the Basel Committee on Banking Supervision.

Solid state drives and pliable nanomaterial

Two interesting bits of news from KurzweilAI.net today.

The first is Intel announces 160 gig solid state drives are soon to market.

The second covers somewhat surprising physical properties of nanomaterials.

Intel confirms 160GB solid-state drives will be unveiled soon

Computerworld, Mar. 11, 2008Intel is close to unveiling a new line of solid-state drives for laptop and notebook PCs that will feature a storage capacity up to 160GB, putting solid-state drives in direct competition with hard drives. Read Original Article>>

Nanomaterials show unexpected strength under stress

Nanowerk News, Mar. 12, 2008University of Maryland-College Park and NIST researchers have discovered that materials such as silica that are quite brittle in bulk form behave as ductile as gold at the nanoscale. At the macroscale, the point at which a material will fail or break depends on its ability to maintain its shape when stressed. The atoms of ductile substances are able to shuffle around and remain cohesive for much longer than brittle substances containing faint structural flaws that act as failure points. At the nanoscale, these structural flaws do not exist, and hence the materials are nearly “perfect.” Read Original Article>>

The law of unintended consequences …

… in action. the NY governor falls, Wall Street rises. This is going to be my only post on the Eliot Spitzer situation.

From the Corner:

Dow Sees Biggest Gain in Five Years   [Stephen Spruiell]

The Fed’s latest injection of liquidity into the market, or a rampant outbreak of Spitzerfreude-related euphoria? I have to think the fact that everyone on Wall Street is in a good mood had something to do with it.

03/11 04:45 PM

I think there’s actually something behind this little theory. Spitzer was roundly hated on Wall Street dating back to his days as NY’s attorney general.

Ziff Davis files Chapter 11

The B2B publisher filed for Chapter 11 bankruptcy protection after a losses in its subscriber base and a decline in print ads.

This is yet another example of how difficult the print side of the publishing industry has always been. Even more so now in the rapidly expanding digital age since there’s reason to segment the industry into traditional- and new-media

From the linked CFO.com article:

Ziff Davis Media Inc. filed for Chapter 11 bankruptcy, but pledged to emerge by this summer.

The indirect wholly-owned subsidiary of Ziff Davis Holdings Inc. — publisher of technology and video game magazines, including PC Magazine,— said it simultaneously reached a restructuring agreement with an ad hoc group of holders of more than 80 percent of its senior secured floating rate notes. That move substantially reduces the company’s funded indebtedness.

Under the restructuring, $225 million principal amount of senior secured indebtedness (including the senior secured notes) will be exchanged for a new $57.5 million senior secured note and at least 88.8 percent of the common stock in the reorganized company.