The Business News Source

Belgium is a small country in the Europe noted mainly for its strong beers and dour men in grey suits at the bureaucratic European Parliament. But at the moment it’s newspapers are savoring a sweet success against Internet giant Google.

Last week Google cut off a dozen Belgium Newspapers after a court order forced the web search engine to stop producing their content of face a fine of €1 million per day.  The newspapers; Le Soir, Le Quotidien de Namur and La Muse were amongst other titles that most of us have never heard of. The case was brought by Copiepresse and has been heralded in certain countries in Europe as great strike for the return of copyright ownership to the newspapers.

At the same time a notable list of various newspaper and publishing bodies across the world welcomed the decision, announcing it would make their various cases stronger.

The problem is ‘they just don’t get it’  - rather than stealing revenue from advertising and giving it to google, the billions of searches made by users of google’s services are in fact helping them generate revenues. Google is driving massive traffic to once obscure journals or newspapers across the world. Ironically Google has certain rights under international copyright law to publish extracts of articles; copyright law was put in place to encourage the use of material, not to discourage it.

Ironically, the newspapers need Google as much as Google needs them, with readership of printed newspapers in decline across the board the shift in advertising has rapidly moved to the Internet. Searching for articles on Google gives the newspapers valuable access to revenue generating customers. Typically countries such as Belgium and France are slow to adapt, because much of their markets are protected by government protection or intervention.

Perhaps a serialisation of ‘The Long Tail’ should be published in these papers, and perhaps the owners should read it. The newspapers have won the battle, but the war
Was won a long time ago.
 

As oil slid below $60 a barrel on Asian markets for the first time in six months various analysts popped out of the woodwork to pronounce that oil still has much further to fall, with many predicting it could easily fall back to as little as $40 a barrel if a compromise is made with oil-rich Iran facing sanctions related to its nuclear plans.

The price of a barrel of US, light sweet crude fell as low as $59.95 in Asian trading, while a barrel of Brent crude dipped as far as $59.75.

Prices are down significantly from the record high of more than $78 a barrel in July.

At the same time growth in the USA has slowed down significantly, reducing demand.

The BBC reports Tony Nunan, energy risk manager at Mitsubishi Corporation as saying "It is falling like crazy and people are bailing out of their positions,"
"The market seems to be bearish with the Iran situation looking like it’s reaching a compromise."

At the same time BP announced that it is on schedule to resume production in Alsaka at its Prudhoe Bay complex, which supplies 400,000 barrels a day.

Houston-based oil consultant Dan Lippe of Petral Worldwide said that with worldwide supplies growing, he wouldn’t be surprised to see oil back below $50 a barrel, and perhaps as low as $40, within a few years — if not sooner.

Lenovo announced this morning that they were investigating a series of battery caused fires. It also said that Sony was working with them to identify the causes.

In a statement Sony outlined that it wasn’t 100 percent sure if the battery in question was from Sony.

This is interesting, because after the Dell/Apple fiasco, Sony made a statement saying that the matter was at a close because and no other manufacturer was involved – then we heard from Toshiba that it was recalling 340,000 laptops because of the Sony battery problem..

It now seems that Sony is also a supplier to Lenovo – numbers potentially affected are yet to be released into the general public domain.

Sony needs to come clean and limit the damage to its brand as we outlined in our previous article. With the launch of the PS3 already hit by supply logistics (it’s most profitable division) the last thing Sony needs is a reputation for dragging its feet on safety – especially as it is a consumer brand. The delay may backfire further if ‘class action lawsuits’ are launched in the US, something as inevitable as night following day.

Inflation across the globe has been surprisingly low for some time now, much of this is down to the ‘Wal-Mart effect’ – where over 80 percent of Wal-Mart’s global suppliers are located in one country, China. In effect the combination of low cost, low wages and artificially low value of the Chinese Yuan have turned China into the factory for the world, the resultant compression of output prices has meant that DVD players, for example have dropped from $250 to $40 – these types of goods offsetting other rises in labour costs in the recipient economies. Thus measured as part of CPI, inflation is kept low.

Whilst this is good news for the consumer, it can be seen as an irritant for economists, as they need to differentiate between long term and short-term effects to advise their various governmental, industry or market bodies. Investment and Business News reported on a comment in an interview by Sir John Gieve, the Bank of England’s Deputy Governor for Financial Stability that warns that we may be coming to the end point in the ‘China does cheap goods’ part of their growth strategy. Even the ‘cooling’ of oil prices may just be considered a ‘blip’ in this context.

BN…
Deputy governor makes new inflation warning

For some time now we have been warning that the deflationary effect of Chinese imports could come to an end, and with it inflation will rise. When economists look at inflation they need to be able to separate one-offs from trends. A rise in the price of oil is not necessarily inflationary, and is only likely to lead to a sustained rise in prices elsewhere if producers pass on the extra fuel costs they pay and workers receive higher wages to fund their more expensive petrol. Indeed if neither of these things happen, a rise in the price of oil could actually be seen to be deflationary, as it helps reduce demand. Conversely, a fall in the oil price could be inflationary.

But then these arguments work both ways. Sure the high price of oil might not be inflationary, but equally, the fall in prices promoted by cheap Chinese imports could also be a one-off. If China starts moving up the value chain or if the Yuan appreciates in value, forcing up the cost of Chinese imports, then inflation could set in.

We have been warning as much for some time, and this morning the FT published an interview with Sir John Gieve, the Bank of England’s Deputy Governor for Financial Stability. Sir John warned that "energy prices were a paradox", since they reduced headline inflation but boosted demand. He also warned that: "It may well be that we’re coming to the end of quite a long period where goods prices were being driven down by globalization and the absorption of China and India."

Interestingly the effects of lower oil prices will have a major impact on the ‘feel good factor’ as petrol station prices start to fall, but due to the nature of the CPI mix, the effects on inflation (as measured by CPI) will be marginal.

If the Chinese allow further floating of the Yuan, then inevitably the cost of goods will increase. At the same time China has been quietly investing in brand names, such as Lenovo’s access to the IBM brand, Haier’s attempts to bid for Maytag. At the other end of the spectrum, many smaller companies with strong brands are being bought – the high-end audiophile market being an example that China is quietly moving into at the $1000 plus range.

The trend with China will probably be the end of the road for cheap goods, India and Russia will not fill the void – Africa, well Africa is Africa.

In an attempt to stem the growing scandal at HP, the board of directors has forced Chairperson, Patricia Dunn to resign from her position and severe all ties with the company.

The Palo Alto, Calif.-based company will turn the chairmanship over to its chief executive, Mark Hurd, who was supposed to take over that job in January as part of changes announced two weeks ago.

But things have changed since then amid a wave of leaked documents revealing how deeply HP’s investigators intruded into the personal lives of seven directors, nine journalists, two employees and family members of those targeted individuals. Dunn authorized the investigation and received regular updates, although she said she didn’t realize HP’s investigators were going to such extremes.

"Now that we know the depth of what has transpired, I take full accountability to drive the actions to set it right," Hurd told reporters as he announced Dunn’s departure and reviewed what the company has learned about its spying program. He took no questions.

Hurd on Friday acknowledged authorizing the bogus e-mail, but said he didn’t recall approving the use of software to trace the reporter’s computer.

California Attorney General Bill Lockyer and several federal agencies are investigating whether HP and its executives broke any laws in their crusade.

As the days move forward we expect more revelations to unfold. With Dunn gone there is little doubt that the press will now be gunning for the next person in the chain of command – Hurd will be lucky to escape without losing his job, or coming through the process with a clean reputation.

HP may need to clear the decks further to prove that it has thoroughly purged the company of those who would serve to destroy its previously untarnished reputation.

Expect more, we certainly do.