Links: 2013-02-28

News links for 28 February 2013

Huawei Plans Firefox OS Phone – Ina Fried – Mobile – AllThingsD

“Although Huawei is among the manufacturers touted by Mozilla as committed to building Firefox OS devices, the Chinese company’s chief says he has doubts as to how successful the new operating system will be.

“Whether the consumers will accept it or not, it is difficult to say,” Huawei Device Chairman Richard Yu said Wednesday during an interview at the Mobile World Congress in Barcelona.

Carriers, he said, are eager to have alternatives to iOS and Android. It is easy to understand that, Yu told AllThingsD. “But whether this can be very successful or not, it is too early to say.””

T-Mobile Loses More Contract Customers, Awaits MetroPCS Deal Cosure – Ina Fried – Mobile – AllThingsD

“T-Mobile continues to lose contract customers, although gains in prepaid business meant that the company’s overall ranks grew slightly last quarter.

The No. 4 U.S. carrier said it managed to add 61,000 total customers for the quarter, as an increase in prepaid customers offset the losses in the traditional business.

Total revenue for the quarter was $4.9 billion, up sequentially from the prior quarter, but down 5.2 percent from a year ago. Operating income before certain expenses was down 15 percent sequentially, and 25 percent year on year.”

Samsung handed loss in Japan patent case against Apple [u]

“A Japanese court on Thursday handed down a favorable ruling for Apple in a lawsuit filed by Samsung, which alleged the Cupertino company misused certain 3G wireless patents in versions of the iPhone.”

Gartner: Public cloud services to hit $131B by 2017 — Tech News and Analysis

“Trying to assess the size of any or all of the cloud computing market is like tacking Jello to the wall so thank God someone — Gartner — attempts it.

In a new report, the big researcher estimates that the public cloud market overall will grow 18.5 percent, to $131 billion, in 2017 from $111 billion in 2012. Under this broad umbrella term for public cloud services, Gartner includes the usual suspects — infrastructure as a service a la Amazon and the growing crowd of OpenStack-based public cloud providers, as well as cloud storage and print services.

Gartner defines Cloud advertising as “processes that support the selection, transaction, and delivery of advertising and ad-related data where content and price are determined at the time of end-user access, usually by an auction mechanism that matches bidders with impressions as they become available.” Relevant vendors include AOL, Apple, AppNexus, Baidu, Facebook, Google, Microsoft, OpenX and Yahoo.”

Groupon’s Loss Widens; Stock Tumbles –

“Chicago-based Groupon has turned a profit just once since going public and is struggling to rev up sales. It posted a net loss of $81.1 million for the fourth quarter, wider than its year-earlier loss of $65.4 million. Revenue rose 30% to $638.3 million, in line with the company’s forecast but below Wall Street expectations.

The worse-than-expected performance and a spate of other problems, including shrinking margins and declining cash flow, raise questions about the future of Groupon Chief Executive Andrew Mason, whom the company’s board discussed replacing last year, people familiar with the matter have said.”

On India’s Streets, Women Run Gantlet of Harassment –

“Here in Barasat, interviews with two dozen women yielded consistent stories of recent and repeated harassment. Men trail women on foot or on scooters, making crude remarks and grabbing at the scarf worn to cover the chest. It happens at the train station, they said, in the fish-market lane, on the road to the university and outside the police station.

Many women interviewed complained that police do little to stop it. One local officer, when asked about that by a reporter, responded: “If these incidents don’t happen, what will happen to our jobs?””

German Cities Struggle to Accommodate Rise in Homeless – SPIEGEL ONLINE

“With frigid temperatures outside, German homeless and emergency shelters are usually full this time of year. But a rising number of homeless people, many from other EU states, are exceeding their capacities and triggering competition for limited cots and resources.”

Sheryl Sandberg’s Good Fight by Naomi Wolf – Project Syndicate

“Institutional battles to redress women’s underrepresentation in land ownership, politics, and so on must be coupled with individualized leadership and skills training for women, ideally in an atmosphere of mutual support in which women learn from peers how to achieve and enlarge their own goals.”

What Bernanke Didn’t Say About Housing – Bloomberg

“What he didn’t say was that the percentage of adjustable-rate mortgages soared to a record 37 percent of total mortgage volume in 2005. From mid-2003 to mid-2006, ARM volume averaged 30 percent. The interest rate on ARMs is priced off the Fed’s overnight rate. It was this type of loan that witnessed the most egregious underwriting abuses and the highest delinquency and foreclosure rates.

Garrett 1, Bernanke 0.

Garrett wasn’t finished. He asked Bernanke about another presumed benefit of QE: higher stock prices.

“I’m sure you’re familiar with Milton Friedman’s work that says that people only really consume off of their permanent income, which basically means that you don’t consume — increase consumption — because your stocks have gone up in the marketplace,” Garrett said, before wandering off into areas such as how seniors should invest, “risk-taking” and “price discovery” in a market distorted by the Fed.”

What Explains the Racial Wealth Gap? – Real Time Economics – WSJ

“The biggest drivers, new research shows, are home ownership and income levels. Tracking 1,700 working-age households from 1984 to 2009, researchers at Brandeis University’s Institute on Assets and Social Policy found that, among households whose wealth grew over the period, the number of years owning a home accounted for nearly 30% of the difference in the relative growth in wealth between white and black families.

Family income accounted for another 20% of the widening gulf in wealth. Other factors include college education, inheritances and unemployment. All told, these five factors accounted for 65% of the increasing wealth gap, researchers said.”

Former Treasury Secretary Geithner to Conduct Financial Crisis Seminars – Real Time Economics – WSJ

“Mr. Geithner’s seminars, first reported by Politico, will focus on crisis prevention and crisis response, a spokeswoman said Wednesday. The goal is to create academic research that future policy makers and the public can use to better understand how and why governments act amid financial catastrophe.

Mr. Geithner has committed to seminars at Harvard University, the Massachusetts Institute of Technology, Northwestern University, Princeton University and the University of Michigan.”

Deficits Expected to Grow Among Developed Countries in 2013 – Real Time Economics – WSJ

“Borrowing needs among the world’s advanced countries will reach $10.9 trillion in 2013, up from $10.8 trillion in 2012, according to a broad budget outlook from the Organization of Economic Cooperation and Development, a Paris-based group for 34 developed nations. That would be a smaller rise than in recent years, a possible sign that government budgets are stabilizing, the report said.”

Gas Prices, Stocks Approach ‘Danger Zone’ – MarketBeat – WSJ

“Evidence is mounting that rising gasoline prices are already crimping the American consumer. Now, they could pose a problem for the stock market, as well.

Gas prices have jumped about 50 cents in the past month alone, pushing the national average to $3.78 a gallon, according to auto club AAA. Some parts of the country are getting hit harder than others; California drivers, for instance, are paying well above $4 a gallon.”

Why Argentina will default in 2013 | Felix Salmon

“Some countries default on their performing debt because they no longer have the ability to pay it. Other countries default on their performing debt because they no longer have the willingness to pay it. Argentina has been in both situations: something of a serial defaulter, it defaulted on or restructured its obligations in 1828, 1890, 1982, 1989, 2001, and 2005.

And it’s going to default once again in 2013.”

Poland relaxes consumer credit rules to boost flagging economy | beyondbrics

“Poland’s government is tossing a bit of caution aside in its attempts to breathe some life back into the fading economy – as seen by the recent decision by the Polish Financial Supervision Authority (KNF) to ease up on regulations concerning consumer loans.

The change to “Recommendation T” was made over the objections of the head of the KNF, Andrzej Jakubiak, and his two lieutenants, but was supported by KNF board representatives nominated by the president, the finance and economy ministries and the central bank.

“The three internal members, including [the KNF head], felt that the changes did not serve the sound and prudent management of the banks,” Lukasz Dajnowicz, KNF spokesman, said of Tuesday’s decision.”

Slovenia Ousts Prime Minister Janez Jansa Amid Anger at Austerity Measures –

“Slovenia’s prime minister became the latest casualty of European public anger at austerity measures and alleged government corruption, as the recession-hit nation’s Parliament ousted him in a no-confidence vote late Wednesday.

Lawmakers in the 90-seat legislature voted 55-33 to name Alenka Bratusek, the head of the largest opposition party, as interim prime minister to succeed Janez Jansa, who had been clinging to office for weeks after members of his coalition defected, leaving him as head of a minority government. She will be the country’s first female premier.”

Too Big to Fail Rules Hurting Too Small to Compete Banks – Bloomberg

“Return on equity, a measure of profitability, has plummeted since the financial crisis to less than 10 percent at many firms as capital levels rose and legal costs and slow economic growth weighed on earnings. ROE exceeded 20 percent at some banks from 1997 to 2007. That measure will revert to about 11 percent or 12 percent for U.S. banks, in line with the average of the past 50 years, says Toos Daruvala, a New York-based director in McKinsey & Co.’s North American banking practice.

“If you need one major overriding theme of the industry in the next three, five, seven, 10 years: massive consolidation, thousands of banks,” says Siegel, whose firm managed $5.1 billion as of the end of last year and invests in small banks. In the U.S., “I do see probably anywhere from 2,000 to 4,000 banks being swallowed up, and what you’ll see then is a more- concentrated system.””

BBC News – End of the line for online passwords, says PayPal

“Ideally, the best password would be something like Az1f6&jWz – but you’d never remember it.

So the industry is looking to ditch passwords, and is turning to a variety of solutions, such as voice recognition, key stroke analysis and finger print identification.

Payments firm PayPal is one of those leading the changes, and president David Marcus says the aim is to make the whole process seamless.

“Like magic, you’ll be authenticated, and the payment will go through,” he tells BBC World Service’s Business Daily.

“We want to move away from passwords, and get to embedded fingerprint scanners on mobile phones.

“You’re going to start seeing that type of experience later this year, with a mass roll-out in the year to come.””

BBC News – Argentina tells court it will resist debt demands

“Argentina has signalled to a US court that it will resist demands by a group of investors to repay them in full 11 years after its huge debt default.

A New York appeals court was hearing arguments after a previous ruling that Argentina should pay $1.3bn (£857m).

Argentina refuses to pay anything to investors who declined to participate in a previous debt reduction deal involving most of the nation’s lenders.”

BBC News – EU agrees to cap bankers’ bonuses

“Under the agreement, bonuses will be capped at a year’s salary, but can rise to two year’s pay if there is explicit approval from shareholders.

The UK, which hosts Europe’s biggest financial services centre, was opposed to any caps on bank bonuses.”

BBC News – Japan nominates Haruhiko Kuroda as central bank boss

“Mr Kuroda is currently the head of the Asian Development Bank and is seen as a supporter of aggressive monetary easing to help revive Japan’s economy.

The government, which recently won a general election, wants the Bank of Japan to do more to boost growth.”

BBC News – RBS lost £5.2bn in ‘chastening’ year

“Royal Bank of Scotland (RBS) has reported its fifth annual loss since it was rescued by the government in 2008.

The bank made a pre-tax loss of £5.17bn, hit by a series of charges. The year before, it lost £766m.

In a conference call for journalists, chief executive Stephen Hester warned of “another choppy year ahead of us”, but added that “the light at the end of the tunnel is coming much closer”.”

BBC News – Bankia turns in record loss of 19.2bn euros for 2012

Just as with Dexia in Belgium and France, the nationalised big lenders have ridiculous losses because their balance sheets are being cleansed thoroughly. It strains credibility to think that other non-nationalized lenders are not carrying a lot of the same losses on their books and simply not recognizing them.

Mantega Says Currency War He Named Eases as Brazil Recovers – Bloomberg

“Brazil succeeded in reducing swings in the real after letting the currency depreciate 19 percent in the two years ending in December to protect local manufacturers from foreign competition, Finance Minister Guido Mantega said in an interview. Now with the real hovering around 2 per dollar, Brazil is abandoning policies to depress the exchange rate even as Japan weakens the yen and the U.S. sticks to policies Mantega has said spurred the start of the currency war.

Brazil started introducing capital restrictions in 2010 after Mantega said rich nations had engaged in a currency war to boost their exports at the expense of developing countries. The real strengthened to a 12-year high of 1.5290 per U.S. dollar in July 2011, a rally that Mantega called a “disaster” because of the damage it was doing to local manufacturers.”

BBC News – Capital plan to boost new banks

“Lord Turner, chairman of the Financial Services Authority (FSA), said new banks would not need to hold as much capital as established rivals.

Under current rules, new banks have to provide a greater buffer in case things go wrong.

The big four High Street banks hold 75% of the UK current account market.

Under the plan, new entrants would be able to start off with a core capital buffer of 4.5% of risk-adjusted assets, the starting minimum under new global rules known as Basel III.

Meanwhile, the major banks would still have to maintain buffers of 9.5% to 10% because of their size.

New entrants would be given time to build up this buffer to 7%, the minimum required by the end of 2018 under Basel III.”

Monti Government Mulls Delaying Monte Paschi Bailout – Bloomberg

“Mario Monti’s caretaker government is considering postponing a 3.9 billion-euro ($5.1 billion) bailout for Banca Monte dei Paschi di Siena SpA, leaving the final decision on the payout to the next government, two people familiar with the discussions said.”

Warren Urges an End to Re-Arguing Consumer Bureau’s Structure – Bloomberg

“U.S. Senator Elizabeth Warren said her Republican colleagues should stop arguing over “settled decisions” and confirm Richard Cordray to lead the Consumer Financial Protection Bureau.”

Spain’s Bankia-Led Bailout Won’t Spell End of Bank Troubles – Bloomberg

“While banks have stepped up efforts to return to health, Spain’s deepening economic slump threatens to push up loan defaults and further undermine lending. The country’s gross domestic product will probably drop 1.5 percent this year after decreasing 1.4 percent in 2012, according to a Bloomberg survey of 40 economists. Spanish unemployment was at 26.1 percent in December, more than double the euro-area average.”

China pushes lending into the shadows –

“Thankfully, regulators are aware of the risks. They are experimenting with regulations to force greater disclosure of off-balance-sheet lending and are weighing whether to enforce limits. Such attempts are welcome but unlikely to prove sufficient. Capital, like water, is wont to find the path of least resistance. Banks and non-banks alike have proved adept at circumventing regulations. “

Canada Losing Debt Halo as Property Peaks Under Carney – Bloomberg

““If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector,” Crockett says, pointing out a window of a downtown coffee shop to dozens of cranes swinging across the skyline. “I’m afraid of a condo crash, and then what will happen to all the investments?””

Bernanke: Fed Must Review Exit Strategy Sometime Soon –

“Federal Reserve Chairman Ben Bernanke on Wednesday said the Fed sometime soon will need to review its strategy for exiting its easy money policies, though it must be careful not to choke off economic growth by raising interest rates too soon.

Mr. Bernanke, in his second day of testimony before Congress, also defended the central bank’s policies against criticism that it is hurting retirees and other savers. He said raising interest rates too soon would hurt them and the rest of the economy.”

Wall Street Junk Kings Selling Debt Poised to Lose Value – Bloomberg

“Wall Street junk-bond underwriters, selling debt at a record pace after the securities returned 19 percent last year, say it’s obvious that prices will drop when interest rates rise. So don’t blame the banks.”

Grillo kills move to break Italy deadlock –

“Beppe Grillo announced on Twitter on Wednesday that his movement would not give a vote of confidence in parliament to a government led by either the centre-left or Silvio Berlusconi’s centre-right party.

Writing on his blog, Mr Grillo also criticised Pier Luigi Bersani, leader of the Democrats, as the “talking dead”, describing him as a “political stalker who has been making indecent proposals to the Five Star Movement for days, instead of resigning as anyone else would have done in his position”.”

Sell currencies of serial QE offenders –

“How should an investor respond? Respect the drone, I suppose, and don’t fight the central bank in the immediate term.

In currency terms, one has only to observe the 15 per cent depreciation of the yen against the dollar and its 20 per cent depreciation versus the euro without a shot even being fired. Japan’s Prime Minister Shinzo Abe has one-upped Federal Reserve Chairman Ben Bernanke simply with a promise to print.

Instead of Big Mac prices, then, or money in/money out trade and investment flows, investors and market speculators should analyse promises, observe QE purchases as a percentage of gross domestic product or outstanding debt, and sell the most serial offender or obsessive compulsive printer.”

On negative interest rates and hoarding | FT Alphaville

“Okay. Negative interest rates have now gone fully mainstream in the UK thanks to this week’s testimony by Bank of England deputy governor Paul Tucker.

Even the Daily Mail is writing about it.

But a number of major misunderstandings are popping up as a result. So let us try to clear some of them up.

First off, as anyone who has been reading FT Alphaville will know, negative rates are in fact a dangerous central bank policy to deploy.

The reason for this is linked to hoarding.”

Thin Snowpack Signals Summer of Fire and Drought –

“After enduring last summer’s destructive drought, farmers, ranchers and officials across the parched Western states had hoped that plentiful winter snows would replenish the ground and refill their rivers, breaking the grip of one of the worst dry spells in American history. No such luck.

Lakes are half full and mountain snows are thin, omens of another summer of drought and wildfire. “

Interview on Investing | | Michael Mauboussin

“Mauboussin shares his thoughts about the stock market. He also expounds on the role of skill and luck in sports, investing and life — the subject matter of his latest book, The Success Equation.”

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