COMMENTS - 2013/03/10

WEEKLY BLOG COMMENTS – No.54

DATES: 2013/03/03– 2013/03/10

ANALYST: Domingo Trassens

---------------------------------------------------------------------------------------------------------------------

Dear Friends:

Hello! I would like to share with you a series of comments posted by myself in the WSJ Journal Community during the last seven days about news related to politics, economy and business in United States and the rest of the world.

The special themes of this week are:

- The Life in New York

- Investment in Emerging Markets.

Next, you will find the other comments organized in the following sections: United States, Europe, The World (Asia, Africa, Middle East…), Latin America and Economy, Business and Technology.

--------------------------------------------------------------------------------------------------------------------

THEME:  The Life in New York

Story: New York City Leads Jump in Homeless

Subject: The number of people sleeping in the homeless shelters of New York City grew in the last few months.

My Comment: More than 50,000 people are sleeping in the homeless shelters of New York City is a huge drama despite this number compared with the population of the city is small.

How many more people are sleeping directly on the street or moving from one place to another because they don’t have a permanent home?

Nobody who has a warm home every night can understand the suffering of the people who have lost all.

Nobody who has food and clean clothes every day can understand the drama of the people who sleep in public shelters sharing the facilities with thousands of others with different behaviors and frequently with terrible frustration.

But the drama of the non-housing is not only a problem of cities like New York. Today a lot of people who don't have a normal income cannot afford rent anywhere in the country. (2013/03/05) 1 Recommendation

Story: Mayor Hits Shelter Rule

Subject: Mayor Michel Bloomberg says the shelters of the city are opened for anybody but the increase of the number of homeless generates problems to his administration.

My Comment: Now the government of New York City is debating about its responsibilities to provide shelter to the homeless people in the city.

We understand the worries of Mayor Michel Bloomberg who commented in a recent interview by radio that the “right to shelter” creates a series of the problems for his administration.

From the other side, we believe that when the Sandy storm hit the city, a lot of people lost their homes and now they don’t have the economic resources for other housing options.

We know that the economy of the poor people didn’t improve during the last years after the crisis of 2008/2009 despite the good pictures that job reports of the US Secretary of Labor showed in last months.

In the case of New York City, if we put together the recent disaster produced by Sandy plus the housing problems that come from 2008 and the low wages that a lot of workers receive monthly, the situation is dramatic.

However, it is reasonable that the New York City Mayor complains when he says: “We have to provide shelter to anybody”, but the open question is about the people –elders, children, jobless workers – who don’t have other alternatives.

To balance the two realities, we believe that New York City has the right to learn about each case of the homeless people who use its facilities through the serious and discreet work of a team of social professionals. Surely, this effort will help some homeless in their searching of other housing alternatives. (2013/03/09)

Story: The Art of Uncertainty

Subject: After Sandy hit New York, its cultural life is reactivating again through different initiatives. 

My Comment: The title “The Art of Uncertainty” associated with New York City immediately reminds us of the cultural projects of the city in the area of the destroyed boardwalk where Sandy hit the east coast.

Till now the areas of the city damaged by Sandy suffer the consequences of the storm, but despite this situation, somebody had the initiative to build a temporary cultural center in the middle of devastation. There, different groups are organizing cultural activities during the current months before the summer.

The news pushes us to ask the following question: How many projects die immediately after a natural disaster?

The cultural center built in the middle of debris shows something different in the case of New York. The spirit of the city continues alive and probably it will help to renovate all that Sandy destroyed with its unlucky visit. (2013/03/09)

--------------------------------------------------------------------------------------------------------------------

THEME:  The investment in emerging markets

Story: Emerging Markets: Should You Bond With Azerbaijan?

Subject: Due to frequent bad experiences investing in different emerging markets, somebody asks about the risk to buy bonds from Azerbaijan and other countries.

My Comment: The question: “Should you invest in bonds of Azerbaijan?” has different answers depending on the risks an investor is able to take.

Similar questions can be made about government papers from Perú, Kazakhstan, Zambia or another country of the group named “emerging markets”.

Always, investments in emerging markets require more than a financial analysis. We have to know about the politics of the country and its historic antecedents.

Through the analysis of historic antecedents it is possible to see how the financial authorities of a country acted before. What was the behavior of the government or the president of the central bank in similar cases of national debts or financial compromises?

Another important factor is the current ideology of the political regime of the country. Some regimes don’t respect international agreements because they assume they have the right to suspend or stop payments when they think the fees and/or interests are high. This situation frequently happens, when the authorities who took a financial compromise fall due to a military revolution or a political unrest.

At all times, investors who invest in emerging markets have to evaluate the possibility of losing all their funds if the authorities of this country change their mind at the moment they have to pay the bonds or other financial obligations. (2013/03/09) 1 Recommendation

--------------------------------------------------------------------------------------------------------------------

THEME:  United States

Story: Jobs Upturn Isn't Enough to Satisfy Fed

Subject: On Friday, the U.S. Secretary of Labor posted the February job report and the unemployment rate.

My Comment: Every month the U.S. Secretary of Labor publishes a job report. In February, the official numbers show the market added 236,000 jobs and the unemployment rate fell to 7.7%.

Through those figures we cannot determine the number of workers who stopped to seek a job during the last months due to frustration they feel after hundred of applications without at least one positive answer.

Additionally, we cannot count the number of “fake” advertisements that fill big job boards and numerous newspaper pages with an unreal picture of the labor market.

With this framework, the 7.7% rate is not a relevant percentage to achieve realistic conclusions about the labor market today. (2013/03/09) 1 Recommendation

Story: Bin Laden's Son-in-Law in Custody in New York – Part 1

Subject: The son-in-law of Bin Laden was captured in the Middle East and he will be judged in a federal court in New York.

My Comment: The news says that U.S. agents have captured Sulaiman Abu Ghaith, a son-in-law of Osama bin Laden and active member of al Qaeda, and the government plans a trial against him in New York.

During the Bush administration this kind of prisoner of the war on terror was categorized as an “enemy combatant”. Now the Obama administration uses the term “unlawful combatant” instead of “enemy combatant”.

However, in both cases according to the Geneva Convention, a prisoner like Sulaiman Abu Ghaith has to be judged by a military tribunal.

If the son-in-law of Osama bin Laden is judged by a court in New York, surely his sentence will be less severe than under martial law.

After all these actions, the question by the citizens who think twice is: Why do U.S. agents make a lot of effort to persecute the terrorists that hit our country if after that we will jail them in a prison for common criminals?  (2013/03/07) 7 Recommendations

Story: Arrest Raises Issue of Where to Try Terror Suspects – Part 2

Subject: Politicians, press and normal citizens debate about where a terror suspect has to be judged.

My Comment: As I said before, from my point of view, the argument that terrorism suspects like Sulaiman Abu Ghaith should face trial in U.S. civilian courts is weak and contradictory.

A terrorist cannot be judged like the guy who stole a chicken or the other one who killed the couple in a passionate crime.

If the son-in-law of Osama bin Laden is considered a common criminal, his lawyer can argue he was kidnapped in another country and in an illegal way transported to U.S. What will be the answer for the prosecutor in this case?

It is incredible that after more than 10 years from September 11, 2001, we haven't learned that “terrorism” is a way to fight against your enemy in a “war” without clear battlefields but with devastating human and physical losses. (2013/03/08)

Story: President Woos GOP to Seek Broad Deal – Part 1

Subject: President Obama started a series of personal conversations with Republicans leaders. The first meeting was a dinner at a Washington restaurant with 12 Republican senators.

My Comment: The story says that President Obama had a dinner at a Washington restaurant with a group of Republican senators.

A private meeting between the President and Republican Senators looks like a good initiative to build “bridges” between politicians of both parties, but this is not enough if after the private conversation the violent fights continue.

I believe this kind of meetings is not only to “build coalitions”. The President has to learn to be a good “listener” paying attention to the opinions of his guests and trying to understand their different points of view in a friendly way.

Now is not the time that the former “community organizer” only wants to be the protagonist at every meeting or activity with politicians of his party or the Republicans.

In a real democracy, everybody can make their own contributions. But the host has to listen to all his guests independently that sometimes the “coalitions” are not possible. (2013/03/07) 1 Recommendation

Story: President Woos GOP to Seek Broad Deal – Part 2

My Comment answering to another member who says that the President will not agree with the GOP: Thank you for your comment, but in my previous comment I didn't say that President Obama has to agree with all the ideas of the GOP.

However, in a democracy, the president has to listen to the representatives of the opposition and all the “voices” who represent the interests of different jurisdictions of the country.

The United States is a federal country and in a lot of states the majority of the constituents really are not Democrats despite the result of the last election.

Probably external observers only see the general results of the elections, but in the United States, we have a diversity of ways of thinking and interests depending on the region, historic roots and other factors.

Definitively, there are states where the majority is Republican and they have the same rights as the rest of the country. For this reason, it is important that the President listens to the Senators who represent these states. (2013/03/07) 2 Recommendations

Story: House Approves Stopgap Budget Deal

Subject: With the initiative of House Speaker John Boehner, the House of Representatives voted a bill to keep the federal government operating till the end of the fiscal year.

My Comment: Something positive! The U.S. House voted to extend spending cuts to keep the federal government operating till the end of the fiscal year on September 30.

According to the news, 50 Democrats joined the majority of Republicans in a voting 267-151, but Nancy Pelosi, Democratic leader, voted against the bill.

When I read this information, two observations come to my mind:
- Why in emergency moments it is never possible for complete agreement between Republicans and Democrats?
- Nancy Pelosi always complains about the “low cooperation” of the Republicans when the White House sends an initiative to Congress, but now she was on the side of “no-cooperation” because House Speaker John Boehner (Republican from Ohio) led the bill. With this mentality, we will never go straight to any solutions. (2013/03/06)

--------------------------------------------------------------------------------------------------------------------

THEME:  Europe

Story: Money-Laundering Suspicion Stalls Europe's Latest Bailout

Subject: Cyprus is a new member of the euro zone with financial problems.

My Comment: Now the news confirms that Cyprus is part of the select "club" of the euro zone nations with financial problems.

If it all continues like this moment, the European authorities will not have anymore possibility to fix the mess that began with the big unrest of the Greeks.

When in 2002, the euro zone started, everybody applauded the initiative of new common currency: the euro.

Today at 11 years after that movement, the happiness and dreams of a strong economic community has became a big headache. And the problem is the return to the previous status is not an easy road. Meanwhile, if the group of sick countries grows, all the community will be contaminated. (2013/03/05) 1 Recommendation

--------------------------------------------------------------------------------------------------------------------

THEME:  The World: Asia, Middle East, Africa…

Story: U.N. Peacekeepers Abducted in Golan Heights

Subject: A Syrian rebel group abducted a convoy of UN peacekeepers who are not involved in actions related to the Syrian civil war. After several days of captivity, the peacekeepers were liberated.

My Comment: During months, the United States and other western countries are trying to help in one or another way the Syrian rebels.

I understand there are different groups of rebels but the abduction of 20 United Nations peacekeepers is a very bad “propaganda” for all the enemies of the Syrian regime.

What will happen the day of the current regime falls? A big civil war will in the end destroy all the country. (2013/03/06) 6 Recommendations

Story: Some Violence Seen as Kenyans Begin Voting

Subject: Kenya confronts a new wave of violence due to national elections.

My Comment: From Kenya, the news talks about “some violence” in the new election. 

According to the information, in the previous election 1,000 people died due to the violence.

This year, again rival gangs killed other people. In this way, the elections never will be a free expression of the voters. (2013/03/04)

--------------------------------------------------------------------------------------------------------------------

THEME: Latin America

Story: Venezuela Leader Chávez Dies at 58 – Part 1

Subject: After a painful and long sickness, Venezuelan President Hugo Chávez died in Caracas. According to several sources, the government is calling for new presidential elections.

My Comment: The day arrived! Everybody who was following the news about the Hugo Chávez’s sickness knew that his last return from Cuba was really the last.

In these circumstances, it is very difficult to make a fair statement because when somebody dies after a painful and long disease probably the right attitude is to keep silence.

However, due to the fact that Venezuelan Hugo Chávez was a very controversial leader who opened a new revolutionary cycle across Latin America, we have to say something.

In between 1945 and 1955, Juan Domingo Perón led a popular right-wing movement in Argentina. He was the mentor of a series of strongmen across all South America and also in Central America.

In 1973, when Perón returned to Argentina after a long exile in “Puerta de Hierro”, Spain, his popular movement was a mix of right-wing and left-wing groups. Since that moment, Latin America was gradually moving to the left.

The next strongman of South America was Hugo Chávez who made close links with Fidel and Raul Castro in the north of Latin America and in the south with the Kirchner couple of Argentina and the presidents of Brazil, Bolivia and Ecuador.

Now the question is: What will be next step for Venezuela? Probably, during a period the Chávez’s followers will retain the power of the country. But I suspect this “period” will be short and confused.

Like Peron in Argentina, Chávez didn’t prepare for his succession and for this reason a lot of his followers will try to be their “heirs”. This situation will generate chaotic reactions from the population and the intervention of his enemies who are waiting for the opportunity to jump into power.

We have to hope the Venezuelans don’t lose the time that Argentina lost trying “stupid” formulas of pseudo-populism.

Venezuela is a country rich in resources: oil, minerals, great beaches and landscapes and with very warm and nice people. They have to accept the “Chavismo” has not more "head" and now it is the time to start a new political cycle with a positive march and national interest. (2013/03/06) 1 Recommendation

Story: Venezuela Leader Chávez Dies at 58 – Part 2

My Comment answering to another member about the corruption and crime in Venezuela: I agree with you that Venezuela has a lot of problems of corruption and crime. I can write a series of stories about my experiences traveling domestic from Caracas to other cities and from other places to Caracas.

From the other side, the Venezuelans have to make a serious study of all the years when Hugo Chávez was in power and they will realize that he didn’t solve the deep social problems of the country.

Like other similar regimes, the “Chavismo” generated special feelings from the population for the leader and anger against his enemies, but this is not the right way to run a country for the road of economic progress and the social justice. With emotions and prejudice nobody can build the foundation of a powerful nation. (2013/03/06) 1 Recommendation

--------------------------------------------------------------------------------------------------------------------

THEME:  Economy, Business and Technology

Story: Google's Motorola Unit to Cut 10% of Workforce – Part 1

Subject: Google announced a new cut of the Motorola Mobility workforce, the mobile phone unit of Motorola that it bought last year.

My Comment: The news says Google is making a new cut of 10% of the workforce of Motorola unit because it is losing money.

How many times, we read similar news from a company that bought another as a bargain with the intention to take its technology and patents as the first priority?

From the beginning of the transaction, it was not clear how Google would integrate Motorola - a hardware company that produces mobile phones - inside of its flow chart of an Internet and software company.

But everybody who has experience about the communication industry knows the real values of Motorola despite during the last year it lost a lot of money. And this was the target of Google.

The problem is that while the dismantlement of the Motorola continues, we never know when and where Google will stop in trying to integrate the good components of the “package” with its Android unit and selling the “wreckage” to a Chinese start-up for a reverse engineering process. (2013/03/08)

Story: Google's Motorola Unit to Cut 10% of Workforce – Part 2

My Comment answering to another member about the problem behind new cut of workforce: Since Google bought Motorola, this is not the first time it cuts resources and changes its plans.

In the technology market, it is very risky to buy products – in this case mobile phones – from a manufacturer that every day changes its plans because after that the customer is the loser.

Sometimes, during the period the manufacturer has a lot of products in stock, it makes great marketing campaigns and from one day to another it announces that it will not continue producing the device or it sells the business unit to an unknown buyer.

During the last decades we saw thousands of cases of people who bought good devices and machines and after that they had to put them in the trash because the manufacturer discontinued the production of those products or sold the business unit to others who don’t assume responsibility for the products that are in the hands of the customers.

In the case of Motorola Mobility, we know that Google has what it wanted: the technology and the patents. About the rest, all is uncertain till now. (2013/03/08)

Story: Google's Motorola Unit to Cut 10% of Workforce – Part 3

My Comment answering to another member who says all this explanation is rhetoric: It is not rhetoric. In the technology industry, when a company doesn’t show a clear and responsible commercial line, buying products from this company is risky.

In the case of the mobile phones, Google through Motorola Mobility is making an “experiment”. It tries to see the reactions of possible customers. And this is not responsible.

To sell smart-phones, digital tablets and computers is very different to sell consumer products that your customer will use only one time and never more. You have to guarantee usability, compatibility, expansion and growth plus a responsible technical service. If you don’t have a clear plan and invest in your business, your products will disappear from market soon. (2013/03/08)

Story: Icahn Talked to Dell Board About Making an Offer

Subject: The investor Carl Icahn made an offer to the Dell board with hard conditions.

My Comment: Carl Icahn is an investor who frequently buys stocks of technology companies.

The problem is he is not tolerant with the point of view of others. For this reason, I don’t believe he will have a good relationship with Michael Dell.  (2013/03/07) 2 Recommendations

Story: EU Fines Microsoft $732 Million

Subject: The European Union fines Microsoft for US$732 million. This is not the first time that the EU regulators punish the software company for a disagreement about the way Microsoft sales its software in Europe.

My Comment: The “wrangles” between the EU regulators and Microsoft come from long time ago. Always the EU charges fines for Microsoft.

In the beginning I was thinking the European Commission was right when it asked Microsoft for some changes in the software this company sells in Europe.

Now, I think differently. I believe the EU has something against Microsoft and other American technology companies due to the way that it prosecutes them.

I don’t have the intention to defend Microsoft because I am not Steve Ballmer. But I believe there are other ways to solve differences with important technology providers that also generate opportunities for the European companies.

I have some questions for the European Commission: Why do you always charge fines instead of solving the differences in a friendly way? Do you fine also Chinese, Indian and Russian companies? I don’t think the companies of these countries only “walk” on the “street” that you “paved” according to your point of view of the technology business. (2013/03/06)

Story: LG Smartphone Offensive Faces Roadblocks

Subject: The Korean electronic company is making a new offensive to expand its market share in the segment of smart-phones.

My Comment: Some years ago, LG was following the steps of Samsung in the mobile phone market and jumping over some corpses of the cell phone industry very fast.

Today, it looks like LG is distant from the leaders of the smart-phone segment and surrounded by new competitors like Huawei Technologies and other Chinese competitors that entered the new segment of intelligent devices with voracity and a lot of power. (2013/03/05)