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Economy grows 7.7% in Q1, slowest in 6 quarters
@ Sep 25, 2011
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http://timesofindia.indiatimes.com/business/india-business/Economy-grows-7-7-in-Q1-slowest-in-6-quarters/articleshow/9803788.cms

TNN | Aug 31, 2011, 04.20AM IST

NEW DELHI: The Indian economy expanded at its slowest pace in six quarters as the impact of rising interest rates, high inflation and global uncertainty took its toll and economists said they expect further moderation in the quarters ahead as economic woes continue in large areas of the developed economies.

But while growth has moderated, India is still one of the fastest growing economies in the world. This is the second successive quarter when growth has slowed below the 8% mark but still remains robust compared to other global economies.

Data released by the Central Statistics Office on Tuesday showed growth in the April-June quarter of the current financial year stood at 7.7% compared to 8.8% in the same year-ago period. In the January-March quarter, the economy expanded 7.8%.

Finance minister Pranab Mukherjee said the data was disappointing but called for more hard work for robust expansion. "There is no room for complacency. We shall have to work hard, government, industry and I am confident that our workers and farmers will contribute and ensure growth with inclusion, Mukherjee told reporters.

The manufacturing sector grew 7.2% in the April-June quarter below the 10.6% registered in the first quarter of 2010-11. The farm sector grew a robust 3.9% in the June quarter, up from 2.4% in the same year-ago quarter. The services sector, which accounts for more than 52% of GDP, held its ground and grew 10% in the June quarter. The construction sector was the laggard, growing 1.2% in the June quarter, down from 7.7% in the 2010-11 first quarter.

The statistics office also lowered the base for the year-ago quarter to 8.8% from the previously announced 9.3% and economists said this had helped project a healthier number. "Growth is poised to decelerate further due to the full impact of the ongoing monetary tightening and the worsening global backdrop, said Rajeev Malik, senior economist at CLSA.

Investment and consumption have slowed as RBI raised interest rates 11 times in the past 18 months to calm price pressures. But inflation still remains elevated at around 9%. The RBI has said that after above-trend growth during 2010-11, growth is expected to decelerate but remain close to the trend of about 8% in 2011-12. If global financial problems amplify and slow down global growth markedly, it would impart a downward bias to the growth projection of around 8% indicated in the monetary policy.

It has said that growth prospects for the year 2011-12 seem to be relatively subdued compared to the previous year. Global uncertainties, high global oil and commodity prices, persistent inflationary pressures, rising input costs, rise in cost of capital due to monetary tightening and slow project execution are some of the factors that are weighing on growth.

CLSA's Malik said the latest GDP details were supportive of another rate hike by the RBI on September 16 when it reviews monetary policy. He said the ongoing moderation in growth suggests that the RBI would likely have to cut its GDP growth forecast of 8%, probably in its mid-year review towards end-October.

Industry groups also voiced concern over the moderation in growth. Ficci said business confidence was now at a two-year low. "If the current trends are any indication, Ficci estimates that the GDP growth in the current fiscal may be in the lower band of 7.5%-8% with some significant downside risks, said Rajiv Kumar, Ficci secretary-general.

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http://www.tradingeconomics.com/india/gdp-growth

India GDP Growth Rate

The Gross Domestic Product (GDP) in India expanded 7.7 percent in the second quarter of 2011 over the previous quarter. Historically, from 2000 until 2011, India's average quarterly GDP Growth was 7.45 percent reaching an historical high of 11.80 percent in December of 2003 and a record low of 1.60 percent in December of 2002. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. This page includes: India GDP Growth Rate chart, historical data, forecasts and news. Data is also available for India GDP Annual Growth Rate, which measures growth over a full economic year.

724a-India GDP.png

India's Economy Grows 7.7% in Q2

Published: 8/30/2011 11:37:59 AM    By: BBC

India's economy grew 7.7% in the three months from April to June, compared with the same period of 2010.

It was India's weakest growth for six quarters, but still better than had been expected.

The gross domestic product (GDP) growth figure from the finance ministry compares with the annual rate of 7.8% in the first three months of the year.

The slowdown is expected to continue as India's central bank continues to raise interest rates to control inflation.

The Reserve Bank of India (RBI) has raised interest rates 11 times since March 2010. The next rate-setting meeting is on 16 September, when many economists expect rates will rise again.

Inflation in July was 9.22%, which was well above the RBI's target rate of 4% to 4.5%.

The sector breakdown showed that the construction sector had been one of the worst-performing parts of the economy.

Construction grew at an annual rate of 1.2% in the second quarter, down from 8.2% in the previous quarter, as rising interest rates and delays in planning approvals held up building projects.

Farm output rose 3.9%, which was down from the previous quarter but above the level of 2.4% in the same period last year.

The manufacturing sector grew 7.2%, an improvement from the previous quarter, but well below the 10.6% in the second quarter of 2010.

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724b) Rupee suffers second-biggest fall in history

http://timesofindia.indiatimes.com/business/india-business/Rupee-suffers-second-biggest-fall-in-history/articleshow/10083793.cms

TNN | Sep 23, 2011, 12.22AM IST

MUMBAI: The rupee suffered its second biggest fall in history as the US dollar continued to be sought by investors as a safe asset and expectations of foreign investor inflows were belied. The local currency dropped by Rs 1.24 against the dollar to close at 49.58 and is now expected to further weaken to below Rs 50 against the dollar.

Those planning an overseas vacation will have to spend nearly 10% more than what they would have set aside three months back for their dollar purchase. The weak rupee will make all imports, including oil, more expensive and add to inflationary pressures. Exporters, however, stand to gain as they will now get more rupees for their dollars. The fall in rupee value will also encourage overseas workers to send more money home and park them in domestic deposits.

724a-Indian Rupee.png

Forex dealers said that the worst might still be ahead with the three-month forward trading at 50.21 in offshore markets as compared to 49 on Wednesday. Although the rupee is not convertible overseas investors hedge their exposure to rupee in the overseas through transaction in non-deliverable forwards - a future market where there is no delivery of rupee currency, but the exchange difference between spot and future rupee is settled in dollars.

Dealers said that RBI had intervened in a small way after the domestic currency fell below 49.2 but it was not enough to reverse its fall. In Delhi, finance minister Pranab Mukherjee said that the central bank would intervene if the volatility increased. He however denied that the central bank had already sold dollars.

The US dollar has soared in value against most currencies despite the downgrade because the European crisis has made US treasuries a relatively safe investment. For several weeks now Euro zone has been on the brink of a crisis. Default by any of the governments would translate into a banking crisis since European banks hold sizeable foreign debt. Fears of bank defaults has added to illiquidity in the euro zone.

Bankers said that the rupee is worst performing Asian currency having fallen nearly 10% in value in the last three months. The Reserve Bank of India has foreign exchange reserves amounting to $316bn which makes it the seventh largest. However, most of these reserves have been accumulated as a result of RBI buying dollars brought in by portfolio investors. The central bank therefore considers the forex reserves as a liability which may be required if foreign investors chose to exit.

More importantly India is the only country with sizeable reserves and a current account deficit. Also this year the country's total external debt has soared beyond the size of its forex reserves. All these factors add to the weakness of the rupee although prospects for the economy remain relatively good.

"The persistence of high inflation over a number of years is bound to impact the economy's competitiveness, as already evidenced by the rise in the real exchange rate. Furthermore, latest estimates of India's purchasing power parity based exchange rate also show that one needs substantially more local currency to purchase an internationally comparable set of goods" said Taimur Baig, chief economist, Deutsche Bank in a report this week.

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History of Rupee in Wikipedia:

http://en.wikipedia.org/wiki/History_of_the_rupee

724a-Rupee graph.png

 

http://bits.wikimedia.org/skins-1.17/common/images/magnify-clip.png

INR Value against USD

Year

Exchange rate (rupees per US$)

1952

5.000

1970

7.576

1975

8.409

1980

7.887

1985

12.369

1990

17.504

1995

32.427

2000

45.000

2006

48.336

2007 (Oct)

38.48

2008 (June)

42.51

2008 (October)

48.88

2009 (October)

46.37

2010 (January 22)

46.21

2011 (April)

44.17

2011 (September 21)

48.24

2011 (September 22)

49.47

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Dow falls 391 on worldwide fears about economy
@ Sep 25, 2011
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http://finance.yahoo.com/news/Dow-falls-391-on-worldwide-apf-3012705529.html?x=0&sec=topStories&pos=5&asset=&ccode=

Wall Street and world markets fall sharply; Dow loses 391 as investors focus on recession fear

724b-wall street.png

A Specialist works on the floor of the New York Stock Exchange, Thursday, Sept. 22, 2011, in New York. (AP Photo/ Louis Lanzano)

Francesca Levy, AP Business Writer, On Thursday September 22, 2011, 6:10 pm EDT

NEW YORK (AP) -- Investors began giving in to fears Thursday that a global recession is already under way, and stock markets shuddered around the world. Selling started in Asia, picked up speed in Europe and sent Wall Street near its worst finish of the year.

The Dow Jones industrial average lost 391 points and at one point was down more than 500, a return to the volatility that gripped the market this summer.

One financial indicator after another showed that investors are losing hope that the global economy can keep growing. The price of oil and metals such as copper, which depend on economic demand, fell sharply. Traders bought Treasury bonds and the dollar for safety.

FedEx, a company that ships so many goods it is considered a barometer of the U.S. economy, had to lower its earnings forecast for the year because customers are putting off purchases of electronics and other gadgets from China.

The Dow fell 391.01 points, or 3.5 percent, and closed at 10,733.83. The selling was not just steep but broad: Nineteen stocks on the New York Stock Exchange fell for every one that rose. At one point, the Dow was down more than 500 points.

"Markets rely on confidence and certainty. Right now there is neither," said John Canally, an economic strategist at LPL Financial, an investment firm in Boston.

It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown -- a bid to lower long-term interest rates and get people and companies to spend more money.

Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies.

"The probability of going back into recession is higher now than at any point in the recovery," said Tim Quinlan, an economist at Wells Fargo. He put his odds of a recession at 35 percent.

Christine Lagarde, the head of the International Monetary Fund, said the world economy was "entering a dangerous phase." She told an annual meeting of the IMF and World Bank that nations need credible plans to get their debt under control.

In the United States, investors poured money into American government debt, which they see as less risky than stocks even as the nation wrestles with how to tame its long-term budget problems.

The yield on the 10-year Treasury note hit 1.71 percent -- the lowest since the Federal Reserve Bank of St. Louis started keeping daily records half a century ago. It was 3.66 percent as recently as February, when the economic forecast was brighter.

Yields fall as investors buy bonds and send their prices higher. Small yields are a sign that investors are just looking for a safe place to park their cash.

"They want to get their money back," said Guy LeBas, chief fixed income strategist at Janney Capital Markets. "How much they earn is secondary."

Besides U.S. bonds, investors bought American dollars. The dollar rose to an eight-month high against the euro because of fears that Europe, staggered by debt, will bear the worst of a global downturn.

The Dow almost matched its lowest close of the year, 10,719 on Aug. 10. The stock market was seized by volatility last month, and at one point the Dow strung together four consecutive days of 400-point moves up or down.

In a sign of what a rocky year it has been for the stock market, Thursday's decline isn't even close to the biggest in 2011. The Dow fell 634 points on Aug. 8, 519 points on Aug. 10 and 512 points on Aug. 4.

It would have to fall 485 more points to reach the traditional definition of a bear market -- a 20 percent decline. The Dow was at 12,810 on April 29.

The Standard & Poor's 500 index, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3 percent for the day.

To get the economy going, President Barack Obama has proposed a $447 billion package of tax cuts, public works projects and benefits for the unemployed, but it faces major opposition in the Republican-controlled House.

While the market was falling Thursday, the president stood in front of an aging bridge that connects Ohio and Kentucky. He exhorted Republicans: "Help us put this country back to work. Pass this jobs bill right away."

Top Republicans in Congress accused Obama of trying to score political points. If Congress fails to pass the jobs bill, it would leave the Fed action this week as the only major new initiative designed to help the economy.

The Fed announced Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans. The plan is known as Operation Twist, a nod to a similar approach taken by the Fed during the time of Chubby Checker in the early 1960s.

The central bank hopes that if people and businesses are able to borrow money more cheaply, they will spend throughout the economy and give it a lift.

Still, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees "significant downside risks to the economic outlook," including volatility in overseas markets.

"In financial markets, the thinking seems to be: If the Fed is worried, the rest of us ought to be really worried," said Brian Gendreau, senior investment strategist at Cetera Financial Group.

Economists say the Fed action may help, but probably not much.

"Counting on the Fed to get us out of this is a mistake," said Uri Landesman, president of Platinum Partners, a hedge fund.

The price of commodities like oil and metals dropped steeply because investors worried that demand for them would fall if the world economy keeps slowing or falls into recession again.

Oil dropped more than $5 a barrel to $80.51, its lowest settling price since Aug. 9. The selling reflected concerns that world demand for oil will fall if the economy slows.

"This is just sudden and strong confirmation that the economy is not improving," said Michael Lynch, president of Strategic Energy & Economic Research. "Energy demand is going to be very poor."

The price of silver fell 9.6 percent. And gold fell 3.7 percent. Earlier this summer, gold set one record high after another. Investors wanted it both as a safe place for their money and to cash in on what seemed an unstoppable run. Gold, which was as high as $1,907 two weeks ago, finished at $1,741.70.

Stocks fell sharply even though the New York Stock Exchange executed a rule designed to smooth trading. The exchange invoked Rule 48, which limits how much information is released about stock trades.

Stock volatility rose anyway. The VIX, an index that measures investor fear, rose about 11 percent to 41.35, double the normal level.

It's common for stocks to move dramatically after the Fed makes a big announcement. But the number of trades that can be made instantly has also gone up in recent years, causing big swings to happen more quickly. Computer systems are programmed to analyze charts, capitalize on tiny changes in price and execute trades with no human intervention.

"These major moves are much more compressed, time-wise, than in the past," Landesman said. "A 5 percent move can now happen in a couple of minutes as opposed to a week or two."

Some analysts called the heavy selling an overreaction.

"The facts show we are not in a recession, and we are not borderline recession," Chris Rupkey, chief financial economist with Bank of Tokyo-Mitsubishi, wrote in a report Thursday.

The U.S. economy grew at an annual rate of 0.7 percent in the first half of this year, the slowest growth since the end of the Great Recession in June 2009. It would take much healthier growth, 4 or 5 percent, to bring unemployment down significantly.

The government reported Thursday that fewer Americans applied for unemployment benefits last week. But the decline wasn't nearly enough to raise any real hope that the job market is getting better.

Asian stocks were hammered to start the world's trading. The Nikkei index in Japan fell 2.1 percent. The main stock averages fell 2.8 percent in China, 2.9 percent in South Korea, 2.6 percent in Australia and almost 5 percent in Hong Kong.

Europe fared even worse. The stock market fell 5.3 percent in France, 5 percent in Germany and 4.7 percent in Britain.

AP Economics Writers Martin Crutsinger, Christopher S. Rugaber and Paul Wiseman in Washington and AP Business Writer Matthew Craft and AP Energy Writer Chris Kahn in New York contributed to this report.

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Diesel cars give petrol cousins a run for their money
@ Sep 25, 2011
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http://timesofindia.indiatimes.com/business/india-business/Diesel-cars-give-petrol-cousins-a-run-for-their-money/articleshow/9954147.cms

Malini Goyal, ET Bureau | Sep 12, 2011, 12.30PM IST

NEW DELHI: They may be pricier, but cheaper fuel has resulted in sales of diesel cars steadily outstripping their petrol counterparts ever since the price differential widened in May. With diesel cheaper by an average of 53% across the major metros, buyers are making a beeline for cars powered by these engines.

Some 56% of all compacts sold in August were diesel cars. The figure has steadily risen from 39% in July 2010 to 45% in January to 51% in June. Compacts, which range from the Chevrolet Beat to the Maruti Swift, Volkswagen Polo and Ford Figo, account for 70% of all cars sold.

724c-diesel car.png

With diesel cheaper by an average of 53% across the major metros, buyers are making a beeline for cars powered by these engines.

It's a similar story in the sedan segment comprising models such as the Honda City, Volkswagen Vento, Maruti SX4, Ford Fiesta, Hyundai Verna and Chevrolet Aveo. A year ago, diesel vehicles comprised just 28% of the car market. That figure would be as high as 64% now, according to estimates by industry insiders.

"Nobody anticipated anything like this. How do you prepare for that kind of swing?" asks Mayank Pareek, marketing sales executive officer, Maruti Suzuki.

But prepare they have to. When the price difference between diesel and petrol was 9 last year, 55% of Maruti's customers preferred the diesel option in the segments in which India's largest car maker offered that option. Today, when the difference between petrol and diesel prices is more than 20, 85% of them are opting for the diesel version.

In the April to August period, Maruti sold about 4 lakh cars, with diesel models accounting for a little over a fifth of those sales.

Maruti offers diesel variants in four of its 12 models - the Swift, SX4, Ritz and Swift DZire. As Suzuki isn't best known for diesel technology, it has partnered with Fiat for engine supply. In 2011 so far, three-fourths of the Swifts, three-fifths of the Swift DZires and two-thirds of the Ritz models sold have been diesel variants.

In comparison just two-thirds of Swifts and under half of Ritz cars sold a year ago were diesel models.

The shift has been more dramatic for Ford India. Till around December 2010, around 55% of the Figo's sales were of diesel versions. That figure has now shot up to 75%.

VW, which bet on diesel early on in India, is reaping the benefits. All its cars in India are available in diesel, barring the Beetle. In fact, VW's sedan Passat is available only in diesel.

At the other end of the spectrum, around 70% of VW Polo cars sold a year ago were petrol. Today the split is 50:50. "I see a slightly further skew towards diesel. Diesel technology has evolved so much that I see a preference for diesel even when the subsidy is reduced," says Neeraj Garg, director, Volkswagen (passenger cars) India.

Toyota has just launched the diesel variants of the Etios sedan and small car Liva. "We have seen the market dynamics changing and the rapid shift toward diesel cars. Customers are gradually buying diesel despite the higher ticket price," says Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar. The share of Toyota's diesel vehicles in its total sales in India has grown to over 70% in the past two months.

For Hyundai India the swing has not been as dramatic. Before the price hike, the diesel to petrol ratio stood at 31:69; the diesel portion has now climbed up to 39%. This may partly have to do with the fact that some of the volume-led models such as the Santro and i10 are not available in diesel. (Hyundai offers diesel in the i20 and Verna).

Hyundai so far has been importing diesel engines but that is set to change in two years. The company is building a diesel engine plant with a capacity of 200,000 units, which will be ready by 2013.

General Motors recently launched a diesel variant of its small car Beat. The diesel engine was specially developed keeping India in mind.

One of the companies badly affected by the diesel swing is Honda-SIEL, which does not have any diesel offering in its portfolio in India.

Clearly, car makers have to take a call on whether an investment for manufacturing diesel engines is an imperative. A month ago, the finance minister quashed speculation about dual pricing of diesel to make it more expensive for car owners.

Yet, manufacturers are not fully convinced. Maruti, for instance, needs to decide fast whether it needs to invest in another diesel plant. Its diesel engine plant in Manesar has an engine capacity of 2.9 lakh units, and there is the joint venture with Fiat. "Investing in a plant is a long-term decision. We need some sort of clarity on what our auto fuel policy road map will be like," says Pareek.

The sharp difference in prices is resulting in two phenomena: juicy offers on petrol cars and long waiting periods for the diesel ones. Honda, for instance, has resorted to cutting prices - the new variant of the Jazz is priced lower by 1.62 lakh. Meantime, VW's diesel Vento has a six-eight week waiting period and for the Polo it is four-six weeks. For the Maruti Swift diesel, the waiting period has gone up to over six months.

Manufacturers are doing what they can to cater to what the consumer wants. Ford's plant is built to have the flexibility to switch between petrol or diesel variants. "We are able to swing between the two in our plants. But our suppliers cannot do it that easily," says Michael Boneham, MD, Ford India.

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For petrol, Indians shell out the most in the world

http://timesofindia.indiatimes.com/india/For-petrol-Indians-shell-out-the-most-in-the-world/articleshow/10023345.cms

TNN Sep 18, 2011, 01.24am IST

For all those already reeling under a series of hikes in petrol prices on the back of zooming inflation, here is some news that will enrage you further. Data of retail prices in countries across the world shows that Indian prices are amongst the highest in the world at current exchange rates. And, if you even out the differences in purchasing power of different currencies then Indian petrol and diesel prices become the highest barring some tiny, remote countries.

Even a simple comparison of retail prices in different countries by converting them to Indian rupee reveals that petrol in India is more expensive than 98 other countries. Among 157 countries for which data is available, those belonging to the Organization of Petroleum Exporting Countries have the lowest price.

724c-petrol prices.png

In term of Purchasing Power Parity(PPP) only 3 countries(Timor-Leste, Malawi and Eritrea) have higher petrol prices than in India.

The Organisation of Petroleum Exporting Countries (OPEC) are the ones that have huge oil reserves and are its main producers. So, petrol is cheapest in Venezuela at just Rs 1.14 per litre. In Iran it sells for Rs 4.8 per litre. The second group comprises of countries like the US, Iraq, Indonesia, etc, where minimal tax is levied on petroleum products. They also have lower prices than India. A litre of petrol costs Rs 42.82 in the US.

India tops the group of countries which have moderate to high tax regimes. Others in the group are the EU countries and others like Singapore, New Zealand, Thailand and Brazil. At Rs 69.90 -the average price of petrol in 24 Indian cities -Indian prices are now comparable to price of petrol in EU. Romania has EU's cheapest petrol at Rs 72.33 per litre.

However, price comparisons done like this - by converting into one currency using the exchange rate - are deceptive. Petrol prices equivalent to Rs 96.39 in the UK might not pinch the English in the same way as Rs 69.90 will clobber Indians.

So, how does one compare prices across countries? This is done by the widely used Purchasing Power Parity (PPP) method. Differences in purchasing powers are evened out and relatively real price comparisons emerge. Using PPP prices, petrol is by far much more costlier in India than most countries. PPP price of petrol in India is $3.95, lower than just three small countries - Timor-Leste, Malawi and Eritrea.

Petrol costs less than a dollar in the OPEC and USA while in most of Europe, Russia, Japan, China and the Americas it is priced between one to two international dollars by PPP calculations. Despite huge subsidies, diesel is more expensive in India than 136 other countries. Costing $2.46 at PPP, India is 23rd most expensive in diesel prices. Can anybody explain why Indians have to bear this unbearable burden?

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A game of catch-up
@ Sep 25, 2011
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http://www.economist.com/node/21528979

The shift in economic power from West to East is accelerating, says John O’Sullivan. The rich world will lose some of its privileges

Sep 24th 2011 | from the print edition

724d-catchup game.png

QUARRY BANK MILL is a handsome five-storey brick building set in the valley of the river Bollin at Styal, a small English village a few miles south of Manchester. It was built in 1784 by Samuel Greg, a merchant, who found profit in supplying cotton thread to Lancashire’s weavers. The raw cotton shipped from America’s slave plantations was processed on the latest machinery, Richard Arkwright’s water frame. Later Greg extended the factory and installed coal-fired steam engines to add to the water power from the Bollin. All this gave a huge boost to productivity. In 1700 a spinster with a pedal-driven spinning wheel might take 200 hours to produce a pound of yarn. By the 1820s it would take her around an hour.

Greg’s mill was part of a revolution in industry that would profoundly alter the world’s pecking order. The new technologies—labour-saving inventions, factory production, engines powered by fossil fuels—spread to other parts of western Europe and later to America. The early industrialisers (along with a few late developers, such as Japan) were able to lock in and build on their lead in technology and living standards.

The “great divergence” between the West and the rest lasted for two centuries. The mill at Styal, once one of the world’s largest, has become a museum. A few looms, powered by the mill’s water wheel, still produce tea towels for the gift shop, but cotton production has long since moved abroad in search of low wages. Now another historic change is shaking up the global hierarchy. A “great convergence” in living standards is under way as poorer countries speedily adopt the technology, know-how and policies that made the West rich. China and India are the biggest and fastest-growing of the catch-up countries, but the emerging-market boom has spread to embrace Latin America and Africa, too.

724d-GDP per person.png

And the pace of convergence is increasing. Debt-ridden rich countries such as America have seen scant growth since the financial crisis. The emerging economies, having escaped the carnage with only a few cuts and grazes, have spent much of the past year trying to check their economic booms. The IMF forecasts that emerging economies as a whole will grow by around four percentage points more than the rich world both this year and next. If the fund is proved right, by 2013 emerging markets (on the IMF’s definition) will produce more than half of global output, measured at purchasing-power parity (PPP).

One sign of a shift in economic power is that investors expect trouble in rich countries but seem confident that crises in emerging markets will not recur. Many see the rich world as old, debt-ridden and out of ideas compared with the young, zestful and high-saving emerging markets. The truth is more complex. One reason why emerging-market companies are keen for a toehold in rich countries is that the business climate there is far friendlier than at home. But the recent succession of financial blow-ups in the rich world makes it seem more crisis-prone.

The American subprime mess that turned into a financial disaster had the hallmarks of a developing-world crisis: large capital inflows channelled by poorly regulated banks to marginal borrowers to finance a property boom. The speed at which bond investors turned on Greece, Ireland and then Portugal was reminiscent of a run on an overborrowed emerging economy.

Because there is as yet no reliable and liquid bond market in the emerging world to flee to, scared investors put their money into US Treasury bonds and a few other rich-country havens instead. So few are the options that even a ratings downgrade of American government debt in August spurred buying of the derided Treasuries. Indeed the thirst in emerging markets for such safe and liquid securities is one of the deeper causes of the series of crises that has afflicted the rich world. Developing countries bought rich-world government bonds (stored as currency reserves) as insurance against future crises. Those purchases pushed down long-term interest rates, helping to stoke a boom in private and public credit.

Today’s faltering GDP growth is a hangover from that boom and adds to the sense of malaise in the rich world. Many households in America, Britain and elsewhere have taken to saving hard to reduce their debts. Those with spare cash, including companies, are clinging on to it as a hedge against an uncertain future. A new breed of emerging-market multinational firms, used to a tough business climate at home, seem keener to invest in the rich world than most Western firms, which have lost their mojo.

Grandeur and decline

People who grew up in America and western Europe have become used to the idea that the West dominates the world economy. In fact it is anomalous that a group of 30-odd countries with a small fraction of the world’s population should be calling the shots. For most of human history economic power has been determined by demography. In 1700 the world’s biggest economy (and leading cotton producer) was India, with a population of 165m, followed by China, with 138m. Britain’s 8.6m people produced less than 3% of the world’s output. Even in 1820, as the industrial revolution in Britain was gathering pace, the two Asian giants still accounted for half the world’s GDP.

The spread of purpose-built manufactories like Quarry Bank Mill separated economic power and population, increasingly so as the West got richer. Being able to make a lot more stuff with fewer workers meant that even a small country could be a giant economic power. By 1870 the average income in Britain was six times larger than in India or China. But by the eve of the first world war Britain’s income per head had been overtaken by that of America, the 20th century’s great power.

America remains the world’s biggest economy, but that status is under threat from a resurgent China. With hindsight, its change in fortune can be traced to 1976, the year of America’s bicentennial and the death of Mao Zedong. By then income per person in China had shrunk to just 5% of that in America, in part because of Mao’s extreme industrial and social policies.

The average Indian was scarcely richer than the average Chinese. Both China and India had turned inward, cutting themselves off from the flow of ideas and goods that had made Japan and other less populous Asian economies richer. India’s economy, like China’s, was largely closed. Huge swathes of industry were protected from foreign competition by high import tariffs, leaving them moribund.

China was first to reverse course. In 1978 Deng Xiaoping won approval for a set of economic reforms that opened China to foreign trade, technology and investment. India’s big liberalisation came a little later, in 1991. The GDP of China and India is many times bigger now than it was in the mid-1970s. In both economies annual growth of 8% or more is considered normal. Average living standards in China are still only a sixth and in India a fourteenth of those in America at PPP exchange rates, but the gap is already much smaller than it was and is closing fast.

Moreover, the great convergence has spread beyond India and China. Three-quarters of biggish non-oil-producing poor countries enjoyed faster growth in income per person than America in 2000-07, says Arvind Subramanian, of the Peterson Institute for International Economics, in his new book, “Eclipse: Living in the Shadow of China’s Economic Dominance”. This compares with 29% of such countries in 1960-2000. And those economies are catching up at a faster rate: average growth in GDP per person was 3.3 percentage points faster than America’s growth rate in 2000-07, more than twice the difference in the previous four decades.

If emerging markets keep on growing three percentage points a year faster than America (a conservative estimate), they will account for two-thirds of the world’s output by 2030, reckons Mr Subramanian. Today’s four most populous emerging markets—China, India, Indonesia and Brazil—will make up two-fifths of global GDP, measured at PPP. The combined weight in the world economy of America and the European Union will shrink from more than a third to less than a quarter.

Economic catch-up is accelerating. Britain’s economy doubled in size in the 32 years from 1830 to 1862 as increased productivity spread from cotton to other industries. America’s GDP doubled in only 17 years as it overtook Britain in the 1870s. The economies of China and India have doubled within a decade.

This is cause for optimism. An Indian with a basic college education has access to world-class goods that his parents (who might have saved for decades for a sputtering scooter) could only have dreamed of buying. The recent leap in incomes is visible in Chinese cities, where the cars are new but the bicycles look ancient, and in the futuristic skyline of Shanghai’s financial district.

China is still a fairly poor country but, by dint of its large population, it is already the world’s second-largest economy measured in current dollars. It may overtake America as the world’s leading economy within a decade (see box), a prospect that has given rise to many concerns in that country. More generally, there are worries about what the ascendancy of emerging markets would mean for jobs, pay and borrowing costs in the rich world.

The first worry is about direct competition for things that are in more or less fixed supply: geopolitical supremacy, the world’s oil and raw materials, the status and perks that come with being the issuer of a trusted international currency. For most people, most of the time, their country’s ranking in terms of military power is not a big issue. The emerging world’s hunger for natural resources, on the other hand, has made rich-world consumers palpably worse off by pushing up the prices of oil and other commodities. The yuan’s increased use beyond China’s borders is a (still distant) threat to the dollar’s central role in trade and international finance, but if the dollar were eventually shoved aside, it would make Americans poorer and raise the cost of their borrowing.

A second set of anxieties relates to job security and pay. Ever stronger trade links between rich and would-be rich countries will mean a reshuffle in the division of labour around the world, creating new jobs and destroying or displacing existing ones. Low-skilled manufacturing and middle-skilled service jobs that can be delivered electronically have been outsourced to cheaper suppliers in China, India and elsewhere (indeed, China is now rich enough to be vulnerable to losing jobs to Vietnam and Indonesia). The threat of outsourcing puts downward pressure on pay, though most American studies suggest that trade accounts for only a small part of the increase in wage inequality.

A third concern, which is at odds with the first two, is that the emerging markets are prone to crises that can cause a still-fragile world economy to stumble. Sluggish GDP growth in the rich world means developing countries have to fall back on internal spending, which in the past they have not managed well. It raises the risks of the overspending, excessive credit and inflation that have spurred past emerging-market crises. Even if crises are avoided, emerging markets are prone to sudden slowdowns as they become richer and the trick of shifting underemployed rural migrants to urban jobs becomes harder to repeat. The rapid growth rates of the recent past are unlikely to be sustained.

Status anxiety

Few forecasters expect America to be a poorer place in ten or 20 years’ time than it is now. The present may be grim, but eventually the hangover from the financial crisis will fade and unemployment will fall. What rich Western countries face is a relative economic decline, not an absolute fall in average living standards (though a few of their citizens may become worse off). That matters politically, because most people measure their well-being by how they are doing in relation to others rather than by their absolute level of income.

The effect of the loss of top-dog status on the well-being of the average American is unlikely to be trivial. Britain felt similar angst at the beginning of the 20th century, noting the rise of Germany, a military rival. It seemed stuck with old industries, such as textiles and iron, whereas Germany had advanced into fields such as electricals and chemicals. That Britain was still well off in absolute terms was scant consolation. The national mood contrasted starkly with the triumphalism of the mid-19th century, says Nicholas Crafts of Warwick University. A wave of protectionist sentiment challenged the free-trade consensus that had prevailed since 1846. It was seen off, but not before it had split the Tory party, which lost the 1906 election to the Liberals.

No country, or group of countries, stays on top forever. History and economic theory suggest that sooner or later others will catch up. But this special report will caution against relying on linear extrapolation from recent growth rates. Instead, it will suggest that the transfer of economic power from rich countries to emerging markets is likely to take longer than generally expected. Rich countries will be cursed indeed if they cannot put on an occasional growth spurt. China, for its part, will be lucky to avoid a bad stumble in the next decade or two. Emerging-market crises have been too quickly forgotten, which only makes them more likely to recur.

Education and social security will have to adapt to a world in which jobs continue to be created and displaced at a rapid rate. The cost of oil and other commodities will continue to rise faster than prices in general, shifting the terms of trade in favour of resource-rich countries and away from big consumers such as America. The yuan will eventually become an international currency and rival to the dollar. The longer that takes, the less pressure America will feel to control its public finances and the likelier it is that the dollar’s eclipse will be abrupt and messy.

The force of economic convergence depends on the income gap between developing and developed countries. Going from poor to less poor is the easy part. The trickier bit is making the jump from middle-income to reasonably rich. Can China and others manage it?

_______________________________________

The celestial economy

http://www.economist.com/node/21528591

By 2030 China’s economy could loom as large as Britain’s in the 1870s or America’s in the 1970s

Sep 10th 2011 | from the print edition

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1870-Britain/Germany/France

1973-USA/Japan/Germany

2010-US/China/Japan

2030-China/USA/India

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Topics- PC, Internet & Information Technology
UNIVAC: the troubled life of America's first computer
@ Sep 25, 2011
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http://arstechnica.com/tech-policy/news/2011/09/univac-the-troubled-life-of-americas-first-computer.ars/1

By Matthew Lasar | Published 2 days ago

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It was November 4, 1952, and Americans huddled in their living rooms to follow the results of the Presidential race between General Dwight David Eisenhower and Adlai Stevenson, Governor of Illinois. We like to think that our time is a unique moment of technological change. But the consumers observing this election represented an unprecedented generation of early adopters, who watched rather than listened to the race on the radio. By that year they had bought and installed in their homes about 21 million copies of a device called the television—about seven times the number that existed just three years earlier.

On that night they witnessed the birth of an even newer technology—a machine that could predict the election's results. Sitting next to the desk of CBS Anchor Walter Cronkite was a mockup of a huge gadget called a UNIVAC (UNIVersal Automatic Computer), which Cronkite explained would augur the contest. J. Presper Eckert, the UNIVAC's inventor, stood next to the device and explained its workings. The woman who actually programmed the mainframe, Navy mathematician Grace Murray Hopper was nowhere to be seen; for days her team had input voting statistics from earlier elections, then wrote the code that would allow the calculator to extrapolate the contest based on previous races.

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J. Presper Eckert and CBS's Walter Cronkite pondering the UNIVAC on election night, 1952.

To the disquietude of national pollsters expecting a Stevenson victory, Hopper's UNIVAC group predicted a huge landslide for Eisenhower, and with only five percent of the results. CBS executives didn't know what to make of this bold finding. "We saw [UNIVAC] as an added feature to our coverage that could be very interesting in the future," Cronkite later recalled. "But I don't think that we felt the computer would become predominant in our coverage in any way."

And so CBS told its audience that UNIVAC only foresaw a close race. At the end of the evening, when it was clear that UNIVAC's actual findings were spot on, a spokesperson for the company that made the machine was allowed to disclose the truth—that the real prediction had been squelched.

"The uncanny accuracy of UNIVAC's prediction during a major televised event sent shock waves across through the nation," notes historian Kurt W. Beyer, author of Grace Hopper and the Invention of the Information Age. "In the months that followed, 'UNIVAC' gradually became the generic term for a computer."

That's putting it mildly. By the late 1950s the UNIVAC and its cousin, the ENIAC, had inspired a generic sobriquet for anyone with computational prowess—a "BRAINIAC." The term became so embedded in American culture that to this day your typical computer literacy quiz includes the following multiple choice poser:

Which was not an early mainframe computer?

  • ENIAC
  • UNIVAC
  • BRAINIAC

But the fact that this question is even posed is testimony to the other key component of UNIVAC's history—its famous trajectory was cut short by a corporation with a much larger shadow: IBM. The turbulent life of UNIVAC offers interesting lessons for developers and entrepreneurs in our time.

The machines and their teams

During the Second World War, two teams in the United States were deployed to improve the calculations necessary for artillery firing and strategic bombing. Hopper worked with Harvard mathematician Howard Aiken, whose Mark I computer performed computations for the Navy. John Mauchly and J. Presper Eckert's Electronic and Numerical Integrator and Computer (ENIAC) rolled out rocket firing tables for the Army.

While both groups served extraordinarily during the war, their leaders could not have thought about these devices more differently. Aiken viewed them as scientific tools. Mauchly saw their potential as commercial instruments.

After the conflict, Aiken obstinately lobbied against the commercialization of computing, inveighing against the "foolishness with Eckert and Mauchly," at computer conferences. Perhaps there was a need for five or six machines in the country, he told associates; no more. But Aiken's assistant Hopper was fascinated by the duo—the former a graduate student and the latter a professor of electronics.

Eckert was "looking way ahead," Hopper recalled. "Even though he was a college professor he was visualizing the use of these computers in the business and industrial area." The University of Pennsylvania sided with Aiken. The college offered Eckert and Mauchly tenured positions, but only on the condition that they sign patent releases for all their work. Both inventors resigned from the campus and in the spring of 1946 formed the Electronic Control Company, which eventually became the Eckert-Mauchly Computer Corporation.

Over the course of five years, the two developers rethought everything associated with computational machines. The result was a device that went way beyond the age of punch card calculators associated with IBM devices. The UNIVAC, unveiled in 1951, was the fruit of this effort.

"No one who saw a UNIVAC failed to see how much it differed from existing calculators and punched card equipment," writes historian Paul E. Ceruzzi:

It used vacuum tubes—thousands of them. It stored data on tape, not cards. It was a large and expensive system, not a collection of different devices. The biggest difference was its internal design, not visible to the casual observer. The UNIVAC was a "stored program" computer, one of the first. More than anything else, that made it different from the machines it was designed to replace.

These characteristics would enable the UNIVAC to perform thousands more operations per second than its closest rival, the Harvard Mark II. And its adaptation of the entertainment industry's new tool—magnetic recording tape—would allow it to store vastly more data. UNIVAC was quickly picked up by the US Census Bureau in a $300,000 contract, which was followed by another deal via the National Bureau of Standards. Soon a racetrack betting odds calculator company called American Totalisator signed on, purchasing a 40 percent interest in the company.

You could see and hold it

But Eckert-Mauchly could not handle this volume of work on its own. Its principals drastically underbid on key contracts. After a plane crash killed the corporation's board president, the inventors and Totalisor clashed over the viability of the project. The duo then went to IBM for backing and met with Thomas Watson Junior and Senior, but could not convince the elder executive of the UNIVAC's viability.

"Having built his career on punch cards," Watson Jr. later reflected, "Dad distrusted magnetic tape instinctively. On a punch card, you had a piece of information that was permanent. You could see it and hold it in your hand.... But with magnetic tape, your data were stored invisibly on a medium that was designed to be erased and reused."

So EMCC turned to its second choice—the Remington Rand office equipment company, whose founder James Rand expressed outrage when he saw a reworked IBM typewriter rather than a Remington hooked up to the UNIVAC. "Take that label off that machine!" Rand declared on his first visit to an EMCC laboratory. "I don't want it seen in here!"

The tenderness over an IBM logo aside, Remington Rand brought an important innovation to the UNIVAC—television advertisements. The longer infomercials came complete with symphony orchestra introductions and historical progress timelines that began with the Egyptian Sphinx. The shorter ones extolled the role that UNIVAC was playing in weather prediction. "Today UNIVAC is saving time and increasing efficiency for science, industry, business, and government," one ad concluded.

A Remington Rand UNIVAC commercial.

But while that was certainly true about what the machine did for its clients, historian Beyer notes that it didn't extend to Remington's management of EMCC. Most of the office company's top staff, like its founder, didn't understand the device, and related more to punch card machines. The man put in direct charge of EMCC, former Manhattan Project director Leslie Groves, tossed Mauchly to the sales department when he flunked a company security clearance test (apparently he had attended some Communist Party meetings in the 1930s).

On top of that, new management did not sympathize with EMCC's female programmers, among them Grace Hopper, who by 1952 had written the UNIVAC's first software compiler. "There were not the same opportunities for women in larger corporations like Remington Rand," she later reflected. "They were older companies, and the jobs had been stereotyped."

Then there was Groves' marketing strategy for the UNIVAC, which amounted to selling less of the devices, even as they were being hawked on TV as exemplars of technological progress. He ordered a fifty percent annual production quota drop. "With such low sales expectations, there was little incentive to educate Remington Rand's sizeable sales force about the new technology," Beyer explains.

The biggest blow, however, came when IBM began to rethink its aversion to magnetic mainframe storage.

Left in the dust

Despite Remington/EMCC's internal chaos, interest in the UNIVAC exploded after the 1952 CBS demonstration. This created more problems. Hopper's programming staff was now besieged with attractive offers from companies using IBM gear, creating a brainiac drain within EMCC itself. "Some members of Dr. Grace Hopper's staff have already left for positions with users of IBM equipment," Mauchly noted in a memo, "and those of her staff who still remain are now expecting attractive offers from outside sources."

Customer service and support became more and more of a challenge. Still, the UNIVAC was highly competitive with IBM equipment. The question was whether EMCC could beat Big Blue in government contract bidding, specifically for the Semi-Automatic Ground Environment (SAGE) defense communications network.

The SAGE project amounted to an early-warning radar system designed to pick up enemy bomber activity around the nation's borders. It was the brainchild of Jay Forrester, director of MIT's Sernomechanisms Laboratory, and central to the idea was a network of digital computers to integrate the network, dubbed "Project Whirlwind." In three years Forrester's team had pioneered real-time, high-capacity access memory for the mainframes. The government now offered a contract to build 50 Whirlwind computers. IBM quickly rallied its forces for the contest.

"I thought it was absolutely essential to IBM's future that we win it," Thomas Watson Jr., who had none of Senior's allergies to digital computing, later explained. "The company that built those computers was going to be way ahead of the game, because it would learn the secrets of mass production."

Forrester gave the matter some thought. Remington Rand had UNIVAC. And it had the prestige of Manhattan Project Director Leslie Groves. But Remington did not have IBM's scale of operation or its production capacity. Indeed, under Groves' direction, it had scaled that capacity down. In 1953, the government offered the contract to IBM. Historian Beyer explains the consequences of this decision:

Not only did IBM take away knowledge about random-access magnetic core memory; they also learned how the Whirlwind team had pushed the technological envelope in a number of other areas. Forrester's staff had figured out a variety of ways to lower the frequency of vacuum-tube failure, thus increasing system reliability. Cathode-ray-tube displays were ingeniously employed to display processed information, index registers made programming easier, and real-time information from radar sensors could be processed without the need for a slow input medium such as punch cards.

IBM quickly integrated these discoveries into its next rollout of commercial computers. The market loved them and ordered thousands. "In a little over a year we started delivering those redesigned computers," Watson Jr. later boasted. "They made the UNIVAC obsolete and we soon left Remington Rand in the dust."

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The UNIVAC universe of the 1950s—clockwise from top left: UNIVAC mathematician and programmer Grace Hopper; John W. Mauchly and John Presper Eckert; General Leslie Groves of Remington Rand; DC Comics' Brainiac confronting Superman in 1959; a Department of Commerce UNIVAC in the center.

Aftermath

Sensing the dust around it, in 1955 Remington merged with the Sperry Corporation and became Sperry Rand. No less than General Douglas MacArthur ran the new entity. This gave the UNIVAC a new lease on digital life, but one that operated in the shadow of the company that had once sworn that it would stick to punch tape: IBM.

In the meantime, a slew of firms jumped into the high-speed computing business, among them RCA, National Cash Register, General Electric, and Honeywell. "IBM and the Seven Dwarfs," they were dubbed. UNIVAC was now a dwarf.

Grace Hopper continued her work. She became an advocate of the assumption inherent in her UNIVAC compiler which she called "automatic" computing—the notion that programs should emphasize simple English words. Her compiler, later called FLOW-MATIC, understood 20 words.

Her contemporaries patiently informed her that this number was enough. Hopper "was told very quickly that [she] couldn't do this because computers didn't understand English," she later noted. Happily, she did not believe this to be true, and advised a team that developed the COBOL programming language, which she championed and furthered through the 1960s and 1970s. US Navy Rear-Admiral Grace Murray Hopper died in 1992.

Having fattened IBM on government grants for decades, the Department of Justice launched an antitrust suit against the corporation in 1969. This initiative was suddenly withdrawn by the Reagan administration in 1982—as the company once again jolted the industry by jumping into the PC market.

As for UNIVAC, its complex birth 60 years ago remains the moment when we discovered that computers were going to be part of our lives—that they were going to become integral our work and collective imagination. It was also a moment when information systems developers and entrepreneurs learned that innovation and genius are not always a match for influence and organizational scale.

"Howard Aiken was wrong," historian Paul Cerruzi wrote in 2000. "There turned out to be a market for millions of electronic digital computers by the 1990s." Their emergence awaited advances in solid state physics. Nonetheless, "the nearly ubiquitous computers of the 1990s are direct descendants of what Eckert and Mauchly hoped to commercialize in the late 1940s."

Further reading

Most of the material in this essay comes from Kurt W. Beyer's must-read book, Grace Hopper and the Invention of the Information Age (MIT Press). Also essential is Paul E. Ceruzzi's History of Modern Computing.

Photograph by stereotype441

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Social Power and the Coming Corporate Revolution
@ Sep 25, 2011
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http://www.forbes.com/sites/techonomy/2011/09/07/social-power-and-the-coming-corporate-revolution/

9/07/2011 @ 5:58PM

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David Kirkpatrick, Contributor

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Civilizations have clashed in an unexpected way this year, as ordinary people using Facebook and Twitter knocked down dictators in Tunisia, Egypt and Libya—and are threatening absolute rule in Syria. A so-called Arab spring brought waves of liberation to a long-oppressed region. Something similar is happening in more democratic countries. In Spain throngs of young people, known as “the indignant ones,” occupied public plazas nationwide, protesting unemployment and exclusionary politics. In Israel ordinary citizens from both right and left united in massive demonstrations against high housing prices. And in India one man’s campaign against corruption went viral, bringing thousands to the streets in support.

This social might is now moving toward your company. We have entered the age of empowered individuals, who use potent new technologies and harness social media to organize themselves. A few have joined cause with WikiLeaks and its terrifying stepchildren, upending the once secure corridors of the U.S. State Department and Pentagon. But most are ordinary people with new tools to force you to listen to what they care about and to demand respect. Both your customers and your employees have started marching in this burgeoning social media multitude, and you’d better get out of their way—or learn to embrace them.

The institutions of modern developed societies, whether governments or companies, are not prepared for this new social power. People are changing faster than companies. “I don’t think it’s crazy to ask if your CEO is the next Mubarak,” says Gary Hamel, one of business’ most eminent theoreticians of management. “The elites—or managers in companies—no longer control the conversation. This is how insurrections start.” Says Marc Benioff, CEO of Salesforce.com: “This isn’t just about Arab spring. This is about corporate spring.” 

In this new world of business, companies and leaders will have to show authenticity, fairness, transparency and good faith. If they don’t, customers and employees may come to distrust them, to potentially disastrous effect. Customers who don’t like a product can quickly broadcast their disapproval. Prospective employees don’t have to take your word for what life is like at your company—they can find out from people who already work there. And long time loyal employees now have more options to launch their own, more fleet-footed start ups, which could become your fiercest competitors in the future. “Companies that have been around more than five years are having a hard time because this is so different from what they know” is the jarring observation of Doreen Lorenzo, president of design and consulting firm Frog.

Facebook

Twitter

LinkedIn

Google

Yammer

YouTube

Fouresquare

GroupMe

But overall these changes suggest a bright future for business and society globally. The world is becoming more democratic and reflective of the will of ordinary people. And pragmatically, social power can help keep your company vital. Newly armed customer and employee activists can become the source of creativity, innovation and new ideas to take your company forward. A growing number of executives and companies are converts to this point of view.

It calls for humility of a sort most business leaders aren’t used to. “Trust is built by sharing vulnerability,” says John Hagel, a long time author and consultant who co-chairs Deloitte’s Center for the Edge. “The more you expose and share your problems, the more successful you become. It’s not about the top executive dictating what needs to be done and when, it’s about providing individuals with the power to connect.”

Benioff recounts his own epiphany about humility and transparency at Salesforce, which sells online software for salespeople. “In 2005 we had reliability problems with one of our servers. We weren’t talking about it, and customers were upset. It turned into a p.r. problem. And my marketing leader Bruce Francis came in and said, ‘Marc, you need to expose everything. You need to have a website that is directly connected to the computers. If they are running, the website should be green, and when they’re not it should be red.’ I had to open up.” Such a system has been in place ever since. “Social success is really based on trust,” Benioff opines. “If you don’t have transparency you will be eliminated by the system around you.” He is now writing a book arguing that every company must become what he calls a “social enterprise.”

The headlines abound with examples of the precariously shifting dynamic. Companies that show greed or insensitivity to workers or customers quickly find themselves on the defensive. Hershey looked Scrooge-like and clueless in August when 400 college students hired through a State Department-sponsored foreign-exchange program revolted, walking off their jobs. They didn’t like their stressful work in a candy-packing factory, sometimes on all-night shifts. These kids from China, Nigeria, Turkey and Ukraine are facile digital communicators and used YouTube, Facebook and other tools to bring attention to their plight.

Adidas recently found itself under attack in New Zealand when fans of the hugely popular national rugby team were outraged to learn that Adidas team jerseys were being sold for significantly more there than elsewhere in the world. Fans went online to research comparative product prices in New Zealand and the U.S. and then to organize fellow fans in protest. Soon national news programs were focusing on the protest and Adidas’ flat-footed response. People started returning Adidas clothing to stores in disgust, and employees felt so threatened they removed logos from company vehicles, reported the New York Times.

Executives can’t hide from the outrage. In the Netherlands earlier this year a social media campaign against bankers’ bonuses focused on Amsterdam-based ING. People began threatening en masse to withdraw deposits. CEO Jan Hommen voluntarily waived his upcoming $1.8 million bonus and ordered all company directors to do the same. British Prime Minister David Cameron recently proposed shutting down social media during riots like those that brought chaos to the U.K. recently. But Google Chairman Eric Schmidt replied to that idea in an interview in the Guardian with advice that applies equally to CEOs: “It is a mistake to look into the mirror and try to break the mirror. Whatever the problem was [that caused the riots] the Internet is a reflection of that problem. If you have a problem, use the Internet to understand what the problem is.”

If there’s a primary culprit for this changed landscape, it’s Facebook. The social network’s astonishing success in less than eight years has brought it more than 750 million active users in every country on earth, made it the world’s busiest website—and the most popular tool for fomenting insurrection around the world. Why? Because Facebook gives all its users a personal broadcast platform. In the past only a select few had such power—Walter Cronkite, for example, or those at the BBC. People on Facebook, by contrast, usually just broadcast to friends, which seems only modestly impactful, at first. However, a peculiar new dynamic—call it a viral consensus—may develop. Say you post a status update, photo or video that expresses a view that your friends agree with or respond to; that message can spread like influenza. Friends click “like,” or comment on the update, saying, for example, “Yeah, I think Mubarak has got to go, too!” or “I’m throwing out all my Adidas stuff!” That rebroadcasts it to their friends. The “meme,” or idea, can go viral and spread almost instantly to vast numbers, if it happens to strike a chord with the zeitgeist.

LinkedIn is another central tool for empowerment all executives ought to ponder—and not only because they already maintain a profile there (along with more than 115 million others). At its heart LinkedIn is a way to maintain a permanent public work résumé. Many of your company’s most valued employees now have CVs out on the street full time—searchable by millions, including your competitor’s recruiters. Do you want to take a chance mistreating or ignoring such people?

Plenty of other social software tools are now in the hands of ordinary people as well. They live on mobile phones that are really powerful computers—broadcast terminals able to spew opinion or information at will, as well as receive it. YouTube, for example, provides endless hours of light entertainment—or can be used by anyone anytime to broadcast video. In 2009 one appeared showing a Domino’s Pizza worker putting cheese in his nose while making a sandwich, among other abominations. Its stock dropped 10% in short order. One employee’s bad judgment damaged an entire company’s reputation. Twitter is a potent broadcast tool for anyone with a following; FourSquare, a way to coordinate in the physical world; GroupMe, just sold to Skype, enables you to send a single text or make one telephone call to a group of up to 25. All these services are basically free.

New incarnations of social power emerge almost daily from legions of entrepreneurs worldwide who see how rapidly success can come in a densely networked world. That ease of company creation is yet another example of individual empowerment. GroupMe’s two founders—ages 24 and 29—sold their company in August for around $50 million just one year after it debuted.

Bo Fishback created his tool of social power with stunning speed. He’s CEO of Zaarly, a location-based market place for buyers and sellers of both products and services; buyers post what they want, and people looking to earn money make offers to provide it. The company was born in February, when Fishback—a perpetual entrepreneur—attended “Startup Weekend” in Los Angeles. He pitched his idea Friday, had a working prototype by Sunday and says that Tuesday he closed $1 million in financing. (He already knew veteran investors, granted.) Two weeks later Zaarly launched in beta at South By Southwest Interactive in Austin, Tex. and did $10,000 worth of transactions. The service debuted in late May in several cities and by late August $3.4 million in transactions had been requested and 50,000 people had registered.

Fishback’s whole life as a Net-centric businessman presumes social power. “Empowered individuals are what drives Zaarly on both sides of our marketplace,” he says. “On the buyer side it transcends typical marketplace dynamics where you can only buy what someone else is already selling. On the fulfiller [or seller] side this demand-driven market gives people a new way to work for themselves.”

If you want your company to tap into social power, a range of emerging software products can help you do so. Some aim to make it easier to conduct an ongoing dialogue with customers. But a thriving industry is also building tools to harness employee power inside a company. Four prominent businesses offer their version of a hybrid Twitter/Facebook for employees: Salesforce.com with its product Chatter, IBM with its Connections software, as well as startups Yammer and Jive, which just announced it intends to go public. The aim is to tap a company’s internal social energy to speed collaboration and innovation. Craig Herkert, CEO of SuperValu, which owns or supplies over 4,000 U.S. grocery stores, is a convert to Yammer. “With the old way, all information flowed via e-mail. Now store managers and support staff all over the country can post on Yammer what they’re doing, what they’re proud of, or say,  ‘Hey, I’ve got a problem. Does anyone know how to fix it?’ I have Yammer on my desktop, my laptop, my cellphone and my iPad. I can see what everyone is doing—that’s radical transparency.”

A little Toronto start up called Rypple applies social thinking in a different way—for internal employee management. Its social evaluation tool lets everyone in a company rate everyone else and gives people continuous real time feedback. It taps social and peer pressure to make job evaluation more effective at driving future performance. The product was largely developed in a beta installation at Facebook itself, whose internal organization strives to be flat and unbureaucratic. (At Facebook newly hired product engineers get a few weeks of technical training and then pick a team to work on.) Anne Benedict is senior vice president of Global Talent at MediaBrands, which has started rolling out Rypple to its 6,500 people. “The highest-value employees are introspective enough to want feedback on themselves,” she explains. “MediaBrands is a media agency, so the technology is perfect for us, because it promotes the use of social networking we preach to our clients.”

The humility and authenticity that social power demands of you can yield numerous benefits with customers and employees. Nadira Hira, 30, is writing a book to be published next year about attitudes toward work in her generation, those who are roughly 16 to 32 years old today. “What many companies get wrong when they think of ‘social’ is they think of it as a marketing ploy, rather than as just a way of extending what you already really are as a company or a brand,” she says. “If you do care about your employees and your customers, it allows you to show it and extend your reach.” Tony Hsieh, CEO of Zappos, used Twitter and his personal blog in late 2008 to announce and manage unexpected layoffs. He talked extensively about what was happening and how painful the process was for himself and others in the company. The layoffs went surprisingly smoothly, especially after he responded to feedback by, for example, extending an employee discount until after the holidays.

When confronting social power, you might as well jump in with both feet, because you just can’t hide. “One common mistake of old-school companies is to ban social media across the company,” says Clara Shih, CEO of HearsaySocial, whose software helps businesses, mostly consumer brands, manage their social media. “But at least in America our job is such an important part of our identity that most people want to talk about it. Passionate employees are going to talk about the brand and the company on Facebook and Twitter and LinkedIn.” When her clients defend lock-down policies against social media, claiming they’ve successfully kept employees offline, Shih unleashes Hearsay’s “rogue page finder.” For one big company it recently turned up 60,000 different social media pages where employees mentioned or discussed company matters. (Not to mention the thousands of employee profiles on LinkedIn.) Hearsay’s tools presume something elemental in a world of social power: that the empowerment of employees is directly tied to the empowerment of customers—because they will inevitably end up working, maybe even conspiring, together.

Ordinary people often seem better at managing and accessing information than the giant corporations they work for or buy from. “Companies literally don’t know what’s being said about them,” says millennial maven Hira .“They don’t even Google themselves!”

But that’s the first thing somebody will do if they’re thinking about going to work at that company.” This is a critical shift in power. “In the old days the managers were on phone calls and in briefings. They had information,” says Chris Cox, who oversees product at Facebook. “The underlings were just working away. But with technology that makes it easy to share and organize stuff, that imbalance goes away.” Adds David Sacks, CEO of Yammer: “‘Information is power’ used to mean that hoarding information gave you power. Now we’re seeing that sharing information is power. The more you can share, the more you can help other people—and the more it becomes apparent you’re an expert and a valuable employee.”

Long before most of us saw it coming, Ray Ozzie, one of the software industry’s most celebrated communications toolmakers, focused his product-development career on a shift toward social power. But he still doesn’t think companies get it. Ozzie replaced Bill Gates as Microsoft’s chief software architect after the company bought Groove Networks, which he founded. He left Microsoft last year. “Individuals are elated with these new capabilities, yet corporations are as risk-averse as they always were. Many companies are hesitant to create a culture that permits self-empowerment because they are afraid of what might happen if people did things by themselves.” Ozzie’s creation of Lotus Notes back in the late 1980s aimed to arm employees with better information and allow them to collaborate in teams.

But though it was a commercial success, Notes’ potential to promote employee empowerment went mostly unrealized. Since then, however, powerful collaborative software—notably Facebook but also Skype, LinkedIn and other tools—has crept into corporations over the Net and in handbags and pockets, carried by employees bringing superior consumer software into the workplace.

Companies are still scrambling to catch up, and most of them probably never will. Consumer technology will remain better and cheaper than what’s made for business. The larger size of the consumer market attracts more investment and innovation, and economies of scale drive down prices—a formula at the heart of the relative empowerment of the individual over the company. David Stein, Co-CEO of Rypple, says that for ordinary employees “the expectation now is that the tools people use at work are as easy and fun as the ones they use in their personal life. If you use 1950s-based management systems, employees are going to revolt. They don’t want to feel like ‘the man’ is just telling them to do things.” And at Skype, CEO Tony Bates isn’t bothering to target the business market, because, as he says, “individuals are bringing it into business themselves. In many companies Skype is the number one form of communications.”

Shoshana Zuboff has been describing this fundamental shift toward individuals and social power since 2002. That’s when the longtime Harvard Business School professor and historian co-wrote The Support Economy: Why Corporations are Failing Individuals and the Next Episode of Capitalism. She says the clash between empowered people and hierarchical institutions was set in motion in the 1950s. “The mass-production economy provided existential security for many, many people,” she says. “That, in turn, produced a new human mentality—of a self-determining individual. This mentality was once the unique precinct of the elite: the wealthy, artists, poets, philosophers. And it became the mentality of everyone.”

She now argues for an urgent rethinking of how all business is conducted. “We’re talking about a fundamental shift away from a mass production model,” she says. “Value has been understood as something companies create: How do I take what I have and sell it to you? But in this new world value is not created inside the organization. It rests in the unfulfilled needs and desires of the individual. Now I have to come to you and say, ‘Who are you? Tell me about yourself. How do you want to live?’” She says the music industry notoriously failed at this in the past decade. “It brought forward the value it had created—the CD. And if you didn’t want it, how did they respond? Well, how about if they hunt you down and put you in jail?”

An increasing number of enlightened companies aim to turn social power to their own advantage by putting customers not in jail but on a pedestal. They become healthily obsessed with what’s said about them online. Gatorade now operates a full-time social media command center where it not only monitors what’s said about it on Facebook, Twitter, blogs and elsewhere,but also intervenes when appropriate to clarify or offer assistance. And Domino’s Pizza responded somewhat brilliantly to that egregious employee video in 2009 with a self-effacing social media and advertising campaign that did not pretend the incident hadn’t happened. By mid-2010 it had regained market share and dramatically boosted online reputation and e-commerce sales. Farmers Insurance uses Hearsay Social’s software to help 15,000 agents nationwide maintain their own Facebook pages. It has even begun marketing itself, aptly enough, in the Farmville game people play inside Facebook.

Ford takes cues from young people immersed in social media in how it designs cars and how it communicates. “Digital suffrage is upon us,” proclaims Venkatash Prasad, Ford’s high-wattage leader of product social networking efforts, in an e-mail. “Everyone has a right to a byte of the action, and we have embraced this might of the byte within Ford, through the use of internal and external social networks.” Prasad brags that Ford recently sent a car across America, tweeting: “Not a human in a car, a car.” Adds Sheryl Connelly, Ford’s manager of consumer trends, in another e-mail: “If you want to reach a millennial, you have to go where they live, and that means online. Millennials want more than engagement. They want their contributions to be meaningful.”

Accepting social power as inevitable can significantly change the kind of products you design. Coca-Cola is installing machines in fast-food restaurants that allow customers to formulate their own beverages. No longer choose just a Coke or Sprite. Now you can come up with new flavor combinations and other customizations that your newly empowered heart desires.

If you ignore these forces, you will probably fail. Says consultant and author Gary Hamel: “The underlying principles on the Web of natural hierarchy, transparency, collaboration and all the rest—those characteristics are going to have to invade management. The idea of a hierarchy that fundamentally empowers the few and disempowers the many is more or less dead.” To demonstrate what’s possible in this new world, Hamel helped spearhead an online forum for Web-influenced management ideas at www.managementexchange.com.

Don’t think that the trends in technology, and resulting social power, will ever give you a respite from the tides of change. Says Microsoft and Lotus veteran Ozzie: “All this was unstoppable from the moment somebody installed the first network—this steady march toward reducing friction and reducing transaction costs faced by individuals. And you ain’t seen nothin’ yet.”

Additional reporting by Adam Ludwig.

For more information about the Techonomy 2011 conference (Nov. 13-15), visit www.techonomy.com. You can also follow Techonomy on Twitter and Facebook.

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Tiny Neutrinos May Have Broken Cosmic Speed Limit
@ Sep 25, 2011
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http://www.nytimes.com/2011/09/23/science/23speed.html?ref=science

721b-CERN tunnel.png

CERN, via Associated Press

The world was watching as scientists announced that neutrinos from the CERN laboratory had raced to an Italian site faster than it would take a light beam.

By DENNIS OVERBYE

Published: September 22, 2011

Roll over, Einstein?

The physics world is abuzz with news that a group of European physicists plans to announce Friday that it has clocked a burst of subatomic particles known as neutrinos breaking the cosmic speed limit — the speed of light — that was set by Albert Einstein in 1905.

If true, it is a result that would change the world. But that “if” is enormous.

Even before the European physicists had presented their results — in a paper that appeared on the physics Web site arXiv.org on Thursday night and in a seminar at CERN, the European Center for Nuclear Research, on Friday — a chorus of physicists had risen up on blogs and elsewhere arguing that it was way too soon to give up on Einstein and that there was probably some experimental error. Incredible claims require incredible evidence.

“These guys have done their level best, but before throwing Einstein on the bonfire, you would like to see an independent experiment,” said John Ellis, a CERN theorist who has published work on the speeds of the ghostly particles known as neutrinos.

According to scientists familiar with the paper, the neutrinos raced from a particle accelerator at CERN outside Geneva, where they were created, to a cavern underneath Gran Sasso in Italy, a distance of about 450 miles, about 60 nanoseconds faster than it would take a light beam. That amounts to a speed greater than light by about 0.0025 percent (2.5 parts in a hundred thousand).

Even this small deviation would open up the possibility of time travel and play havoc with longstanding notions of cause and effect. Einstein himself — the author of modern physics, whose theory of relativity established the speed of light as the ultimate limit — said that if you could send a message faster than light, “You could send a telegram to the past.”

Alvaro de Rujula, a theorist at CERN, called the claim “flabbergasting.”

“If it is true, then we truly haven’t understood anything about anything,” he said, adding: “It looks too big to be true. The correct attitude is to ask oneself what went wrong.”

The group that is reporting the results is known as Opera, for Oscillation Project with Emulsion-Tracking Apparatus. Antonio Ereditato, the physicist at the University of Bern who leads the group, agreed with Dr. de Rujula and others who expressed shock. He told the BBC that Opera — after much internal discussion — had decided to put its results out there in order to get them scrutinized.

“My dream would be that another, independent experiment finds the same thing,” Dr. Ereditato told the BBC. “Then I would be relieved.”

Neutrinos are among the weirdest denizens of the weird quantum subatomic world. Once thought to be massless and to travel at the speed of light, they can sail through walls and planets like wind through a screen door. Moreover, they come in three varieties and can morph from one form to another as they travel along, an effect that the Opera experiment was designed to detect by comparing 10-microsecond pulses of protons on one end with pulses of neutrinos at the other. Dr. de Rujula pointed out, however, that it was impossible to identify which protons gave birth to which neutrino, leading to statistical uncertainties.

Dr. Ellis noted that a similar experiment was reported by a collaboration known as Minos in 2007 on neutrinos created at Fermilab in Illinois and beamed through the Earth to the Soudan Mine in Minnesota. That group found, although with less precision, that the neutrino speeds were consistent with the speed of light.

Measurements of neutrinos emitted from a supernova in the Large Magellanic Cloud in 1987, moreover, suggested that their speeds differed from light by less than one part in a billion.

John Learned, a neutrino astronomer at the University of Hawaii, said that if the results of the Opera researchers turned out to be true, it could be the first hint that neutrinos can take a shortcut through space, through extra dimensions. Joe Lykken of Fermilab said, “Special relativity only holds in flat space, so if there is a warped fifth dimension, it is possible that on other slices of it, the speed of light is different.”

But it is too soon for such mind-bending speculation. The Opera results will generate a rush of experiments aimed at confirming or repudiating it, according to Dr. Learned. “This is revolutionary and will require convincing replication,” he said.

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Neutrinos!

http://www.astro.wisc.edu/~larson/Webpage/neutrinos.html

Neutrinos are everywhere. They permeate the very space all around us. They can be found throughout our galaxy, in our sun and every second tens of thousands of neutrinos are passing through your body. But there is no need to become alarmed for these tiny particles barely interact with anything. In fact, they can even pass through the entire Earth without being affected.

Neutrinos are fundamental particles that were first formed in the first second of the early universe, before even atoms could form. They are also continually being produced in the nuclear reactions of stars, like our sun, and nuclear reactions here on earth. Much is still unknown about these particle, they have an undetermined mass and travel at near the speed of light.

721b-neutrino box.png

There are three types of neutrinos: electron neutrino, muon neutrino, and tau neutrino. According to the standard model (see figure 1) there exist 12 fundamental particles. Each "flavor" of neutrino has a corresponding charged particle from which it gets its name. The Standard Model consists of three generations and each generation has two quarks a neutrino and a charged particle. The particles in the standard model are separated into two types: quarks and leptons. The quarks interact via the strong nuclear force while the leptons interact via the electromagnetic or the weak nuclear force. Neutrinos are nearly massless and have no electric charge. Therefore, unlike the other particles, they only interact via the weak nuclear force. Neutrino actually means "little neutral one." Since the weak nuclear force only acts at shot ranges, neutrinos can pass through massive objects without interacting with them.

References:

Casper,Dave. What’s a Neutrino?.

History

Because of the neutrinos' elusive behavior, their existence was not even known until 1959 even though they had been predicted back in 1931. Wofgang Pauli first predicted the neutrino in order to account for the apparent loss of energy and momentum that he observed when studying radioactive beta decays(see Figure 2).

721b-neutron decay.png

Fig. 2 The neutron Decay.(Neutrinos)

He predicted that the energy was being carried off by some unknown particle. Then in 1959, Clyde Cowan and Fred Reines finally found a particle that fit the description of the proposed neutrino by studying the particles created by a nuclear power plant. By doing this they actually discovered the electron neutrino. The next big discovery was that of the muon neutron found by Leon Lederman, Mel Schwartz, and Jack Steinberger, scientists at CERN. They did this by firing a GeV proton beam through a target thus producing pions, muons, and muon neutrinos.

The first experiment to attempt to detect electron neutrinos from the sun was conducted by a detector in the bottom of the Homestake mine in South Dakoda in 1968. However they detected only neutrinos about twice a week. It was predicted however that the detector should find about one of the 1016 solar neutrinos a day. This unexplainable lack of solar neutrinos detected became known as the Solar Neutrino Problem. It is thought that the neutrinos actually oscillate between the different "flavors" after being emitted from the sun as electron-neutrinos. Therefore they were not detecting all of the neutrinos because some had changed into muon and tau neutrinos.

The existence of the third flavor of neutrino, the tau neutrino, was first inferred in 1978 with the discovery of the Tau particle at SLAC, the Stanford Linear Accelerator Center. They realized that the Tau particle was just a heavier version of the electron and muon and therefore should have a corresponding neutrino as well. The tau neutrino evaded detection though for many years. Firstly the Tau particle only lasts for about 300 fs, making them difficult to track and therefore making it difficult to track their corresponding neutrino. Secondly, tau neutrinos are incredibly rare. However, in 2000 the scientists at CERN on the DONUT detector were finally able observe a tau neutrino.

References:

Neutrinos.

Verkindt,Didier. History of the Neutrino.

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WMAP Reveals Neutrinos, End of Dark Ages, First Second of Universe

http://imagine.gsfc.nasa.gov/docs/features/news/10mar08.html

10 March 2008



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Click for larger image

WMAP cosmic microwave fluctuations over the full sky with 5-years of data. Colors represent the tiny temperature fluctuations of the remnant glow from the infant universe: red regions are warmer and blue are cooler. (Credit: WMAP Science Team)

NASA released this week five years of data collected by the Wilkinson Microwave Anisotropy Probe (WMAP). These data refine our understanding of the universe and its development. It is a treasure trove of information, including at least three major findings:

  • New evidence that a sea of cosmic neutrinos permeates the universe
  • Clear evidence the first stars took more than a half-billion years to create a cosmic fog
  • Tight new constraints on the burst of expansion in the universe's first trillionth of a second

"We are living in an extraordinary time," said Gary Hinshaw of NASA's Goddard Space Flight Center in Greenbelt, Md. "Ours is the first generation in human history to make such detailed and far-reaching measurements of our universe."

WMAP measures a remnant of the early universe - its oldest light. The conditions of the early times are imprinted on this light. It is the result of what happened earlier, and a backlight for the later development of the universe. This light lost energy as the universe expanded over 13.7 billion years, so WMAP now sees the light as microwaves. By making accurate measurements of microwave patterns, WMAP has answered many longstanding questions about the universe's age, composition and development.

The universe is awash in a sea of cosmic neutrinos. These almost weightless sub-atomic particles zip around at nearly the speed of light. Millions of cosmic neutrinos pass through you every second.

"A block of lead the size of our entire solar system wouldn't even come close to stopping a cosmic neutrino," said science team member Eiichiro Komatsu of the University of Texas at Austin.

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Click for larger image

Relative constituents of the universe today (top), and for the universe 13.7 billion years ago (bottom). Neutrinos used to be a larger fraction of the energy of the universe than they are now. (Credit: WMAP Science Team)

WMAP has found evidence for this so-called "cosmic neutrino background" from the early universe. Neutrinos made up a much larger part of the early universe than they do today.

Microwave light seen by WMAP from when the universe was only 380,000 years old, shows that, at the time, neutrinos made up 10% of the universe, atoms 12%, dark matter 63%, photons 15%, and dark energy was negligible. In contrast, estimates from WMAP data show the current universe consists of 4.6% percent atoms, 23% dark matter, 72% dark energy and less than 1 percent neutrinos.

Cosmic neutrinos existed in such huge numbers they affected the universe's early development. That, in turn, influenced the microwaves that WMAP observes. WMAP data suggest, with greater than 99.5% confidence, the existence of the cosmic neutrino background - the first time this evidence has been gleaned from the cosmic microwaves.

Much of what WMAP reveals about the universe is because of the patterns in its sky maps. The patterns arise from sound waves in the early universe. As with the sound from a plucked guitar string, there is a primary note and a series of harmonics, or overtones. The third overtone, now clearly captured by WMAP, helps to provide the evidence for the neutrinos.

The hot and dense young universe was a nuclear reactor that produced helium. Theories based on the amount of helium seen today predict a sea of neutrinos should have been present when helium was made. The new WMAP data agree with that prediction, along with precise measurements of neutrino properties made by Earth-bound particle colliders.

Another breakthrough derived from WMAP data is clear evidence the first stars took more than a half-billion years to create a cosmic fog. The data provide crucial new insights into the end of the "dark ages," when the first generation of stars began to shine. The glow from these stars created a thin fog of electrons in the surrounding gas that scatters microwaves, in much the same way fog scatters the beams from a car's headlights.

721b-wave peak.png


Click for larger image

The first peak reveals a specific spot size for early universe sound waves, just as the length of guitar string gives a specific note. The second and third peaks are the harmonics. (Credit: WMAP Science Team)

"We now have evidence that the creation of this fog was a drawn-out process, starting when the universe was about 400 million years old and lasting for half a billion years," said WMAP team member Joanna Dunkley of the University of Oxford in the U.K. and Princeton University in Princeton, N.J. "These measurements are currently possible only with WMAP."

A third major finding arising from the new WMAP data places tight constraints on the astonishing burst of growth in the first trillionth of a second of the universe, called "inflation", when ripples in the very fabric of space may have been created. Some versions of the inflation theory now are eliminated. Others have picked up new support.

"The new WMAP data rule out many mainstream ideas that seek to describe the growth burst in the early universe," said WMAP principal investigator, Charles Bennett, of The Johns Hopkins University in Baltimore, Md. "It is astonishing that bold predictions of events in the first moments of the universe now can be confronted with solid measurements."

The five-year WMAP data were released this week, and results were issued in a set of seven scientific papers submitted to the Astrophysical Journal.

Prior to the release of the new five-year data, WMAP already had made a pair of landmark finds. In 2003, the probe's determination that there is a large percentage of dark energy in the universe erased remaining doubts about dark energy's very existence. That same year, WMAP also pinpointed the age of the universe to be 13.7 billion years.

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World's Smallest Electric Motor Made from a Single Molecule
@ Sep 25, 2011
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http://www.sciencedaily.com/releases/2011/09/110904140353.htm

ScienceDaily (Sep. 5, 2011) — The smallest electrical motor on the planet, at least according to Guinness World Records, is 200 nanometers. Granted, that's a pretty small motor -- after all, a single strand of human hair is 60,000 nanometers wide -- but that tiny mark is about to be shattered in a big way.

Chemists at Tufts University's School of Arts and Sciences have developed the world's first single molecule electric motor, a development that may potentially create a new class of devices that could be used in applications ranging from medicine to engineering.

In research published online Sept. 4 in Nature Nanotechnology, the Tufts team reports an electric motor that measures a mere 1 nanometer across, groundbreaking work considering that the current world record is a 200 nanometer motor. A single strand of human hair is about 60,000 nanometers wide.

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Chemists at Tufts University have developed the world's first single molecule electric motor, which may potentially create a new class of devices that could be used in applications ranging from medicine to engineering. The molecular motor was powered by electricity from a state of the art, low-temperature scanning tunneling microscope. This microscope sent an electrical current through the molecule, directing the molecule to rotate in one direction or another. The molecule had a sulfur base (yellow); when placed on a conductive slab of copper (orange), it became anchored to the surface. The sulfur-containing molecule had carbon and hydrogen atoms radiating off to form what looks like two arms (gray); these carbon chains were free to rotate around the central sulfur-copper bond. The researchers found that reducing the temperature of the molecule to five Kelvin (K), or about minus 450 degrees Fahrenheit (ºF), enabled them to precisely impact the direction and rotational speed of the molecular motor The Tufts team plans to submit this miniature electric motor to the Guinness World Records. The research was published online Sept. 4 in Nature Nanotechnology. (Credit: Heather L. Tierney, Colin J. Murphy, April D. Jewell, Ashleigh E. Baber, Erin V. Iski, Harout Y. Khodaverdian, Allister F. McGuire, Nikolai Klebanov and E. Charles H. Sykes.)

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According to E. Charles H. Sykes, Ph.D., associate professor of chemistry at Tufts and senior author on the paper, the team plans to submit the Tufts-built electric motor to Guinness World Records.

"There has been significant progress in the construction of molecular motors powered by light and by chemical reactions, but this is the first time that electrically-driven molecular motors have been demonstrated, despite a few theoretical proposals," says Sykes. "We have been able to show that you can provide electricity to a single molecule and get it to do something that is not just random."

Sykes and his colleagues were able to control a molecular motor with electricity by using a state of the art, low-temperature scanning tunneling microscope (LT-STM), one of about only 100 in the United States. The LT-STM uses electrons instead of light to "see" molecules.

The team used the metal tip on the microscope to provide an electrical charge to a butyl methyl sulfide molecule that had been placed on a conductive copper surface. This sulfur-containing molecule had carbon and hydrogen atoms radiating off to form what looked like two arms, with four carbons on one side and one on the other. These carbon chains were free to rotate around the sulfur-copper bond.

The team determined that by controlling the temperature of the molecule they could directly impact the rotation of the molecule. Temperatures around 5 Kelvin (K), or about minus 450 degrees Fahrenheit (ºF), proved to be the ideal to track the motor's motion. At this temperature, the Tufts researchers were able to track all of the rotations of the motor and analyze the data.

While there are foreseeable practical applications with this electric motor, breakthroughs would need to be made in the temperatures at which electric molecular motors operate. The motor spins much faster at higher temperatures, making it difficult to measure and control the rotation of the motor.

"Once we have a better grasp on the temperatures necessary to make these motors function, there could be real-world application in some sensing and medical devices which involve tiny pipes. Friction of the fluid against the pipe walls increases at these small scales, and covering the wall with motors could help drive fluids along," said Sykes. "Coupling molecular motion with electrical signals could also create miniature gears in nanoscale electrical circuits; these gears could be used in miniature delay lines, which are used in devices like cell phones."

The Changing Face of Chemistry

Students from the high school to the doctoral level played an integral role in the complex task of collecting and analyzing the movement of the tiny molecular motors.

"Involvement in this type of research can be an enlightening, and in some cases life changing, experience for students," said Sykes. "If we can get people interested in the sciences earlier, through projects like this, there is a greater chance we can impact the career they choose later in life."

As proof that gaining a scientific footing early can matter, one of the high school students involved in the research, Nikolai Klebanov, went on to enroll at Tufts; he is now a sophomore majoring in chemical engineering.

This work was supported by the National Science Foundation, the Beckman Foundation and the Research Corporation for Scientific Advancement.

Tufts University, located on three Massachusetts campuses in Boston, Medford/Somerville, and Grafton, and in Talloires, France, is recognized among the premier research universities in the United States. Tufts enjoys a global reputation for academic excellence and for the preparation of students as leaders in a wide range of professions. A growing number of innovative teaching and research initiatives span all campuses, and collaboration among the faculty and students in the undergraduate, graduate and professional programs across the university is widely encouraged.

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10 Tips to knock a decade off your age
@ Sep 25, 2011
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http://timesofindia.indiatimes.com/life-style/health-fitness/diet/10-Tips-to-knock-a-decade-off-your-age/articleshow/9744354.cms

DAILY MIRROR | Sep 4, 2011, 12.00AM IST

These balanced eating rules will help your body defy the effects of time

Growing older is inevitable, but looking your age is not - and slashing years off your aging body starts with eating the right foods.

A healthy diet loaded with lean protein and whole grains will allow you to retain muscle tone but lose excess fat as you age, while plenty of antioxidant-rich fruits and veggies will help stave off those wrinkles.

723a-knock off age.png

10 Tips to knock a decade off your age

Here's a list of simple to-dos to keep you younger-looking, younger-feeling:

1. Say yes to whole grains

The waistlines of middle-aged people who ate white bread and other white carbohydrates expanded three times more than those who ate wholemeal foods, according to an American research.

2. See fish as your ally

Fish is a great source of the protein leptin, which acts like a hormone in the body and controls your appetite so you don't overeat. Oily fish such as salmon contains high levels of omega-3 fatty acids, which are potent wrinkle-fighters at any age. In fact, the 'fish facelift diet' was created as a result of this.

3. Bacteria buddies

After you turn 35, levels of friendly gut bacteria drop significantly, leaving you at an increased risk of sluggish digestion and bloating. To combat this, have a probiotic drink or yoghurt every day.

4. Moisturise from within

As you get older your skin becomes drier and flakier as the oil glands produce smaller amounts of natural moisturiser. Your skin also becomes less elastic, causing fine lines to develop. Eating foods containing healthy, natural oils, such as avocado, nuts, seeds and olive oil can have a softening and plumping effect on skin.

5. Ditch the biscuit

For every decade you age once you turn 30, your body needs around one per cent fewer calories. The good news is you can easily drop these calories just by stopping your mid-morning biscuits or not having that extra slice of toast.

6. Snack with care

Treats between meals tend to have heaps of calories crammed into small mouthfuls and will ensure you pile weight on around your middle and thighs - a dead giveaway of your true age. Foods such as ice cream, crisps, chocolate and fizzy drinks all fall into this category, so limit them to a twice-a-week treat and snack instead on a platter of brightly coloured fruits.

7. Go easy on the booze

Reduce your alcohol intake to a small glass of red wine with dinner at weekends only. Not only is booze brimming with calories, drinking too much alcohol dehydrates skin and can age you prematurely.

8. Stop skipping meals

This is a habit women tend to hang on to all their life, but you can get away with it in your 20s. In your 30s and 40s, all those decades of emergency dieting will have slowed your metabolism down permanently, making it tough to stay slim. Never go without food for more than three hours.

9. Antioxidant-rich foods

Fruit, veggies and nuts contain powerful anti-ageing chemicals to keep you youthful.

10. Slash your salt intake

Too much salt is bad for your body, as it causes water retention, leaving you heavy and sluggish. Besides, with age, the body's ability to shift excess fluid also slows down. Cutting down salt will decrease this bloating. Beware of hidden sources of salt - often found in ready meals, soups and bread.

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Topics-World Affairs
Bahrain's contribution to the Arab Spring
@ Sep 25, 2011
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http://english.aljazeera.net/indepth/opinion/2011/08/20118301473301296.html

The Bahraini government used the spectre of sectarian violence to justify their crackdown on peaceful protesters.

Lamis Andoni Last Modified: 30 Aug 2011 14:07

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Bahrainis grieve during the funeral procession of a protester shot dead by security forces [GALLO/GETTY]

Arab silence on the continued repression of the Bahraini people is a shameful episode that does not fit the era of the Arab revolution. It is also a testimony to the determination of the US-backed Gulf political order - that is leading the effort to place a cap on change in the Arab World - to prevent the revolution from reaching its member states.

But in a wider context, the silence, or at least the lack of adequate solidarity with Bahraini revolutionaries, is indicative "of fear" of the Iranian and Shia influence on the predominantly Sunni Arab world. The Gulf states made sure to portray the protests as a sectarian Shia plot in order to obscure the Bahraini movement's political message of justice and equality.

The relative success of isolating the Bahraini movement by fomenting sectarian fears is regretfully a sign that the Arab Spring has not succeeded in doing away with sectarian prejudices that are not only impeding  effective solidarity, but threaten to tear up some Arab uprisings.

Part of the problem is that the Arab uprisings have not yet radically changed the official Arab order that consists of governments that have fed sectarian divisions to ensure their longevity. The fact that Bahrain's population is 70 per cent Shia but is ruled by an authoritarian Sunni royal family have made it possible for governments to claim an Iranian scheme to undermine the stability of the Gulf and consequently the Arab world.

Some Iranian statements, such as the infamous quote by former Iranian Shura Council speaker Akbar Nateq Nouri, that Bahrain is part of Iran, did not help. In other words, the Bahraini movement for change became partly a victim to the geopolitical contest between Iran and Saudi Arabia over the strategically located country. But mostly the open conspiracy against the Bahraini movement was precisely due to its indigenous, popular and political nature - a fact that was clear from the very outset.

Historic struggle

If anything, the Bahraini protests that started last February were in effect a continuation of a long-standing  historic struggle for political freedoms that preceded the tiny country's independence from Britain in 1971.

Bahrain was affected by the anti-colonialist Pan Arab and leftist wave that swept the Arab world in the fifties demanding independence from British rule and the formation of an elected consultative council. The dream  was about to be fulfilled after independence when in 1973 Emir Issa Ben Salman Bin Khalifa approved a constitution allowing elected parliament (74 per cent were elected and around 26 per cent were appointed by the Emir).

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Click for more of Al Jazeera's special coverage of the government crackdown on protests in Bahrain

The parliamentary experiment came to a halt when the Emir dissolved parliament, citing fears of sectarian strife - a claim refuted by the opposition at the time - and proceeded to rule by decree.

An all-out campaign of arrests and torture followed, forcing many Bahraini intellectuals and activists to seek asylum in other countries, particularly in Europe, including the Eastern bloc, away from reach of their government.

The Bahraini government, which by then had become a close ally of Washington, tried to impose subordination by pursuing a combined policy of repression and discrimination against the Shia. The 1979 Iranian revolution spurred the emergence of movements based on religious identity (Sunni and Shia alike), especially after the blow dealt to the secular opposition.

But the major demands of the Bahraini opposition revolved around equality and a restoration of parliamentary life - although a pro-Iranian Shia group did call for extending Tehran's rule to the tiny country.

In 1994 an uprising, led mainly, but not exclusively, by Shia parties finally culminated in the signing of the National Action Charter (NAC) in 2001. It represented an historic accord between the opposition and the royal family based on the restoration of parliamentary elections and political reforms.

But in spite of two parliamentary elections, Hamad Ben Issa Al Khalifa, who succeeded his father and changed his title to king from emir (prince) - a move that was supposedly aimed at establishing a constitutional monarchy - continued the regime's authoritarian and repressive policies.

Thus it was natural that Bahrainis were inspired early on by the success of the Arab uprisings in Tunisia and Egypt to pursue a new stage of their struggle. As early as February 14, Bahraini youth followed the example of their peers in other Arab countries by staging protests and sit-ins demanding constitutional and political reforms.

The organisers of the earlier protests were originally young people who did not necessarily belong to the predominantly Shia opposition parties. They did not rise as Shia but as youth who wanted to have a say on their fate through active political participation. The protests were peaceful and initially they sought the implementation of 2001 NAC and an end of the security control over the country's political life.

Bahrain's Tahrir Square

Like many people in Bahrain, the youth activists felt cheated by the regime which agreed to political reforms, included in the NAC. The regime did not honor its end of the agreement although the document was approved by 98.4 per cent of voters in a national referendum held in February 2001.

Shortly after the beginning of protests the mainly Shia opposition parties took over but endorsed the same demands - set forward by the youth - for a new constitution that would shift most powers into the hands of elected officials. They were joined by secular leftist and liberal groups, which include Shia and Sunni members, as the protesters sought to turn the Pearl Roundabout into Bahrain's revolutionary Tahrir Square.

The idea of a Tahrir Square in Bahrain sent a dangerous signal not only to the country's royal family but also to rulers in the Gulf states more generally. Regardless of the peaceful nature of the sit-in - and the fact that it looked like a destination for family picnics rather than a political protest rally - the Pearl Roundabout was about to become a symbol of the political challenge to all the oil-rich Gulf states.

Bahrain's ruthless security clampdown in the dark of night, on March 17, indicated that the ruling family was determined not to have a repeat of Egypt's Tahrir Square. The day after the deadly crackdown, bulldozers were brought in to demolish the six sails holding a pearl statue in an attempt to bury any trace of the political rebellion it had come to represent .

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Young people in Bahrain were protesting in favour of a constitutional monarchy [Reuters]

The Gulf states' reaction, mainly the sending of Saudi Arabian and United Arab Emirates security forces to help quell the protests, underscored that the official Gulf order would not hesitate to do anything to maintain the status quo of the rule of the few.

The demands of the Bahraini protesters for elected officials accountable to freely elected parliaments, even under the umbrella of the monarchy, were intolerable to Gulf leaders. Such ideas challenged the notion of absolute control practiced in these countries and went far beyond the parliamentary system allowed in Kuwait.

The implicit and even explicit message that was sent from the Gulf to the rest of the Arab world, is that what happened in Bahrain was different than the uprisings in Tunisia and Egypt. Monarchs framed Bahrain's protests as an Iranian-backed sectarian Shia "conspiracy" to destabilise the Gulf and dominate the Arab World.

From a media perspective, if Bahrain had experienced the same level of attention that was placed on Egypt, for example, the regime there would have faced greater scrutiny across the world.

Some articles, in influential Gulf-owned newspapers, quoted or at times even misquoted Bahraini Shia leaders uttering sectarian statements. That is not to say that there are no pro-Iranian Shia voices in Bahrain that contributed to protests. But those voices offered a fragmented image and not the whole picture. Consequently most of the Arab media failed to tell the more important story: that the political demands by the protesters had little to do with sectarian bigotry and were very similar in their aspirations to those of protesters across the Arab World.

Sectarian rhetoric

At the same time, some Sunni religious leaders, at the payroll of some Gulf rulers, did not hesitate from fanning sectarianism by preaching anti-Shia sentiments, feeding fear of Bahraini protesters.

There is no denying that there was shock or anger - especially among Arab activists - over the crackdown and over Saudi and UAE intervention in Bahrain. But the absence of adequate coverage in the mass media undercut Bahraini citizens' attempts to reach out to the wider Arab world.

Thus it became easier for distorted presentations of Bahrain's movement to influence segments of the public who feared what was presented as Shia sectarianism.

The misrepresentations of events in Bahrain further deepened the Sunni-Shia divide - as Shias in Lebanon and Iraq, for example, have become bitter over the lack of coverage of what they view as Shia grievances in Bahrain.

Al-Manar television, run by the Lebanese Shia Hezbollah movement, as well as some Iraqi (Shia) stations - were the only channels that gave considerable coverage to the protests in Bahrain. The polarised coverage only served to further confuse public opinion, nurturing the sectarian beast.

The excellent Al Jazeera English documentary Shouting in the Dark, chronicling the heroic struggle of the Bahraini people and the harrowing clampdown, ought to open minds and hearts and send shock waves across the Arab world and the world at large.

But without real coverage and open debate in the Arab-speaking media about the reality of the situation in Bahrain there will be little change. It is wrong and unacceptable to paint the Bahraini opposition with a sectarian brush - while at the same time ignoring the fact that the regime used sectarian politics to consolidate its grip and prevent change. The Bahraini regime's policies, more than anything else, created sectarian reactions and pushed a segment of the people towards Iran. Repression is not the solution.

In fact, the people of Bahrain have given the regime several chances to reform, but repression will only drive people towards endorsing more radical demands of overthrowing the regime.

Although Bahrain is a young country, its history has shown that repression did not prevent the struggle for political freedoms to resume. It is about time that Arabs stood unequivocally with the Bahraini people who contributed to the Arab Spring, even as the Arab Spring failed them.

Lamis Andoni is an analyst and commentator on Middle Eastern and Palestinian affairs.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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India, China in Standoff Over South China Sea Oil
@ Sep 25, 2011
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http://online.wsj.com/article/SB10001424053111904563904576586620948411618.html#project%3DASIASPAT0611%26articleTabs%3Darticle

SEPTEMBER 22, 2011, 5:00 P.M. ET

By JEREMY PAGE in Beijing and TOM WRIGHT in New Delhi

India is being pulled into a complex and increasingly tense territorial dispute in the South China Sea, with China repeatedly warning ONGC, the Indian state oil company, that its joint exploration plans with Vietnam amount to a violation of Chinese sovereignty.

The Indian government responded to the latest Chinese warnings Thursday by repeating its pledge to continue exploring for energy in the South China Sea, where China is embroiled in territorial disputes with Vietnam, the Philippines, Taiwan, Malaysia and Brunei.

Disputed Isles

Competing territorial claims have led to maritime disputes off the coast of Asia.

View Interactive

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ONGC, meanwhile, said it planned to resume drilling next year at one of its two remaining blocks in the area, after a temporary suspension there because of a hard seabed, and after relinqishing another block last year because it lacked production potential.

"We plan to restart drilling there," said ONGC Chairman A.K. Hazarika. "The [Indian] Ministry of External Affairs has informed us that the block is well within the territory of Vietnam and so there are no issues with exploration there."

The testy public exchanges follow an unusual incident in July when, according to the Indian government, an Indian navy ship visiting Vietnam as part of expanding bilateral defense ties received a radio message warning it that it was entering Chinese waters. China has dismissed India's version of the incident as "groundless."

Analysts say the fresh standoff between Asia's two emerging economic and military giants, which fought a brief war over their disputed Himalayan land borders in 1962, increases the risk of a military flare-up in the South China Sea.

China, which won the 1962 war, has been involved in several angry exchanges and incidents at sea this year with Vietnam and the Philippines, which have been beefing up their military arsenals, and defense ties with the U.S., in response to what they see as growing Chinese assertiveness.

The U.S. has meanwhile been fending off repeated Chinese protests about its surveillance operations in the area, while trying to encourage democratic allies and partners, especially India, Australia and Japan, to play a more active role in defending freedom of navigation in the region.

The South China Sea, which Beijing claims almost in its entirety, is thought to be rich in oil and gas—although proving that has been hard because of the territorial disputes—and is one of the world's most important shipping routes.

It is also now one of the region's major potential flashpoints as emerging Asian economies, especially China and India, build up their military firepower and seek the energy and other resources they need to fuel growth.

"Beijing is worried that other claimants are becoming more active and any de facto occupation and/or exploration lend credence and bargaining power in future negotiation," said Jingdong Yuan, an expert on the South China Sea at the University of Sydney's Centre for International Security Studies.

One of the latest Chinese warnings to India came Thursday in an article on the website of the People's Daily — the main Communist Party mouthpiece —which was written by its correspondents in Vietnam and India and was not published in the newspaper itself.

"It's not worthwhile for Vietnam and India to damage the greater interests of the peace, stability and economic development between China and Vietnam, China and India, and in the whole region, for the sake of these small interests in the South China Sea," the article said.

China's Foreign Ministry spokesman, Hong Lei, also repeated the Chinese government's claims to sovereignty over the area. "Any foreign company that engages in oil exploration activity in waters under China's jurisdiction without the agreement of China has violated China's sovereignty, rights and interests," he said Thursday in a briefing. "This is illegal and invalid."

Vishnu Prakash, spokesman for India's Ministry of External Affairs, played down the the People's Daily article, as well as the incident with the Indian navy ship, and declined to comment on media reports that China had made an official diplomatic protest over ONGC's plans.

But he said India strongly believed in freedom of navigation in the South China Sea and would continue to explore in the area as part of a "quest for energy security".

"We're engaged with China closely," he said. "And as we are closely cooperating with China, we're also closely cooperating with Vietnam."

India and China have been expanding economic ties in the last few years, but many Indian officials and experts harbor deep concerns about Beijing's growing military power and its expanding influence in neighboring countries, especially Pakistan.

In response, India has been building closer defense and commercial ties with the U.S. and many of its regional allies and partners, including Vietnam, which India's Foreign Minister, S.M. Krishna, visited last week.

ONGC's overseas arm, ONGC Videsh, accounts for much of India's investment in Vietnam.

It operates one gas field—Block 06.1 in the Nam Con Son basin off Vietnam's south coast—in a joint venture with TNK-BP and PetroVietnam, which China has not protested over.

ONGC Videsh also won a contact in 2006 to jointly explore with PetroVietnam in Blocks 127 and 128 in the Phu Khanh basin further north. China protested at the time that both blocks were in its waters, and maintains that position now, according to the People's Daily article.

A spokesman for Vietnam's Foreign Ministry said Thursday that Blocks 127 and 128 were both in Vietnamese territorial waters. He declined further comment.

Vietnam launched a fresh round of licensing this year for blocks it says are not in contested waters. However, China has never specified the precise extent of its territorial claims.

A spokeswoman for ONGC Videsh said the company was only exploring now in Block 128, having relinquished 127, but declined to comment on whether it had future exploration plans with Vietnam.

Another Indian company, Essar Group, has a production-sharing contract for a petroleum block off Vietnam's coast. An Essar spokesman said it was not in "controversial" waters and Essar did not plan to bid for further exploration rights from Vietnam.

—Nguyen Anh Thu in Hanoi and Rakesh Sharma in New Delhi contributed to this article.

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Women in Saudi Arabia to vote and run in elections
@ Sep 25, 2011
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http://www.bbc.co.uk/news/world-us-canada-15052030

25 September 2011 Last updated at 11:12 ET

Women in Saudi Arabia are to be given the right to vote and run in future municipal elections, King Abdullah has announced.

He said they would also have the right to be appointed to the consultative Shura Council.

The move was welcomed by activists who have called for greater rights for women in the kingdom, which enforces a strict version of Sunni Islamic law.

The changes will occur after municipal polls on Thursday, the king said.

King Abdullah announced the move in a speech at the opening of the new term of the Shura Council - the formal body advising the king, whose members are all appointed.

"Because we refuse to marginalise women in society in all roles that comply with sharia, we have decided, after deliberation with our senior clerics and others... to involve women in the Shura Council as members, starting from next term," he said.

"Women will be able to run as candidates in the municipal election and will even have a right to vote."

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Saudi women face severe restrictions in their working and personal lives

Analysis

Emily Buchanan BBC world affairs correspondent

Saudi Arabia is a conservative society which has been inching towards reform under the leadership of King Abdullah, himself a reformist.

About 10 years ago the king said women should be central to the Saudi economy. Since then, change has been gradual for fear of a religious backlash.

Steps have been taken to reduce segregation and give more respect to women. Now, allowing women to stand and vote in municipal elections is a big step towards political reform, even though the municipal councils have very little power.

The right for women to join the all- male Shura Council could turn out to be even more significant as it is the most influential political body in the country.

Cautious reformer

The BBC's world affairs correspondent Emily Buchanan says it is an extraordinary development for women in Saudi Arabia, who are not allowed to drive, or to leave the country unaccompanied.

She says there has been a big debate about the role of women in the kingdom and, although not everyone will welcome the decision, such a reform will ease some of the tension that has been growing over the issue.

Saudi writer Nimah Ismail Nawwab told the BBC: "This is something we have long waited for and long worked towards."

She said activists had been campaigning for 20 years on driving, guardianship and voting issues.

Another campaigner, Wajeha al-Huwaider, said the king's announcement was "great news".

"Now it is time to remove other barriers like not allowing women to drive cars and not being able to function, to live a normal life without male guardians," she told Reuters news agency.

Correspondents say King Abdullah has been cautiously pressing for political reforms, but in a country where conservative clerics and some members of the royal family resist change, liberalisation has been very gradual.

In May more than 60 intellectuals called for a boycott of Thursday's ballot saying "municipal councils lack the authority to effectively carry out their role".

Municipal elections are the only public polls in Saudi Arabia.

More than 5,000 men will compete in municipal elections on Thursday - the second-ever in the kingdom - to fill half the seats in local councils. The other half are appointed by the government.

The next municipal elections are due in four years' time.

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