JimPinto.com - Connections for Growth & Success™
No. 221 : 22 November 2006

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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Happy Thanksgiving!

This week in America, we celebrate Thanksgiving. Midst the turmoil and busyness, we slow down to give thanks for many good things we have to be thankful for. Happy Thanksgiving to all!

Rockwell sells Reliance, focus on computers/software

My predictions that Rockwell Automation was ailing and would be acquired have long since proved wrong. Under Chairman and CEO Keith Nosbusch, the company is moving ahead strongly. Revenues for FY2006 (Sept 06) were up 11% at $5.5B, and operating earnings were $1B, up 19%.

Rockwell has experienced significant growth in Asia, and China. A new global headquarters in Singapore will include manufacturing, sales and support for low-end products.

At Rockwell's annual Automation Fair, Keith Nosbusch seemed well in control, very different from his predecessor Don Davies who has since exited. The stock has doubled since he departed.

Keith Nosbusch speaks with the confidence and conviction of an engineer who understands the markets, "Information will drive the next wave. The utilization and deployment of information will provide a quantum leap in competitive advantage." Clearly Rockwell is focusing on high-tech control products and software.

The clear sign of this shift is that Rockwell recently sold off its Reliance power systems division to Baldor Electric for $1.75B in cash and about $50 million in stock. The sale, which is expected to close by April, came after much speculation. The price was higher than many had predicted.

Reliance Electric and Dodge brand names include electric motors, bearings and gears, century old businesses. The business was profitable in recent years, but vulnerable to economic downturns. Reliance employs 4,300 people, with $1B revenue, 20% of Rockwell's total. After the sale, Rockwell will still employ about 18,000 people worldwide.

Rockwell has said previously that it would use some of the proceeds for dividends or share buybacks, but also wanted to raise capital to fuel growth in its other businesses. After the announcement, Rockwell shares closed at $63.20, up 3% - indicating that the move is seen as positive.

Click Rockwell to sell power systems unit - focus on software, new technologies

Click Rockwell Automation posts strong growth; predicts more to come

Click Visit the Rockwell Automation Weblog

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Micro-loans help to abolish poverty & build self-respect

The Nobel Peace Prize for 2006 has been awarded to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development for poor people. I saw Yunus on CPAN the other day, and was impressed by his clear visions and simple answers to many complex questions.

With pioneering "micro-credit" loans (as little as $10) Yunus has transformed society in Bangladesh, one of the poorest countries in the world. While poverty is increasing elsewhere in the world, in Bangladesh it is steadily decreasing, and decreasing faster.

The movement started in 1974, when Muhammad Yunus, a University economics professor in Bangladesh, took his students on a field trip to a poor village. They saw a woman making bamboo stools, who had to borrow a few pennies to buy raw bamboo. After repaying the money-lender, at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at better rates, she would have been able to get beyond the subsistence level.

Realizing that there was something terribly wrong with the economics he was teaching, Yunus (from his own pocket) lent the equivalent of about $25 to 42 basket-weavers. He found that this tiny amount not only helped them to survive, but also created the spark of personal initiative for them to pull themselves out of poverty.

Against the advice of banks and the government, Yunus continued giving "micro-loans" and in 1983 formed the Grameen Bank ("village bank") founded on the principles of trust and solidarity. In Bangladesh today, Grameen has 1,084 branches, with 12,500 staff, and 2.1 million borrowers in 37,000 villages. 94% of the borrowers are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system.

Grameen methods are now applied in 58 countries, including the US, Canada, France, The Netherlands and Norway.

Muhammad Yunus is that rare thing - a bona fide visionary. His dream is the total eradication of poverty from the world. He has started a fundamental rethink on the economic relationship between the rich and the poor, their rights and their obligations.

Yunus was asked for his views on the American welfare system. Here's his direct, simple and startling response, which rings true:

    "In the wealthy, western countries you have designed a great big box called 'social welfare'. If people are poor, it is society's responsibility to keep them alive. I think that's completely wrong. That way of thinking creates a divide between those who work and can take care of themselves and those who cannot.

    "What happens? If you're one of the unlucky few, you get a benefit payment every month. The message is clear: 'No need to do anything, the government will take care of you'. So people become dependent. The get used to having society hand out money. They don't have to do anything for it, don't have to justify it. That is deadly to initiative, and they start waiting for more aid. That's when the fundamental human element of creativity is broken.

    "The social welfare system creates a human zoo. The animals in the zoo are given their meals on time and a doctor comes by when they're sick, but they are living in captivity. They still have a vague instinct that tells them they should hunt, but they aren't challenged to go hungry for days and hunt prey. The animals aren't as sharp and inventive as they would be in nature. They have become a poor imitation of themselves. People who are swallowed up in the western social welfare system are also no longer themselves. They aren't stimulated to discover their possibilities, talents and creativity. They are robbed of every challenge. They are curbed in their development."

    "Every single individual on earth has both the potential and the right to live a decent life. Across cultures and civilizations, even the poorest of the poor can work to bring about their own development.

    "Micro-credit has proved to be an important liberating force in societies where women, in particular, have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male."

Wow, I was transfixed with the simplicity and directness of this man as I watched him on TV. When he was done, I switched it off and sat contemplating in the dark for several minutes.

Follow the weblinks below, to read about Yunus and Grameen Bank.

Click Grameen - banking for the poor

Click One Man Makes a Huge Difference In Ending Poverty For Millions

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The public-education crisis in America

Several friends who are teachers have become increasingly troubled about the decline in American public education over the past several years. A recent story by John Stossel on ABC 20/20 inspired this editorial.

Bad things are going on in America's public schools. Some complain that teachers are not paid enough, and that spending more money on schools would solve the problem. But there actually is no linkage between budgets and student achievement. Per-pupil spending has been doubled (adjusting for inflation) over the last 30 years, and yet schools aren't getting better - they're getting worse.

America's cultural condition is not healthy. It is shocking how badly the average American middle-class has declined. Since 1960, the US population has increased 41%; the GDP has nearly tripled; and total social spending by all levels of government (measured in constant 1990 dollars) has risen more than fivefold. Spending on welfare has increased by 630%; spending on education by 225%.

During the same period there has been a 560% increase in violent crime, a 419% increase in illegitimate births; a quadrupling of divorce rates; a tripling of the percentage of children living in single-parent homes; more than a 200% increase in the teenage suicide rate; and a drop of almost 80 points in SAT scores. All signs point to deterioration in the quality of American schools.

Europeans and Asians have rapidly expanded their educational systems over the last 50 years. US stagnation and even decline has been apparent since the 1970s. Even our high school graduation rates are lower today than they were a decade ago.

In the new global age, human capital is more important than physical capital for long-term economic development. Our weak educational systems will soon prove disastrous if something is not done NOW.

While Congress wages partisan political warfare, America's education system keep declining. Who will stand up to make a difference?

Click Read John Stossel's "Stupid in America"

Click US workforce income to decline if education doesn't improve

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Washington K Street - blatant bribery & corruption

Since 2000, the number of registered lobbyists in Washington, DC has more than doubled from 16,300 to 34,800. That works out to 65 lobbyists for every Congressman.

These lobbyists spend $200 million every month, wining, dining and corrupting the very people who are voted in to represent America.

The amount that lobbyists charge their new clients has increased by as much as 100% over the past few years. Only a few other businesses have enjoyed greater prosperity. The lobbying boom has been caused by three factors: rapid growth in government, Republican control of both the White House and Congress, and wide acceptance among corporations that they need to hire professional lobbyists to secure their share of federal benefits. To the great growth industries in America, such as health care and home building add one more: influence peddling.

Lobbying firms can't hire people fast enough. Starting salaries have risen to about $300,000 a year for the best-connected aides eager to "move downtown" from Capitol Hill. Once considered a distasteful post-government vocation, big-bucks lobbying is luring nearly half of all lawmakers when they leave Congress.

In the 1990s, lobbying was largely reactive. Corporations had to fend off restrictive legislative proposals that would cost them money. But with pro-business officials running the executive and legislative branches, companies started to hire well-placed lobbyists to go on the offensive and find ways to profit from tax breaks, loosened regulations and other government goodies that are increasingly available.

"K Street" is the center of Washington's lobbying industry. Many of the major Washington lobbying firms are located in a section sometimes referred to as "the fourth branch of government". K-Street firms hire ex-politicians from both major parties, to hedge their bets.

Jack Abramoff's recent conviction for numerous felonies has called the K Street Project into question. Americans are starting to insist on cleaning up political contributions.

In Connecticut, contributions to politicians from lobbyists and state contractors are banned. In races for governor and state legislature, candidates must fund their own campaigns. And to qualify to run, they must first raise a significant number of small contributions from voters in their district. This allows competitive candidates with something to say a chance without needing access to big money.

Arizona and Maine also have similar public financing regulations. In California, the Clean Money and Fair Elections Act passed the State Assembly in January and moves on to the Senate.

Supreme Court Justice Louis Brandeis said: "You can have wealth concentrated in the hands of a few, or democracy, but you cannot have both."

Click K Street faces a changing of the guard

Click The Road to Riches Is Called K Street

Click K Street sizing up soon-to-be ex-lawmakers

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The soaring cost of political & presidential campaigns

In the decade since 1996 the cost of presidential and Congressional elections has doubled from $1.6 billion to more than $3.9 billion.

The chairman of the Federal Election Commission thinks that by 2008, each major-party presidential candidate will need to raise $ 400M, well in excess of the $ 274M and $ 253M collected by GW Bush and John Kerry in 2004. $ 100M is the minimum ante for primaries. And where does this money come from? It's an open secret - go read about it on Government websites.

Americans must insist on cleaning up political campaign contributions. Clean money can indeed be a reality. In Connecticut, contributions to politicians from lobbyists and state contractors are banned. In races for governor and state legislature, candidates must fund their own campaigns. And to qualify to run, they first must raise a significant number of small contributions from voters in their district. This allows competitive candidates with something to say a chance without needing access to big money.

Arizona and Maine also have similar public financing regulations. In California, the Clean Money and Fair Elections Act passed the State Assembly in January and moves on to the Senate.

Click Money's Going to Talk in 2008

Click 2004 Presidential Election Contributions

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Alan Morrow [amorrow77@hotmail.com] regarding whether Global warming is man made:
    "I am always surprised when I hear well educated engineers talk about the 'myth' of human caused global warming. Are engineers practicing wishful thinking because they do not want to admit that they have some responsibility for the problem? Is it a mistrust of the mathematical models or the data?

    "There is little legitimate dispute over the fact that CO2 concentrations have been increasing based on human generated emissions. An engineer certainly cannot dispute the facts of basic physics; increasing CO2 and other greenhouse gases will trap more heat on our planet. Given those two ideas, the resistance to the theory of significant human caused global warming must be due to suspicion of the climate models. I think you will find that the current climate models have vastly improved over the past decade and hey all predict on a significant climate change based on projected CO2 emissions, although they can disagree on the magnitude of the change.

    "Perhaps there is another reason for the suspicion of human caused global warming. In your article, you cite human ego as a factor. In other words, you imply that humans want to be recognized as a force on the planet, when in reality, they are not very significant. I cannot disagree more. Humans are a force on this planet; simply look at the number of species that have been driven to extinction, the forests that have disappeared, desertification, depletion of ocean fisheries, and the ecological disasters that continue to happen."

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Laurie Williams [lauriew@williamsbrothers.com.au] from Australia is enthusiastic about Solar Tower development:

    "I wonder whether generation plants built on solar tower principles may get significant results. They are becoming cheap to build. Distribution and sale of electricity anywhere on the planet where it's needed is more attractive than construction of large, centralized nuclear plants.

    "This idea has been around for something like 20 years. It is very impressive simple technology, already proved in pilot form. Just a few solar tower plants would provide the same (peak) power as an average nuclear plant, with none of the risks and at far lower running cost, with no water needed in operation.

    "I can see how solar tower plants could be included in a set of power generation plants of different types, with hydro, tidal, wind and photovoltaic generation, with balance of numbers and outputs of the different types of generation plants depending on many factors, including season, time of day, geography, latitude, etc.

    "Excess generated energy from solar towers could be stored in the same way as excess from any other seasonal or time-dependent source, What could be simpler, cleaner and lower maintenance than free hot air blasting its way up a chimney?"

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Joanne Harris [punkinmark@mindspring.com] in Florida feels that not all immigrants are willing to join the mainstream of American society, as I had suggested:

    "You need to visit South Florida, where the majority of Hispanic car owners hang the flag of their own country - NOT the U.S. flag from the rearview mirror. You need ask for help in a grocery store in Miami to West Palm Beach where they look at you like you're speaking a foreign language and have to ask other Hispanic workers what the heck you're saying.

    "Many immigrants here - legal or illegal in status - have no interest in integrating linguistically or culturally. They are here or the money.

    "I can understand wanting a better life. What I don't understand is anyone moving to a foreign country and refusing to even try to speak the language - and they get to learn English for free!

    "Yet we keep highly educated Western Europeans out of the country, saying we've already met our quota for green cards. Try again next year. We don't care that you'll pay taxes on your income, and provide professional services.

    "The original immigrants came with the realization and acceptance that to forge a living for themselves in a new land, that they'd have to work harder than ever, bear up under great difficulties and have nothing until they made something for themselves.

    "While some immigrants today come in with that attitude, many come only to get free handouts, to send all their income back to their homeland instead of investing it back into their new communities (which makes for a healthy economy)."

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