Haven't been too active on this board recently.. but I see I'm starting to get some comments, so it's time to update some of my positions...
As I mentioned in a reply to a comment from imapedestrian, I've tearfully sold out of my CCUR position, and reallocated it to GNBT based upon Technicals and the perception that they are about to go Phase III on their Ora-lyn insulin delivery system..
I do remain skeptical about GNBT's CEO, Anna Gluskin, but I think that some of their directors will provide the necessary managerial credibility. Dr. Gerald Bernstein, a former president of the American Diabetes Association, is on their BOD, and would be an excellent "face-man" for the company when it comes time to do CNBC interviews. But even if he's operating behind the scenes, that's fine with me..
Anyway.. the chart for GNBT indicates we're very close to an inflection point on a rising wedge formation, which could lead to a breakout that takes the stock almost 75% higher to the $2.50/range within the next 30-60 days.
Daily chart:
Daily chart
Note the "golden cross" of the Moving Averages on the daily chart... Very bullish, IMO, although we may have a short-term pull-back consolidation.. Volume has been very good in recent weeks and it appears accumulation is occurring.
And when we look at the monthly chart, it becomes evident that the bollinger bands are definitely pinching, a further indicator of a future major move to be expected in the stock (hopefully upward.. ;0)
Monthly chart
As for DNDN.. I also, regretfully, was forced to sell that stock at a loss, and even now, with the recent news that FINALLY Congress is pushing for an investigation into the FDA decision on Provenge, the stock is trading below where I sold it at. All of that support that had been built into the stock over the past 6 months has now turned into resistance and it's going to require substantial news to overcome it.
Thus, under $8/share, DNDN is a very speculative trading vehicle.. But as I type this, I see the stock is trading at $7.70 on heavy volume (short covering, I suspect.. ;0)
The Scrutinizer
Friday, December 14, 2007
Tuesday, July 24, 2007
CCUR and VOD update
An interesting article on VOD development plans by major Cable companies. One of the deficiencies of the article is their failure to note CCUR's subsidiary, Everstream, and it's VOD tracking services that enable providers to track who's watching which program (very useful for targeting dynamic ad insertion to the most receptive audience). They also fail to mention that CCUR's VOD operating system software, as I understand it, is fully capable of dynamic ad insertion.
VOD's Growing Pains
VOD's Growing Pains
Come Together
(Broadcasting and Cable) _ Can cable operators, programmers, advertisers design a VOD model that works?
By Jon Hemingway
When it comes to video-on-demand (VOD), cable operators, networks and advertisers are a lot like eager summer tourists on a road trip: They know where they want to be but can't agree on how to get there.
Most TV executives agree that watching favorite primetime shows whenever you want will be a reality within the next few years'or sooner. According to a recent study by the Leichtman Research Group, the portion of U.S. digital-cable households that have used VOD grew from 25% in 2004 to 60% in 2006. And a study by PricewaterhouseCoopers (PwC) reveals that, although VOD represents a fraction of end-user spending on television distribution, the segment is by far the fastest-growing.
Viewers will spend $2.1 billion on VOD services in 2007, a 23% rise from 2006. PwC projects such spending will double by 2011, to $4.2 billion, a compound annual growth rate of 19.5%. No other service element available today will grow as fast. But cable operators and advertisers are still trying to figure out the right advertising model, as networks begin to experiment with putting popular programming on VOD. There's no big rush from programmers because the audiences'and fees'are still so small. Cable operators find themselves in need of more television programming to feed a hungry audience.
Viewers have shaped the evolution of VOD in no uncertain terms. Early deals with broadcasters to carry content on a transactional on-demand basis were scrapped when viewers balked at paying for the content. Free, ad-supported offerings became a focus. Cable operators are growing this category at a rapid rate to distinguish themselves in the eyes of the consumer. Free content represented 67% of total first-quarter orders tracked by Rentrak, which measures VOD usage.
Says Comcast VP of New Media Matthew Strauss, "[Video-on-demand] is no longer new. It is now integrated into how people watch television." Comcast, the nation's largest cable operator, has nurtured its VOD into a business that registers 250 million views a month. "That's 250 million times that viewers are not watching traditional television," he says.
Viewers have become so accustomed to VOD offerings that Time Warner Cable is reaching out to linear viewers with VOD functionality. Its Enhanced TV suite allows viewers to start at the beginning of a program if they tuned in late (Start Over function) or view programs that aired earlier in the day if they missed them (Look Back). It doesn't, however, allow the viewer to fast-forward.
Cable operators'and competing telephone companies'have not charged consumers directly for most VOD because the service has been used "as a tool for retention," says Tricia Lynch, director of Verizon FiOS TV programming, noting that it increasingly shows up on consumer checklists. Many cable operators believe that, once viewers are hooked on using free on-demand, they will gravitate toward the premium content.
Increasingly, the big broadcast networks smell opportunity. Cox Communications and Disney-ABC Television will run a trial this fall in which Cox will provide four primetime shows and other content on-demand the day after it premieres.
To lure advertisers, Cox will disable the fast-forward function on its system, and the two companies will test dynamic ad insertion. With dynamic insertion, operators can offer targeted ads to be swapped in and out of content as it is delivered. Usually, ads are inserted in advance and cannot be swapped out once the content is on the operator's network. Dynamic targeted ad insertion is the linchpin that operators hope will bring all parties, content and advertising, to the table.
"We need to make sure the next move in advertising has incentives for everybody involved," says Verizon's Lynch, whose company is testing dynamic insertion through year-end and expects to implement it in 2008.
Cable operators are still considering revenue-sharing plans and operational tolls per ad and per insertion. Advertisers are attracted to the targeting potential of dynamic ad insertion, which will give them the ability to accurately measure viewer response to advertising and address ads to viewers based on preference and behavior, far more specifically than the data relied on now.
"It all comes down to the fact that, with VOD, you have a unicast connection to the customers," says Jim Owens, solutions marketing manager for Motorola's home and networks mobility division. "In [delivery over the cable plant], you can make some distinction between service groups, ZIP codes and ad zones. But with VOD, you have a one-to-one relationship with a person that's time-specific. You have this live connection with them.
Such targeting, however, is still a ways off, cautions Owens: "It is technologically possible, but there are a lot of challenges and a lot of changes on the sales side and the systems side in how you manage the inventory and sell it."
Moreover, advertisers point out that the audience for VOD represents under 5% of total viewership. "They still need the impressions," says Maria Mandell, executive director of digital innovation, Ogilvy Interactive. "The CPMs are high at about $50, compared to $25 for online, due to limited impressions." She notes that, while advertisers have participated in some ad-insertion trials, no one is actively pitching it to the ad community.
James McQuivey, principal analyst covering media and entertainment technology at Forrester Research, says momentum toward expanding VOD has never been stronger. "It's good for the advertisers, it's good for the operators, it's good for the networks," he says. "The only one we have to wait and see on is the viewer."
While the network operators work feverishly to expand television content, they are also working to squeeze shut the window between DVD release and VOD availability. Operators are conducting day-and-date trials. "We think it's inevitable," says Bob Benya, senior VP, on-demand product management, Time Warner Cable, referring to the eventuality of day-and-date release. Time Warner Cable has been in trials with Warner Bros. Studios and Lionsgate Films. The studios, wary of cannibalizing their existing channels, are taking a cautious approach.
Warner Bros. began testing day-and-date release with Comcast last November in Denver and Pittsburgh and will extend the run through the coming November. What the studio sees in the results is a sharp spike in VOD usage of 52% versus comparable non-trial markets and a strong, 10% increase in DVD sales with just a marginal, 2%-3%, hit to rentals. In its trials with TWC in Austin, Texas, and Columbus, Ohio, the studio says, the early numbers show increases across all indexes.
IFC is finding success with a different model, simultaneous VOD and theatrical release. Launched in March of last year on Cablevision and Comcast, IFC's In Theaters proved a unique opportunity for the less commercial, or specialty, independent titles in the company's stable, allowing them greater reach than they would otherwise receive.
IFC's In Theaters introduces two films a month on-demand as they hit the big screen. The price per 24-hour viewing period can vary but averages about $5.99 per film, and the films are receiving 50,000-75,000 views a month each.
"The theatrical distribution model for specialty films was not viable anymore," says IFC President Jonathan Sehring, "We saw what a great technology VOD had become."
Cable Vendors Predict Surge
Vendors tweak old platforms for new applications
By Glen Dickson
VOD technology vendors are forecasting a surge in sales as cable operators upgrade their existing infrastructure to support more VOD content, including bandwidth-intensive high-definition fare, and new applications such as timeshifting and targeted advertising. Providing a better VOD experience generally means both adding storage capacity and expanding the number of on-demand "unicast" (i.e. delivered to a single set-top) streams that can be delivered simultaneously to subscribers.
New applications such as providing the timeshifting capabilities of a digital video recorder (DVR) through VOD, sometimes known as "network DVR," require a dramatic expansion in the number of program streams that can be ingested at one time, as operators will need to record and store the most popular shows in real-time. And delivering up-to-date and/or targeted commercials within a VOD program, a technique known as "dynamic insertion," necessitates heavy software integration between the VOD platform and existing traffic systems.
Cable operators and competitors aren't facing a full-scale swap-out of existing infrastructure, but instead incremental upgrades and expansions. As a benefit, some of the network upgrades for VOD can also be used to deliver more linear HD channels and faster high-speed data service.
This upgrade investment will be far less than the massive infrastructure buildup in the mid-90s. "On an order of magnitude, we're talking hundreds of millions" of dollars, says Ferris Baker Watts analyst Murray Arenson, who covers leading vendors SeaChange, C-COR and Concurrent.
Basil Badawlyeh, VP of on-demand strategy for C-COR, says that competition is driving cable's investment on VOD infrastructure, whether it is DirecTV's planned expansion of high-definition programming, Verizon's new fiber-optic-based television service or Amazon's plan to sell movie downloads through TiVo digital video recorders.
"The biggest catalyst is the fact that competition is heating up in a very big way," says Badawlyeh. "The other piece of this is that the type of content historically available on video-on-demand is catering to different demographics of people than what the industry was originally pushing towards."
As the content mix shifts, "broadcast on-demand" services like Time Warner Cable's Start Over, which lets viewers tuning in late to a primetime show jump back to the beginning by initiating an on-demand stream, are the biggest current driver of VOD investment.
Most VOD systems were initially designed as simply a better form of pay-per-view; that is, they were intended to deliver premium movies on a transactional basis. So most of the existing systems were designed to deliver VOD streams to about 10% of the VOD-capable homes within a given service area, sometimes less than that.
But with Start Over, Time Warner has found contention rates jumping to 40-50% as subscribers discover a more convenient way to watch the most popular shows. "The networks are being designed for a lot more concurrent stream usage," says Badawlyeh.
Concurrent, which is one of Time Warner's key vendors for Start Over, has focused on the reliability of its MediaHawk 4500 platform as more brand-name network content moves to VOD, says director of marketing Tim Dodge. "Session success rates in the low 90s used to be acceptable, now they're asking for 99.5%. VOD is really becoming a mission-critical product offering."
Storage is also being increased, says Badawlyeh.
Time Warner has doubled the storage in many systems from 2,500 to 5,000 hours and Comcast, which was an early leader in promoting "free" i.e. ad-supported VOD content from networks like NBC and CBS, is specifying VOD systems with a minimum of 4000 hours of storage.
"We see a lot of interest in much larger content libraries," adds Kip Compton, senior director/general manager of Video & Content Networking for Cisco, which entered the VOD game last year with its acquisition of Arroyo Video Networks. Compton, a former Comcast executive, says that while a 5,000-hour VOD system might have once seemed to be very robust, "we see 50,000 and 100,000-hour libraries in the not-too-distant future."
The way operators are storing on-demand video is also changing, as they move toward distributed architectures that place content on different types of storage, depending on how often content is accessed. Cisco uses varying types of storage: SATA drives for low-cost storage, SCSI drives for low-cost streaming, and some RAM (random access memory) storage to hold the most popular content.
Motorola, which entered the VOD business with its acquisition of Broadbus Technologies in Sept. 2006, thinks it has an edge in handling the explosion in VOD content through its solid-state server architecture. The company, which is supplying the servers for Time Warner Cable's Start Over deployment in San Antonio, uses dynamic random access memory (DRAM) storage for content ingest and streaming, as well as storing the most popular content. It relies on hard disk for storing the much greater volume of content that isn't accessed as frequently.
In order to serve a greater number of streams more efficiently, SeaChange has developed a new VOD server that uses flash-memory storage instead of hard disk and is designed to share high-demand content.
Another exciting prospect for VOD is expanding the amount of high-definition programming. To date, there has been very little HD content available on-demand, due both to concerns about copy protection and the relatively small number of HD-enabled homes. But with flat-panel HD sets flying off store shelves, the cable industry knows that hi-def VOD will soon be a requirement for customers. There is also the looming specter of satellite operator DirecTV, which has heavily promoted its plans to broadcast some 100 HD channels by year end.
Comcast has taken the lead in providing hi-def content through VOD, including movies from premium networks HBO and Cinemax, primetime fare from A&E, and even hi-def artwork and fine photography from Seattle-based Gallery Player. Cox has added HD movies to its on-demand library, and other operators are also expected to soon bulk up their offerings.
"The number one priority for most cable operators out there is expanding their hi-def offerings, as there is a lot of competition from satellite guys advertising 100 HD channels," says SeaChange's Phil Simpson, director of product marketing for on demand solutions. "HD VOD is a strategic opportunity for cable, but it requires more streaming capacity and more storage capacity."
With HD streams coming in at 15 megabits per second (Mbps) compared to the 3.75 Mbps required for standard-definition VOD, the bandwidth implications are pretty easy to comprehend.
Some operators will be grabbing more bandwidth by upgrading their hybrid-fiber-coax plants from 750 or 860 megahertz (MHz) to one gigahertz (GHz). Many others will rely on the relatively new transmission technique of switched digital video (SDV), which conserves network bandwidth by delivering linear program channels in unicast form, much like a VOD stream is delivered. Some operators will employ a combination of both solutions.
"The beauty of switched digital video is it really blurs the linear stuff with the nonlinear stuff, and it's totally transparent to the viewer experience," says David Price, VP of business development for Harmonic. Harmonic sells both VOD software (it acquired VOD specialist Entone Technologies last year) as well as the "EdgeQAM" devices that are used to transmit digital video and data down cable pipes.
When cable operators look for new revenues to recoup their VOD investments, targeted advertising is the hot topic. Traditionally, inserting commercials in VOD content was a time-consuming process that required re-encoding the content to insert new spots. That meant spots might be several weeks old before they aired, thus limiting their appeal to advertisers. But through the new technique of dynamic insertion, fresh spots can be spliced into compressed VOD content as it streams from the VOD server, and more importantly, targeted spots can be delivered to individual set-tops.
C-COR played an instrumental role in one of the first trials of dynamic advertising insertion with Charter Communications in St. Louis. The trial successfully delivered dynamically-inserted spots to some 250,000 digital subscribers.
SeaChange has also experienced success with a dynamic insertion trial with small Kansas-based operator Sunflower Broadband. The trial, done in partnership with Atlas, MTV Networks and Mediaedge:cia, runs on SeaChange's AdPulse software.
Harmonic's Price thinks that targeted advertising will show up alongside premium fare as well as free VOD, particularly as the windows for VOD movies get closer to the DVD window. He says that operators are mulling the idea of selling a new theatrical release on-demand for perhaps $7.99 for a commercial-free version, and $5.99 with five minutes of ads running before the movies. Says Price, "If you know a person bought 'Talladega Nights,' then you know they are interested in watching a NASCAR promotion and you know they are interested in the latest oil from Pennzoil."
In order to pursue such targeted advertising opportunities, integration between VOD and existing traffic and sales software is crucial. Compton and others point to the Society of Cable Telecommunications Engineers' DVS-629 standard as a likely interface between the VOD platform and ad decision systems.
The continued march of popular content to the on-demand platform is inevitable, says Jonathan Bokor, VP of business development for Tandberg, which provides its AdPoint on-demand advertising software to Comcast. But while most VOD advertising trials have experimented with pre-and post-roll ads, Bokor doesn't think that the basic look and feel of VOD commercials needs to be different from what people are used to in linear TV.
"I don't see why the ad breaks should be much different than when you turn on the TV today," he says. "I know it's a bit of a clean slate, and most of the high-value content hasn't been there yet. But why should there be a different ad load in on demand than in linear?"
Video-on-demand could be called child's play at the moment. Kids' programming represented 24% of total free VOD orders in the first five months of 2007, behind music and movies, according to Rentrak. TV executives believe this is the start of something big. Viewers are eager to see the primetime shows already appearing in cable systems' VOD packages. Equipment makers predict a surge in the hardware needed for storage and dynamic ad insertion. But VOD ad dollars represent a fraction of advertiser spending on TV. Can networks, advertisers and TV distributors make VOD profitable?
*********************************
I think what we can all sum up from this article is that VOD presents a TREMENDOUS opportunity for cable companies to generate ad revenue in a manner we have seen with Google and other content delivery networks via the internet.
And it's likely there will be tremendous amounts of money invested in the industry over the next several years, and the potential for some of the smaller players (like CCUR) to get bought out by the bigger players.
The Scrutinizer
An interesting article on VOD development plans by major Cable companies. One of the deficiencies of the article is their failure to note CCUR's subsidiary, Everstream, and it's VOD tracking services that enable providers to track who's watching which program (very useful for targeting dynamic ad insertion to the most receptive audience). They also fail to mention that CCUR's VOD operating system software, as I understand it, is fully capable of dynamic ad insertion.
VOD's Growing Pains
VOD's Growing Pains
Come Together
(Broadcasting and Cable) _ Can cable operators, programmers, advertisers design a VOD model that works?
By Jon Hemingway
When it comes to video-on-demand (VOD), cable operators, networks and advertisers are a lot like eager summer tourists on a road trip: They know where they want to be but can't agree on how to get there.
Most TV executives agree that watching favorite primetime shows whenever you want will be a reality within the next few years'or sooner. According to a recent study by the Leichtman Research Group, the portion of U.S. digital-cable households that have used VOD grew from 25% in 2004 to 60% in 2006. And a study by PricewaterhouseCoopers (PwC) reveals that, although VOD represents a fraction of end-user spending on television distribution, the segment is by far the fastest-growing.
Viewers will spend $2.1 billion on VOD services in 2007, a 23% rise from 2006. PwC projects such spending will double by 2011, to $4.2 billion, a compound annual growth rate of 19.5%. No other service element available today will grow as fast. But cable operators and advertisers are still trying to figure out the right advertising model, as networks begin to experiment with putting popular programming on VOD. There's no big rush from programmers because the audiences'and fees'are still so small. Cable operators find themselves in need of more television programming to feed a hungry audience.
Viewers have shaped the evolution of VOD in no uncertain terms. Early deals with broadcasters to carry content on a transactional on-demand basis were scrapped when viewers balked at paying for the content. Free, ad-supported offerings became a focus. Cable operators are growing this category at a rapid rate to distinguish themselves in the eyes of the consumer. Free content represented 67% of total first-quarter orders tracked by Rentrak, which measures VOD usage.
Says Comcast VP of New Media Matthew Strauss, "[Video-on-demand] is no longer new. It is now integrated into how people watch television." Comcast, the nation's largest cable operator, has nurtured its VOD into a business that registers 250 million views a month. "That's 250 million times that viewers are not watching traditional television," he says.
Viewers have become so accustomed to VOD offerings that Time Warner Cable is reaching out to linear viewers with VOD functionality. Its Enhanced TV suite allows viewers to start at the beginning of a program if they tuned in late (Start Over function) or view programs that aired earlier in the day if they missed them (Look Back). It doesn't, however, allow the viewer to fast-forward.
Cable operators'and competing telephone companies'have not charged consumers directly for most VOD because the service has been used "as a tool for retention," says Tricia Lynch, director of Verizon FiOS TV programming, noting that it increasingly shows up on consumer checklists. Many cable operators believe that, once viewers are hooked on using free on-demand, they will gravitate toward the premium content.
Increasingly, the big broadcast networks smell opportunity. Cox Communications and Disney-ABC Television will run a trial this fall in which Cox will provide four primetime shows and other content on-demand the day after it premieres.
To lure advertisers, Cox will disable the fast-forward function on its system, and the two companies will test dynamic ad insertion. With dynamic insertion, operators can offer targeted ads to be swapped in and out of content as it is delivered. Usually, ads are inserted in advance and cannot be swapped out once the content is on the operator's network. Dynamic targeted ad insertion is the linchpin that operators hope will bring all parties, content and advertising, to the table.
"We need to make sure the next move in advertising has incentives for everybody involved," says Verizon's Lynch, whose company is testing dynamic insertion through year-end and expects to implement it in 2008.
Cable operators are still considering revenue-sharing plans and operational tolls per ad and per insertion. Advertisers are attracted to the targeting potential of dynamic ad insertion, which will give them the ability to accurately measure viewer response to advertising and address ads to viewers based on preference and behavior, far more specifically than the data relied on now.
"It all comes down to the fact that, with VOD, you have a unicast connection to the customers," says Jim Owens, solutions marketing manager for Motorola's home and networks mobility division. "In [delivery over the cable plant], you can make some distinction between service groups, ZIP codes and ad zones. But with VOD, you have a one-to-one relationship with a person that's time-specific. You have this live connection with them.
Such targeting, however, is still a ways off, cautions Owens: "It is technologically possible, but there are a lot of challenges and a lot of changes on the sales side and the systems side in how you manage the inventory and sell it."
Moreover, advertisers point out that the audience for VOD represents under 5% of total viewership. "They still need the impressions," says Maria Mandell, executive director of digital innovation, Ogilvy Interactive. "The CPMs are high at about $50, compared to $25 for online, due to limited impressions." She notes that, while advertisers have participated in some ad-insertion trials, no one is actively pitching it to the ad community.
James McQuivey, principal analyst covering media and entertainment technology at Forrester Research, says momentum toward expanding VOD has never been stronger. "It's good for the advertisers, it's good for the operators, it's good for the networks," he says. "The only one we have to wait and see on is the viewer."
While the network operators work feverishly to expand television content, they are also working to squeeze shut the window between DVD release and VOD availability. Operators are conducting day-and-date trials. "We think it's inevitable," says Bob Benya, senior VP, on-demand product management, Time Warner Cable, referring to the eventuality of day-and-date release. Time Warner Cable has been in trials with Warner Bros. Studios and Lionsgate Films. The studios, wary of cannibalizing their existing channels, are taking a cautious approach.
Warner Bros. began testing day-and-date release with Comcast last November in Denver and Pittsburgh and will extend the run through the coming November. What the studio sees in the results is a sharp spike in VOD usage of 52% versus comparable non-trial markets and a strong, 10% increase in DVD sales with just a marginal, 2%-3%, hit to rentals. In its trials with TWC in Austin, Texas, and Columbus, Ohio, the studio says, the early numbers show increases across all indexes.
IFC is finding success with a different model, simultaneous VOD and theatrical release. Launched in March of last year on Cablevision and Comcast, IFC's In Theaters proved a unique opportunity for the less commercial, or specialty, independent titles in the company's stable, allowing them greater reach than they would otherwise receive.
IFC's In Theaters introduces two films a month on-demand as they hit the big screen. The price per 24-hour viewing period can vary but averages about $5.99 per film, and the films are receiving 50,000-75,000 views a month each.
"The theatrical distribution model for specialty films was not viable anymore," says IFC President Jonathan Sehring, "We saw what a great technology VOD had become."
Cable Vendors Predict Surge
Vendors tweak old platforms for new applications
By Glen Dickson
VOD technology vendors are forecasting a surge in sales as cable operators upgrade their existing infrastructure to support more VOD content, including bandwidth-intensive high-definition fare, and new applications such as timeshifting and targeted advertising. Providing a better VOD experience generally means both adding storage capacity and expanding the number of on-demand "unicast" (i.e. delivered to a single set-top) streams that can be delivered simultaneously to subscribers.
New applications such as providing the timeshifting capabilities of a digital video recorder (DVR) through VOD, sometimes known as "network DVR," require a dramatic expansion in the number of program streams that can be ingested at one time, as operators will need to record and store the most popular shows in real-time. And delivering up-to-date and/or targeted commercials within a VOD program, a technique known as "dynamic insertion," necessitates heavy software integration between the VOD platform and existing traffic systems.
Cable operators and competitors aren't facing a full-scale swap-out of existing infrastructure, but instead incremental upgrades and expansions. As a benefit, some of the network upgrades for VOD can also be used to deliver more linear HD channels and faster high-speed data service.
This upgrade investment will be far less than the massive infrastructure buildup in the mid-90s. "On an order of magnitude, we're talking hundreds of millions" of dollars, says Ferris Baker Watts analyst Murray Arenson, who covers leading vendors SeaChange, C-COR and Concurrent.
Basil Badawlyeh, VP of on-demand strategy for C-COR, says that competition is driving cable's investment on VOD infrastructure, whether it is DirecTV's planned expansion of high-definition programming, Verizon's new fiber-optic-based television service or Amazon's plan to sell movie downloads through TiVo digital video recorders.
"The biggest catalyst is the fact that competition is heating up in a very big way," says Badawlyeh. "The other piece of this is that the type of content historically available on video-on-demand is catering to different demographics of people than what the industry was originally pushing towards."
As the content mix shifts, "broadcast on-demand" services like Time Warner Cable's Start Over, which lets viewers tuning in late to a primetime show jump back to the beginning by initiating an on-demand stream, are the biggest current driver of VOD investment.
Most VOD systems were initially designed as simply a better form of pay-per-view; that is, they were intended to deliver premium movies on a transactional basis. So most of the existing systems were designed to deliver VOD streams to about 10% of the VOD-capable homes within a given service area, sometimes less than that.
But with Start Over, Time Warner has found contention rates jumping to 40-50% as subscribers discover a more convenient way to watch the most popular shows. "The networks are being designed for a lot more concurrent stream usage," says Badawlyeh.
Concurrent, which is one of Time Warner's key vendors for Start Over, has focused on the reliability of its MediaHawk 4500 platform as more brand-name network content moves to VOD, says director of marketing Tim Dodge. "Session success rates in the low 90s used to be acceptable, now they're asking for 99.5%. VOD is really becoming a mission-critical product offering."
Storage is also being increased, says Badawlyeh.
Time Warner has doubled the storage in many systems from 2,500 to 5,000 hours and Comcast, which was an early leader in promoting "free" i.e. ad-supported VOD content from networks like NBC and CBS, is specifying VOD systems with a minimum of 4000 hours of storage.
"We see a lot of interest in much larger content libraries," adds Kip Compton, senior director/general manager of Video & Content Networking for Cisco, which entered the VOD game last year with its acquisition of Arroyo Video Networks. Compton, a former Comcast executive, says that while a 5,000-hour VOD system might have once seemed to be very robust, "we see 50,000 and 100,000-hour libraries in the not-too-distant future."
The way operators are storing on-demand video is also changing, as they move toward distributed architectures that place content on different types of storage, depending on how often content is accessed. Cisco uses varying types of storage: SATA drives for low-cost storage, SCSI drives for low-cost streaming, and some RAM (random access memory) storage to hold the most popular content.
Motorola, which entered the VOD business with its acquisition of Broadbus Technologies in Sept. 2006, thinks it has an edge in handling the explosion in VOD content through its solid-state server architecture. The company, which is supplying the servers for Time Warner Cable's Start Over deployment in San Antonio, uses dynamic random access memory (DRAM) storage for content ingest and streaming, as well as storing the most popular content. It relies on hard disk for storing the much greater volume of content that isn't accessed as frequently.
In order to serve a greater number of streams more efficiently, SeaChange has developed a new VOD server that uses flash-memory storage instead of hard disk and is designed to share high-demand content.
Another exciting prospect for VOD is expanding the amount of high-definition programming. To date, there has been very little HD content available on-demand, due both to concerns about copy protection and the relatively small number of HD-enabled homes. But with flat-panel HD sets flying off store shelves, the cable industry knows that hi-def VOD will soon be a requirement for customers. There is also the looming specter of satellite operator DirecTV, which has heavily promoted its plans to broadcast some 100 HD channels by year end.
Comcast has taken the lead in providing hi-def content through VOD, including movies from premium networks HBO and Cinemax, primetime fare from A&E, and even hi-def artwork and fine photography from Seattle-based Gallery Player. Cox has added HD movies to its on-demand library, and other operators are also expected to soon bulk up their offerings.
"The number one priority for most cable operators out there is expanding their hi-def offerings, as there is a lot of competition from satellite guys advertising 100 HD channels," says SeaChange's Phil Simpson, director of product marketing for on demand solutions. "HD VOD is a strategic opportunity for cable, but it requires more streaming capacity and more storage capacity."
With HD streams coming in at 15 megabits per second (Mbps) compared to the 3.75 Mbps required for standard-definition VOD, the bandwidth implications are pretty easy to comprehend.
Some operators will be grabbing more bandwidth by upgrading their hybrid-fiber-coax plants from 750 or 860 megahertz (MHz) to one gigahertz (GHz). Many others will rely on the relatively new transmission technique of switched digital video (SDV), which conserves network bandwidth by delivering linear program channels in unicast form, much like a VOD stream is delivered. Some operators will employ a combination of both solutions.
"The beauty of switched digital video is it really blurs the linear stuff with the nonlinear stuff, and it's totally transparent to the viewer experience," says David Price, VP of business development for Harmonic. Harmonic sells both VOD software (it acquired VOD specialist Entone Technologies last year) as well as the "EdgeQAM" devices that are used to transmit digital video and data down cable pipes.
When cable operators look for new revenues to recoup their VOD investments, targeted advertising is the hot topic. Traditionally, inserting commercials in VOD content was a time-consuming process that required re-encoding the content to insert new spots. That meant spots might be several weeks old before they aired, thus limiting their appeal to advertisers. But through the new technique of dynamic insertion, fresh spots can be spliced into compressed VOD content as it streams from the VOD server, and more importantly, targeted spots can be delivered to individual set-tops.
C-COR played an instrumental role in one of the first trials of dynamic advertising insertion with Charter Communications in St. Louis. The trial successfully delivered dynamically-inserted spots to some 250,000 digital subscribers.
SeaChange has also experienced success with a dynamic insertion trial with small Kansas-based operator Sunflower Broadband. The trial, done in partnership with Atlas, MTV Networks and Mediaedge:cia, runs on SeaChange's AdPulse software.
Harmonic's Price thinks that targeted advertising will show up alongside premium fare as well as free VOD, particularly as the windows for VOD movies get closer to the DVD window. He says that operators are mulling the idea of selling a new theatrical release on-demand for perhaps $7.99 for a commercial-free version, and $5.99 with five minutes of ads running before the movies. Says Price, "If you know a person bought 'Talladega Nights,' then you know they are interested in watching a NASCAR promotion and you know they are interested in the latest oil from Pennzoil."
In order to pursue such targeted advertising opportunities, integration between VOD and existing traffic and sales software is crucial. Compton and others point to the Society of Cable Telecommunications Engineers' DVS-629 standard as a likely interface between the VOD platform and ad decision systems.
The continued march of popular content to the on-demand platform is inevitable, says Jonathan Bokor, VP of business development for Tandberg, which provides its AdPoint on-demand advertising software to Comcast. But while most VOD advertising trials have experimented with pre-and post-roll ads, Bokor doesn't think that the basic look and feel of VOD commercials needs to be different from what people are used to in linear TV.
"I don't see why the ad breaks should be much different than when you turn on the TV today," he says. "I know it's a bit of a clean slate, and most of the high-value content hasn't been there yet. But why should there be a different ad load in on demand than in linear?"
Video-on-demand could be called child's play at the moment. Kids' programming represented 24% of total free VOD orders in the first five months of 2007, behind music and movies, according to Rentrak. TV executives believe this is the start of something big. Viewers are eager to see the primetime shows already appearing in cable systems' VOD packages. Equipment makers predict a surge in the hardware needed for storage and dynamic ad insertion. But VOD ad dollars represent a fraction of advertiser spending on TV. Can networks, advertisers and TV distributors make VOD profitable?
*********************************
I think what we can all sum up from this article is that VOD presents a TREMENDOUS opportunity for cable companies to generate ad revenue in a manner we have seen with Google and other content delivery networks via the internet.
And it's likely there will be tremendous amounts of money invested in the industry over the next several years, and the potential for some of the smaller players (like CCUR) to get bought out by the bigger players.
The Scrutinizer
Thursday, July 05, 2007
Trading updates:
DNDN had HUGE volume on the 3rd of July (which was a shortened trading session). Expect the same thing today. As of this writing at 9am on the 5th, over 300K shares have traded in pre-market. The driver of the recent action is a study by leading Cancer researchers that suggests immuno-therapeutic cancer treatments, like Provenge, do seem to increase patient survivability. They also stated that such treatments which rely upon using the patient's own immune system to fight the cancer, require more time to work, thus patient studies should be adjusted by the FDA to take this fact into account.
But most of all, CNBC's "Fast Money" noted the extreme call option activity in the stock:
"Fast Money" calls DNDN a potential lottery ticket
In my opinion, with over 40% of the stock float (tradeable public shares) short, this represents a tremendous potential for gains of 50-100% in this stock. The SEC is cracking down on "naked short selling" and DNDN's shares have been on the SEC's Reg SHO list for months now:
Reg SHO list
Now.. some of my other positions. QTWW experienced a significant "downdraft" as it was removed from the Russell 3000 index and their placement of $18 million in shares at 1.50. But it remains in an uptrend channel:
QTWW charts for 5 July
Rumours also seem to abound that FRPT will receive a huge multi-billion order from the military for their Cheetah MRAP vehicles, and this could provide some support for QTWW, as they have some engineering associations with FRPT.
Furthermore, it would appear that GM is planning on focusing on Fuel Cell vehicles, and that would definitely play into QTWW's benefit.
GM prioritizing alternative energy vehicles
I'm expecting a rebound in QTWW to at least $2/share as a retest of resistance. But to penetrate that price, it will require some positive news, IMO.
NOW... I wanted to update the activity in CCUR. I ran the charts today and what I'm seeing is probably one of the most bullish TA "Grand Alignments" I've ever witnessed. Every chart, hourly, daily, weekly, monthly, quarterly, has turned positive for CCUR. Now all that is required is substantial positive news, and volume and the shares could easily rally to $3-4/share short-term..
Don't believe me? Check it out for yourself:
CCUR charts for 5 July
Be sure to imput the monthly and quarterly time frames into the charts to observe long term trend.
Finally.. GNBT..
GNBT is at an inflection point. If it breaks below current price levels, it will face some difficulties short term. The stock requires news and volume in order to move higher and hopefully we'll see this sometime this week. R&R has reiterated a $6/share target, citing increased interest in Oral-Lyn as a result of GNBT's presentations at the ADA conference a few weeks ago:
GNBT charts for 5 July
I'm also starting to research and review BCON, and I'm also starting to get re-interested in MVIS (but I need to see that stock stabilize). Also, INAP is looking like it's trying to find a bottom here as well, but I expect some churning of the shares over the short term in order to rehabilitate the chart:
INAP daily chart
Happy Trading!!
The Scrutinizer
DNDN had HUGE volume on the 3rd of July (which was a shortened trading session). Expect the same thing today. As of this writing at 9am on the 5th, over 300K shares have traded in pre-market. The driver of the recent action is a study by leading Cancer researchers that suggests immuno-therapeutic cancer treatments, like Provenge, do seem to increase patient survivability. They also stated that such treatments which rely upon using the patient's own immune system to fight the cancer, require more time to work, thus patient studies should be adjusted by the FDA to take this fact into account.
But most of all, CNBC's "Fast Money" noted the extreme call option activity in the stock:
"Fast Money" calls DNDN a potential lottery ticket
In my opinion, with over 40% of the stock float (tradeable public shares) short, this represents a tremendous potential for gains of 50-100% in this stock. The SEC is cracking down on "naked short selling" and DNDN's shares have been on the SEC's Reg SHO list for months now:
Reg SHO list
Now.. some of my other positions. QTWW experienced a significant "downdraft" as it was removed from the Russell 3000 index and their placement of $18 million in shares at 1.50. But it remains in an uptrend channel:
QTWW charts for 5 July
Rumours also seem to abound that FRPT will receive a huge multi-billion order from the military for their Cheetah MRAP vehicles, and this could provide some support for QTWW, as they have some engineering associations with FRPT.
Furthermore, it would appear that GM is planning on focusing on Fuel Cell vehicles, and that would definitely play into QTWW's benefit.
GM prioritizing alternative energy vehicles
I'm expecting a rebound in QTWW to at least $2/share as a retest of resistance. But to penetrate that price, it will require some positive news, IMO.
NOW... I wanted to update the activity in CCUR. I ran the charts today and what I'm seeing is probably one of the most bullish TA "Grand Alignments" I've ever witnessed. Every chart, hourly, daily, weekly, monthly, quarterly, has turned positive for CCUR. Now all that is required is substantial positive news, and volume and the shares could easily rally to $3-4/share short-term..
Don't believe me? Check it out for yourself:
CCUR charts for 5 July
Be sure to imput the monthly and quarterly time frames into the charts to observe long term trend.
Finally.. GNBT..
GNBT is at an inflection point. If it breaks below current price levels, it will face some difficulties short term. The stock requires news and volume in order to move higher and hopefully we'll see this sometime this week. R&R has reiterated a $6/share target, citing increased interest in Oral-Lyn as a result of GNBT's presentations at the ADA conference a few weeks ago:
GNBT charts for 5 July
I'm also starting to research and review BCON, and I'm also starting to get re-interested in MVIS (but I need to see that stock stabilize). Also, INAP is looking like it's trying to find a bottom here as well, but I expect some churning of the shares over the short term in order to rehabilitate the chart:
INAP daily chart
Happy Trading!!
The Scrutinizer
Friday, June 15, 2007
Is Generex (Nadaq: GNBT) a "Sweet Buy"?
NOTE: I'll be editting this, so check back for updates every day as I collect more links and arrange my thoughts.
JUNE 18th NOTE: At the moment I'm waiting for some direction in the price of GNBT before re-entering the shares. There seems to be a "battle" going on between big block trades at the current price of 1.80-1.86. It's hard to discern if the recent short-term support is merely some MMkr propping up the stock in order to permit shorts to enter positions, or whether it represents institutional buying holding the stock up. But it's definitely overbought on the daily chart and could trend sideways to lower for the next couple of days unless we see a catalyst for a move back up. But I don't believe any pullback will be long-term, so "dipping your feet in the water" and buying a few shares wouldn't necessarily be foolish here, so long as you are aware that the price might plunge short-term (and give you a chance to back up the truck).
Been trading GNBT for the past couple of days and banked some decent coin (approx 15% over 2 days). This stock just had a TREMENDOUS spike upward, motivating by a influential 42 page analyst report asserting that he has a $6/share price target within 18 months.
GNBT Analyst recommendation
R&R Analyst Report for your reading pleasure
So what does Generex do? Well, this little Canadian Bio-Tech has a couple of things on the plate. First off, they offer a "buccal" administered insulin drug (think asthma spray-style applicator, except you don't breath it in), which has been approved in Ecuador, and is now pending serious FDA approval. Secondly, via their subsidiary, they are working on some immuno-therapies for breast cancer. Thirdly, they have been working on "Bird Flu" vaccines (which was all the rage several years ago).
Generex Website
Now.. let's start off with the daily chart for GNBT so you all can see how historically volatile this stock has been (note that for a longer time frame, you will need to enter in 2 or 5 year numbers):
1 year Daily Chart
As you can see.. this stock is given to SERIOUS volatility!!!
So.. is it a buy? Well, that depends upon your time horizon. Being a short-term day and swing trader, I like to buy low, bank my coin on a surge, and then look for a re-entry point at support (usually on the 60 minute chart):
GNBT 60 Minute Chart
That 60 minute chart, per the day of this posting, 15th June, really looks interesting if it can hold it. There is a "pinch" forming on the hourly Bollinger Bands. Now for those not versed in BBs, they are a trader's WET DREAM!! They signify that longs and shorts are facing off like two hockey teams. And when the puck (representing the price of the stock) gets thrown in amidst them, they will battle with each other to try and send it one direction or the other. And whichever way that puck goes, both sides go as well. So, if the price goes up, both sides go long.. If it goes down, both sides go short. This will continue until the next level of support/resistance is reached. And the longer the time horizon (daily, weekly) the stronger, and longer lasting, the move.
NOTE: I'll be editting this, so check back for updates every day as I collect more links and arrange my thoughts.
JUNE 18th NOTE: At the moment I'm waiting for some direction in the price of GNBT before re-entering the shares. There seems to be a "battle" going on between big block trades at the current price of 1.80-1.86. It's hard to discern if the recent short-term support is merely some MMkr propping up the stock in order to permit shorts to enter positions, or whether it represents institutional buying holding the stock up. But it's definitely overbought on the daily chart and could trend sideways to lower for the next couple of days unless we see a catalyst for a move back up. But I don't believe any pullback will be long-term, so "dipping your feet in the water" and buying a few shares wouldn't necessarily be foolish here, so long as you are aware that the price might plunge short-term (and give you a chance to back up the truck).
Been trading GNBT for the past couple of days and banked some decent coin (approx 15% over 2 days). This stock just had a TREMENDOUS spike upward, motivating by a influential 42 page analyst report asserting that he has a $6/share price target within 18 months.
GNBT Analyst recommendation
R&R Analyst Report for your reading pleasure
So what does Generex do? Well, this little Canadian Bio-Tech has a couple of things on the plate. First off, they offer a "buccal" administered insulin drug (think asthma spray-style applicator, except you don't breath it in), which has been approved in Ecuador, and is now pending serious FDA approval. Secondly, via their subsidiary, they are working on some immuno-therapies for breast cancer. Thirdly, they have been working on "Bird Flu" vaccines (which was all the rage several years ago).
Generex Website
Now.. let's start off with the daily chart for GNBT so you all can see how historically volatile this stock has been (note that for a longer time frame, you will need to enter in 2 or 5 year numbers):
1 year Daily Chart
As you can see.. this stock is given to SERIOUS volatility!!!
So.. is it a buy? Well, that depends upon your time horizon. Being a short-term day and swing trader, I like to buy low, bank my coin on a surge, and then look for a re-entry point at support (usually on the 60 minute chart):
GNBT 60 Minute Chart
That 60 minute chart, per the day of this posting, 15th June, really looks interesting if it can hold it. There is a "pinch" forming on the hourly Bollinger Bands. Now for those not versed in BBs, they are a trader's WET DREAM!! They signify that longs and shorts are facing off like two hockey teams. And when the puck (representing the price of the stock) gets thrown in amidst them, they will battle with each other to try and send it one direction or the other. And whichever way that puck goes, both sides go as well. So, if the price goes up, both sides go long.. If it goes down, both sides go short. This will continue until the next level of support/resistance is reached. And the longer the time horizon (daily, weekly) the stronger, and longer lasting, the move.
Saturday, June 02, 2007
Well, my trade in Dendreon (Nasdaq: DNDN) from Thursday did not go well on Friday. I bought it after it retraced from it's $13/share high, under the belief that $10 would provide psychological support as the shorts covered. Recall that some 40-50% of the stock's 83 million share float has been shorted and that's significant considering the stock was once $25/share just a few months ago. But as a result of the controversial FDA ruling, the shares plummeted.
Here's a link to the CNBC interview with Dr. Gold, DNDN CEO back in March when the FDA panel recommended approval for Provenge:
March, 2007 interview on CNBC with DNDN CEO
DNDN short interest as of May 15
The company has completed Phase III testing on its Immunotherapeutic drug for Prostrate Cancer, Provenge and has received "fast track" authority for final approval. And what is more interesting is that it's the first cancer drug that is designed to assist the bodies own immune response to target the cancer cells, rather than typical chemo-therapy that uses chemicals to destroy the cancer (and generally winds up killing other healthy cells and weakening the immune system as a result). So we're talking about some innovative bio-technology here that could have a huge impact on fighting not only prostrate cancer, but other forms as well.
But what is the company's stock worth, should their drug be approved by the FDA?:
DNDN value analysis
This gentleman from the "Seeking Alpha" website suggests that there are signs of major "corruption" within the FDA advisory panel that has been delaying approval of Provenge and this makes sense to me:
Seeking Alpha's comments on DNDN and FDA
So we're engaged in some serious market valuation "Hardball" and both the shorts and longs are lining up for a market "brawl" in coming weeks. This is going to be an interesting week to observe in the stock.
I posted this commentary on the DNDN Yahoo discussion thread yesterday and I still stand by my comments:
My Yahoo comments
But what are the charts telling us about investor psychology in the shares?:
Daily Bigchart for DNDN
But even more telling is the weekly chart:
DNDN Weekly Bigchart
Now if you'll note on that weekly chart, everytime the weekly Stochastic has turned upward, it has led to major gains in the share price. Hence, my decision to speculate on having a chance to participate in a second run-up (having missed the first one .. sigh). There's just that much money at stake that it's hard to discern what the true valuation of this stock should be based upon the potential of the drug.
But what is the status of Provenge? Is it safe? Is it effective? Well, the FDA has ALREADY ruled that Provenge is safe by a UNANIMOUS vote of 17-0, so what's the problem with approving it?
FDA minutes from March meeting of advisory council:
FDA Advisory Council minutes discussing Provenge..
Pg. 370 is where they discuss effectiveness and the controversial NO votes were cast by 3 out of 4 panel members who have a conflict of interest and had to be granted waivers
And did Dr. Scher, one of the "Nays" on the FDA advisory committee, lie about his conflict of interest, for which he had to receive a waiver to be on that FDA advisory committee? The member who went to the extraordinary measures of actually writing a letter warning against approving Provenge, here is a list of his UNDISCLOSED conflicts of interest that should have been sufficient to deny his eligibility for being on that that committee to begin with? Decide for yourself:
Dr. Scher is on the Science Advisory Board of an investment fund with over $900 million under management. Why wasn't this disclosed on his COI waiver? And why wasn't it disclosed that Novecea is one of those portfolio companies? Fine, if he had disclosed this, then it could have been adjudicated. But it NEVER came up in the COI waiver letter.
Dr. Scher on Science Advisory board of investment fund
Summation of Dr. Scher's undisclosed Conflict of Interest
FDA confirms safety of Provenge
And read this logically based letter from another DNDN shareholder, to the FDA:
Open Letter from DNDN shareholder to FDA
I can't find any fault with the logic the author displays. Clearly the drug is efficacious because 34% of the patients who took Provenge are still alive, as compared to only 11% who took the placebo. And the FDA advisory committed UNANIMOUSLY agreed that Provenge is safe, so what's the problem with temporary approval of the drug, pending final results of the IMPACT study? If it's safe, let THE PATIENT make the choice of taking it or not.. If anything, it provides HOPE...
And what's even more interesting, and something that will likely receive some news coverage on Monday, is that a Cancer patients have spontaneously banded together to lobby congress to have the FDA approve the drug NOW, and not wait. That's unheard of, from my past experience. The group, ProvengeNow will be assembling on Capital Hill at 10 AM on Monday, and since I'm near-by, I think I'll try and be in attendance as well (with Laptop in hand because the Scrutinizer is addicted to his Level 2 market data). But it will be interesting to see if any Senators step out to speak with the demonstrators, and how the FDA will respond to future calls from Senators asking:
"If this drug has been unanimously deemed safe, and 75% of you deemed it effective, why are you holding up approving it? Get off your butts and approve the drug NOW!!! I have constituents WHO VOTE and I don't want them to die before the next election!!.."
That's how politics work.
This could get interesting...
ProvengeNow assembly on the Upper Senate Park on Capital Hill
ProvengeNow's mission statement
Now one more point. DNDN has been "flying solo" throughout this development process, apparently not being willing to partner with a big pharmaceutical. There has been some rumours flying through the CBOE in Chicago (where coincidentally the ASCO convention is occuring this weekend) that DNDN will arrive at a partnering agreement in order to ensure they have the political clout to get their drug onto the market first. Some shareholders have mentioned that DNDN fired their marketing staff recently as a cost-saving measure, presumably because they would not rely upon their partner firm to market and distribute the drug. If this is the case, presumably it could prove to be a tremendous driver for the stock price and the shorts will find themselves facing a problem.
In sum, owning DNDN is a high risk venture that could provide massive returns, or (at these current valuations) some time spent in Cramer's "House of Pain". But again, looking at the charts, I'm wagering I'll be hearing that sultry voice telling me I'm in the "House of Pleasure" sometime in coming weeks.
The Scrutinizer
Here's a link to the CNBC interview with Dr. Gold, DNDN CEO back in March when the FDA panel recommended approval for Provenge:
March, 2007 interview on CNBC with DNDN CEO
DNDN short interest as of May 15
The company has completed Phase III testing on its Immunotherapeutic drug for Prostrate Cancer, Provenge and has received "fast track" authority for final approval. And what is more interesting is that it's the first cancer drug that is designed to assist the bodies own immune response to target the cancer cells, rather than typical chemo-therapy that uses chemicals to destroy the cancer (and generally winds up killing other healthy cells and weakening the immune system as a result). So we're talking about some innovative bio-technology here that could have a huge impact on fighting not only prostrate cancer, but other forms as well.
But what is the company's stock worth, should their drug be approved by the FDA?:
DNDN value analysis
This gentleman from the "Seeking Alpha" website suggests that there are signs of major "corruption" within the FDA advisory panel that has been delaying approval of Provenge and this makes sense to me:
Seeking Alpha's comments on DNDN and FDA
So we're engaged in some serious market valuation "Hardball" and both the shorts and longs are lining up for a market "brawl" in coming weeks. This is going to be an interesting week to observe in the stock.
I posted this commentary on the DNDN Yahoo discussion thread yesterday and I still stand by my comments:
My Yahoo comments
But what are the charts telling us about investor psychology in the shares?:
Daily Bigchart for DNDN
But even more telling is the weekly chart:
DNDN Weekly Bigchart
Now if you'll note on that weekly chart, everytime the weekly Stochastic has turned upward, it has led to major gains in the share price. Hence, my decision to speculate on having a chance to participate in a second run-up (having missed the first one .. sigh). There's just that much money at stake that it's hard to discern what the true valuation of this stock should be based upon the potential of the drug.
But what is the status of Provenge? Is it safe? Is it effective? Well, the FDA has ALREADY ruled that Provenge is safe by a UNANIMOUS vote of 17-0, so what's the problem with approving it?
FDA minutes from March meeting of advisory council:
FDA Advisory Council minutes discussing Provenge..
Pg. 370 is where they discuss effectiveness and the controversial NO votes were cast by 3 out of 4 panel members who have a conflict of interest and had to be granted waivers
And did Dr. Scher, one of the "Nays" on the FDA advisory committee, lie about his conflict of interest, for which he had to receive a waiver to be on that FDA advisory committee? The member who went to the extraordinary measures of actually writing a letter warning against approving Provenge, here is a list of his UNDISCLOSED conflicts of interest that should have been sufficient to deny his eligibility for being on that that committee to begin with? Decide for yourself:
Dr. Scher is on the Science Advisory Board of an investment fund with over $900 million under management. Why wasn't this disclosed on his COI waiver? And why wasn't it disclosed that Novecea is one of those portfolio companies? Fine, if he had disclosed this, then it could have been adjudicated. But it NEVER came up in the COI waiver letter.
Dr. Scher on Science Advisory board of investment fund
Summation of Dr. Scher's undisclosed Conflict of Interest
FDA confirms safety of Provenge
And read this logically based letter from another DNDN shareholder, to the FDA:
Open Letter from DNDN shareholder to FDA
I can't find any fault with the logic the author displays. Clearly the drug is efficacious because 34% of the patients who took Provenge are still alive, as compared to only 11% who took the placebo. And the FDA advisory committed UNANIMOUSLY agreed that Provenge is safe, so what's the problem with temporary approval of the drug, pending final results of the IMPACT study? If it's safe, let THE PATIENT make the choice of taking it or not.. If anything, it provides HOPE...
And what's even more interesting, and something that will likely receive some news coverage on Monday, is that a Cancer patients have spontaneously banded together to lobby congress to have the FDA approve the drug NOW, and not wait. That's unheard of, from my past experience. The group, ProvengeNow will be assembling on Capital Hill at 10 AM on Monday, and since I'm near-by, I think I'll try and be in attendance as well (with Laptop in hand because the Scrutinizer is addicted to his Level 2 market data). But it will be interesting to see if any Senators step out to speak with the demonstrators, and how the FDA will respond to future calls from Senators asking:
"If this drug has been unanimously deemed safe, and 75% of you deemed it effective, why are you holding up approving it? Get off your butts and approve the drug NOW!!! I have constituents WHO VOTE and I don't want them to die before the next election!!.."
That's how politics work.
This could get interesting...
ProvengeNow assembly on the Upper Senate Park on Capital Hill
ProvengeNow's mission statement
Now one more point. DNDN has been "flying solo" throughout this development process, apparently not being willing to partner with a big pharmaceutical. There has been some rumours flying through the CBOE in Chicago (where coincidentally the ASCO convention is occuring this weekend) that DNDN will arrive at a partnering agreement in order to ensure they have the political clout to get their drug onto the market first. Some shareholders have mentioned that DNDN fired their marketing staff recently as a cost-saving measure, presumably because they would not rely upon their partner firm to market and distribute the drug. If this is the case, presumably it could prove to be a tremendous driver for the stock price and the shorts will find themselves facing a problem.
In sum, owning DNDN is a high risk venture that could provide massive returns, or (at these current valuations) some time spent in Cramer's "House of Pain". But again, looking at the charts, I'm wagering I'll be hearing that sultry voice telling me I'm in the "House of Pleasure" sometime in coming weeks.
The Scrutinizer
Thursday, May 31, 2007
The little company that might "own" the CDN and Music Streaming market.
There's this little company that's been struggling to get some respect in the VOD and Real Time Operating System markets. It's called Concurrent Computers (Nasdaq: CCUR). A few years back they purchased this company by the name of Everstream which specializes is audience tracking analytics for the cable industry (think automated Nielsen's Rating for on-demand content) that could assist advertisers to better target their audience for specific ad content.
Now, everyone has thought about CCUR as a VOD play.. they claim to have set the standard for VOD servers that the major cable companies will require for meeting the growing demand for VOD content. But for whatever reason, they haven't yet received much respect from the market place (probably due to the fact that they've had difficulty achieving profitability while they been restructuring and improving their product line).
Well, the old Scrutinizer must admit that he's been a "bag-holder" in this stock for almost a year now, with most of my shares under $2/share in price. I've just been laying in wait for the moment when the hidden value of this company would be recognized. I'm a firm believer that VOD, and all the advertising opportunities involved, will be the next major driver for advancing the internet (anyone remember the internet bubble back in 2000? I don't think you've seen anything yet).
Well, back to the story... It would seem that Everstream holds a series of extensive patents that pertain to both CDN and Music Streaming market places that date back to 1996, before any of these current CDN and music streaming players were even around. And furthermore, it would seem that CCUR and Everstream's lawyers believe that the BIG BOYS in the CDN field might just be violating most of them. But instead of calling in the "legal eagles" to form a IP posse (remember these guys are still a small fish in a big sea), they've opted to hold a strategic auction for these patents, with the provision that CCUR receives a license back to use them.
Read all about it here:
Concurrent Computers looks to auction off critical CDN and Music streaming patents
AND A MUST READ!!! Light Reading article related to CCUR's patents.
And view the company's recent presentation for FBR Capital Markets today:
CCUR presentation
Now what are these patents? Well.. take a look for yourself and decide if companies like AAPL, GOOG, MSFT, AKAM, INAP, and many others, might just be violating them. And while you're reviewing them, think about how much they might be worth to one of those 800 pound gorillas in the targeted ad market who is trying to lock in their "turf". I mean.. not only secure their turf, but force their competitors to license the patents from THEM!!
How humbling would that be?
So here are the patents.. You decide for yourself:
Programmed music on demand from the internet
Programmed music on demand from the internet #2
Method and system for using a communication network to supply targeted streaming advertising in interactive media
As a final note, some folks might recall that MSFT recently issued a statement that Linux providers might be violating over 230 patents held by Bill Gate's "Evil Empire". That's sent shivers (and outrage) through the Linux markets)...
Now just think what Billy "The Borg" Gates might be willing to pay for the ability to lock up music streaming and CDN delivering?
Hmmmm....
And if you still can't understand the significance of IP protections (read $$$$$$$!!!) for these markets, think about this.. MSFT recently paid $6 Billion for AdQuantive just so they could set themselves up to compete against GOOG pending acquisition of Double-Click. They both just bought themselves some "money trees", and both are looking to start plucking those $$$ bills and stuffing them into their pockets..
Were they smart buys?
Analysis of CND potential market
But one problem.. Those "money trees" happen to be growing on (Patented) land that Everstream holds the "deed" to. They staked a claim to that territory back in 1996, long before GOOG, or AdQuantive existed.
Now, if you're going to pay that kind of "bling" for CDN "Money Trees", how much are you going to be willing to pay for the deed and title to the land they are growing on? How much would you pay for patents on Music streaming?
And how much would you pay just to keep your most ferocious competitors from getting the deed to that land and taking a percentage from every dollar you pluck from your tree? Even if you think you can contest the deed, wouldn't it make sense to fork out some cash to improve your case in IP court?
Something to REALLY think about.. and given how the shares are responding over the past couple of days, I think some other folks are thinking about it too..
The Scrutinizer
There's this little company that's been struggling to get some respect in the VOD and Real Time Operating System markets. It's called Concurrent Computers (Nasdaq: CCUR). A few years back they purchased this company by the name of Everstream which specializes is audience tracking analytics for the cable industry (think automated Nielsen's Rating for on-demand content) that could assist advertisers to better target their audience for specific ad content.
Now, everyone has thought about CCUR as a VOD play.. they claim to have set the standard for VOD servers that the major cable companies will require for meeting the growing demand for VOD content. But for whatever reason, they haven't yet received much respect from the market place (probably due to the fact that they've had difficulty achieving profitability while they been restructuring and improving their product line).
Well, the old Scrutinizer must admit that he's been a "bag-holder" in this stock for almost a year now, with most of my shares under $2/share in price. I've just been laying in wait for the moment when the hidden value of this company would be recognized. I'm a firm believer that VOD, and all the advertising opportunities involved, will be the next major driver for advancing the internet (anyone remember the internet bubble back in 2000? I don't think you've seen anything yet).
Well, back to the story... It would seem that Everstream holds a series of extensive patents that pertain to both CDN and Music Streaming market places that date back to 1996, before any of these current CDN and music streaming players were even around. And furthermore, it would seem that CCUR and Everstream's lawyers believe that the BIG BOYS in the CDN field might just be violating most of them. But instead of calling in the "legal eagles" to form a IP posse (remember these guys are still a small fish in a big sea), they've opted to hold a strategic auction for these patents, with the provision that CCUR receives a license back to use them.
Read all about it here:
Concurrent Computers looks to auction off critical CDN and Music streaming patents
AND A MUST READ!!! Light Reading article related to CCUR's patents.
And view the company's recent presentation for FBR Capital Markets today:
CCUR presentation
Now what are these patents? Well.. take a look for yourself and decide if companies like AAPL, GOOG, MSFT, AKAM, INAP, and many others, might just be violating them. And while you're reviewing them, think about how much they might be worth to one of those 800 pound gorillas in the targeted ad market who is trying to lock in their "turf". I mean.. not only secure their turf, but force their competitors to license the patents from THEM!!
How humbling would that be?
So here are the patents.. You decide for yourself:
Programmed music on demand from the internet
Programmed music on demand from the internet #2
Method and system for using a communication network to supply targeted streaming advertising in interactive media
As a final note, some folks might recall that MSFT recently issued a statement that Linux providers might be violating over 230 patents held by Bill Gate's "Evil Empire". That's sent shivers (and outrage) through the Linux markets)...
Now just think what Billy "The Borg" Gates might be willing to pay for the ability to lock up music streaming and CDN delivering?
Hmmmm....
And if you still can't understand the significance of IP protections (read $$$$$$$!!!) for these markets, think about this.. MSFT recently paid $6 Billion for AdQuantive just so they could set themselves up to compete against GOOG pending acquisition of Double-Click. They both just bought themselves some "money trees", and both are looking to start plucking those $$$ bills and stuffing them into their pockets..
Were they smart buys?
Analysis of CND potential market
But one problem.. Those "money trees" happen to be growing on (Patented) land that Everstream holds the "deed" to. They staked a claim to that territory back in 1996, long before GOOG, or AdQuantive existed.
Now, if you're going to pay that kind of "bling" for CDN "Money Trees", how much are you going to be willing to pay for the deed and title to the land they are growing on? How much would you pay for patents on Music streaming?
And how much would you pay just to keep your most ferocious competitors from getting the deed to that land and taking a percentage from every dollar you pluck from your tree? Even if you think you can contest the deed, wouldn't it make sense to fork out some cash to improve your case in IP court?
Something to REALLY think about.. and given how the shares are responding over the past couple of days, I think some other folks are thinking about it too..
The Scrutinizer
Ray Robinson has an article on American Thinker that I think is of importance:
Al Qai'da fracturing?
And if one reflects upon the recent article where we're seeing some of the most prominent leaders of Egyptian Jihadist groups speaking out against Al Qai'da, it seems to indicate that the strategy of putting Al Qai'da in the position of having to deliberately target fellow muslims with terrorist attacks has ellicited the desired result.
It's one thing for the "Arab street" to applaud, condone, or simply remain indifferent to attacks against infidel "Ferengi" (Persian word "Faranji" for foreigner), but when those attacks are conducted against other Muslims, then they are directly challenging the Fatwas of the existing Islamic scholarly hierarchy. And Egypt is the leading center for Sunni Islamic thought and the Grand Imam and the Grand Mufti of Egypt have taken public stances against violent Jihad, and especially Jihad that targets other muslims.
Egytian militant leaders denouncing violent Jihad
Let's all keep our fingers crossed that this trend will continue. Because, ultimately, it is up to the practioners of Islam to determine how it will interface with the rest of the world.
The Scrutinizer
Al Qai'da fracturing?
And if one reflects upon the recent article where we're seeing some of the most prominent leaders of Egyptian Jihadist groups speaking out against Al Qai'da, it seems to indicate that the strategy of putting Al Qai'da in the position of having to deliberately target fellow muslims with terrorist attacks has ellicited the desired result.
It's one thing for the "Arab street" to applaud, condone, or simply remain indifferent to attacks against infidel "Ferengi" (Persian word "Faranji" for foreigner), but when those attacks are conducted against other Muslims, then they are directly challenging the Fatwas of the existing Islamic scholarly hierarchy. And Egypt is the leading center for Sunni Islamic thought and the Grand Imam and the Grand Mufti of Egypt have taken public stances against violent Jihad, and especially Jihad that targets other muslims.
Egytian militant leaders denouncing violent Jihad
Let's all keep our fingers crossed that this trend will continue. Because, ultimately, it is up to the practioners of Islam to determine how it will interface with the rest of the world.
The Scrutinizer
Bought some DNDN today around $10 on news the FDA will not require 3 years of additional testing, but merely "further information"
http://biz.yahoo.com/prnews/070531/aqth093.html?.v=6
The great financial website "Seeking Alpha" has been strongly questioning the practices of the FDA panel that sought to exclude Provenge from being considered..
http://biz.yahoo.com/seekingalpha/070529/36622_id.html?.v=1
DNDN's recent high was $25 and had plummeted to mid-single digits. On release of the news this morning, the stock had rocketed up 60% to 13 (resistance level). Missed that first move up there (that was something to behold on Level 2), but decided to buy back in at $10/share. I believe it will attempt to hold here and maybe attempt to retest $11-12/share short term.
And btw, the short position against DNDN equates to 41% of the trading float. That's a HUGE short position that someone has to cover.
Also, I bought QTWW on news that Force Protection, INC (FRPT: Nasdaq) has contracted with QTWW to build a replacement for the HUMMV (HUMMER to you civies.. ;0) FPRT has been one of the hot performers over the past year on their series of mine-resistant vehicles and given the fact that DOD will likely be replacing, and not refurbishing, existing equipment, both companies stand to do well.
The weekly chart just looks REALLY EXCITING on QTWW and combined with the fact that 7% of the stock is short, the shares could see significant upside in coming days:
http://biz.yahoo.com/prnews/070531/lath009.html?.v=101
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=QTWW&freq=2&compidx=aaaaa%3A0&comp=&ma=4&maval=13%2C%2B22%2C%2B50&uf=8&lf=268435456&type=4&time=9&style=320&startdate=&enddate=&size=4&lf2=32&lf3=4
(Note: See that Bollinger Band "pinch" forming on the weekly chart?
The Scrutinizer
http://biz.yahoo.com/prnews/070531/aqth093.html?.v=6
The great financial website "Seeking Alpha" has been strongly questioning the practices of the FDA panel that sought to exclude Provenge from being considered..
http://biz.yahoo.com/seekingalpha/070529/36622_id.html?.v=1
DNDN's recent high was $25 and had plummeted to mid-single digits. On release of the news this morning, the stock had rocketed up 60% to 13 (resistance level). Missed that first move up there (that was something to behold on Level 2), but decided to buy back in at $10/share. I believe it will attempt to hold here and maybe attempt to retest $11-12/share short term.
And btw, the short position against DNDN equates to 41% of the trading float. That's a HUGE short position that someone has to cover.
Also, I bought QTWW on news that Force Protection, INC (FRPT: Nasdaq) has contracted with QTWW to build a replacement for the HUMMV (HUMMER to you civies.. ;0) FPRT has been one of the hot performers over the past year on their series of mine-resistant vehicles and given the fact that DOD will likely be replacing, and not refurbishing, existing equipment, both companies stand to do well.
The weekly chart just looks REALLY EXCITING on QTWW and combined with the fact that 7% of the stock is short, the shares could see significant upside in coming days:
http://biz.yahoo.com/prnews/070531/lath009.html?.v=101
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=QTWW&freq=2&compidx=aaaaa%3A0&comp=&ma=4&maval=13%2C%2B22%2C%2B50&uf=8&lf=268435456&type=4&time=9&style=320&startdate=&enddate=&size=4&lf2=32&lf3=4
(Note: See that Bollinger Band "pinch" forming on the weekly chart?
The Scrutinizer
Thursday, May 17, 2007
How Biofuels Could Starve the Poor
A thought provoking article related to how the recent craze for developing ethanol alternatives to gasoline places undo pressure on global foodstocks.
http://www.foreignaffairs.org/20070501faessay86305-p0/c-ford-runge-benjamin-senauer/how-biofuels-could-starve-the-poor.html
Commentary:
Although there is no doubt that ethanol is a viable alternative to gasoline, it is not the panacea that some folks would have you believe. For one thing, you can not co-mingle ethanol and petroleum within the existing petroleum distribution network. Ethanol is corrosive, and leads to pipeline degradation. Thus, it will require a massive secondary distribution network to provide supply to service stations. That's expensive.
As of now, ethanol is distributed by tanker truck and the "Bulk Transporter" website states that demand for tankers to carry ethanol has been robust:
http://bulktransporter.com/management/trends/economy_flattens_tank_fleets_rolling/
Additionally, ethanol contains fewer BTU/gal than gasoline, meaning you require more of it to perform the same amount of work (that's lower MPG for the laymen commuters out there)
So, why are we so intent on pushing the ethanol alternative? Votes, my friend.. Votes. Someone has to grow the sugar-rich crops used for making ethanol. And ethanol stands to make the nation's farmers very happy, and prosperous, indeed.
But is there an alternative to ethanol? An alternative that possesses comparable BTU/gal energy, can be transported in the existing petroleum supply network, and can be co-mingled easily with petroleum derived fuels?
Yes.. It's called bio-diesel. Some people also call it vegetable oil, peanut oil.. ;0)
But wait Scrutinizer!! Won't that just cause the price of my favorite jar of Skippy (I'm a JIF man myself) to go through the roof? Will my local pub stop giving away peanuts for free while I'm enjoying my brewskie? God forbid!!
But if you click on the link to the left, Oilgae, you'll find your answer. A potentially unlimited source of bio-diesel that does NOT impact the current food chain. A source of fuel that not only can operate diesel motor vehicles (with almost no modification required), but can also be used as winter fuel oil (I'll get to the importance of this in a second).
Here's a useful link I've often referenced in the past:
http://www.unh.edu/p2/biodiesel/article_alge.html
Now, I know we all love our gasoline power vehicles.. And boy.. those diesels are dirty and noisy.. But is this really the case? Has the technology advanced sufficiently to give diesels the kind of responsiveness we expect from gas powered engines?
Furthermore, as I mentioned it before, another plus factor is that diesel engine's disadvantages in terms of output and noise have been largely overcome, with the latest diesels offering a performance not markedly different from that of gasoline engines in this respect.
http://www.isuzu.co.jp/world/technology/randd/project2/03.html
The whole argument for bio-fuels lies in the belief that they are "carbon neutral". In other words, they maintain the balance of CO2 in the atmosphere, whereas fossil fuels release CO2 that has been sequestered for eons in the form of petroleum far underground. Since plants take in CO2 for transpiration (making food), and releasing, any CO2 that would be released by converting them to bio-fuels would maintain the CO2 balance.
Now, the Scrutinizer is not convinced of the "inconvenient truth" of global climate change due to CO2 increases. There are far more powerful greenhouse gases lurking out there, including Methane (up to 23x more potent than CO2) and common water vapor (think sauna). But who am I to argue with the these folks if it serves the purpose of making this country more energy independent and less dependent upon whacko suppliers in Venezuela and the Mid-East?
Furthermore, CO2 increases are a trailing indicator of global warming, not a leading indicator. And it's quite possible that there exist other factors that are responsible for higher CO2 levels in the atmosphere, including natural emissions (volcanic), deforestation, and changes within the oceans that decrease it's ability to sequester CO2 (lack of phytoplankton) which I might discuss in a future posting.
But there is one compelling argument for bio-diesels that directly impact each of our pocketbooks. We're all suffering under the recent soaring prices for gasoline in recent months. The primaries reasons for this are limited refining capacity within the US, as well as increasing global demand for refined petroleum products in China and other countries. All petroleum is a fungible international market and the price for fuels and crude oil is set on an international level (modified by currency exchange ratios as with the recent weakness in the US Dollar).
But the most severe impact on the price of gasoline is the limited refining capacity. Refineries have two primary markets they serve throughout the year. During the summer driving season, refineries emphasize the production of gasoline, while during the winter, they focus upon refining heating oil (diesel). In between these seasons, refineries are required to shut down operations in order to facilitate the processing changes required for switching between these two fuel. This normally occurs during the late winter, and early spring, depending upon the amount of reserve fuel in above ground storage as well as demand (harsh winters draw down available diesel stocks). And since there hasn't been a new refinery built in the US in 30 years, we're seeing a choke point in the production of refined fuels.
But were we to rely upon bio-diesels to provide the bulk of that winter demand, then refineries would not be required to switch to meet the demands of the two different markets. They could focus on producing gasoline, and eventually, be rendered obsolete as the majority of vehicles are converted to bio-diesel.
In sum, switching the American economy to an alternative fuel is a major undertaking and will create economic distortions. In order to decrease any negative impacts that might lead to the inflation of agricultural products, we must think carefully about the direction we wish to go with regard to replacing fossil fuel based energy. Thus, my preference is for bio-diesel (as well as hydrogen and electric). Ethanol is far too valuable for it's medicinal purposes (mixed with my favorite fruit based mixer) to be burned in an engine.
The Scrutinizer
A thought provoking article related to how the recent craze for developing ethanol alternatives to gasoline places undo pressure on global foodstocks.
http://www.foreignaffairs.org/20070501faessay86305-p0/c-ford-runge-benjamin-senauer/how-biofuels-could-starve-the-poor.html
Commentary:
Although there is no doubt that ethanol is a viable alternative to gasoline, it is not the panacea that some folks would have you believe. For one thing, you can not co-mingle ethanol and petroleum within the existing petroleum distribution network. Ethanol is corrosive, and leads to pipeline degradation. Thus, it will require a massive secondary distribution network to provide supply to service stations. That's expensive.
As of now, ethanol is distributed by tanker truck and the "Bulk Transporter" website states that demand for tankers to carry ethanol has been robust:
http://bulktransporter.com/management/trends/economy_flattens_tank_fleets_rolling/
Additionally, ethanol contains fewer BTU/gal than gasoline, meaning you require more of it to perform the same amount of work (that's lower MPG for the laymen commuters out there)
So, why are we so intent on pushing the ethanol alternative? Votes, my friend.. Votes. Someone has to grow the sugar-rich crops used for making ethanol. And ethanol stands to make the nation's farmers very happy, and prosperous, indeed.
But is there an alternative to ethanol? An alternative that possesses comparable BTU/gal energy, can be transported in the existing petroleum supply network, and can be co-mingled easily with petroleum derived fuels?
Yes.. It's called bio-diesel. Some people also call it vegetable oil, peanut oil.. ;0)
But wait Scrutinizer!! Won't that just cause the price of my favorite jar of Skippy (I'm a JIF man myself) to go through the roof? Will my local pub stop giving away peanuts for free while I'm enjoying my brewskie? God forbid!!
But if you click on the link to the left, Oilgae, you'll find your answer. A potentially unlimited source of bio-diesel that does NOT impact the current food chain. A source of fuel that not only can operate diesel motor vehicles (with almost no modification required), but can also be used as winter fuel oil (I'll get to the importance of this in a second).
Here's a useful link I've often referenced in the past:
http://www.unh.edu/p2/biodiesel/article_alge.html
Now, I know we all love our gasoline power vehicles.. And boy.. those diesels are dirty and noisy.. But is this really the case? Has the technology advanced sufficiently to give diesels the kind of responsiveness we expect from gas powered engines?
Furthermore, as I mentioned it before, another plus factor is that diesel engine's disadvantages in terms of output and noise have been largely overcome, with the latest diesels offering a performance not markedly different from that of gasoline engines in this respect.
http://www.isuzu.co.jp/world/technology/randd/project2/03.html
The whole argument for bio-fuels lies in the belief that they are "carbon neutral". In other words, they maintain the balance of CO2 in the atmosphere, whereas fossil fuels release CO2 that has been sequestered for eons in the form of petroleum far underground. Since plants take in CO2 for transpiration (making food), and releasing, any CO2 that would be released by converting them to bio-fuels would maintain the CO2 balance.
Now, the Scrutinizer is not convinced of the "inconvenient truth" of global climate change due to CO2 increases. There are far more powerful greenhouse gases lurking out there, including Methane (up to 23x more potent than CO2) and common water vapor (think sauna). But who am I to argue with the these folks if it serves the purpose of making this country more energy independent and less dependent upon whacko suppliers in Venezuela and the Mid-East?
Furthermore, CO2 increases are a trailing indicator of global warming, not a leading indicator. And it's quite possible that there exist other factors that are responsible for higher CO2 levels in the atmosphere, including natural emissions (volcanic), deforestation, and changes within the oceans that decrease it's ability to sequester CO2 (lack of phytoplankton) which I might discuss in a future posting.
But there is one compelling argument for bio-diesels that directly impact each of our pocketbooks. We're all suffering under the recent soaring prices for gasoline in recent months. The primaries reasons for this are limited refining capacity within the US, as well as increasing global demand for refined petroleum products in China and other countries. All petroleum is a fungible international market and the price for fuels and crude oil is set on an international level (modified by currency exchange ratios as with the recent weakness in the US Dollar).
But the most severe impact on the price of gasoline is the limited refining capacity. Refineries have two primary markets they serve throughout the year. During the summer driving season, refineries emphasize the production of gasoline, while during the winter, they focus upon refining heating oil (diesel). In between these seasons, refineries are required to shut down operations in order to facilitate the processing changes required for switching between these two fuel. This normally occurs during the late winter, and early spring, depending upon the amount of reserve fuel in above ground storage as well as demand (harsh winters draw down available diesel stocks). And since there hasn't been a new refinery built in the US in 30 years, we're seeing a choke point in the production of refined fuels.
But were we to rely upon bio-diesels to provide the bulk of that winter demand, then refineries would not be required to switch to meet the demands of the two different markets. They could focus on producing gasoline, and eventually, be rendered obsolete as the majority of vehicles are converted to bio-diesel.
In sum, switching the American economy to an alternative fuel is a major undertaking and will create economic distortions. In order to decrease any negative impacts that might lead to the inflation of agricultural products, we must think carefully about the direction we wish to go with regard to replacing fossil fuel based energy. Thus, my preference is for bio-diesel (as well as hydrogen and electric). Ethanol is far too valuable for it's medicinal purposes (mixed with my favorite fruit based mixer) to be burned in an engine.
The Scrutinizer
Tuesday, May 15, 2007
Did Saddam declare war on the US in 1993?
We've all heard the anti-war pundits tell us that there was no evidence that Saddam was supporting Al Qai'da, or the Jihadist movement, in general. They assert that Saddam was a secular ruler, and thus, the sword enemy of militant Islam. But if this is the case, then why was it that we discovered hundreds of suicide vests at Salman Pak, the camp that US intelligence asserted was a training ground for various terrorist groups?:
http://tank.nationalreview.com/post/?q=MDJkNDdkMjhjZjI1MWNjYTgyMDc0MmRjMmYzYjQyZGQ=
Exactly which secular Arab terrorist groups commit ritual suicide bombings? Please name a few examples for me (and don't say the LTTE in Sri Lanka.. they aren't muslim).
Were they to be used against the Israelis? Quite possibly. But then again, I have to ask what is the ideological nature of those suicide bombers who have blown themselves up in Israel? I don't personally recall many bombers blowing themselves up in the name of Ba'thism.
And here's one of my favorite little tidbits of information which has been generally ignored by the MSM. It consists of a number of documents recovered by coalition forces after Saddam's overthrow. They date from 1993, prior to the actual creation of Al Qai'da (which was a merger between Bin Ladin's group and Egyptian Islamic Jihad, led by Ayman Al-Zawahiri) in 1995.
http://www.cnsnews.com/ViewNation.asp?Page=%5CNation%5Carchive%5C200410%5CNAT20041011a.html
Each of the documents is a copy of the original, with the english translation provided in the small .pdf button above it.
Here's a link to Page 1, a memo from Saddam's desk, dated January 13th, 1993, directing that actions be taken against Americans, especially those operating in Somalia (remember "Blackhawk Down"?). The order precedes the Battle of Mogadishu that led to the deaths of 19 US Army Rangers in Oct, 1993.
You can ask yourself if Saddam's Intelligence operatives played a role in this, or not:
http://www.cnsnews.com/specialreports/2004/exclusive1.asp
English translation for Saddam's order:
http://www.cnsnews.com/PDF/2004/enPage1.pdf
(note: bear in mind that many of the translators we hired for document exploitation (DOCEX) were not the best english speakers, thus the poor grammar and spelling. But in other cases the translations are verbatim.. the Ba'thist leadership was notoriously illiterate).
Now maybe the old Scrutinizer may be a "hawk", but it sure sounds like Saddam was declaring war upon the US by issuing the order to "hunt Americans". And if this isn't tantamount to a declaration of war against the US, then please tell me how you would define it? At the very least, was a direct violation of the terms of the 1991 cease-fire (UNSC 687) ending Operation: Desert Storm. In that cease fire agreement, Saddam agreed to CEASE all cooperation with terrorist groups.
So, the next time someone tells you that Saddam was not a clear and present danger to Americans, print out these documents and show them to them. Here was a guy who was authorizing his intelligence service to interact with the likes of Egyptian Islamic Jihad, one of the primary groups that later formed Al Qai'da and attempted to kill 50,000+ Americans on 9/11 (the number of people who normally worked in the WTC on a daily basis). And although there is little publicly available information as to the extent of the ties that developed after Saddam's 1993 order, it's pretty clear he had no problem coordinating his agenda with Muslim extremists when it suited his interests.
And while you're at it, ask yourself (or your congressional representative) why this administration has been negligent in its obligation to inform the American people as to the nature of the threat that dragged our country into overthrowing Saddam. There had been an effort to publicly release all of the captured Iraqi documents in order to enlist the assistance of academics and native speakers to assist the DOCEX operation. However, that all came to a halt last year when some VERY SENSITIVE untranslated documents related to nuclear triggers found their way into the public realm. Documents that, under the terms of the cease-fire, Saddam's regime should have turned over to UNSCOM back in 1991.
Hmmm....
Btw, there are literally MILLIONS of these types of documents we managed to recover in Iraq. The Iraqi's, like most totalitarian states (remember the Stasi files from E. Germany?), were pretty good record keepers. It made sure that everyone in his corrupt regime was accountable to Saddam and had no excuse for not following his orders. Of course, not all related to the operations of Iraqi intelligence, but suffice it say that we've still only scratched the surface in translating a fraction of them. Simply put, when the Iraq Survey Group, funded by executive order, closed down in April, 2005, no other agency wanted to allocate more than a token budget to keep the Document Exploitation efforts open. Had it not been for the thousands of boxes of Iraqi documents sitting in warehouses waiting for translation, I'm sure the entire operation would have been defunded.
As far as I know, there is only a token "DOCEX" operation still in place, and it could prove to be 5-10 years before we ever know the full truth regarding what else Saddam and his cronies were up to.
The Scrutinizer
We've all heard the anti-war pundits tell us that there was no evidence that Saddam was supporting Al Qai'da, or the Jihadist movement, in general. They assert that Saddam was a secular ruler, and thus, the sword enemy of militant Islam. But if this is the case, then why was it that we discovered hundreds of suicide vests at Salman Pak, the camp that US intelligence asserted was a training ground for various terrorist groups?:
http://tank.nationalreview.com/post/?q=MDJkNDdkMjhjZjI1MWNjYTgyMDc0MmRjMmYzYjQyZGQ=
Exactly which secular Arab terrorist groups commit ritual suicide bombings? Please name a few examples for me (and don't say the LTTE in Sri Lanka.. they aren't muslim).
Were they to be used against the Israelis? Quite possibly. But then again, I have to ask what is the ideological nature of those suicide bombers who have blown themselves up in Israel? I don't personally recall many bombers blowing themselves up in the name of Ba'thism.
And here's one of my favorite little tidbits of information which has been generally ignored by the MSM. It consists of a number of documents recovered by coalition forces after Saddam's overthrow. They date from 1993, prior to the actual creation of Al Qai'da (which was a merger between Bin Ladin's group and Egyptian Islamic Jihad, led by Ayman Al-Zawahiri) in 1995.
http://www.cnsnews.com/ViewNation.asp?Page=%5CNation%5Carchive%5C200410%5CNAT20041011a.html
Each of the documents is a copy of the original, with the english translation provided in the small .pdf button above it.
Here's a link to Page 1, a memo from Saddam's desk, dated January 13th, 1993, directing that actions be taken against Americans, especially those operating in Somalia (remember "Blackhawk Down"?). The order precedes the Battle of Mogadishu that led to the deaths of 19 US Army Rangers in Oct, 1993.
You can ask yourself if Saddam's Intelligence operatives played a role in this, or not:
http://www.cnsnews.com/specialreports/2004/exclusive1.asp
English translation for Saddam's order:
http://www.cnsnews.com/PDF/2004/enPage1.pdf
(note: bear in mind that many of the translators we hired for document exploitation (DOCEX) were not the best english speakers, thus the poor grammar and spelling. But in other cases the translations are verbatim.. the Ba'thist leadership was notoriously illiterate).
Now maybe the old Scrutinizer may be a "hawk", but it sure sounds like Saddam was declaring war upon the US by issuing the order to "hunt Americans". And if this isn't tantamount to a declaration of war against the US, then please tell me how you would define it? At the very least, was a direct violation of the terms of the 1991 cease-fire (UNSC 687) ending Operation: Desert Storm. In that cease fire agreement, Saddam agreed to CEASE all cooperation with terrorist groups.
So, the next time someone tells you that Saddam was not a clear and present danger to Americans, print out these documents and show them to them. Here was a guy who was authorizing his intelligence service to interact with the likes of Egyptian Islamic Jihad, one of the primary groups that later formed Al Qai'da and attempted to kill 50,000+ Americans on 9/11 (the number of people who normally worked in the WTC on a daily basis). And although there is little publicly available information as to the extent of the ties that developed after Saddam's 1993 order, it's pretty clear he had no problem coordinating his agenda with Muslim extremists when it suited his interests.
And while you're at it, ask yourself (or your congressional representative) why this administration has been negligent in its obligation to inform the American people as to the nature of the threat that dragged our country into overthrowing Saddam. There had been an effort to publicly release all of the captured Iraqi documents in order to enlist the assistance of academics and native speakers to assist the DOCEX operation. However, that all came to a halt last year when some VERY SENSITIVE untranslated documents related to nuclear triggers found their way into the public realm. Documents that, under the terms of the cease-fire, Saddam's regime should have turned over to UNSCOM back in 1991.
Hmmm....
Btw, there are literally MILLIONS of these types of documents we managed to recover in Iraq. The Iraqi's, like most totalitarian states (remember the Stasi files from E. Germany?), were pretty good record keepers. It made sure that everyone in his corrupt regime was accountable to Saddam and had no excuse for not following his orders. Of course, not all related to the operations of Iraqi intelligence, but suffice it say that we've still only scratched the surface in translating a fraction of them. Simply put, when the Iraq Survey Group, funded by executive order, closed down in April, 2005, no other agency wanted to allocate more than a token budget to keep the Document Exploitation efforts open. Had it not been for the thousands of boxes of Iraqi documents sitting in warehouses waiting for translation, I'm sure the entire operation would have been defunded.
As far as I know, there is only a token "DOCEX" operation still in place, and it could prove to be 5-10 years before we ever know the full truth regarding what else Saddam and his cronies were up to.
The Scrutinizer
Will the internet slay Islam?
Thought provoking article on the Global Politician website.
http://www.globalpolitician.com/articledes.asp?ID=2817&cid=2&sid=2
Commentary:
While I hopefully don't have the apparent bias against Islam as the author, I do find it interesting to contemplate if the advent of information on the internet regarding contradictions and "uncomfortable truths" lurking within Islam might not cause more muslims to become militant in the defense of their faith. The human psyche has an enormous capacity for cognitive dissonance and justification of contradictions within their faith.
I can look at almost ANY religion and find contradictions and misinterpretations, to include christianity (whether catholic or protestant). Islam is no different. For what is a religion except mankind attempting to manifest its various perceptions of the spiritual "will of god"into their daily lives? And interpretations are almost always subjective, with more emphasis placed upon certain beliefs than upon others. In protestantism, for example, some faiths emphasize the "gifts of the holy spirit" (such as the speaking of tongues), over others (like the gift of healing). Some interpretations accept that alcohol, drunken in moderation, is acceptable (take a little wine for thy stomach's sake), which others strictly forbid it's consumption to the point that they use grape juice for their sacrament ceremonies.
Through the ages the teachings of Christ have been warped and defiled by the corrupt desires of the men and women who claim to believe in them. Anyone know the phrase "kill them all, let God sort them out". It was first uttered by Arnaud-Amaury at Berziers, where crusaders exterminated the "heretical" sect of Cathars. He was asked by a subordinate how to differetiate a Cathar from other residents in the area, to which he responded, "kill them all, God will know his own". Does that sound any different from the militant rhetoric we're hearing from Al Qai'da and other Jihadist factions? Were some Christian leader to utter such an edict today, he would be immediately denounced and humiliated. Thus, it's evident that Christianity has definitely evolved over the centuries via the process of intellectual "domestication".
And as a whole, today's religious faiths are representative of this evolution. In fact, the whole nature of religion is a history of man's attempts to define his place within the universe. Some have theorized that Judaism has its roots within the teachings of Akhenaten's cult of the sun god in Ancient Egypt, widely recognized as the first monotheistic religion. Christianity, obviously, has its roots within Judaism. And Islam has it's roots within both Judaism and Christianity, with both the old and new testaments accepted (supposedly) as holy writings worthy of being read and studied. However, find a modern muslim Imam, mufti, or ayatollah, who would be willing to publicly proclaim that it's alright to read the bible. And, of course, later religious faiths, such as Mormonism, has its basis in Christianity. And it is worthy to note that both of the latter religions make use of contemporary prophets in order to unveil new "revelations" of god in order to supercede, if not replace, the Bible, proclaiming their new religious texts as the "fulness of the gospel". But I digress.
What we represent as religion today would be almost unrecognizable to the beliefs originally taught because they have had to evolve to incorporate modern intellectual and technological change. Where once Christians wouldn't have thought twice about waging wars, and forcible conversion, in the name of god against heretics and non-christians, today the majority of Christians find the thought of waging "crusade" an antiquated belief, unworthy of the teachings of Christ. They prefer to wage spiritual "battles" for souls, using evangelism and foreign ministries to convert people to their religions.
But Islam is different. Muslim society as yet to fully cast off the belief in their right to wage violent Jihad to forcibly convert the infidel. That's not bias, it's just plain fact that is portrayed to the world in the Muslim proclamations and their media. Islam has stagnated since it Muhammad proclaimed that he held a new revelation from god. It's adherents have failed to submit it's original teachings to serious re-examination as to exactly what God demands from them. And the interpreters of the Q'uran have failed to reconcile why their society has been unable to recognize the fruits of its religious fervor. Islam's defeat at the hands of Charles the Hammer at Poitiers, followed by the crushing defeat at the hands of the Mongol horde, followed by the humiliating eviction of the Moors from the European continent by Ferdinand and Isabella, and ultimately it's defeat under the Ottoman Turks at the Battle of Vienna has left its adherents with a serious inferiority complex. And the fall of the Ottoman empire at the hands of the West, and break up of its territorial holdings into a polyglot of arbitrarily defined geographical boundaries is only the latest in that string of humiliations.
And now Islam is facing it's ultimate challenge, an information war where every one of its tenets is being analysed and debated on an international level, via the internet. Thus, maybe, just maybe, the advent of Qutbism (See Sayyid Qutb) which is the basis for moderan Islamic extremism may be argued as a reactionary response to having their beliefs exposed and challenged on a global scale. It only seems logical that as Muslim beliefs, and especially those that justify violence, are revealed, that it's adherents would assume a defensive, if not militant reactionary stance. But the question in my mind is whether there lies the ability for progressive and peaceful change within the soul of Islam that will bring it "up to date"? Can moderate muslims who hold to the perception that Islam is a religion of peace prevail over those who defend their "right" forcibly convert humanity to their religion? Can moderates manage to evolve their religious beliefs to dovetail with modern philosophical thought, namely that violence perpetrated in the name of religion is repugnant and antithetical to the nature of god's will for humanity? That, in my opinion, is a question that we'll have to wait decades before we receive an answer.
What right has any man/woman to believe that they are empowered by God to physically force another human being to adher to their particular religious interpretation? Can anyone logically accept the contention that any Supreme Being would need (or desire) to force people to believe in "him"? I can't. It's the ultimate contradiction that any almighty, all knowing creator of all we know would need to force we puny humans to believe in him. Maybe I'm a fool, but I prefer to believe that God is attempting to throw me a lifeline to save me from the ocean of sins I'm wallowing in, not threatening to make me walk the plank. And what militant religious fanatics are attempting to perpetrate upon humanity is exactly the latter; convert to their faith or walk the plank in order to expedite our trip to hell,... do not pass go, do not collect eternity.
So the challenge for modern muslims is whether they can muster the necessary intestinal fortitude to confront the militants in their midst, and instead, wage a spiritual, but peaceful, war aimed at changing the hearts of humanity to more closely adher to that definition of "paradise" they all seem to claim is awaiting us. And for that matter, the very same thing can be said to apply to those militant Christians who believe they have the god-given right to blow up abortion clinics.
The Scrutinizer
Thought provoking article on the Global Politician website.
http://www.globalpolitician.com/articledes.asp?ID=2817&cid=2&sid=2
Commentary:
While I hopefully don't have the apparent bias against Islam as the author, I do find it interesting to contemplate if the advent of information on the internet regarding contradictions and "uncomfortable truths" lurking within Islam might not cause more muslims to become militant in the defense of their faith. The human psyche has an enormous capacity for cognitive dissonance and justification of contradictions within their faith.
I can look at almost ANY religion and find contradictions and misinterpretations, to include christianity (whether catholic or protestant). Islam is no different. For what is a religion except mankind attempting to manifest its various perceptions of the spiritual "will of god"into their daily lives? And interpretations are almost always subjective, with more emphasis placed upon certain beliefs than upon others. In protestantism, for example, some faiths emphasize the "gifts of the holy spirit" (such as the speaking of tongues), over others (like the gift of healing). Some interpretations accept that alcohol, drunken in moderation, is acceptable (take a little wine for thy stomach's sake), which others strictly forbid it's consumption to the point that they use grape juice for their sacrament ceremonies.
Through the ages the teachings of Christ have been warped and defiled by the corrupt desires of the men and women who claim to believe in them. Anyone know the phrase "kill them all, let God sort them out". It was first uttered by Arnaud-Amaury at Berziers, where crusaders exterminated the "heretical" sect of Cathars. He was asked by a subordinate how to differetiate a Cathar from other residents in the area, to which he responded, "kill them all, God will know his own". Does that sound any different from the militant rhetoric we're hearing from Al Qai'da and other Jihadist factions? Were some Christian leader to utter such an edict today, he would be immediately denounced and humiliated. Thus, it's evident that Christianity has definitely evolved over the centuries via the process of intellectual "domestication".
And as a whole, today's religious faiths are representative of this evolution. In fact, the whole nature of religion is a history of man's attempts to define his place within the universe. Some have theorized that Judaism has its roots within the teachings of Akhenaten's cult of the sun god in Ancient Egypt, widely recognized as the first monotheistic religion. Christianity, obviously, has its roots within Judaism. And Islam has it's roots within both Judaism and Christianity, with both the old and new testaments accepted (supposedly) as holy writings worthy of being read and studied. However, find a modern muslim Imam, mufti, or ayatollah, who would be willing to publicly proclaim that it's alright to read the bible. And, of course, later religious faiths, such as Mormonism, has its basis in Christianity. And it is worthy to note that both of the latter religions make use of contemporary prophets in order to unveil new "revelations" of god in order to supercede, if not replace, the Bible, proclaiming their new religious texts as the "fulness of the gospel". But I digress.
What we represent as religion today would be almost unrecognizable to the beliefs originally taught because they have had to evolve to incorporate modern intellectual and technological change. Where once Christians wouldn't have thought twice about waging wars, and forcible conversion, in the name of god against heretics and non-christians, today the majority of Christians find the thought of waging "crusade" an antiquated belief, unworthy of the teachings of Christ. They prefer to wage spiritual "battles" for souls, using evangelism and foreign ministries to convert people to their religions.
But Islam is different. Muslim society as yet to fully cast off the belief in their right to wage violent Jihad to forcibly convert the infidel. That's not bias, it's just plain fact that is portrayed to the world in the Muslim proclamations and their media. Islam has stagnated since it Muhammad proclaimed that he held a new revelation from god. It's adherents have failed to submit it's original teachings to serious re-examination as to exactly what God demands from them. And the interpreters of the Q'uran have failed to reconcile why their society has been unable to recognize the fruits of its religious fervor. Islam's defeat at the hands of Charles the Hammer at Poitiers, followed by the crushing defeat at the hands of the Mongol horde, followed by the humiliating eviction of the Moors from the European continent by Ferdinand and Isabella, and ultimately it's defeat under the Ottoman Turks at the Battle of Vienna has left its adherents with a serious inferiority complex. And the fall of the Ottoman empire at the hands of the West, and break up of its territorial holdings into a polyglot of arbitrarily defined geographical boundaries is only the latest in that string of humiliations.
And now Islam is facing it's ultimate challenge, an information war where every one of its tenets is being analysed and debated on an international level, via the internet. Thus, maybe, just maybe, the advent of Qutbism (See Sayyid Qutb) which is the basis for moderan Islamic extremism may be argued as a reactionary response to having their beliefs exposed and challenged on a global scale. It only seems logical that as Muslim beliefs, and especially those that justify violence, are revealed, that it's adherents would assume a defensive, if not militant reactionary stance. But the question in my mind is whether there lies the ability for progressive and peaceful change within the soul of Islam that will bring it "up to date"? Can moderate muslims who hold to the perception that Islam is a religion of peace prevail over those who defend their "right" forcibly convert humanity to their religion? Can moderates manage to evolve their religious beliefs to dovetail with modern philosophical thought, namely that violence perpetrated in the name of religion is repugnant and antithetical to the nature of god's will for humanity? That, in my opinion, is a question that we'll have to wait decades before we receive an answer.
What right has any man/woman to believe that they are empowered by God to physically force another human being to adher to their particular religious interpretation? Can anyone logically accept the contention that any Supreme Being would need (or desire) to force people to believe in "him"? I can't. It's the ultimate contradiction that any almighty, all knowing creator of all we know would need to force we puny humans to believe in him. Maybe I'm a fool, but I prefer to believe that God is attempting to throw me a lifeline to save me from the ocean of sins I'm wallowing in, not threatening to make me walk the plank. And what militant religious fanatics are attempting to perpetrate upon humanity is exactly the latter; convert to their faith or walk the plank in order to expedite our trip to hell,... do not pass go, do not collect eternity.
So the challenge for modern muslims is whether they can muster the necessary intestinal fortitude to confront the militants in their midst, and instead, wage a spiritual, but peaceful, war aimed at changing the hearts of humanity to more closely adher to that definition of "paradise" they all seem to claim is awaiting us. And for that matter, the very same thing can be said to apply to those militant Christians who believe they have the god-given right to blow up abortion clinics.
The Scrutinizer
Sunday, May 13, 2007
China and the Greater Fool Theory
For those unacquainted with the "Greater Fool Theory", simply stated it means there always a greater fool out there willing to pay more than you did for something. And it's the entire basis of the equity markets, where people pay extraordinary price for little slips of paper (generally electronic) that represent a percentage shareholdership in a company. And when you run out of people willing to pay more for your shares, you quickly find out who the "greater fool" really is (believe me, I've been there myself).
Now.. I've nothing against the stock markets. They are valuable sources of financing for companies requiring capital to grow, or just to bring new products to market. And when you are one of those lucky investors who buy pre-IPO stock in some company like Google (Nas:GOOG), you can really make a fortune as that company executes its business plan and increases both revenues and profits, thus increasing the public perception of value for the shares you hold. Heck, it the basis for my owning shares in Microvision (Nas: MVIS), because I see their miniature laser projection displays for eyeware and cellphones as a very disruptive technology that will, if they execute their business plan properly, reap them hundreds of millions in revenues and profits.
But let's face some facts folks.. There's a reason we have something called a "Price to Earnings" ratio (P/E for short). It assists we investors in determining if we're overpaying for a company's stock, or if there is hidden value. Analysts get worried when the S&P500 (SPX) has a P/E of 15-20 times earnings. If you listen to the news, everyone is worried about the US markets because the SPX currently has a P/E of 18.31.
But the Chinese markets? My goodness.. as some may have heard, the sum total value of public shares listed on the Shanghai stock exchange exceed that of all Asian markets combined. This includes Japan, the second largest economy on the planet, right behind the US. But the average P/E of China's markets is currently at 40 times earnings. Now granted, this is being matched by growth in many of these companies, but what is fueling this growth? Is it internally driven, or export driven? And if the latter, which is the likely the case with China, what happens when your customers come upon hard economic times? Who will buy China's products then?
Currently the Chinese markets, including the Hang Seng in Hong Kong, are on a tear as the Chinese government has authorized certain Chinese banks the ability to invest greater amounts in non-Chinese stocks. They are doing this as a pitiful attempt to drain money from the Chinese market bubble. Chinese investors are generally not permitted to purchase foreign equities, nor transfer large amounts of money out of China. This is all because Bejing strictly controls the value of the Yuan (currency) and they don't want people circumventing those currency controls by purchasing foreign stocks and then selling them (Chinese investors would have sell Yuan in order to buy foreign denominated equities, thus placing downward pressure on the Yuan).
Also, I've seen the first public mention regarding my previous comment regarding my belief that Bejing will do whatever is possible to avoid an economic disruption prior to the 2008 Olympics. Get a load of this:
For those unacquainted with the "Greater Fool Theory", simply stated it means there always a greater fool out there willing to pay more than you did for something. And it's the entire basis of the equity markets, where people pay extraordinary price for little slips of paper (generally electronic) that represent a percentage shareholdership in a company. And when you run out of people willing to pay more for your shares, you quickly find out who the "greater fool" really is (believe me, I've been there myself).
Now.. I've nothing against the stock markets. They are valuable sources of financing for companies requiring capital to grow, or just to bring new products to market. And when you are one of those lucky investors who buy pre-IPO stock in some company like Google (Nas:GOOG), you can really make a fortune as that company executes its business plan and increases both revenues and profits, thus increasing the public perception of value for the shares you hold. Heck, it the basis for my owning shares in Microvision (Nas: MVIS), because I see their miniature laser projection displays for eyeware and cellphones as a very disruptive technology that will, if they execute their business plan properly, reap them hundreds of millions in revenues and profits.
But let's face some facts folks.. There's a reason we have something called a "Price to Earnings" ratio (P/E for short). It assists we investors in determining if we're overpaying for a company's stock, or if there is hidden value. Analysts get worried when the S&P500 (SPX) has a P/E of 15-20 times earnings. If you listen to the news, everyone is worried about the US markets because the SPX currently has a P/E of 18.31.
But the Chinese markets? My goodness.. as some may have heard, the sum total value of public shares listed on the Shanghai stock exchange exceed that of all Asian markets combined. This includes Japan, the second largest economy on the planet, right behind the US. But the average P/E of China's markets is currently at 40 times earnings. Now granted, this is being matched by growth in many of these companies, but what is fueling this growth? Is it internally driven, or export driven? And if the latter, which is the likely the case with China, what happens when your customers come upon hard economic times? Who will buy China's products then?
Currently the Chinese markets, including the Hang Seng in Hong Kong, are on a tear as the Chinese government has authorized certain Chinese banks the ability to invest greater amounts in non-Chinese stocks. They are doing this as a pitiful attempt to drain money from the Chinese market bubble. Chinese investors are generally not permitted to purchase foreign equities, nor transfer large amounts of money out of China. This is all because Bejing strictly controls the value of the Yuan (currency) and they don't want people circumventing those currency controls by purchasing foreign stocks and then selling them (Chinese investors would have sell Yuan in order to buy foreign denominated equities, thus placing downward pressure on the Yuan).
Also, I've seen the first public mention regarding my previous comment regarding my belief that Bejing will do whatever is possible to avoid an economic disruption prior to the 2008 Olympics. Get a load of this:
And many investors believe Chinese leaders will prop up prices to avoid turmoil ahead of a key Communist Party meeting in late 2007 and the Beijing Olympics next year.
"We hear that before 2008, the government won't let prices fall," said Ding's sister, Ding Jingxian. "We're not afraid."
http://news.yahoo.com/s/ap/20070513/ap_on_bi_ge/china_stock_market_fever
Now the Shanghai market is currently trading around 4,000, which represents tremendous gains over the course of the past year. If you don't believe me.. look at this chart:
The Shanghai market has more than doubled over the past year. DOUBLED!!!
I suspect when that market hits the major psychological barrier represented at 5,000, millions of Chinese are going to look in the mirror and discover they have become the "greater fool". It may happen before it reaches 5,000, but if those comments are correct, the Chinese government will do everything to prevent a market correction from becoming a market collapse, including governmental repurchasing of stocks to place a "bid" under any market collapse.
On the other hand, the ability for savvy Chinese investors to invest in the markets of those countries who actually purchase the predominant amount of Chinese products (the US, Japan, and Europe) should bode well for our markets.
But god forbid we have a recession in the US within the next year. We're already seeing slower growth, despite our fantastic levels of low unemployment (which directly translates to consumer spending for all those cheap Chinese goods.)
I will be looking for ways to short the Chinese markets in a relatively conservative way when it approachese 5,000. I believe there is a Exchange Traded Fund that covers Chinese markets and those can be shorted like any other stock. But preferably my short position will be options based. Less money at risk, and if the market goes up, my potential for loss is limited to the cost of my options position.
The Scrutinizer
Saturday, May 12, 2007
Interesting article related to the recent gains we've seen in the stock market.
Bubble tipped to burst in 2011
Andy Mukherjee COMMENTARY
Thursday, May 10, 2007
Harvard University economist Jeffrey Frankel has an interesting theory about the timing of the next emerging- market meltdown.
He says capital flows into developing economies follow a 15-year pattern: "seven fat years followed by seven lean years." The year between the two phases is when the flow of money suddenly stops. Why 15 years?
"After 15 years have gone by, there is somebody new on the trading desk who did not personally live through the last crash," Frankel said at a globalization forum, organized by the International Monetary Fund in Washington. "They sort of know about it, but it is easier for them to say the world has changed than if they lost money in it."
There have been two such cycles in the recent past, according to Frankel. The first wave began around 1975, following a sharp increase in oil prices in 1973-74. After seven years of frenzied recycling of petrodollars into emerging-market securities, Mexico blew up in 1982.
Then there were seven slow years, before investors came back to these markets with renewed vigor in the early 1990s. That boom, which again went on for seven years, ended with the Asian crisis in 1997. By this logic, the next blow to emerging-market economies will come in 2011 or 2012. So all those who envision that the current subprime mortgage crisis in the United States will lead to investors bailing out of risky, emerging-market securities may be disappointed.
The time is not ripe, yet, for a disaster. "It is too soon, memories are still fresh," Frankel said. "Argentina and Turkey, they were not that long ago, so I think it is too soon."
Could the next meltdown start in Asia? The region has a seemingly inexhaustible war chest of US$2.5 trillion (HK$19.5 trillion) in foreign- exchange reserves. Besides, most Asian current accounts are now in surplus. East Asia is no longer funding its expansion with capital borrowed from overseas. Now it is exporting capital to the rest of the world.
All of this makes a currency crisis unlikely. But other risks remain.
Nouriel Roubini, chairman of Roubini Global Economics in New York, is predicting "a new and different type of financial crisis in Asia," one that is triggered by excessive liquidity and asset bubbles. The risks stem from Asia's currency policies. China remains reluctant to allow the yuan to trade more freely.
That means other Asian nations will not be able to tolerate significant currency appreciation without their exports losing market share to cheap Chinese-made goods in Western markets.
One country that did try to live with faster currency gains - Thailand - had to resort to capital controls to prevent its exports from sinking under the weight of a stronger baht.
Cheap Asian currencies are not a free lunch. The bloated and growing Asian forex reserves are being increasingly financed by an expansion in the monetary base. Base-money growth in China was 21 percent in 2006, double the annual average of 2004 and 2005. It was about 20 percent in Korea in 2006, six times the average in the preceding two years, according to a World Bank report last month.
Unmistakably, Asia is contributing - along with petrodollars and Japanese carry trades - to a surfeit of global liquidity and a mispricing of risk. For now, excesses may continue to build up. The spread, or the extra yield demanded by investors to hold dollar-denominated emerging-market bonds instead of risk-free US securities, has shrunk to about a 10th of its post-Asian crisis level, according to a JPMorgan Chase index.
Those who want to sell you developing-country debt will tell you what a fine job these nations have done in containing public debt and inflation.
Besides, countries such as Brazil are buying back dollar bonds, reducing supply; so the high valuations are warranted, they will say.
Standard & Poor's, which raised the credit rating on eight out of 34 emerging-market sovereigns and lowered its assessment on just one in the 12 months through August 2006, is talking about the need to redefine the "emerging market" label, and in certain cases, even eliminate it.
This excessive show of optimism has "bubble" written on it in bright neon. Yet, investors will wait to see emerging-market risk turn to zero before being stung by losses.
The same is true for equity.
Morgan Stanley Capital International's MSCI index of emerging- market shares reached 1000 this week. It has doubled in 2 years. Do not be surprised if it doubles again. The bubble is alive and well. It just might keep growing for the next five years, if Frankel's prophecy is right.
BLOOMBERG
http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=44077&sid=13528100&con_type=1
Commentary
Bear in mind that the Dow Theory triple high back in February in the Dow Transports, Industrials, and Utilities gave a new market buy signal that is extremely rare, and combined with the all-time record short interest on the NYSE, it puts a tremendous "bid" under the market as shorts get scared and cover their positions. The higher the markets go, the more the shorts are losing and the higher their financial "pain". It's also worth noting, for those unfamiliar with short-selling that the potential risk of loss for a short is infinite. If a "long" buys a stock, the most they can lose is the total purchase price of their stock (ie: it goes to zero value). When a short seller initiates a position, they borrow the stock certificate (generally this is electronically executed) and sell it with the promise to replace that stock certificate at a later date. If they stock they shorted is valued less when they buy it back to return to the brokerage (covering their short is what it's called) than the price they sold it at when they initiated their position, they pocket the difference as profit.
However, if the stock increases in value ABOVE what they shorted it at, then they lose money with each dollar that stock increases in value. And since there is no limit to how high a stock can go in price, their potential for loss is infinite.
Something to thing about in coming weeks/months as we assess the long term potential for the indices, and stock overall. Let's not forget that, even though the Dow and S&P have reach new highs, the Nasdaq has yet to achieve the same. It's unlikely we'll see 5000 on the Nasdaq anytime soon, given how high it assailed in 2000. But it's quite possible we could print 3400 by this time next year.
It all depends on Asia, in my opinion. China's markets are definitely due for a correction, but with the Olympics coming up next year, we can all anticipate that the government in Bejing will do anything they can to delay the pain of such a correction until after the medals are all passed out.
So, I might be wrong, but I suggest we all try and enjoy the next couple of years. Because when the financial hangover comes, it's going to be a doozy!!
The Scrutinizer
Bubble tipped to burst in 2011
Andy Mukherjee COMMENTARY
Thursday, May 10, 2007
Harvard University economist Jeffrey Frankel has an interesting theory about the timing of the next emerging- market meltdown.
He says capital flows into developing economies follow a 15-year pattern: "seven fat years followed by seven lean years." The year between the two phases is when the flow of money suddenly stops. Why 15 years?
"After 15 years have gone by, there is somebody new on the trading desk who did not personally live through the last crash," Frankel said at a globalization forum, organized by the International Monetary Fund in Washington. "They sort of know about it, but it is easier for them to say the world has changed than if they lost money in it."
There have been two such cycles in the recent past, according to Frankel. The first wave began around 1975, following a sharp increase in oil prices in 1973-74. After seven years of frenzied recycling of petrodollars into emerging-market securities, Mexico blew up in 1982.
Then there were seven slow years, before investors came back to these markets with renewed vigor in the early 1990s. That boom, which again went on for seven years, ended with the Asian crisis in 1997. By this logic, the next blow to emerging-market economies will come in 2011 or 2012. So all those who envision that the current subprime mortgage crisis in the United States will lead to investors bailing out of risky, emerging-market securities may be disappointed.
The time is not ripe, yet, for a disaster. "It is too soon, memories are still fresh," Frankel said. "Argentina and Turkey, they were not that long ago, so I think it is too soon."
Could the next meltdown start in Asia? The region has a seemingly inexhaustible war chest of US$2.5 trillion (HK$19.5 trillion) in foreign- exchange reserves. Besides, most Asian current accounts are now in surplus. East Asia is no longer funding its expansion with capital borrowed from overseas. Now it is exporting capital to the rest of the world.
All of this makes a currency crisis unlikely. But other risks remain.
Nouriel Roubini, chairman of Roubini Global Economics in New York, is predicting "a new and different type of financial crisis in Asia," one that is triggered by excessive liquidity and asset bubbles. The risks stem from Asia's currency policies. China remains reluctant to allow the yuan to trade more freely.
That means other Asian nations will not be able to tolerate significant currency appreciation without their exports losing market share to cheap Chinese-made goods in Western markets.
One country that did try to live with faster currency gains - Thailand - had to resort to capital controls to prevent its exports from sinking under the weight of a stronger baht.
Cheap Asian currencies are not a free lunch. The bloated and growing Asian forex reserves are being increasingly financed by an expansion in the monetary base. Base-money growth in China was 21 percent in 2006, double the annual average of 2004 and 2005. It was about 20 percent in Korea in 2006, six times the average in the preceding two years, according to a World Bank report last month.
Unmistakably, Asia is contributing - along with petrodollars and Japanese carry trades - to a surfeit of global liquidity and a mispricing of risk. For now, excesses may continue to build up. The spread, or the extra yield demanded by investors to hold dollar-denominated emerging-market bonds instead of risk-free US securities, has shrunk to about a 10th of its post-Asian crisis level, according to a JPMorgan Chase index.
Those who want to sell you developing-country debt will tell you what a fine job these nations have done in containing public debt and inflation.
Besides, countries such as Brazil are buying back dollar bonds, reducing supply; so the high valuations are warranted, they will say.
Standard & Poor's, which raised the credit rating on eight out of 34 emerging-market sovereigns and lowered its assessment on just one in the 12 months through August 2006, is talking about the need to redefine the "emerging market" label, and in certain cases, even eliminate it.
This excessive show of optimism has "bubble" written on it in bright neon. Yet, investors will wait to see emerging-market risk turn to zero before being stung by losses.
The same is true for equity.
Morgan Stanley Capital International's MSCI index of emerging- market shares reached 1000 this week. It has doubled in 2 years. Do not be surprised if it doubles again. The bubble is alive and well. It just might keep growing for the next five years, if Frankel's prophecy is right.
BLOOMBERG
http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=44077&sid=13528100&con_type=1
Commentary
Bear in mind that the Dow Theory triple high back in February in the Dow Transports, Industrials, and Utilities gave a new market buy signal that is extremely rare, and combined with the all-time record short interest on the NYSE, it puts a tremendous "bid" under the market as shorts get scared and cover their positions. The higher the markets go, the more the shorts are losing and the higher their financial "pain". It's also worth noting, for those unfamiliar with short-selling that the potential risk of loss for a short is infinite. If a "long" buys a stock, the most they can lose is the total purchase price of their stock (ie: it goes to zero value). When a short seller initiates a position, they borrow the stock certificate (generally this is electronically executed) and sell it with the promise to replace that stock certificate at a later date. If they stock they shorted is valued less when they buy it back to return to the brokerage (covering their short is what it's called) than the price they sold it at when they initiated their position, they pocket the difference as profit.
However, if the stock increases in value ABOVE what they shorted it at, then they lose money with each dollar that stock increases in value. And since there is no limit to how high a stock can go in price, their potential for loss is infinite.
Something to thing about in coming weeks/months as we assess the long term potential for the indices, and stock overall. Let's not forget that, even though the Dow and S&P have reach new highs, the Nasdaq has yet to achieve the same. It's unlikely we'll see 5000 on the Nasdaq anytime soon, given how high it assailed in 2000. But it's quite possible we could print 3400 by this time next year.
It all depends on Asia, in my opinion. China's markets are definitely due for a correction, but with the Olympics coming up next year, we can all anticipate that the government in Bejing will do anything they can to delay the pain of such a correction until after the medals are all passed out.
So, I might be wrong, but I suggest we all try and enjoy the next couple of years. Because when the financial hangover comes, it's going to be a doozy!!
The Scrutinizer
Thursday, May 10, 2007
We Support the Stupid Mercenaries
May 2, 2007:
Yet another example of a media celebrity letting their true feeling about the troops slip out. In this case, it is "The View" guest co-host Ricki Lake (best known for a trashy talk show), who used the word "ineducation" to describe why young Americans join the military. This was in response to a question from co-host Rosie O'Donnell as to why they enlist. An attempt to challenge that by co-host Elizabeth Hasselback was slapped down by O'Donnell, who went on to claim that felons were being allowed to enlist. This is not the first time that such insults have been fired off, but it does show the contempt that is held for the troops in at least some quarters of the anti-war movement.
This is not the first time such comments have been made by opponents of the Iraqi component campaign of the war on terror. In February, NBC commentator William Arkin, criticized American soldiers who defended their efforts in the war on terror. Arkin also had expressed his hope the troops who made the comments had been counseled. Arkin also raised the specter of a military coup, and then referred to them as mercenaries.
In November, 2006, Senator John Kerry made comments concerning an alleged lack of intelligence among the troops and the notion that many of the recruits are poor. Like Kerry's comments, which killed his 2008 presidential bid, Rosie O'Donnell's comments also have little, if any, basis in truth. Every year since 1983, over 90 percent of all recruits have at least a high school diploma. Many officers and enlisted personnel tend to get college degrees (both graduate and undergraduate), often paid for by the armed services. The claim that most of the recruits are poor also did not stand up to facts. Most of the recruits come from middle-class families. These recruits also score high on the AVSAB tests (two-thirds of recruits score over 60 percent on the test), another indication that they are not stupid. Also, felonies are a bar to enlistment.
The comments from Ricki Lake, Rosie O'Donnell, and John Kerry are not the worst things that have been said about the troops. Some scurrilous and very incendiary charges came from Seymour Hersh, a journalist who broke various stories in the Vietnam War. Hersh openly called for American troops to be treated as they were when they returned from Vietnam. Hersh claimed that the American forces in Iraq were carrying out atrocities. In one instance, he claimed a video of a massacre at a soccer game in the wake of an IED attack existed. Yet Hersh made this claim at a lecture at McGill University in Canada. He apparently had not heard of the Army's Criminal Investigative Division and the Naval Criminal Investigative Service (the latter of which is the subject of a popular prime-time TV series).
In a very real sense, there is only so much hypocrisy that the anti-war movement will be able to get away with. It certainly is fair to ask the anti-war movement how they reconcile their belief that they support the troops, when they express almost implacable opposition to what the troops are doing. These claims of support become harder to buy when they come right after the person making them has called the troops stupid on national TV. – Harold C. Hutchison (haroldc.hutchison@gmail.com)
http://www.strategypage.com/htmw/htiw/articles/20070502.aspx
Commentary:
I have to admit, this is one of reasons that I have yet to vote Democrat. It's one thing to play partisan politics with domestic or foreign policy, but quite another to disparage the people tasked with implementing that policy as idiots. And what are the soldiers to do when it comes to defending themselves from such denigrating abuse?
Recently, DOD issued a policy stating that all "mil-bloggers" have to clear their postings with their chain of command before publicizing their comments on their personal blogs due to concerns about Operational Security concerns. Aside from being this potentially becoming an excessive burden upon the chain of command to undertake censorship duties, it also deprives our soldiers the ability to voice their owns opinions as to whether they believe in their mission or not. My view is that if a soldier commits an OPSEC violation, they should be punished. If they insult their chain of command, or engage in partisan political activities online, they should be punished. This preserves the professional quality of our military force and maintains their subservience to civilian control.
There should be nothing wrong with servicemen creating blogs as a means of letting the American people know what they are doing and how they live. For one thing, in this day and age, it's almost technically impossible to stop. If China, with its near complete control over internet access in that country, can't stop their people from posting anti-government comments, what makes us think the US military can do so in our open societies? What's to stop a soldier from typing up comments on his laptop, storing it on a thumb drive, and mailing it to some accomplice who will post it anonymously?
Collective punishment perpetrated against all soldiers trying to educate the American homefront is not the answer. It's difficult for most Americans to understand their frustrations, as well as their triumphs, when the main stream media doesn't consider it important enough to report.
No wonder the people in this country don't understand what's at stake in Iraq (let alone the entire Middle East).
The Scrutinizer
May 2, 2007:
Yet another example of a media celebrity letting their true feeling about the troops slip out. In this case, it is "The View" guest co-host Ricki Lake (best known for a trashy talk show), who used the word "ineducation" to describe why young Americans join the military. This was in response to a question from co-host Rosie O'Donnell as to why they enlist. An attempt to challenge that by co-host Elizabeth Hasselback was slapped down by O'Donnell, who went on to claim that felons were being allowed to enlist. This is not the first time that such insults have been fired off, but it does show the contempt that is held for the troops in at least some quarters of the anti-war movement.
This is not the first time such comments have been made by opponents of the Iraqi component campaign of the war on terror. In February, NBC commentator William Arkin, criticized American soldiers who defended their efforts in the war on terror. Arkin also had expressed his hope the troops who made the comments had been counseled. Arkin also raised the specter of a military coup, and then referred to them as mercenaries.
In November, 2006, Senator John Kerry made comments concerning an alleged lack of intelligence among the troops and the notion that many of the recruits are poor. Like Kerry's comments, which killed his 2008 presidential bid, Rosie O'Donnell's comments also have little, if any, basis in truth. Every year since 1983, over 90 percent of all recruits have at least a high school diploma. Many officers and enlisted personnel tend to get college degrees (both graduate and undergraduate), often paid for by the armed services. The claim that most of the recruits are poor also did not stand up to facts. Most of the recruits come from middle-class families. These recruits also score high on the AVSAB tests (two-thirds of recruits score over 60 percent on the test), another indication that they are not stupid. Also, felonies are a bar to enlistment.
The comments from Ricki Lake, Rosie O'Donnell, and John Kerry are not the worst things that have been said about the troops. Some scurrilous and very incendiary charges came from Seymour Hersh, a journalist who broke various stories in the Vietnam War. Hersh openly called for American troops to be treated as they were when they returned from Vietnam. Hersh claimed that the American forces in Iraq were carrying out atrocities. In one instance, he claimed a video of a massacre at a soccer game in the wake of an IED attack existed. Yet Hersh made this claim at a lecture at McGill University in Canada. He apparently had not heard of the Army's Criminal Investigative Division and the Naval Criminal Investigative Service (the latter of which is the subject of a popular prime-time TV series).
In a very real sense, there is only so much hypocrisy that the anti-war movement will be able to get away with. It certainly is fair to ask the anti-war movement how they reconcile their belief that they support the troops, when they express almost implacable opposition to what the troops are doing. These claims of support become harder to buy when they come right after the person making them has called the troops stupid on national TV. – Harold C. Hutchison (haroldc.hutchison@gmail.com)
http://www.strategypage.com/htmw/htiw/articles/20070502.aspx
Commentary:
I have to admit, this is one of reasons that I have yet to vote Democrat. It's one thing to play partisan politics with domestic or foreign policy, but quite another to disparage the people tasked with implementing that policy as idiots. And what are the soldiers to do when it comes to defending themselves from such denigrating abuse?
Recently, DOD issued a policy stating that all "mil-bloggers" have to clear their postings with their chain of command before publicizing their comments on their personal blogs due to concerns about Operational Security concerns. Aside from being this potentially becoming an excessive burden upon the chain of command to undertake censorship duties, it also deprives our soldiers the ability to voice their owns opinions as to whether they believe in their mission or not. My view is that if a soldier commits an OPSEC violation, they should be punished. If they insult their chain of command, or engage in partisan political activities online, they should be punished. This preserves the professional quality of our military force and maintains their subservience to civilian control.
There should be nothing wrong with servicemen creating blogs as a means of letting the American people know what they are doing and how they live. For one thing, in this day and age, it's almost technically impossible to stop. If China, with its near complete control over internet access in that country, can't stop their people from posting anti-government comments, what makes us think the US military can do so in our open societies? What's to stop a soldier from typing up comments on his laptop, storing it on a thumb drive, and mailing it to some accomplice who will post it anonymously?
Collective punishment perpetrated against all soldiers trying to educate the American homefront is not the answer. It's difficult for most Americans to understand their frustrations, as well as their triumphs, when the main stream media doesn't consider it important enough to report.
No wonder the people in this country don't understand what's at stake in Iraq (let alone the entire Middle East).
The Scrutinizer
Wednesday, May 09, 2007
Reaping What We Have Sown
Why is there an Militant Islamist insurgency in Iraq? Did it just "appear" when Saddam was overthrown, or was the foundation of a Salafist/Takfirist Islamist state already taking root during the '90s when Saddam's regime was weakened by international sanctions, as well as Shi'a and Kurdish rebellion (after years of oppression).
One of the epiphanies I experienced while I was in Iraq was the degree to which former Ba'thists were involved in the leadership of various Jihadist groups which MNF-I all, rightly or wrongly, categorized as Al Qai'da in Iraq (AQIZ, IZ being the country code for Iraq). Ansar Al-Islam, Ansar Al-Sunnah, 1920 Brigades.. Umar Brigades, and let's not forget Al Qai'da. All of these are among the most prevalent of the Sunni based insurgent groups. For the moment, I will refrain from addressing the Shi'a factions, since the focus of this post is to point out that militant Islamism was a rising force that not even Saddam was successful at containing. But here is a general list of current insurgent groups operating in Iraq:
http://www.milnet.com/pentagon/centcom/iraq/Terrorism-in-Iraq.html
One of the fundamental questions that has remained begging to be asked is why has the nature of the insurgency taken on an Islamist tone? Why, in the wake of Saddam's overthrow, did we not see the Sunnis rally around already organized resistance movements such as the Fidayin Saddam (Saddam's men of sacrifice) and thus, preserving a Ba'thist "tone" to the insurgency? The message from many in the main stream media and anti-war pundits is that Saddam, nasty as he might have been, was at least secular dictator and thus, a "ally" in our war against militant Islam. But if Saddam were really as powerful as everyone claims, Al Qai'da should have been squashed by the Sunnis tribal leaders the very minute it attempted to compete with the Ba'thists for control over the insurgency.
Instead, the Fidayin (also anglicized as Fedayeen), although a force of resistance during the early months after Saddam's fall, were quickly dismantled as an organization, and their members drifted to the Islamist groups. Of course, this might have been also due to their proclivity to tatoo themselves with heart or wings, topped by an F (for Fidayin).
Now, another point that seemed to elude understanding is why Syria, despite long standing rivalries between the Syrian Ba'thist party and Saddam, did not provide support to the Iraqi Ba'thist, if only out of sheer self-preservation of their veracity of their own ideology (as as to potentially finally seize control over the Iraqi Ba'thist political apparatus). One would think that the Syrians would have had an interest in promoting a Ba'thist insurgency, rather than assisting in inciting an militant Sunni Islamist resistance movement that might undermine its own authority in Damascus (look up Hama and Assad to fully understand the logic).
IMO, the reality is that the only authority the Ba'thists had in ruling Iraq was their ability to implement a "divide and conquer" strategy amongst the Sunni tribes, pitting them against one another for Saddam's favor (translate as money and political power), while increasing their representation within Saddam's administrative and military/intelligence machine (think patronage system). I believe the same situation exists within Syria, and Bashir Al-Assad has relatively little control over the activities those Ba'thist officials who secretly have a duel allegiance to the Islamist factions.
Over and over again, I would see reports of individuals formerly part of the Ba'thist party apparatus, now apparently involved with Al Qai'da and/or Ansar Al-Sunnah (the 2 dominant Jihadist factions). The Umar (Omar) Brigrade was reportedly recruited from the ranks of former Republican Guards, Special Security, and Intelligence members, to fight against the Shi'a Badr brigades. But no one willing to claim allegiance to Ba'thism.
If one doubts me, then let's look at the capture of Abu Ayman, one of the biggest, baddest, terrorist cell leaders in the Baghdad area for several years. He was someone who was closely linked to Abu Mu'sab Al-Zarqawi, and was reported next in line to become the "Amir" (Prince) of Baghdad representing Al Qai'da in 2005, after Abu Azzam was killed. But who is Abu Ayman?:
http://jamestown.org/terrorism/news/article.php?articleid=2369955
Mohammed Hila Hammad Obeidi(Ubaydi), aka Abu Ayman, "was formerly the chief of staff of intelligence under the regime of Saddam Hussein and was most recently the leader of the Secret Islamic Army, a secret militia operating in the Babil province".
Now ask yourselves how a man, supposedly one of the highest members of Saddam's Intelligence Service, heavily vetted for his Ba'thist loyalties, suddenly opted to become a militant Islamist? Why didn't he just represent himself as a Ba'thist, with aim of restoring Ba'thism to nation of Iraq? How did a man, who would rapidly turn from secular ideology, strongly oppsed to militant Islam, rise to such a rank that he became the COS of Saddam's intelligence service?
And then there is the case of Sa'ad Ali Firas and his associates, most of whom were former members of Saddam's intelligence/security entities:
http://www.globalsecurity.org/military/library/news/2005/10/mil-051020-mnfi01.htm
Now, I could go on about discussing the multitude of former members of Saddam's intelligence and security agencies who have risen to leadership within either Al Qai'da or Ansar Al Sunnah, including some who were former bodyguards for Saddam's family. But there's not much "publicly available" documentation to support this, primarily because the members of the press have not posed these questions to MNF-I PAO briefers and much of it remains classifed.
Why is no one asking this question, you might ask?
Well, some people HAVE asked this question. Ray Robinson was a member of the DOCEX operation for the Iraq Survey Group, and he has expressed many of the same questions and perspectives that I did during my period in Iraq:
http://www.americanthinker.com/2006/10/fallujah_baathist_and_wahhabis.html
To sum this up.. those who would contend that Saddam's regime was a secular dictatorship ignore the fact that it was increasingly becoming dependent upon, if not infiltrated by, individuals who did not share the secular ideology of Ba'thism. It was merely a convenient means for them to survive, until such a time that they possessed sufficient control over the military and intelligence, to stage a coup.
Anyone remember what happened to Sadat?
http://www.nmhschool.org/tthornton/jihadorgan.php
"In the 1990s, Egyptian members of al-Jihad merged with Osama bin Laden's organization, al-Qaeda ("the Foundation"). One of Jihad's leaders, Ayman al-Zawahiri, became one of Osama bin Laden's chief lieutenants.
And what would have been the US response to such a coup by a Jihadist motivated government? What COULD our response have been, except to wring our hands and accept it. After all, Saddam's overthrow was what we were hoping for, right? How could we oppose any faction that managed to accomplish that?
By overthrowing Saddam ourselves, what we did was unleash the pent-up Salafist forces that ALREADY existed in Iraq and were simply binding their time until the proper opportunity arose to take charge. We permitted these Salafists to gain power during the '90s by weakening Saddam's power, rather than just overthrowing him as punishment for the invasion of Kuwait. We threw him into the hands of the Salafists, without who's support, he could not defend the regime against the rebellious Shi'a and Kurds. He put "Allah Ahkbar" on the Ba'thist Iraqi flag in recognition of his growing dependence on the Salafists. He built them HUGE mosques within which to pray and spread their Islamist ideas. Saddam was riding the back of an Islamist "Tiger", hoping that controlling it's agenda, he could prevent himself from being devoured by it.
Thus, by not removing Saddam in 1991, when we had real justification (and the necessary troops) we have reaped what we have sown.
The Scrutinizer
Why is there an Militant Islamist insurgency in Iraq? Did it just "appear" when Saddam was overthrown, or was the foundation of a Salafist/Takfirist Islamist state already taking root during the '90s when Saddam's regime was weakened by international sanctions, as well as Shi'a and Kurdish rebellion (after years of oppression).
One of the epiphanies I experienced while I was in Iraq was the degree to which former Ba'thists were involved in the leadership of various Jihadist groups which MNF-I all, rightly or wrongly, categorized as Al Qai'da in Iraq (AQIZ, IZ being the country code for Iraq). Ansar Al-Islam, Ansar Al-Sunnah, 1920 Brigades.. Umar Brigades, and let's not forget Al Qai'da. All of these are among the most prevalent of the Sunni based insurgent groups. For the moment, I will refrain from addressing the Shi'a factions, since the focus of this post is to point out that militant Islamism was a rising force that not even Saddam was successful at containing. But here is a general list of current insurgent groups operating in Iraq:
http://www.milnet.com/pentagon/centcom/iraq/Terrorism-in-Iraq.html
One of the fundamental questions that has remained begging to be asked is why has the nature of the insurgency taken on an Islamist tone? Why, in the wake of Saddam's overthrow, did we not see the Sunnis rally around already organized resistance movements such as the Fidayin Saddam (Saddam's men of sacrifice) and thus, preserving a Ba'thist "tone" to the insurgency? The message from many in the main stream media and anti-war pundits is that Saddam, nasty as he might have been, was at least secular dictator and thus, a "ally" in our war against militant Islam. But if Saddam were really as powerful as everyone claims, Al Qai'da should have been squashed by the Sunnis tribal leaders the very minute it attempted to compete with the Ba'thists for control over the insurgency.
Instead, the Fidayin (also anglicized as Fedayeen), although a force of resistance during the early months after Saddam's fall, were quickly dismantled as an organization, and their members drifted to the Islamist groups. Of course, this might have been also due to their proclivity to tatoo themselves with heart or wings, topped by an F (for Fidayin).
Now, another point that seemed to elude understanding is why Syria, despite long standing rivalries between the Syrian Ba'thist party and Saddam, did not provide support to the Iraqi Ba'thist, if only out of sheer self-preservation of their veracity of their own ideology (as as to potentially finally seize control over the Iraqi Ba'thist political apparatus). One would think that the Syrians would have had an interest in promoting a Ba'thist insurgency, rather than assisting in inciting an militant Sunni Islamist resistance movement that might undermine its own authority in Damascus (look up Hama and Assad to fully understand the logic).
IMO, the reality is that the only authority the Ba'thists had in ruling Iraq was their ability to implement a "divide and conquer" strategy amongst the Sunni tribes, pitting them against one another for Saddam's favor (translate as money and political power), while increasing their representation within Saddam's administrative and military/intelligence machine (think patronage system). I believe the same situation exists within Syria, and Bashir Al-Assad has relatively little control over the activities those Ba'thist officials who secretly have a duel allegiance to the Islamist factions.
Over and over again, I would see reports of individuals formerly part of the Ba'thist party apparatus, now apparently involved with Al Qai'da and/or Ansar Al-Sunnah (the 2 dominant Jihadist factions). The Umar (Omar) Brigrade was reportedly recruited from the ranks of former Republican Guards, Special Security, and Intelligence members, to fight against the Shi'a Badr brigades. But no one willing to claim allegiance to Ba'thism.
If one doubts me, then let's look at the capture of Abu Ayman, one of the biggest, baddest, terrorist cell leaders in the Baghdad area for several years. He was someone who was closely linked to Abu Mu'sab Al-Zarqawi, and was reported next in line to become the "Amir" (Prince) of Baghdad representing Al Qai'da in 2005, after Abu Azzam was killed. But who is Abu Ayman?:
http://jamestown.org/terrorism/news/article.php?articleid=2369955
Mohammed Hila Hammad Obeidi(Ubaydi), aka Abu Ayman, "was formerly the chief of staff of intelligence under the regime of Saddam Hussein and was most recently the leader of the Secret Islamic Army, a secret militia operating in the Babil province".
Now ask yourselves how a man, supposedly one of the highest members of Saddam's Intelligence Service, heavily vetted for his Ba'thist loyalties, suddenly opted to become a militant Islamist? Why didn't he just represent himself as a Ba'thist, with aim of restoring Ba'thism to nation of Iraq? How did a man, who would rapidly turn from secular ideology, strongly oppsed to militant Islam, rise to such a rank that he became the COS of Saddam's intelligence service?
And then there is the case of Sa'ad Ali Firas and his associates, most of whom were former members of Saddam's intelligence/security entities:
http://www.globalsecurity.org/military/library/news/2005/10/mil-051020-mnfi01.htm
Now, I could go on about discussing the multitude of former members of Saddam's intelligence and security agencies who have risen to leadership within either Al Qai'da or Ansar Al Sunnah, including some who were former bodyguards for Saddam's family. But there's not much "publicly available" documentation to support this, primarily because the members of the press have not posed these questions to MNF-I PAO briefers and much of it remains classifed.
Why is no one asking this question, you might ask?
Well, some people HAVE asked this question. Ray Robinson was a member of the DOCEX operation for the Iraq Survey Group, and he has expressed many of the same questions and perspectives that I did during my period in Iraq:
http://www.americanthinker.com/2006/10/fallujah_baathist_and_wahhabis.html
To sum this up.. those who would contend that Saddam's regime was a secular dictatorship ignore the fact that it was increasingly becoming dependent upon, if not infiltrated by, individuals who did not share the secular ideology of Ba'thism. It was merely a convenient means for them to survive, until such a time that they possessed sufficient control over the military and intelligence, to stage a coup.
Anyone remember what happened to Sadat?
http://www.nmhschool.org/tthornton/jihadorgan.php
"In the 1990s, Egyptian members of al-Jihad merged with Osama bin Laden's organization, al-Qaeda ("the Foundation"). One of Jihad's leaders, Ayman al-Zawahiri, became one of Osama bin Laden's chief lieutenants.
And what would have been the US response to such a coup by a Jihadist motivated government? What COULD our response have been, except to wring our hands and accept it. After all, Saddam's overthrow was what we were hoping for, right? How could we oppose any faction that managed to accomplish that?
By overthrowing Saddam ourselves, what we did was unleash the pent-up Salafist forces that ALREADY existed in Iraq and were simply binding their time until the proper opportunity arose to take charge. We permitted these Salafists to gain power during the '90s by weakening Saddam's power, rather than just overthrowing him as punishment for the invasion of Kuwait. We threw him into the hands of the Salafists, without who's support, he could not defend the regime against the rebellious Shi'a and Kurds. He put "Allah Ahkbar" on the Ba'thist Iraqi flag in recognition of his growing dependence on the Salafists. He built them HUGE mosques within which to pray and spread their Islamist ideas. Saddam was riding the back of an Islamist "Tiger", hoping that controlling it's agenda, he could prevent himself from being devoured by it.
Thus, by not removing Saddam in 1991, when we had real justification (and the necessary troops) we have reaped what we have sown.
The Scrutinizer
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