The Rude Awakening
Laguna Beach, California
Tuesday, May 15, 2007 ------------------------- - The Dow goes up, purchasing power goes down,
- Measuring performance in euros,
- Robot "Rosie" without the attitude and plenty more…
------------------------- Eric Fry, reporting from Laguna Beach, California… Three cheers for the Dow Jones Industrial Average! The venerable stock price index registered another all-time high yesterday - its 21st record close out of the last 30 trading days. Those are Hall of Fame stats in any league…when measured in dollars, that is. But when measured in euros, the Dow's performance is strictly minor league…at best. In euro terms, the Dow has not registered a single new record high in any of the last 30 trading sessions…nor in any of the last 300 trading sessions. In fact, the euro-denominated Dow has not logged a record close since June 5, 2001. 
And so what? Why should we care if a few French owners of U.S. stocks have lost some of their euros during the last six years? We Americans are still making money, right? Yes and no. We Americans are making money in the stock market, but the money we are making is not making us richer. That's because the money we are making is losing its global purchasing power. It's true, for example, that the rallying U.S. stock market has delivered a 40% return (in dollars) over the last six years. But even so, a dollar-based investor would have fared much better by simply exchanging his dollars in 2001 for almost any other major asset class…even major asset classes like foreign bonds and precious metals. As the nearby chart illustrates, euro-denominated bonds has doubled (approximately) over the last six years, while gold has soared about 150%. 
Your editors here at the Rude Awakening would not bother with such hindsight, unless we thought it also offered a bit of foresight. If the feeble dollar is not merely an historical artifact of the last six years, but also a semi-permanent feature of the global financial scene, investors would be well-advised to consider diversification OUT of dollars and IN to asset classes that seem likely to retain their global purchasing power better than dollar bills. It is a strange brand of prosperity that we Americans have devised here in the States. It is one in which our share prices go up, while our currency goes down - the effect of which is to make us feel richer, even though we are not. Meanwhile, this strange prosperity of ours tends to bestow an increasing portion of our national bounty on those who already drive Ferraris and already own houses in Greenwich…and Aspen…and Key Biscayne. "The incomes of the top 20% [of Americans] have grown much faster than earnings of those at the middle or bottom of the income distribution," the BBC reports. "The income[s] of the top 1% and top 0.1% have grown particularly rapidly. "From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262. In the 1960s, the comparable figure was 24." "In other words," our colleague, Bill Bonner observes, "the rich get richer; the poor get poorer. You don't hear us complaining about it…but others surely will…The ratio of the top earners to the bottom earners has risen 1,000% since the Johnson administration." "Of course, it's not polite to ask what others make," Bonner concludes" People with manners will ignore the disparity entirely. But that still leaves nearly 300 million American ready to make an issue of it." Here at the Rude Awakening, the widening gulf between rich and poor has not escaped our attention. Indeed, we've made an issue of this issue on several occasions…and we'll certainly make an issue of it again. But we'll leave this weighty topic for another day. In today's issue, we'll take a brief tour through the Wonderful World of Jonathan Kolber - a world where CEOs don't steal from their shareholders (often), and where speculators lose their money honestly…if they lose it at all. ---------------------------- The Jetsons Come to Life
By Jonathan Kolber You may recall the TV show The Jetsons. While much of it was technologically fanciful, it may have been a little less fanciful than we thought. Already, the flying car has been prototyped (Moller Intl.). Now, the household robot seems on the horizon (hopefully, with a little less attitude than the Jetsons' "Rosie"). OK, a truly humanoid robot is a few years away. But one capable of performing as an assistant is tantalizingly close. Physorg.com reports that Massachusetts Institute of Technology researchers have prototyped a very early version of such intelligent robotic helpers. It's called "Domo," and it can grasp objects and place them on shelves or counters. No big deal, unless you're a stocker at a supermarket or other retail store. Then I'd be worried. It has surprising subtlety, or what some call "kinesthetic sense." For instance, it performs tasks such as putting away dishes without breaking or chipping them. Domo could also be used for agriculture, space travel and assisting workers on an assembly line, according to Dr. Aaron Edsinger, one of the researchers. Domo has the ability to both interact with humans and to learn how to handle unfamiliar objects. This makes it far more practical than previous robot prototypes. While robots are already performing repetitive tasks on factory assembly lines, they can't adapt to new situations. Domo functions a lot more like a person in this regard. According to Edsinger, "Robots that are designed to help people in their homes will have to be able to ignore the clutter found in most environments and focus only on certain stimuli. Typically, robots are placed in very restricted worlds because then you can control the environment. We want the robot to adapt to the world, not the world to adapt to the robot." Domo can "see" everything going on in front of it. As its blue eyes scan the room, cameras feed information to 12 computers that analyze what's being seen and decide what to focus on. It is also attuned to unexpected motion, allowing it to focus on important stimuli within human environments. For example, identifying human faces is critical for social interaction, and people are often in motion. When Domo spots motion that looks like a face, it locks its gaze onto it. Edsinger recently demonstrated how Domo might work in a home. After exchanging greetings (basically, saying hello), the robot is attuned to the fact that a human wants something from it. Dr. Edsinger then says, "Shelf, Domo."Domo looks around until it "sees" a nearby table that looks promising. It uses its left hand to touch the shelf, to confirm that the shelf is really there. After confirming the shelf's existence, it reaches the other hand toward Edsinger, who places a bag of coffee beans in the open hand. Domo wiggles it a little to get a feel for the object, then transfers the bag from its right hand to its left hand (nearest the shelf). Domo then places the bag of coffee on the shelf. Wiggling the object is key to the robot's ability to accurately place it on a shelf, Edsinger says. Domo is programmed to understand the size of an object by focusing on the tip of the object - for example, the cap of a water bottle. When the robot wiggles the tip back and forth, it can figure out how big the bottle is and decide how to transfer it from hand to hand or to place it on a shelf. "You can hand it an object it's never seen before, and it can find the tip and start to control it," Edsinger said. For Domo or any robot to safely interact with humans, it must know when a human is touching it. If you grab Domo's hand and push, it will move with your push. Robots such as Domo could help with the burgeoning health care crisis caused by the aging population, Edsinger said. Even help with simple tasks, such as getting a glass from a cabinet, could make a big difference for elderly or wheelchair-bound people. There's no doubt in my mind that the following statements are true: Domo's successors will be progressively more versatile, communicative and intelligent. As capabilities rise, costs will plummet. (Today's personal computer, for example, is the supercomputer of 25 years ago.) Eventually, a mass market for such assistive robots will arise. I expect this to happen within 10-15 years. As a personal aside, South Korea is rapidly becoming a leader of the robotics revolution, and I have some contacts there who will watch for investment opportunities. Meanwhile, right here at home, military researchers are developing flying robots called UAEs. PhysOrg.com reports that scientists, military planners and governments are currently investing large amounts into developing fleets of small unmanned aerial vehicles (UAVs). Dr. Tariq Samad, author of "Network-Centric Systems for Military Operations in Urban Terrain: The Role of UAVs," said, "A particularly exciting development in UAVs over the last few years has been the emergence of (by now several) small, often portable, relatively low-cost vehicles. These new UAVs are especially well suited for urban operations and [will] allow safer, easier and more comprehensive surveillance and reconnaissance in urban areas." Unfortunately, urban environments are frequently becoming theaters of war. They create a three-dimensional challenge for invading troops unfamiliar with the city. Fortunately, UAVs equipped with imaging technology, signals and sensors could perform surveillance and reconnaissance operations for soldiers. Live video coverage, close-up views and tracking moving objects are well within the reach of UAVs, based on recent demonstrations. This will help to minimize civilian casualties. A fleet of UAVs equipped with radios could also fill in the gaps of GPS or cellular infrastructure in limited line-of-sight regions common in urban areas. "One aspect of UAV technology of particular interest to us is autonomy: How can UAVs successfully operate with minimal human oversight," Samad said. "Limitations include the fact that obstacle and collision avoidance require the human operator's engagement… Minimizing the associated cognitive and physical workload of urban war fighters through increasingly autonomous UAVs and UAV-based systems is essential for the potential benefits of UAV technology to be realized." Samad also stated, "We believe our concept of operations is unique in that it shows that the benefits of multi-UAV missions -- such as coordinated, area-wide reconnaissance and surveillance -- can be realized with today's UAV systems with little or no modifications to the vehicles." A few types of UAVs have already proven effective in Iraq and Afghanistan, providing troops with timely surveillance and reconnaissance. Due to their relatively inexpensive fabrication and testing, along with a variety of applications, UAVs seem poised to play a significant role in the future of war. UAVs aren't just for military applications. They can also serve surveyors, whether in remote and inaccessible places on Earth such as Antarctica (perhaps the last great mother lode of terrestrial resources), or on other planets for extraterrestrial exploration. They could also serve as devices for monitoring traffic, both ground-based and aerial, offering a new and more reliable system than air traffic controllers. Next time, I'll share with you one particularly exciting possibility for this technology. Stay tuned. [Joel's Note: Fortunately for Jonathan (and his readers), weird and profitable are not mutually exclusive terms. 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