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Date: Monday, August 26 2013 02:46 PM
Subject: FW: Press Snapshot: Monday, August 26th, 2013
From: Boris Nikolic 11111111111111111111.111.11111111111M
To: Jeffrey Epstein <jeevacation@gmail.com>;
See good article re balmer below.
Still awaiting for call reply
Sent from my Windows Phone
From: John Pinette
Sent: M2642013 4:17 PM
To: Bill Gates
Cc: DL-Press Snapshot
Subject: Press Snapshot: Monday, August 26th, 2013
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Headline Journalist Outlet Full Text
Energy
Nuclear Operator Raises Alarm on Crisis Hiroko Tabuchi New York Times Article text
The New Nuclear Craze Mark Bittman New York Times Article text
Pipeline-Capacity Squeeze Reroutes Crude Oil Russell Gold Wall Street Journal Article text
U.S. Electrical Grid on the Edge of Failure Jeff Tollefson Nature Article text
Technology
Ballmer Departure From Microsoft Was More Sudden Kara Swisher All Things D Article text
Than Portrayed by the Company
The Decline of E-Empires Paul Krugman New York Times Article text
As Amazon Stretches, Seattle's Downtown Is Reshaped Kirk Johnson & Nick New York Times Article text
Wingfield
State Budgets and Healthcare Costs
How to Charge $546 for Six Liters of Saltwater Nina Bernstein New York Times Article text
States scramble to get health-care law's insurance Sarah Kliff and Sandhya Washington Post Article text
marketplaces up and running
Somashekhar
80 House members: Shutdown better than Obamacare Charles Babington Associated Press Article text
Berkshire Hathaway
No breaking news
Philanthropy
Philanthropy: the givers club Cordelia Jenkins Livemint and the Wall Article text
Street Journal
Global Health and Development
Pat on the back or force for good: what purpose do Mark Tran Guardian blog Article text
development awards serve?
Education
A Chance at Learning Ginia Bellafante New York Times Article text
Obama goes for college 'datapalooza' Nick Anderson Washington Post Article text
Massively Online And Offline Too: How MOOCs Will Giovanni Rodriguez Forbes Article text
Evolve In The Physical World
Women and Children
Indian Police Arrest Suspects in Two Gang Rapes Sean Mclain and Wall Street Journal Article text
Khushita Vasan
Is there any space in the development debate for African Andrew Quinn Guardian blog Article text
experts?
Child marriage campaigners in south Asia receive $23m Mark Tran Guardian blog Article text
cash iniection
ARTICLE TEXT
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Energy — Full text articles
Nuclear Operator Raises Alarm on Crisis
Hiroko Tabuchi — New York Times
The operator of Japan's tsunami-hit nuclear power plant sounded the alarm on the gravity of the deepening crisis of
containment at the coastal site on Friday, saying that there are more than 200,000 tons of radioactive water in makeshift
tanks vulnerable to leaks, with no reliable way to check on them or anywhere to transfer the water.
The latest disclosures add to a long list of recent accidents, leaks and breakdowns that have underscored grave
vulnerabilities at the Fukushima Daiichi nuclear power plant site more than two years after a powerful earthquake and
tsunami set off meltdowns at three reactors.
They come two weeks after the prime minister, Shinzo Abe, promised that his government would take a more active role in
the site's cleanup, raising questions over how seriously he has taken that pledge. Mr. Abe's government has continued to
push for a restart of the country's nuclear power program, and he heads to the Middle East on Saturday to promote
Japanese exports to the region, including nuclear technology.
Mr. Abe also plans to lead Tokyo's delegation to Argentina for the International Olympic Committee's final vote, set for Sept.
7, on the host city for the 2020 Olympics. Tokyo, 150 miles south of the stricken nuclear power plant, is one of three finalists
competing to host the games. The others are Istanbul and Madrid.
Opposition lawmakers here have demanded that Mr. Abe stay home and declare a state of emergency.
"The nuclear crisis is real and ongoing, yet the government continues to look the other way," said Yoshiko Kira of the
opposition Japan Communist Party, which made significant gains in parliamentary elections last month.
"The government should declare a state of emergency right now, and intervene to stop the outflow of contaminated water,"
Ms. Kira said at an anti-nuclear rally outside Mr. Abe's office in Tokyo.
Mr. Abe remains popular, and it is uncertain how large a liability the crisis at the Fukushima plant will become for him.
But it has become increasingly clear that the latest problems may be too large for the plant's operator, the Tokyo Electric
Power Company, or Tepco, to handle.
Tepco has built nearly 1,000 tanks at the sprawling complex to store as many as 335,000 tons of contaminated water, the
product of coolant pumped into the reactors to keep their cores from overheating, and groundwater pouring into their
breached basements at a rate of 400 tons a day. This week, Tepco said one tank had sprung a huge leak.
On Friday, Tepco presented an even starker view of the situation, acknowledging that as much as 220,000 tons of that water
is stored in makeshift steel tanks similar to the one that is leaking. The operator said the 36-foot-tall cylindrical tanks, meant
as a temporary repository for the growing amount of radiated water at the complex, used vulnerable rubber sealing and that
their ability to withstand radiation was not tested.
The tanks are susceptible to leaks at the seams and through their concrete base, said Noriyuki Imaizumi, the acting general
manager of Tepco's nuclear power division. A nearby drain can carry any leaked water to the sea, Mr. Imaizumi said, and
high radiation readings along a section suggest that water has already traveled through the drain to the ocean.
The makeshift tanks also lack water level gauges, making it difficult to detect leaks. Only two workers are assigned to
checking nearly 1,000 tanks on two-hour patrols twice a day, Mr. Imaizumi said.
The Nuclear Regulation Authority, which the Japanese government ordered to more actively advise and monitor Tepco's
activities at the plant, had told the company to begin transferring the water from the makeshift tanks to better-built vessels.
But after visiting the plant on Friday, an authority commissioner, Toyoshi Fuketa, said the vast quantities made doing so
quickly "unrealistic."
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A series of pits Tepco dug to store some of the water also began leaking earlier this year, forcing workers to transfer the
water into the steel tanks.
Experts have said they suspect that more contaminated water is seeping out from under the melted-down reactors into the
groundwater and the Pacific. Elevated levels of radioactive cesium in surrounding waters seem to confirm those suspicions.
Tepco has said those leaks are not directly from beneath the reactors, but from maintenance tunnels that run along the coast
and remain contaminated from the early days of the disaster.
But it also acknowledges that the water beneath the reactors is extremely contaminated, and experts say that if it does get
into the ocean, it will surpass even the leaks that occurred in the disaster's early days.
"That prospect scares me," Michio Aoyama, a senior scientist in the Oceanography and Geochemistry Research
Department at the government-affiliated Meteorological Research Institute, said in an interview this month.
"It's the ultimate, worst-case scenario," Professor Aoyama said.
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The New Nuclear Craze
Mark Bittman - New York Times
There is a new discussion about nuclear energy, prompted by well-founded concerns about carbon emissions and fueled by
a pro-nuclear documentary called "Pandora's Promise." Add a statement by James E. Hansen — who famously sounded
the alarm on climate change — and, of course, industry propaganda, and presto: We Love Nukes.
Before we all become pro-nuclear greens, however, you've got to ask three questions: Is nuclear power safe and clean? Is it
economical? And are there better alternatives?
No, no and yes. So let's not swap the pending environmental disaster of climate change for another that may be equally
risky.
Despite all-out efforts and international cooperation, Fukushima, which scared Germany right out of the nuclear power
business, still isn't under control. Proponents of nuclear power promise new and safer technology, but these discussions
are filled with "coulds"; no such plants exist. Nor would they reduce the risks of proliferation. (Oh, that little thing.)
Nor would they do much to mitigate the all-too-infrequently discussed dangers of uranium mining, which uses vast amounts
of water in the West — an area that can ill afford it— and is barely regulated or even studied. Thousands of uranium mines
have been abandoned, and no one seems to know how many remain to be cleaned up. The cost of that cleanup, of course,
will be borne by taxpayers, not industry.
Then there's disposal of spent fuel, which is not contained at the same safety level as active fuel, itself a scary thought.
Decades into the nuclear age there remains, incredibly, no real plan for this; a patchwork scheme by the Nuclear Regulatory
Commission, which appears to be even more industry-friendly than most federal agencies, was rejected by an appeals court
last year, and the Obama administration is standing by its campaign promise (shocking, I know) to abandon the nuclear
repository at Yucca Mountain in Nevada.
The economic viability of nuclear power is no more encouraging. Plants continue to close and generation rates continue to
drop. Operators may indeed continue to make money on reactors, but that's only because federal subsidies are enormous.
Insurance costs are limited. Loans are guaranteed (the Solyndra loan guarantee was half a billion dollars; in contrast, loan
guarantees for new nuclear plants may run $8 billion); cost recovery and return on investment are also assured for decades,
and some operators are able to collect costs from ratepayers (and pay dividends to shareholders) years before plants come
online — even if they never come online.
So they're economical as long as you're the owner, because historically, subsidies for nuclear power have been more than
double the expense of power generation itself. While estimates of the costs of power generation vary wildly — allowing both
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proponents and detractors of any given power technology to make their cases — few of them take externalities (costs to the
environment or to public health, for example) into account. And nuclear power's externalities could exceed those for any
other form of power generation except coal.
That's why we're reducing coal usage — if we had a strong climate policy it would be gone in a couple of deades, and
nuclear should be right behind it. It's likely that no new nuclear plants will be built before true renewables are able to take the
place of scary, highly damaging energy sources.
Which brings us full circle: the new proponents of nuclear power say that since nuclear power is arguably preferable to coal,
maybe we should subsidize the building of new plants.
If those were the only options, maybe that argument would be a sound one. But they're not. Energy efficiency (remember
that?), natural gas (imperfect, yes, but improvable) and wind are all cheaper. Even solar is already less expensive than
nuclear power in good locations.
Some studies show that renewables can generate 80 percent of our electricity in 2050, using current technologies, while
reducing carbon emissions from the electric sector by 80 percent. Climate change fears should be driving not old and
disproven technologies but renewable ones, which are more practical. These technologies remain relatively small — non-
hydro renewables were around 5 percent of the total last year— but they're growing so fast (wind and solar use have
quadrupled in the last five years) that just this week the chairman of the Federal Energy Regulatory Commission predicted
that solar power could soon begin to double every two years.
Utilities are afraid that solar power will be to the electrical grid what PCs were to mainframes, or e-mail to the Postal Service:
a technology that will simply kill its predecessors. Coal and nuclear power are both doomed, and the profit-making power
grid with it. That's all to our benefit.
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Pipeline-Capacity Squeeze Reroutes Crude Oil
Russell Gold —Wall Street Journal
More crude oil is moving around the U.S. on trucks, barges and trains than at any point since the government began keeping
records in 1981, as the energy industry devises ways to get around a pipeline-capacity shortage to take petroleum from new
wells to refineries.
The improvised approach is creating opportunities for transportation companies even as it strains roads and regulators. And
it is a precursor to what may be a larger change: the construction of more than $40 billion in oil pipelines now under way or
planned for the next few years, according to energy adviser Wood Mackenzie.
"We are in effect re-plumbing the country," says Curt Anastasio, chief executive of NuStar Energy LP, NS +0.58% a pipeline
company in San Antonio. Oil is "flowing in different directions and from new places."
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U.S. oil production has reached its highest level in two decades, while imports have fallen dramatically. A system built to
import oil and deliver it to coastal refineries has become ill-equipped to handle rising production in Texas, North Dakota and
Canada's Alberta province.
"All of the pipes are pointed in the wrong direction," says Harold York, an oil researcher at Wood Mackenzie. "We are turning
the last 70 years of oil-industry history in North America on its head, and we are turning it on its head in the next 10 to 15
years."
With oil prices persistently above $100 a barrel, companies drilling new wells don't want to forgo revenue while they wait
years for new pipelines. That leaves them with trucks, trains and barges to move an increasing amount of crude.
Oil delivered to refineries by trucks grew 38% from 2011 to 2012, according to the U.S. Energy Information Administration,
while crude on barges grew 53% and rail deliveries quadrupled. Although alternatives are growing rapidly, pipelines and
oceangoing tankers remain the primary method for delivering crude to refineries.
In the Eagle Ford, a large four-year-old South Texas oil field, production has grown to more than 500,000 barrels a day, from
less than 1,000 in 2009, according to state statistics. Getting that torrent out of the sparsely populated region has required
modifications to the oil-delivery system.
For example, last year NuStar reversed a 16-inch pipeline built to carry crude imported from Africa and Europe northward
from the Port of Corpus Christi. Now, the pipeline flows south, taking delivery from hundreds of trucks that fill up at individual
wells. Some of the 175,000 barrels a day moving through the pipe is loaded onto barges at Corpus Christi and towed toward
refineries near Houston.
Earlier this year, Phillips 66 began putting some of this crude on ships for a 2,200-mile journey around Florida to its refinery
in Linden, N.J.
The heavy trucks moving Eagle Ford crude are causing headaches for residents and local officials, ripping up roads and
causing traffic tie-ups.
"These are rural roads built for 10 cars an hour, and now it's 100 vehicles an hour, and 75 of them are 80,000-pound trucks,"
says Tom Voelkel, president of Dupre Logistics LLC. The Lafayette, La., company started hauling crude in Eagle Ford in
November 2011 and has more than 100 drivers full time in the region.
The Texas Legislature appropriated $450 million this year to repair and improve roads in oil-producing counties. "It doesn't
even begin to reach where it needs to reach," says Daryl Fowler, the chief elected county official in Cuero, Texas, about a
hundred miles southeast of San Antonio.
"We've seen a fourfold increase in congestion around here," he says. "The roads are crumbling."
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In July, the Texas transportation department decided to convert 83 miles of state road in six oil-boom counties from
pavement to gravel, to reduce repair costs and slow traffic.
Trucks filled with Eagle Ford crude are also heading 100 miles west to a barge canal. The first barge of crude departed in
September 2011, heading south toward the Gulf of Mexico and refineries near Houston. Now the canal moves 1.6 million
barrels a month, says Jennifer Stastny, executive director of the Port of Victoria.
"It's like putting your 5-year-old to bed one night and he wakes up the next morning as a 16-year-old, with the appetite and
demands of a 16-year-old," she says.
In North Dakota, trains move 69% of the state's 800,000 barrels a day of crude, according to state figures. Energy
companies say they value rail's ability to deliver crude to the highest-paying markets.
But the deadly runaway crude train crash in Canada's Quebec province in July, which incinerated a small town and killed at
least 47 people, highlighted the risks of the mile-long crude trains crisscrossing the country. The U.S. government is
imposing new regulations on oil shipments by rail.
Some state regulators wonder if their local efforts leave them prepared for a train accident, in part because federal railroad
rules pre-empt state and local control over trains.
In Washington state, "we can't say [to train operators] you have to have oil-spill contingency plans in order to operate," says
Curt Hart, a spokesman for the state's Department of Ecology. "We do that for oil tankers, barges, large commercial vessels
and refineries."
Home to five refineries, the state levies a per-barrel tax on crude delivered by tankers and barges, which pays for spill-
response officials and inspectors. The tax doesn't apply to rail shipments.
The American Association of Railroads says it is prepared for growing crude shipments because it has long carried
hazardous cargoes. In 2008, major U.S. railroads carried 9,500 carloads of crude, the association says, and are on pace this
year to carry 389,000.
Most industry analysts believe that while crude on trains will last, truck and barge traffic will decline once new pipelines
come into service.
Environmental groups have criticized some pipeline projects, including the Keystone XL, meant to move Canadian oil to
Gulf Coast refineries. The federal government is still studying the Keystone pipeline and has yet to issue needed permits.
Steve Kean, president and chief operating officer of Kinder Morgan Inc., KM! +0.30% one of several interrelated companies
that own or operate 82,000 miles of North American pipeline, says government agencies thoroughly vet new projects.
Falling imports, infrastructure investments and increased manufacturing are just some of the benefits of newly abundant
energy supplies, he says. "This has got to be one of the best things that has happened in our economy in the past 10 years.
It is better than the iPad."
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U.S. Electrical Grid on the Edge of Failure
Jeff Tollefson — Nature
Facebook can lose a few users and remain a perfectly stable network, but where the national grid is concerned simple
geography dictates that it is always just a few transmission lines from collapse.
That is according to a mathematical study of spatial networks by physicists in Israel and the United States. Study co-author
Shlomo Havlin of Bar-Ilan University in Ramat-Gan, Israel, says that the research builds on earlier work by incorporating a
more explicit analysis of how the spatial nature of physical networks affects their fundamental stability. The upshot,
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published today in Nature Physics, is that spatial networks are necessarily dependent on any number of critical nodes
whose failure can lead to abrupt— and unpredictable — collapsel
The electric grid, which operates as a series of networks that are defined by geography, is a prime example, says Havlin.
"Whenever you have such dependencies in the system, failure in one place leads to failure in another place, which
cascades into collapse."
The warning comes ten years after a blackout that crippled parts of the midwest and northeastern United States and parts of
Canada. In that case, a series of errors resulted in the loss of three transmission lines in Ohio over the course of about an
hour. Once the third line went down, the outage cascaded towards the coast, cutting power to some 50 million people.
Havlin says that this outage is an example of the inherent instability his study describes, but others question whether the
team's conclusions can really be extrapolated to the real world.
"I suppose I should be open-minded to new research, but I'm not convinced," says Jeff Dagle, an electrical engineer at the
Pacific Northwest National Laboratory in Richland, Washington, who served on the government task force that investigated
the 2003 outage. "The problem is that this doesn't reflect the physics of how the power grid operates."
Critical order
Havlin and his colleagues focused on idealized scenarios. They found that randomly structured networks — such as social
networks — degrade slowly as nodes are removed, which in the real world might mean there is time to diagnose and
address a problem before a system collapses. By contrast, the connections of orderly lattice structures have more critical
nodes, which increase the instability. The problem is that such orderly networks are always operating near an indefinable
edge, Havlin says. To reduce that risk, he recommends adding a small number of longer transmission lines that provide
short cuts to different parts of the grid.
Benjamin Carreras, a physicist at Oak Ridge National Laboratory in Tennessee who has conducted similar work2, says that
network theory can be useful for providing insight into electric grids but must be complemented with more complex models
that attempt to represent both the physical realities and the responsiveness of the modern electric grid. Although in some
cases adding long lines can benefit the overall stability of an electric system, Carreras' work suggests that in certain
circumstances such an approach allows problems to propagate even farther.
"More connections may stabilize some processes, by, for instance, increasing the number of paths to generators, but also
may destabilize others," Carreras says. "One cannot make generic statements on this topic."
Although local outages caused by falling trees knocking down distribution lines are common, large-scale failures within the
core ne transmission lines rarely occur on a modern electric grid. Before 2003, the last major blackout in the United States
had been on the west coast in 1996, and more recently an outage has struck in the San Diego area.
Dagle says that the 2003 blackout stemmed from a combination of bad vegetation management — the first three lines
tripped after sagging into trees but were all within their load rating — and a series of monitoring and communications
breakdowns. Vegetation requirements have since been standardized, and a new generation of sensors is providing grid
operators with more information about what is happening across the grid at any given moment.
"Many more utilities have much more data," Dagle says. "The next phase of our voyage is to make better use of that data."
Back to top
Technology — Full text articles
Ballmer Departure From Microsoft Was More Sudden Than Portrayed by the Company
Kara Swisher —All Things D
According to sources close to the situation, the departure of CEO Steve Ballmer from Microsoft last week was more sudden
than was depicted by the company in its announcement that he would be retiring within the next year in a planned smooth
transition.
It was neither planned nor as smooth as portrayed.
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While the decision to go seems to have technically been Ballmer's, interviews with dozens of people inside and outside the
company, including many close to the situation, indicate that he had not aimed to leave this soon and especially after the
recent restructuring of the company that he had intensely planned.
Instead, sources said Ballmer's timeline had been moved up drastically — first by him and then the nine-member board,
including his longtime partner and Microsoft co-founder and chairman Bill Gates — after all agreed that it was best if he left
sooner than later.
That was due to a number of increasingly problematic issues on the immediate horizon — including a potentially nasty proxy
fight, continued business performance declines and, perhaps most of all, that Ballmer's leadership was becoming a very
obvious lightning rod.
Interestingly, Ballmer actually indicated that he had planned on staying in his letter about his impending departure, noting:
"My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and
services company focused on empowering customers in the activities they value most."
That sentence spurred much chatter inside the company, including the persistent rumor that Gates had dropped the bomb
on Ballmer. That sentiment was further underscored when Ballmer's letter contained no reference or thanks to Gates, with
whom he has been tightly tethered over the last several decades. Its absence has been much discussed internally at
Microsoft, where it has been seen as an unusual slight and a sign of a rift.
Gates also did not reference his longtime business partner in any celebratory manner in Microsoft's announcement. "As a
member of the succession planning committee, I'll work closely with the other members of the board to identify a great new
CEO," said Gates, in the entirety of the quote about Ballmer's retirement. "We're fortunate to have Steve in his role until the
new CEO assumes these duties."
Other sources cautioned that it was not indicative of tensions between the pair, but was done to minimize "lame duck
concerns" that might arise if Ballmer was portrayed as already out the door.
Those sources also insist that Gates never asked Ballmer to step down sooner, although they acknowledge that he also did
not — as Gates had in the past — disagree that it was best that he move on.
"Did Gates instigate it? No," said one source with knowledge of the situation. "But was he as supportive of Ballmer as he had
been in the past? Maybe not."
That was still a big change, of course. Gates — who has always been and remains the key decision-maker on Microsoft's
board — had always been Ballmer's major backer, despite increasing pressure both externally and from other directors for
him to step down.
Gates had rejected such suggestions for years. That included former director and Netflix CEO Reed Hastings, who many
sources said had been one of the first to urge that the company replace Ballmer as CEO, as well as from a spate of Wall
Street investors complaining about the company's declining value in the Ballmer years.
As AllThingsD's John Paczkowski wrote on Friday: "Here's one metric by which Ballmer will be judged harshly. On the last
day of 1999, the day before he took over as CEO, Microsoft's market capitalization was $600 billion. On the day before he
announced his intention to retire, it was less than $270 billion."
That's a damning number, of course, coupled with a widespread sentiment that Ballmer had missed critical trends in tech
under his tenure. Despite a strong growth in revenue, investors and others had long concluded that Microsoft had thrived
when Gates was CEO and waned under Ballmer's rule.
Still, until recently, there has been no signal from the company indicating any change in top leadership. In fact, the
management reorganization backed strongly by the board a month ago had essentially placed Ballmer at the center of the
structure under a plan described as "One Microsoft."
And, at the time of the restructuring announcement in July, Ballmer's definite and clear message was that he was there to
stay:
"Lots of change. But in all of this, many key things remains the same. Our incredible people, our spirit, our commitment, our
belief in the transformative power of technology — our Microsoft technology — to make the world a better place for billions
of people and millions of businesses around the world. It's why I come to work inspired every day. It's why we've evolved
before, and why we're evolving now. Because we're not done. Let's go."
Though early in its rollout, the changes have been jarring and created a level of chaos at the company that has led to much
grumbling internally. It also did not help that the restructuring was quickly followed by a dismal 04 performance by Microsoft.
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As I wrote in mid-July: "Microsoft had a bad fourth quarter, mostly because many people are not using PCs any more. In
addition, the tech giant took a $900 million charge related to having to cut the price of its Surface RT tablet, which had — as
you might imagine — an impact on results. Missed profit expectations, missed revenue, missed all over the ying-yang."
With the prospect that the next quarter could be weaker still and with numerous reports of late that there has been slowing of
adoption from its new flagship Windows 8 offering, Ballmer and the board finally aligned to move his departure date sooner.
Most critical to that decision, source said, were increased board worries that recent pressure from activist investor ValueAct
— which has a large stake in the company — had a good chance of succeeding in its efforts to obtain a seat on the board of
Microsoft, especially if Ballmer stayed in place.
And even if the software giant was able to thwart that from happening, said several sources, such a public fight is untenable
for the company, since it was likely to attract even more scrutiny to Ballmer's performance and perhaps even more investor
action
ValueAct has until August 30 to notify Microsoft if it plans a proxy battle, and sources said it still wants more that Ballmer's
retirement. In talks, said sources, it has asked for an aggressive stock buyback and also a dividend increase, which might
assuage its efforts to garner a board seat.
Ballmer denied any pressure from ValueAct specifically in his decision in an interview with the Seattle Times, though
sources said that was simply bluster.
And, even with mounting pressure on him, Ballmer definitely portrayed the change as his decision in an interview he gave to
ZDNet's Mary Jo Foley last week, after his retirement announcement.
"I would say for me, yeah, I've thought about it for a long time, but the timing became more clear to me over the course of the
last few months," he insisted.
When asked if Gates asked him to stay or go, he said no, apparently to both. "Bill respects my decision. I mean, it's one of
these things when if it's — you know, ultimately these kinds of things have to be one's own personal decision."
That statement also struck many inside the company as a quick shift. Ballmer, said sources, had been jumping
enthusiastically into business review meetings, as part of the new structure, over the last month. In addition, he had
expressed to many employees his excitement at being part of the changes he had initiated.
But, in meetings after the announcement, numerous sources inside the company said Ballmer seemed uncharacteristically
chastened and quiet, in contrast to his usual confident and forceful manner.
"He was definitely not leaving and then he suddenly was," said one source. "Even if today's Steve made the choice, it was a
choice yesterday's Steve did not want to."
Another source, close to the board, perhaps explained it best: "If ValueAct got on the board, I think Ballmer finally realized
that meant it was going to be the hard way from then on out until he left and he did not want that for a company he clearly
loves and has been his life."
Now, those inside the company are turning to what comes next. While not everyone on the board thought that Ballmer
should step down without a new CEO in place, it's moot now as Microsoft turbocharges the process — in place for several
years now — to select its next leader.
But, though the committee is headed up by John Thompson, CEO of Virtual Instruments and the former CEO of security
software giant Symantec, most expect Gates — as usual — to be the key decision maker on that choice, too.
A Microsoft spokesman declined comment.
Back to top
The Decline of E-Empires
Paul Krugman — New York Times
Steve Ballmer's surprise announcement that he will be resigning as Microsoft's C.E.O. has set off a huge flood of
commentary. Being neither a tech geek nor a management guru, I can't add much on those fronts. I do, however, think I
know a bit about economics, and I also read a lot of history. So the Ballmer announcement has me thinking about network
externalities and Ibn Khaldun. And thinking about these things, I'd argue, can help ensure that we draw the right lessons
from this particular corporate upheaval.
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First, about network externalities: Consider the state of the computer industry circa 2000, when Microsoft's share price hit its
peak and the company seemed utterly dominant. Remember the T-shirts depicting Bill Gates as a Borg (part of the hive
mind from "Star Trek"), with the legend, "Resistance is futile. Prepare to be assimilated"? Remember when Microsoft was at
the center of concerns about antitrust enforcement?
The odd thing was that nobody seemed to like Microsoft's products. By all accounts, Apple computers were better than PCs
using Windows as their operating system. Yet the vast majority of desktop and laptop computers ran Windows. Why?
The answer, basically, is that everyone used Windows because everyone used Windows. If you had a Windows PC and
wanted help, you could ask the guy in the next cubicle, or the tech people downstairs, and have a very good chance of
getting the answer you needed. Software was designed to run on PCs; peripheral devices were designed to work with PCs.
That's network externalities in action, and it made Microsoft a monopolist.
The story of how that state of affairs arose is tangled, but I don't think it's too unfair to say that Apple mistakenly believed that
ordinary buyers would value its superior quality as much as its own people did. So it charged premium prices, and by the
time it realized how many people were choosing cheaper machines that weren't insanely great but did the job, Microsoft's
dominance was locked in.
Now, any such discussion brings out the Apple faithful, who insist that anything Windows can do Apple can do better and
that only idiots buy PCs. They may be right. But it doesn't matter, because there are many such idiots, myself included. And
Windows still dominates the personal computer market.
The trouble for Microsoft came with the rise of new devices whose importance it famously failed to grasp. "There's no
chance," declared Mr. Ballmer in 2007, "that the iPhone is going to get any significant market share."
How could Microsoft have been so blind? Here's where Ibn Khaldun comes in. He was a 14th-century Islamic philosopher
who basically invented what we would now call the social sciences. And one insight he had, based on the history of his
native North Africa, was that there was a rhythm to the rise and fall of dynasties.
Desert tribesmen, he argued, always have more courage and social cohesion than settled, civilized folk, so every once in a
while they will sweep in and conquer lands whose rulers have become corrupt and complacent. They create a new dynasty
— and, over time, become corrupt and complacent themselves, ready to be overrun by a new set of barbarians.
I don't think it's much of a stretch to apply this story to Microsoft, a company that did so well with its operating-system
monopoly that it lost focus, while Apple — still wandering in the wilderness after all those years — was alert to new
opportunities. And so the barbarians swept in from the desert.
Sometimes, by the way, barbarians are invited in by a domestic faction seeking a shake-up. This may be what's happening
at Yahoo: Marissa Mayer doesn't look much like a fierce Bedouin chieftain, but she's arguably filling the same functional
role.
Anyway, the funny thing is that Apple's position in mobile devices now bears a strong resemblance to Microsoft's former
position in operating systems. True, Apple produces high-quality products. But they are, by most accounts, little if any better
than those of rivals, while selling at premium prices.
So why do people buy them? Network externalities: lots of other people use iWhatevers, there are more apps for iOS than
for other systems, so Apple becomes the safe and easy choice. Meet the new boss, same as the old boss.
Is there a policy moral here? Let me make at least a negative case: Even though Microsoft did not, in fact, end up taking over
the world, those antitrust concerns weren't misplaced. Microsoft was a monopolist, it did extract a lot of monopoly rents, and
it did inhibit innovation. Creative destruction means that monopolies aren't forever, but it doesn't mean that they're harmless
while they last. This was true for Microsoft yesterday; it may be true for Apple, or Google, or someone not yet on our radar,
tomorrow.
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State Budgets and Healthcare costs — Full text articles
How to Charge $546 for Six Liters of Saltwater
Nina Bernstein — New York Times
It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.
Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least
expensive. The average manufacturer's price, according to government data, has fluctuated in recent years from 44 cents to
$1.
Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV
bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New
York.
Some of the patients' bills would later include markups of 100 to 200 times the manufacturer's price, not counting separate
charges for "IV administration." And on other bills, a bundled charge for "IV therapy" was almost 1,000 times the official cost
of the solution.
It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it
is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in
the hieroglyphics of hospital bills.
At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies,
purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants
cannot say what the simplest component of care actually costs, let alone what it should cost.
And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.
A PRICE IN FLUX
In the food-poisoning case, some of the stricken were affluent, and others barely made ends meet. Some had private
insurance; some were covered by government programs like Medicare and Medicaid; and some were uninsured.
In the end, those factors strongly (and sometimes perversely) affected overall charges for treatment, including how much
patients were expected to pay out of pocket. But at the beginning, there was the cost of an IV bag of normal saline, one of
more than a billion units used in the United States each year.
"People are shocked when they hear that a bag of saline solution costs far less than their cup of coffee in the morning," said
Deborah Spak, a spokeswoman for Baxter International, one of three global pharmaceutical companies that make nearly all
the IV solutions used in the United States.
It was a rare unguarded comment. Ms. Spak — like a spokesman for Hospira, another giant in the field — later insisted that
all information about saline solution prices was private.
In fact, manufacturers are required to report such prices annually to the federal government, which bases Medicare
payments on the average national price plus 6 percent. The limit for one liter of normal saline (a little more than a quart) went
to $1.07 this year from 46 cents in 2010, an increase manufacturers linked to the cost of raw materials, fuel and
transportation. That would seem to make it the rare medical item that is cheaper in the United States than in France, where
the price at a typical hospital in Paris last year was 3.62 euros, or $4.73. One-liter IV bags normally contain nine grams of
salt, less than two teaspoons. Much of it comes from a major Morton Salt operation in Rittman, Ohio, which uses a
subterranean salt deposit formed millions of years ago. The water is local to places like Round Lake, Ill., or Rocky Mount,
N.C., where Baxter and Hospira, respectively, run their biggest automated production plants under sterility standards set by
the Food and Drug Administration.
But even before the finished product is sold by the case or the truckload, the real cost of a bag of normal saline, like the true
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cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential
rebates and fees that would be considered illegal kickbacks in many other industries.
IV bags can function like cheap milk and eggs in a high-priced grocery store, or like the one-cent cellphone locked into an
expensive service contract. They serve as loss leaders in exclusive contracts with "preferred manufacturers" that bundle
together expensive drugs and basics, or throw in "free" medical equipment with costly consequences.
Few hospitals negotiate these deals themselves. Instead, they rely on two formidable sets of middlemen: a few giant group-
purchasing organizations that negotiate high-volume contracts, and a few giant distributors that buy and store medical
supplies and deliver them to client hospitals.
Proponents of this system say it saves hospitals billions in economies of scale. Critics say the middlemen not only take their
cut, but they have a strong interest in keeping most prices high and competition minimal.
The top three group-purchasing organizations now handle contracts for more than half of all institutional medical supplies
sold in the United States, including the IVs used in the food-poisoning case, which were bought and taken by truck to
regional warehouses by big distributors.
These contracts proved to be another black box. Debbie Mitchell, a spokeswoman for Cardinal Health, one of the three
largest distributors, said she could not discuss costs or prices under "disclosure rules relative to our investor relations."
Distributors match different confidential prices for the same product with each hospital's contract, she said, and sell
information about the buyers back to manufacturers.
A huge Cardinal distribution center is in Montgomery, N.Y. — only 30 miles, as it happens, from the landscaped grounds of
the Buddhist monastery in Carmel, N.Y., where many of the food-poisoning victims fell ill on Mother's Day 2012.
Among them were families on 10 tour buses that had left Chinatown in Manhattan that morning to watch dragon dances at
the monastery. After eating lunch from food stalls there, some traveled on to the designer outlet stores at Woodbury
Commons, about 30 miles away, before falling sick.
The symptoms were vicious. "Within two hours of eating that rice that I had bought, I was lying on the ground barely
conscious," said Dr. Elizabeth Frost, 73, an anesthesiologist from Purchase in Westchester County who was visiting the
monastery gardens with two friends. "I can't believe no one died."
About 100 people were taken to hospitals in the region by ambulance; 5 were admitted and the rest released the same day.
The New York State Department of Health later found the cause was a common bacterium, Staphylococcus aureus, from
improperly cooked or stored food sold in the stalls.
MYSTERIOUS CHARGES
The sick entered a health care ecosystem under strain, swept by consolidation and past efforts at cost containment.
For more than a decade, hospitals in the Hudson Valley, like those across the country, have scrambled for mergers and
alliances to offset economic pressures from all sides. The five hospitals where most of the victims were treated are all part of
merged entities jockeying for bargaining power and market share — or worrying that other players will leave them struggling
to survive.
The Affordable Care Act encourages these developments as it drives toward a reimbursement system that strives to keep
people out of hospitals through more coordinated, cost-efficient care paid on the basis of results, not services. But the billing