Coruscation

What would happen if you traveled to a country you'd never been to and relied on suggestions from blogs and online locals instead of those from friends and guidebooks? Would you end up at a Star Trek convention? Trapped in a basement full of cat hair and moody Swedish folk singers? Not according to my visit at the Skeppsholmen.

I asked Emi if she had a theory as to why Stockholm has so many bloggers, and she said: "It might be partly our inferiority complex. We're feeling kind of alone, all the way up here in the north. We want to reach out and tell people that we're alive. We want to show people that we're on top of everything."

This naturally led to a discussion of hipster-riddled Sodermalm, whose cafes I had recently described to a friend as "laptoppy." Emi reported: "The Stockholm hipsters have gotten very nerdy about bread. And coffee is reaching Brooklyn levels." On the bread front: "Sourdough has gotten huge, especially for stay-at-home dads. The bakery of this deli that we're in has a 'sourdough hotel' where you can leave your starter when you go on vacation." (Sourdough starter needs to be "fed" to keep the yeast active. The "hotel" is a shelving unit that holds some 30 jars of customers' dried or live starter; the top shelf is labeled "Penthouse.") Emi said, "When I first heard about it, I thought it was a hipster joke."

My hope was that by taking tips from young bloggers I'd immediately be plugged into hipster Stockholm and neatly dodge any Millennium or Abba walking tours -- or indeed, any activity that might shed a light on sulky fictional hackers or the troubled marriage of Benny and Anni-Frid.

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Rogue 'phone service' demands verification only on exit, not on entry.

The case of Streaming Flix, Cindy Landeen, Local Exchange Carrier (LEC) billing, and a "billing aggregator" called Billing Services Group (BSG).

MyIproducts, 800 Vmailbox, and Digital Vmail--all services that used LEC billing to offer voicemail service that almost no "subscriber" actually used. (Between July 2009 and March 2010, tens of thousands of people were billed but only 209 ever used their mailbox). The total amount billed for these services in less than a year: $30 million.

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Looking at the three left of centre dailies: The Guardian sold 367,000 copies a day five years ago, it now stands at 214,128; The Independent 249,536 versus 98,636 today; the Daily Mirror 1,537,243 versus 1,084,355.

Collectively that is a sales decline of 35 per cent.

Looking at the main right of centre dailies, the Daily Mail was selling 2,300,420 copies a day five years ago versus 1,991,275 today; the Daily Express 760,086 versus 568,628; the Daily Telegraph 898,817 versus 576,790; The Times 629,157 versus 393, 187 and The Sun 3,047,527 versus 2,624,008.

Conclusion: tech-savy young lefties don't buy print.

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Typically, changes in value-at-risk models at banks are made by committees composed of managers who monitor risks and business heads who take them, according to risk management experts.

Banks in the United States are required to give investors periodic counts of their value-at-risk. The numbers are calculated and presented differently across companies, but in general are supposed to show a minimum amount that a portfolio could be expected to lose in each of a few days during a quarter.

What's most useful to investors is not so much the actual numbers, but how much they change, experts say.

JPMorgan first told investors on April 13 that the reading of risk at its CIO unit as of the end of March showed that the unit could lose at least $67 million in a single trading day, slightly less than the $69 million from the previous reading in December.

The report indicated steady risk management in the CIO's office, which was in contrast to press reports at the time that a London-based trader for JPMorgan was taking whale-sized positions.

But on May 10 when the bank suddenly disclosed the $2 billion-plus loss, it also revealed for the first time that the $67 million reading had been calculated with a new model. The prior model showed risk had actually spiked as the value-at-risk nearly doubled to $129 million.

Had the higher number been reported, said analyst Jason Goldberg of Barclays, "certainly, they would have been asked why the VaR doubled."

To bring a potential case against JPMorgan over its value-at-risk model change, the SEC will need to decide if the failure to disclose the model change was "material." In other words, would a reasonable investor see the information as significant?

Experts are divided on whether the understatement of risk by the bank will meet the SEC's legal test. It is unclear if investors would have seen the hike in risk-taking as something that could lead to a big trading loss.

Since the financial crisis, the SEC has faced a barrage of criticism for what some say is a failure to go after the top executives at the country's major banks.

Several legal experts say that the failure of JPMorgan to disclose changes to its value-at-risk modeling could actually present a prime opportunity to do just that.

"To make management sweat a little bit, the SEC's focus might well be on internal controls," said Charles Whitehead, a professor at Cornell Law School and former Wall Street executive.

By Sarah N. Lynch in Washington and David Henry in New York; Editing by Karey Wutkowski and Phil Berlowitz

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GoToMeeting vs MeetingBurner: who will buy ads for online business meeting webcasts ?

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To understand the broader trends at work, a useful place to turn is Jay Cost's essay on "The Politics of Loss" in the latest issue of National Affairs. For most of the post-World War II era, Cost argues, our debates over taxing and spending have taken place in an atmosphere of surplus. The operative question has been how best to divide a growing pie, which has enabled politicians in both parties to practice a kind of ideologically flexible profligacy. Republicans from Dwight Eisenhower to George W. Bush have increased spending, Democrats from John F. Kennedy to Bill Clinton have found ways to cut taxes, and the great American growth machine has largely kept the toughest choices off the table.

But not anymore. Between our slowing growth and our unsustainable spending commitments, "the days when lawmakers could give to some Americans without shortchanging others are over; the politics of deciding who loses what, and when and how, is upon us." In this era, debates will be increasingly zero-sum, bipartisan compromise will be increasingly difficult, and "the rules and norms of our politics that several generations have taken for granted" will fade away into irrelevance.

-- Douthat

A similar story could be told about Barack Obama's Washington, in which a temporarily ascendant Democratic Party pushed through sweeping spending bills and social-compact altering health care legislation before unprecedented Republican obstructionism ground the process to a halt. In fact, it's useful to think of Obama's stimulus bill and Walker's budget repair bill as mirror image exercises in legislative shock and awe, and the Tea Party and the Wisconsin labor protests as mirror images of backlash.

At both the state and national level, then, the two coalitions are aiming for a mix of daring on offense, fortitude on defense and ruthless counterattacks whenever possible. The goal is to simultaneously maximize the opportunities presented to one's own side and punish the other party for trying to do the same.

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A shot-glass amount of sunscreen should be applied to all exposed skin, including the ears, back of the neck and top of the feet, which are often forgotten."

In Australia, where skin cancer has long been epidemic, a "no hat, no play" policy as part of a broad-based emphasis on sun protection has made the country one of the first in the world in which skin cancer incidence is declining, Mr. Geller said.

And once children reach their teens, sun protection succumbs to burgeoning feelings of independence and invulnerability, as well as the popular belief among teenagers that they look more attractive when sporting a tan. Few seem worried about the chances of developing wrinkled, leathery, blotchy skin decades later as a result. Fewer still seem to know that they are risking cancer.

Yet childhood is the most critical time for avoiding sun-induced harm later in life. As much as 80 percent of a person's lifetime exposure to skin-damaging ultraviolet rays occurs by age 18. Multiple studies have shown that the more youngsters are exposed to the sun early in life, especially if they suffer serious sunburns, the greater the risk of later developing both superficial skin cancers and deadly melanomas.

Slather it.

Canadian researchers showed more than a decade ago that routine use of sunscreen by school-age children diminishes their risk of developing moles. The study, directed by Richard Gallagher of the British Columbia Cancer Agency in Vancouver, followed 458 elementary school children over three years. All were initially examined to count and measure how many moles they had.

The children were then divided into two groups. The parents of both groups were asked to keep detailed diaries of their children's sun exposure during the summer months. One group of parents was given educational materials and a supply of broad-spectrum sunscreen, SPF 30, and instructions to apply it whenever their children were likely to be in the sun for 30 minutes or longer. Each month, the amount of lotion remaining in the bottles was measured as a test of compliance.

The second group of parents received neither the educational materials nor the free sunscreen, though many parents in this group did apply sunscreen to their children on their own. At the end of the study, the number and size of moles on both groups of children was reassessed.

There was no difference in the amount of time the children spent in the sun or in how much clothing they wore. But the children whose parents got the educational information and sunscreen developed fewer moles than the children whose parents did not. And fewer moles, the researchers said, no doubt mean that these children will be less likely to develop melanomas when they grow up.

"This is a true prevention study," Dr. Gallagher said. "Parents need to know that if they intervene early, they can probably significantly reduce their child's risk of skin cancer in the future."

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But despite their relative success, Skinnerian weight-loss programs have not become the default treatment for obesity the way AA has for alcoholism. One reason, of course, is that most would-be weight-losers can't afford these programs (insurance usually won't cover them) or don't have the time, patience, or motivation to commit to one. At up to $3,500, the six-month Miriam outpatient program is a relatively good deal, especially compared with Canyon Ranch, which offers a well-regarded residential program for about $1,200 a day.

"We know how to get people to eat healthier and exercise," says Steven Blair, an exercise and epidemiology researcher at the University of South Carolina. "The question is how to roll out the needed behavioral strategies to 50 million unfit adults in the U.S. Even if there were enough trained counselors to work with that many people, which there aren't, the cost issues would be overwhelming."

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Denied:
¶In Seattle, the Virginia Mason Medical Center, once deemed a high-cost provider, has conducted rigorous internal reviews to eliminate waste and inefficiency. It says that after doctors were required to click through a computerized checklist of the medical circumstances needed to justify a costly imaging test, CT scans for sinus conditions dropped by 27 percent and M.R.I.'s for headaches by 23 percent. It placed nursing teams and supplies closer to patients, freeing nurses to spend 90 percent of their time on direct patient care, far more than the 35 percent at most hospitals. The time needed to process insurance claims was sharply cut by consolidating steps. In a tough environment for hospitals, Virginia Mason has been reporting margins of 4 to 5 percent.

Speedy:
¶Virginia Mason also collaborated with Starbucks and the company's insurance provider, Aetna, to find better ways to treat patients with uncomplicated back pain, a costly burden to the company. At the start, all patients complaining of back pain typically waited many weeks to see a specialist, who would then prescribe a costly, unnecessary M.R.I. before finally sending them on to a physical therapist. By finding ways to separate out the uncomplicated cases, Virginia Mason was able to send them directly to a therapist on the day the patient requested an appointment, and the vast majority were able to quickly return to work.

Denied:
¶The Cincinnati Children's Hospital Medical Center is using computer models to predict the number of intensive-care beds needed for patients having surgery. When necessary, it limits elective surgeries that require access to the intensive-care unit, and the smoother flow of patients has allowed the hospital to avoid $100 million in capital costs to build new bed capacity.

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Brownstones are desirable.

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When everyone agrees, prices get stupid. Studies have shown that crowd estimates can be surprisingly accurate on average -- but only when there is sufficient diversity of opinion. Market valuations are the same way: When you have a diversity of opinion, reasonable estimates prevail as outliers cancel each other out. But when there is a critical mass of one-sided opinion -- when an overwhelming majority shares the same general view -- you get serious mispricings.

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Should you trust your gaydar in everyday life? Probably not. In our experiments, average gaydar judgment accuracy was only in the 60 percent range. This demonstrates gaydar ability -- which is far from judgment proficiency.

Two such experiments in PLoS ONE, both of which yielded novel findings. In one experiment, we found above-chance gaydar accuracy even when the faces were presented upside down. Accuracy increased, however, when the faces were presented right side up.

What can we make of this peculiar discovery? It's widely accepted in cognitive science that when viewing faces right side up, we process them in two different ways: we engage in featural face processing (registering individual facial features like an eye or lip) as well as configural face processing (registering spatial relationships among facial features, like the distance between the eyes or the facial width-to-height ratio). When we view faces upside down, however, we engage primarily in featural face processing; configural face processing is strongly disrupted.

-- Joshua A. Tabak and Vivian Zayas

Thus our finding clarifies how people distinguish between gay and straight faces. Research by Professor Rule and his colleagues has implicated certain areas of the face (like the mouth area) in gaydar judgments. Our discovery -- that accuracy was substantially greater for right side up faces than for upside-down faces -- indicates that configural face processing contributes to gaydar accuracy. Specific facial features will not tell the whole story. Differences in spatial relationships among facial features matter, too.

Consider, for example, facial width-to-height ratio. This is a configural physical feature that differs between men and women (men have a larger ratio) and reflects testosterone release during adolescence in males. Given that stereotypes of gender atypicality -- gay men as relatively feminine and gay women as relatively masculine -- play a role in how people judge others' sexual orientation, our finding suggests that cues like facial width-to-height ratio may contribute to gaydar judgments.

Another novel finding: in both experiments, participants were more accurate at judging women's sexual orientation (64 percent) than at judging men's (57 percent). Lower gaydar accuracy for men's faces was explained by a difference in "false alarms": participants were more likely to incorrectly categorize a straight man as gay than to incorrectly categorize a straight woman as gay.

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For Javaid Tariq, a taxi driver in New York City who sends money monthly to his family in Pakistan, the exchange rate is particularly infuriating because of how much money he loses. When he sent $300 to his family in April, he received 89.2 rupees for every dollar, less than the 91.2 exchange rate that he checks each morning, he said. For his family, that means 599 fewer rupees, or more than a week's salary in Lahore.

Immigrant advocates argue that many people do not have time to shop for better rates.

"These are people working who are often working minimum wage jobs with very little savvy or time about where to price-shop," said Francis Calpotura, the founder and director of the Transnational Institute for Grassroots Research and Action in Oakland, Calif.

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But money has diminishing returns -- like just about everything else. Satisfaction rises with income until about $75,000 (or perhaps as high as $120,000). After that, researchers have had trouble proving that more money makes that much of a difference. Other factors -- like marriage quality and health -- become more relatively important than money. It might be the case that richer people use their money to move to richer areas, where they no longer feel rich. Non-economists might chalk this up to the "keeping up with the Jones'" principle.

3a) The diminishing-returns principle is true for entire countries, too... The "Easterlin Paradox" suggests that once a developed country passes a threshold average income, more growth doesn't increase average reported happiness.

3b) ... but there might be exceptions -- or the whole theory might be wrong!. Betsey Stevenson and Justin Wolfers, disagreeing with Easterlin in a widely-read paper, have showed that some countries, such as Japan and Italy, have clearly rising levels of well-being alongside rising GDP.

4) Income inequality reduces well-being, and higher public spending increases well-being. These conclusions have been reached many times ... and called into question many times. Most interestingly, "perceived social mobility" might mitigate the effects of income inequality. If people think they can move up the income ladder, they're willing to tolerate a larger equality gap.

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At least some of the early adopters of the Kinect were not content just to play games with it. "Kinect hackers" were drawn to the fact that the object affordably synthesizes an arsenal of sophisticated components -- notably, a fancy video camera, a "depth sensor" to capture visual data in three dimensions and a multiarray microphone capable of a similar trick with audio.

Combined with a powerful microchip and software, these capabilities could be put to uses unrelated to the Xbox. Like: enabling a small drone to "see" its surroundings and avoid obstacles; rigging up a 3-D scanner to create small reproductions of most any object (or person); directing the music of a computerized orchestra with conductorlike gestures; remotely controlling a robot to brush a cat's fur. It has been used to make animation, to add striking visual effects to videos, to create an "interactive theme park" in South Korea and to control a P.C. by the movement of your hands (or, in a variation developed by some Japanese researchers, your tongue).

An object that spawns its own commercial ecosystem is a thing to take seriously. Think of what Apple's app store did for the iPhone, or for that matter how software continuously expanded the possibilities of the personal computer. Patent-watching sites report that in recent months, Sony, Apple and Google have all registered plans for gesture-control technologies like the Kinect. But there is disagreement about exactly how the Kinect evolved into an object with such potential. Did Microsoft intentionally create a versatile platform analogous to the app store? Or did outsider tech-artists and hobbyists take what the company thought of as a gaming device and redefine its potential?

This clash of theories illustrates a larger debate about the nature of innovation in the 21st century, and the even larger question of who, exactly, decides what any given object is really for. Does progress flow from a corporate entity's offering a whiz-bang breakthrough embraced by the masses? Or does techno-thing success now depend on the company's acquiescing to the crowd's input? Which vision of an object's meaning wins? The Kinect does not neatly conform to either theory. But in this instance, maybe it's not about whose vision wins; maybe it's about the contest.

At the time -- this was shortly before the 2010 holiday season -- Microsoft's primary Kinect focus was the mainstream game-playing market. Its first response to OpenKinect seemed predictable: CNET reported an unnamed spokesperson declaring that the company "does not condone the modification of its products" and would "work closely with law enforcement . . . to keep Kinect tamper-resistant." Adafruit increased its prize, ultimately to $3,000. Within days a developer in Spain posted videos demonstrating that he made his Kinect work with a P.C. OpenKinect refined and spread the open-source driver code, and a variety of "Kinect hacks," as they came to be called, proliferated in YouTube videos. (An early example involved a Kinect used to create a version of the hand-swipe control contraption Tom Cruise used in "Minority Report.") Soon Watson and his wife, Emily Gobeille, posted their own video, in which her hand movements were captured by a Kinect and translated onto a screen displaying a computer-generated bird figure, which she controlled like a high-tech puppet.

Watson told me this by phone from Amsterdam, where he and Gobeille had just presented a polished version of their creation as an installation at CineKid, an international entertainment festival, for an audience that included Dutch royalty. The specter of a Microsoft-backed "law enforcement" response to projects like his had obviously faded. In fact, shortly after the open-source driver was finished, one of Microsoft's top Kinect people appeared on NPR's "Science Friday" and, in remarks that were widely reproduced across the Web, asserted that OpenKinect participants would "absolutely not" be prosecuted.

In December 2010, Microsoft's partner PrimeSense, an Israeli company that created the Kinect's 3-D depth-sensing chip, released its own set of software drivers and code for the so-called hackers to monkey with. A few months later, Microsoft announced it would release its own code kit. It certainly seemed, as Mashable.com put it, that the company had "done a complete 180 when it comes to hacks."

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We need to adopt a corporate performance statement that is transparent and relevant for assessing value. This should include two separate sections: the cash flows the company realised during the reporting period and estimates of the company's future cash flow commitments. The statement begins with revenue and deducts cash outlays for operating expenses and capital investments to arrive at free cash flow. This is the cash available to pay interest and dividends and gives investors a baseline from which they can assess the company's prospects. Clearly stating the individual items that determine free cash flow is the best way to serve investors.
The second section presents estimates of the cash flows that the company anticipates it will need to satisfy future financial commitments, such as pension liabilities. Reporting a single estimate to capture an uncertain amount leaves investors in the dark. This corporate performance statement presents a most likely, an optimistic and a pessimistic estimate for each account. Management's discussion of the factors driving the estimates and the likelihood of each enables investors to form their own expectations in an informed fashion.

The corporate performance statement would have been useful, for instance, in informing the debate over how to value mortgage-backed securities during the subprime lending crisis. Critics argued that forcing banks to write down their long-duration securities to fire-sale prices understated their value and exacerbated the financial meltdown. Other observers maintained that the low prices fairly reflected the poor decisions companies had made, and that investors were entitled to know the unvarnished truth. This type of controversy vanishes when there are three estimates. Fire-sale prices are appropriate for the pessimistic estimate if it is likely that creditors or regulators will force the bank to sell assets to stay afloat.

The optimistic scenario reflects the present value of holding the securities until market prices recover. The most-likely estimate lies in between. This disclosure acknowledges that there is no right answer, only a range of possibilities.
When investors and creditors have the information they need to manage their risks, they lower the rate of return that they demand. A lower cost of capital allows companies to invest profitably in more projects, leading to stronger economic growth.
Investors, managers and accountants are all heavily invested in the current accounting model. But this corporate performance statement offers benefits too great to ignore: not only more useful information, but greater trust in public companies and capital markets.

-- Michael Mauboussin and Alfred Rappaport

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Traffic jams can form out of the simplest things. One driver gets too close to another and has to brake, as does the driver behind, as does the driver behind him -- pretty soon, the first driver has sent a stop-and-go shock wave down the highway. One driving-simulator study found that nearly half the time one vehicle passed another, the lead vehicle had a faster average speed.

All this leads to highway turbulence, which is why many traffic modelers see adaptive cruise control (A.C.C.) -- which automatically maintains a set distance behind a car and the vehicle in front of it -- as the key to congestion relief. Simulations have found that if some 20 percent of vehicles on a highway were equipped with advanced A.C.C., certain jams could be avoided simply through harmonizing speeds and smoothing driver reactions.

One study shows that even a highway that is running at peak capacity has only 4.5 percent of its surface area occupied. More sophisticated adaptive cruse control systems could presumably fit more cars on the road.

-- Tom Vanderbilt

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For the last half-century, just about every education reform -- from desegregation to school choice -- has taken care to keep city and suburban schools and students separate. Buses for school desegregation rarely crossed the urban-suburban boundary, thanks to a Supreme Court ruling in 1974, which meant that suburban students would not have to participate in court-ordered desegregation of city schools.

Most modern school choice plans have followed the same pattern by offering students choices among schools within the same school district. A perfect example is the No Child Left Behind Act, which allows kids in "failing" schools to choose another school, as long as it is within the same district.

What these reforms have in common is that they have protected the exclusivity of suburban public schools and have ensured that city students would stay put in city schools.

Open enrollment could shake up the education system.

Mr. Romney's proposal, if put in place, could change that. Most directly, and perhaps most dramatically, Mr. Romney's proposal would force -- yes, force -- suburban districts to accept city students, a step that the Supreme Court refused to take back in 1974. As Mr. Romney said in a white paper also released last week, he would require states to "adopt open-enrollment policies that permit eligible students to attend public schools outside of their school district."

In doing so, Mr. Romney's proposal would target the real source of educational inequality in this country: school district boundaries, which wall off good school systems from failing ones. The grossest inequalities in educational opportunity today exist between school districts, not inside them.

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Ferrari could have just gone with the crowd and built a low-slung four-door like the Aston Martin Rapide. Instead it built a modern version of the 1961 Ferrari 250 GT Breadvan racecar, and bully on them for doing it. The world has enough Mercedes CLS clones. It doesn't have nearly enough Ferrari shooting brakes.

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Putting living vegetation on the roof is not a new idea. For thousands of years people have made sod roofs to protect and insulate their houses, keeping them cooler in summer and warmer in winter. The modern movement for green roofs began in the last 50 years in Europe. Germany, where about 10 percent of roofs are green, is the leader; some parts of Germany require green roofs on all new buildings.

Greening a roof is not simple or cheap. Over a black roof -- flat is easiest but sloped can work -- goes insulation, then a waterproof membrane, then a barrier to keep roots from poking holes in the membrane. On top of that there is a drainage layer, such as gravel or clay, then a mat to prevent erosion. Next is a lightweight soil (Chicago City Hall uses a blend of mulch, compost and spongy stuff) and finally, plants.

An extensive roof -- less than 6 inches of soil planted with hardy cover such as sedum -- can cost $15 per square foot. An intensive roof -- essentially a garden, with deeper soil and plants that require watering and weeding -- can double that. But because the vegetation is thicker, it will do a better job of cooling a building and collecting rainwater. Plants reduce sewer discharge in two ways. They retain rainfall, and what does run off is delayed until after the waters have peaked.

Green roofs have other advantages.They scrub the air: one square meter can absorb all the emissions from a car being driven 12,000 miles a year, said Amy Norquist, chief executive of Greensulate, which installs green roofs

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The SAS financial services modeling group in San Diego, exploring ways they can take advantage of high-performance analytics and big data techniques to deliver more models, more quickly, and to more customers. This wasn't completely an academic exercise--the team in San Diego has added several new customers recently and have been looking for ways to boost productivity, so this is the perfect setup for our high-performance story. Perhaps you've seen Jim Davis' blog where he ponders what you can do with all the extra time savings that high-performance analytics offers ... provide service to more customers is one good idea!

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The swelling middle class in emerging economies is transforming the economic balance of power across the globe. Measuring it, however, is no easy task. There is no widely accepted definition of what constitutes the middle class, and the most common ways of measuring its growth -- through looking at rises in income -- suffer from a number of flaws.

Next: middle class means cars, meat, toothpaste, cell phones, and air-conditioners.

-- Foreign Policy

There's an easier way. In the developing world, buying a car is virtually synonymous with entry into the middle class. In these countries, car ownership separates those with the ability to purchase many other nonessentials from those within the wider population. Car statistics, moreover, are generally reliable and frequently updated, and they include data by automobile type that can be used to further segment the middle class. For this reason, the number of passenger cars in circulation serves as the most reliable gauge we have about the size of a country's middle class.

Applying this measure significantly alters our understanding of the middle class in the developing world. It shows that there are many more affluent people in developing countries than had previously been thought and that about 70 developing countries with a combined population of about 4 billion are near or above the point where car ownership rises very rapidly. This suggests that very large numbers of people will enter the middle class in the coming years, transforming the economies and political systems of the countries they inhabit.

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Simplicity in the hardware has not always been matched in the software, which since the rise of iOS - the operating system for iPad, iPhone and iPod touch - has been marked by something known as skeuomorphism, a tendency for new designs to retain ornamental features of the old design. Thus the calendar in Apple's Macs and on iOS has fake leather texture and even fake stitching.

When I mention the fake stitching, Ive offers a wince but it's a gesture of sympathy rather than a suggestion that he dislikes such things. At least, that's how I read it. He refuses to be drawn on the matter, offering a diplomatic reply: "My focus is very much working with the other teams on the product ideas and then developing the hardware and so that's our focus and that's our responsibility. In terms of those elements you're talking about, I'm not really connected to that."

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The biggest threat to incumbents, however, comes from outside the traditional banking sector, where hungry innovators are trying to cut the cost of investment advice and wealth management drastically. The most fertile ground for many of these new firms is in California, where a generation of technology entrepreneurs that made its money online is preparing to invest it online too. The region is already awash with traditional wealth managers. UBS, Goldman Sachs, JPMorgan and others are expanding in San Francisco and around Silicon Valley. They have recently been joined by online rivals such as Wealthfront, MarketRiders and Personal Capital, all of which use technology to help clients build customised asset portfolios at a small fraction of what traditional wealth managers would charge.

The biggest threat to incumbents comes from outside the banking sector, where hungry innovators are trying to cut the cost of wealth management.

Wealthfront, which is aiming its offering squarely at Silicon Valley's new rich, will manage money for a fee of 0.25% a year, using sophisticated algorithms that measure risk tolerance and build a diversified portfolio. Another new entrant is Personal Capital, started by Bill Harris, a former chief executive of PayPal and Intuit. It tries to straddle the world between cheap online wealth management and the old world of private banking. Customers can sign up online but the firm provides expert portfolio and tax-management advice and assigns wealth managers to individual customers. In Britain a firm called DCisions has crunched the data on millions of portfolios to obtain risk-adjusted returns as benchmarks for new investors. The data show up clearly how wealth managers' fees have affected the value of the portfolios and what difference the managers' advice has made.

Tom Blaisdell, a partner at DCM, a venture fund, manages his savings through MarketRiders. For a flat fee of $14.95 a month the firm assesses his tolerance for investment risk and helps him construct a portfolio of investments using exchange-traded funds that he can buy through any discount broker. The firm monitors his asset allocation as markets move and sends him quarterly instructions on what to buy or sell to rebalance his portfolio. "I've got a personal rant on this but 90% of what people call 'investing' in this country is what I call 'gambling'," says Mr Blaisdell. "It is a big area for innovation."

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"STRATEGICALLY, I THINK in terms of millionaires and billionaires," says Jürg Zeltner, the head of wealth management at UBS, a Swiss bank. It is a claim that many big banks would like to make about their clients. Few can. With a squeeze on revenues from banking services for more down-at-heel folk, many of the world's biggest banks, as well as some smaller ones, hope to plump up their profit margins by serving the very wealthy. Yet margins in private banking and wealth management are also being squeezed, and new competitors from outside banking stand a good chance of breaking into this market.

Self-evidently, the big attraction for banks is that rich people have more money to invest and spend on advice than poorer ones. Definitions of rich customers vary from bank to bank and region to region, but there is a rough pecking order. Customers with financial assets above $1m (not counting their homes or businesses) are generally classified as high-net-worth individuals, and those with assets of $10m-30m as ultra-high-net-worth. The Boston Consulting Group puts the total investible assets of the world's wealthy at around $122 trillion last year, almost enough to buy all the shares traded on the New York Stock Exchange ten times over. Capgemini and Merrill Lynch come up with a more modest estimate of about $43 trillion. Whichever number is right, the market is certainly big enough to be interesting; and everyone agrees that it is growing quickly. The rich world is still home to most of the world's money: about a third is in America and another third in Europe. Yet the fastest growth is in Asia, where the assets of the rich increased by almost a fifth in 2010

Rich people are more demanding and cost more to serve than the poor. Most private banks or wealth managers try to strike a balance between cost and revenue by giving different clients different amounts of service. The extraordinarily rich get extraordinarily good service, with expert advice on anything they could possibly want, from help with finding a yacht broker to information on the best boarding schools. Such advice generally does not come cheap and is difficult to scale up. The very best private bankers tend to be well educated and well versed in financial markets--the sort of people who might be chief investment officers at fund-management firms. It helps if they have gone to the right schools, are over 50 and perhaps play polo. "Wealthy clients want relationship managers who are just like them," notes one private banker. At the same time banks do not want their star managers to get too close to their most lucrative customers, because they are worried that if the managers leave they might take their clients with them. The very best employees are disproportionately well paid, as in investment banking.

In Asia and Latin America, the fastest-growing markets for private banking, these problems are magnified by a shortage of experienced bankers, particularly older ones. "In Asia seniority is incredibly important," says Christian Edelmann of Oliver Wyman. "You just can't have a 30-year-old banker servicing a 50-year-old entrepreneur."

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Custora, which also works with sites like Etsy and Revolve Clothing, creates similar online dashboards. But its specialty is identifying the most valuable customer segments and using algorithms to forecast their potential spending over time. Right now, for example, only 15 percent of Fab.com purchasers shop with the company's iPad app. But a Custora forecast estimated that, over the next two years, a typical iPad customer would spend twice as much as a typical Web customer and that the iPad cohort would generate more than 25 percent of Fab.com's revenue.

In an era of online behavioral tracking, Fab.com has been more transparent than some other sites about a lot of its customer surveillance, data collection and analysis. Mr. Goldberg writes regularly about the company's social marketing practices and metrics on his blog. Likewise, when Fab.com was seeking seed money last year, Mr. Goldberg gave several venture capital firms passwords to the RJMetrics' dashboard so they could see the company's revenue and customer trends for themselves.

"V.C.'s could see it every day," he says. "They could come back and say, 'How did Fab do today?' "

Last December, Fab raised $40 million from Andreessen Horowitz, Menlo Ventures, First Round Capital and several other sources, including the actor Ashton Kutcher. Mr. Goldberg, meanwhile, is now an investor in and a board member at RJMetrics.

THIS month, the site even re-engineered its look -- to Fab 3.0 (post Fabulis)-- to capitalize on recent data indicating that users who had checked out the site's crowd-sourcing feature were more likely to make purchases than those who had not. Among other updates, the site now gives more prominence to a live feed featuring the products that members have just bought or liked.

http://www.nytimes.com/2012/05/27/business/fabcom-and-the-value-of-online-word-of-mouth.html?hpw#

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From offices on the 58th floor of the Chrysler Building in Midtown Manhattan, Mr. Weinstein runs a $5.5 billion hedge fund firm called Saba Capital Management. ("Saba" is Hebrew for "grandfatherly wisdom," a nod to his Israeli roots.) It was there, last autumn, that he noticed an aberration in the market for credit derivatives. He knew from experience what it was like to lose a lot of money at a big bank. Before starting Saba, he was responsible for a team that lost nearly $2 billion, in the depths of the financial crisis, at Deutsche Bank. Others lost even more. Last November, however, he saw that a certain index seemed to be trading out of line with the market it was supposed to track. He and his team pored through reams of data, trying to make sense of it.

It was his pick for the "best" investment idea of the moment. Mr. Weinstein recommended buying the Investment Grade Series 9 10-year Index CDS -- the same index that Mr. Iksil was shorting.

Standoffs are not uncommon on Wall Street. An aggressive trader makes a wrongheaded bet, then doubles down to scare off competitors on the other side of the trade. Market rivals often get slapped down, unwilling to keep buying as the other side is selling, or vice versa. For traders with the backing of a major bank, like JPMorgan, the task is much easier.

But not always. Sometimes, the other side sits tight, then hits back in force. And it does so in numbers.

By January of this year, the trade against the London Whale was not going well for the hedge funds. The price of the index, as well as others, was still falling, and the losses were mounting for Mr. Weinstein and the others. But by February, it was clear that a single, big player was behind the selling. On trading desks in London and New York, everyone was talking.

the London Whale was so big that, for months, the hedge funds betting against him simply got steamrolled. One of Mr. Weinstein's funds at Saba was down 20 percent heading into May.

Then the tables began to turn, as news reports about Mr. Iksil, fed by the hedge funds, began to surface on both sides of the Atlantic. Suddenly, everyone was checking out the obscure index that Mr. Weinstein and others had seized upon.

By May, when fears over Europe's debt crisis again came to the fore, the trade reversed. The London Whale was losing. And Mr. Weinstein began to make back all of his losses -- and then some -- in a matter of weeks.

Other hedge funds were also big winners. Blue Mountain Capital and BlueCrest Capital, both created by former JPMorgan traders, were among those winners. Lucidus Capital Partners, CQS and a fund called III came out ahead, too.

INSIDE the hedge fund world, some joked that Mr. Weinstein had been able to spot the London Whale because he himself had been a whale once, too.

Mr. Weinstein was a pioneer in complex credit derivatives, latching onto them early in his tenure at Deutsche Bank, before they became the financial weapons of mass destruction that worsened the financial crisis. He was a profit machine at the bank, notching earnings in 10 of his 11 years trading there. At 27, he became one of the youngest managing directors in the bank's history. Before his book blew up, Mr. Weinstein was reportedly pulling down about $40 million a year. He exploited price discrepancies and piled leverage into his trades.

Then his team at Deutsche Bank lost $1.8 billion during the 2008 financial crisis. The trading losses ruined bonuses throughout the bank, and ruffled more than a few feathers.

He would later leave the bank and, along with 12 of his colleagues, set up Saba. Mr. Weinstein started it with $140 million -- a pittance by hedge fund standards. In the intervening years, he has outperformed his peers and managed to vacuum up assets at a time when most growing hedge funds have been struggling to hold on to what they've got. He now controls more than $5.5 billion.

The similarities between Mr. Weinstein and Mr. Iksil still resonate in the market.

"It was one whale versus another whale," one hedge fund manager said.

Those who have traded against Mr. Weinstein describe him as an aggressive trader who bets big and moves fast.

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b\Because Morgan Stanley aggressively priced the stock, at $38 a share -- Facebook maximized its take, at $16 billion. Long-term investors should be happy about this outcome; the company now has plenty of capital as it competes with Google and the other Internet big boys.

But let's be honest. Were there really any long-term investors in Facebook that first day? Judging by the torrent of criticism that has rained on Facebook and Morgan Stanley, it sure doesn't appear that way. Instead, what the Facebook aftermath suggests is that we've all become brainwashed into believing that, when it comes to I.P.O.s, up is down and down is up. A successful I.P.O. is one where the company gets hosed by Wall Street. A failed I.P.O. is one where the company's interests, not those of Wall Street speculators, are served.

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The investment returns of people with defined-contribution pensions are woefully low -- much lower than the returns seen by the managers of defined-benefit schemes. And the difference, to a first approximation, is rents being extracted by the financial-services industry. That's the industry which does all of the educating: so it's unrealistic to assume that it's going to educate people and thereby reduce its own income.

-- Abnormal Tadas Viskanta and FelSalm.

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