If You Don't Eat or Drive, Inflation's No Problem (NYTimes, 10/23/05)

October 23, 2005
Economic View
If You Don't Eat or Drive, Inflation's No Problem
By DANIEL GROSS
ASIDE from the stuff that's becoming more expensive, like food and energy, there is no problem with inflation in the economy. That's the message economists want us to take from recent inflation reports.
On Oct. 14, the Bureau of Labor Statistics said the Consumer Price Index, the main inflation gauge, rose by a whopping 1.2 percent in September and by 4.7 percent in the last 12 months. The bureau also said the Producer Price Index, which measures inflation experienced by businesses, rose 1.9 percent in September alone.
Amid these alarming reports, many economists urged Americans to remain calm and to focus on the so-called core C.P.I. - the inflation measure that excludes the volatile costs of energy and food. The core rate rose just 0.1 percent in September, and is up only 2 percent in the last 12 months.
The dueling numbers seem to offer a classic case of how economists and consumers view the world differently. If only we lived in some futuristic biosphere where we didn't need energy or food, inflation wouldn't matter.
Government economists have been stripping out energy and food costs from the price gauge for more than three decades. After the Arab oil embargo of 1973, Arthur Burns, who was then the chairman of the Federal Reserve, correctly reasoned that temporary shifts in the price of oil shouldn't influence monetary policy unduly. So he asked Fed economists to show him a measure of price changes that excluded energy costs. Later, he asked for one that also excluded food costs.
Steven Roach, chief economist at Morgan Stanley, was an economist at the Fed at the time. "When we were asked to strip out some of the most important things that people buy, my reaction was, 'You've got to be nuts,' " he said. "These are the vital necessities of life."
But Mr. Roach, like most other economists, has come to see the virtues of distinguishing between the so-called headline C.P.I. and the core C.P.I.
Prices of food and energy are notoriously volatile, and susceptible to supply shocks and acts of nature. Inflation in these vital sectors doesn't necessarily indicate inflation across the economy. Mr. Roach notes that in the last year, consumer energy prices have risen 35 percent, while prices of other goods and services are up just 2 percent.
Economists also say the utility of the inflation measure depends on the question you are trying to answer. "If you want to know how much more it costs you to live this year than last year, look at the headline C.P.I.," said Ann L. Owen, associate professor of economics at Hamilton College in Clinton, N.Y., and a former economist at the Federal Reserve. "And from a consumer's perspective, there's nothing good about a 4.7 percent increase in headline inflation in 12 months."
Economists at the Fed aren't obsessed with short-term pocketbook issues like high oil prices - and not just because many of them commute to work in Washington on the Metro. Rather, they focus on long-term economywide issues.
"You want to make sure that short-term monetary policy isn't responding to a phenomenon that is just going to go away in a few months, or even a year," said Stephen G. Cecchetti, economics professor at Brandeis University. "A change in an interest rate today will have an effect on inflation one to two years from today." We would not have wanted the Fed to act as if the post-Katrina spike in gasoline prices were permanent, he noted.
What's more, the Fed tends to focus on things that it can control. Not even a Fed chairman as powerful as Alan Greenspan can affect the price of oil by manipulating interest rates. "There's nothing the central bank can do about that, unless it figures out how to produce more oil," said Michael F. Bryan, vice president and economist at the Federal Reserve Bank of Cleveland.
But the Fed can control the amount of money circulating in the economy relative to the quantity of goods available. "So it tries to find the inflation signal common to all prices throughout the economy," Mr. Bryan said.
Thus considered, the core C.P.I. may be the best tool the Fed has to monitor long-term changes in prices.
Still, economists see two good reasons not to ignore the headline number today. First, inflation in a crucial category like energy can worm its way into the entire system. "If high energy costs persist, and if they continue to rise, they may ultimately seep into the core," Professor Owen said. The second reason has less to do with hard economic realities than with softer perceptions. The cost of gasoline is the economy's most visible price. People see it every day even if they don't buy gas every day, said Matthew Martin, senior economist at Economy.com. And most people buy food every week.
"If prices for those two things go up quickly, consumers will form the impression that inflation is high," he said. "And if consumers begin to expect more inflation, they might be more tolerant of price increases."
If that happens, the headline C.P.I. number could dominate the headlines.
Daniel Gross writes the "Moneybox" column for
Slate.com.

惠普執行長摒除「盲從」心態(CNet, 19/10/2005)

惠普執行長摒除「盲從」心態CNET新聞專區：Mike Ricciuti19/10/2005原文網址 : http://taiwan.cnet.com/news/hardware/0,2000064553,20101989,00.htm
惠普公司執行長Mark Hurd表示，他為公司擘劃的戰略很簡單，就是回歸根本，並堅定不移。
Hurd今年3月取代Carly Fiorina成為惠普執行長，他18日在佛州舉行的Gartner Symposium/IT Expo會議中表示，惠普會回頭鞏固核心技術，並致力於改善客戶關係。
換句話說，惠普會鎖定三大領域：伺服器、儲存設備與管理軟體。Hurd說：「你會看到我們快馬加鞭發展這些業務。」
在回答Gartner分析師的提問時，Hurd並重申，惠普不打算撤出PC或印表機市場。
Hurd刻意與前任者Fiorina訂定的策略方向撇清關係，例如惠普經銷蘋果電腦iPod數位隨身聽的協議已經喊卡。
Hurd說：「我的看法是，iPod不是一場有趣的遠足：取得這項產品，在上頭印上我們的商標，然後銷往市場對我們沒有益處，有些情況下還附帶100億美元的帳單。這毫無道理。」
惠普今年夏季停止銷售iPod。
先前在NCR任職25年的Hurd表示，他的首要之務是強化惠普的營運，藉精簡人事、整頓銷售團隊等方式，提昇公司的財務績效。
他說：「儲存設備對惠普而言比iPod更好。我們不會把印表機獨立門戶，或脫售PC部門。但我們會不斷地自我調整。」
至於Itanium架構的伺服器，Hurd強調惠普會繼續支持。「購買Itanium，你就會獲得我們的支援。我們會信守承諾，英特爾也是。」
同時，惠普也會努力改善與客戶的關係。「我們銷售5,000萬台印表機、3,000萬台PC以及2、300萬台的伺服器。我們會設法改善對這些顧客提供服務的方式，」他說。
分析師詢問惠普如何避免東施效顰，一味模仿IBM和戴爾(Dell)成功的模式，Hurd答：「所謂『盲從』(me too)的評論，大致是媒體人製造出來的俏皮話，不是事實。我不知道惠普在模仿誰。我們在若干核心領域方面比其他廠商都來得強，技術會是我們鶴立雞群之處。我們是一家科技公司，我們會持續專注於此。」
市場調查數據顯示，排名第二的惠普PC出貨量成長速度比市場龍頭戴爾稍快，扭轉戴爾領先差距持續擴大的趨勢。
戴爾公司創辦人兼董事長Michael Dell預定在周四(20日)赴Gartner會議發表專題演講。（唐慧文）

Behind Artificial Intelligence, a Squadron of Bright Real People (NYTimes, 10/14/05)

October 14, 2005
Behind Artificial Intelligence, a Squadron of Bright Real People
By JOHN MARKOFF
SAN FRANCISCO, Oct. 12 - The five robots that successfully navigated a 132-mile course in the Nevada desert last weekend demonstrated the re-emergence of artificial intelligence, a technology field that for decades has overpromised and underdelivered.
At its low point, some computer scientists and software engineers avoided the term artificial intelligence for fear of being viewed as wild-eyed dreamers.
But the work of a small team of researchers at the Stanford Artificial Intelligence Laboratory is helping to restore credibility to the field. The team's winning robotic Volkswagen, named Stanley, covered the unpaved course in just 6 hours and 53 minutes without human intervention and guided only by global positioning satellite waypoints.
The feat, which won a $2 million prize from the Pentagon Defense Advanced Research Project Agency, was compared by exuberant Darpa officials to the Wright brothers' accomplishment at Kitty Hawk, because it was clear that it was not a fluke. Twenty-two of the 23 vehicles that started this year did as well or better than the seven miles completed by the best vehicle last year.
The ability of the vehicles to complete a complex everyday task - driving - underscores how artificial intelligence may at last be moving beyond the research laboratory.
While artificial intelligence technology is already in use in telephone answering systems with speech recognition and in popular household gadgets like the iRobot vacuum cleaner, none of the existing systems have been as ambitious as Darpa's Grand Challenge road race.
This leap was possible, in large part, because researchers are moving from an approach that relied principally on logic and rule-based systems to more probability or statistics-oriented software technologies.
"In the past A.I. has been dominated by symbolic systems and now the world is gray," said Terrence J. Sejnowski, head of the computational neurobiology laboratory at the Salk Institute in La Jolla, Calif. "That's what it's like to deal with the real world."
This crucial shift, Mr. Sejnowski said, "grew out of the recognition that the human brain is very good at this, why not have machines do the same thing?"
New artificial intelligence systems - like that embodied in Stanley - are now capable of evaluating a huge amount of data from sensors and then making probabilistic decisions.
"The prior opinion of many informed observers, based on decades of disappointing experimental results, was that the problems were so hard that they would remain unsolved for many decades yet," said Hans Moravec, a Carnegie Mellon University robotics researcher who was one of the nation's first developers of autonomous vehicles during the 1970's. "But now everyone knows differently," he said. "The interest, effort and investment in the broader field is sure to skyrocket."
The Stanford lab has long been at the forefront of A.I. research. The first autonomous vehicle, based on a vehicle salvaged from the NASA lunar landing program, was created at the lab and took its first baby steps in 1975. By the late 1970's, the robotic vehicle was capable of moving about two feet at a time in one-second spurts, pausing for half a minute to compute between attempting the next movement.
Until recently, progress in artificial intelligence lagged so far behind computing technology that some in the field talked about an "A.I. winter," after commercial and government funding evaporated in the mid-1980's.
Now there is talk about an A.I. spring among researchers like Sebastian Thrun, the director of the Stanford lab.
"The amount of journalistic interest and investor interest has fluctuated wildly," said John McCarthy, a pioneer in the field and now professor emeritus in the computer science department at Stanford University. "A.I. has continued all along, thanks to the interest among researchers and the continued support of government agencies, especially Darpa."
The enthusiasm is already spreading. Researchers point out that an obvious and powerful application for A.I. technology is in automobile safety systems.
"Any time you create a technology that has the potential of saving 20,000 to 30,000 lives in a year, one has to sit up and take notice," said Raj Reddy, a professor of computer science and robotics at Carnegie Mellon University. "If you look at automotive accidents in the United States, the repair bill is about $55 billion each year."
The potential of the application is directly relevant to Volkswagen, the German car manufacturer who was one of the research sponsors of the Stanford team.
The company has put a high priority on what it refers to as driver-assistance systems, which are now capable of providing intelligent cruise control and lane "departure" warnings, two systems that will be crucial for driver safety in coming years.
"We can take a lot of the approaches used in Stanley and adapt them," Sven Strohband, senior research engineer at the Volkswagen Electronics Research Laboratory in Palo Alto, Calif. "It's a nice fresh wind of ideas."
The public visibility of the Grand Challenge is a big boost for Darpa, but may also show that the agency's current funding approach is a poor strategy. It has shifted money away from universities and experimental projects and toward work that is classified or done through military contractors. The victory of the Stanford team is proof of what can be done by a motivated team of scientific researchers on a relatively small budget.
"This is consistent with the history of our field," said David A. Patterson, a computer scientist at the University of California, Berkeley, who is president of the Association for Computing Machinery. "This demonstrates the importance of the participation of government-funded academics."

New York Times(10/09/05) : Danger of Flu Pandemic Is Clear, if Not Present

October 9, 2005
Danger of Flu Pandemic Is Clear, if Not Present
By DENISE GRADY
Fear of the bird flu sweeping across Asia has played a major role in the government's flurry of preparations for a worldwide epidemic.
That concern prompted President Bush to meet with vaccine makers on Friday to try to persuade them to increase production, and it led Health and Human Services Secretary Michael O. Leavitt to depart yesterday for a 10-day trip to at least four Asian nations to discuss planning for a pandemic flu.
But scientists say that although the threat from the current avian virus is real, it is probably not immediate.
Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, said a bird flu pandemic was unlikely this year.
"How unlikely, I can't quantitate it," Dr. Fauci said. But, he added, "You must prepare for the worst-case scenario. To do anything less would be irresponsible."
Dr. Jeffery Taubenberger, chief of the molecular pathology department at the Armed Forces Institute of Pathology, said, "I would not say it's imminent or inevitable." Dr. Taubenberger said he believes that there will eventually be a pandemic, but that whether it will be bird flu or another type, no one can say.
The Bush administration is in the final stages of preparing a plan to deal with pandemic flu. A draft shows that the country is woefully unprepared, and it warns that a severe pandemic will kill millions, overwhelm hospitals and disrupt much of the nation.
What worries scientists about the current strain of bird flu, known as H5N1, is that it has shown some ominous traits. Though it does not often infect humans, it can, and when it does, it seems to be uncommonly lethal. It has killed 60 people of the 116 known to have been infected.
Alarm heightened on Thursday when a scientific team led by Dr. Taubenberger reported that the 1918 flu virus, which killed 50 million people worldwide, was also a bird flu that jumped directly to humans.
There is a crucial difference, however; the 1918 flu was highly contagious, while today's bird flu has so far shown little ability to spread from person to person. But a mutation making the virus more transmissible could set the stage for a pandemic.
Another concern is that H5N1 has become widespread, killing millions of birds in 11 countries and dispersing further as migratory birds carry it even greater distances. This month, it was reported in Romania.
Meanwhile, the flu is spreading widely among birds in Asia. And it has unusual staying power, persisting in different parts of the world since it emerged in 1997.
"Most bird flus emerge briefly and are relatively localized," said Dr. Andrew T. Pavia, chief of the division of pediatric infectious diseases at the University of Utah and chairman of the pandemic influenza task force of the Infectious Diseases Society of America. The most worrisome thing about H5N1, Dr. Pavia said, is that it has not gone away.
Some scientists suspect that if H5N1 has not caused a pandemic by now, then it will not, because it must be incapable of making the needed changes. But others say there is no way to tell what the virus will do as time goes on. And they point out that no one knows how long it took for the 1918 virus to develop the properties that led to a pandemic.
Meanwhile, H5N1 seems to be finding its way into more and more species. Once known to infect chickens, ducks and the occasional person, the virus is now found in a wide range of birds and has infected cats.
"It killed tigers at the Bangkok zoo, which is quite remarkable because flu is not traditionally a big problem for cats," Dr. Pavia said.
It has also infected pigs, which in the past have been a vehicle to carry viruses from birds to humans.
"We should be worried but not panicked," Dr. Pavia said.
The timing of the bird flu's emergence also makes scientists nervous, because many believe that based on history, the world is overdue for a pandemic. Pandemics occur when a flu virus changes so markedly from previous strains that people have no immunity and vast numbers fall ill.
"In the 20th century there were three pandemics, which means an average of one every 30 years," Dr. Fauci said. "The last one was in 1968, so it's 37 years. Just on the basis of evolution, of how things go, we're overdue."
Dr. Bruce Gellin, director of the National Vaccine Program Office, said: "You get this sense of compounding risks. First, it's in some birds. Then more. Then more area, then more mammals and then to humans, albeit inefficiently."
In just a few instances, Dr. Gellin noted, the virus does appear to have spread from person to person.
"The only thing it hasn't done is to become an efficient transmitter among humans," he said. "It's done all the other things that are steps toward becoming a pandemic virus."
But not everyone is equally worried about the bird flu.
The fear "is very much overdone, in my opinion," said Dr. Edwin Kilbourne, an emeritus professor of immunology at New York Medical College, who has treated flu patients since the 1957 pandemic and has studied the 1918 flu.
The bird flu, he said, is distantly related to earlier flus, and humans have already been exposed to them, providing some resistance.
Scientists also say that the death rate may not be as high as it appears, because some milder cases may not have been reported.
Dr. Kilbourne and other experts also noted that when viruses become more transmissible, they almost always become less lethal. Viruses that let their hosts stay alive and pass the disease on to others, he explained, have a better chance of spreading than do strains that kill off their hosts quickly.
Moreover, he said, while much has been made of comparisons between the current avian flu and the 1918 strain, the factors that helped increase the flu's virulence in 1918 - the crowding together of millions of World War I troops in ships, barracks, trenches and hospitals - generally do not exist today for humans.
But an essential difference is that people carrying the flu today can board international flights and carry the disease around the world in a matter of hours.
Dr. Kilbourne emphasized that medical care had improved greatly since 1918. Although some flu victims then turned blue overnight and drowned from blood, with fluid leaking into their lungs, many more died of what are now believed to be bacterial infections, which can be treated with antibiotics.
Although the death toll from that flu was high, the actual death rate was less than 5 percent.
In addition, more people now live in cities, where they have probably caught more flus, giving them immunity to later ones. "In 1918, you had a lot of farm boys getting their first contact with city folks who'd had these things," Dr. Kilbourne said.
What researchers wish they could do now is look at a flu virus like H5N1 and predict whether it is heading down the genetic road to becoming a pandemic strain.
"I hope in the future we will be able to do that, work out which mutations are critical," Dr. Taubenberger said. "We know the 1918 strain had everything it needed."
Andrew Pollack and Donald G. McNeil Jr. contributed reporting for this article.