The-Economist整理版(《经济学人》原版英文有4000词汇即可练习阅读绝好资料)

DigestOfThe.Economist.2006(2-3)

Movingmarkets

Shiftsintradingpatternsaremakingtechnologyevermoreimportant

ANINVESTORpressesabutton,sending1,000small“buy”orderstoastockexchange.Theexchange'scomputersysteminstantlykicksin,butasplitsecondlater,99%oftheordersarecancelled.Havingfoundthebestprice,theinvestormakeshistradediscreetly,leavingnovisibletraceonthemarket—allinlesstimethanittakestoblink.Hisstealthstrategyremainsintact.

Eventslikethishappenmanytimesaday,asfloodsofordersfromactivehedgefundsand“algorithmic”traders—whouseautomatedprogramstobuyandsell—rushthroughtheinformation-technologysystemsoftheworld'sexchanges.Theaveragetransactionsizeonleadingstockexchangeshasfallenfromabout2,000sharesinthemid-1990stofewerthan400today,althoughtotaltradingvolumehassoared.Butexchanges'systemshavetocopewithmorethanjustagrowingonslaughtof“buy”and“sell”messages.Customerswanttotradeinmorecomplicatedways,combiningdifferenttypesofassetsondifferentexchangesatonce.Then,asalways,thereisregulation.Allthisispushingtechnologyfurthertothefore.

RecentembarrassmentsattheTokyoStockExchangehaveillustratedwhatcanhappenwhensystemsfailtokeepupwiththetimes.Injustthepastfewmonths,theimportanceoftechnologyhasbeenplaininmergers(thoseoftheNewYorkStockExchangeandArchipelago,andNASDAQandINET);collaborations(thedecisionbytheNewYorkBoardofTradetousetheChicagoBoardofTrade'stradingplatform);andthecreationofoff-exchangetradingnetworks(includingoneunveiledrecentlybyCitigroup).

Technologyishardlyanewelementinfinancialmarkets:theadventofelectronictradinginthe1980s(firstinEurope,laterinAmerica)helpedtoglobalisefinancialmarketsanddroveuptradingvolumes.Buthavingslowedafterthedotcombubbleitisnowdemandingevermoreofexchanges'andintermediaries'attention.Investorscannowdealmoreeasilywithexchangesoreachother,bypassingtraditionalroutes.Ascustomers'demandsandbargainingpowerhaveincreased,sotheexchangeshavehadtorampuptheirownsystems.“Technologycreatedthemonsterthathastobeaddressedbymoretechnology,”saysLeslieSutphenofCalyonFinancial,abigfuturesbroker.

AiteGroup,aresearchfirm,reckonsthatinAmericaalonethesecuritiesandinvestmentindustryspent$26.4billionlastyearonIT(seechart),andmayspend$30billionin2008.Sell-sidefirmsspendmost:J.P.MorganChaseandMorganStanleyeachsplashedoutmorethan$2billionin2004,whileasset-managementfirmssuchasStateStreetGlobalAdvisors,BarclaysGlobalInvestorsandFidelityInvestmentsspentbetween$250mand$350mapiece.Withbrokeragefeesfortradeswhittleddown,manyhaveconcludedthatbettertechnologyisonewaytocuttradingcostsandkeepcustomers.

Testingallengines

Globalgrowthislookinglesslopsidedthanformanyyears

LARRYSUMMERS,aTreasurysecretaryunderBillClinton,oncesaidthat“theworldeconomyisflyingononeengine”todescribeitsexcessiverelianceonAmericandemand.Nowgrowthseemstobebecomingmoreevenatlast:EuropeandJapanarerevvingup,asaremostemergingeconomies.Asaresult,if(orwhen)theAmericanenginestalls,theglobalaeroplanewillnotnecessarilycrash.

Forthetimebeing,America'smonetarypolicymakersthinkthattheireconomyisstillrunningprettywell.Thisweek,asAlanGreenspanhandedoverthechairmanshipoftheFederalReservetoBenBernanke,theFedmarkedtheendofMrGreenspan's18-yearreignbyraisinginterestratesforthe14thconsecutivemeeting,to4.5%.ThecentralbankersalsogaveMrBernankemoreflexibilitybysofteningtheirpolicystatement:theysaidthatfurthertightening“maybeneeded”ratherthan“islikelytobeneeded”,asbefore.

MostanalystsexpecttheFedtoraiseratesonceortwicemore,althoughtheeconomyslowedsharplyinlate2005.RealGDPgrowthfelltoanannualrateofonly1.1%inthefourthquarter,thelowestforthreeyears.Economistswerequicktoascribethisdisappointingnumbertospecialfactors,suchasHurricaneKatrinaandasteepfallincarsales—theconsequenceofgenerousincentivesthathadencouragedbuyerstobringpurchasesforwardtothethirdquarter.Theconsensushasitthatgrowthwillbouncebacktoanannualrateofover4%inthefirstquarterandstaystrongthereafter.

Thissoundstoooptimistic.Areboundisindeedlikelyinthisquarter,buttherestoftheyearcouldprovedisappointing,asaweakeninghousingmarketstartstoweighonconsumerspending.InDecembersalesofexistinghomesfellmarkedlyandthestockofunsoldhomessurged.EconomistsatGoldmanSachscalculatethat,afteradjustingforseasonalpatterns,themedianhomepricehasfallenbyalmost4%sinceOctober.ExperiencefromBritainandAustraliashowsthatevenasoftlandingforhousepricescancauseanacuteslowdowninconsumerspending.

Americanconsumershavebeenthemainenginenotjustoftheirowneconomybutofthewholeworld's.Ifthatenginefails,willtheglobaleconomynose-dive?Afewyearsago,theanswerwouldprobablyhavebeenyes.Buttheglobaleconomymaynowbelessvulnerable.AttheWorldEconomicForuminDavoslastweek,JimO'Neill,thechiefeconomistatGoldmanSachs,arguedconvincinglythataslowdowninAmericaneednotleadtoasignificantgloballossofpower.

StartwithJapan,whereindustrialoutputjumpedbyanannualrateof11%inthefourthquarter.GoldmanSachshasraiseditsGDPgrowthforecastforthatquarter(theofficialnumberisdueonFebruary17th)toanannualized4.2%.Thatwouldpushyear-on-yeargrowthto3.9%,wellaheadofAmerica's3.1%.ThebankpredictsaverageGDPgrowthinJapanthisyearof2.7%.ItthinksstrongdemandwithinAsiawillpartlyoffsetanAmericanslowdown.

Japan'slabourmarketisalsostrengthening.InDecembertheratioofvacanciestojobapplicantsrosetoitshighestsince1992(seechart1).Itiseasiertofindajobnowthanatanytimesincethebubbleburstintheearly1990s.Strongerhiringbyfirmsisalsopushingupwagesafteryearsofdecline.Workersareenjoyingthebiggestriseinbonusesforoveradecade.

Passtheparcel

Onlineshoppersgiveparcelsfirmsanewleaseoflife

THINGSmustbegoingwellintheparcelsbusiness.At$2.5mfora30-secondTVcommercialduringlastweekend'sSuperBowl,anadfromFedExwastheonemanyAmericansfoundthemostentertaining.Itshowedacavemantryingtouseapterodactylforanexpressdelivery,onlytowatchitbegobbledupontake-offbyatyrannosaur.WhatdidtheworlddobeforeFedEx,theadinquired?ItmighthaveaskedwhatonearthFedExdidbeforethearrivalofonlineretailers,whichwouldthemselvesbesunkwithouttoday'sfastandefficientdeliveryfirms.

Consumersandcompaniescontinuetoflockindrovestotheinternettobuyandsellthings.FedExreporteditsbusiestperiodeverlastDecember,whenithandledalmost9mpackagesinasingleday.OnlineretailersalsosetnewrecordsinAmerica.Excludingtravel,some$82billionwasspentlastyearbuyingthingsovertheinternet,24%morethanin2004,accordingtocomScoreNetworks,whichtracksconsumerbehaviour.Onlinesalesofclothing,computersoftware,toys,andhomeandgardenproductswereallupbymorethan30%.Andmostofthisstuffwaseitherpostedordeliveredbyparcelcompanies.

Theboomisglobal,especiallynowthatmorecompaniesareoutsourcingproduction.Itisbecomingincreasinglycommonforproductstobedelivereddirectfromfactorytoconsumer.InoneeveningjustbeforeChristmas,arecord225,000internationalexpresspackageswerehandledbyUPSatagiantnewair-cargohub,openedbytheAmericanlogisticsfirmatCologneairportinGermany.“Theinternethashadaprofoundeffectonourbusiness,”saysDavidAbney,UPS'sinternationalpresident.UPSnowhandlesmorethan14mpackagesworldwideeveryday.

Itisstrikingthatpostalfirms—onceseenasobsoletebecauseoftheemergenceoftheinternet—arenowfindingsalvationfromit.Peoplearepayingmorebillsonlineandsendingmoree-mailsinsteadofletters,butmostpostofficesaremakingupforthatthankstoe-commerce.Afterfouryearsofprofits,theUnitedStatesPostalServicehasclearedits$11billionofdebt.

FirmssuchasAmazonandeBayhaveevenhelpedmakeBritain'sRoyalMailprofitable.Itneedstobe:onJanuary1st,theRoyalMaillostits350-year-oldmonopolyoncarryingletters.Itwillfacegrowingcompetitionfromrivals,suchasGermany'sDeutschePost,whichhasexpandedvigorouslyafterpartialprivatisationandnowownsDHL,anotherbiginternationaldeliverycompany.

Bothpostofficesandexpress-deliveryfirmshavedevelopedarangeofservicestohelpecommerceandeBay'straders—wholistedacolossal1.9billionitemsforsalelastyear.Amongthemostpopularservicesaretrackingnumbers,whichallowpeopletofollowtheprogressoftheirdeliveriesontheinternet.

Aquestionofstandards

Moresuggestionsofbadbehaviourbytobaccocompanies.Maybe

ANOTHERroundhasjustbeenfoughtinthebattlebetweentobaccocompaniesandthosewhoregardthemasspawnofthedevil.InapaperjustpublishedintheLancet,withtheprovocativetitle“Secretscience:tobaccoindustryresearchonsmokingbehaviourandcigarettetoxicity”,DavidHammond,ofWaterlooUniversityinCanadaandNeilCollishawandCynthiaCallard,twomembersofPhysiciansforaSmoke-FreeCanada,alobbygroup,criticisethebehaviourofBritishAmericanTobacco(BAT).Theysaythefirmconsideredmanipulatingsomeofitsproductsinordertomakethemlow-tarintheeyesofofficialdomwhiletheyactuallydeliveredhightarandnicotinelevelstosmokers.

Itwasandisnosecret,asBATpointsout,thatpeoplesmokelow-tarcigarettesdifferentlyfromhigh-tarones.Thereasonisthattheywantadecentdoseofthenicotinewhichtobaccosmokecontains.Theythereforepullalargervolumeofairthroughthecigarettewhentheydrawonalow-tarratherthanahigh-tarvariety.Theextravolumemakesupforthelowerconcentrationofthedrug.

Butaburningcigaretteisacomplexthing,andthatextravolumehassomeunexpectedconsequences.Inparticular,abiggerdrawisgenerallyafasterdraw.Thatpullsahigherproportionoftheairinhaledthroughtheburningtobacco,ratherthanthroughthepapersidesofthecigarette.This,inturn,meansmoresmokeperunitvolume,andthusmoretarandnicotine.Thenatureofthenicotinemaychange,too,withmoreofitbeinginaformthatiseasyforthebodytoabsorb.

AccordingtoDrHammondandhiscolleagues,aseriesofstudiesconductedbyBAT'sresearchersbetween1972and1994quantifiedmuchofthis.Thestandardisedwayofanalysingcigarettesmoke,aslaiddownbytheInternationalOrganisationforStandardisation(ISO),whichregulateseverythingfromcomputercodetogreenhousegases,usesamachinetomake35-millilitrepuffs,drawnfortwosecondsonceaminute.Thefirm'sresearchers,bycontrast,foundthatrealsmokersdraw50-70mlperpuff,anddosotwiceaminute.DrHammonds'sconclusionisdrawnfromthehugebodyofdocumentsdisgorgedbythetobaccoindustryaspartofvariouslegalsettlementsthathavetakenplaceinthepastfewyears,mainlyasaresultofdisputeswiththeauthoritiesin

theUnitedStates.

DrHammondsuggests,however,thefirmwentbeyondmerelyinvestigatinghowpeoplesmoked.Aseriesofinternaldocumentsfromthelate1970sandearly1980sshowsthatBATatleastthoughtaboutapplyingthisknowledgetocigarettedesign.Aresearchreportfrom1979putsitthus:“Therearethreemajordesignfeatureswhichcanbeusedeitherindividuallyorincombinationtomanipulatedeliverylevels;filtration,paperpermeability,andfilter-tipventilation.”Aconferencepaperfrom1983says,“Thechallengewouldbetoreducethemainstreamnicotinedeterminedbystandardsmoking-machinemeasurementwhileincreasingtheamountthatwouldactuallybeabsorbedbythesmoker”.Anotherconferencepaper,from1984,says:“Weshouldstrivetoachievethiseffectwithoutappearingtohaveacigarettethatcheatstheleaguetable.Ideallyitshouldappeartobenodifferentfromanormalcigarette...Itshouldalsobecapableofdeliveringupto100%morethanitsmachinedelivery.”

Thankstothebanks

Collegestudentslearnmoreaboutmarketrates

AGOODeducationmaybepriceless,butinAmericaitisfarfromcheap—anditisnotgettinganycheaper.OnFebruary1stCongressnarrowlypassedtheDeficitReductionAct,whichaimstoslimAmerica'sbulgingbudgetdeficitby,amongotherthings,lopping$12.7billionoffthefederalstudent-loanprogramme.Interestratesonstudentloanswillrisewhilesubsidiesfall.

Familyincomes,grantaidandfederalloanshaveallfailedtokeeppacewiththegrowthinthecostoftuition.“Thefundinggapbetweenwhatstudentscanaffordandwhathighereducationcostshasgotwiderandwider,”saysClaireMezzanotteofFitch,aratingsagency.Lendersarerushingtobridgethegapwith“private”studentloans—loansthatarefreeofgovernmentsubsidiesandguarantees.

Virtuallynon-existenttenyearsago,privatestudentloansinthe2004-05schoolyearamountedto$13.8billion—acompoundannualgrowthrateofalmost30%—andtheyareexpectedtodoubleinthenextthreeyears.AccordingtotheCollegeBoard,anassociationofschoolsandcolleges,privatestudentloansnowmakeupnearly22%ofthevolumeoffederalstudentloans,upfromamere5%in1994-95.

Thegrowthshowslittlesignofslowing.EducationcostscontinuetoclimbwhilepressureonCongresstoparedownthebudgetdeficitmeansfederalaidwill,atbest,stayatcurrentlevels.Meanwhile,thenumberofstudentsattendingcollegesandtradeschoolsisexpectedtosoarasthechildrenofpost-warbaby-boomerscontinuematriculating.

Privatestudentloansarepopularwithlendersbecausetheyareprofitable.Lenderschargemarketratesfortheloans(theratesonfederalstudentloansarecapped)beforeaddingup-frontfees,whichcanthemselvesbearound6-7%oftheloan.SallieMae,astudent-loancompanyandbyfarthebiggestdispenserofprivatestudentloans,disclosedinitsmostrecentreportthattheaveragespreadonitsprivatestudentlendingwas4.75%,morethanthreetimesthe1.31%itmadeonitsfederallybackedloans.

Allofthisisgoodnewswhenlendersarehungryfornewareasofgrowthinthefaceofacoolingmortgagemarket.Privatestudentloans,saysMatthewSnowlingofFriedman,Billings,Ramsey,aninvestmentbank,areprobably“thefastest-growingsegmentofconsumerfinance—andbyfarthemostprofitableone—atatimewhenfindingassetgrowthischallenging.”LastDecemberJ.P.Morgan,whichalreadyhadasizeableeducation-financeunit,snappedupCollegiateFundingServices,aVirginia-basedprovideroffederalandprivatestudentloans.CompaniesfromBankofAmericatoGMAC,thefinancingarmofGeneralMotors,havejumpedin.Otherconsumer-financecompanies,suchasCapitalOne,arewhisperedtobeeyeingthemarket.

Inthebeginning...

HowlifeonEarthgotgoingisstillmysterious,butnotforwantofideas

NEVERmakeforecasts,especiallyaboutthefuture.SamuelGoldwyn'swiseadviceiswellillustratedbyapairofscientificpaperspublishedin1953.Bothwerethoughtbytheirauthorstobemilestonesonthepathtothesecretoflife,butonlyonehassofaramountedtomuch,anditwasnottheonethatcaughtthepublicimaginationatthetime.

JamesWatsonandFrancisCrick,whowrote“Astructurefordeoxyribosenucleicacid”,havebecomeasfamousasrockstarsforaskinghowlifeworksandtherebystartingalineofinquirythatledtotheHumanGenomeProject.StanleyMiller,bycontrast,thoughlaudedbyhispeers,languishesinobscurityasfarasthewiderworldisconcerned.Yetwhenitappeared,“ProductionofaminoacidsunderpossibleprimitiveEarthconditions”wasexpectedtobeginascientificprocessthatwouldsolveaprobleminsomewaysmoreprofoundthanhowlifeworksatthemoment—namelyhowitgotgoinginthefirstplaceonthesurfaceofasterilerock150mkmfromasmall,unregardedyellowstar.

DrMillerwasthefirsttoaddressthisquestionexperimentally.InspiredbyoneofCharlesDarwin'sideas,thattheingredientsoflifemighthaveformedbychemicalreactionsina“warm,littlepond”,hemixedthegasesthenthoughttohaveformedtheatmosphereoftheprimitiveEarth—methane,ammoniaandhydrogen—inaflaskhalf-fullofboilingwater,andpassedelectricsparks,mimickinglightning,throughthemforseveraldaystoseewhatwouldhappen.Whathappened,asthenameofthepapersuggests,wasaminoacids,thebuildingblocksofproteins.Theoriginoflifethenseemedwithingrasp.Butithaseludedresearcherseversince.Theyarestilllooking,though,andthisweekseveralofthemmetattheRoyalSociety,inLondon,toreviewprogress.

Theoriginquestionisreallythreesub-questions.Oneis,wheredidtherawmaterialsforlifecomefrom?ThatiswhatDrMillerwasasking.Thesecondis,howdidthoserawmaterialsspontaneouslyassemblethemselvesintothefirstobjecttowhichtheterm“alive”mightreasonablybeapplied?Thethirdis,how,havingoncecomeintoexistence,diditsurviveconditionsintheearlysolarsystem?

ThefirstquestionwasaddressedbyPatrickThaddeus,oftheHarvard-SmithsonianCentreforAstrophysics,andMaxBernstein,whoworksattheAmeslaboratory,inCalifornia,partofAmerica'sspaceagency,NASA.AsDrBernsteinsuccinctlyputit,thechemicalrawmaterialsforlife,intheformofsimplecompoundsthatcouldthenbeassembledintomorecomplexbiomolecules,couldcomefromabove,beloworbeyond.

Fulltobursting

Risinglevelsofcarbondioxidewilldumpevenmorewaterintotheoceans

THElungsoftheplanet,namelygreen-leafedplantsthatbreatheincarbondioxideandbreatheoutoxygen,alsoputwatervapourintotheatmosphere.Justaspeoplelosewaterthroughbreathing(thinkofthemistedmirrorusedtocheckforvitalsigns),so,too,doplants.Thequestionis,whateffectwillrisingconcentrationsofcarbondioxidehaveonthis?Theanswer,publishedinthisweek'sNaturebyNicolaGedneyofBritain'sMeteorologicalOfficeandhercolleagues,wouldappeartobe,lesswaterintheatmosphereandmoreintheoceans.

Measurementsofthevolumeofwaterthatriversreturntotheoceansshowthat,aroundtheworld,rivershavebecomefulleroverthepastcentury.Intheory,therearemanyreasonswhythiscouldbeso,butsomehavealreadybeendiscounted.Researchhasestablished,forexample,thatitisnot,overall,raining—orsnowing,hailingorsleeting—anymorethanitusedto.Butthereareotherpossibilities.Oneconcernschangesinlanduse,suchasdeforestationandurbanisation.Thesoilinruralareassoaksuptherainandtreesbreatheitbackintotheatmosphere,whereastheconcreteinurbanareastransfersrainwaterintodrainsandhenceintorivers.Anotherpossibilityis“solardimming”,inwhichaerosolparticlescreateahazyatmospherethatholdslesswater.Andthenthereisthedirecteffectofcarbondioxideonplanttranspiration.

DrGedneyusedastatisticaltechniquecalled“optimalfingerprinting”or“detectionandattribution”toidentifywhichofthesefourfactorsmatter.Herteamcarriedoutfivesimulationsofriverflowinthe20thcentury.Inthefirstofthesetheyallowedallfourexplanationstovary:rainfall,haze,atmosphericcarbondioxideandlanduse.Theythenheldoneofthemconstantineachofthenextfoursimulations.Bycomparingtheoutcomeofeachofthesewiththefirstsimulation,theteamgainedasenseofitspartintheoverallpicture.So,forexample,theyinferredtheroleoflandusebydeductingthesimulationinwhichitwasfixedfromthesimulationinwhichitvaried.

Aswithanystatisticalanalysis,theresultsareonlyasgoodasthemodel,theexperimentaldesignandthedata.DrGedneyandhercolleaguesacknowledgethattheirmodeldoesnotfullytakeintoaccounttheuseofwatertoirrigatecrops—particularlyimportantinAsiaandEurope—northequestionofurbangrowth.Theyargue,however,thattheseaspects,takentogether,wouldremovewaterfromrivers,whichmakestheirconclusionallthemorestriking.Anditisthis:fullerriverscannotbeexplainedbymorerainfallorhazeorchangesinlanduse,buttheycanbeexplainedbyhigherconcentrationsofatmosphericcarbondioxide.

Themechanismisstraightforward.Aplantbreathesthroughsmallholes,calledstomata,foundinitsleaves.Plantstakeincarbondioxide,andwhentheatmosphereisrelativelyrichinthisgas,lesseffortisneeded.Thestomatastayclosedforlonger,andlesswaterislosttotheatmosphere.Thismeansthattheplantdoesn'tneedtodrawasmuchmoisturefromthesoil.Theunusedwaterflowsintorivers.

Thegreattechbuy-outboom

Willtheenthusiasmofprivate-equityfirmsforinvestingintechnologyandtelecomsendintears,again?

PRIMECOMPUTERS,RhythmNetConnectionsandXOCommunications—allnamestodrainthebloodfromthefaceofaprivate-equityinvestor.Orsoitwasuntilrecently,wheninvestingintechnologyandtelecomssuddenlybecamealltherageforprivate-equitycompanies.Theseinvestmentfirms—labelled“locusts”byunfriendlyEuropeans—generallymaketheirmoneybybuyingbigcontrollingstakesincompanies,improvingtheirefficiency,andthensellingthemon.

Inthelate1980s,PrimeComputersbecameprivateequity'sfirstgreat“techwreck”,humiliatinginvestorswhothoughttheyunderstoodthetechnologybusinessandcouldnurturethefirmbacktohealthawayfromtheshorttermistpressuresofthepublicstockmarket.AfterPrimefailed,private-equityfirmsspentthebestpartofadecadefocusingsolelyontheoldeconomy.Onlyinthelate1990s,whentheneweconomywasalltherage,didtheypluckupthecouragetoreturntotechandtelecoms—adecisionsomeofthegrandestnamesintheindustryweresoontoregret.Hicks,Muse,FurstandTate(RhythmNetConnections)andForstmannLittle(XO)havebothbeenshadowsoftheiroldselvessincelosingfortunesontelecoms.

Now,investingintechnologyandtelecomsisonceagainoneofthehottestareasinthesuper-heatedprivateequitymarket.Themulti-billion-dollarquestionis:willthisroundofinvestmentendanylesshorriblythantheprevioustwo?

LastmonthTDC,aDanishphonecompany,wasfinallyacquiredafterabidof$15.3billionbyaconsortiumincludingEuropeangiantsPermiraAdvisorsandApaxPartners,andAmericanveteransKohlbergKravisRoberts(KKR),BlackstoneGroupandProvidenceEquityPartners.Inthepastfiveyears,therehasbeenprivate-equityinvolvementinabout40%oftelecomsdealsinEurope.

OntheothersideoftheAtlantic,theactionhasfocusedmainlyontechnology,ratherthantelecoms.Lastsummer,aconsortiumincludingSilverLakePartnersandKKRcompletedthebiggestprivate-equitytechdealtodate,buyingSunGardDataSystems,afinancial-technologyfirm,for$11.3billion.Sincethenthedealshavecontinuedtoflow.The$1.2billionacquisitionofSerenaSoftwarebySilverLakeisduetobecompletedbytheendofMarch.BlackstoneandothersaresaidtobecirclingtwoIToutsourcingfirms—ComputerSciencesandACS.

Therearereasonstohopethatthistimewillbedifferent.Intelecoms,forinstance,private-equityfirmsaremostlytryingtobuyestablishedfirms—oftenformernationalmonopolists—that,whiletheymightbethreatenedbyinternettelephony,havestrongcashflow,physicalassetsandplentyofscopetoimprovethequalityofmanagement.Thesearethesortsofcharacteristicsprivate-equityinvestorsthriveon.Bycontrast,thedisastrousinvestmentsinthelate1990swereinnewtelecomsfirmsthatwerebuildingtheiroperations.

Intechnology,private-equityinteresthasgrownastheindustryhasmatured,andcash-flowandprofitabilityhavebecomemorepredictable.Untilrecently,ithasbeenthenormfortechfirmstoploughbackalltheirprofitandcashflowintoinvestinginthebusiness.Theyhavecarriednodebtandpaidnodividends.Nowprivate-equityfirmsseetheopportunitytopursuetheirclassicstrategyofbuyingfirmsbyborrowingagainstcashflow,andthenreturningmoneytoshareholders.GlennHutchinsofSilverLakethinksthetechsectorisnowinasimilarconditiontotheoldeconomyinAmericaintheearly1980s,whichiswhenprivateequityfirststartedtohaveanimpact,byrestructuringandconsolidatingmanyindustries.

Howtoliveforever

Thelatestfromthewackyworldofanti-senescencetherapy

DEATHisafactoflife—atleastithasbeensofar.Humansgrowold.Fromearlyadulthood,performancestartstowane.Musclesbecomeprogressivelyweaker,cognitionfails.Butthepointatwhichageturnstoillhealthand,ultimately,deathisshifting—thatis,peopleareremaininghealthierforlonger.Andthatraisesthequestionofhowdeathmightbepostponed,andwhetheritmightbepostponedindefinitely.

Humansarecertainlylivinglonger.AnAmericanchildbornin1970couldexpecttolive70.8years.By2000,thathadincreasedto77years.Moreover,anadultstillaliveattheageof75in2002couldexpectafurther11.5yearsoflife.

Muchofthischangehasbeentheresultofimprovednutritionandbettermedicine.Buttoexperienceahealthyoldagealsoinvolvesmaintainingphysicalandmentalfunction.Age-relatednon-pathologicalchangesinthebrain,muscles,joints,immunesystem,lungsandheartmustbeminimised.Thesechangesarecalled“senescence”.

Researchshowsthatexercisecanhelptomaintainphysicalfunctionlateinlifeandthatexercisingone'sbraincanlimittheprogressionofsenescence.Otherwork—ontheeffectsofcaloricrestriction,consumingredwineandalteringgenesinyeast,miceandnematodes—hasshownpromiseinslowingsenescence.

TheapproachadvocatedbyAubreydeGreyoftheUniversityofCambridge,inEngland,andpresentedatlastweek'smeetingoftheAmericanAssociationfortheAdvancementofScience,israthermoreradical.Asanengineer,hefavoursinterveningdirectlytorepairthechangesinthebodythatarecausedbyageing.Thisisanapproachhedubs“strategiesforeng