HOW DO YOU SAY, "DON'T BE EVIL" IN MANDARIN? The answer: You can't, if you happen to be within earshot or eyeshot of the Beijing apparatchiks. Who would ever have thought that simple and rather bland admonition would trigger a confrontation between the world's two greatest powers, China and Google?
In fact, much as it grieves us to say so, it was all Google's fault. For the company had the effrontery to demonstrate that its corporate motto wasn't just a bit of inspirational fluff but actually was supposed to be, of all things, pertinent to its business practices. We know that Larry Page and Sergey Brin, who founded the company, are still youngsters as moguls go, but, really, who ever dreamed they'd be so naive as to try to live up to a smiley slogan?
When you get down to it, Google (ticker: GOOG) refrained from setting the behavioral bar too high. We mean, it doesn't urge either its management or its employees to be good, just to abstain from inflicting harm. And, as carpers fell all over each other in a rush to point out, the company hasn't always been on the side of the angels in its business tactics, and it did agree to bend to censorship when it entered the market four years ago.
To which we say, so what? Perfect isn't the point; summoning up the courage to stick your tongue out at blatant and treacherous abuse of power is.
"Don't be evil" seemingly doesn't lend itself to easy translation. Earnest attempts to do so by the Chinese somehow yielded only pornographic cuneiform that, regrettably, we can't pass along because it has no place in a family magazine. (Nor, we might interject, does porno video on the Internet, which, if we understand it correctly, is the official excuse for shutting down Google's YouTube site in China. We confess, it never occurred to us that was why YouTube is so popular.)
Clean living obviously ranks second only to party loyalty in the Chinese catechism. So the Sino cybernauts had no choice but to launch an attack on Google's computer systems to make sure everything on those systems was, by the ruling clique's lights, "kosher" (sorry, we don't know how you say that in Mandarin, either).
What they were particularly interested in were the identities of those bothersome pests, the dissidents, who are inclined to post all kinds of subversive messages online promoting such blasphemous notions as the Communist bosses don't know best about everything. Imagine! Just the sort of dangerous ideas that can make the natives restless, a rather disturbing prospect when you're talking a billion-odd natives.
And, of course, the authorities are so keen on discovering just who those dissidents are simply because they're eager to reason with them, and gently persuade them of the error of their ways. The persuasion process might take eight or 10 years, but, hey, what's the hurry? After all, the misguided activists are guaranteed three squares (or at least three slivers) a day and a whole 10 minutes in the exercise yard. If you happen to be in the neighborhood and listen carefully, you can hear them holler for joy.
Nor was Google singled out. All told, something like three dozen American companies were attacked on the odd chance they might have some data or info worth appropriating. Besides "don't be evil" and "kosher," the phrase "intellectual property" seemingly is alien to the Chinese lexicon.
Whether Google decides to act on its threat to pull out of Beijing refuses to curb its appetite for censorship, we'll find out in the weeks ahead. But just by making a public fuss over the invidious intrusions and the stifling grip of censorship, the company merits a big thumbs-up! And that such dispassionate sources as the Chinese government and Microsoft (MSFT), which has designs for its own search engine in the giant Sino market, disagree, merely reinforces our impulse to shout "bravo" to Google.
HOW MUCH THE FESTERING quarrel between China and Google exerted an overall effect on the market admittedly is arguable. Given stocks' abrupt retreat on Friday from 15-month highs set the day before, it's tempting to infer that the fracas, adding to a growing number of contentious issues between the U.S. and Beijing -- on currency manipulation, barriers to the Chinese market that make a mockery of free trade and some scattered retaliatory actions by us, Washington's decision to sell arms to Taiwan and the forthcoming official visit by the Dalai Lama -- raised the specter of a more serious chill in the relations between the two countries and helped cool investor enthusiasm.
More likely, we suspect, Friday's fall was caused by more mundane factors, like disappointing fourth-quarter operating results and some less-than-exhilarating economic reports. At the same time, the latest readings showed mounting optimism on the part of investors, both pros and do-it-yourselfers, usually a sign that, for a spell, anyway, the easy money had been made.
Investors Intelligence, which canvasses advisory services and treats them as an ideal contrary indicator (they're most excited about equities when the market is about to take a spill and most negative when it's poised to go up), found in its latest survey that 53.4% of them were bullish, the highest level since December of '07, not in retrospect the most propitious time to buy stocks. A scant 15.9% were bearish, just a fraction above the 15.6% a fortnight ago, which was a pessimistic low that goes back to April '87, a few months before equities were about to do a historic swan dive.
While for the most part, the public, still nursing its wounds from the portfolio devastation it absorbed in 2008 and early 2009, has not vigorously participated in the great 70% rally from last March's lows, it has begun to get its toes wet of late. That's reflected in the latest soundings of sentiment among members of the American Association of Individual Investors, which recorded 47.4% bullish and 26.9% bearish.
We might note that one sure indicator of at least incipient euphoria is a tendency among some technicians to downplay the Investors Intelligence numbers by contending that the real key is the growing number of those seers who are looking for a correction. No sooner did they run that one up the flagpole than the ranks of those anticipating a correction began to shrink and, besides, as the chaps who run the survey point out, most of the correction group are basically bullish.
YOU CAN'T HELP BUT FEEL just a tad sorry for the poor banks. On the face of it they've never had it so good: borrowing money from the Fed at zero interest and doing all sorts of interesting things with it, like lending it out (sparingly) at 5% and several notches higher, but also playing the runaway market big-time.
Yet they're the target of opprobrium from hoi polloi, who, poor souls, can't grasp that banks, as one of the mightiest of their chieftains recently declared, "do God's work." Of course, no one seems to have inquired, but the god he was referring to was Mammon.
According to a front-page piece in Friday's Wall Street Journal, the 38 top lenders enjoyed a record year in 2009, with revenues taking a great leap forward, to $449.6 billion from $306.2 billion in 2008. And their hard-working or something employees will receive an aggregate of $145.8 billion in compensation and benefits. Laboring for Mammon certainly pays off.
Still, bankers aren't all that chipper these days.
Not only are they reluctant to own up to what they do for fear of being at a minimum verbally assaulted, but they're also smack dab in the cross hairs of the dastardly politicians, who besides regularly scolding leading bankers in full view of the voting pubic, are busily devising ways and means to make them pay for their sins, not least in the form of taxes.
As it happens, banks were prominent losers in Friday's wide retreat and, indeed, they were among the prime causes of the market's turning tail and heading down. There were some reports of inexorably rising credit losses that disturbed investors. And then JPMorgan Chase (JPM), despite a strong rise in fourth-quarter earnings (they quadrupled), came in, as the cliché goes, a bit light in the revenue department.
Even more discouraging so far as investors were concerned, the top brass seemed less than ebullient about Chase's immediate prospects. It's not inconceivable, to be sure, that the big cheeses in banking, in order to cool the public rage and calm down the rabid politicians, are deliberating playing it humble. But, Freud shmeud, the CFO's warning of "cautious outlook, two words," was not a model of reassurance.
Nor was CEO Jamie Dimon wildly encouraging when he reckoned that things might be better in the second half. Which leaves the obvious possibility they might not and, in any event, appears to put a question mark on the five-plus months left in the first half.
As we've said, perhaps ad nauseam, expectations for the banks have far outraced likely results this year. But that's true as well for the market as a whole. To us, anyway, that suggests more disappointments and more reactions like Friday's
by,Barron's
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