The Risks and Rewards of Crisis Investing

Investors hate risk. So when one country sinks another's ship, killing 46 sailors, and threatens "all-out war," it sounds like a good time to sell, right? Wrong. Political crises sometimes can be a great time to buy. When South Korea released a report on May 19 proving that the North was behind a torpedo attack two months earlier, tensions heightened and stock prices tumbled. But steely-nerved investors swooped in, and those who bought a broad index of South Korean stocks at the low made a 12...

The Rational Optimist: How Prosperity Evolves

Matt Ridley sets out to prove that now is by far the best of times, and it's only going to keep getting better. Even today's greatest challenges, such as African poverty and climate change, are surmountable because of a remarkable human insight: that specialization and division of labor allow us to constantly improve our lot.

Forget Water Coolers—It's All About Hashtags Now

O. J. Simpson's low-speed chase, the blackout in the Northeast in 2003, Kanye "I'ma let you finish" West at the MTV Video Music Awards—these are the "common denominators" of our time, to borrow a phrase from NEWSWEEK's editor in chief, Jon Meacham. They are the water-cooler moments, the events that everyone talks about the next day at work, the connective tissue keeping American culture from liquefying into isolated pools of niche interest.And increasingly, they happen online. Every time...

Monopoly Comes to the App Store (and We're Not Talking About a Board Game)

Apple's next "magical" and "revolutionary" product? An iLegalDefenseTeam. According to the New York Post, the Department of Justice and Federal Trade Commission are negotiating over which of the two agencies will launch an antitrust inquiry against the company, now the third-largest in America (by market capitalization). A decision could be made within days, but at this point, it's just a rumor—neither the government nor Apple is confirming or denying anything. And even if true, an inquiry...

Facebook's Play to Take Over the Entire Internet

Mark Zuckerberg must read NEWSWEEK. For months now, Techtonic Shifts has implored him to open up the social graph—the Facebook data that describe our friendships, tastes, and more—and share it with the world. Back in February, we wrote,"If competition breeds innovation, closed systems kill it . . . Today, there's no war over who can better mine the social graph. That's because Facebook holds the only key, and for now, we're all locked inside." Facebook still holds the key, but...

Uncle Sam Wants Your Tweets

How does a tweet die? Quickly and quietly. As any Twitter user can attest, the rolling, unstoppable "tweet stream" has a short shelf life; any message older than a few hours has reached its expiration date. That all changed yesterday, when the Library of Congress announced (through its Twitter account, of course) that it would archive every public tweet ever made. That's right—every tweet, from the mind-numbing review of your sister-in-law's breakfast burrito to John Larroquette's...

Is Twitter Trying to Be Unimaginative at Making Money?

For much of the last two years, Silicon Valley's favorite parlor game has been guessing how Twitter would eventually make money. The much-hyped company is now valued at more than $1 billion, yet for its first three years of existence it had no meaningful revenues. At a conference last November, Twitter's chief operating officer, Dick Costolo, hinted that a business model was in the works, and that it would wow the tech punditry. "It will be fascinating and completely nontraditional," he...

As Goliath, Facebook Targets the Wrong David

Facebook won an important skirmish in the privacy wars this week. That is one way, at least, to read the news that the social-networking startup successfully forced Pete Warden, a tech entrepreneur and former Apple engineer, to delete a data set culled from Facebook's public profile pages. Warden had spent several months and tens of thousands of dollars crawling the public pages and collecting data on individuals—their location, fan pages, and a sampling of their friendships....

Pretending We're Not In a Trade War

Even in the darkest days of the recession, as job reports registered stomach-flipping descents, politicians around the globe swore not to give in to protectionism. Now, as the economy starts to stabilize, the World Trade Organization has offered them a muted congratulations. Its analysis of anti-free trade actions in 2009 reveals some minor slippage, but in general "paints a reassuring picture." But like all self-portraits, this one tends to flatter the painter. The WTO relies on countries to...

On Chatroulette, Even a Great Pianist Doesn't Impress

Last week the nebulae swirled, the interstellar dust motesaccreted, and a Web star was born: Merton, a.k.a. the Chatroulette piano-improvguy. First, for those of you living off the grid (or actually using their computer to, youknow, work), here's a little background: Chatroulette is the latest Webfad, a stripped-down site that randomly connects you and a stranger via Webcam. If you don't like your chat partner, hit "next," and within secondsanother in a near-infinite line of anonymous strangers...

Europe Should Not Curtail Credit Default Swaps

Greek Prime Minister George Papandreou claims to have discovered the culprit behind his country's economic misery, and last week he laid out his indictment. In a speech in D.C., he blamed hedge funds and other speculators for driving up the borrowing costs of his cash-strapped nation. In particular, credit default swaps--financial derivatives that act like insurance for bondholders--are a "scourge that haunts Greece and all of us," he said. By mid-week, German Chancellor Angela Merkel and...

LastHistory Mashes Up Your Music and Photo Timelines

You would hate my iPod. But not because my taste in music is bad. It's actually quite good. (Don't take my word for it, though. Judge for yourself.) But rather than rely on recognizable groupings like "Indie Electronica" or "Party Mix!!!," my iPod is chronologically ordered, like an audio diary. The playlists on it are primarily for the benefit of my nostalgia. The songs on "2006-03-March," for example, instantly evoke early spring, redwood forests, and a road trip down the California...

I Am Not Sgt. Sperm Donor: Why Facebook Should Open the Social Graph

At this point, Facebook owns your social life. The site, which just overtook Yahoo to become the second most visited Web destination in the U.S., has had six years to record all the photo tags, friend requests, and pokes made by its 400 million users. The result is a well-developed social graph—a tangled ball of twine that describes how we connect to one another and what we care about. Facebook intends to keep that information to itself for as long as it can. The company has been compared to...

Battling For Good Health in Congo

War may indeed be hell, but hell, apparently, isn't all that bad for your health. According to a new study, during most armed conflicts since the 1970s mortality rates have actually declined. That's not to say that war, in and of itself, leads to longer life spans. Instead, a major reason for the drop is that conflict has become an impetus for international humanitarian groups to ramp up their efforts in a poor country, and they've learned to work public-health miracles in a...

Why Haiti Is Without Parallel

If death toll is the sole metric used, the world has known worse disasters than Haiti's earthquake--China's 1976 Tangshan quake left more than 200,000 dead, as did the 2004 Indian Ocean tsunami. But few catastrophes have decapitated a city as essential to a nation as Port-au-Prince is to Haiti. It is the country's commercial, political, and cultural heart, and home to one third of its 9 million residents. Disaster historians have to grope for a proper parallel. In the past...

2010 Prediction: The Year of the Paid Subscription

This year the Web turns 21. So it's somewhat ironic that 2010 will also be the year the place finally sobers up.Many of the startups and media sites that define the e-commerce ecosystem are, at long last, making serious plans to make serious money.  Hulu, the slick portal that picked up where TiVo left off in killing the idea of "appointment television," is the free site likeliest to begin charging in 2010. Chase Carey, a top executive of News Corp., which owns 27 percent of Hulu,...

This Decade, It's an Apple-Google Slugfest.

Google's new "superphone," the Nexus One, stole all the headlines yesterday, but there was another bit of tech news worth trumpeting: Apple's reported $275 million purchase of Quattro Wireless, a mobile advertising platform. True, mobile advertising isn't as sexy as a sleek new gadget. But the Quattro purchase highlighted the fact that there are really only two tech companies worth caring about anymore, and the lines between them are growing blurry. It used to be that Apple made the hardware...

Why Markets Aren't Efficient

Remember when everybody thought that markets were all-knowing? Before the financial crisis struck in late 2008, the reigning dogma in economics was the "efficient-markets hypothesis," an idea popularized by Eugene Fama that enjoyed exalted status for more than three decades. EMH, as economists call it, posits that markets reflect all available information, that investors are rational, and that prices are stable. While anyone without a Ph.D. or an M.B.A. probably immediately recognized the flaws...

The True Cost of Fixing the Climate

Despite the brouhaha over stolen e-mails from the University of East Anglia, the science of climate change is well enough established by now that we can move on to the essential question: what's the damage going to be?The total bill, if emissions are left unchecked, could reach 20 percent of annual per capita income, says Nicholas Stern, the British economist who led an influential Whitehall-sponsored study. That's ruinous—the world hasn't seen a drop in living standards like that since,...

Australian PM Rudd on Climate Change, Copenhagen

Australian Prime Minister Kevin Rudd has bulletproof green credentials—his first act as P.M. was to sign the Kyoto Protocol, forcing his country to slash carbon emissions. In December he'll play a key role in negotiating Kyoto's successor at the Copenhagen climate-change conference. He spoke with Newsweek's Barrett Sheridan about the global talks. Excerpts: What needs to happen at Copenhagen for it to be considered a success?I believe that we need, at a minimum, a political agreement...

I Switched From Firefox to Internet Explorer─And Lived to Tell!

I am a loyal Firefox user. I love the tabs, the extensions, the customization. It's fast and free and, because it's an open-source project organized by a nonprofit in Silicon Valley, it gives me a warm, fuzzy, volunteering-at-the-soup-kitchen kind of feeling. I love watching its market share grow, from 15 percent in 2007 to 23 percent today. Each uptick in the chart is like a poke in the red, gleaming, robotic eye of our technological overlord, Microsoft, and its crusty workhorse, Internet...

The Waning Power of the Bully Pulpit

President Barack Obama didn't reveal any sweeping new policies in his speech on financial reform at Federal Hall today. In fact, most of it was a rehash of the wonkish proposals already put forward by Treasury Secretary Tim Geithner and others. Most notably, the Administration will work with Congress to create a Consumer Financial Protection Agency that will -- in theory, at least -- keep banks from pushing exploding mortgages to uninformed consumers. They'll make the Federal Reserve...

Paul Romer's Charter Cities

The secret to turning a poor nation into a rich one can't be found in a World Bank report. Rather, it comes from the British Empire. That's one way, at least, of interpreting U.S. economist Paul Romer's new plan for transforming economically backward countries such as Cuba into engines of growth. Experts have long known that traditional tools of development--free trade, foreign investment, charity--have failed as many countries as they've helped. The rot in a...

Somalia Illustrates the High Cost of Failed States

Secretary of State Hillary Clinton's Africa visit earlier this month disappointed experts who'd hoped for groundbreaking new policies. But it certainly made one man happy: Sheik Sharif Sheik Ahmed, president of Somalia's transitional government, who won promises of more money, equipment, and training for his beleaguered country. If the promised millions have much effect, Washington will be getting a bargain. The global cost of anarchy in Somalia and other failed states like Haiti is far higher...

Elections Don't Curb Violence in Developing World

The pictures are certainly gripping: a purple index finger in Iraq, a line of burqa-clad women in Afghanistan. International officials who oversee rebuilding countries often try to nudge them toward democracy as soon as possible. But political scientists now think that's getting it backward. Paul Collier, a professor at Oxford and author of The Bottom Billion, has run exhaustive studies of post-conflict societies, to learn what factors lead to peace. His conclusion? Elections don't help....

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