Copyleft integral to copyright

Without copyright, copyleft programmers may not be open to public release of their work, says Dr Bhaskar Dasgupta.

The India Babble
After having spent the first three days of the week in middling territory, trading between 3600 and 3650, the markets went up on Thursday and on Friday above 3700, before falling back and closing at 3676. Selling pressure with profit taking was evident over Monday, Tuesday and Wednesday.

Maruti listed on Wednesday but the general euphoria was dampened by the profit taking push
by the market participants. On Thursday, good results from Infosys helped in turning the market sentiment, especially in the tech stocks. Besides this good piece of news, the PSU stocks got a good steam after the Indian Cabinet Committee on Disinvestment announced fresh privatisation initiatives. The government will disinvest from 3 PSU's - Hindustan Copper Limited, National Fertiliser Limited and Mineral Exploration Corporation. Moreover, further disinvestment is proposed for DCI, CMC, VSNL, IPCL IBP and Balco, firms which have been privatised over the past few years.

The Civil Aviation Minister announced that a new civil aviation policy will be released in the next few months and the pious hope is, that it will create a level playing field for private and public entities in this sphere. I do not know what it is about civil aviation and the mantri's and babu's in power but it always gives them the opportunity to show up their total lack of intelligence and utter stupidity, time after time after time. For a country which is so large like India and desperate for good transportation links, this intellectual vacuity is criminal.

I realise that domestic air travel is expensive, but prices have come down significantly so that it competes with first class rail travel and in many cases, can literally open up regions to business and investment. How many times can one imagine that a factory or office has not opened because of bad rail links? Check out the Airports Authority of India website, http://civilaviation.nic.in/aai/airport.htm#EXPERTISE, it shows the rather tragic state of affairs, not to mention anything about the atrocious website.

Speaking to a very interesting gentleman from the Liberty Institute, http://www.libertyindia.org/, he mentioned that out of 400 odd airfields in the country, only 46 airfields are in regular use. I would strongly recommend this website for good economic analysis and to show the budding growth of rigorous institutional policy analysis in India. Ideologically biased policy has been implemented too long and this institute gives a clear slant to many a tough Indian subject.

The foreign institutional investors have been a significant factor in the rally over the past weeks and as with the US market, the corporate results due in the next few will really put the stamp on the rally, either support it or weaken it considerably. Based on initial estimates, it looks like the corporate results will be good, so I would tentatively put on my prediction hat and prophesy that the markets will gather a nice bullish trend with good depth. Couple of good numbers: The CMIE projected a growth rate of 6.5 per cent for this year, while industrial production was up 6 per cent in May of this year. So, to wind it up, good numbers, good initial performance and Pandora is in DA house!

The Babble in the Ivory Towers
A fascinating paper by Mikko Mustonen of the University of Helsinki explores the concept of copyleft, entitled, "Copyleft-the economics of Linux and other open source software". The author analyses the relationship between copyleft and copyright programs, their development costs, quality, customers, monopoly power and behaviour of programmers in both the copyleft and copyright parts of the industry. It turns out that the program implementation cost is critical and determines the behaviour of the consumers. In other words, if the implementation cost is low, then the monopoly power is constrained in its pricing power.

The other aspect is the influence of programmers on copyleft programs, which are driven more by recognition rather than monetary considerations if employed in the copyright software firm. It should be noted that copyleft programmers help out without reference to consumer markets. One key aspect that the author makes is that the existence of copyleft is based on a rigorous enforcement of copyright. If copyright is not enforced, then copyleft programmers may not be willing to release their work into the public domain.

A really good analytical study, which should be required reading to all nations who want to build up their IT industries, such as Malaysia, India, Indonesia, Thailand, etc. Both copyleft and copyright products are good for the market, both, in a way, help in the development of a good solid base of programming excellence. Enforcement of copyright is vital and in some of the countries mentioned above, copyright is observed more in abeyance than any firm belief.

Till piracy is stamped out, the nation will keep on losing potential revenues. Of course, software pricing is a related matter, but piracy is even worse and can devastate the key part of intellectual property rights development and economic development.

Details of this paper and past columns are available on http://beady.blogspot.com

The World Babble
Ok, so this week's performance was nothing to write home about, the DOW and S&P500 barely closed at the same level as the weekly open, while the NASDAQ did much better and closed 4.2 per cent up on the week. Microsoft abandoned the stock options scheme and for such a bell-weather firm to abandon a key cornerstone of the compensation policy of the tech stocks, it means that the
days of stock options are numbered.

Several billion dollar bids were announced and this provided some meat to the M&A sector and the banking sector got a fillip. Dana went after ArvinMeritor, EMC bid for Legato and Yellow bid for Roadway and since these are all in several sectors, the whole market got some good news about the corporate feelings about future performance as M&A is a very good indicator of future expectations. GE, Yahoo and Scholastic reported lower quarterly profits but met analyst expectations.

US unemployment figures rose by a tiny amount of 1000 and this is the 19th week that the figures are above the important 400k mark. While there are faint signs of economic recovery, the labour market is still very tight and people are finding it difficult to get jobs. On the pricing front, thedepreciation of the US dollar caused the price of imported goods to rise by 0.8 per cent in June. This will hopefully be a good sign in pushing inflation up a wee bit. The US trade deficit in May rose to $41.8Bn from $41.65Bn in April. This is bad news, as the annual deficit could well be at half a trillion dollars this year and funding this will become progressively difficult.

The bond market was much more relaxed this week after last week's worry about the bond bubble, but is still keeping a wary eye out for next week's earnings results, the speech by Alan Greenspan and the other important economic numbers due out next week.

Europe wasn't really that different and the FT Eurotop 300 index barely ended up 5 points up at 865 from a start of about 860, and this tiny upswing was mostly driven by carmakers and insurers. Just as in the States, the earnings season is going to enter full gear next week and the signs are not as good, I am afraid. The tech stocks are not pulling their weight in Europe, Nokia dropped and next week Ericsson, Phillips and SAP will weigh in with their results. Keep those nails free. Whether the impact of the lower interest rates and the appreciated euro will impact the earnings, it is anybody's guess. So there is a fair bit of profit taking after the recent rally and quite understandable, too.

The European Central Bank did not cut interest rates and with companies like Total, Wolseley, Business Objects all reported rather disappointing news. On the other hand, the Bank of England did cut interest rates to 3.5 per cent, a level not seen since 1955. The new Bank of England Governor, Mervyn King said that this rate cut was an insurance against the hesitant global recovery. This UK rate cut pushed gilt yields up and the sterling took a dive against both the euro and dollar while the Footsie meandered all over the place all through the week and barely ended up in positive territory at 4058.

The Nikkei 225 Average fell off the cliff after fears that the rally had gone on too long. The index, after having gone beyond 10,000, fell back to almost 9,600 before recovering a wee bit to close at 9713. With the international market participants hoping that Japan will take up the slack which the Euro land and USA are not taking up, they pumped in serious sums of money into the Japanese markets, but it looks like this optimism has run its course and will mean a subdued trading session for the forthcoming weeks.

The foreign exchange markets are nervous all right, with the far east frantically intervening in the markets to try and maintain their rates against the dollar, the Chinese Yuan and Hong Kong Dollar pegged, the whole load of appreciation is falling on the Euro and it is slowly starting to get even more painful. While the South East Asian central banks are heavy investors in the US treasury market, one wonders as to how long will this situation last. If China decides to change the Yuan's valuation, it will set off a cascading chain reaction of competitive revaluations of all the Asian currencies and that will not be good at all. Mind you, the chances of China doing anything with the Yuan is very far fetched, the Chinese economy is not quite in the right condition to take a shock like this.

On the trade front, the USA got a bit of a shock when the WTO ruled against the US government's import duties on steel and said that the duties were illegal. The complaints launched by the European Union and 7 other countries claimed that the US import duties were hurting their domestic producers. It is a certainty that the USA will appeal against this judgement, which will allow the duties to remain for some more time. Bearing in mind that it wasn't really the import of low cost steel which was hurting the US producers, but its major problem was the huge overhang of health care and pension liabilities. I suspect the USA will try to incorporate this steel issue along with other WTO issues such as the GM foods, foreign sales corporation export subsidies, and agricultural subsidies in the forthcoming Cancun meet. That promises to be a rollicking discussion. Oh! To be a fly on that wall!

(Dr Bhaskar Dasgupta writes a weekly Monday round-up on markets and indicators. He holds a Doctorate in Finance and Artificial Intelligence from Manchester Business School and works in London in diverse capacities in the banking sector.)