Paramount Vantage, the Los Angeles distributor of Kite Runner, has decided to delay the release of the film because of concerns over the safety of it’s child actors, and the possibility that it could set off ethnic violence in Afghanistan. As reported in the New York Times:

The boys (actors) and their relatives are now accusing the filmmakers of mistreatment, and warnings have been relayed to the studio from Afghan and American officials and aid workers that the movie could aggravate simmering enmities between the politically dominant Pashtun and the long-oppressed Hazara.

In an effort to prevent not only a public-relations disaster but also possible violence, studio lawyers and marketing bosses have employed a stranger-than-fiction team of consultants. In August they sent a retired Central Intelligence Agency counterterrorism operative in the region to Kabul to assess the dangers facing the child actors. And on Sunday a Washington-based political adviser flew to the United Arab Emirates to arrange a safe haven for the boys and their relatives.

“If we’re being overly cautious, that’s O.K.,” Karen Magid, a lawyer for Paramount, said. “We’re in uncharted territory.” In interviews, more than a dozen people involved in the studio’s response described grappling with vexing questions: testing the limits of corporate responsibility, wondering who was exploiting whom and pondering the price of on-screen authenticity.

The Kite Runner is based on the best-selling novel by Khaled Hosseini that spans three decades of war in Afghanistan. It is about a friendship between two Afghan boys- one a Pashtun and one a Hazara, but the storyline includes a rape of the Hazara boy by a Pashtun. The film’s director, Marc Forster made the film in Dari, an Afghan language. He has said that casting the two young Afghan actors did not seem risky at the time, but the situation there has since deteriorated and ethnic tensions are on the rise. In late July, violence worsened in Kabul, so Paramount executives turned to lobbyists for Viacom- their Parent Company, for help. They recommended that John Kiriakou, a retired C.I.A. operative with experience in the region, be sent to assess the situation. As the New York Times reported, Mr. Kiriakou’s briefing “could make a pretty good movie by itself”:

A specialist on Islam at the State Department nearly wept envisioning a “Danish-cartoons situation,” Mr. Kiriakou said. An Afghan literature professor, he added, said Paramount was “willing to burn an already scorched nation for a fistful of dollars.” The head of an Afghan political party said the movie would energize the Taliban. Nearly everyone Mr. Kiriakou met said that the boys had to be removed from Afghanistan for their safety. And a Hazara member of Parliament warned that Pashtun and Hazara “would be killing each other every night” in response to the film’s depiction of them. None of the interviewees had seen the movie.

While the Taliban destroyed all movie theaters in Afghanistan, bootleg DVDs often appear on the streets of Kabul shortly after a major film is released. It is likely that Kite Runner will be released after some time has passed and the safety of the child actors can be assured.

The U.S. General Services Administration accidentally “deleted” government website addresses for entire State of California yesterday. As a result, state government websites were unavailable to the public for most of the day until the system was restored late Tuesday. As explained in Network World:

Even the government shudders when someone says they’re from the government and they’re here to help. Case in point: A hacker’s diversion of traffic from a California county government Web site to a porn purveyor spiraled into IT chaos yesterday after a countermeasure applied from Washington essentially “deleted the ca.gov domain.”

Order was restored only after seven hours of frenzied coast-to-coast communications and a “forced propagation” of ca.gov network systems, according to Jim Hanacek, public information officer for the California Department of Technology Services.

“We don’t for sure have the whole picture, but as we understand it, there was some event at the Transportation Authority of Marin Country where their site got hacked,” Hanacek told me this afternoon. Traffic was being redirected from that site to one featuring pornography.

A department within the U.S. General Services Administration in Washington oversees and polices the .gov domain. “The federal government saw this incorrect use of ca.gov and they made a change at a much more global level than probably was necessary and it started taking down all of our ca.gov domain,” says Hanacek. “That impacted Web access and e-mail services.”

A Network World reader whose brother works for a California state agency forwarded me an e-mail alert that his brother received: “The Department of Technology Services (DTS) has notified us that the Federal Government inadvertently deleted the CA.GOV domain. As the evening progresses you may experience an impact in your ability to access some Web sites and exchange e-mail. DTS is working with their federal counterparts to restore service as quickly as possible but service may not be restored until tomorrow morning.”

The change from Washington was made around noontime yesterday on the West Coast … and things quickly got worse. “Unfortunately there was no prior notification, they just made the change and sent us an e-mail to one of our administrators who wouldn’t be a normal contact,” Hanacek says. “Once that person saw the e-mail and started looking we determined how serious this could be and we opened our emergency operations center. Unfortunately that was about 3 in the afternoon and folks back East were already going home, so it took us some time to get hold of the right people in the General Service Administration to get this address reinstated.”

Those corrections began between 4 and 5 p.m. PT but didn’t restore full normalcy until about 7:30 p.m. Hanacek indicated that California’s IT people will be having a chat with their Washington counterparts: “We’ll certainly be discussing how we should be notified of a change of this magnitude.”

The International Centre for Settlement of Investment Disputes in Washington, D.C., has awarded Sempra Energy $172 million according to a report in the San Diego Business Journal. The award was to settle a 2002 dispute involving the company’s 43 percent ownership in two Argentine natural gas holding companies. “We hope that the government of Argentina will honor its legal obligations as we seek immediate enforcement of the award,” said Javade Chaudhri, executive vice president and general counsel for Sempra. Sempra had the interest in Sodigas Pampeana and Sodigas Sur. In a statement, Sempra says the dispute involved its efforts to recover the utilities’ diminution in value that occurred as a result of measures taken by the Argentine government in 2002.

Interesting article in the San Francisco Chronicle:

Around the globe, the falling dollar is touching everyone in the business world, from Saudi oil princes to U.S. computer-makers, making American goods and services cheaper while raising the cost of foreign products.

One effect that hasn’t received much attention is how the dollar’s relentless drop is throwing a bit of sand into the gears of India’s vaunted technology machine. That movement of technology operations to India is a trend that has emerged as a prime symbol of globalization in recent years.

The reason U.S. companies went to India for technology in the first place was to save money. Workers there in the outsourcing sector earn roughly one-eighth as much as their American counterparts, according to experts on India business. And software development services that might cost $200 to $275 per person per hour in the United States can be purchased from an Indian company for $25 an hour or less, those experts note.

The past year, the dollar has fallen from about 45 rupees to about 39. That 13 percent drop, on top of significant pay increases there, has shaved part of the Indian cost advantage, forcing both buyers and sellers of technology services to adapt. And economists expect the rupee to strengthen over the long term as India’s economy matures.

“We are facing some tough questions. It’s not an easy process,” said GK Murthy, senior vice president with Sierra Atlantic, a Fremont business software services company that does most of its programming in India.

One ironic bit of fallout from the falling dollar: Big Indian software companies are stepping up their hiring of American tech workers, who have suddenly become a lot cheaper to employ. For example, Bangalore technology giant Wipro Technologies recently unveiled a plan for a software development center in the Atlanta area that ultimately could hire 500 programmers.

Full article: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/10/01/BU6USGDH9.DTL&feed=rss.business

That’s according the the “Good Morning Silicon Valley” newsletter:

In what will undoubtedly be a blow to the Skype founders’ seller rating, eBay finally acknowledged that its bid for the VoIP firm may have been a tad overenthusiastic and that whatever expectations it had were not being met. EBay announced that in the quarter just ended, it will take $1.4 billion in write-offs and charges related to the Skype acquisition. About $530 million will go to former Skype shareholders to help them forget about those additional performance-based payouts. And eBay will write off about $900 million in Skype-related “goodwill” to more accurately reflect the acquisition’s value. And just in case the message wasn’t clear, Skype co-founder Niklas Zennstrom was eased out of the CEO’s office and given the non-executive chairman’s seat at the Skype board table.

According to a report in the Los Angeles Times, Time Warner Inc.’s Warner Bros. studio struck a multibillion-dollar joint venture deal Wednesday with two Abu Dhabi companies that will build a huge entertainment complex in the Persian Gulf region:

The partners have agreed to build a theme park, a hotel and multiplex cinemas in Abu Dhabi, the leading power in the United Arab Emirates. They also plan to produce movies and video games as well as undertake Web initiatives as part of the deal, which is arguably the most ambitious gamble yet by a U.S. entertainment giant in a region traditionally wary of Western culture.

Flush with cash from the oil boom, the Persian Gulf monarchies have been in a race to attract foreign investment in real estate, finance, healthcare and technology. Over the last year, Abu Dhabi and its smaller neighbor Dubai have made cross-cultural alliances with Universal Studios and Paramount Pictures in an effort to establish entertainment hubs in the Arab world…

Bahrain has emerged as a center for consumerism and tourism in the Middle East. Establishing an entertainment beachhead is seen by the emirates as helping to shake its reputation as lacking cultural attractions. The strategic alliance between Warner Bros.; ALDAR Properties, Abu Dhabi’s leading real estate developer; and the newly established Abu Dhabi Media Co. represents the Burbank-based studio’s first venture into the region.

“We think it’s a region of the world that has great potential and opportunities on many levels,” Warner Bros. Chairman and Chief Executive Barry Meyer said. “This is a unique arrangement for us. There’s nothing of the size, scope and breadth that encompasses so many of our businesses.”

In a conference call with Meyer from Time Warner’s corporate headquarters in New York, top executives from ALDAR and Abu Dhabi Media also expressed enthusiasm for the new arrangement. “We’ve found the right partner to start building our entertainment and media infrastructure,” said Ahmed Ali Al Sayegh, chairman of ALDAR. “In the next five years, we hope to be the leader in the region. To do that, we need to attract world-class names, and Warner Bros. is certainly a very trusted name.”

According to Voice of America News:

Two U.S. Congressmen have introduced legislation aimed at improving America’s image abroad by promoting international tourism to the United States. The bill would establish a competitive $50 million grant to boost international business and leisure travel to America from five target countries. As VOA’s Cindy Saine reports from Washington, the program will also seek to give foreign tourists a friendlier welcome at U.S. airports and other entry points.

At a news conference on Capitol Hill, Congressman Sam Farr, a Democrat representing California’s scenic central coast, summed up how fewer foreign tourists are coming to America. “International travelers aren’t coming to America and figures show it,” said Sam Farr. “The U.S. has experienced a 17- percent decline in overseas visitors since September 11, 2001.”

Congressman Farr says he believes Americans are among the friendliest, most helpful and most accepting people in the world. But he thinks the current “fortress America” image comes from a combination of factors. “Kids have access to Ipods and media, they’ve just seen America as a very violent country, they’re afraid to come here,” he said. “Frequent travelers find that when they come now they get hassled and it’s uncomfortable for them, they are distinguished people.”

The co-sponsor of the tourism bill, Representative Jon Porter, says the U.S. should be secure and welcoming at the same time. “The problem is that right now there is this perception that we’re not as friendly as we really are,” said Jon Porter. “And because of our emphasis on security, homeland security, I think that the pendulum has swung too far, and that is how we are treating our visitors.”

A majority of Californians expect the economy to worsen over the next year as housing sales plunge and more residents lose their homes to foreclosure, according to the results of a poll conducted by the Public Policy Institute of California. Fifty-nine percent of adults expect “bad times” financially over the next 12 months, a jump of 10 percentage points since June, according to the survey. “There has been a significant shift in attitude this year,” Mark Baldassare, the president of the institute, said in a statement. “For so many people, the feeling of overall financial well-being is tied to the value of their homes, something that seems increasingly threatened as they see sales slow, prices dip, and foreclosures rise.” Pessimism about the state’s economy cuts across all regions and income levels and is similar for those who own and rent homes, according to the poll.

Press Release:

AT&T today announced a $500,000 contribution to be paid over the next two years to the Mexican American Opportunity Foundation (MAOF), a community-based organization providing a wide range of family services to low-income residents throughout California. The contribution will fund a pilot program called “BeSchoolReady”, an Internet-based educational tool that introduces young children to computer technology through Internet-delivered learning modules designed to develop learning, language and cognitive skills. The purpose of the program is to prepare preschool students to begin their formal education and increase their chances of kindergarten success.

AT&T’s contribution will provide over 1,300 preschool students from low-income families within the next two years with the opportunity to use the BeSchoolReady program. For many children, and their parents, it will be a first-time experience with computers, so the project also helps to encourage technology literacy in the Latino community. MAOF preschool children are already using the BeSchoolReady web program at several Los Angeles County MAOF Centers.

“We are thrilled to partner with AT&T to help encourage technology literacy in the Latino community,” explained Martin Castro, MAOF President & CEO. “The launch of the BeSchoolReady program will help ensure our preschoolers are comfortable with computers and can be better prepared to succeed in the public school system when they enter kindergarten.”

San Mateo-based Menlo Worldwide LLC, a provider of logistics, transportation management and supply chain services announced the opening of its new European headquarters in Holland. According to the San Jose / Silicon Valley Business Journal, Menlo, a subsidiary of Con-way Inc. the 70,000-square-foot facility is near Amsterdam’s Schiphol Airport:

The center is Menlo Worldwide’s fourth-largest of eight distribution and logistics centers in Europe serving customers in the high-tech industry as well as other markets, the company said. “As the center of an extensive network connecting the rest of Europe, Amsterdam is a crucial market for Menlo and our customers,” said Gert Askes, managing director of European Operations. “The proximity of this new facility to the airport and customs is ideal and allows us very fast turnaround times. It is also a state-of-the-art building, perfectly suited to support the requirements of our high-tech clientele.”

That’s according to a report in the San Francisco Chronicle:

Bad news came in threes for the real estate industry Tuesday as two nationwide economic reports and one from California showed the housing slump is accelerating. California home sales plunged nearly 30 percent last month compared with August 2006 and median prices dropped by almost 14 percent in the High Desert area and part of Santa Barbara County, the California Association of Realtors said Tuesday.

In the Bay Area, sales of existing homes dropped 26.5 percent in the same time period, but, because of more sales at the higher end of the market, the median price of a single-family home actually rose 9.9 percent from August 2006, to $832,760. That was down about 1.1 percent from July’s median of $841,660. For the entire state, the median price edged up 2 percent to $588,970. But analysts at the trade group pointed out that prices were weak in nine geographic regions and at the lower end of the market. The median price of an entry-level home – anything less $500,000 in California – dropped 5.1 percent in August to $349,360.

In addition, the inventory of unsold homes was 11.8 months in August, compared with 5.9 months in August 2006. The figure represents the number of months it would take to sell all the homes currently on the market. “The credit crunch emerged as uncertainty about the extent of the subprime problem drove investors across the globe to turn off the tap of funds to lenders in mortgage and other credit market segments. With credit drying up, even qualified buyers were unable to receive funding for home purchases,” Leslie Appleton-Young, the trade group’s chief economist, said in a news release…

Some economists warned that even worse news could be ahead because of the financial market turbulence in August. “August’s sales do not reflect the full impact of the credit crunch, which hit financial markets in mid-month, since most sales were financed with loans approved weeks beforehand,” said Patrick Newport, an economist at Global Insight.

Trimble Navigation Ltd. acquired Kirchheim, Germany-based Ingenieurburo Breining GmbH- a German company that provides custom field data collection and office software for the survey market. , Sunnyvale-based Trimble did not disclose financial or other terms of its deal with Breining. According to a report in the San Jose / Silicon Valley Business Journal, Trimble said the addition of Breining software, expertise and products will help the company address local application requirements and provide custom survey products for the German market. Trimble focuses on GPS, construction lasers, robotic total stations and machine control solutions and has more than 3,400 employees in over 18 countries.

The courts do not have the authority or the expertise to decide injury lawsuits concerning global warming, a judge in San Francisco ruled in dismissing a suit brought by the State of California against six auto companies. The State of California claimed that these companies produced vehicles that accounted for more than 20 percent of human-generated carbon dioxide emissions in the United States and more than 30 percent of those emitted in California, and sought billions of dollars in damages. Judge Martin Jenkins, however, did not believe this was an appropriate role for the courts: “The adjudication of plaintiff’s claim would require the court to balance the competing interests of reducing global warming emissions and the interests of advancing and preserving economic and industrial development,” Jenkins wrote.

Overseas international flights at Los Angeles International Airport (LAX) make a substantial contribution to the economy of Southern California, adding $82.1 billion in total economic output, according to a study by the Los Angeles County Economic Development Corporation (LAEDC) and other organizations. he LAEDC study revealed that the LAX flights created 363,700 direct and indirect jobs with annual wages of $19.3 billion in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura Counties in 2006. Over the course of 2006, an average transoceanic flight traveling round-trip from LAX every day added $623 million in economic output and sustained 3,120 direct and indirect jobs in Southern California with $156 million in wages. The economic output, jobs, and wages were calculated from the production and transportation of freight exports (carried in the belly of the plane), the transportation of freight imports, the operation of the airport itself, and the purchases made by international visitors on the flights. Freight exports (which are generally high-value items) accounted for over 80% of the annual economic activity generated by international flights at LAX.

From today’s San Francisco Chronicle:

The number of homes entering the foreclosure process hit a record high in the second quarter, but things are going to get even worse over the next 12 months, when millions of borrowers see the interest rate on their adjustable-rate mortgages reset for the first time. ARMs are tied to short-term interest rates but are typically fixed for a few years before they begin adjusting. Because short-term rates have increased dramatically, many homeowners will face payment shock when their rates adjust. In a meeting with mortgage servicers Wednesday, Treasury Secretary Henry Paulson said, “We’ve been experiencing market turbulence, and as I’ve said for a while, this will take some time to work its way out.” …

About $1.1 trillion of adjustable-rate mortgages were scheduled to reset for the first time in 2007 and 2008, according to First American LoanPerformance. These represent about 10 percent of all mortgages outstanding. Virtually all these ARMs will reset at higher rates – in many cases much higher – resulting in bigger payments for homeowners. Reset activity is likely to peak in the fourth quarter of this year and the first quarter of next year… Well over half of the resetting loans were made to subprime borrowers with low credit scores. “The subprime resets will create more difficulty for households and the economy because many subprimes qualified based on a low teaser rate,” not on the post-adjustment rate, says Steve Cochrane, senior managing director of Economy.com. With tighter lending standards and no investor appetite for risky mortgages, refinancing “might not be possible,” Cochrane says. And with home prices lower in most areas, borrowers who put little or nothing down now owe more than their homes are worth, so selling the home to pay off the loan is no longer an option. The brunt of the reset problem has yet to hit.

No, this is not an article from “The Onion” – it is from the San Jose Business Journal:

Google Inc. said Thursday it will sponsor a $30 million robot race to the moon. Mountain View-based Google said the race is being organized by Santa Monica-based X Prize Foundation, which is known for its multimillion-dollar scientific challenges. The grand prize of $20 million will go to the first team to get a privately funded spacecraft on the moon. Some specific tasks are also included in the challenge. Second prize is $5 million and a bonus of $5 million will go to the team that carries out other specific challenges, such as locating ice on the lunar surface. In a statement, Peter Diamandis, X Prize CEO, said the use of space “has dramatically enhanced the quality of life and may ultimately lead to solutions to some of the most pressing environmental problems that we face on earth – energy independence and climate change.”

The first nationwide decline in jobs in four years raised new fears that the housing market and credit squeeze, particularly in hard-hit states like California, could drag the economy into a recession, according to a report in the Sacramento Bee:

“I think we’re very near recession, and California is on the leading edge of the downturn,” said chief economist Mark Zandi of Moody’s Economy.com. “The housing market is the economy’s most significant problem, and California’s housing market is among the worst in the country.”

The U.S. Labor Department said nationwide payrolls shrank by 4,000 in August, the first monthly decline since August 2003. Although the unemployment rate was unchanged at 4.6 percent, the payroll loss jolted Wall Street, which had expected jobs to grow. The Dow Jones average fell 249.97 points, to 13,113.38. Economists said the job loss was evidence the housing market’s problems are seeping into the overall economy. They believe the Federal Reserve, in an effort to boost the economy, will almost surely lower interest rates at its next meeting Sept. 18…

Yet the national slowdown in jobs mirrors what’s been occurring lately in California, where payrolls are in decline and unemployment is inching up. The state lost 8,600 jobs in July as unemployment rose to 5.3 percent. Sacramento-area unemployment is up to 5.4 percent, as the region lost 5,200 jobs in July. State and local job numbers for August will be released Sept. 21.

“We are leading in terms of this whole correction, or whatever you want to call it, in the housing sector,” said Howard Roth, chief economist at the California Department of Finance. “Where it ends, I’m not sure.” On the national level, 22,000 construction jobs disappeared in August, as did 46,000 factory jobs and 6,000 in the lending industry.

In addition, the government revised downward its estimates of job creation in June and July, from a combined 218,000 jobs to 137,000. Analysts believe some of the losses in manufacturing are tied to housing as anxious consumers, no longer tapping their home equity for cash, cut back on spending. Auto industry officials, for instance, say most of the downturn in U.S. auto sales is in California and Florida, where the housing market is the weakest. Car sales in California fell 7.7 percent in the first half of the year. “The problems in housing and mortgage markets are now affecting confidence, and thus activity, in other parts of the economy,” said Zandi of Moody’s Economy.com.

And, of course, industries directly tied to housing are continuing to shed workers. A host of mortgage lenders suspended operations in recent weeks, eliminating jobs in the Sacramento area. The construction industry is still weakening. Christopherson Homes of Santa Rosa has laid off 22 of its 30 employees in south Placer in the past year, while Folsom-based Elliott Homes cut 15 jobs in the past two weeks. “We laid some people off,” said Elliott Vice President Russ Davis. “I think every company in the region has laid people off.”

Chris Thornberg, head of Beacon Economics consulting in Los Angeles, said California will feel the effects of a recession worse than most states because it was such a hotbed of subprime mortgage lending. “We will bear the brunt of this primarily because of the mortgage issue,” Thornberg said.

Rumor has it that German automaker Volkswagen AG and American computer company Apple Inc. are now in talks about the possibility of producing an “iCar” that would feature products from the manufacturer of personal music player. Apple Chief Executive Steve Jobs and Volkswagen’s chief Martin Winterkorn met several days ago in California, and plan to meet for further discussions, said Hans-Gerd Bode, a spokesman for Volkswagen. There are “scores of ideas,” but few concrete plans at this point, according to a report in Digital Journal. Jobs and Winterkorn are supposedly in discussion to build a series of vehicles, reported German magazine Capital. The two industry giants met in California recently, and while the talks are in their early stages, Apple and Volkswagen are reportedly planning to cooperate on developing VW compact cars that will include Apple products.

Biodiesel industry leaders have created the California Biodiesel Alliance, a new not-for-profit trade association to promote increased use and production of high quality, renewable biodiesel fuel in California, according to a report in Central Valley Business Times. The founding members of the group is are biodiesel feedstock suppliers, producers, fuel marketers and distributors, technology providers, fuel retailers, consumers, and advocates. “We’re inviting industry and members of the public to join us in unleashing the power of the biodiesel market here in California,” says Alliance Chairman Eric Bowen of Tellurian Biodiesel.

Club Penguin, a virtual world for kids, has been bought by the Walt Disney Company. The deal is valued at $700 million: $350 million in cash now, and another $350 million if performance targets are met through 2009, according to a report in Venture Beat. The company, based in British Columbia, has more than twelve million total users — mostly kids 6-14 in North America — and including more than 700,000 paying subscribers. It says it is completely funded through subscriptions. Founded in March 2005, Club Penguin features avatars of animated penguins that live in an antarctic virtual world. Users can play games together, chat, and furnish virtual homes with virtual accessories. Subscribers choose to pay between USD$5.95 per month and USD$57.95 per year to “[d]ress up your penguin, decorate your igloo, be the first to discover new areas and lots more.” The purchase shows that Disney is hungry to get into online gaming, a market that is expected to grow significantly in the coming years. One analyst expects US spending to hit $725 million in 2008, up from $375 in 2006.