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Monday, February 27, 2006

Bubblicious

Here's a nice comparison of recent bubbles, and a similar graph comparing US to Japanese real estate bubbles. The extension of the green curve on the right of the first graph is a prediction (based on a PIMCO model ;-) of what kind of "mini-bubble" we are headed into with NASDAQ. Black is historical NASDAQ, blue is Nikkei (1980-99) and red is Dow (1919-39). The lower graph shows how the current US property bubble compares to the Japanese bubble of the late 20th century. I've posted a million times on the US real estate bubble, you can just search on "bubble" on the right to find those discussions.





Meanwhile, the long awaited equilibration between manufacturing labor costs here and abroad has begun -- the Times reports a drop of almost 50% in hourly compensation for new workers at Caterpillar (and other midwestern manufacturers) versus what older "grandfathered" workers are making (about $20 per hour including benefits, versus about $40 in the good old pre-globalization days). Equilibration can hurt!

On a related note (via Economistsview), Krugman emphasizes that the main beneficiaries of the new economy are a tiny elite of super-rich -- it's not just manufacturing workers losing out, average white collar compensation is stagnant as well. I'm going to check in with some of my financier friends to see whether they wouldn't mind sharing some of the gains from globalization with me ;-)

So who are the winners from rising inequality? ... A new research paper by Ian Dew-Becker and Robert Gordon ... gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only ... about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticket to big income gains.

But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint. Just to give you a sense of who we're talking about: ... the 99th percentile will correspond to an income of $402,306, and the 99.9th percentile to an income of $1,672,726. The ... 99.99th percentile [is] probably well over $6 million a year. ...

Saturday, February 25, 2006

Summers and Shleifer

Apparently there was more to Summers' resignation than politically correct backlash and rejection of his arrogant management style. One of the issues behind the new FAS vote of no confidence was the so-called Shleifer affair. Summers has been protecting Andrei Shleifer, a star economist (John Bates Clark medal winner) and protege, despite a scandal involving Shleifer that cost Harvard over $40M (including legal fees) to settle with the US government. Shleifer remains on the Harvard faculty, despite the well-documented malfeasance.

Strangely, the story was little covered by big media (WSJ, NYTimes), and it took a 25,000 word investigative piece by Institutional Investor (based on court documents including 60 depositions and over 1000 exhibits) to reveal the sordid details of Shleifer's involvement with Russian privatization and misuse of US funds through the Harvard Institute for International Development. I am sure copies of this article have been circulating widely among Harvard faculty. (See here for an amusing account of how a Boston jury was completely unimpressed by Harvard lawyers' narrow technical defense that Shleifer was not bound by conflict of interest rules. The jury took only two hours to decide unanimously against Harvard and Shleifer.)

Then, in quiet contrast, there is the case of economics professor Andrei Shleifer, who in the mid-1990s led a Harvard advisory program in Russia that collapsed in disgrace. In August, after years of litigation, Harvard, Shleifer and others agreed to pay at least $31 million to settle a lawsuit brought by the U.S. government. Harvard had been charged with breach of contract, Shleifer and an associate, Jonathan Hay, with conspiracy to defraud the U.S. government.

Shleifer remains a faculty member in good standing. Colleagues say that is because he is a close longtime friend and collaborator of Summers.

Another amusing Summers anecdote, from the Boston Globe (Ellison, an anthropologist, was Dean of the Graduate School under Summers. Summers, an MIT man, is not exactly what you'd call a smooth diplomat :-)

Over lunch not long after Summers took over the presidency in 2001, Ellison said, Summers suggested that some funds should be moved from a sociology program to the Kennedy School, home to many economists and political scientists. ''President Summers asked me, didn't I agree that, in general, economists are smarter than political scientists, and political scientists are smarter than sociologists?" Ellison said. ''To which I laughed nervously and didn't reply."

Of course, Summers was correct if average GRE scores are any guide ;-)

Friday, February 24, 2006

Fannie Mae redux

I normally don't agree with much that appears on the editorial page of the WSJ, but in this case I do. Fannie Mae execs are guilty of fraud and mismanagement, as discussed in previous posts here and here.

Will Franklin Raines keep his $40M+ in compensation awarded during years when Fannie was violating the law and deliberately misleading investors and the public? I watched the hearings on CSPAN over a year ago and heard Raines and his CFO lying directly to Congress. Will there be consequences?

(Why is a physicist interested in this at all? Because the problem of hedging a portfolio of mortgages is theoretically interesting. Fannie was claiming to have smooth, predictable earnings from a business notorious for causing blow ups for the most sophisticated banks and hedge funds. How were they doing it? Or were they just gambling with taxpayer dollars?)

Fannie's Funny Business

The stock market seemed relieved yesterday when Warren Rudman's 2,652-page report into Fannie Mae's accounting troubles didn't report major new discrepancies in the mortgage giant's books. That news was enough to put the stock up about 2% on the day after a nearly 4% rise Wednesday ahead of the report's release.

And we suppose it is good news of a sort that Fannie Mae's accounting restatement, for which the world has been waiting for more than a year, won't grow from the $10.8 billion figure already estimated. But $10.8 billion is big enough as it is; WorldCom's fraud came to "only" $11 billion. The report's main findings paint the picture of a company that routinely flouted both the rules and law. Some conclusions from the executive summary give a flavor:

• "[M]anagement's accounting practices in virtually all of the areas that we reviewed were not consistent with GAAP, and, in many areas, management was aware of the departures from GAAP" (emphasis added).

• "[E]mployees who occupied critical accounting, financial reporting, and audit functions at the Company were either unqualified for their positions, did not understand their roles, or failed to carry out their roles properly."

• "[T]he information that management provided to the Board of Directors with respect to accounting, financial reporting, and internal audit issues generally was incomplete and, at times, misleading."

• "[T]he Company's accounting systems were grossly inadequate."

The report also identified one case, in 1998, where earnings were manipulated specifically to meet a bonus target. That one instance was a doozy, however; a $199 million amortization expense that went unreported in order to make sure management got its lush payday.

If Fannie Mae were a normal private company, it would be tarred and feathered faster than you can say "Enron." But Fannie Mae is not just another private company. It has a federal charter and an implicit guarantee from the government (read: taxpayers) of its debt. Which makes it all the more vital that Congress reduce the risk that Fannie Mae and Freddie Mac pose to our financial system and the federal fisc.

One of the Rudman report's more worrisome findings was that Fannie's derivatives accounting was wrong because Fannie claimed that its hedges exactly matched its risk exposure when it did not. Fannie has long claimed it is capable of perfectly hedging the interest-rate and prepayment risks in its $800 billion portfolio of mortgage-backed securities. The Rudman report found that that often was not true. But the report only looked at the accounting issues posed by derivatives and hedging, so the public still knows precious little about the extent of the portfolio risk.

The report lets former CEO Franklin Raines off lightly, blaming him mainly for a "culture" that tolerated the accounting abuses. But the core of that culture was a belief that critics -- including us -- could be dismissed and assailed because the company knew it had Congress bought and paid for. And judging by the laughably weak reform that Financial Services Chairman Mike Oxley passed through the House, it still does. If Republicans on Capitol Hill want to know why voters think they've gone native, the failure to rein in Fannie even after a $10.8 billion accounting scandal is Exhibit A.

Thursday, February 23, 2006

Harvard's loss

This is why Harvard needed Larry Summers: "He pointed out, for example, that while it was socially unacceptable at a great university to admit that one hadn't read a play by Shakespeare, you could safely joke about not knowing the difference between a gene and a chromosome."

See related post here.

Monday, February 20, 2006

Dark energy and the future of the universe

I just gave this talk at the UO Center for High Energy Physics (PDF slides). I'm giving it as a colloquium at Washington University in St. Louis and the University of Kansas later in the spring, so no peeking if you are from one of those places.

Title: Dark Energy and the Future of the Universe

Abstract: Recent observations of Type Ia supernovae, cosmic microwave background radiation and large scale structure indicate that the expansion rate of the universe is increasing. A number of models describing exotic forms of matter, generically referred to as dark energy (not to be confused with dark matter), have been proposed to explain this acceleration. For example, the dark energy may be due to Einstein's cosmological constant. In this talk I will give an introduction to big bang cosmology and dark energy, with emphasis on the dark energy equation of state and how it determines the future (large time evolution) of the universe.

Saturday, February 18, 2006

Voting and Weighing

There is an old saying in finance: in the short run, the market is a voting machine, but in the long run it's a weighing machine.

That is, the price of a stock at any moment might be determined by sentiment, speculation or mania, and wildly divergent from its "real" value, but in the long run it is hard to hide a lack of profits or revenue at a company. (I guess Amazon holds the world's record, still befuddling investors 10 years down the line :-)

You might think science is a weighing machine, with experiments determining which theories survive and which ones perish. Healthy sciences certainly are weighing machines, and the imminence of weighing forces honesty in the voting. However, in particle physics the timescale over which voting is superseded by weighing has become decades -- the length of a person's entire scientific career. We will very likely (barring something amazing at the LHC, like the discovery of mini-black holes) have the first generation of string theorists retiring soon with absolutely no experimental tests of their *lifetime* of work. Nevertheless, some have been lavishly rewarded by the academic market for their contributions.

Friday, February 17, 2006

Valley zeitgeist

Just returned from a visit to RobotGenius world headquarters in Oakland, and a whirlwhind of meetings in the nerve center of the high tech world (Palo Alto, Menlo Park, Mountain View, Woodside).

Some observations... Animal spirits are reviving -- it's not 1999 again but the mood is very positive compared to the last few years. Many VCs are emboldened by recent positive exits in their portfolio companies. The latest ill-defined buzzword is Web 2.0. Wireless (cellphone) security startups have already seen exits. Fear and loathing of Microsoft is being replaced by fear and loathing of Google. Upscale restaurants with $20 lunch entres were packed in Mountain View, and not just by money men (VC density isn't high there, unlike University Ave in Palo Alto), but what appear to be rank and file tech workers. The density of startups in some areas is startling -- every third building seems to house a couple of small tech companies with goofy names. It's strange to see 21st capitalism cheek by jowl with ancient businesses. The JPMorgan Partners office in Woodside is next to a barber shop and a bakery, with its luxe futuristic interior camoflaged by an rickety wood exterior. RobotGenius sits across the street from a tiny Hawaiian barbeque restaurant, a nail salon and an acupuncturist-herbalist. (Our $1 per sq ft rent in Oakland is probably a fraction of JPM's - gotta watch the burn rate :-)

A new culinary phenomena: Indian-Chinese food (that is, Chinese food as served in India, now imported to the Valley at hole in the wall restaurants). Ethnic diversity is striking (esp. relative to Eugene) -- so many Indians and east Asians, not to mention Hispanics and black and white Americans.

Saturday, February 11, 2006

Taleb podcast: What do we know?

Here is an excellent talk by Nassim Taleb, hedge fund manager and author of the book Fooled by Randomness, which I highly recommend. Taleb addresses the prediction problem: how do you evaluate your knowledge of the world, other than by testing your ability to make predictions about what will happen next? (Post-diction is too easy - one can always construct post-hoc stories which are consistent with the data. Sorry, historians :-) He then notes that in certain fields like finance, economics and social science, the accuracy of predictions, when carefully studied, is dismal. (See my earlier discussion of Tetlock's research, which confirms this in a quantitative way. Tetlock had to work hard at this, since he looked at softer non-quantitative predictions as in foreign affairs. If you stick to quantitative predictions, like of equity or commodity prices, it is much easier to see that prognosticators are terrible.)

Feynman once said, holding up his fist and rotating it as if it were a charged sphere or something, "Physics is about answering the question: if I do this, what happens next?" I think this is very much in the spirit of Taleb's viewpoint.

One nice experiment Taleb describes shows how overconfident we are in our ability to predict the future.

Ask a group of people to make a prediction -- for example, how many Corollas will Toyota sell next (or last) year? We're not interested in the central values of their predictions. We're more interested in their understanding of its accuracy. So we say, give me a range that covers the 98 percent confidence interval. That is, give me a range of how many Corollas were sold last year, with the real value somewhere in that range at 98 percent confidence. Even if you know nothing about the auto industry, you could incorporate this into your guess by choosing a large range (e.g., between 10,000 and 10 million).

However, people are systematically overconfident in the quality of their predictions - by at least an order of magnitude, says Taleb. Typically, their 98 percent confidence level prediction is more like a 60 percent confidence level prediction. In other words, if you try this experiment with 100 students who correctly understand their own state of knowledge, you would expect only about 2 students to choose ranges which don't include the actual value. Instead, what you find is that 40 or so of the ranges will not contain the correct number! (Their error estimate of 2% is a gross underestimate.)

Taleb claims that the worst performing groups on this kind of exercise (regardless of the prediction requested) are stock analysts and economists, probably because the two groups are selected for a systematic bias toward overconfidence in dealing with noisy data. I wonder how physicists would do? I often stress that in communicating some information to a colleague (e.g., "A neutrino with those properties is ruled out by LEP data"), it is useful to also include a confidence level ("I have thought carefully about the loopholes and have looked at the LEP analysis and am 99% confident what I just said to you is true"). Thus, rather than transmitting a single statement, it is better to transmit the statement plus a confidence estimate. The utility of the pair is dramatically greater than just the statement itself.

My feeling is that when it comes to discussing the implications of a particular experiment, physicists are trained to accurately understand the confidence intervals. However, when it comes to a question like "How likely is it that supersymmetry solves the hierarchy problem?" I suspect we are as overconfident as any other group in the accuracy of our predictions.

Thursday, February 09, 2006

Startups for physicists

I gave this talk recently here at U Oregon. There were a lot of graduate students in the audience, which is great. I'm not sure how my colleagues found it though ;-)

PPT Slides (warning, it's a 3 MB file).

Title: Startups for Physicists

Abstract: 20 years ago research and development was concentrated at corporate labs like Bell, IBM, and Xerox PARC. Today, innovation is more likely to be found at small, venture capital backed companies founded by creative risk takers. The odds have never been greater that you, a scientist or engineer, might someday work at (or found!) a startup company. This talk is an introduction to this important and dynamic part of our economy. (Originally presented at the Caltech Entrepreneur's Club.)

Tuesday, February 07, 2006

Beta release

Help us beta test our product!

We've developed a new way to fight malware (adware, spyware) and clean up infected Windows PCs. Our product is installed at the driver level, between the OS and the hard drive (HD). It builds a "causal" XML database of all HD activity on the machine: object A created B which created C, and so on. You can use this to trace any file back to where it came from. Even, for example, back to the Web site from which it was downloaded -- perhaps without your knowledge via a browser exploit! Our testing indicates that if our product is installed before an infection, we can clean the machine completely with one click. This goes for rootkits as well as ordinary adware.

There is some interesting recursive stuff here -- because we sit between the OS and the HD, we can prevent the bad guys from modifying our code or data.

You can download the free beta version here: www.robotgenius.net

Robot Genius has created a set of tools for securing and managing your PC. Spyberus allows you to monitor all files installed on your machine, and to eliminate any misbehaving or unwanted software. Popup ads and windows can be easily traced to offending malware, and the entire group of infected files deleted in one click! Spyberus is installed in a layer between your Windows operating system and the hard drive itself. Nothing can get onto your drive without going through us.

Saturday, February 04, 2006

Trackback and arXiv

arXiv.org, the physics research archive, now allows trackback links to appear on article abstract pages. I often give talks on my research, and I thought it would be nice to use my blog and the trackback functionality to make it easy for readers of the papers to find the PDFs of the corresponding talks. The slides of a talk are sometimes easier to follow than the paper itself!

THERMAL GRAVITY, BLACK HOLES AND COSMOLOGICAL ENTROPY, B. Murray and S. Hsu, hep-th/0512033: Slides of Talk given as ITS seminar by B. Murray.

ENTANGLEMENT ENTROPY, BLACK HOLES AND HOLOGRAPHY, R. Buniy and S. Hsu hep-th/0510021: Slides of Talk given as ITS seminar by S. Hsu.

INSTABILITIES AND THE NULL ENERGY CONDITION, R. Buniy and S. Hsu, hep-th/0502203: Slides of Talk given at Johns Hopkins by S. Hsu.

Let's see if arXiv accepts these trackbacks... Oops, Blogger doesn't support trackback, and arXiv doesn't support manual trackback pings, so it doesn't work right now.

Google is watching

ZDNet have a nice FAQ discussing what user information Google collects, and what they can do with it. Using identifiers like IP address and cookies, they can easily index every search keyword you've used. If you're a gmail user, they can do much more :-) Nope, they don't delete any of this data - remember how cheap storage is these days?

It is only a matter of time before they are forced to reveal this kind of information under court order. Gee, if there were only some easy to use anonymity service to protect us from all this! ;-)

Q: Does Google collect and record people's search terms whether they're logged in or not?
Yes. Google confirmed this week that it keeps and collates these results, which means the company can be forced to divulge them under court order. Whether Google does anything else with them is another issue.

Given the Department of Justice's recent subpoena to Google, it's likely the police or even lawyers in civil cases--divorce attorneys, employers in severance disputes--eventually will demand that Google, Microsoft, Yahoo, AOL, and other search engines cough up users' search histories.

Q: Has this happened before?
Almost. A North Carolina man was found guilty of murder in November in part because he Googled the words "neck," "snap," "break" and "hold" before his wife was killed. But those search terms were found on Robert Petrick's computer, not obtained from Google directly.

Also, attorneys have already begun introducing searches conducted on Google, Yahoo and AltaVista as evidence.

Q: When I use search engines, I type in a lot of search terms I consider private. What does this mean?
We go into all the details below. But the short answer is that when private companies collect reams of data all the time on nearly every American, and the government and curious attorneys can get to that with few obstacles, this becomes a problem. Search engines provide a look into people's personal lives, and privacy awareness has not kept pace.

Q: Aren't there any privacy laws that protect us?
Not really. There is a federal law called the Electronic Communications Privacy Act. But it was enacted in 1986, long before politicians knew about the Internet, and the wording doesn't prevent police and attorneys from targeting search engines.

Politicians wrote that law in a way that is technology-specific--one key part revolves around the meaning of the pre-Internet term "processing services"--instead of adopting a more flexible approach that would grow with technology. Some states may have laws that are more applicable.

Q: Why does Google store that information about me, anyway?
No law requires Google to delete it, and there are some business justifications for keeping it.

For instance, keeping detailed records can help in identifying click fraud (faking clicks on Web ads to drive up a rival's cost), and in optimizing search results for different geographic areas. Compiling a user profile can aid in tailoring search results in products like Google Personalized Search. Also, disk storage is cheap, and engineers tend to prefer to keep data rather than delete it.But it's hardly clear that a compelling reason exists for keeping older records--beyond a few months--unless a customer voluntarily chooses options like personalization.

Q: Does that mean Google has the technical ability to link a person's searches together and divulge them when legally required?
Yes. Google says in its FAQ that it records Internet address, date, time, browser type, operating system and a cookie ID.

Author and entrepreneur John Battelle received word from Google this week that the company can perform two important types of matches. (We confirmed this with Google and followed up with additional questions.)

First, given a number of search terms, Google can produce a list of people (identified by Internet address or cookie) who searched for a given term. Second, given a collection of Internet addresses, Google can produce a list of the terms searched by the user of a given address. That effectively creates an electronic dossier of an individual.

Friday, February 03, 2006

New Yorker Turing profile

A nice overview of Turing's life here in the guise of a review of the new biography by David Leavitt. Not surprisingly, Leavitt's book falls short of the wonderful Alan Turing: The Enigma by Andrew Hodges, himself a mathematical physicist.

Turing's unique contributions enjoy greater appreciation as time goes on. Turing solved a fundamental problem in mathematical logic as a byproduct of conceptualizing the notion of a universal computer, played the single largest role in breaking the German Enigma code (crucial to winning WWII), designed and built one of the first electronic computers, and pioneered the idea of artificial intelligence. It was a terrible tragedy for science that his life ended so early, at age 41.

...But the death of Leibniz’s dream turned out to be the birth of the computer age. The boldest idea to emerge from Turing’s analysis was that of a universal Turing machine: one that, when furnished with the number describing the mechanism of any particular Turing machine, would perfectly mimic its behavior. In effect, the “hardware” of a special-purpose computer could be translated into “software” and then entered like data into the universal machine, where it would be run as a program—the way, for example, the operating system on your laptop treats a word-processing program as data. What Turing had invented, as a by-product of his advance in logic, was the stored-program computer.

Thursday, February 02, 2006

Behind the scenes

John Markoff of the Times has the story behind Bush's pro-science and technology message in the State of the Union address. I think I've heard this "doubling in 10 years" claim before with regards to science budgets, so I'll believe it when I see it. For some time now, a good year is one in which funding at NSF or DOE does not decline in real terms.

NYTimes: President Bush's proposal to accelerate spending on basic scientific research came after technology industry executives made the case for such a move in a series of meetings with White House officials, executives involved said Wednesday.

In his State of the Union message Tuesday evening, Mr. Bush called for a doubling within 10 years of the federal commitment to "the most critical basic research programs in the physical sciences."

The president's science adviser, John H. Marburger III, said Mr. Bush would request $910 million for the first year of the research initiative, with a commitment to spending $50 billion over 10 years.

Computer scientists have expressed alarm that federal support for basic research is being eroded by shifts toward applied research and shorter-term financing. But in his speech, Mr. Bush pointed to work in supercomputing, nanotechnology and alternative energy sources — subjects that were favorites in the Clinton administration but had not been priorities for the current White House.

What was different this year, according to a number of Capitol Hill lobbyists and Silicon Valley executives, was support on the issue by Republican corporate executives like Craig R. Barrett, the chairman of Intel, and John Chambers, the chief executive of Cisco Systems.

Industry officials eager to see a greater government commitment to research held a series of discussions with administration officials late last year that culminated in two meetings in the Old Executive Office Building on Dec. 13.

There, a group led by Mr. Barrett and Norman R. Augustine, a former Lockheed Martin chief executive, met with Vice President Dick Cheney. A second group headed by Charles M. Vest, the former president of the Massachusetts Institute of Technology, met with Joshua B. Bolten, director of the Office of Management and Budget.

The industry and science leaders told the officials that the administration needed to respond to concerns laid out in a report by a National Academy of Sciences panel headed by Mr. Augustine. It warned of a rapid erosion in science, technology and education that threatened American economic competitiveness.

The report, "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future," has been circulating in draft form since October. It was put together by a group of top technology and science leaders, who say the country faces a crisis that the Bush administration is ignoring.

"The gravitas of that group," Dr. Vest said, "has a lot to do with how we got as far as we did."

Still, even after the meetings, the executives and educators were not certain that the administration would respond. So President Bush's proposal on Tuesday night came as something of a surprise.

Albert H. Teich, director of science policy for the American Association for the Advancement of Science, the nation's largest professional organization for scientists, called Mr. Bush's proposal "a breath of fresh air."

"We haven't seen this interest in basic research from this president before," Mr. Teich said. "We in the science community have talked about the state of basic research for quite a while, with its flat or declining budgets, and we are hopeful about this initiative."

Mr. Barrett of Intel, according to people who worked with him, had grown particularly frustrated with the lack of progress on the matter.

In a speech to the National Academy of Engineering in October, in which he described the findings of the Gathering Storm report, Mr. Barrett said: "If you look at the achievement of the average 12th-grade student in math and science, which is of interest to us here, that 12th-grader in the U.S. ranks in the bottom 10 percent among their international peers. I think it is incumbent upon all of us to look at that report and help raise our voices collectively to our local officials, state officials and national officials."

The executives said that the administration had also been induced to respond by a growing bipartisan movement in Congress supporting basic research and education.

Two bills tackling this matter have recently been introduced. One is the Protect America's Competitive Edge Act, by Senators Pete V. Domenici, Republican of New Mexico; Jeff Bingaman, Democrat of New Mexico; Lamar Alexander, Republican of Tennessee; and Barbara A. Mikulski, Democrat of Maryland. A similar bill was introduced by Senator Joseph I. Lieberman, Democrat of Connecticut. Several of the senators met with President Bush in December to encourage him to support the competitiveness legislation.

"We're excited the president has jump-started this and that it is very bipartisan," Dr. Vest said.

Now the technologists and the educators are waiting to see the specifics of the financing when the president's budget is introduced next week. The report had called for an annual 10 percent increase over the next 10 years, and several executives said they now expected a rise of 7 percent annually, putting annual spending around twice the current level in 10 years.

Peter A. Freeman, the National Science Foundation's assistant director for computer and information science and engineering, said the president's initiative would make a big difference.

"We're obviously not at liberty to say what will be in the president's budget next week," Mr. Freeman said, "but we're very hopeful based on the State of the Union address. This is a strong sign that this administration will continue to be very supportive of fundamental science and engineering."

Despite there being little detail yet with precise figures, even those who had been publicly critical of the administration were enthusiastic.

"This is really a huge deal and I'm very encouraged," said David A. Patterson, a computer scientist at the University of California, Berkeley, who is president of the Association for Computing Machinery, a professional group.

At the same time, though, Mr. Patterson was concerned that the president's proposal to double funds for basic research drew little applause from the Congressional audience on Tuesday night. "It just shows the challenge we have," he said. "It wasn't obvious to the legislators."

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