Problem:

Panoramio pictures in Google Earth take very long time to open or don't open at all.
During this time Google Earth application is not responsive.
Panoramio in Google Earth

Solution:

Problem was caused by Internet Explorer option "Automatically detect settings".
Local Area Network Settings



To switch this off:

Internet Explorer >  Tools > Internet Options > Connections > LAN Settings - make sure all options are disabled.

Obviously only do this if don't need proxy for Internet access.

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