"Robert Cornelius, self-portrait facing front, arms crossed. Inscription on backing: 'The first light-picture ever taken'; One of the first photographs made in the United States, this quarter-plate daguerreotype, taken in the yard of the Cornelius family's lamp-making business in Philadelphia, is said to be the earliest photographic portrait of a person"
Ilargi:
OZYMANDIASI met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip, and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.Percy Bysshe Shelley
Egyptian president Muhammad Hosni Mubarak was history the moment he said last week that he would replace his government but not himself. He blinked. And the pack smells fear; once you get to that point, it’s all nose and no eyes, case closed. And while it's no surprise that the US has been sponsoring Mubarak's political opponents, Washington has managed to fumble the ball here once again in a grandiose way.
Obama et al could have regained a huge amount of respect in the Arab world if they had dropped Mubarak there and then, when he dropped his government. Obama fumbled, no surprise, and America will never get back what was lost at that point. The US could have been the liberator, and will now be the henchman forevermore. Even if, heavens forbid, Mubarak stays beyond tomorrow, the longer he does, the more the US will be blamed.
Sure, it's common knowledge that the US made Egypt the biggest recipient, after Israel, of its foreign aid when Mubarak took over 30-odd years ago. But Mubarak was finished. And still the ball was fumbled. This will have a huge influence on what follows after Mubarak is forced to leave tomorrow, February 1. Ironically , or maybe not at all, Al Jazeera reports that Israel prepares to welcome Mubarak, after Saudi Arabia refused to grant him exile. That's almost as ironic as a report that Israel was completely caught by surprise by the events of the past few days.
Al Jazeera, blacked out in much of the US, the same way Egypt shuts the internet and China closes all web searches for Egypt (isn't that hilarious?), reported a few hours ago that 250,000 people had already gathered in the streets of Cairo. The Egyptian army has announced it will not use violence during tomorrow's announced Cairo million man march.
It's over. Having a puppet in the region's by far most populous country was great while it lasted, and Egypt has been an isolated state all that time, but there's no guarantee that will last. Between the Muslim Brotherhood, Hamas and a few dozen other candidates, nobody knows what will come out of the street parties.
The secret services of not just the US and Israel, but also Britain and France, deeply ingrained in northern Africa for ages, are still at it as we speak. But they have lost. And they fear losing a whole lot more. Yemen is stirring. So are Jordan, Syria, Lebanon and Algeria. The risk of Saudi Arabia joining in is all too real. Look at the map:
This is the Arab world. Egypt is the most populous, the center, the leader, the cornerstone. If Egypt should emerge as the leader of a great liberation movement in this part of the world, beware. And why shouldn't it? People in all these nations on the map will look to Cairo tomorrow and feel greatly emboldened by the example.
And yes, it's ironic that the US now sends a message into the world of being torn between its "demands for democracy" and its allegiance to an ally and puppet who stood for and wanted the exact opposite of that.
Some nice convenient propaganda from AP White House correspondent Steven R. Hurst:
The US moral conundrum in EgyptAs with Iran 30 years ago, American leaders again are wrestling with the moral conflict between Washington's demands for democracy among its friends and strategic coziness with dictatorial regimes seen as key to stability in an increasingly complex world, particularly the Middle East.
The turmoil in Egypt — and its potential for grave consequences for U.S. policy throughout the region — was inevitable. The recent WikiLeaks release of U.S. diplomatic reports showed that Washington knew what problems it increasingly faced with the regime of President Hosni Mubarak and his three decades of iron-fisted rule.
As importantly, the U.S. handling of Egyptian uprising, regardless of how it plays out, now has other close American friends in the Middle East — particularly in Saudi Arabia and Jordan — watching closely, looking for foreshadowings of what might be in store for them. For that reason, U.S. officials have taken great pains to walk a middle line between Mubarak, an old friend and bulwark ally in the Arab world, and the street protests that threaten to drive him from power.
Secretary of State Hillary Rodham Clinton was spreading that message widely on U.S. television talk shows Sunday. "It's not a question of who retains power," she said. "It's how are we going to respond to the legitimate needs and grievances expressed by the Egyptian people and chart a new path."
Ilargi: The US, through Mubarak, has kept its boot on the necks of the Egyptian people for decades. And now wants them to believe it has an honest desire for democracy. Neither is Mubarak the only one in the region with questionable "principles" but nevertheless supported by the US. Indeed, the west has made sure only dictators reign on the south side of the Mediterranean, and eastward. Dictators and gross inequality.
In that sense, more irony still ensues. Because American society itself resembles that of Egypt and other neighboring lands more all the time. A rich elite and a large "impoverished class". You know, feudal. While America tumbles right into that model, Egypt tries to climb out of it. Interesting to say the least.
And really, these are not poor countries. They merely happen to have a lot of poor people, because there are a few who sit on all the wealth, and the rest get nothing. Which is where the US is going.
Algeria and Libya are OPEC members, and the world's 9th and 11th largest oil exporters, respectively. Egypt does produce oil, it’s no. 27 on the producers list, but since it is far more populous that most of its neighbors, it hardly ever exported any oil, and is therefore not an OPEC member. Besides, Egypt has become a net importer recently, on account of falling production and increased demand. Algeria also is the sixth-largest natural gas producer in the world – after Russia, the US, Canada, Iran and Norway, and is the fourth-largest LNG exporter – behind Qatar, Malaysia and Indonesia. Algeria is about the only large source of gas Europe has available if it doesn't want to be silly-putty in Putin's hands.
Here’s a rundown of population stats in the countries we're talking about from the BBC:
Obviously, population and median age numbers may be sort of correct, but unemployment and poverty are definitely not. If Egypt's real unemployment number were under 10%, chances are there wouldn't be a million people+ marching on Cairo tomorrow. Moreover, in all these countries, it’s the young people who are out of a job much more than the older generations. And there's a lot of young people. There's a lot of young men who can't have sex till they're married, and can't marry till they have a good job. Testosterone can be a harsh mistress. In that situation, 77 virgins doesn't maybe sound all that bad.
But no matter what I was planning to say on politics or energy, today's news takes all that hostage; it has one direction only: food. Just look:
Here's Salma Abdelaziz for CNN:
Food staples starting to run out in EgyptWhile discontent, resentment and nationalism continue to fuel demonstrations, one vital staple is in short supply: food. Many families in Egypt are fast running out of staples such as bread, beans and rice and are often unable or unwilling to shop for groceries. "Everything is running out. I have three children, and I only have enough to feed them for maybe two more days. After that I do not know what we will do." school administrator Gamalat Gadalla told CNN.
The unrest has paralyzed daily life in Egypt with many grocers closing shop and spotty food shipments. "With the curfew, there are no restaurants, food or gas. Basic goods will soon be in shortage," Sandmonkey, an Egyptian blogger said via Twitter.
Rowena Mason and Garry White for the Telegraph:
After food protests, water riots are nextGovernments in Tunisia, Egypt, Algeria, Morocco and Yemen have faced protests in recent weeks, part fuelled by rising food costs. Unfortunately, this is a trend that looks set to continue and probably escalate over the next two decades.
The rise of the middle classes in emerging markets, coupled with a soaring world population, underpin an increase in the price of basics such as wheat, corn and sugar. But the situation is going to be made much worse by the scarcity of water – the most important commodity there is. "Water remains a more problematic commodity than food and fuel: though cheap in its natural state, it is expensive to process and expensive to transport, especially in the quantities necessary for agriculture," according to a report from a Washington-based think tank released last month.
"Past water shortages have been temporary or small-scaled; future groundwater depletion will be massive and effectively permanent."
Marilyn Geewax for NPR:
Rising Food Prices Can Topple Governments, TooPolitical unrest has broken out in Tunisia, Yemen, Egypt and other Arab countries. Social media and governmental policies are getting most of the credit for spurring the turmoil, but there's another factor at play. Many of the people protesting are also angry about dramatic price hikes for basic foodstuffs, such as rice, cereals, cooking oil and sugar.
The Food and Agriculture Organization of the United Nations says its global food price index is at a record high, above even where it stood during the last food crisis three years ago. In early 2008, rising prices caused riots in dozens of countries — several of which are now seeing uprisings once again.
The Telegraph's Ambrose Evans-Pritchard:
Egypt and Tunisia usher in the new era of global food revolutionsPolitical risk has returned with a vengeance. The first food revolutions of our Malthusian era have exposed the weak grip of authoritarian regimes in poor countries that import grain, whether in North Africa today or parts of Asia tomorrow. If you insist on joining the emerging market party at this stage of the agflation blow-off, avoid countries with an accelerating gap between rich and poor. Cairo’s EGX stock index has dropped 20pc in nine trading sessions.
Events have moved briskly since a Tunisian fruit vendor with a handcart set fire to himself six weeks ago, and in doing so lit the fuse that has detonated Egypt and threatens to topple the political order of the Maghreb, Yemen, and beyond. As we sit glued to Al-Jazeera watching authority crumble in the cultural and political capital of the Arab world, exhilaration can turn quickly to foreboding. This is nothing like the fall of the Berlin Wall. The triumph of secular democracy was hardly in doubt in central Europe. Whatever the mix of aspirations of those on the streets of Cairo, such uprisings are easy prey for tight-knit organizations – known in the revolutionary lexicon as Leninist vanguard parties.
Ben Farmer, also at the Telegraph:
Authoritarian governments start stockpiling food to fight public angerAuthoritarian governments across the world are aggressively stockpiling food as a buffer against soaring food costs which they fear may stoke popular discontent. Commodities traders have warned they are seeing the first signs of panic buying from states concerned about the political implications of rising prices for staple crops. However, the tactic risks simply further pushing up prices, analysts have warned, pushing a spiral of food inflation.
Governments in Asia, the Middle East and North Africa have recently made large food purchases on the open market in the wake of unrest in Tunisia which deposed president Zine al-Abidine Ben Ali. Resentment at food shortages and high prices, as well as repression and corruption, drove the popular uprising which swept away his government. Youths reportedly chanted "bring us sugar!" in the demonstrations which toppled his regime.
Michael Sainsbury for The Australian:
China hungry for local food assetsChina is gearing up for a multi-billion-dollar investment push into the Australian agricultural sector to secure food supplies after a senior official admitted the country would face pressure supplying farm produce to its 1.3 billion people over the next five years.
The Australian has learned that interest from Chinese buyers across the whole spectrum of Australian agribusiness has stepped up markedly in the past six months, with the sweet spot being in "under the radar" private farms, aggregation and processing businesses worth between $10 million and $200m. Purchases of businesses within this range would avoid scrutiny by the Foreign Investment Review Board, whose purview is limited to businesses worth more $231m.
Harry Wallop for the Telegraph:
Orange juice will soon be 'luxury'Orange and apple juice, an integral part of many people's breakfast, could become an unaffordable "luxury", according to a report, which highlights how the price of fruit juice has rocketed.
A series of bad harvests from Florida, America to Shandong Province, China, combined with increased demand from Asian countries, has forced up the price of orange and apple juice on the world market. Supermarkets have started to react in Britain by pushing up the price of a carton of juice. The Grocer, the industry trade magazine, reported prices are set to climb even higher making most juices a "luxury". Experts predicted factory prices could rise by as much as 80 per cent for orange juice and 60 per cent for apple juice in 2011.
And the best for last, from Mariette le Roux at AFP:
'Bug Mac' and larva quiche - food of the futureDutch student Walinka van Tol inspects the worm protruding from a half-eaten chocolate praline she's holding, steels herself with a shrug, then pops it into her mouth. "Tasty ... kind of nutty!" the 20-year-old assures her companions clutching an array of creepy crawly pastries at a seminar, which forecast that larvae and locusts will invade Western menus as the price of steak and chops skyrocket.
Van Tol and about 200 other tasters were guinea pigs for a group of Dutch scientists doing groundbreaking research into insects replacing animal meat as a healthier, more environmentally friendly source of protein. "There will come a day when a Big Mac costs 120 euros ($163) and a Bug Mac 12 euros, when more people will eat insects than other meat," head researcher Arnold van Huis told a disbelieving audience at Wageningen University in the central Netherlands. "The best way to start is to try it once," the entomologist insisted.
At break time, there is a sprint for the snack tables with a spread of Thai marinated grasshopper spring rolls, buffalo worm chocolate gnache, and a seemingly innocent pastry "just like a quiche lorraine, but with meal worms instead of bacon or ham", according to chef Henk van Gurp. The snacks disappear quickly to the delight of the chef and organisers. But the university's head of entomology Marcel Dicke knows that changing Westerners' mindset will take more than disguising a worm in chocolate.
"The problem is here," he tells AFP, pointing at his head while examining an exhibition featuring a handful of the world's more than 1,200 edible insect species including worms, gnats, wasps, termites and beetles. Three species: meal worms, buffalo worms and grasshoppers, are cultivated by three farmers in the Netherlands for a small but growing group of adventurous foodies. "People think it is something dirty. It generates a Fear Factor response," citing the reality series that tests competitors' toughness by feeding them live insects.
Ilargi: The thing is that food issues have not only brought down governments, that's just the easy one. They've also brought down entire empires. And that's why I started with Shelley's Ozymandias. That and the long forsaken sands of Egypt. And the fact that the sonnet was written as part of a bet by a guy who didn’t even live to see 30, and still wrote one of the smartest and at the same time most heartfelt and eternal poems in the English language. And that's just one poem out of many he wrote, seemingly effortlessly. Krishnamurti once said: "Shelley is as sacred as the Bible". The rest of us are mere mortals, fully incapable of avoiding the same mistakes Shelly addresses, and bound to make them over and over and time and again.
Here's to the people of Cairo. May they live in peace, not rest in it.
A great new interview Stoneleigh did with Jim Puplava at Financial Sense:
Oil: Myths & Reality Part 2
Jim Puplava interviews Robert Hirsch and Nicole Stoneleigh Foss.
Choose your audio format:
RealPlayer WinAmp Windows Media MP3
James J Puplava
Robert L Hirsch
Nicole M Foss
The state of the oil markets and what's the outlook ahead; how the price of oil is driven higher by speculation, and how higher prices this year will lead to less consumption
Protesters call 'million man march' in Cairo tomorrow
by PTI
Upping the ante to topple President Hosni Mubarak, Egyptian protesters on gave a call for a "million man march" on Tuesday as an indefinite strike gripped the country paralysing all essential services. The so-called "Shabab April 6" movement said it plans to have more than a million people on the streets of Cairo on Tuesday, as anti-Mubarak sentiments reached a feverish pitch in the embattled nation.
As thousands of protesters converged on Tahrir Square — the hub of the protests in the heart of Cairo — their leaders served an ultimatum telling the Army to choose between "Egypt or Mubarak", indicating that a decisive stage was nearing. On his part, the 82-year-old President told his new Prime Minister Ahmed Shafiq to bring in immediate reform to stem the tide. Mr. Mubarak‘s instructions to Mr. Shafiq were read out on state tv but had no discernable effect on protesters who vowed to continue their demonstrations until the former steps down.
Terming the reforms as "too little and too late," the protesters continued their sit-in at the Tahrir Square saying they would not budge till Mr. Mubarak resigns, with indications that Egyptian strongman’s fate now hangs on the military. As the focus shifted on the influential army for a smooth transition of power, protesters enforced a countrywide general strike.
Pro-democracy activist and Nobel Laureate Mohammad ElBaradei, who defied house arrest to join the protesters at the Tahrir Square on Sunday night, asked the embattled President to "step down today itself." "It is loud and clear from everybody in Egypt that Mubarak has to leave today," Mr. ElBaradei said in an interview aired on CNN. "He needs to leave today... to be followed by a smooth transition (to) a national unity government to be followed by all the measures set in place for a free and fair election."
Army positioned tanks around the square and were checking the identity papers, but were letting protesters in. Meanwhile, the death toll in the last six days of violence crossed 150.
Al-Azhar scholars join stir
Egyptian judges and scholars from world’s prestigious Islamic seminary Al-Azhar joined mass protests, calling for an end to Mubarak’s 30-year rule. France 24 Television channel quoted a senior U.S. official as saying that President Barack Obama’s national security aides believe "Mubarak’s time had passed". Secretary of State Hillary Clinton on Sunday called for an "orderly transition" to democracy in Egypt, saying the legitimate grievances of the people will have to be addressed.
In a desperate move to cling to power, Mr. Mubarak on Sunday visited the military headquarters and met the newly appointed Vice-President Omar Suleiman and top commanders after which more troops and armoured vehicles moved on to the streets. Qatar-based Al-Jazeera channel put the death toll at 150 and said 4,000 people had been injured since protests began, while some other reports said over 100 had been killed.
The Revolution Continues – Unrest in Algeria, Jordan
by Erin - Africana Online
Algeria, another northern African nation, has also been inspired by neighboring Tunisia and is seeing massive protests. More than 10,000 protesters marched against authorities in Algeria’s northeastern city of Bejaia on Saturday in the country’s largest rally yet. Demonstrators marched peacefully in the city, chanting slogans such as: "For a radical change of the regime!" RCD leader Said Sadi, whose group organized the rally, said, "The protest gathered more than 10,000 people."
The police were out but the protesters dispersed peacefully. In Algeria, as in Egypt and Tunisia, residents are growing frustrated with rising costs and unemployment. Three-fourths of Algerians are under 30. Most of them do not have jobs or apartments, despite the fact that the state assets are full with money from oil and gas exports.
"This country has accumulated 150 billion euros ($203 billion) in foreign exchange," Francis Ghiles, from the Center for International Studies in Barcelona said. "The problem is not a lack of money, but a clientele economy. It’s a casino. There’s no order, no plan, no perspective. And on top of that the government is autistic. Those in power just don’t listen, they don’t see the problems of their people, or they simply just don’t want to see.
After riots broke out earlier in the month that left five people dead and over 800 injured, Algiers responded swiftly by reducing the prices of oil, sugar and other basic necessities which had risen sharply. The government also assured citizens that subsidies on essential goods like flour would continue. But, longtime President Abdelaziz Bouteflika is supported by a corrupt circle of military officers and secret police and his assurances did little to calm the unrest in the country. Similar to Tunisia and Egypt, more residents are using public suicide in an effort to protest the government. Within the past two weeks, eight people have set themselves on fire, most jobless and desperate.
Pro-democracy protests have also spread to the country of Jordan. Although smaller scaled than in Egypt or Algeria, Jordan demonstrators are also upset with soaring food prices that are putting more and more residents into poverty. The protesters are frustrated at the unpopular policies of the prime minister. It all began in one small Tunisia town with one despondent man, frustrated by lack of employment who set himself on fire and in turn set the whole Arab world ablaze with anger and hope. As the dominos fall throughout the Arab and northern African world, many of us wonder what is waiting on the other side. Will the people in these countries get the freedom and hope they desire? Or will another corrupt dictator simply assume power?
Egypt protests: America's secret backing for rebel leaders behind uprising
by Tim Ross, Matthew Moore and Steven Swinford - Telegraph
The American government secretly backed leading figures behind the Egyptian uprising who have been planning "regime change" for the past three years, The Daily Telegraph has learned. The American Embassy in Cairo helped a young dissident attend a US-sponsored summit for activists in New York, while working to keep his identity secret from Egyptian state police.
On his return to Cairo in December 2008, the activist told US diplomats that an alliance of opposition groups had drawn up a plan to overthrow President Hosni Mubarak and install a democratic government in 2011. He has already been arrested by Egyptian security in connection with the demonstrations and his identity is being protected by The Daily Telegraph. The crisis in Egypt follows the toppling of Tunisian president Zine al-Abedine Ben Ali, who fled the country after widespread protests forced him from office.
The disclosures, contained in previously secret US diplomatic dispatches released by the WikiLeaks website, show American officials pressed the Egyptian government to release other dissidents who had been detained by the police. Mr Mubarak, facing the biggest challenge to his authority in his 31 years in power, ordered the army on to the streets of Cairo yesterday as rioting erupted across Egypt.
Tens of thousands of anti-government protesters took to the streets in open defiance of a curfew. An explosion rocked the centre of Cairo as thousands defied orders to return to their homes. As the violence escalated, flames could be seen near the headquarters of the governing National Democratic Party. Police fired rubber bullets and used tear gas and water cannon in an attempt to disperse the crowds. At least five people were killed in Cairo alone yesterday and 870 injured, several with bullet wounds. Mohamed ElBaradei, the pro-reform leader and Nobel Peace Prize winner, was placed under house arrest after returning to Egypt to join the dissidents. Riots also took place in Suez, Alexandria and other major cities across the country.
William Hague, the Foreign Secretary, urged the Egyptian government to heed the "legitimate demands of protesters". Hillary Clinton, the US Secretary of State, said she was "deeply concerned about the use of force" to quell the protests. In an interview for the American news channel CNN, to be broadcast tomorrow, David Cameron said: "I think what we need is reform in Egypt. I mean, we support reform and progress in the greater strengthening of the democracy and civil rights and the rule of law."
The US government has previously been a supporter of Mr Mubarak’s regime. But the leaked documents show the extent to which America was offering support to pro-democracy activists in Egypt while publicly praising Mr Mubarak as an important ally in the Middle East. In a secret diplomatic dispatch, sent on December 30 2008, Margaret Scobey, the US Ambassador to Cairo, recorded that opposition groups had allegedly drawn up secret plans for "regime change" to take place before elections, scheduled for September this year.
The memo, which Ambassador Scobey sent to the US Secretary of State in Washington DC, was marked "confidential" and headed: "April 6 activist on his US visit and regime change in Egypt." It said the activist claimed "several opposition forces" had "agreed to support an unwritten plan for a transition to a parliamentary democracy, involving a weakened presidency and an empowered prime minister and parliament, before the scheduled 2011 presidential elections". The embassy’s source said the plan was "so sensitive it cannot be written down".
Ambassador Scobey questioned whether such an "unrealistic" plot could work, or ever even existed. However, the documents showed that the activist had been approached by US diplomats and received extensive support for his pro-democracy campaign from officials in Washington. The embassy helped the campaigner attend a "summit" for youth activists in New York, which was organised by the US State Department.
Cairo embassy officials warned Washington that the activist’s identity must be kept secret because he could face "retribution" when he returned to Egypt. He had already allegedly been tortured for three days by Egyptian state security after he was arrested for taking part in a protest some years earlier. The protests in Egypt are being driven by the April 6 youth movement, a group on Facebook that has attracted mainly young and educated members opposed to Mr Mubarak. The group has about 70,000 members and uses social networking sites to orchestrate protests and report on their activities.
The documents released by WikiLeaks reveal US Embassy officials were in regular contact with the activist throughout 2008 and 2009, considering him one of their most reliable sources for information about human rights abuses.
Egyptian upheaval a 'complete surprise' to Israel
by Sheera Frenkel - Mcclatchy Newspapers
Despite its renown for gathering precise intelligence about its Arab neighbors, Israel was caught completely off guard by the political upheaval in Egypt, officials said Sunday. The outpouring of Egyptians demanding the ouster of President Hosni Mubarak has shaken this country's foreign policy establishment. Top officials met Sunday to discuss the implications for Israel's security, but they were unable to produce any recommendations on what to do. "There is no doubt that Israel was caught with its pants down," said a minister in Israel's defense cabinet. "We were completely surprised by what is happening in Egypt right now. Nobody predicted this."
The official, like others, spoke anonymously on Egypt, because the government is maintaining official silence, fearing that any public statement could harm Israeli interests as events unfold. Mubarak has long been a trusted partner for Israel, for upholding the peace agreement that was signed in 1979, after three major wars in 30 years. He also cooperated with Israel to maintain a tight cordon around Gaza, where Hamas militants now rule, and generally has been supportive for Israel's stance on peace talks with Palestinians.
Defense officials said they would do everything they could to help strengthen Mubarak, whose regime is threatened by street protesters demanding his ouster. But it wasn't clear how Israel could help Mubarak without causing him further damage. Officials here now fear the protests will clear the way for the Muslim Brotherhood or other militant Islamic groups to take control of the country. But they acknowledge they have no way of knowing that would happen. "We couldn't predict that this was going to happen, so we certainly can't predict what will happen," said a Foreign Ministry official. "All we can do is wait and hope."
A foretaste of change occurred Sunday, when Israeli officials said that possibly dozens of Hamas detainees who had been sprung from Egyptian jails had fled back into Gaza, presumably reaching the former Israeli occupied territory through tunnels. One fading hope was that Omar Suleiman, Mubarak's newly named vice president, might provide a smooth transition to a new regime in Egypt. Suleiman, who was Mubarak's intelligence chief, has a long-standing relationship with Israel in which the two countries regularly share intelligence.
In addition to taking a central role in negotiations for the reconciliation between the Hamas and Fatah Palestinian movements, Suleiman has also negotiated for the release of Israeli soldier Gilad Shalit - currently being held by Hamas in the Gaza Strip. Suleiman was also one of Israel's main sources of information about Egypt's internal situation, which led Israeli officials to let down their guard.
There's no question that Israel has sustained a major intelligence failure. Only last week the incoming director of military intelligence, Maj. Gen. Aviv Kochavi, presented his regional outlook for 2011. Nowhere in his address was there mention of a possible upheaval in Egypt or instability in Mubarak's regime. "We dedicate a great deal of resources to monitoring Egypt, therefore we - of all people - should have seen this coming," said an intelligence officer who took part in the meeting. "We are examining what failures led to our misreading of the situation." He added that the government expected that protests that swept the Middle East since the initial rumblings in Tunisia would not affect Egypt to any great extent.
In December, Tunisians started taking to the streets to demand the ouster of President Zine El Abidine Ben Ali, who fled Tunisia on Jan. 14 after 23 years in power. Protests erupted in half a dozen other countries including Lebanon, Algeria and Jordan, all of them demanding new leadership. In Egypt, however, Israeli intelligence officials relied on the power of Mubarak's leadership and the strength of its police and military. The long border between the two countries remains the only land border on which Israel does not have a fence or a high-tech security apparatus.
"We didn't expect the protests to gain so much momentum so quickly," said the intelligence official. "We didn't expect the riot control to be so ineffective. This was against everyone's predictions." In the Hebrew-language daily Yediot Ahronoth, Israel's former ambassador to Egypt, Eli Shaked, wrote: "Things do not look good for Israel and the moderate Arab states. The developments from here on are not going to be good for our peace with Egypt and stability in the region." A Foreign Ministry official said the best assessment was the headline splashed across the front pages of two of Israel's leading papers: "A New Middle East."
Poverty and joblessness fueling Mideast unrest
by Brian Murphy - AP
Just days before fleeing Tunisia, the embattled leader went on national television to promise 300,000 new jobs over two years. Egypt's President Hosni Mubarak did much the same Saturday as riots gripped Cairo and other cities: offering more economic opportunities in a country where half the people live on less than $2 a day. The pledges-under-siege have something else in common: an acknowledgment that the unprecedented anger on Arab streets is at its core a long-brewing rage against decades of economic imbalances that have rewarded the political elite and left many others on the margins.
With startling speed — less than two months since the first protests in Tunisia — underscored the wobbly condition of the systems used by some Arab regimes to hold power since the 1980s or earlier. The once formidable mix of economic cronyism and hard-line policing — which authorities sometime claim was needed to fight Islamic hard-liners or possible Israeli spies — now appears under serious strain from societies pushing back against the old matrix.
Mubarak and other Arab leaders have only to look to Cairo's streets: a population of 18 million with about half under 30 years old and no longer content to have a modest civil servant job as their top aspiration. One protester in Cairo waved a hand-drawn copy of his university diploma amid clouds of tear gas and shouted what may best sum up the complexities of the domino-style unrest in a single word: Jobs. "They are taking us lightly and they don't feel our frustration," said another protester, homemaker Sadat Abdel Salam. "This is an uprising of the people and we will not shut up again."
The narrative of economic injustice has surrounded the protests from the beginning. "The regimes and the leaders are the ones under fire, but it's really about despair over the future," said Sami Alfaraj, director of the Kuwait Center for Strategic Studies. "The faces of this include the young man with a university degree who cannot find work or the mother who has trouble feeding her family."
Tunisia's mutiny that ousted President Zine El Abidine Ben Ali was touched off by a struggling 26-year-old university graduate who lit himself on fire after police confiscated his fruit and vegetable cart in December. Apparent copycat self-immolations quickly spread to Egypt, Yemen and elsewhere. In Yemen, the poorest nation on the Arabian peninsula, sporadic riots have forced President Ali Abdullah Saleh into quick economic concessions, including slashing income taxes in half and ordering price controls on food and basic goods.
On Friday in Jordan, thousands of marchers clogged streets to demand the resignation of Prime Minister Samir Rifai and call for measures to control rising prices and unemployment. Many chanted: "Rifai go away, prices are on fire and so are the Jordanians." King Abdullah II also has tried to dampen the fury by promising reforms, and the prime minister announced a $550 million package of new subsidies for fuel and staple products like rice, sugar, livestock and liquefied gas used for heating and cooking.
What feeds the flames is common across much of the Arab world: young populations, a growing middle class seeking more opportunities and access to websites and international cable channels, such as Al-Jazeera, which have eroded the state's hold on the media. There are no clear signs on whether more protests could erupt.
Syria's authoritarian regime remains in firm control and has taken gradual steps to open up the economy. Rulers in the wealthy Gulf states have the luxuries of relatively small populations that often receive generous state benefits and other largesse. Kuwait's emir, for example, pledged this month 1,000 dinars ($3,559) and free food coupons for each citizen to mark several anniversaries, including the 1991 U.S.-led invasion that drove out Saddam Hussein's army.
But there have been stirrings of discontent in North Africa. Earlier this month, security forces in Algeria clashed with opposition activists staging a rally apparently inspired by neighboring Tunisia. In Mauritania, a businessman died after setting himself ablaze in a protest against the government.
A state-backed newspaper in Abu Dhabi, The National, ran interviews from four men from across the Middle East describing their trouble finding work. One 33-year-old Syrian, who has an English literature degree from Damascus University, complained he cannot find a teaching job or afford to get married. "I feel as though I am in the Samuel Beckett play 'Waiting for Godot,' which I studied during my degree," Khaled Kapoun was quoted as saying. "I keep hoping that tomorrow a job will come along."
Even high Arab officials have expressed unusual candor following Tunisia's upheaval. Earlier this month, the head of the Arab League warned that the "Arab soul is broken by poverty, unemployment and general recession." "The Tunisian revolution is not far from us," Amr Moussa said in his opening address to the 20 Arab leaders and other representatives of Arab League members gathered in the Egyptian Red Sea resort of Sharm el-Sheikh. "The Arab citizen entered an unprecedented state of anger and frustration." Moussa, who is Egyptian, called for an Arab "renaissance" aimed at creating jobs and addressing shortcomings in society.
But at the Global Economic Forum in Davos, Switzerland, some experts said an education overhaul is needed in the region to shift from emphasis on state jobs to more dynamic private sector demands. "Many people have degrees but they do not have the skill set," Masood Ahmed, director of the Middle East and Asia department of the International Monetary Fund, said earlier this week. "The scarce resource is talent," agreed Omar Alghanim, a prominent Gulf businessman. The employment pool available in the region "is not at all what's needed in the global economy."
Rich, Poor and a Rift Exposed by Unrest
by David D. Kirkpatrick and Mona El-Naggar - New York Times
As the government of Egypt shakes from a broad-based uprising, long-simmering resentments have burst into open class warfare. Over the past several days, hundreds of thousands of Egyptians — from indigent fruit peddlers and doormen to students and engineers, even wealthy landlords — poured into the streets together to denounce President Hosni Mubarak and battle his omnipresent security police. Then, on Friday night, the police pulled out of Egypt’s major cities abruptly, and tensions between rich and poor exploded.
Looters from Cairo’s vast shantytowns attacked gleaming suburban shopping malls, wild rumors swirled of gunfights at the bridges and gates to the most expensive neighborhoods and some of their residents turned wistful about Mr. Mubarak and his authoritarian rule. "It is as if a domestic war is declared," said Sarah Elayashi, 33, from an apartment in the affluent neighborhood of Heliopolis, not far from Mr. Mubarak’s palace. "And we have nothing to defend ourselves but kitchen knives and mop sticks." "The protesters are against us," she added. "We hope President Mubarak stays because at least we have national security. I wish we could be like the United States with a democracy, but we cannot. We have to have a ruler with an iron hand."
Now some accuse the Mubarak government of deliberately fanning class tensions in order to create demands for the restoration of its brutal security state. But such resentments have built up here for nearly a decade outside of public view. "These big guys are stealing all the money," said Mohamed Ibraham, a 24-year-old textile worker standing at his second job as a fruit peddler in a hard-pressed neighborhood called Dar-al-Salam. "If they were giving us our rights, why would we protest? People are desperate."
He had little sympathy for those frightened by the specter of looting. He complained that he could barely afford his rent and said the police routinely humiliated him by shaking him down for money, overturning his cart or stealing his fruit. "And then we hear about how these big guys all have these new boats and the 100,000 pound villas. They are building housing, but not for us — for those people up high."
The widening chasm between rich and poor in Cairo has been one of the conspicuous aspects of city life over the last decade — and especially the last five years. Though there were always extremes of wealth and poverty here, until recently the rich lived more or less among the poor — in grander apartments or more spacious apartments but mixed together in the same city. But as the Mubarak administration has taken steps toward privatizing more government businesses, kicking off an economic boom for some, rich Egyptians have fled the city. They have flocked to gated communities full of big American-style homes around country clubs, and the remoteness of their lives from those of average Egyptians has become starkly visible.
The new rich communities and older affluent enclaves closer to the city were seized with fear over the weekend after a rash of looting Friday night. At the ravaged City Centre mall, looters had pulled bank A.T.M.’s from the walls, smashed in skylights and carted away televisions, and on Sunday a small crowd was inspecting the damage and debating the causes. A group of men standing guard said they had watched the police abandon the mall as if on command Friday at 11 p.m., and the first looters arrived in cars shortly after. They argued that the government had tried to create the impression of chaos. Others blamed hordes who poured in from impoverished neighborhoods, or Bedouins who they said came in from the desert.
Ayman Adbel Al, 43, a civil engineer inspecting the damage with his two teenage sons, blamed Mr. Mubarak, arguing that he had allowed the growing class divisions in Egyptian society to build up for years until they exploded last week. "I can say that I am well off, but I hate it, too. It is not humanitarian," he said, showing a picture of himself with his family at the protests Saturday. The only people who wanted Mr. Mubarak to stay in power, he argued, were rich people "afraid for their money."
Egyptians Defiant as Military Does Little to Quash Protests
by David D. Kirkpatrick and Alan Cowell - New York Times
As President Hosni Mubarak struggled to maintain a tenuous hold on power and the Egyptian military reinforced strategic points in the capital, the United States said on Sunday it was offering evacuation flights for its citizens and urged all Americans currently in Egypt to "consider leaving as soon as they can safely do so."
The announcement injected a stronger note of growing alarm among Egypt’s allies as an uprising against Mr. Mubarak’s almost three decades in power entered a sixth day, fraught with uncertainty about its outcome. Police have largely withdrawn from the country’s major cities and the military has done little so far to hold back tens of thousands of demonstrators defying a curfew to call for an end to Mr. Mubarak’s rule.
On Sunday, Turkey, a major regional player, also said it was sending three flights to evacuate 750 of its citizens from Cairo and Alexandria. France, Britain and Germany issued a joint statement urging President Mubarak and the protesters to show restraint. But, like President Obama, they did not call for the ouster of an autocratic leader who has cast himself as a lynchpin of Western diplomatic and security interests in the Middle East.
In a statement, the American Embassy here said it was telling "U.S. citizens in Egypt who wish to depart that the Department of State is making arrangements to provide transportation to safehaven locations in Europe." "Flights to evacuation points will begin departing Egypt on Monday, Jan. 31," the statement said, adding that the Obama administration had authorized the "voluntary repatriation" of American citizens including diplomats’ dependents and some employees not dealing with emergencies, meaning they could choose to leave if they wished.
With the situation on the ground still fluid, soldiers appeared to have thrown up new roadblocks, turning back cars as Egyptians on foot filtered back into the city center following the end of the overnight curfew. Before dawn, around 50 tanks and other armored vehicles rolled into the upmarket suburb of Heliopolis, near the airport and close to President Mubarak’s home, and there seemed to be a renewed effort to tighten controls on the flow of news.
In another part of Cairo, witnesses reported seeing around 100 tanks and armored personnel carriers gathered for deployment in the same parade ground where the former President Anwar al-Sadat, who made the Camp David peace agreement with Israel in 1979, was assassinated in 1981. At that time, Mr. Mubarak was Vice President and the killing of Mr. Sadat propelled him into a position he has never left since, steadfastly refusing to name a successor.
In the central Tahrir, or Independence, Square — which has become an epicenter of protest — the demonstrators seemed greater than the thousands on Saturday, feting the military as guardians. At one point, crowds hoisted aloft an officer and processed through the throng chanting: "The people and the army are one hand."
Sunday is usually the start of the working week here but banks schools and the stock market remained closed in a city paralyzed by the uprising, scarred by looting and braced for further protests. Some Cairenes said gas stations were running out of fuel and many automated cash machines had either run out of money or had been looted.
State television said Al Jazeera, the Qatar-based satellite broadcaster whose coverage of the turmoil in the Arab world has spread word of protests from capital to capital, was being taken off the air in Egypt. But, initially at least, the station continued to broadcast. Earlier, its Arabic channel had proclaimed: "Egypt speaks for itself." Internet connections remained cut on Sunday as the authorities sought to contain the potential spread of unrest.
Egypt closed its border with the Palestinian coastal enclave of Gaza, Paletinian authorities said. In a highly unusual development, a diplomat said, Israel authorized Egyptian troops to take up positions in the north of the Sinai peninsula, despite a prohibition on such deployments in the 1979 Camp David peace accord. The diplomat spoke in return for anonymity in light of the sensitivity of the issue.
As street protests flared for a fifth day on Saturday, Mr. Mubarak fired his cabinet and appointed Omar Suleiman, his right-hand man and the country’s intelligence chief, as vice president, stirring speculation that he might be planning to resign. That, in turn, raised the prospect of an unpredictable handover of power in a country that is a pivotal American ally — a fear that administration officials say factored into President Obama’s calculus not to push for Mr. Mubarak’s resignation, at least for now.
The appointments of two former generals — Mr. Suleiman and Ahmed Shafik, who was named prime minister — also signaled the central role the armed forces will play in shaping the outcome of the unrest. But even though the military is widely popular with the public, there was no sign that the government shakeup would placate protesters, who added anti-Suleiman slogans to their demands.
On Saturday, Mohamed ElBaradei, the Noble laureate and a leading critic of the government, told Al Jazeera that Mr. Mubarak should step down immediately so that a new "national unity government" could take over, though he offered no details about its makeup.
But, among more affluent Egyptians, some said the country needed stability more than upheaval. After night when men took to the streets armed with broom sticks and kitchen knives to defend their home against looters in Heliopolis, one resident, Sarah Elyashy, 33, said: "It has been the longest night of my life." "I wish we could be like the United States with our own democracy, but we can’t," she said. "We have to have a ruler with an iron hand."
Control of the streets, meanwhile, cycled through a dizzying succession of stages. After an all-out war against hundreds of thousands of protesters who flooded the streets on Friday night, the legions of black-clad security police officers — a reviled paramilitary force focused on upholding the state — withdrew from the biggest cities.
Looters smashed store windows and ravaged shopping malls as police stations and the national party headquarters burned through the night. Two mummies were destroyed in Cairo’s Egyptian Museum, the country’s chief antiquities official said. Then thousands of army troops stepped in late Friday to reinforce the police. It was unclear whether the soldiers in the streets were operating without orders or in defiance of them. But their displays of support for the protesters were conspicuous throughout the capital. In one striking example, four armored military vehicles moved at the front of a crowd of thousands of protesters in a pitched battle against the Egyptian security police defending the Interior Ministry.
But the soldiers refused protesters’ pleas to open fire on the security police. And the police battered the protesters with tear gas, shotguns and rubber bullets. Everywhere in Cairo, soldiers and protesters hugged or snapped pictures together on top of military tanks. With the soldiers’ consent, protesters scrawled graffiti denouncing Mr. Mubarak on many of the tanks. "This is the revolution of all the people," read a common slogan. "No, no, Mubarak" was another.
By Saturday night, informal brigades of mostly young men armed with bats, kitchen knives and other makeshift weapons had taken control, setting up checkpoints around the city. Some speculated that the sudden withdrawal of the police from the cities — even some museums and embassies in Cairo were left unguarded — was intended to create chaos that could justify a crackdown.
Before the street fights late Saturday, government officials had acknowledged more than 70 deaths in the unrest, with 40 around Cairo. But the final death toll is likely to be much higher. One doctor in a crowd of protesters said the staff at his Cairo hospital alone had seen 23 people dead from bullet wounds, and he showed digital photographs of the victims.
There were ominous signs of lawlessness Saturday in places where the police had abandoned their posts. Peter Bouckaert, emergencies director of Human Rights Watch, said that he observed a group of soldiers completely surrounded by people asking for help in protecting their neighborhoods. The army told them that they would have to take care of their own neighborhoods and that there might be reinforcements Sunday. "Egypt has been a police state for 30 years. For the police to suddenly disappear from the streets is a shocking experience," Mr. Bouckaert said.
State television also announced the arrest of an unspecified number of members of the Muslim Brotherhood, the outlawed Islamist group long considered the largest and best organized political group in Egypt, for "acts of theft and terrorism." It was unclear, however, what role the Brotherhood played in the protests or might play if Mr. Mubarak were toppled.
If Mr. Mubarak’s decision to pick a vice president aroused hopes of his exit, his choice of Mr. Suleiman did nothing to appease the crowds in the streets. Long trusted with most sensitive matters like the Israeli-Palestinian talks, Mr. Suleiman is well connected in both Washington and Tel Aviv. But he is also Mr. Mubarak’s closest aide, considered almost an alter ego, and the protesters’ negative reaction was immediate.
Many of the protesters were critical of the United States and complained about American government support for Mr. Mubarak or expressed disappointment with President Obama. "I want to send a message to President Obama," said Mohamed el-Mesry, a middle-aged professional. "I call on President Obama, at least in his statements, to be in solidarity with the Egyptian people and freedom, truly like he says."
What next for Egypt, the USA and the Middle East?
by Alex Spillius - Telegraph
As Washington struggles to come to terms with a rapidly changing Middle East, US President Barack Obama is acutely aware he must get Egypt right, for the wrong side of history eagerly beckons.
Faced with a dilemma that has long troubled Western leaders, including Britain's, Barack Obama's administration has not covered itself in glory vis à vis Egypt. Hillary Clinton, the Secretary of State, was conspicuously caught between two natural inclinations - encouraging the forces of democracy and preserving an autocratic but deeply loyal friend of the United States and its allies. Initially, she said that although the US supported "the fundamental rights of expression and assembly", in her view the Egyptian government was "stable".
The next day, as the turmoil deepened in Cairo, she declared that reform "must be on the agenda" of the Egyptian government, which should respond to "active, civil leaders". Vice President Joe Biden, whose foot is never far from his mouth, rejected the suggestion that Mubarak was a dictator and questioning whether the crowds of Egyptians were indeed making "legitimate claims".
Those were dangerous words. The US provides $1.3 billion military aid annually to Egypt, money which helps fund a repressive apparatus that Washington now more than ever does not want to be closely identified with. Rather late in proceedings, Mr Obama himself produced a more calibrated response on Friday, edging away from Hosni Mubarak and effectively putting the Egyptian leader on notice. "This moment of volatility has to be turned into a moment of promise," said the US president, who urged that "reforms that meet the aspirations of the Egyptian people".
It was a similar choice of words to that used a day earlier by William Hague, the Foreign Secretary, whose reactions have been less equivocal than the Americans' but equally cautious. "It is important in this situation to respond positively to legitimate demands for reform... that would be my advice to Egyptian leaders and to many others around the Arab world," he said. Reform, of course, is very different from regime change, which is what those on the streets of Egypt's cities seem to be demanding, and Mr Obama is acutely aware he must get Egypt right, for the wrong side of history eagerly beckons.
Some in his administration still feel stung by criticism that they did not stand up for Iran's Green Movement when it braved Mahmoud Ahmadinejad's thugs in the summer of 2009. Failure now to support Egyptian men and women braving police bullets and batons, and being too closely identified with an ageing agent of tyranny, could wipe out Washington's credibility with a generation of young Arabs. Cairo, the very city where the US president famously declared a "new beginning" in relations between the America and the Muslim world early in his presidency, could become the graveyard of that ambition.
Excessive hesitancy as events unfold would furthermore give the US and Britain less leverage in the future of the Middle East's most populous country if - or when - Mr Mubarak leaves the stage to what promises to be a muddled cast of actors, which would include the outlawed Muslim Brotherhood and other Islamist groups. The West's support for Mr Mubarak needs little explaining. He has been an ultra-reliable friend in a volatile region. Diplomatic US cables provided courtesy of WikiLeaks have revealed that the Egyptian president cooperated on brokering a ceasefire between Hamas and the Israelis, slowing the flow of arms to militants in Gaza and Washington's initiative on containing Iran.
The cables also disclosed that Mr Mubarak himself habitually warned that by fostering reform in his country, Western powers could open the door to extremism. He often invoked the example of the Shah of Iran, another unpopular secular leader who was deserted by Jimmy Carter with very unhappy consequences. The comparison however does not quite fit. In Egypt, there is no charismatic fundamentalist such as the Ayatollah Khomeini waiting in the wings. The protestors have not yet hinted at any allegiance with the Brotherhood or any other group which would flower into support for a theocratic rule.
Unfortunately for policy-makers in London and Washington, neither is there a moderate moderniser or enlightened figurehead ready to carry the people's hopes into the breach. A Cory Aquino, Vaclav Havel or Megawati Sukarnoputri always comes in handy when an autocracy is crumbling. Successive governments on both sides of the Atlantic share the blame for that lack. Mr Mubarak was allowed hog the arena to the heartless exclusion of others. Formerly vice-president to Anwar Sadat, the West stood by as he failed to appoint a vice-president of his own, grooming only his son Gamal for a succession that is now unlikely to happen.
Mr Obama and the current and former British governments have only nudged and prodded Cairo on human rights. For all its liberal pretensions, the US administration in fact ended the policy of publicly naming dissidents and shaming the regime's treatment of them that was part of George W Bush's "freedom agenda". State Department and Foreign Office realpolitik has determined that the risks of pressurising an old ally were too great.
Had Mr Bush not allowed his initiative to liberalise the Middle East be crushed by the weight of the Iraq war, and had Mr Obama done more than offer empty words of encouragement for civic society, Mr Mubarak might - against his expectations - be in a stronger position today. Gradual reform might have gone a long way to preserving his reign and with it his Western friends' stake in a crucial regional power.
In two years, Mr Obama has shown himself to be a quick learner. Let us hope he absorbs the lesson provided by Egypt and the uprisings elsewhere in the Middle East, which is that clear and consistent support for freedom will, in the long run, serve America best.
Food staples starting to run out in Egypt
by Salma Abdelaziz - CNN
While discontent, resentment and nationalism continue to fuel demonstrations, one vital staple is in short supply: food. Many families in Egypt are fast running out of staples such as bread, beans and rice and are often unable or unwilling to shop for groceries. "Everything is running out. I have three children, and I only have enough to feed them for maybe two more days. After that I do not know what we will do." school administrator Gamalat Gadalla told CNN.
The unrest has paralyzed daily life in Egypt with many grocers closing shop and spotty food shipments. "With the curfew, there are no restaurants, food or gas. Basic goods will soon be in shortage," Sandmonkey, an Egyptian blogger said via Twitter. Egyptian President Hosni Mubarak has ordered a curfew in Egypt to be extended from 3 p.m. to 8 a.m. on Monday, further stifling normal life in the embattled nation. Egyptian state-run Nile TV has set up a hotline for citizens to call in and report bread shortages. There has been no other indication of what the Egyptian government is doing to address the crisis.
After food protests, water riots are next
by Rowena Mason and Garry White - Telegraph
Governments in Tunisia, Egypt, Algeria, Morocco and Yemen have faced protests in recent weeks, part fuelled by rising food costs. Unfortunately, this is a trend that looks set to continue and probably escalate over the next two decades.
The rise of the middle classes in emerging markets, coupled with a soaring world population, underpin an increase in the price of basics such as wheat, corn and sugar. But the situation is going to be made much worse by the scarcity of water – the most important commodity there is. "Water remains a more problematic commodity than food and fuel: though cheap in its natural state, it is expensive to process and expensive to transport, especially in the quantities necessary for agriculture," according to a report from a Washington-based think tank released last month.
"Past water shortages have been temporary or small-scaled; future groundwater depletion will be massive and effectively permanent." The Centre for Strategic and International Studies (CSIS) study looked at water as a strategic resource in the Middle East – the most water-scarce region on Earth. It argued that the real wild card for political and social unrest in the region is not war, terrorism, or revolution – it is water "Current patterns of water use accurately reflect the fact that water is free or nearly so, and its supplies are unlimited," CSIS says. "Without some sort of water tariff that at least covers the economic cost of producing water – and more ideally covers the social cost of using water – it is hard to imagine that patterns of use will change much."
The "green revolution" of the 1980s and 1990s made it possible for nations in the region to sustain agriculture and feed its growing population. However, governments have been putting all their efforts into maintaining supply rather than reducing demand. "The Middle East's green revolution has created a situation in which agriculture now accounts for between 65pc and 90pc of national water consumption across the region," CSIS said. "But much of the water that agriculture uses comes from underground aquifers that cannot be replenished."
Water is being taken from underground aquifers more quickly than they can recharge. This means the water supply is shrinking – and in some cases becomes too salty to use for either agriculture or drinking. Quite simply, demand has to be curbed by increasing the price but rising prices can spark the type of social unrest we have seen over the past few weeks. Yemen has the second-fastest population growth of any country on Earth. It also has very little water. In fact, the country's capital Sana'a is expected to have exhausted its underground aquifers within just six years.
Four times as much water is taken out of its river basin as enters it through precipitation each year, so Sana'a is expected to be the world's first capital city to completely run out of water. Along with reducing demand, desalination will be the key to solving the region's problems – but at a very large cost. It is an extremely energy intensive process – one which a country like Yemen may be unable to afford. "Most of Yemen's population lives at elevations of more than a mile above sea level, making pumping desalinated drinking water prohibitively expensive," CSIS said. "Even without pumping costs, desalination would be a heavy burden on a country with a per capita income of less than $900 a year, and with rapidly vanishing oil resources."
The report concludes that nuclear power generation, which gives off a significant amount of heat, could provide the solution. Nuclear desalination is not a new idea. A reactor at Aktau in Kazakhstan on the shore of the Caspian Sea successfully produced up to 135 megawatts of electricity and 80,000 cubic metres of drinking water a day between 1972 and 1999, when it was closed at the end of the reactor's life. Water has also been desalinated using nuclear reactors in India and Japan. But with new nuclear plants costing in excess of £1.5bn, counties like Yemen just need to find a way to afford them.
Rising Food Prices Can Topple Governments, Too
by Marilyn Geewax - NPR
Political unrest has broken out in Tunisia, Yemen, Egypt and other Arab countries. Social media and governmental policies are getting most of the credit for spurring the turmoil, but there's another factor at play. Many of the people protesting are also angry about dramatic price hikes for basic foodstuffs, such as rice, cereals, cooking oil and sugar.
The Food and Agriculture Organization of the United Nations says its global food price index is at a record high, above even where it stood during the last food crisis three years ago. In early 2008, rising prices caused riots in dozens of countries — several of which are now seeing uprisings once again. The problem is one of the top concerns among economists, political leaders and corporate executives at their annual gathering in Davos, Switzerland. At the event, which ends Sunday, participants expressed worries that rising crop and meat prices will further contribute to political instability in developing and impoverished countries.
Rising prices are "leading to riots, demonstrations and political instability," New York University economics professor Nouriel Roubini said during a panel discussion. "It's really something that can topple regimes, as we have seen in the Middle East." And, the Davos experts warn, higher prices could hurt consumers and derail the economic recoveries under way in wealthier countries.
What Causes Food Prices To Rise
In large part, the food-price crisis reflects the simple law of supply and demand. The supply of food has been diminished by bad weather in many crucial crop-growing areas of the world. Russia, Ukraine and Argentina have had severe droughts, while Pakistan and Australia have had massive flooding. At the same time, demand for food has been rising as people in fast-developing countries, such as India and China, have been buying more groceries.
In addition, production and transportation costs have been driven up by the rising price of oil. Other factors involve currency fluctuations, food trade policies and financial speculation in commodities markets. Energy policy also plays a role, because ethanol makers are using more corn to produce fuel. In the United States, these factors have not significantly pushed up consumer prices — yet. The USDA released a new study that showed U.S. grocery store prices rose less than 1 percent last year.
U.S. Food Prices Insulated For Now
The reason for the tame price environment in this country is that the cost of food itself is a relatively small part of what U.S. consumers pay at the cash register, according to Homi Kharas, senior fellow for the Global Economy and Development program at the Brookings Institution, a Washington-based think tank. He says that when a U.S. consumer buys a box of cereal or a cup of Starbucks coffee, she is mostly paying for the packaging, marketing and attractive store fixtures. So the shopper is not greatly affected by the underlying commodity price the way poorer people are in other countries when they buy, say, a simple sack of rice.
"Take corn flakes," Kharas says. "Very little of the price of the box reflects the corn inside." Also, U.S. food companies often lock in lower prices by using futures contracts, so the price of ingredients they are using today may have been set a year ago, before bad weather drove up crop prices, he says. Still, the impact of higher grain, dairy and meat prices eventually will filter down to U.S. consumers, he says. The USDA is predicting grocery prices to rise between 2 and 3 percent this year.
Supplying The World's Food Demand
Around the world, political leaders are looking for ways to slow price increases. In some poorer countries, government officials already have imposed price caps. In the long run, economists say the only real solution will be to increase the supply of affordable food. They are urging governments in poorer countries to invest in roads and irrigation to support local agriculture and to reduce agricultural waste. More controversial proposals involve increasing the use of genetically modified seeds, controlling population and opening up more markets to global trade.
Egypt and Tunisia usher in the new era of global food revolutions
by Ambrose Evans-Pritchard - Telegraph
Political risk has returned with a vengeance. The first food revolutions of our Malthusian era have exposed the weak grip of authoritarian regimes in poor countries that import grain, whether in North Africa today or parts of Asia tomorrow. If you insist on joining the emerging market party at this stage of the agflation blow-off, avoid countries with an accelerating gap between rich and poor. Cairo’s EGX stock index has dropped 20pc in nine trading sessions.
Events have moved briskly since a Tunisian fruit vendor with a handcart set fire to himself six weeks ago, and in doing so lit the fuse that has detonated Egypt and threatens to topple the political order of the Maghreb, Yemen, and beyond. As we sit glued to Al-Jazeera watching authority crumble in the cultural and political capital of the Arab world, exhilaration can turn quickly to foreboding. This is nothing like the fall of the Berlin Wall. The triumph of secular democracy was hardly in doubt in central Europe. Whatever the mix of aspirations of those on the streets of Cairo, such uprisings are easy prey for tight-knit organizations – known in the revolutionary lexicon as Leninist vanguard parties.
In Egypt this means the Muslim Brotherhood, whether or not Nobel laureate Mohammed El Baradei ever served as figleaf. The Brotherhood is of course a different kettle of fish from Iran’s Ayatollahs; and Turkey shows that an ‘Islamic leaning’ government can be part of the liberal world – though Turkish premier Recep Tayyip Erdogan once let slip that democracy was a tram "you ride until you arrive at your destination, then you step off."
It does not take a febrile imagination to guess what the Brotherhood’s ascendancy might mean for Israel, and for strategic stability in the Mid-East. Asia has as much to lose if this goes wrong as the West. China’s energy intensity per unit of GDP is double US levels, and triple the UK. The surge in global food prices since the summer – since Ben Bernanke signalled a fresh dollar blitz, as it happens – is not the underlying cause of Arab revolt, any more than bad harvests in 1788 were the cause of the French Revolution.
Yet they are the trigger, and have set off a vicious circle. Vulnerable governments are scrambling to lock up world supplies of grain while they can. Algeria bought 800,000 tonnes of wheat last week, and Indonesia has ordered 800,000 tonnes of rice, both greatly exceeding their normal pace of purchases. Saudi Arabia, Libya, and Bangladesh, are trying to secure extra grain supplies. The UN’s Food and Agriculture Organization (FAO) said its global food index has surpassed the all-time high of 2008, both in nominal and real terms. The cereals index has risen 39pc in the last year, the oil and fats index 55pc.
The FAO implored goverments to avoid panic responses that "aggravate the situation". If you are Hosni Mubarak hanging on in Cairo’s presidential palace, do you care about such niceties?
France’s Nicolas Sarkozy blames the commodity spike on hedge funds, speculators, and the derivatives market (largely in London). He vowed to use his G20 presidency to smash the racket, but then Mr Sarkozy has a penchant for witchhunts against easy targets. The European Commission has been hunting for proof to support his claims, without success. Its draft report – to be released last Wednesday, but withdrawn under pressure from Paris – reached exactly the same conclusion as investigators from the IMF, and US and British regulators. "There is little evidence that the price formation process on commodity markets has changed in recent years with the growing importance of derivatives markets", it said.
As Jeff Currie from Goldman Sachs tirelessly points out, future contracts are neutral. For every trader making money by going long on wheat, sugar, pork bellies, zinc, or crude oil, there is a trader losing money on the other side. It is a paper transfer between financial players. You have to buy and hoard the vast amounts of these bulk commodities to have much impact on the price, which is costly and difficult to do, though people do park crude on floating tankers sometimes, and Chinese firms allegedly stashed copper in warehouses last year.
But that is not what commodity index funds with $150bn are actually doing with food, base metals, and energy. Only governments have strategic petroleum and grain reserves big enough to make a difference. The immediate cause of this food spike was the worst drought in Russia and the Black Sea region for 130 years, lasting long enough to damage winter planting as well as the summer harvest. Russia imposed an export ban on grains. This was compounded by late rains in Canada, Nina disruptions in Argentina, and a series of acreage downgrades in the US. The world’s stocks-to-use ratio for corn is nearing a 30-year low of 12.8pc, according to Rabobank.
The deeper causes are well-known: an annual rise in global population by 73m; the "exhaustion" of the Green Revolution as the gains in crop yields fade, to cite the World Bank; diet shifts in Asia as the rising middle class switch to animal-protein diets, requiring 3-5 kilos of grain feed for every kilo of meat produced; the biofuel mandates that have diverted a third of the US corn crop into ethanol for cars. Add the loss of farmland to Asia’s urban sprawl, and the depletion of the non-renewable acquivers for irrigation of North China’s plains, and the geopolitics of global food supply starts to look neuralgic.
Can the world head off mass famine? Yes, with leadership. The regions of the ex-Soviet Union farm 30m hectares less today than in the Khrushchev era, and yields are half western levels. There are tapped hinterlands in Brazil, and in Africa where land titles and access to credit could unleash a great leap forward. The global reservoir of unforested cropland is 445m hectares, compared to 1.5 billion in production. But the low-lying fruit has already gone, and the vast investment needed will not come soon enough to avoid a menacing shift in the terms of trade between the land and the urban poor.
We are on a thinner margin of food security, as North Africa is discovering painfully, and China understands all too well. Perhaps it is a little too early to write off farm-rich Europe and America.
Authoritarian governments start stockpiling food to fight public anger
by Ben Farmer - Telegraph
Authoritarian governments across the world are aggressively stockpiling food as a buffer against soaring food costs which they fear may stoke popular discontent. Commodities traders have warned they are seeing the first signs of panic buying from states concerned about the political implications of rising prices for staple crops. However, the tactic risks simply further pushing up prices, analysts have warned, pushing a spiral of food inflation.
Governments in Asia, the Middle East and North Africa have recently made large food purchases on the open market in the wake of unrest in Tunisia which deposed president Zine al-Abidine Ben Ali. Resentment at food shortages and high prices, as well as repression and corruption, drove the popular uprising which swept away his government. Youths reportedly chanted "bring us sugar!" in the demonstrations which toppled his regime.
Nouriel Roubini, the New York University economics professor who predicted the financial crisis, this week told the World Economic Forum in Davos that high prices were "leading to riots, demonstrations and political instability." "It's really something that can topple regimes, as we have seen in the Middle East," he said. Algeria purchased 800,000 tonnes of milling wheat on Wednesday and Saudi Arabia has said it will purchase enough wheat for a 12 month reserve.
Egypt, which has seen several days of unrest in part provoked by high food prices, is expected to follow. Bangladesh has tripled its rice import target and Indonesia this week bought 820,000 tonnes of Thai rice. Jim Gerlach, of commodity brokerage A/C Trading, said: "Sovereign nations are beginning to stockpile food to prevent unrest." "You artificially stimulate much higher demand when nations start to increase stockpiles."
"This is only the start of the panic buying," said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures. "I expect we'll have more countries coming in and buying grain." Prices have not hit the peaks seen in 2008 when inflation caused a food price crisis, but economists have warned they still have the power to topple regimes. Hamza Alkholi, chairman and chief executive of the Saudi Alkholi Group, a holding company investing in industrials and real estate, said protest would not stop in North Africa. "It will spread in many countries because of high unemployment and increasing food prices," he warned.
China hungry for local food assets
by Michael Sainsbury - The Australian
China is gearing up for a multi-billion-dollar investment push into the Australian agricultural sector to secure food supplies after a senior official admitted the country would face pressure supplying farm produce to its 1.3 billion people over the next five years.
The Australian has learned that interest from Chinese buyers across the whole spectrum of Australian agribusiness has stepped up markedly in the past six months, with the sweet spot being in "under the radar" private farms, aggregation and processing businesses worth between $10 million and $200m. Purchases of businesses within this range would avoid scrutiny by the Foreign Investment Review Board, whose purview is limited to businesses worth more $231m. Despite high expectations fuelled by two failed multi-billion-dollar bids for Nufarm and CSR's sugar business Sucrogen, China has been slower than expected in broadening its Australian investment strategy outside the mining sector.
Austrade Beijing's senior trade commissioner, Alan Morrell, said Australia was a logical investment destination for China as the nation moved to strengthen food security. The Chinese have shown particular interest in potential grain, meat and wool purchases. "Given the growth of the Chinese economy, the changes in consumer demand and the strategic goals of the central government, Chinese agribusiness companies likely will seek overseas investment opportunities to secure access to supplies of commodities, to strengthen research and development capabilities and to gain access to new markets," Mr Morrell said.
"As a result, we expect to see more international investment and M&A in agricultural production, processing, circulation, distribution and other areas in the course of China's agricultural modernisation." So far investments in Australia's agriculture sector by China have been mainly projects under $40m, with the majority under $10m. Some examples include Beijing Sanyuan Dairy Co's investment in Dairy Farm in WA; Qiantang Group (Zhejiang) in orchard farms in Tasmania; Shan Shan Group (Zhejiang) in wine in NSW; and Shanghai Yanlong International Trade in Tasmanian spring water.
But activity and deal size are on the increase, according to Shanghai-based agribusiness consultant Nick Hunt of Kirribilli Agricultural. One Chinese company, for example, is seeking 5000ha of grain farmland, which would have a value of about $75m, one Beijing consultant said. A parliamentary inquiry into the foreign ownership of Australian agriculture is now under way. Among the major state-owned companies looking at Australian assets are Shanghai's Bright Food, which made last year's unsuccessful bid for Sucrogen; China's largest food and drinks wholesaler, Cofco; and private player New Hope, which last year posted sales of $6.5 billion and is executing an ambitious global strategy.
Chinese Agriculture Vice-Minister Chen Xiaohua admitted last week that during the next five years, there would be increased pressure on the agriculture sector. He said that from 2011 to 2015, China would annually consume an extra 4 million tonnes of grain, 800,000 tonnes of vegetable oil and 1 million tonnes of meat.
'Bug Mac' and larva quiche - food of the future
by Mariette le Roux - AFP
Dutch student Walinka van Tol inspects the worm protruding from a half-eaten chocolate praline she's holding, steels herself with a shrug, then pops it into her mouth. "Tasty ... kind of nutty!" the 20-year-old assures her companions clutching an array of creepy crawly pastries at a seminar, which forecast that larvae and locusts will invade Western menus as the price of steak and chops skyrocket.
Van Tol and about 200 other tasters were guinea pigs for a group of Dutch scientists doing groundbreaking research into insects replacing animal meat as a healthier, more environmentally friendly source of protein. "There will come a day when a Big Mac costs 120 euros ($163) and a Bug Mac 12 euros, when more people will eat insects than other meat," head researcher Arnold van Huis told a disbelieving audience at Wageningen University in the central Netherlands. "The best way to start is to try it once," the entomologist insisted.
At break time, there is a sprint for the snack tables with a spread of Thai marinated grasshopper spring rolls, buffalo worm chocolate gnache, and a seemingly innocent pastry "just like a quiche lorraine, but with meal worms instead of bacon or ham", according to chef Henk van Gurp. The snacks disappear quickly to the delight of the chef and organisers. But the university's head of entomology Marcel Dicke knows that changing Westerners' mindset will take more than disguising a worm in chocolate.
"The problem is here," he tells AFP, pointing at his head while examining an exhibition featuring a handful of the world's more than 1,200 edible insect species including worms, gnats, wasps, termites and beetles. Three species: meal worms, buffalo worms and grasshoppers, are cultivated by three farmers in the Netherlands for a small but growing group of adventurous foodies. "People think it is something dirty. It generates a Fear Factor response," citing the reality series that tests competitors' toughness by feeding them live insects.
Dicke said Westerners had no choice but to shed their bug bias, with the UN's Food and Agriculture Organisation predicting there will be nine billion people on the planet by 2050 and agricultural land already under pressure. "We have to eat less meat or find an alternative," said Dicke, who claims to sit down to a family meal of insects on a regular basis.
- 'Why do we not eat insects?' -
Bugs are high in protein, low in fat and efficient to cultivate - 10 kilograms (22 pounds) of feed yields six to eight kilograms of insect meat compared to one kilogram of beef, states the university's research. Insects are abundant, produce less greenhouse gas and manure, and do not transfer any diseases, when eaten, that can mutate into a dangerous human form, say the researchers. "The question really should be: 'Why do we NOT eat insects?," said Dicke, citing research that the average person unwittingly eats about 500 grams of bug particles a year anyway - in strawberry jam, bread and other processed foods.
According to Van Huis, about 500 types of insects are eaten in Mexico, 250 in Africa and 180 in China and other parts of Asia - mostly they are a delicacy. One avid European convert is Marian Peters, secretary of the Dutch insect breeders association, Venik, who likes to snack on grasshoppers and refers to them as "the caviar of insects". On a visit to an insect farm in Deurne in the south east Netherlands, she greedily peels the wings and legs off a freeze dried locust and crunches down with gusto. "They are delicious stir fried with good oil, garlic and red pepper and served in a taco," said Peters.
The owner of the farm, Roland van de Ven, produces 1,200kg of meal worms a week of which "one or two percent" for human consumption, the rest as animal feed. "When you see an insect, it is a barrier. I think people will come around if the insects are processed and not visible in food," he explains while running his fingers through a plastic tray teeming with worms - one of hundreds stacked ceiling-high in refrigerated breeding rooms. "It is harder to eat a pig you have seen on a spit than a store-bought steak. This is similar."
The farmer said human demand for his "mini-livestock" was growing slowly - from 300 kilograms in 2008 to 900 kilograms last year. For those who won't be swayed, there is hope for less grizzly alternative. Wageningen University is leading research into the viability of extracting insect protein for use in food products. "We want to determine if we can texturise it to resemble meat, like they do with soy," said Peters, clutching a bag of pinkish powder - protein taken from meal worms she hopes will one day be a common pizza ingredient.
Orange juice will soon be 'luxury'
by Harry Wallop - Telegraph
Orange and apple juice, an integral part of many people's breakfast, could become an unaffordable "luxury", according to a report, which highlights how the price of fruit juice has rocketed.
A series of bad harvests from Florida, America to Shandong Province, China, combined with increased demand from Asian countries, has forced up the price of orange and apple juice on the world market. Supermarkets have started to react in Britain by pushing up the price of a carton of juice. The Grocer, the industry trade magazine, reported prices are set to climb even higher making most juices a "luxury". Experts predicted factory prices could rise by as much as 80 per cent for orange juice and 60 per cent for apple juice in 2011.
This would place further pressure on retailers to increase the price of orange and apple juices on shop shelves even though they have already gone up sharply. Over the past year, the price of a one-litre carton of Tropicana fresh orange juice across the five major supermarket chains has risen 22 per cent, from an average of £1.80 to an average of £2.19, while a one-litre carton of own-label apple juice from concentrate has gone up an average of 21 per cent, from 87p a year ago to £1.05 now. Fruit juices are just the latest key household staple to be hit by the spike in global commodity prices, which has affected everything from a litre of unleaded petrol to a loaf of bread.
The Office for National Statistics has calculated that inflation, based on the Consumer Prices Index, increased from 3.3 per cent in November to 3.7 per cent in December, with food prices driving much of this jump. Food increased in price by 6.1 per cent during last year, with butter, fruit, lamb, tea and juices particularly badly hit. Orange juice has been particularly affected by the bitterly cold winter in Florida last year, the main orange growing area in the world and which at one point was colder than Alaska. Cold weather in China, too, wiped out 40 per cent of the apple harvest in some parts of the country. China has become one of the main producers of apples in the world.
Richard Hall, chairman of food consultancy Zenith International, said orange and apple juice producers were already the world's largest, most efficient juice producers, so there was little room for them to absorb cost increases. "Pricing for orange and apple juice this year could see the most radical change," he said.
Adam Pritchard, chief executive of drinks maker Pomegreat, which makes pomegranate and other juices, said costs had gone up 40 per cent and his company would have to pass on about 10 per cent increase. "Part of the problem is the upward shift in demand from places such as China and India, who are spending more money on expensive drinks. This is putting pressure on the world markets. "I think consumers are still feeling the pain, and if they see the price of their staple products in the supermarket go up, they will see them as a luxury and cut back. We're not talking an extra 5p or 10p on a carton of orange juice, we're talking a doubling in price."
According to Mintec, a research company that tracks commodity prices, the price of frozen orange juice concentrate has climbed by 143 per cent in the last two years from $1,500 (£940) to $3,647. Apple juice prices are now at £1,500 a tonne, up from £650 just a year ago. While poor harvests have affected food prices around the world have been the main reason, higher oil prices have also had a large affect, pushing up the price of packaging, and distributing the juices.
How Egypt spells oil spike
by Colin Barr - Fortune
Egypt may not cause an oil shock this week. But trends that have been playing out there for decades show why another bruising bout with sky-high prices may be unavoidable.Let's assume that unrest in the world's No. 27 exporter will be contained, keeping the current U.S. price of a barrel of crude nearer $90 than $100. For now, that's good news for a global economic expansion that's addicted to the stuff.
Bad trends for oil guzzlers
But a look at Egypt's oil profile (see chart, right) is hardly an uplifting experience. Production has been sliding for two decades, while domestic use has been rising at a higher rate. As a result, a country that in 1990 was able to export something on the order of 400,000 barrels a day is now a small net importer.
You surely don't care that Egypt is addicted to foreign oil. But the upshot of its switch to net petroleum consumption is that other, bigger oil addicts – such as the United States, which you may well care about – will inevitably find themselves fighting over a smaller supply of global oil exports. The terms of this battle will surely involve higher prices.
This is one reality of so-called peak oil -- a school of thought that contends, over the loud objections of Exxon (XOM) et al., that global crude production has likely gone as high as it will.
A diminishing supply of oil exports is bad enough news for big consumers like the United States. But what really stands to tighten the screws on oil fiends is the rising demand for that shrinking supply, driven by the head over heels growth of everyone's two favorite emerging market economies, China and India.
Squaring the shrinking oil export market with the surging global demand for fuel, we have something called peak export theory. This camp argues that we are doomed to a steady, double-digit annual rise in oil prices till the global economy, like Roberto Duran in New Orleans, finally whimpers "no mas" -- at which point a recession will send prices down to a lower if still excruciatingly high level.
Oil at $200 in the boom and $120 in the bust? It seems outlandish, but remember, oil cost just $9 and change in December 1998 and just $16 three years later, in the wake of the 9/11 attacks. Since 1998, it has risen at a 14% annual compound clip. At that rate, why not look at the stratosphere?
"Egypt is a perfect case history for peak export theory," said Jeffrey J. Brown, a Dallas area petroleum geologist who has been making this case on the oil drum and other oil publications. "We're only going to see prices rise as more and more exporters slide down the curve toward being importers."Brown contends Saudi Arabia, the biggest oil exporter in the world and the third-biggest supplier to the United States, after Canada and Mexico, is already sliding down this curve. He notes that since Saudi crude production hit its recent high in 2005 near 10 million barrels a day, output is off 3% while domestic use is up 7%.
The result? A 6% decline in Saudi exports, over a span in which the average price of oil has risen from the mid-$50s into the $80s and $90s.
Many observers assume Saudi Arabia maintains spare capacity that it could call into use should prices rise too high. But Brown notes that while Saudi Arabia responded to the 2000-2005 oil price runup by raising output, it hasn't done so in response to the price surge of the past five years.
Indeed, Saudi Arabia's production over the past five years has fallen short of its indicated 2005 capacity by some 2 billion barrels, he said.
"Something changed in early 2006," said Brown.
He estimates the global pool of available net oil exports could shrink to 27 million barrels a day in 2015 from 41 million barrels in 2005, thanks to slowing production and a surge in demand from India and China.
Under this scenario, Brown says, the two biggest developing nations will slurp up nearly a third of global oil exports by 2015 – tripling their share in 2005.
Can prices keep rising well into the triple digits without sending the global economy off the rails? It's possible it can, he contends, if you take a look at oil consumption over the past dozen years or so.
While U.S. consumption is basically flat with 1998 levels, oil use has surged in China, India, Morocco and Kenya, to name a few. It figures to keep rising in those places because energy consumption there fuels real growth -- something that has been in short supply here of late.
"Developing countries have been outbidding us for oil," he said.
So if you think $3-a-gallon gas is a problem, imagine what fuel prices might be in 2015, if the world develops the way Brown expects. Of course, there is a bright spot, sort of.
"Our forecast is that the U.S. is well on the way to becoming 'free' of its dependence on foreign oil," Brown says. "Just not in the way that many people anticipated."
China blocks Internet searches for 'Egypt'
by David Pierson - LA Times
The unrest may be taking place thousands of miles away, but Chinese Internet censors felt it close enough to disable searches for "Egypt" in its Twitter-like services. The blocking underscores Beijing’s continued concern over the Internet and its potential to access anti-government information and organize opposition to China’s ruling Communist Party. Protests have swept across cities in Egypt with the aim of ousting President Hosni Mubarak. The Egyptian government has since suspended Internet and cellphone service in the country.
China’s 457 million Internet users have been embracing microblogs, which act like Twitter by allowing people to write short posts and provide links instantaneously. Twitter is banned in China and accessible only through special software. The number of micoblog users is believed to have more than tripled to 100 million last year and has attracted film stars and famous entrepreneurs. China’s leading Internet portals, such as Sohu.com and Sina.com, have been offering the service, which had been thought of as an example of growing free expression in an otherwise tightly controlled corner of China.
Last summer, the services were mysteriously shut down in what was believed to be a warning to the web portals to scrub their sites of politically sensitive topics. At the time, searches for posts about protests in southern China over the demise of Cantonese were disabled. Chinese media coverage of the Egyptian crisis has been mostly downplayed, with little mention of the underlying causes for the revolt. In international sections, newspapers carried nearly identical reports provided by the state-controlled New China News Agency, a common practice for politically sensitive issues.
Coverage, both online and in print, focused on the economic repercussions of the situation in Egypt, with the Egyptian pound falling against the dollar on Friday. No mention was made of Egypt’s rising prices or official corruption -- problems with which many Chinese are all too familiar. Searches on Sina.com for "Egypt" returned a message saying, "According to relevant laws, statues and policies, the search results cannot be displayed." A microblogging site operated by Tencent showed no results.
Al Jazeera English Blacked Out Across Most Of U.S.
by Ryan Grim - Huffington Post
Canadian television viewers looking for the most thorough and in-depth coverage of the uprising in Egypt have the option of tuning into Al Jazeera English, whose on-the-ground coverage of the turmoil is unmatched by any other outlet. American viewers, meanwhile, have little choice but to wait until one of the U.S. cable-company-approved networks broadcasts footage from AJE, which the company makes publicly available. What they can't do is watch the network directly.
Other than in a handful of pockets across the U.S. - including Ohio, Vermont and Washington, D.C. - cable carriers do not give viewers the choice of watching Al Jazeera. That corporate censorship comes as American diplomats harshly criticize the Egyptian government for blocking Internet communication inside the country and as Egypt attempts to block Al Jazeera from broadcasting. The result of the Al Jazeera English blackout in the United States has been a surge in traffic to the media outlet's website, where footage can be seen streaming live. The last 24 hours have seen a two-and-a-half thousand percent increase in web traffic, Tony Burman, head of North American strategies for Al Jazeera English, told HuffPost. Sixty percent of that traffic, he said, has come from the United States.
Al Jazeera English launched in the fall of 2006, opening a large bureau on K Street in downtown Washington, but has made little progress in persuading cable companies to offer the channel to its customers. The objections from the cable companies have come for both political and commercial reasons, said Burman, the former editor-in-chief of the Canadian Broadcasting Corporation. "In 2006, pre-Obama, the experience was a challenging one. Essentially this was a period when a lot of negative stereotypes were associated with Al Jazeera. The effort was a difficult one," he said, citing the Bush administration's public hostility to the network.
"There was reluctance from these companies to embark in a direction that would perhaps be opposed by the Bush administration. I think that's changed. I think if anything the Obama administration has indicated to Al Jazeera that it sees us as part of the solution, not part of the problem," Burman said.
Cable companies are also worried, said Burman, that they will lose more subscribers than they will gain by granting access to Al Jazeera. The Canadian experience, he said, should put those fears to rest. In Canada, national regulators can require cable companies to provide certain channels and Al Jazeera ran a successful campaign to encourage Canadians to push the government to intervene. There has been extremely little negative reaction over the past year as Canadians have been able to view the channel and decide for themselves. "We had a completely different process and result here in Canada -- a grassroots campaign that was overwhelmingly successful," said Avi Lewis, the former host of Al Jazeera's Frontline USA. (He now freelances for Al Jazeera while working on a documentary project with his wife, Naomi Klein.)
Media critics have begun to push for Al Jazeera's inclusion. "It is downright un-American to still refuse to carry it," wrote Jeff Jarvis on Sunday. "Vital, world-changing news is occurring in the Middle East and no one-not the xenophobic or celebrity-obsessed or cut-to-the-bone American media-can bring the perspective, insight, and on-the-scene reporting Al Jazeera English can." Al Jazeera follows a public broadcasting model similar to the BBC, CBC and NPR and is largely funded by the government of Qatar, which Burman said takes a completely hands-off approach to content.
Al Jazeera is the scourge of authoritarian governments around the Middle East, which attempt to block it. The network, however, covers much more than the Middle East, and now has more bureaus in Latin America than CNN and the BBC, said Burman. "As proud as we are of our Middle Eastern coverage, we are in other places in the world that are never, never seen on television in American homes," he said.
Burman said that he will use the experience with the Tunisia and Egyptian uprisings in upcoming meetings with cable providers as the network continues its push. Comcast did not respond to requests for comment.
"Why in the most vibrant democracy in the world, where engagement and knowledge of the world is probably the most important, why it's not available is one of these things that would take a PhD scholar to understand," Burman said.
Niall Ferguson: Yes, The Us Is Screwed
by Henry Blodget - Business Insider
BI: So, Professor Ferguson is the United States still screwed?
NF: Well this is not a technical term in economics that I recognize so let me maybe rephrase the question. Does the United States still have an economic problem? Yes. What is that problem? The problem is that having thrown massive fiscal and monetary stimulus at the economy it is still growing too slowly to bring down the unemployment rate. um what is the answer to that problem? some people say more fiscal stimulus and that indeed is what is being done and more monetary stimulus, and that indeed is what is being done in the form of QE 2.
That may well have some short term impact but there is a risk that the fiscal position of the United States tips over from being stimulative to being unsustainable. And the big worry is that at some point this year, could be next year, the level of borrowing the United States engages in pushes inflation expectations or even default expectations to the point that nominal yields really start to spike and then The Fed is in a jam b/c it would then have to do QE3 on a massive scale and quite quickly we could be facing a really major dislocation either in the bond market or currency markets that is the problem. Is the U.S. screwed? No not the way Japan is screwed or even the way the Euro zone is screwed but the U.S. is certainly not out of trouble.
BI: So isn't that what people were saying about Japan, in 1993, that they were done and here we are 18 yrs later and interest rates are still zero, they're still spending, still borrowing and borrowing and they haven't collapsed yet?
NF: Well if that's the fate of the United States it is screwed right? So if the United States were to have two lost decades of growth then you'd have a mountain of debt and you would have an extremely disgruntled populace. There are two big differences between Japan and United States one is, Japan is a homogeneous society, it is ethnically almost completely homogeneous and it can cope with low growth, socially, culturally, the United States is not. Second difference is Japan finances its vast debt domestically. half the federal debt is in foreign hands and of that a very substantial proportion of that is held by the People's Republic of China. So its a completely different situation and I doubt very much if the United States is going to repeat the Japanese experience. Even if it did, it would hardly be a good outcome.
BI: You've written a long presentation on what happens to countries that get into a situation that the United States is in basically that there's no easy way out. What do you think will happen to the United States?
NF: Well never make predictions especially about the future but there are a couple of obvious scenarios, one is based on historical evidence. One is inflation which is the kind of obvious way out if you have large debt in excess of 100% of GDP that is denominated in your own currency and your own currency you can print for free. Then you would expect the fed to let the printing press run, as happened in the period after WWII particularly in the '70s. Second scenario which is not quite so likely is default, where the United States defaults on some of its liabilities, perhaps its external liabilities.
It certainly will default on its liabilities in social security and medicare that is very likely. But on the bond market i doubt a U.S. default is likely. Defaults by states however, Illinois, California, seem very likely so there will be elements of default at the state level. The third scenario which gets much less air time is one in which the US can not escape from the debt mountain b/c every time it tries to inflate the markets price and the inflation risks with higher yields and in that sense it begins to look more like your Japanese scenario, except that as i said there is much less social stability to cope with that low growth, high debt scenario and you've got foreign creditors getting very uneasy.
So, I think at the moment its scenario three that I think is most likely, and that is a scenario in which the debt mountain wont go away, the dollar refuses to depreciate fast enough to reduce the debt burden, the economy doesn't grow very fast, and significant social and political problems ensue because I don't think Americans will take it lying down. And then it gets a little cloudier in my crystal ball to see where we'll be even a year from now is difficult if there is a shift in bond market sentiment, if there is a big move in currency markets, who knows? Right Now the US is indeterminately pursuing fiscal and monetary stimulus while the rest of the world is putting their foot on the break.
At some point I think that has to end b/c frankly foreign governments will refuse to finance US borrowing at these kinds of rates, in the low threes. It's just not likely to continue and when we get to that point, I think the Congress and President are going to face an incredibly difficult decision and I have the sense by the way that those risks are being underestimated at Davos this year.
BI: Certainly the stock market will tell you that everybody thinks everything is off to the races again. US GDP is growing strongly again and a lot, perhaps 90% of wall street economists will say its 4 - 5% growth from here, we're in great shape. Is there any scenario that you see that would lead to a happy outcome as opposed to the three horrible scenarios that you described?
NF: Well I certainly think 4.5% growth would be a very important part of that. I'd love to know where this growth is supposed to come from with highly leveraged households and a dollar that refuses to get weak, as weak at least as would be necessary for a really major export drive. I heard Larry Sommers go through the determinates of growth and when I did the arithmetic in my head I didn't get to 4.5% or anything close.
The stock market is not a great measure of the health of the US economy anymore because the corporations on the S&P 500 on the DOW are multinational and international corporations their business is booming in Asia, their stocks are going to look good, but does that help you in Michigan if you're unemployed? So the high growth scenario is what everyone wants to see but I must say that I do have difficulty imagining such a high number b/c the debt has not gone away, the deleveraging process has achieved remarkably little so far in household balance sheets, so consumers are still constrained in a very major way and they are or were 70% of GDP.
Maybe corporations will suddenly go out on an investment splurge and of course we know there's great piles of money on the sidelines but I'm wondering what would impel them to do that unless they were really focused on emerging market exports. Final thought if people are into stocks, or if they are into investing in real assets, they are out of the treasury market right, that seems to be where that money is currently parked. So if that money is moving in to higher risk assets that seems to me to imply higher yields b/c they'll be out of the treasury market so I don't know how that really helps. QE2 was sold to me only yesterday as a policy that would reduce yields but they've gone up since that policy was announced, and they'll go higher.
BI: You're very clear that we're on a road to hell in a hand basket as you think. Some people would say but if we were to change course right now we will kill the economy, the same way the UK just killed the economy by becoming austere as it worried about the debt. What do you recommend that we actually do to to make the best possible of the worst scenarios that you talked about?
NF: Well first now, I don't accept that the UK killed the economy, I mean it was clear it was going to some pain b/c you don't move out of a bloated public sector into a dynamic private sector w/o some major pains of transition and the kinds of cuts that George Osborne is implementing will have an impact on consumption b/c the people in those bloated public sector jobs will lose their jobs and they aren't going to go shopping to celebrate, there's nothing surprising about what the UK is doing (HB - and its still the right thing to do) It was clearly the right thing to do b/c the alternative given the horrible numbers that George Osborne inherited from Gordon Brown and Alistair Darling implied a Greek or Irish style crisis
And I think it was very prudent to preemptively avoid that by embarking on a course of fiscal stabilization and I think politically, as well as economically, it was the right thing to do. In the US the situation is different, the governments obviously been in office now for longer, and therefore the political benefits of acting decisively are smaller. But there's a critical point that I think Obama and his people consistently have dodged. It is not impossible to have a 10 year plan to return to fiscal stability without a short run austerity package. In other words you don't need to front load this but you do need to have a plan that will get the US back into equilibrium in a 10 year time frame.
If you don't have that, you lack credibility. And if you lack credibility you're going to have a risk premium at some point, whether its an inflation risk or default risk. So my hope is that we will see, and it remains to be seen, is that the White House will work with the more intelligent elements of the Republican party personified by Paul Ryan to come up with that kind of road map that Ryan has been talking about now for some years.
A road map that will get the US back to fiscal equilibrium over as I said a 10 year time frame. I think that would do a wonder, do a marvelous amount for business confidence in the US. Small businesses look at the numbers and the say 'hey I don't know what's happening this year but this has to imply either my input's going to be costing me more because of inflation or I will be hit by a tax bill like I never saw before' because this just can't be sustained. Uncertainty is the thing that keeps people back from investing and from hiring new people, and a clear and credible plan for fiscal stabilization over the decade would do a lot for confidence.
BI: Last question because I now you're besieged and congratulations for that by the way (NF: It's probably a curse in disguise). Given what you know about the US political system do you think its possible that we could enact such a plan and stick to it?
NF: I wish i could say yes. I mean the moment that there is a quality to politics in Washington that is deeply worrying. The worry is that a polarization in terms of partisanship is making it very hard indeed to construct the kind of consensual reforms that will be needed and entitlements that will be tackled if the tax code is really to be reformed. I see the personalities that could do that but they're not a large number of people. I can remember going to dinner last year in Washington to discuss radical fiscal reform, I thought it would be held in one of the big hotels in one of the ballrooms to accommodate all the interested congressmen. Three showed up and one of them was Paul Ryan.
The worry I have, and it was increased by the State of the Union address, is that American politicians will talk about tackling the deficit and do completely the opposite until finally they run out of road. And that is a very very risky scenario for two reasons, one, even if interest rates stay low the way Paul Krugman says they will, the percentage of revenues going on debt service goes up every year because you're borrowing at 10% of GDP every year. And as that rises from 10% to 20% to 30% you are running out of money to pay for anything else. I mean discretionary expenditure gets squeezed whether you like it or not and you really don't want to see the US budget devoted to entitlements - medicare, social security, and interest payments and oh that's it.
And that would be the future without change and change now. Remember the CBO just before Christmas said you need to stabilize the GDP ratio to increase taxes by 12% or cut entitlements by 12%, there isn't a single living American politician that would let those words pass his or her lips. But if you leave the problem the CBO said it gets worse. In the immediate aftermath of that reports publication the agreement was reached to borrow another $900 billion. So they say one thing, and they know what has to be done, but their political incentives lead them to do the exact, diametric opposite. So yeah I must be the you know the voice of doom in otherwise cheerful Davos but I don't know the more cheerful people are I think back to 2006 and people were cheerful then but look this is going to be liquidity crisis, now I'm saying this is going to be a bond market.
Bank Crisis Report a Whodunit With Laughs and Tears
by Gretchen Morgenson - New York Times
Truly startling revelations were few in the voluminous report, published last Thursday by the Financial Crisis Inquiry Commission on the origins of the financial panic. This is hardly a shock, given the flood-the-zone coverage and analysis of the crisis since it erupted four years ago.
Yet the report still makes for compelling reading because so little has changed as a result of the debacle, in both banking and in its regulation. Providing chapter and verse, for example, on the bumbling and siloed management at the nation’s largest banks is enlightening, in that many of these institutions are even bigger than they were before. With too-big-to-fail institutions now larger than ever, we are almost certain to go through another episode like 2008 in the not-too-distant future.
For those who might find the report’s 633 pages a bit daunting for a weekend read, we offer a Cliffs Notes version.
Let’s begin with the Federal Reserve, the most powerful of financial regulators. The report’s most important public service comes in its recitation of how top Fed officials, both in Washington and in New York, fiddled while the financial system smoldered and then burned. It is disturbing indeed that this institution, defiantly inert and uninterested in reining in the mortgage mania, received even greater regulatory powers under the Dodd-Frank law that was supposed to reform our system.
The report shows how the Fed refused to exert its authority on predatory lending. On Page 94, we learn that from 2000 to 2006, it referred a grand total of three institutions to prosecutors for possible fair-lending violations in mortgages.
The Fed "succumbed to the climate of the times," its general counsel, Scott G. Alvarez, told commission investigators. It is hard for a supervisor to challenge banks when they are highly profitable, other officials said. Richard Spillenkothen, head of supervision at the Fed until 2006, attributed its reluctance to "a desire not to inject an element of contentiousness into what was felt to be a constructive or equable relationship with management."
Is it any shock, then, that neither the Federal Reserve Bank of New York nor the Office of the Comptroller of the Currency, a partner in regulatory inadequacy, saw that the S.S. Citigroup was headed for the shoals? This depressing case is chronicled in depth in the report. In testimony last September, Ben S. Bernanke, the chairman of the Federal Reserve Board, said that his organization "has moved vigorously to address identified problems."
But back a few years, as regulators were coddling bank managers, some executives were busily telling their investors that everything was just dandy. On Page 248, we learn about dire events at Countrywide Financial, the subprime lender.
On Aug. 2, 2007, Countrywide’s access to crucial market financing dried up; commercial paper investors would not buy its obligations, the report quoted Angelo R. Mozilo, the company chief executive, as saying. But Eric P. Sieracki, the company’s chief financial officer, said in a statement that day that Countrywide had plenty of liquidity and had experienced "no disruption in financing its ongoing daily operations, including placement of commercial paper."
This rather interesting take on reality prompted Moody’s to reaffirm the company’s A3 debt rating. Two weeks later, Countrywide drew down all of its $11.5 billion in credit lines, signaling extreme distress to the markets. The stock plunged; a few months later the lender was taken over in distress by Bank of America. Mr. Sieracki declined to comment, but his lawyer said on Friday that the Aug. 2 statement was accurate at the time Mr. Sieracki made it.
On Page 264, the report lays out Citigroup’s silence about the ticking time bombs it had shoved off its balance sheet but that would soon have to be repatriated, generating enormous losses. A spokeswoman for Citigroup said that it was a different company today, and that it had overhauled its risk management and bolstered its financial strength.
We already know, of course, that our government moved mountains to help the banks during the crisis. But the report adds to our understanding of events by describing how the Treasury Department changed the tax code to benefit banks acquiring weaker institutions. Never mind that the Constitution allows only Congress to write tax rules.
I.R.S. Notice 2008-83 came out of nowhere on Sept. 30, 2008, the report noted on Page 371. It removed existing limits on the use of tax losses that could be taken by a bank when it acquired a troubled institution. The change appeared just as Citigroup was mounting its $1-a-share bid for Wachovia. (The beleaguered bank was headed by Robert K. Steel, a former under secretary of domestic finance at Treasury who had left his post two months earlier. "Secretary Paulson had recused himself from the decision because of his ties to Steel," the report said, "but other members of Treasury had ‘vigorously advocated’ saving Wachovia.")
Two days after the tax change, Wells Fargo topped Citi’s proposal by offering $7 a share. The change in the code had made such a deal more economical for Wells because it could reduce its taxable income by $3 billion in the first year after acquiring Wachovia. Previously, Wells could have reduced its income by just $1 billion in Year 1.
"They were changing the rules on the fly to the apparent advantage of banks who wanted to get something for nothing out of this crisis," said Janet Tavakoli, president of Tavakoli Structured Finance in Chicago. "Why aren’t people being questioned and held accountable for that?"
As it turned out, Wells did not benefit from the code change because it had no taxable income to offset, the report said. I.R.S. Notice 2008-83 was repealed in 2009.
For those of you who’ve wondered why there have been so few prosecutions of mortgage fraud during this epidemic, your answer is on Page 164. "The terrible thing that happened," said William K. Black, a former fraud investigator in the savings-and-loan crisis who is a professor at the University of Missouri-Kansas City School of Law, "was that the F.B.I. got virtually no assistance from the regulators, the banking regulators and the thrift regulators."
Finally, if it’s comic relief you’re after, turn to Page 105 for an interview with Angelo R. Mozilo, former chief executive of Countrywide Financial, a lender that profited by roping unsuspecting borrowers into poisonous loans.
Mr. Mozilo, the commission said, described his company as having "prevented social unrest" by providing loans to 25 million borrowers, many of them members of minority groups. Never mind that throngs of these loans have resulted in foreclosures and evictions. "Countrywide was one of the greatest companies in the history of this country," Mr. Mozilo maintained, "and probably made more difference to society, to the integrity of our society, than any company in the history of America."
You cannot make this stuff up.
Do further bailouts lie ahead? Neil Barofsky, special inspector general for the Troubled Asset Relief Program, seems to think so. When the government stepped in to save Citigroup in 2008, "it did more than reassure troubled markets — it encouraged high-risk behavior by insulating risk-takers from the consequences of failure," he said in his report to Congress last week.
"Unless and until an institution such as Citigroup is either broken up, so that it is no longer a threat to the financial system, or a structure is put in place to assure that it will be left to suffer the full consequences of its own folly," he said, "the prospect of more bailouts will potentially fuel more bad behavior with potentially disastrous results."
Never Again?
by Sewell Chan - New York Times
The final judgment of the official inquiry into the 2008 financial crisis — that it was an avoidable disaster, brought about by regulatory neglect and Wall Street recklessness — was an admonition to the government never to let it happen again. Most experts aren’t holding their breath.
Bubbles and manias, followed by crashes and hangovers, seem endemic to capitalism. The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails. But the first two efforts are under attack by the new Republican majority in the House, and the new process for containing the fallout from a giant bank’s collapse is untested.
Meanwhile, the financial sector’s outsized role in the economy hasn’t changed; the giant banks that were considered "too big to fail" have only gotten bigger. It was not the same the last time around.
The Senate conducted hearings from 1932 to 1934, in the Depression’s depths, to investigate the causes of the Great Crash. Led by a fiery prosecutor from New York, Ferdinand Pecora, the proceedings galvanized outrage over Wall Street excesses and created the climate for sweeping changes to securities and banking laws, according to Michael Perino, who teaches law at St. John’s University. "The real lesson of the Pecora hearings is that fundamental reforms to the structure of financial regulation invariably come in the wake of crisis and scandal," says Mr. Perino, whose biography of Pecora, "The Hellhound of Wall Street," was published last year by Penguin. "That ship has sailed, and we missed it."
In unveiling its 633-page report Thursday — accompanied by a slightly shorter commercial version, on sale for $14.99 — the Financial Crisis Inquiry Commission noted the outsized influence of banking lobbyists and Wall Street campaign contributions. But it did not suggest limiting the size and concentration of banks, as some economists have urged.
In their defense, commission members said they were tasked with assessing the crisis’s origins, not advocating reforms. "For us to have been asked to determine what happened and also to propose solutions – that I think would have taken a lot more time, a lot more energy," said one commissioner, John W. Thompson, a technology executive.
Moreover, the commission’s verdict – bankers and regulators: guilty as charged — reflected just a bare majority of its members, the six named by Democrats. The four Republicans dissented. "The commissioners’ failure to agree on most of the causes and narrow their differences to a handful of issues does the country a great disservice, by perpetuating the idea that reasonable people cannot understand what happened," said Anil K. Kashyap, a business school professor at the University of Chicago, who added that most economists are in basic agreement on the factors that caused the crisis.
The report also came too late to shape the Dodd-Frank law, the Wall Street reform act that President Obama signed last year. "They were told to explain what caused the crisis – and the implications for reform — but by the time the report came out, we were six months into the reform," said David A. Skeel Jr., who teaches corporate law at the University of Pennsylvania.
The Dodd-Frank law strengthened and added regulatory authority, but punted – Mr. Skeel says "outsourced" – many of the most intricate decisions to agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission. Mr. Skeel worries the rules, which could be years in the making, will be watered down. Its warnings about the perils of deregulation might be the report’s most lasting contribution, said Greta R. Krippner, a University of Michigan sociologist whose book "Capitalizing on Crisis: The Political Origins of the Rise of Finance" (Harvard University Press) comes out next month.
"The report reinforces the view that financial activities should serve the nonfinancial economy, rather than the other way around, as has been the case in the U.S. economy over the last several decades," she said. That orientation toward finance — rather than the deregulation and avarice — is the real source of instability, according to Judith Stein, a historian at the City University of New York Graduate Center and the author of "Pivotal Decade: How the United States Traded Factories for Finance in the ’70s," published last year by Yale University Press.
"Low wages, low interest rates to encourage consumption, and too much investment in housing and financial services because of the decline in manufacturing and other tradable goods – those are the underlying causes."
Far-fetched? The report revealed that no less a capitalist than John W. Snow, a railway executive who was President George W. Bush’s Treasury secretary just before the crisis, questioned Wall Street’s outsized role in American life. "We overdid finance," he told investigators, "versus the real economy."
Only one US bank was safe from collapse during financial crisis, says Fed's Ben Bernanke
by Richard Blackden - Telegraph
Only one of America's major financial institutions was not at risk of collapse during the financial crisis that swept Wall Street in 2008, according to previously private remarks the chairman of the Federal Reserve made to a panel investigating the crisis. The Financial Crisis Inquiry Commission released comments Ben Bernanke made in a private interview alongside its final report on Thursday. "If you look at the firms that came under pressure in that period... only one... was not at serious risk of failure," Mr Bernanke told the commission. "Even Goldman Sachs, we thought there was a real chance that they would go under."
The material disclosed by the commission did not identity which bank the Fed chairman believed could have withstood the turmoil. The commission was established by Congress in May 2009 to provide an authoritative explanation of what caused the country's worst financial crisis since the Great Depression. However, the commission has been marred by political infighting among its members, and only the six Democratic members endorsed the final report. The report concluded that the crisis was avoidable and laid much of the blame at the feet of regulators, including the Federal Reserve. "We do not accept the view that regulators lacked the power to protect the financial system," the report argues. "They had ample power in many arenas and they chose not to use it."
Alan Greenspan, Mr Benanke's predecessor, came in for particular criticism for championing less regulation. "The government permitted financial firms to pick their preferred regulators in what became a race to be the weakest supervisor," the report said. Meanwhile, Moody’s said its timeframe for possibly placing a negative outlook on the Aaa rating of US Treasury bonds is shortening as the country’s deficit widens. The outcome of the November elections, the extension of tax cuts and the chance that Congress will not address deficit reduction have increased Moody’s uncertainty over the willingness and ability of the US to reduce its debt, the credit-rating company said in a report on Thursday.
No Clear Strategy to Save the Euro
by Jack Ewing - New York Times
To listen to the talk here this week, everyone is determined — really, really determined — to save the euro. But no one seems to know quite how. One leader after another marched before audiences at the World Economic Forum to declare an unshakable will to overcome the euro area’s sovereign debt crisis and restore confidence in the common currency.
The euro "is more than a currency," Chancellor Angela Merkel of Germany said in a speech in Davos on Friday. "It is Europe. If the euro fails, Europe fails." Her speech came after an almost identical oath of allegiance to the euro during the last week by the president of France, Nicolas Sarkozy. But there still seems to be deep division among European leaders, as well as the big thinkers from economics and academia, about what policies would remove doubts about the euro’s future.
Buy back Greek bonds? Increase the size of the European rescue fund? Allow Greece to default? Or just keep muddling through? "If they’re not willing just to write blank checks to the peripheral countries, I don’t see what their strategy is," said Kenneth Rogoff, an economics professor at Harvard University and former chief economist at the International Monetary Fund.
Even though many of the key figures in the debate are at Davos, no clear solutions have emerged. In fact, much of the rest of the world seems to have moved on. The most intense economic discussion seems to be about how to resolve the tensions created by the trade deficit of the United States and China’s surplus. Timothy F. Geithner, the United States Treasury secretary, told an audience Friday that the European sovereign debt crisis hurt the United States economy last year when it caused a plunge in stock prices but that the effect was short-lived. "I think it had a significant effect on slowing the recovery at a delicate point," Mr. Geithner said. "After a brief loss of momentum, the U.S. started to recover."
There does seem to be some marginal progress on what to do about Greece. George A. Papandreou, the Greek prime minister, said in Davos on Friday that he expected the European Union and the I.M.F. to grant the country more time to pay back the money it owed them. "This will be a major asset for calming markets," he said. Mr. Papandreou also said officials were discussing how to strengthen the European Financial Stability Facility, which is administering a $604 billion rescue fund.
One proposal is to give the facility the power to buy government bonds, or to buy Greek debt at depressed market values in a kind of stealth restructuring. The European Central Bank has been buying Greek, Irish and Portuguese bonds to stabilize markets but has made it clear that it wants political leaders to take over the heavy lifting. "There is a strong will to think about how the E.F.S.F. can be more robust," Mr. Papandreou said.
But he continued to reject suggestions that Greece default on its debt or restructure its obligations so that it has more time to pay — measures that Mr. Rogoff and many other economists say are inevitable. Instead, Mr. Papandreou and his finance minister, George Papaconstantinou, insisted that Greece would modernize its tourism and agriculture to restore growth. In addition, they said, Greece will increase revenue by combating rampant tax evasion by the seizing the yachts of wealthy deadbeats, going after assets hidden in foreign banks and other measures.
"We sometimes underestimate the capabilities we have," Mr. Papandreou said. Such measures helped Greece increase revenue 5.5 percent last year, according to government figures.
Mr. Rogoff, who has studied the history of sovereign defaults, said on the sidelines of the World Economic Forum that Greece might be able to get its debt under control someday but that it would require years of sacrifice that few political systems can endure.
The only precedent for such long-term suffering in the service of debt repayment is Romania in the 1980s, Mr. Rogoff said. At the time, the country’s dictator, Nicolae Ceausescu, imposed a draconian austerity program on the Romanian people, who later rose up and executed him. Even among the stars of the economics world who have congregated at Davos, there is disagreement about if and when Greece should default.
Some advocate a restructuring as soon as possible. "The longer you delay it, the higher the stakes," said Daniel Gros, director of the Center for European Policy Studies, a research organization in Brussels. "An orderly default of Greece is not such a bad thing. But do this now." Others fear that a restructuring would heighten fears that Ireland, Portugal and even Spain could also default, alarming markets and risking a much bigger crisis. "To me the precedent of a default of a euro country is pretty bad," said Robert J. Shiller, professor of economics at Yale.
There is one solution that everyone agrees would work, at least in the short term. Other European countries would simply give Greece and Ireland money to pay off their debts.
But that solution is considered politically unacceptable in Germany. Many economists agree that letting Greece off the hook would reward bad fiscal behavior, raise borrowing costs for other countries and eventually destabilize the European monetary union.
"It means that the incentive for Greeks to get their house in order is lowered," said Dennis J. Snower, president of the Kiel Institute for the World Economy in Kiel, Germany. "Ultimately if any country misbehaves, then the risk premium in other countries rises because they are among those who pay for the mess."
There was, at least, no shortage in Davos of moral support for the beleaguered euro area. "Britain has a real interest in the euro succeeding," David Cameron, the prime minister of Britain, said at the forum on Friday. Noting that euro members account for 44 percent of British exports, Mr. Cameron said, "A weak euro zone that doesn’t confront its difficulties is not good for us." But he also sounded glad that Britain still has its own currency. "There are times when different countries need different monetary policies," he said, "and I want us to have a monetary policy that suits our needs."
'China syndrome' means country faces dangerous property bubble
by Kamal Ahmed - Telegraph
One of China's leading economists has said that the country is facing the possibility of a dangerous real-estate bubble and rising inflation which could put growth at risk. Yu Yongding, senior fellow at the Chinese Academy of Social Sciences (CASS) and former member of the monetary policy committee of the People's Bank of China, said that the demand for new property was so high that prices were in danger of soaring out of control.
Speaking at the World Economic Forum in Davos, Mr Yongding said that China's authorities would have to act to calm the market and that the rate of growth would have to be lowered: "Definitely inflation is the biggest concern so far. At the same time we are concerned about a real estate bubble. "The demand for houses is still tremendous. So there is a tug of war between the central bank and the real estate developers. If the bank loosens [the property] policy there may be a re-emergence of a real estate bubble." CASS is affiliated to the State Council, one of the major government bodies in China.
Mr Yongding's warning comes after a series of signals that markets are becoming concerned that the rapid rate of growth in China is not sustainable. Three weeks ago The Sunday Telegraph revealed that a number of hedge funds had begun taking short positions against China. The following week, Goldman Sachs warned of some short term dangers for the Chinese economy and last week a report from the consultants, McKinsey, said that high property and commodity prices were a threat.
Mr Yongding made it clear that he did not believe that there were "short-run" risks to China, but he did say that a fundamental restructuring of the economy was necessary to stop long term problems: "I am not too worried about the short run prospects of the Chinese economy. Why am I so confident? Because China's fiscal position is extremely good." China's gross debt is just 20pc of GDP. "There is tremendous room for the central bank to use very expansionary fiscal policy to stimulate the economy," he said. "We are now formulating the next five-year map of [the] monetary plan and according to our intention [in] the next five years Chinese growth will be lower. [It] will be lower than 8pc."
China's most recent growth rate has been above 10pc but high food and other commodity prices are putting pressure on consumers. The Chinese authorities appear to be well aware of the problems of inflation and over-heated house prices. Last week the country introduced its first property tax in an attempt to curb spiralling prices. The tax will apply to anyone buying a second home in Shanghai and Chongqing and will be set between 0.4pc and 1.2pc of the purchase price depending on the value of the home compared to the rest of the market.
The property tax would have "a big psychological effect on potential home buyers," said Ge Haifeng, head of research at China Real Estate Index System in Beijing. "China's housing market may get really quiet in coming months," he said. The move is also likely to stop Chinese home buyers' hoarding houses as it will no longer be cost free. It could also curtail people who buy houses simply as an asset class rather than as a home.
In a separate move yesterday, a senior government official in China said that the country also faces major challenges in securing its food supply in the next five years because of increasing domestic demand. Chen Xiaohua, a vice agricultural minister, said he expected China's consumption of grain to grow by 4bn kilograms a year between 2011 and 2015. "Our country is facing great pressure in the supply of agricultural products," Mr Chen added. He argued that the government would try to boost food supply through policy measures including higher spending on farming subsidies.
Any problems with China's food supply could boost consumer inflation, which ran at an annual rate of 4.6pc in December, just below November's 28-month high of 5.1pc. Food prices, which account for about a third of China's consumer price index, rose 7.2pc in 2010 compared to a year ago.
The Great Deflation: In Japan, Young Face Generational Roadblocks
by Martin Fackler - New York Times
Kenichi Horie was a promising auto engineer, exactly the sort of youthful talent Japan needs to maintain its edge over hungry Korean and Chinese rivals. As a worker in his early 30s at a major carmaker, Mr. Horie won praise for his design work on advanced biofuel systems.
But like many young Japanese, he was a so-called irregular worker, kept on a temporary staff contract with little of the job security and half the salary of the "regular" employees, most of them workers in their late 40s or older. After more than a decade of trying to gain regular status, Mr. Horie finally quit — not just the temporary jobs, but Japan altogether. He moved to Taiwan two years ago to study Chinese. "Japanese companies are wasting the young generations to protect older workers," said Mr. Horie, now 36. "In Japan, they closed the doors on me. In Taiwan, they tell me I have a perfect résumé."
As this fading economic superpower rapidly grays, it desperately needs to increase productivity and unleash the entrepreneurial energies of its shrinking number of younger people. But Japan seems to be doing just the opposite. This has contributed to weak growth and mounting pension obligations, major reasons Standard & Poor’s downgraded Japan’s sovereign debt rating on Thursday. "There is a feeling among young generations that no matter how hard we try, we can’t get ahead," said Shigeyuki Jo, 36, co-author of "The Truth of Generational Inequalities." "Every avenue seems to be blocked, like we’re butting our heads against a wall."
An aging population is clogging the nation’s economy with the vested interests of older generations, young people and social experts warn, making an already hierarchical society even more rigid and conservative. The result is that Japan is holding back and marginalizing its youth at a time when it actually needs them to help create the new products, companies and industries that a mature economy requires to grow.
A nation that produced Sony, Toyota and Honda has failed in recent decades to nurture young entrepreneurs, and the game-changing companies that they can create, like Google or Apple — each started by entrepreneurs in their 20s. Employment figures underscore the second-class status of many younger Japanese. While Japan’s decades of stagnation have increased the number of irregular jobs across all age groups, the young have been hit the hardest.
Last year, 45 percent of those ages 15 to 24 in the work force held irregular jobs, up from 17.2 percent in 1988 and as much as twice the rate among workers in older age groups, who cling tenaciously to the old ways. Japan’s news media are now filled with grim accounts of how university seniors face a second "ice age" in the job market, with just 56.7 percent receiving job offers before graduation as of October 2010 — an all-time low. "Japan has the worst generational inequality in the world," said Manabu Shimasawa, a professor of social policy at Akita University who has written extensively on such inequalities. "Japan has lost its vitality because the older generations don’t step aside, allowing the young generations a chance to take new challenges and grow."
Disparities and Dangers
While many nations have aging populations, Japan’s demographic crisis is truly dire, with forecasts showing that 40 percent of the population will be 65 and over by 2055. Some of the consequences have been long foreseen, like deflation: as more Japanese retire and live off their savings, they spend less, further depressing Japan’s anemic levels of domestic consumption. But a less anticipated outcome has been the appearance of generational inequalities.
These disparities manifest themselves in many ways. As Mr. Horie discovered, there are corporations that hire all too many young people for low-paying, dead-end jobs — in effect, forcing them to shoulder the costs of preserving cushier jobs for older employees. Others point to an underfinanced pension system so skewed in favor of older Japanese that many younger workers simply refuse to pay; a "silver democracy" that spends far more on the elderly than on education and child care — an issue that is familiar to Americans; and outdated hiring practices that have created a new "lost generation" of disenfranchised youth.
Nagisa Inoue, a senior at Tokyo’s Meiji University, said she was considering paying for a fifth year at her university rather than graduating without a job, an outcome that in Japan’s rigid job market might permanently taint her chances of ever getting a higher-paying corporate job. That is because Japanese companies, even when they do offer stable, regular jobs, prefer to give them only to new graduates, who are seen as the more malleable candidates for molding into Japan’s corporate culture. And the irony, Ms. Inoue said, is that she does not even want to work at a big corporation. She would rather join a nonprofit environmental group, but that would also exclude her from getting a so-called regular job. "I’d rather have the freedom to try different things," said Ms. Inoue, 22. "But in Japan, the costs of doing something different are just too high."
Many social experts say a grim economy has added to the pressures to conform to Japan’s outdated, one-size-fits-all employment system. An online survey by students at Meiji University of people across Japan ages 18 to 22 found that two-thirds felt that youths did not take risks or new challenges, and that they instead had become a generation of "introverts" who were content or at least resigned to living a life without ambition. "There is a mismatch between the old system and the young generations," said Yuki Honda, a professor of education at the University of Tokyo. "Many young Japanese don’t want the same work-dominated lifestyles of their parents’ generation, but they have no choices."
Facing a rising public uproar, the Welfare Ministry responded late last year by advising employers to recognize someone as a new graduate for up to three years after graduation. It also offers subsidies of up to 1.8 million yen, or about $22,000 per person, to large companies that offer so-called regular jobs to new graduates. But perhaps nowhere are the roadblocks to youthful enterprise so evident, and the consequences to the Japanese economy so dire, as in the failure of entrepreneurship.
The nation had just 19 initial public offerings in 2009, according to Tokyo-based Next Company, compared with 66 in the United States. More telling is that even Japan’s entrepreneurs are predominantly from older generations: according to the Trade Ministry, just 9.1 percent of Japanese entrepreneurs in 2002 were in their 20s, compared with 25 percent in the United States. "Japan has become a zero-sum game," said Yuichiro Itakura, a failed Internet entrepreneur who wrote a book about his experience. "Established interests are afraid a young newcomer will steal what they have, so they won’t do business with him."
Many Japanese economists and policy makers have long talked of fostering entrepreneurship as the best remedy for Japan’s economic ills. And it is an idea that has a historical precedent here: as the nation rose from the ashes of World War II, young Japanese entrepreneurs produced a host of daring start-ups that overturned entire global industries.
Entrepreneur’s Rise and Fall
But many here say that Japan’s economy has ossified since its glory days, and that the nation now produces few if any such innovative companies. To understand why, many here point to the fate of one of the nation’s best-known Internet tycoons, Takafumi Horie. When he burst onto the national scene early in the last decade, he was the most un-Japanese of business figures: an impish young man in his early 30s who wore T-shirts into boardrooms, brazenly flouted the rules by starting hostile takeovers and captured an era when a rejuvenated Japanese economy seemed to finally be rebounding. He was arrested five years ago and accused of securities fraud in what seemed a classic case of comeuppance, with the news media demonizing him as a symbol of an unsavory, freewheeling American-style capitalism.
In 2007, a court found him guilty of falsifying company records, a ruling that he is appealing. But in dozens of interviews, young Japanese brought him up again and again as a way of explaining their generation’s malaise. To them, he symbolized something very different: a youthful challenger who was crushed by a reactionary status quo. His arrest, they said, was a warning to all of them not to rock the boat. "It was a message that it is better to quietly and obediently follow the established conservative order," Mr. Horie, now 37, wrote in an e-mail.
He remains for many a popular, if almost subversive figure in Japan, where he is once again making waves by unrepentantly battling the charges in court, instead of meekly accepting the judgment, as do most of those arrested. He now has more than a half-million followers on Twitter, more than the prime minister, and publicly urges people to challenge the system. "Horie has been the closest thing we had to a role model," said Noritoshi Furuichi, a 25-year-old graduate student at the University of Tokyo who wrote a book about how young Japanese were able to remain happy while losing hope. "He represents a struggle between old Japan and new Japan."
Mr. Furuichi and many other young Japanese say that young people here do not react with anger or protest, instead blaming themselves and dropping out, or with an almost cheerful resignation, trying to find contentment with horizons that are far more limited than their parents’. In such an atmosphere, young politicians say it is hard to mobilize their generation to get interested in politics. Ryohei Takahashi was a young city council member in the Tokyo suburb of Ichikawa who joined a group of other young politicians and activists in issuing a "Youth Manifesto," which urged younger Japanese to stand up for their interests.
In late 2009, he made a bid to become the city’s mayor on a platform of shifting more spending toward young families and education. However, few younger people showed an interest in voting, and he ended up trying to cater to the city’s most powerful voting blocs: retirees and local industries like construction, all dominated by leaders in their 50s and 60s. "Aging just further empowers older generations," said Mr. Takahashi, 33. "In sheer numbers, they win hands down."
He lost the election, which he called a painful lesson that Japan was becoming a "silver democracy," where most budgets and spending heavily favored older generations. Social experts say the need to cut soaring budget deficits means that younger Japanese will never receive the level of benefits enjoyed by retirees today. Calculations show that a child born today can expect to receive up to $1.2 million less in pensions, health care and other government spending over the course of his life than someone retired today; in the national pension system alone, this gap reaches into the hundreds of thousands of dollars.
Abandoning the System
The result is that young Japanese are fleeing the program in droves: half of workers below the age of 35 now fail to make their legally mandated payments, even though that means they must face the future with no pension at all. "In France, the young people take to the streets," Mr. Takahashi said. "In Japan, they just don’t pay." Or they drop out, as did many in Japan’s first "lost generation" a decade ago.
One was Kyoko, who was afraid to give her last name for fear it would further damage her job prospects. Almost a decade ago, when she was a junior at Waseda University here, she was expected to follow postwar Japan’s well-trodden path to success by finding a job at a top corporation. She said she started off on the right foot, trying to appear enthusiastic at interviews without being strongly opinionated — the balance that appeals to Japanese employers, who seek hard-working conformists.
But after interviewing at 10 companies, she said she suffered a minor nervous breakdown, and stopped. She said she realized that she did not want to become an overworked corporate warrior like her father. By failing to get such a job before graduating, Kyoko was forced to join the ranks of the "freeters" — an underclass of young people who hold transient, lower-paying irregular jobs. Since graduating in 2004 she has held six jobs, none of them paying unemployment insurance, pension or a monthly salary of more than 150,000 yen, or about $1,800. "I realized that wasn’t who I wanted to be," recalled Kyoko, now 29. "But why has being myself cost me so dearly?"
Derivatives still in flux as Dodd-Frank deadline looms
by Aline Van Duyn - Financial Times
Anyone who wants to know on what day of the week their birthday falls between now and 2040 can get a quick answer from me.
This is not because I have a special talent for retaining dates. It is because I now own a "swaps calendar", a folded paper rectangle that can be pulled out to reveal 30 years’ worth of dates. Contracts such as the widely used interest rate swaps – of which there are nearly $350,000bn worth outstanding – are created to match a specific date needed by the buyer or seller. With more than 10,000 days to choose from between now and the end of 2040, it is handy to have a quick way to check on what day of the week a payment could be due and whether it happens to clash with one of the world’s public holidays.
The calendar, given to me by Tradeweb, is a simple and clear illustration of just how tailor-made even widely used and "standardised" derivatives contracts like interest rate swaps are. The ability to choose from thousands of days is one reason so many investors, companies and banks use swaps and like them. Buying or selling more approximate hedges – such as US government bonds to offset potential interest rate swings – can leave weeks or months’ worth of mismatches.
The customisation is also the reason over-the-counter derivatives have become a dangerous wire connecting the world’s biggest financial institutions. The trillions of dollars worth of customised contracts rely on the creditworthiness of the financial institution writing the contract. Only a handful of banks are big enough to stand behind such contracts. The crisis revealed that this had created too much interconnection.
If one big derivatives writer – or "counterparty" – goes under, then other big counterparties could topple over in turn. Reducing these connections by shifting huge parts of the market to clearing houses where the costs of defaults are shared among all the users of the market is now a key plank of financial market reform.
The derivatives industry is "on message" about the benefits of clearing. Clearing is also required by US law following the passage of the Dodd-Frank Act last year. What will also be needed is an overhaul of the way swaps are traded. Newly invented entities with the ugly name of "swap execution facilities" or "Sefs" are currently in the works. However, as yet, no one knows what they will look like, what the creditworthiness of the Sefs will be, and whether the Sefs will be deemed safe enough by investors. Having spoken to dozens of derivatives experts – from regulators to dealers and investors – at a packed conference in New York this week, the only certainty is that it will take a very long time to find out whether the new trading structure will fly.
This is not just because many of the key rules have not yet been written – although that is a pretty big deal. But even when the rules are out – and the Dodd-Frank deadline is set for mid-July – it is going to take years before the real shape of the derivatives markets will be known. There will not be a "big bang". Huge numbers of people need to work through the complexities of it. Consider, for example, an investor such as BlackRock. It invests on behalf of clients, ranging from mutual funds to pension funds. When it comes to clearing derivatives, BlackRock may have to get the go-ahead from these customers. They essentially all trade as different legal entities, even if BlackRock acts on their behalf.
The group has 3,000 fixed income clients. Of those, 800 currently have contacts in place which allow them to trade over-the-counter derivatives such as interest rate swaps, according to Richie Prager, managing director at BlackRock. He says 500 of those currently have some kind of derivatives exposure.
Will a more transparent swap market open the door for the 2,500 who do not use them to enter the market? Or will the 500 that currently use derivatives like swaps decide the new system is too complex, cumbersome and expensive? It will take years to find out. So get your swap calendars now. Whether they continue to be useful for swaps traders, or just end up as a party trick, is not known. What is, is that the answer to that question will not be quick to come.
Et in Arcadia ego
by Economist
The suburban sunbelt is the scene of terrible poverty
The statistics are worthy of Detroit or Newark: almost half the children in the local schools are from families poor enough to be eligible for free or cut-price lunches; a tenth of households qualify for food stamps; one in eight residents gets free meals from soup kitchens or food banks; perhaps one in 12 has suffered a recent spell of homelessness. Yet the spot in question is not a benighted rust-belt city, but Sarasota, Florida—a balmy, palm-studded resort town on the shores of the Gulf of Mexico.
The Sarasota-Bradenton metropolitan area, a two-county sprawl of condominiums, marinas and retirement homes, saw the proportion of people living below the poverty line rise by more between 2007 and 2009 than any other big city in America, from 9.2% to 13.7%, according to the Census Bureau. Nor is Sarasota an aberration.
All the other metropolitan areas that saw jumps of four points or more are also formerly fast-growing southern and western cities: Bakersfield, California; Boise, Idaho; Greenville, South Carolina; Lakeland, Florida and Tucson, Arizona. Arizona now has the second highest poverty rate in the nation, after Mississippi. The especially severe housing bust that ended the breakneck growth of these sunbelt cities has brought with it deprivation on a scale they have never previously encountered and are struggling to address.
Poor inner cities in the Midwest and north-east still have higher overall poverty rates, but in recent years, notes Elizabeth Kneebone of the Brookings Institution, a think-tank, poverty has grown fastest in the suburbs, especially in the sunbelt. A third of America’s poor, she notes, now live in suburban areas. Many cities in the sunbelt, adds Margaret Simms of the Urban Institute, are suffering from what it calls "double trouble", meaning a plunge both in property values and employment, with concomitant jumps in poverty. This trend is significant, says Scott Allard of the University of Chicago, since it is harder for the poor to seek assistance and to hunt for jobs amid the suburban sprawl.
Sarasota epitomises all these trends. For many years it prospered by offering tourists and new residents—especially retirees—relatively cheap accommodation in a sunny climate. The population grew by about 5% a year for decades. At the height of the boom, in 2006, construction, property finance and related services accounted for at least a third of the local economy, says Kathy Baylis, the head of Sarasota County’s economic development corporation. Her hairdresser (a traditional harbinger of bursting bubbles) was speculating in property, teaming up with friends to buy and "flip" condos.
When property prices began to drop, the effects on the area were particularly pernicious. Those in the building or tourism trades, as well as retirees living off their investments—a huge share of the population—quickly felt the pinch. Unemployment soared, from 3.1% on average in 2006 to 13.4% in January of last year (it is 12.3% now). It would be higher still had some not moved away, causing the population of the county, like the state, to fall for the first time in living memory in 2008.
That has left people like Ken struggling to keep body and soul together. He describes how he gave up his cooking job to look after his ailing mother in 2007. When he started to look for work again a few months later, he could find only a part-time job, which soon evaporated. He had no savings, so could no longer afford to rent. He wound up in a tent in a camp for the homeless called Pinellas Hope, which was set up by the Catholic church in the town of Clearwater, 50 miles up the coast from Sarasota.
He is relatively lucky: Steve Barton, a carpenter from Ohio, is one of several hundred living in the woods outside Venice, 20 miles south of Sarasota. He has been out of work for over two years, so is no longer eligible for unemployment payments. He lives entirely off charity.
In addition to the cooks, chambermaids and construction workers who hit the skids soon after the recession began, many former professionals have now exhausted their savings and are beginning to fall back on local charities. Angie Sammann, a former loan officer at a bank, is another of the tent-dwellers at Pinellas Hope. She tells the story of how she lost her job due to illness, then her apartment, then part-time work in a deli, then the room she was renting and finally the possessions she had put in storage. She got a month’s work from the Census Bureau last year, but otherwise has not seen a pay cheque for over a year. "I don’t care if I scrub toilets," she says, "I just want a job."
Pinellas Hope has 255 tents and 28 huts, all of which are occupied. The Salvation Army branch in Sarasota is equally overrun. It has 200 beds for the homeless, but regularly ends up accommodating 250 or more, according to Bryan Pope, the manager. A special phone service that directs those seeking help to local charities can only help one in five callers, says Richard Martin, the head of a local homelessness charity.
Much of the money for such schemes comes from different local, state and federal government agencies. But all are tightening the purse strings. The county’s revenues have fallen with property values, so it is cutting back. The state, meanwhile, has cut its grants to Mr Martin’s outfit by 80% over the past four years. Many of the federal grants come courtesy of the stimulus bill of 2009, and so are quickly drying up. When the federal money runs out, says Carolyn Mason, a county commissioner, "that’s pretty much the end of the road".
Moreover, cities like Sarasota are unsympathetic places for those down on their luck. One of the reasons they grew so fast in the boom years were their low taxes, leaving little money for social programmes. Homelessness is often seen as a threat to migration and tourism. Sarasota city council made several attempts to outlaw sleeping rough, finally finding a formula that passed muster with the courts in 2005. That year it was named the meanest city in America by the National Coalition for the Homeless. All the other cities in the top ten were also in the sunbelt.
The Natural Laws of Collapse
by Adam D. Sacks - Culture Change
Home That birds fly and pigs don't is a consequence of laws of nature governing physics and biology. Nothing that transpires on physical planet Earth is any different: the laws of nature are inviolate. Always.
This is a truism, and should be readily apparent, as it indeed often is in indigenous cultures where people are entirely dependent on natural forces and what is close at hand. But this truism is rendered invisible by technological and bureaucratic power, the delusional quality of human exceptionalism, and the complexity of civilizations, especially but not exclusively of recent industrialized civilization.
That is, we have imagined throughout the known history of the past ten thousand friendly-climate years that, because from time to time we have been able to use the laws of nature to our short- and long-term advantage, we are no longer subject to them. Current instances are encyclopedic: Use of fossil fuels, the Green Revolution, atomic energy, widespread dispersion of toxics, and entering the sixth great extinction are recent examples. We persistently act as if unintended consequences do not exist.
Nonetheless, such consequences abound, and are forcefully shaping our lives. If we are to address causes and consequences, whether we fully understand them or not, it's essential to be open to and explore perspectives that may be very different from prevailing ones. Cultures evolve because they provide us with effective ways of surviving the environmental hand we are dealt, but cultures are powerful regulators of human behavior and thought, and tend to persist despite changes which may render their central assumptions dysfunctional or lethal (e.g., we can pollute and desertify the planet to our heart's content).
The culture which drives us, whether we deplore it or not, likes us to go around in activism circles whenever we threaten to question its most basic tenets -- activism keeps us busy and harmless. Notwithstanding, the forbidden point to consider here is that collapse of civilizations, including ours, is inevitable and always has been. Hidden in plain sight, we have not grasped what will sooner or later become obvious: Civilizational collapse is not up to any of us, no matter what we do. As when faced with an unstoppable Hurricane Katrina, which is only obeying the laws of nature, the best we can do is to be prepared.
To elaborate a bit: there are indeed laws of nature that govern human groups, just as there are physical/biological laws that govern any living creature. This seems as if it should be obvious. These laws, particularly in relationship to civilizations, may not be so obvious as the laws governing the behavior of a falling apple, but they are every bit as inviolable.
In order to live within the constraints of such laws, which civilized humans habitually seem to forget (not only in Euro-American civilization, but in all other civilizations throughout known history), we have to re-learn them (a central theme in Ishmael). And by "civilization," I mean human societies more or less larger than chiefdoms, industrialized or not, living in central dwellings more or less distant from sources of food and other necessities, with a distinct class structure that differentiates between a ruling oligarchy and everybody else.
What kinds of laws are these? Pretty simple really. Primarily, any biological organism, including humans, will grow exponentially until it runs into limits to growth, or overshoot of carrying capacity. The wall may be in the form of no more food, or competing species, or new competing members of one's own species. Sometimes a balance is struck, and an equilibrium is maintained for an indefinite period of time if and until an external event upsets the balance (e.g., a new species in the niche, climate change, etc.).
A critical corollary is that exponential growth is an imperative. Any species will expand its numbers if it possibly can for as long as it can. Now with humans sometimes culture adapts to perceptions of limits, and develops norms that restrict expansion of self-defeating growth (China's one-child policy is an example of such an attempt, successful or not); island cultures may do that because the limits are painfully obvious. But, as on Easter Island, ecosystem reality may remain unappreciated, as people would often rather die than change their culture, and die they did.
As civilizations grow larger the ability to change seems to dwindle, and we witness all civilizations in history going through their birth, vigor, then death, until, as in Ozymandias,
. . . Nothing beside remains: round the decay
Of that collosal wreck, boundless and bare,
The lone and level sands stretch far away.
In one of my top ten books of the 20th century, Joseph Tainter (The Collapse of Complex Societies)explains, in terms of the flow of energy (he calls it "marginal return"), why civilizations must collapse. Social complexity is very expensive, and the more a civilization grows the less you get back per unit of input (also called "diminishing returns"). Sooner or later every civilization busts its budget, cannot afford its armies or its bureaucracies, is unable to suppress increasing dissatisfaction among the masses who must be at least nominally pacified (think bread and circuses), exhausts its resources, suffers from its environmental travesties (the most salient of which is destruction of trees and soil), runs out of food, and is eventually supplanted by simpler more sustainable groups (if there are any around) or just disperses (if there's any place left to disperse to).
I would propose that the civilizational life cycle, as described above, is a law of nature. The collapse is therefore predictable. It has nothing to do with our specific Euro-American now-gone-global deplorable civilization -- it has to do with any civilization that gets to a certain size, necessitating hierarchy and class. Cultures will vary in their metaphors and style, partly depending upon geography, as Jared Diamond has pointed out [5], but the final outcome will be the same: collapse.
And that's where we are now. The determining factor is size (relative to resources). All else is simply the stories we tell ourselves. Therefore:
We can write to politicians, we can riot in the streets, we can write learned tomes, we can cavort through the vast wasteland of talk radio, we can make impassioned documentaries, we can bring down Monsanto, we can put up solar panels and drink organic yak's milk. None of that will change the outcome one bit (as tragic as that may be now that humans have become a global force) -- because civilization is on a course prescribed by laws of nature which have no regard whatsoever for human wishful thinking.
It sounds grim, what can we actually do? Well, once we recognize the reality -- but not until then -- we can act on it. As far as I can tell, acting on it means getting ready to live our lives within planetary means. It may be too late for that, as the climate prepares to rage wildly beyond livability, but let us try what we can (which may include pulling carbon out of the atmosphere so somebody will survive). [6]
Preparing ourselves is not a salve for the terrible pain of our current predicament, but it's about as good as it gets -- and is full of relationship and a renewed sense of community, so that we may, at the very least, as Elizabeth Kübler-Ross once put it, live until we say goodbye.
Sovereign debt: Pointers from the past
by Anousha Sakoui - FT
On a warm June day in the French capital, Jean-Claude Trichet rose to address the Paris Club, a group that for 50 years has represented the interests of creditor governments in talks with countries battling to repay their debt. It was 2006 and the president of the European Central Bank, who was a previous chairman of the 19-nation club, recalled the "years of intense negotiations" during the 1980s and early 1990s over the many sovereign debt restructurings he had experienced in Latin America and beyond.
Suddenly, all that experience of write-offs, reschedulings and the like is proving more valuable in his role as head of the ECB than anyone could have imagined. The former top French finance official heads a phalanx of European policymakers grappling with an increasingly severe debt crisis in the 17-nation eurozone itself. "There are European policymakers in prominent positions who have sovereign debt restructuring experience gained in an emerging market context, and this experience will no doubt shape their views on how a future eurozone restructuring could or should evolve," says Sebastian Espi?nosa of White Oak, a sovereign advisory firm.
In spite of recent bail-outs, markets are pricing in a high risk of a restructuring for countries such as Greece and Ireland, in what would be the first default of an advanced nation since postwar Germany in 1948. Officials from the International Monetary Fund as well as the European Union have repeatedly rejected the suggestion that there might be any such need. Meanwhile, at a Brussels summit on Friday, EU leaders are expected to discuss a range of ideas for further underpinning their support of the weaker economies in the single currency bloc.
How a restructuring would be handled in the event that one becomes necessary is of vital interest to investors worldwide and could set the tone in markets for years to come. The question of how a eurozone member could reduce its debt to more sustainable levels could also determine whether the EU could carry on in its current form. As the more than 50 sovereign restructurings of the modern era all come from the developing world, policymakers are likely to turn to emerging markets for guidance on what to do. "There is one lesson from this history that is inescapable," says Lee Buchheit, a lawyer who worked on debt restructurings of Mexico, Russia and Iraq among others. "A sovereign debt crisis can be a painful experience for both the debtor and its creditors; a mismanaged sovereign debt crisis can be a catastrophically painful experience."
Europe’s own debt crisis started in late 2009, after revisions to core data showed Greece’s finances were worse than previously thought. This lit the touchpaper of investor fears about the ability of a number of eurozone members to repay their debts, pushing up borrowing costs. The EU and IMF, which have provided bail-out funds to Greece, do not think the country needs a restructuring as it is sticking to fiscal reform targets. But many economists and investors disagree. Willem Buiter, chief economist at Citigroup, has warned that there could be several eurozone sovereign debt restructurings in the next few years.
When Greece last year adopted austerity measures in order to deal with the debt burden, the public response was a wave of riots. It was an uncomfortable parallel to the experience of Argentina in 2001. That was the largest default in history, involving nearly $100bn of debt. Not only did creditors sue but an economic crisis led to domestic civil unrest. Buenos Aires still owes western creditors $7bn, though Argentine officials are confident of reaching a deal within weeks to reschedule payments to the Paris Club. The loss to lenders has been painful, at about 75 per cent of their initial investments as a result of a restructuring in 2005. Originally only 75 per cent accepted, but that proportion has since risen through a second offer to 90 per cent.
The eurozone "has a strong desire to ensure that however the process plays out, it is very different to Argentina’s restructuring", says one sovereign debt adviser. "Argentina from 2001 to 2010 is the paradigm to avoid: they did almost everything wrong. They defaulted, turned their back on the IMF at an early stage, jettisoned their currency board, converted bank assets and liabilities asymmetrically, adopted an aggressive position with their creditors, were excluded from the international markets and spent many years defending extensive litigation."
Similarly to what is happening in Europe today, the IMF tried a decade ago to create a more formal process by which sovereign borrowers restructured their debts. That followed a series of large scale bail-outs orchestrated by the Fund during the 1990s for countries such as Mexico and nations affected by the Asian financial crisis. Proposed in 2001, this "Sovereign Debt Restructuring Mechanism" was aimed at making it easier for countries to restructure debts – which by that time were largely held by an increasingly numerous, anonymous and difficult to co-ordinate group of bondholders.
Under the mechanism, a country could reach a restructuring agreement with a qualified majority of creditors that would then be made binding on the others – deterring litigation. But against a backdrop of improving emerging markets, the SDRM failed to win enough support. One concern was that it would erode the rights of individual investors. In recent months, European ministers have agreed on the need for a mechanism that would stop the contagion of panic and spiralling borrowing costs across the eurozone. They seem to have learnt from the failure of the SDRM: the proposal known as the European stabilisation mechanism takes a less statutory, more consensual approach.
That plan will not come into effect, however, until 2013. At last week’s World Economic Forum in Davos, economists and others warned that one or more of the more indebted eurozone members could be forced into a rather earlier restructuring. "You cannot wait until 2013 to restructure some of the debt," said George Soros, the financier, even though the euro itself "will certainly hang together".
So a softer voluntary solution is being mooted as a route to ease Greece’s debt burden in particular – originating from the other side of the world. In the 1980s, Klaus Regling was stationed in Jakarta for the IMF and in that role was involved in a plan to help the nearby Philippines restore its creditworthiness by reducing its excessive debts. Today the 60-year-old German runs the European Financial Stabilisation Facility, a bail-out fund set up last year by the EU to support struggling member states.
The Philippines plan involved the World Bank along with the IMF and others lending Manila funds to buy back its debts from banks, the price of which had collapsed to about half of face value. The question now is whether the EFSF could lend money to a country such as Greece to capitalise on the depressed market value of its bonds, capturing potentially a 30 per cent discount. Importantly, this method would im?pose on creditors no change in terms.
Neither Mr Regling nor Mr Trichet have commented on such a plan, although at Davos Mr Trichet did say it would be "useful" if the EFSF could buy up governments’ bonds". George Papaconstantinou, Greek finance minister, was also reported as confirming that bond buy-backs were "an idea on the table". In any event, some analysts doubt these would do enough to address Greece’s solvency or funding issues. For one, Greece’s debt stock (at €326bn) is much higher, likely requiring far more cash for it to have a meaningful impact. Moreover, in the Philippines case lenders had largely lost hope of recovering their money, which is not the case in the eurozone.
"The main problem with debt buy-backs is that to make them successful, you need to pay up. But the more you pay up, the less debt relief you deliver," says Mr Buchheit, of Cleary Gottlieb Steen & Hamilton, who worked on the Philippines plan. "That is the Catch-22 that leads people to start looking at methods of inducing creditor participation that do not involve paying a higher price."
Unlike a debt buy-back, restructurings seek to amend the terms of bonds, often where a country offers investors the opportunity to swap from their old bonds into new ones. In essence, creditors agree to exchange an existing bond for a longer dated bond, potentially with lower interest costs. This gives the debtor country longer to repay and a smaller interest burden. The incentive for creditors to take up the offer is that if they hold out and the situation deteriorates, they could end up worse off.
Pakistan in 1999 became the first of the modern era to restructure sovereign bonds, followed by Ukraine, Uruguay and the Dominican Republic. The process has proved successful, with in many cases more than 90 per cent of bondholders participating. But even a small percentage of holdouts, when the debts are large, can pose problems. European policymakers seemed aware of this risk when in November they gave the first details of their plans to deal with future debt crises. They said that under its new framework from mid-2013, if a member state needed financial assistance, it would have to submit to an analysis conducted by the European Commission and the IMF to determine whether its debt was sustainable. If that was found not to be the case, it would have to negotiate a restructuring with its private sector creditors.
New government bonds would, moreover, include clauses that bound a dissenting minority of bondholders legally to a restructuring supported by a majority of creditors. This has raised concerns that these bonds could be more expensive to place, as they would be considered more likely to be restructured. It is a fear some debt advisers dismiss, pointing to the experience of Mexico, which started to include these clauses in 2003 with little impact. But it is unclear what would happen to existing debts. Greece and Ireland have the advantage that most of their debt is governed by local law, which they can theoretically change to facilitate restructuring, unlike in the emerging markets where bonds are often under New York or English law.
While much of the script is still to be written, another lesson learnt is that while it can be painful, restructuring can be a path to recovery. Joseph Stiglitz, the Nobel laureate economist, points to the experience of Argentina, in spite of its messy default, as proof "that there is life after restructuring": in the years that followed, the country experienced rapid growth. "There is a rationale to delay if you really think you can make it through, but there is a tendency for delay unnecessarily, because the costs are exaggerated by financial markets," Mr Stiglitz says. "If debt is going to have to be restructured, it’s better to be sooner than later."
Financial sector exposure
Austria’s biggest insurer opts to take a hit on its holdings
Vienna Insurance Group last week offered a taster of what European financial groups might face from the debt crisis. Austria’s leading insurer wrote down the value of its Greek and Irish bonds by about 25 per cent, write Richard Milne and Chris Bryant. "There are debates about whether there will be haircuts or voluntary buy-backs [of debt]," says Martin Simhandl, chief financial officer. "If it comes to a [haircut] I want to be prepared."
The cost of the writedown was in the low tens of millions of euros as Vienna Insurance has less than 1 per cent of its investment portfolio in bonds from the eurozone’s so-called peripheral countries. But its move does represent one of the first times that a European financial institution has both openly acknowledged that a restructuring could take place and taken a financial hit for it. For many observers, the eurozone crisis is as much about the fragility of its financial system as it is about the debt levels of countries. Parallels in particular are drawn with the Latin American crisis in the 1980s. Back then, concerns about the ability of US banks to withstand the losses they had incurred in the region delayed the onset of restructuring.
The crisis broke in 1982 but restructuring started properly only seven years later, in part to allow lenders to build up their reserves to withstand the likely losses from debt relief. European banks today appear to have about double the amount of loans to the eurozone periphery than they have capital, a similar situation to US banks in Latin America. "European banks are the largest holders of Greek bonds. The stability of those institutions will be very much on the minds of Greece’s multilateral and bilateral supporters should a debt restructuring prove unavoidable," Lee Buchheit of Cleary Gottlieb Steen & Hamilton and Mitu Gulati of Duke University wrote last year.
French and German banks have the largest exposure to Greece, according to the Bank for International Settlements, with €59bn and €40bn respectively as of last September. German banks are also among the most exposed to Ireland, with €154bn outstanding. One European regulator says: "The health of the banking system is paramount to considerations about how this all unfolds." Mr Simhandl insists he is merely acting cautiously. "It is not that we think that Greece is a bad country or that it has developed badly?.?.?.?You just want to evaluate [the debate] as a prudent person. Of course, I would be happy if it doesn’t turn out that way."
AAA Rating Tough to Defend as U.S. Debt Soars
by Kevin Hassett - Bloomberg
Last week, Standard & Poor’s lowered Japan’s bond rating to AA-, the fourth-highest level. By that standard, the U.S. got away with a slap on the wrist from Moody’s Investors Service, which warned merely that "the probability of assigning a negative outlook in the coming two years is rising."
If you look at the U.S. budget trajectory with an eye on the lessons from Japan’s recent history, there’s a strong case that the U.S. rating should be cut immediately. It’s true that the U.S., with total government debt equal to 98.5 percent of gross domestic product, according to Organization for Economic Cooperation and Development data, has many years of unrestrained deficits ahead before it reaches the crisis point of Japan, which has debt of 204 percent of GDP.
A more plausible target, however, is 135.4 percent of GDP. That was Japan’s debt in 2000, just before S&P first downgraded it from AAA in February 2001. If the U.S. makes no fiscal progress, and continues to run annual deficits at the 2011 level of $1.48 trillion dollars, it will take just six years to reach a debt level of 135.3 percent of GDP. The Japan precedent suggests the U.S. would lose its sacrosanct AAA rating at that point, if not sooner.
To be fair, the Congressional Budget Office, in its forecasting, predicts that the U.S. will do better than that, in part because revenue should increase as the economy recovers. CBO’s wholly unrealistic baseline forecast suggests the day of reckoning is far off. Don’t believe it.
Doctors’ Pay
The budget agency’s somewhat more grounded "alternative fiscal scenario" reflects "fixes" likely to be passed by lawmakers, such as higher payment rates to doctors under Medicare. If we use this alternate forecast, and factor in CBO assumptions that high debt levels would crowd out capital investment, then the U.S. hits the 135 percent debt mark in 2020 or 2021. Be happy that Japan, not Greece, is the logical point of comparison here. Greece saw its credit rating downgraded repeatedly in 2009. Its debt was 105.6 percent of GDP at the end of 2008 and 120.2 percent of the nation’s economic output at the end of 2009.
The U.S. could depart from the collision course with a downgrade if it took serious steps to reduce its deficit. But President Barack Obama’s State of the Union address offered pitifully small spending cuts while floating Obama’s fiscal commission out to sea on an iceberg. I may be old-fashioned, but all of this should mean that rating of U.S. long-term debt should be downgraded -- today.
Uneasy A
A report from S&P last October estimated that "absent policy and other changes" the U.S. could be rated A -- two rungs below Japan’s current status -- by 2020. So start the process now, for goodness sake. Think of it this way: Somebody buying and holding a 10-year or 30-year U.S. bond today faces a pretty good likelihood of suffering a downgrade. Shouldn’t a bond’s rating have a strong chance of staying the same over the life of the bond?
I should add two important caveats:
- First, gross government debt numbers might not be the best measure of country-specific risk. A U.S. with debt of 135 percent of GDP might reasonably still be a safer place to stick money than an equally indebted country. Still, governments everywhere play the same kind of trust-fund games the U.S. plays, so the OECD data provide the best readily available apples-to-apples comparison.
Also, focusing on gross debt may make the situation look better than it really is for the U.S., since Japan’s is so high relative to debt held by the public. Japan’s publicly held debt was 66.3 percent of GDP when it lost its AAA rating, compared with the current U.S. level of 72.7 percent.- Second, one might argue that it is unthinkable that the U.S. would ever default, so it should always have a solid AAA rating. Think again. As debt levels rise, a fiscal situation can become simply impossible, making default inevitable. And it can happen here.
Since its founding, the U.S. has defaulted on its debt twice. The first time, in 1790, it deferred payments on money owed stemming from the Revolutionary War. While the dollar values were eventually repaid -- 10 years later -- the delay was technically a default.
The second time, in 1933, the U.S. blatantly broke its obligation with creditors by refusing to repay loans in physical gold. Existing contracts stated that lenders could request payment in either dollars or gold, but President Franklin Delano Roosevelt and Congress, with plans to significantly inflate the dollar, passed a law forbidding repayment in gold. Again, the dollar values were repaid, but unilaterally changing the terms of a contract is the equivalent of a default.
The failure of the ratings companies to identify the riskiness of real estate loans clearly contributed to the financial crisis. If, given the evidence, they fail to act responsibly and change the U.S. credit rating soon, they will be setting investors up for yet another fall.
Kevin Hassett is director of economic policy studies at the American Enterprise Institute
Britons Less Optimistic on House Prices
by Scott Hamilton - Bloomberg
The number of Britons who expect house prices to rise this year decreased in the last three months as concerns about the economy mounted, Rightmove Plc said, citing a survey. About 24 percent of 28,401 U.K. consumers surveyed this month said prices will be higher in a year, the operator of Britain’s biggest property website said in a report released in London today. That compares with a result of 27 percent in October and 53 percent a year earlier.
House prices may remain under pressure this year as banks curtail lending and the government steps up spending cuts to tackle a record budget deficit. Britain’s economy unexpectedly shrank 0.5 percent in the fourth quarter, while inflation accelerated to an eight-month high in December, deepening a split among Bank of England officials on the future of policy. "A lot hangs on economic recovery," Miles Shipside, commercial director of Rightmove, said in the report.
"For many, the relatively low cost of borrowing money means it really is a good time to buy, though the shortage of available property in some popular locations, and demanding criteria set by lenders, mean that it is not necessarily an easy time to buy." Thirty-eight percent of respondents in the survey forecast home values would be "about the same" in a year, compared with 36 percent in October. The proportion that said prices will be lower was unchanged at 32 percent.
Policy maker Adam Posen said last week that he sees a "downside" risk to the housing market because of the lack of credit for first-time buyers. Hometrack Ltd. said on Jan. 27 that house prices dropped 0.5 percent in January. Mortgage approvals fell to the lowest level since March 2009 last month, the Bank of England said on Jan. 21. A report by the Land Registry today showed that house prices fell 0.2 percent in December from a month earlier.
Some 53 percent of respondents in Rightmove’s study who expect prices will fall over the next year cited a lack of confidence in the economy as the main reason, while 30 percent said an increasing number of properties for sale would be key. Rightmove carried out the survey online between Jan. 4 and Jan. 18. It began the poll in January 2009.
A separate poll by homebuilder Barratt Developments Plc showed 86 percent of Britons under the age of 30 say home ownership is a "key priority." That was higher than the 76 percent who said job satisfaction and 57 percent who said their disposable income. Sixty-five percent say they can’t afford to buy a home as big as their parents’.
76 comments:
I remember hearing a speech by Jean Kirkpatrick who was the US ambassador to the UN. She was an original neoconservative. The jist of her speech was than we should not nation build and push countries into a democratic form of government. Fast forward to Iraq where Wolfowitz and Pearl both neocons argued that the reason they were in Iraq was to bring democracy to Iraq. Has the neocon philosophy changed or was this just BS. to justify our presence in Iraq.
I would like to ask our readers to consider helping one of our own. Killian O'Brien, a permaculture teacher and community activist, organized the talk I did in Detroit in September. I stayed with him in the heart of the city, which his family had chosen to live in as a place where they could make a difference. In fact I did my first interview with Max Keiser from Killian's house.
Killian is my friend, and he and his wife risk having their utilities cut off imminently and losing their home. If they can make it to spring, they will be able to resume teaching courses and selling produce.
These people are offering an essential service in a neighbouhood desperately in need of it. I would like them to be able to continue to do so, and without fear of impending homelessness.
This is their appeal.
Mr. Hope and Change has really turned out to be the rankest of rank amateurs, hasn't he?
UK: Age of the part-timer: 200,000 jobs were created last year. Only 3 per cent were full-time
Hi S&I, another excellent post. free humanity vs... ???
people need to think who the ??? are.
my favorite hormonally balanced diet guru addresses exactly why the atkins diet isn't optimal for losing excess fat and keeping it off. this is especially true of the induction period, which most people confuse with the diet itself. but it is also true of the high omega 6 fatty acid portion of the ongoing plan.
the zone diet is a human optimization diet - he's worked with about 25 athletes who have won gold medals in the olympics (nobody on atkins is an olympian and for good reason!).
dara torres missed gold by 1/100 of a second as a 42 year old swimmer.
valentina vezalli is on the only human on planet earth to win 3 straight golds in fencing - her latest a 38 year old!
the oldest swimmer on the US olympic team has been a zoner since 1992... including to the two most decorated female swimmers in world history - dara torres and jenny thompson.
anyway, here's dr. sears blog entry for those interested in taking their diet to the hormonal level...
http://blog.zonediet.com/2011/01/18/why-the-atkins-diet-doesn%E2%80%99t-work-and-never-will/
dr. sears isn't perfect - i think he's late to the game on GMO foods, which i try to avoid.
if you want to know what a 62 year old zoner can look like, check out charles of crossfit...
http://www.localsgym.com/zone-diet
the elite crossfitters care about one thing above all others - performance.
that's why the elite crossfitters recommend the zone diet - and the paleo zone as being the best of all words.
eat like a cave man - you were either created to eat like that or you evolved to eat like that.
either way, your body is optimized to eat like that...
http://blog.zonediet.com/2011/01/10/want-to-lose-weight-eat-like-our-paleolithic-ancestors/?utm_source=iPost&utm_medium=email&utm_content=continue-reading&utm_campaign=2011-01-30-Blog-WL
here is another nicole on the zone diet...
http://journal.crossfit.com/2005/10/getting-off-the-crack-by-nicol.tpl
looking good is one thing. feeling good is even better. i'm as stressed as the next guy as the psychiopaths run us off the cliff, but i feel better in my mid 40s than i did at 20. it has been 4 years since my last physical and my doctor tells me "don't waste my time" when i ask to have another physical b/c i want to see how much my blood lipid profile has improved over the last 10 years.
if this sounds too good to be true, it would be 'cept for the fact it is true.
manuel uribe is probably the poster child - down about 600 lbs on the zone diet and he is now happy and satiated on 2000 calories a day instead of starving and depressed on 30,000 calories a day.
expect manuel to feel fantastic as he sets the world record for top to bottom weight loss of about 1000 lbs.
and his blood work is exceptionally healthy.
hi Stoneleigh,
thanks for the heads up on Killian. a few of us have contributed enough to the point the utilities won't be cut off.
the process of helping out was really simple.
i'd love to see Killian put together a DVD so they can share their knowledge.
it also might help with their finances going forward.
This might interest people here - in Egypt dial-up modems, faxes etc. are making a come back as internet is curtailed. Check the BBC story. Nice and informative pic about the net access in the link. Couldn't happen here? Wait and see...
For the record,
Egypt with 79 million people has the largest Islamic population of the countries on the map. But Indonesia with 238 million people, mostly Islamic, is by far the largest Islamic country in the world.
Cheers,
Robert
Fox news, the news site for which accuracy is not important, like most Americans is unable to place correctly the location of Egypt on a map: http://www.huffingtonpost.com/2011/01/31/fox-news-cant-find-egypt-map_n_816540.html
Cheers,
Robert
Huffington Posts article on American cable companies not carrying Al jazerra says:
"Cable companies are also worried, said Burman, that they will lose more subscribers than they will gain by granting access to Al Jazeera. The Canadian experience, he said, should put those fears to rest. In Canada, national regulators can require cable companies to provide certain channels and Al Jazeera ran a successful campaign to encourage Canadians to push the government to intervene. There has been extremely little negative reaction over the past year as Canadians have been able to view the channel and decide for themselves."
America is NOT Canada. Popular American doctrine gets in the way of rationally analyzing the good and bad of a news site. I would expect strong opposition by a lot of viewers if Al Jazzera were to be allowed on certain American cable networks.
I mean, my gosh, it originates from an ARAB country! And you know how various groups including government and neoconservative personalities have been demonizing all of Arab orgin.
FWIW, I have compared Al Jazzera's English edition with other new sources since it first appeared and found it to be accurate and objective in its reporting.
Cheers,
Robert
@Robert
I don't have cable or TV (I home-made an antenna but it was too cumbersome so I stopped using it long ago).
However, the american viewers had the opportunity to see people discussing (and being mocked for it) their housing bubble and collapse (Schiff) while the canadian bubble seems to be all green shoots.
So yes, America is NOT Canada, but for a different reason for my part.
Canadian readers, please correct me if it is true there's been talks of the bubble on the TV. I cannot see said talks on youtube and I read all the bubble blogers from Canada, they linked none.
Regards,
Paul
@Robert
Just to be clear, I'm not saying you're wrong, but I can still see people talking BIG Truths (and also big lies) on american TV which I simply don't see here in the press or on youtube.
Regards,
Paul
King Abdullah of Jordan has just fired his entire government in an obvious attempt to quell protests.
Yes, Jordan borders on Israel.
.
Warning: these images may be considered disturbing.
But you might as well get used to them, you're going to see them incresingly more often
Escaping poverty by suicide is prevalent in Saudi Arabia
Regards,
Paul
Just heard the tail end of a CBC interview with Robert Fisk of The Independent. He was saying, " Once people break through their fear they cannot be injected again." Hope that is true...I am having a fantasy of the breakthrough spreading, specifically a fantasy of travellers refusing en masse to be fondled by Homeland Security, passengers running around unplugging all those infernal peeping Tom machines...and those who finance those mechanics of oppression end up barefoot in a food queue. Alas there won't be any food left for them once( if ) they reach the front of the line.
No doubt others are having similar fantasies?
I am wondering as well if the G20 leaders will have meetings in the future? Which country is still prepared to blow its budget on protecting them, on abusing and locking up its protesting youth? A year later and I still can't grasp that the Cdn gov't was S-O-O eagar to abuse its citizens, spend SO-O-O much money to be a player in the sandbox of Empire, build fake lakes, party and party somemore. The 2B Canada spent didn't make the world a better place, did not fix the economic system.It did put some fine people in jail who are still caught in the web of the legal system.
These meetings of world leaders have become an excuse to intimidate the host population. Enough already!
@p01...the video you posted on poverty in Saudi Arabia was an eye opener. I have been inclined to imagine all Saudis as rich. If the video is an indicator of conditions it is possible for SA to be one of the falling dominos.
Scandia wrote:
@p01...the video you posted on poverty in Saudi Arabia was an eye opener. I have been inclined to imagine all Saudis as rich.
And imagine where will things stand if/when oil exports drop significantly for whatever reason.
As Mubarak seems stuck in " mute mode " it would be helpful if the protesters gave him a timeframe within which to speak. That should focus his abilities.
Ireland has an opportunity
Will they seize it?
Spread this video please.
Regards,
Paul
So I follow skilo’s links and start reading. So far so good, all the standard Paleo selling points --yes indeed, I do believe in the dietary approach myself.
I continue on down the line, to that “Start Your Journey To Better Health “ place and click the continue onward link. And what do I find, but an image of what looks like a Bavarian Pastry shop, a cornucopia of refined carbohydrates--all for 179.00 bucks.
And people wonder why their claims are met with skepticism.
Extra, extra, read all about It
Nice blog about Egypt.
"Al Jazeera, blacked out in much of the US, the same way Egypt shuts the internet and China closes all web searches for Egypt (isn't that hilarious?)..."
Al Jazeera live is avail 24x7 online anywhere in the world. My hunch: Many US cable & satellite TV providers probably don't carry AJ because there isn't much interest and thus generates little ad revenue. Although I'm sure AJ is available in the UK for obvious reasons.
@M
Problably the only blog that does not sell anything; smart, articulate, MD, hunter:
Panu
I urge everyone who has metabolic problems to read this blog. If you're not able to go for 24 hours without eating, you probably have metabolic problems. Think what can happen.
Regards,
Paul
Paul (p01):
What makes you think that isn't (more quietly) already going on here?
Paul,
Thanks for the link to the Panu site. There's some fascinating information there and I would heartily recommend it to TAE readers. Here's one paragraph I found particularly interesting:
"Humans are omnivores that now have a hugely expanded ecological niche through the technology of adapting rot resistant carbohydrate rich seeds that can be stored, milled, ground up cooked and eaten, mechanically planted and fertilised with the aid of petroleum, bred for higher yields, and even genetically engineered. Humans have thrived and expanded to 6 B souls on a finite planet despite the fact that grains are not an optimal food source at the level of the individual. Remember that the gene is the unit of selection. Grains are adaptive at the level of the gene and increasing human poplulation. Your genes do not care if you get coeliac disease, heart disease, diabetes, degenerative arthritis, tooth decay, autoimmune disorders, cancer or alzheimer dementia if by eating grains you were able to avoid famine just long enough to reproduce."
Here's a Kunstler interview I found on the Energy Bulletin. I think he mirrors many of the same ideas as I&S. Re-enforcing to hear from another quarter that housing & stock prices are coming down, energy & food going up, up, up, etc.
here
As Mubarak seems stuck in " mute mode " ...
scandia,
18 years ago, I spent 6 months in Washington DC. I heard over their international cocktail circuit or whatever the following tale during Mubarak's visit - he had come to the US to make a speech to congress.
The Americans told him it must not be longer than 30 minutes. His hacks went to work and produced an English speech.
Mubarak practised in private and timed himself - it took 90 minutes. He was very angry and berated his speechwriters. It turned out that there were 3 copies of the same speech and he read them right through.
I was not there, but I am sure the story is true.
When he was much younger educated Egyptians called him la vache qui rit
Thanks for the Panu link... this has some very interesting info..Will spend time reading it.
p01,
Every time I see your handle, I can't help thinking that this must be some new secret society, like Italy's P2 - Propaganda Due :)
I think a little background about the possible reason for young men committing suicide in Saudi Arabia might be in order. I don't think this guy killed himself because he was hungry, could not pay the utilities and suffered from the cold or was unemployed - at least not directly. Saudi Arabia is very different from Egypt, Tunisia, Jordan, Syria, Iran and so on.
In Saudi Arabia, rich men can have 4 wives. Personally, I think this is a really effective way of spreading their wealth about (i.e. making them poorer). The downside is that at the other end of the economic scale there are lots of men deprived of the possibility of having a family life. As it is, young Saudi guys take out their frustrations on their younger male cousins and so on (these get a chance to do the same later on). If they are lucky, they may have a philippina/malay/indonesian maid in the family who may get abused by lots of different guys. I don't like generalising but there really is an awful lot going on below the surface. I think that male sexuality is not a simple gay/hetero thing - it is a spectrum. In fact, almost any young guy is capable of almost anything under the right circumstances.
I wish women were that simple. :)
This unfortunate guy may well have fallen in love with some girl and her parents would not let her marry him or she simply wanted to marry a wealthier man.
@Nassim
The handle is "Pol" in haxor speak :p
Old *nix username I got used to.
Thanks for the info on KSA.
Regards,
Paul
In related news:"Obama says U.S. stands ready to provide any aid needed to help the Egyptian people in aftermath of protests"
Aftermath?! I think this was just the warm-up...Or did they find a succesor to do the fish and bread trick or maybe a way to actually get the Bernank to stop POMO-ing and QE-ing?
Oops...some might appreciate less money and more peace of mind from now on
Regards,
Paul
Wading in on the discussion of "what are we" (omnivores etc), here is Jon Barron's take (from "Lessons from the Miracle Doctors)":
Most medical texts suggest that our teeth are designed to eat all kinds of food from meat to fruit, suggesting that humans are omnivores. However,
the teeth of humans are nearly the same height. Our canines project only a small amount, and our molars are broad-topped. Compare this to the teeth of a carnivore such as lion. The first thing you notice about carnivores is that their teeth are nothing like those found in humans. They have huge canines for striking and seizing prey, pointed incisors for removing meat from bones, and molars and premolars with cusps for shredding muscle fiber. In carnivores, the teeth of the upper jaw slide past the outside of the lower jaw so that prey is caught in a vice-like grip. In general, carnivores don't chew much; mostly, they just tear chunks off and swallow them whole. All in all, nothing like human teeth.
But the claim in medical texts is that we are omnivores, not carnivores. How does that claim stand up? Well, first of all, no animal is really adapted to eat all things, but if any animal comes close, it would be the bear. Typical foods consumed by bears include ants, bees, seeds, roots, nuts, berries, insect larvae such as grubs, and even flowers. Some meat, of course, is eaten by bears, including rodents, fish, deer, pigs, and lambs. Grizzlies and Alaskan brown bears are well-known salmon eaters. Polar bears feed almost exclusively on seals, but then, what vegetation is there for them to eat in the frozen wastes of the Arctic? And, of course, anyone who has read Winnie the Pooh knows that many bears love honey. So, other than the ants, grubs, and rodents, the bear diet sounds a lot like the typical Western diet. So let's take a look at the bear's teeth.
Notice, the bear has the sharp canines of the carnivore and the pronounced incisors of the herbivore. They also have molars that are both pointed and broad topped. That's not even close to the human set of teeth pictured earlier.
So, does that mean we are restricted to a diet of fruits and nuts? Not at all! In fact, the frugivores we most closely resemble, the wild chimpanzees, periodically eat live insects and raw meat. The chimp's teeth, Other than the long canines, are virtually identical to human teeth. Among the great apes (the gorilla, the orangutan, the bonobo, and the chimpanzee) and ourselves, only humans and chimpanzees hunt and eat meat on a frequent basis. Gorillas have never been observed hunting or feeding on any animals other than invertebrates such as termites and ants. Nevertheless, chimpanzees are largely fruit eaters, and meat comprises only about 3 percent of their diet -- far less than is found in the typical Western diet.
Bottom line: at least as defined by our teeth, we do not qualify as carnivores or omnivores. So, at least as judged by our teeth, meat should comprise no more than 3% of our diet. But teeth do not comprise the end of the issues.
As for the bowel of the frugivore, it runs about 10-12 times the length of the body from mouth to anus, the same as found in the human body. The stomach of the frutivore is typially long and extended (a complex structure), containing a tenth of the acidic salts and pepsin foudn in a carnivore's stomach. again, the same as in humans.
...Dr. Alan Walker, an anthropologist from Johns Hopkins University published research based on a careful examination of fossil teeth and fossilized human remains... Preliminary studies of the fossil teeth have led to the startling suggestion that our early human ancestors were not predominantly meat-eaters or even eaters of seeds, shoots, leaves, or grassses, nor were they omnivorous,. Instead they appear to have subsisted chiefly on a diet of fruit.
sumacarol,
I wonder why you failed to address the dentition of sharks, bull snakes, monitor lizards, whales, moles and various and sundry other critters that do not live on fruits. The despicable Rumsfeld would probably say, we eat our meat with the teeth we have, not the teeth we might wish we had.
It's little wonder science is getting such a bad name and people like you are helping that right along. Evolution has many pathways and it is worth remembering that much of the digestive work inside us is performed by bacteria, not some peculiar attribute of human anatomy.
If you want to believe that you can live a healthy life on fruit, be my guest. Why not throw in a megadose of HFCF while you're at it. I'll take your share of the meat. I'm nearly convinced that anthropologists must be vying with economists for the title of biggest charlatans ever.
Too late to leave: residents told to bunker down
It seems that people in Queensland are about to experience another disaster - 1,500km further north. As well as hurricane winds, the sea will be 7m over the expected high tide. The coastal area, where buildings are concentrated, is mostly flat and low.
Homes to tumble 'like a house of cards'
Here, the Queensland president of the Australian Institute of Architects confirms that many buildings will be blown down. Buildings put up correctly since 1975 should withstand gusts of up to 250km/hr. They already have gusts of 290km/hr out at sea.
The strongest hurricane since records began in that area was in 1899 - Mahina Cyclone. The area it hit was, at the time, almost uninhabited except by aborigines and pearl fishermen - most of those who could not run fast enough died. The wind was gusting at 350km/hr.
The power of wind is determined by the square of its velocity so a wind of 350km/hr is almost twice as powerful than one of 250km/hr.
Obviously, I hope things do not turn out as expected but the point I am really trying to make is that humans seem unable to handle probabilities any better than they can handle the exponent.
sumacarol: The human digestive system can digest most anything except cellulose and chitin. All the enzymes are there and very efficient at digesting a variety of foods including protein, simple carbohydrates including sugars and certain starches as well as lipids.
With the advent of cooking, the digestion of meat became much more facile and efficient. That goes for other foods because cooking breaks down fibers and cell walls in other foods too.
Certain Siberian tribes eat most of their meat raw and thrive on it.
As you know, too much simple sugars and certain other carbohydrates can cause your insulin system to go wacko. My wife and I have been guests in Arab and Berber homes (Atlas Mountains) in Morocco. When they make tea they put huge crystals of "rock" sugar into the tea pot. As you know this results in development of type 2 diabetes in much of the population. It is especially a problem among those who lead a sedentary life style and/or smoke heavily.
I do not know where you get your information, but everything points to the human organism being an omnivore. In fact, this is why the human has thrived (too) well under widely variable sources of food supply.
The old adage "everything in moderation" applies well to diet. Living on only one food class can lead to serious health problems. Even vegetarians get carbohydrates, proteins and fats in their diets.
A fruit only diet will result in starvation because of lack of protein and fats. Admittedly some tropical fruits do have fats and very limited amounts of protein.
A fruit-nut (and grain) diet can correct these deficiencies. If you eat only fruit you will certainly, rapidly loose weight especially protein mass in no time at all. But the risk to good health is extreme.
It was American and British technology companies that provided special technology to the Egyptian regime to block internet access and to track and identify activists. See:
http://www.democracynow.org/2011/2/1/digital_darkness_us_uk_companies_help
Narus - a subsidiary of Boeing was largely responsible for this but Vodaphone, GB, provided a special version (vodaphone Egypt) that also helped make this surveillance possible.
See also:
http://en.wikipedia.org/wiki/Narus
also.
Cheers,
Robert
Robert and I.M. Nobody: It would be most helpful to a "healthy" conversation if you could resist jumping into attack mode just long enough to read to the end of a post and maybe “digest” it a little.
I.M. Nobody – thanks for the ad hominem – really added “spice” to the discussion.
“Much of the digestive work inside us is performed by bacteria”. Really? I thought that much of the digestive work was done by enzymes, pepsin and hydrochloric acid.
I question the suggestion that, whereas other species tend to stick to eating what they are anatomically designed to eat, anatomy is not an important consideration for humans in terms of what we eat. From what I am reading, an important, but forgotten, part of the digestion process starts in the mouth, where food is physically broken down (by our teeth) and mixed with the digestive enzymes found in our saliva. On a personal note, I notice that my dogs, in contrast, do not chew their food.
“If you want to believe that you can live a healthy life on fruit, be my guest”. Please do re-read the part of my post where it says: “So, does that mean we are restricted to a diet of fruits and nuts? Not at all! In fact, the frugivores we most closely resemble, the wild chimpanzees, periodically eat live insects and raw meat”.
Robert:
“With the advent of cooking, the digestion of meat became much more facile and efficient. That goes for other foods because cooking breaks down fibers and cell walls in other foods too. Certain Siberian tribes eat most of their meat raw and thrive on it.”
Arguably, the eating of raw meat is advantageous from the point of view that the enzymes which aid in digestion are present, whereas this is not the case in cooked meat in which the enzymes that facilitate digestion have been killed.
“I do not know where you get your information” Actually this isn’t a mystery – at the beginning of my article I state that my information is from Jon Barron’s book “Lessons from the Miracle Doctors”. He also runs a website where he has posted thousands of pages of very useful non-conventional nutritional info. www.jonbarron.org.
Lets see... I was an ole Coy Ote, then "graduated" to Hombre, perhaps soon if I keep reading I can become C. H. Omnivorus!
A more serious concern is that the stalwart efforts for new leadership by the Egyptians, because they have moved the world, will lead to internet and other types of censures.
Ex: from China - “All media nationwide must use Xinhua’s reporting on the Egyptian riots,” read a directive issued last Friday, referring to the state run Xinhua news agency. “It is strictly forbidden to translate foreign media coverage,” the order said, warning that websites that did not censor comments about Egypt would be “shut down by force.”
And - http://tinyurl.com/internet-shutdown-explained
It appears that all hell is starting to break loose in Egypt.
See: http://english.aljazeera.net/watch_now/
The protesters perceive, correctly IMHO, that the promise by the president in his speech, late yesterday evening, to not seek reelection in elections set for a couple months from now is merely an attempt at stalling and stopping protests. This would give the government opportunity to arrest protest leaders and put an iron fist down on the movement.
The presidents speech last night was cleverly worded so as to toot his horn about his loyalty to Egypt and his military career where he fought in battles for Egypt. The later part is true and in his favour.
The people, however, judge his overall speech as being just so much BS to stall and regroup the presidents strength.
Suddenly pro-government protesters have appeared and are attacking the protesters physically and with stones. Surely the pro-government group is heavily infiltrated with professional government agitators as has happened over and over in past.
May God (Allah) protect the protesters in their push to bring about massive reform of a totally corrupt government.
Cheers,
Robert
I dare anyone to thrive on wild fruits. Not the supermarket colorful biggies, but real wild fruits. Please try it. But then I guess you never saw a wild avocado or apple. You can google some pictures. Sheesh!
Regards,
Paul
@I.M.Nobody I can't resist the opportunity to show off some newly acquired information in response to your comment that "...the digestive work inside us is performed by bacteria." Let me explain...
Last week CBC radio had a fascinating program on bacteria. I kind of thought that microbiology was the study of the little bits and pieces. In all my life I have given the micro field scant attention. I'm a " big picture " performer afterall!!!
The gleanings from only a half hour left me feeling wacked across the back of my head by the zen master. Is it not worth noting that bactria are capable of lateral organization? Relates to our board discussion of lateral/vertical thinking styles. Who knew that bacteria can move genes laterally. I had thought the gene was the decider. Maybe not? Another comment was that when bacteria are under stress without a solution they send out a message to all bacteria asking for ideas.
Bacteria brainstorm! Who knew!
A book, " Bacteria R Us " was referenced.
The program left me entirely dumbfounded by the inadequacy of my education. The program restored sight to the child's eye. Not sure if I see the world anew or if I see anew the world.
What do bacteria have to do with society's " Berlin " moments? I'll just bet there is a connection albeit on a scale we cannot perceive.
Re: the last article posted "Britons less optimistic on house prices"
Apparently there really is no difference in the delusion on opposite sides of the Atlantic.
Somewhere I once read that this constant referal to "house prices" resulted in a national obsession over real estate here in the states.
It continually puzzles me why people who complain incessently about the prices of virtually every other thing on the market are most optimistic about housing (i.e. shelter) when the banksters are sucking as much money as possible from them (or inventing new ways to extract even just a bit more whether the buyers are truly capable of giving it up or not).
I get most optimistic about house prices when I read that they've dropped another 5 or 10% - not when the banks / gov. have invented a new way to prop up the artificially high "values".
sumacarol said:
"Arguably, the eating of raw meat is advantageous from the point of view that the enzymes which aid in digestion are present, whereas this is not the case in cooked meat in which the enzymes that facilitate digestion have been killed."
You do not seem to know much about metabolism of food. The stomach and gut are full of proteolytic enzymes enzymes which break down the proteins of meat into peptides and amino acids. Since you do not cook your stomach their are plenty of proteases available in you body to digest proteins (meat). You do not need any help from what might be present in raw meat.
Bile acids and their salts stored in the gall bladder are also released into the gut and serve as detergents making dispersions out of lipids. The triglycerides that make up lipids can not pass through the intestinal walls. They are then broken down into free fatty acids and monoglycerides by pancreatic lipase. These fragments can now pass through the intestinal barrier and reformed into triglycerides. At this point the triglycerides can be integrated into fat cells or metabolized as an energy source.
Also:
“ 'Much of the digestive work inside us is performed by bacteria'. Really? I thought that much of the digestive work was done by enzymes, pepsin and hydrochloric acid."
You seem surprised by what is well known. Bacteria live in the gut in a symbiotic relationship with the human body. Humans eat food, partially digest it in the stomach and then pass it down to the intestinal tract. There bacteria feed on much food that is difficulty digestible and so doing release many nutrients valuable to the human body. At the same time, human digestive enzymes work on the food too.
In fact, relatively recently, it has been shown that people with severe digestive problems can often be helped by injecting slurried and filtered fecal material from a healthy person into the intestinal tract of the sick person. A kind of pro-biotic treatment in that the bacteria from the healthy individual replace toxic or non useful bacteria from the gut. This new therapy shows great promise but due to the yuck factor it is not yet a common treatment.
Cheers,
Robert
The situation in Egypt is becoming grave: http://english.aljazeera.net/watch_now/
Pro-government protesters are attacking anti-government protesters with rocks and apparently machetes. It has apparently been shown that many of the pro-government protesters have identification showing that they are in fact government police (not military).
Citizens are terrified as bloodied people are brought in. There have now been gun shots easily heard on live broadcast.
Cheers,
Robert
Does anyone know how Joe Bageant is?
For anyone who doesn't already know, watch live coverage at http://english.aljazeera.net/
Oh, sorry. Robert already had it covered.
@Robert 8:07 - Agree wholeheartedly! May the angels, Gods, Great Spirit, and all sentient beings help and protect these distressed and brave young people.
Ilargi,
Mesmerising photo on this latest Rattle... a very nice choice. Soemthing about it stirs my soul.
This morning on CBC radio Canada's Minister of foreign Affairs, after opening platitudinous thoughts on democracy let go a zinger. He said that Canada's concern was that the people of Egypt form a government friendly to Israel. Now why would Minister Cannon jump to a conclusion that the people of Egypt might be hostile to Israel and for what cause?
I'm wondering how it serves Canada's ( my ) interests to champion the State of Israel while compatriots are being bloodied in the streets of Cairo?
The Mubarak supporters are said -- according to Al-Jazeera English, the BBC, CNN and the New York Times -- to be carrying machetes, sticks and other weapons.
CNN crew punched and kicked by Mubarak supporters. Molotov cocktails flying!
http://tinyurl.com/CNNcrewattacked
And now it's gotten violent.
Some are saying Rent-a-Crowds, Bribes, etc.
I presented another option: Xe. Blackwater, in a show of force (at least smaller than they can), just to force the starving to knuckle under and FOAD.
Where's the fox! Or, why Egypt doesn't count!
http://tinyurl.com/Foxnewsonegypt
It looks like things are starting to boil in Egypt.
Wonder how long it will take to go viral all over that section of the world.This might be where it starts folks.
One suicide by a poor fruit vendor has lite a fuse,and no one knows where its going to end.Iran is in lock-down by the .gov now,it looks like Mubarak will call out the dogs to see if he can pull the same trick off,and I bet lots of talk-talk in lots of places saying"Now IS the time."
And anyone who is paying attention should be very,very worried.
The repression of the masses for such a long time,has built a load of societal tinder...the same way fire suppression in the northwest woods has created deadly thick layers of brush,that,once ignited,burns the whole forest to ash
We are seeing the same thing happen in the mid-east now.As the man said,"You cannot re-inject fear"....unless you spill a LOT of blood.
God have mercy on the innocent "In the way" of the fury of the state.
This will not end well.
That "Natural law of collapse"should be copied,and posted EVERYWHERE.Its the most succinct evaluation of where we be I have read in awhile...and funny.
Nassim,should you ever find yourself in the pacific northwest,You have a standing dinner invitation,on me.You,I think, would be a interesting dinner guest,[and I would try my best to be a good host]
...Bee good,or
Bee careful
snuffy
Ilargi, first wow a Krishnamurti quote! This takes the blog to a new level of philosophical sophistication for me. Second, the CFR and other elite orgs are very aware of the tenuous hold they have on the populace. http://tinyurl.com/4uya49m If the Middle East was the original birthplace of civilization, perhaps it's fitting the new revolution begins there again.
Stoneleigh, how about a little bit of a warm up preliminary to the Gonz(al)o Lira bout? Would you like to see what you can do with this Chris Martenson inflation article?
How long can the party in stocks last? Chrismartenson
p01
Hi Paul,
Take a look at the below:
http://www.huffingtonpost.com/2011/02/02/oreilly-colmes-al-jazeera-fight_n_817404.html
This is the kind of crap being said by so-called "conservative" sensationlists. Unfortunately, these characters have a large following who tend to believe anything they say.
Many of the "Religious Right" (as in always right) spew out this kind of line.
These kind of ravings can be very dangerous in a society that is pressed economically and need some one to blame.
Cheers,
Robert
Not sure if it was posted already, but this is a very good listen with Steve Keen on Frisby's Bulls & Bears...
On a side note,
All it takes now is 1 small rocket
+ 1 big tanker in the gulf of Hormuz....and bad things start to happen very fast I think...I am really worried that this is it boys and girls.
Bee good,or
Be very careful
snuffy
@Robert
I know, Robert...I know...
I'm about to become "religulous" myself:
"The End is Nigh" and nothing can be done anymore; the human project has failed (or maybe it was a success from Nature's point of view; we did our job admirably, now we exit the picture; next evolutionary step: plastic-eating thingy)
Regards,
Paul
Here is Chris Martenson, who said to me he is "agnostic" about oil prices:
How Long Can The Party In Stocks Really Last?
with: I spend as much time on this subject as I do because the decisions you make based on whether you are protecting yourself from inflation vs. deflation are as different as to whether you grab an anvil or a life raft on your way out the door when facing an emergency.
I do my best to let the data do the talking, and right now it is saying inflation.
inflation vs. deflation looks to me like climate change vs. no climate change.
And yes, even if you have record snow storm or record cold, it is still global warming...
Nassim,should you ever find yourself in the Pacific northwest,You have a standing dinner invitation,on me.You,I think, would be a interesting dinner guest,[and I would try my best to be a good host]
snuffy,
That is most kind of you. Thank you. The same goes for you should you find yourself in Melbourne.
I am planning to go to a family reunion in Vancouver, BC, in July. I have to see my elderly uncles before it is too late. I shall be travelling with my wife and two small girls and my big boy will be coming from Norway. I will pay a little more and fly via Beijing so as to avoid the States as I don't want any of us to be fingerprinted. Nothing to hide, it is just a matter of principle.
I have no idea how far from Vancouver you are, if it is not too far, a restaurant meal for two is on me.
@scandia
Congratulations on having added the micro critters to your big picture paradigm. I discovered some of these secrets of the microbial world a few years ago while trying to understand if there was anything known that wasn't being tried to cure my nephew's MRSA infection. That is when I learned that not only can they swap genes, but they even have ways of advertising what capabilities they have available to swap. The MRSA had apparently acquired, from another bacterium, the capability to hide from antibiotics. Bacteria and viruses are certainly an important part of the big picture.
@sumacarol
I see nothing ad hominem about denouncing the promotion of bad science and especially pseudoscience.
Science does have something important to say about fructose in human nutrition and you really should pay some attention to it. Lest your liver someday sue for separate maintenance.
PaNu - Carbohydrates
The speech by Brzezinski is a perceptive one. Here is another interesting one by him BRZEZINSKI’S LAMENT ‘JEWISH LOBBY CONTROLS OBAMA’
Egypt may have sold its foreign policy for a measly $2 billion/year of crap equipment, but the US has donated its foreign policy for free.
I hate to have to say this, but it will not be possible to get rid of Mubarak unless the Egyptian army starts shooting people in great numbers. The Capo di tutti capi (Mubarak) cannot be removed without all his Made men going too. Anything else, is a sellout.
In 1978, I was in Tehran and I saw at how this happened. There were giant marches and the police tried to break it up. Later, the army was brought in with its tanks and a military curfew put in place. There were a lot of deaths and the bodies taken outside Tehran and buried at night in the great salt desert by the truckload. Helicopter gunships were shooting anyone on the roofs in South Tehran (the poorer area). A lady I knew would be speaking to a lady friend in that part of town and we would hear the hammering of heavy machine guns in the background over the phone. Their houses are steel-framed with hollow terra cotta block partitions in between and arched brick floors so the bullets went right through several walls and floors with no difficulty. You would be driving your car down a very busy one-way street downtown and suddenly word would spread that the army is shooting ahead and everyone would have to do a 3-point turn and speed back the way they had come. A grown-up version of dodgem cars.
Jimmy Carter had flown in a few hundred American crowd-control experts. They were all holed up in the Hilton hotel which is on a hill at the edge of town and they may as well have been on the other side of the moon - they could not speak Farsi :)
I hope Ilargi does not delete this comment. He deleted a similar one some months ago - long before Egypt erupted.
IM Nobody said:
"I discovered some of these secrets of the microbial world a few years ago while trying to understand if there was anything known that wasn't being tried to cure my nephew's MRSA infection. That is when I learned that not only can they swap genes, but they even have ways of advertising what capabilities they have available to swap. The MRSA had apparently acquired, from another bacterium,---"
I do not want to get your hopes up prematurely but you should take a look an article in "New Scientist,18 Dec 2010" called Bug vs Super Bug.
You did not mention where in his body the infection was concentrated, but read below.
It has been shown that patients infected with Clostridium Difficle that had acquired antibiotic resistance (acquired through constant use of antibiotics)could be eliminated from the GI tract by means of a Faecal transplant and the patient could be cured of life threatening infections within 48 hrs.
As described in my February 2, 2011 9:13 AM post above, the process involves taking an extract of faecal material from a healthy donor and flushing out the colon. The introduced microbes compete with the baddies and eliminate them from the system often followed by remarkable complete recovery.
You might want to read the article and perhaps research what all has been done using this, controversial treatment.
Cheers,
Robert
Nassim'
Sounds like a plan...
Bee good,or
Bee careful
snuffy
@Nassim and Snuffy,
Stoneleigh will be going through the West Coast at some point this summer. Maybe this could all work out for a nice meetup.
@Robert
I have heard of the faecal matter treatment recently. As far as his infection, it was was in his lower leg. When it became apparent that it was not going to be cured, he surrendered his lower leg to the surgical saw. Fortunately, it succeeded in eliminating all the infection.
Nassim - Very interesting links! About this...
"I hate to have to say this, but it will not be possible to get rid of Mubarak unless the Egyptian army starts shooting people in great numbers."
Meaning that would trigger enough international political backlash? Or...?
Meaning that would trigger enough international political backlash? Or...?
Hombre,
No. Mubarak couldn't care less about an international backlash - its the Israelis' problem. They control pretty well everything that you see on TV in the US and much of Europe and they have even managed to keep Al-Jazeera out of the US cable networks for years. I hardly need mention that the New York Times is not exactly impartial here. Every film out of Hollywood has to conform to their view of what the world should look like. :)
I mean, the ordinary people in Egypt would have to learn quickly how to be better than the military at doing the fighting. Not as difficult as you may think. Also, don't forget that whereas the top-brass of the military have a life of luxury and all sorts of rights and benefits and private business monopolies, ordinary soldiers are extremely badly treated by their officers and very poor and badly fed. In Iran, that was not the case - the ordinary soldiers were quite well treated before the revolution and probably still so now.
I read a book called Cairo: The City Victorious a while back and gave it away so what I am quoting is from memory - it is an excellent book. The author explains how he once went to a party at a senior officer's house in Cairo and the food was served off the shaved heads of his soldiers - they made holes in the table so the soldiers could crouch underneath. Go figure.
part 2
I have had the unusual experience of being the only Western guest at a large (300+ officers and wives) party at the Imperial Officers' Country club just north of Tehran. During the party, I was at the table of my host, General Ali Badrei who was commander of the Imperial guard and the 2nd most important officer in the country at that time. A group of senior Turkish officers were the main guests. A famous Turkish pop-singer was brought in from Istanbul with her band (think Madonna). The general liked playing practical jokes on me so he got this beautiful lady to sing to me her love songs (in Turkish and Farsi) at a distance of 30cm with hundreds of people laughing and clapping at adjacent tables. They were having a great time at my expense so shortly afterwards I left the venue and went for a walk into the woods surrounding it. I hardly went any distance before I was surrounded by armed sentries who I had not seen and escorted back to the party at bayonet-point. :)
Emel Sayen sang Gol Sangam in my face among other songs - ask some Iranian to translate the lyrics to see why I walked out. Later, the general presented her with a chunky diamond necklace that Princess Diana would have been very pleased to wear.
When the revolution broke out, this general was very busy and I did not see so much of him. He offered me a huge amount of money to buy a hotel in London - as security for his wife and only child who were in California - but I refused as I kind of knew it would screw up my life properly. Maybe I made a mistake but I don't think so. I left the country almost penniless and watched Western businessmen going fisticuffs against one another for the few plane seats available - I was travelling with a free standby ticket but got on one of the only planes that were not cancelled on 23 Dec 78. I found myself a few hours later at the Christmas party of my new employer - a well-known American company. The party was on a boat off Amsterdam. Culture shock! It took me a while to recover mentally.
Later, I heard that there had been a huge demonstration outside the Shah's palace (the Shah had left) and this general had gone out to address the crowd. He was very brave. A couple of his junior officers shot him in the back. These officers thought that that would endear them to the new rulers - they were executed a few weeks later.
BTW, this officer was Kurd and most of the officers Azari - something Americans will never understand.
I suspect that it would not take much for the soldiers to shoot their officers in Egypt. It is hard to tell.
Nassim said...
"The speech by Brzezinski is a perceptive one. Here is another interesting one by him BRZEZINSKI’S LAMENT ‘JEWISH LOBBY CONTROLS OBAMA’"
You undercut your position as an intelligent and insightful commentator when you supply a link to a hate filled anti-semitic site like the one referenced above.
As one who generally agrees with your take on things and finds your posts quite informative, I truly hope you don’t incline toward this age old disease. Racism from any quarter is ugly and destructive. No people or nation are either immune or especially susceptible. Everyone, particularly those with power or influence, should be vigilant against that scourge.
Hey Robert, as a matter of fact, I am familiar with those proteolytic enzymes. Jon Barron on proteolytic enzymes, or "pseudo-science" as I M Nobody like to call it: "Enzymes are proteins that facilitate chemical reactions in living organisms. In fact, they are required for every single chemical action that takes place in your body. All of your tissues, muscles, bones, organs, and cells are run by enzymes.
Your digestive system, immune system, bloodstream, liver, kidneys, spleen, and pancreas, as well as your ability to see, think, feel, and breathe, (in fact, the very functioning of each and every cell in your body) all depend on enzymes. All of the minerals and vitamins you eat and all of the hormones your body produces need enzymes in order to work properly. In fact, every single metabolic function in your body is governed by enzymes. Your stamina, your energy level, your ability to utilize vitamins and minerals, your immune system -- all governed by enzymes.
The vast majority of metabolic enzymes in the body -- the enzymes that regulate everything from liver function to the immune system -- are proteases, or proteolytic enzymes -- enzymes that regulate protein function in the body.
When we continually eat foods that are enzyme dead (cooked or processed), we force the body to divert its production of enzymes away from proteolytic enzymes designed to govern metabolic functions into proteolytic enzymes designed to break down dead proteins in our diets. The health consequences of this diversion are enormous."
New post up.
Who's better off: Americans or Egyptians?
.
You undercut your position as an intelligent and insightful commentator when you supply a link to a hate filled anti-Semitic site like the one referenced above.
rcg1950,
Do you object to what Brzezinski said? I don't know this website so I certainly don't vouch for it. Just do a quick search for Brzezinski and you will find lots of other sites that quote this speech. If you don't like what Brzezinski said, take it up with him. I don't classify websites by racial preferences and I have sourced several articles from the Jerusalem Post and Haaretz although I probably disagree with 90% of their editorials.
You say that you think that I am "anti-Semitic" - what does that mean? The Palestinians are a Semitic people as are the Arabs of Saudi Arabia, Yemen, the Gulf, Iraq, Syria and much of North Africa. I am not a Semitic person. If you mean to say "anti-Jewish" then kindly say so - it is obviously not true. If you mean to say "anti-Zionist" then says so - you are equally obviously correct. There are an awful lot of people around the world of the same persuasion - including lots of Jews. The reasons for that are pretty obvious.
If you want to know where the "Lost Tribes of Israel" are, do a DNA check on the population of the Hejaz province of Saudi Arabia. Lots of tribes of Jews were converted to Islam over there - by the sword. If you want to find racism, there is plenty of that in Israel among Jews - with Arab and African Jews at the bottom of the social heap.
When I was in Iran (1974-78), the people were quite ill-informed about Israel. They were simply not interested in the problems of the Palestinians and so on as that was, and still is, a long way away. They have their own languages, customs and cultures which are quite different to the Arabs to their West. Do you really want to know why they are now so antipathetic towards the State of Israel? BTW, they have seats reserved for Iranian Jews in their parliament.
Sometimes, I really wish I could write like Graham Greene - I would loved to have been able to write something called The Quiet Israeli
@Nassim - Your experiences and expressions are articulate and interesting, especially at this time. I say this without any judgemental tone. One thing seems obvious and that is that we in the west can hardly comprehend the complexity of the Mid-east social and political realities.
@rgc1950 - I can agree with you that racism or religious hatred is wrong, but I also comprehend a clear separation between those who protest Zionism and yet are Jewish and/or are friends of fine Jewish people.
ex: My wife is a Quaker and I am affiliated with the Society of Friends. Yet I clearly believe and state categorically that presidents Hoover and Nixon were not good and in Nixon's case did many evil deeds and was a disaster for the country. Quakers both!
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