“I would say that because of the decisions we took during the good times, we were able to save some money for the bad times. And I would say that today that policy is producing results.”
It's gonna be quite a G-20.
SHAUN CURRY/AFP/Getty Images
For the past few months, the in-vogue comparison for the U.S. financial crisis and government intervention has been the "lost decade" in Japan. But, over at Marginal Revolution, Tyler Cowen toys with the comparison between the current U.S. fiscal stimulus and the Bundesbank's massive spending policy just after German reunification. He writes:
The results were less than wonderful. The higher demand boosted measured gdp growth in the short run (bananas and porn, plus reconstruction) but Germany fell into economic stagnation. The new demands took the West German economy only so far. The higher taxes and debt then kept the German economy down for many years. Few Germans were happy with the economic fallout from this "stimulus." And that was with a relatively well-functioning financial system and a reasonable amount of initial optimism.
You can list many dissimilarities between German unification and the current U.S. situation (and in the comments I am sure you will). Still, as historical examples go, I believe this one has some relevance. When European leaders are skeptical about fiscal stimulus, they have some reasons, some of them quite recent.
Photo: Flickr user gavinandrewstewart
The New York Times reports that embattled Czech Prime Minister and E.U. President Mirek Topolanek, addressing the European Parliament, described Obama's fiscal package as the "road to hell," saying the bailout would "undermine the stability of the global financial market."
Yesterday, Topolanek was defeated in a no-confidence vote by the Czech parliament -- largely due to criticism of his handling of the financial crisis.
Photo: Dominique Faget/AFP/Getty Images
This strikes me as a significant moment, but let's hang on a second before we lose our heads.
In it, Zhou asks, "What kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF?"
Theoretically, an international reserve currency should first be anchored to a stable benchmark and issued according to a clear set of rules, therefore to ensure orderly supply; second, its supply should be flexible enough to allow timely adjustment according to the changing demand; third, such adjustments should be disconnected from economic conditions and sovereign interests of any single country. The acceptance of credit-based national currencies as major international reserve currencies, as is the case in the current system, is a rare special case in history. The crisis called again for creative reform of the existing international monetary system towards an international reserve currency with a stable value, rule-based issuance and manageable supply, so as to achieve the objective of safeguarding global economic and financial stability.
Though Zhou does not say so explicitly, the clear implication is that the dollar isn't doing these things. Interestingly, he cites John Maynard Keynes:
But, he admits, "The re-establishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time." As the WSJ explains:
Back to the 1940s, Keynes had already proposed to introduce an international currency unit named "Bancor", based on the value of 30 representative commodities. Unfortunately, the proposal was not accepted. The collapse of the Bretton Woods system, which was based on the White approach, indicates that the Keynesian approach may be more farsighted.
[T]he technical and political hurdles to implementing China's recommendation are enormous, so even if backed by other nations, the proposal is unlikely to change the dollar's role in the short term. ... The central banker's proposal reflects both China's desire to hold its $1.95 trillion in reserves in something other than U.S. dollars and the fact that Beijing has few alternatives. With more U.S. dollars continuing to pour into China from trade and investment, Beijing has no realistic option other than storing them in U.S. debt.
Looks like you can hang on to those greenbacks for a little while longer.
U.S. banks, battered by record losses from the worst housing slump since the Great Depression, now must weather increasing loan delinquencies from owners of skyscrapers and shopping malls.
The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt. A projected tripling in the default rate would result in losses of about 7 percent of total unpaid balances, according to estimates from analysts at research firm Reis Inc.
There is a lot that was audaciously optimistic about Zimbabwean President Robert Mugabe's plea today for $5 billion to restart the country's troubled economy. He seemed confident that donors would trust his government to dole out aid. He asked for assistance in the area of "governance" (while opposition activists were being simultaneously disappeared). Wackiest of all was a claim than Zimbabwe's can cut its 230 million percent inflation rate to just 10 (no million) percent in just a few months.
If only it were all so easy. Apparently not yielding to Mugabe's assesment of sanctions on his regime as "inhumane, cruel, and unwarranted," at least one donor -- the United States -- has already rejected the calls for aid. "We have not yet seen sufficient evidence from the government of Zimbabwe that they are firmly and irrevocably on a path to inclusive and effective governance as well as respect for human rights and the rule of law," U.S. State Department spokesman Robert Wood said today.
As to fixing the economy -- the country needs a miracle as much as it does $5 billion. Even the government is running on fumes -- cigarette fumes, to be specific. As Finance Minister Tendai Biti told CNN, "indirect taxes made up of customs and excise duty have contributed 88 percent of government revenue, which means that the government has been literally sustained by beer and cigarettes." In such a state, and amid a global financial crisis, Zimbabwe is unlikely to find much support from its neighbor for adopting the South African Rand. No wonder Mugabe conceded the finance ministry to the opposition in this coalition government.
All this creates a devil of a conundrum. To be certain, Zimbabwe needs help and lots of it. The country and its people are in a desperate state. But perhaps first, Zimbabwean policymakers need a reality check.
DESMOND KWANDE/AFP/Getty Images
I just stumbled across the text of today's speech by Jean-Claude Trichet (pdf), the head of the European Central Bank, expecting a heady, technical disquistion on how the financial crisis is affecting European economies and just what he intends to do about it. Or perhaps a passionate cris de coeur for better financial regulation.
But no. Speaking at the Center for Financial Studies in Frankfurt, M. Trichet waxed eloquent about the likes Dante, Prout, Goethe, and Derrida. A sample:
Dante brings to Italy the “terza rima”, or triplet rhyme, which structures the poem in tercets closely linked to the preceding and following rhymes, so that a rhyme is never introduced that has not been framed by two earlier rhymes, with the exception of the first tercet of the canto. This new verse form – which creates an impression of fast, breathless movement, while offering the permanence of an unchangeable structure – was to be an instant success: Boccaccio and Petrarch adopted it immediately. Dante himself borrowed it from another language, Provençal: the “sirventès”, a lyric form which goes back to the troubadours used the “terza rima” or triplet rhyme. It was another example of the felicitous influence of a crossover between two forms of vernacular language: Provençal and Italian.
I have nothing against erudition. I like my central bankers literate. But shouldn't the man be focusing on, um, saving Europe from economic catastrophe right now?
Economists at Deutsche Bank AG and Goldman Sachs Group Inc. have criticized Trichet for not clarifying what the ECB may do at a time when the Bank of England and Federal Reserve are already buying assets such as commercial paper and government bonds to ease credit conditions.
“We are in an ongoing process of studying further measures and assessing the possible need for them,” Trichet said today in a speech to business leaders in Paris.
Maybe a little less Dante and a little more Deutsche Bank would help move things along?
Last night, NBC late-night comedian Jay Leno -- hosting U.S. President Barack Obama this week -- riffed extensively on the international implications of the increasingly catastrophic AIG bailout during his monologue:
[The AIG executives] bankrupt the company, took $170 billion of our dollars and they're giving out bonuses. You know the main thing they want to reward their people for? Convincing the Treasury Department to give $170 billion dollars to a failing company, so they can give out bonuses for a job well done. You know what "AIG" stands for -- anybody know? Adventures in Greed.
They don't have to account for any of us. Now it turns out they gave $35 billion -- not million, $35 billion -- of our money to bail out European banks. See, this is how a global economy works. Our hard-earned tax dollars are used to bail out German banks for making bad investments in American companies that shut down because the Japanese owners moved the whole thing to India, China, and Mexico. Boy, you thought St. Patrick drove the snakes out of Ireland? Let's send him down to Wall Street!
Turns out, Leno's right. This week, AIG released a document listing the "financial counterparties" who received $101 billion directly from the U.S. government's "emergency loan." AIG used more than of half the Treasury funds to pay down money owed for things like credit default swaps -- most of which went to foreign companies' coffers. Using data BusinessWeek broke down, we made the above chart.
Funny how the comedians are besting the finance experts now, huh?
Oddly parallel stories in the New York Times and the Washington Post today say more or less that Chinese firms are snapping up everything in sight now that the financial crisis has given them a competitive edge.
"The sheer scope of the agreements," the Post's Ariana Eunjung Cha declares, "marks a shift in global finance, roiling energy markets and feeding worries about the future availability and prices of those commodities in other countries that compete for them, including the United States."
And for the Times, Keith Bradsher makes the case that China is using the crisis to retool:
The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.
Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.
And while American leaders struggle to revive lending — in the latest effort with a $15 billion program to help small businesses — Chinese banks lent more in the last three months than in the preceding 12 months.
China is also making it easier for companies to acquire foreign firms:
The [commerce] ministry is now leading its first mergers and acquisitions delegation of corporate executives to Europe; the executives are looking at companies in the automotive, textiles, food, energy, machinery, electronics and environmental protection sectors.
Delve a little deeper into Bradsher's story, however, and there's less here than meets the eye. There's still the fact that some 20 million migrant workers have lost their jobs. "The social safety net of pensions, health care and education barely exists," Bradsher notes. And China is losing some of its low-tech industries to countries with even less weaker labor and environmental laws. Exports fell more than 25 percent in February.
Nor can we assume that China's economic stewards really have a handle on the economic zeitgeist. The Financial Times reports today that the country "has lost tens of billions of dollars of its foreign exchange reserves through a poorly timed diversification into global equities just before world markets collapsed last year."
The bottom line: Be skeptical of claims that China is taking over the world right now. If anything, Beijing's list of domestic problems is getting longer, not shorter.
Here's what Iran's president had to say at a summit of the Central Asia's 10-nation Economic Cooperation Organization:
"After the collapse of the closed socialist economy, the capitalist economy is also on the verge of collapse," Ahmadinejad said in a speech.
"The liberal economy and the free market have failed," he said, pointing to the use of "thousands of billions of dollars" to bail out Western banks and companies.
Ahmadinejad proposed a single currency for the region to facilitate trade, though I'm not sure if even he'd go as far as Kazakh President (and fellow ECO member) Nursultan Nazarbayev's global "acmetalism" idea. The ECO definitely seems like a contender for the world's most outside-the-box regional trade federation.
I had always put Kazakh President Nursultan Nazarbayev in the megamaniacal but ultimately pragmatic class of dictators rather than the batshit crazy naming-months-after-himself kind. That was before I heard his idea for solving the global financial crisis:
"In our view, we must create a single world currency under the aegis of the United Nations," Nazarbayev said on Tuesday, a day before a major economic conference opens in his Central Asian country.
"We must make a transition to an absolutely new global currency system based on legitimacy and, in view of all countries, one single monetary system," he told a meeting of the Eurasian Association of Universities.
This is the first time Nazarbayev has spoken publicly about the need for a single world currency although he has previously written about it.
He first called for the creation of a worldwide currency, to be called "acmetal" - a combination of "acme," a Greek word meaning the peak or the best, and "capital" - in an article published last month.
In the article in Russia's Rossiskaya Gazeta, Nazarbayev suggested that once a single currency system was in place, the world might consider changing the term used to describe global finance from "capitalism" to "acmetalism."
This comes from Luke Allnutt RFE/RL's excellent TransMission blog, who notes that Genghis Khan had a similar idea.
Nazarbayev's book "The Kazakhstan Way," (featuring an intro by Margaret Thatcher!) has been sitting unread on my bookshelf since I snagged it off the FP review pile last year. If it's full of ideas this good I may have to move it up on my list.
Creative financing schemes and frisky credit-risk assessments haven't only catapulted capitalist economies to the brink. For years China's state-run banks have relied upon a coterie of dubious experts and shady loan guarantee companies when extending credit. Now, as things fall apart,
Whether or not banks elsewhere are nationalized, the real issue remains whether financial planners know what they're doing. Tim Geithner, take note.
On the other hand, per Forbes, at least credit is still available in China:
"In America, basically, private capital has dried up, but in China you have these large pools of capital sitting around," says Anne Stevenson-Yang, principal of Wedge MKI, an investment research and advisory firm in Beijing. "The problem is that most of the short-term capital and capital for private companies is in these gray and sometimes semicriminal networks."
China Photos/Getty Images
The United Nations' International Labor Organization (word file courtesy of Dani Rodrik) is keeping tabs on the world's stimulus packages. The charts make for interesting reading,
fun depressing financial crisis factoids.
For instance: Which countries haven't sorted out or passed their packages yet? Austria, Denmark, Greece, Iceland (no money to spend?), Ireland, New Zealand, Poland, Sweden, and Turkey.
Who's spending the most, in terms of percentage of G.D.P.? Spain (8.1 percent), China (6.9), and the United States (5.5). Brazil's the biggest cheapskate. Its $4 billion package amounts to a mere two-tenths of a percent of G.D.P.
Already, the blogosphere's parsed the data to decide which countries are pulling their weight and which are relying on others to do the spending for them.
Justin Fox at Time's The Curious Capitalist praises the U.S. and China and derides, well, everyone else:
"The concern is that if we in the U.S. do lots of stimulating and other economies don't, much of the money will just leak out overseas as we spend on imports but others don't buy our exports. China seems to be doing its part, but most of the developed world is not."
Ezra Klein agrees:
"We're doing a lot. China is doing a lot. Everyone else isn't....the global economy will be slower than it needs to be, which means national economies will be slower than they need to be (if Caterpillar's international sales sag, they'll cut U.S. jobs)."
Singled out for specific vitriol in the blogosphere is the Eurozone -- in particular, Germany, which has come under regular fire from the likes of Paul Krugman et. al. for free-riding on others' efforts.
Megan McArdle writes:
"Europe is dropping the ball here. The euro area is being notably stingy with both fiscal and monetary stimulus, and I'm not the only one who's stonkered by it. If fiscal policy remains too tight, it threatens the very union they're supposed to be protecting--how long can Greece and Italy, Ireland and Spain, suffer under a tight regime before one of them pulls out? And if one of them pulls out, the other weak sisters will pay sharply higher interest rates to compensate for currency risk, probably forcing them out as well."
If there's already global tension over which countries need to do more, just think when the arguments inevitably begin over who started it...
Andreas Rentz/Getty Images
The Dow Jones Industrial Average hit a bone-wrenching 6763.29 points yesterday amid news of failing Eastern Europe, faltering U.S. GDP, flinching Citigroup, flailing AIG, and lots more fun that you're no doubt aware of. So what was happening in the world the last time the stock market hit this point? It was April 25, 1997.
Some of the highlights from the 6763 days:
In his first on-the-record meeting with the media, held Wednesday, CIA Director Leon Panetta discussed the destabilizing effects of the global economic crisis. After he expressed particular concern over potential trouble in Argentina, Ecuador, and Venezuela, the Argentines are not happy. Yesterday President Cristina Fernández de Kirchner summoned the U.S. Ambassador to discuss the CIA director's comments, and speaking at a news conference, Foreign Minister Jorge Taiana had this to say:
We consider the statements an unacceptable interference in the internal affairs of our country, even more so coming from an agency that has a sad history of interference in the internal affairs in the countries in the region."
While economists are predicting that Argentina's GDP will contract next year, none of them seem to be forecasting this sort of doomsday scenario. Ambassador Earl Wayne claims that Panetta's statements do not reflect the U.S. government's official position, but rather the CIA chief was merely recounting the opinion of a "foreign source." Even if that is true, it's hard not to get the feeling that the CIA is once again causing trouble in Latin America.
Paul J. Richards/GETTYIMAGES
In an interview with the Financial Times, former Federal Reserve Chairman Alan Greenspan officially came out in favor of temporary bank nationalization as a possible solution to the current economic crisis:
It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do."
This is a big admission for Greenspan. But it seems as if the erstwhile devotee of Ayn Rand has been reassessing his ideas as of late. This past October, during testimony for the House Committee on Oversight and Government Reform, Greenspan said,
This modern risk-management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year."
Well, as Martin Wolf recently wrote in FT, "We are all Keynesians now" -- even the high priest of neoliberal economics himself. It's a new day.
TIM SLOAN/AFP/Getty Images
Two days after Venezuela celebrated the passage of a referendum to remove term limits, the country still seems to be shaking off a hangover. Analysts the world over are mulling over the Venezuela's rising inflation, alarming debt burden, and perceived fiscal shortfall as oil prices fall to dismal lows.
Putting it more frankly, a former Venezuelan central bank official says the country is headed for certain stagflation. "A model based on the state entrepreneurial role is being depleted," he told El Universal. Rough words for a President who has nationalized the oil industry, among others, and may soon do the same in banking.
But if the markets say anything, it is that Chavez will simply have to start reigning in his popular but extensive spending -- something he'd avoided doing until the votes were cast. The country's currency rose on precisely those hopes yesterday.
From the looks of it, Hugo Chavez did indeed enjoy the hell-of-a party in Caracas on Sunday night, celebrating his big win. Good thing. One of the catchier slogans of the campaign, "Oh, ah, Chavez no se va!", is Venezuela's reality: Chavez isn't going anywhere. Is he sure it's a job he wants anymore? La recesion, tampoco, no se va...
Photo: THOMAS COEX/AFP/Getty Images
Truly, no one is safe from the long reach of the financial crisis. Time's China Blog reports:
With the flagging economy, no one's job is secure, not even for a mistress. A Qingdao newspaper reported that a Qingdao businessman facing money problems decided to “fire” four out of his five mistresses last December.
According to the paper the man, surnamed Fan, was “inspired by those talent challenge programs he saw on TV”, and arranged similar competitions for his five mistresses. Only the top winner would remain Fan's mistress and enjoy a monthly income of US$800 and an apartment. The five women then presented themselves in front of a professional model trainer, gave speeches, sang songs and even gulped down liquor to show their drinking capacity.
Read the whole post for the story's strange and tragic conclusion.
Update: Looks like this one was too good to be true. Time has learned that the story was fictional.
The Russian central bank appears to have avoided a currency crisis this week, at least temporarily. Policymakers virtually painted a target on the ruble by announcing in late January that they had established a new floor on the currency in order to stabilize its slide. In fact, the opposite happened. Within days investors pushed the currency's value down against the floor, threatening to cause another large selloff of foreign exchange reserves in its defense.
After losing over a third of the country's reserves since August and having the government's debt rating lowered by Fitch last week, the central bank made a change of course by tightening interest rates, making speculation more costly and easing the pressure to draw down official reserves. The move even caused the ruble yesterday to make its biggest gains against the dollar and euro in the past two years, signaling a temporary stabilization.
While they are not out of the woods yet, the Russians seem to have finally taken a step in the right direction. And at time when everyone is focused on the mounting woes in the world economy, any good news on the economic front is welcome.
ALEXEY SAZONOV/Getty Images
I guess the markets were none too keen on Tim Geithner's bank rescue revamp.
Many people will no doubt take this as ispo facto proof that the plan is flawed. Obviously, it's too soon to tell ,and we don't have enough details to make a definitive judgment as to whether it will work.
But in any event, should we really be trusting the collective wisdom of the markets at this point? I mean, isn't mass hysteria partly what got us all into this mess in the first place?
Wen Jiabao was one thing, but Fidel Castro?
Today's "Reflections of Comrade Fidel" (in Spanish) column is a fun one. In it, the communist leader blasts the Obama adminstration and congressional Democrats for their protectionist tendencies (Translation assist from Blaine Sheldon):
To please the unions that supported them in the campaign, the U.S. House of Representatives, dominated by the Democrats, launched the extremely protectionist slogan 'buy American products', which throws aside a fundamental principle of the World Trade Organization: that all nations of the world, large and small, base their dreams of development on the exchange of goods and services, for which, however only the largest and those of natural wealth have the privilege to survive.
When Fidel Castro is lecturing the U.S. government on the principles of international capitalism, you know that something strange is afoot in the new world order.
Photo: ADALBERTO ROQUE/AFP/Getty Images
I must say, this is kinda metal:
The agriculture minister of Latvia has been forced to resign in the wake of growing protests by farmers, while the government faces a no-confidence vote.
Minister Martins Roze announced his resignation even as the cabinet agreed a big rescue package for farmers.
On Tuesday they picketed the agriculture ministry and delivered cows' heads in a coffin.
I'd probably resign after that too. Totally gross, probably NSFW picture here.
On a more serious note, Latvia's government faces a no-confidence vote today over its handling of the economy. Will it be the first government on our "next Iceland" list to fall? Stay tuned.
Italy has taken its fair share of losses in the current economic downturn. However, the damage hasn't been severe enough to elevate it to one of the top five countries that we fear could become the next Iceland. In scanning the reddit comments on our list, I noted one Italian with a hilarious explanation for why Italy hasn't been more affected:
We (Italy) are somewhat not in this mess because our banks did not understand the last 5 years of finance and did not pretend to understand it, so they stayed out. We are now in the spot where stupidity and luck meet.
Photo: AFP PHOTO / JOHN THYS
I pity the poor soul who came up with this headline combo:
"The Magic Mountain: Can Talks in Davos Help Solve the Economic Crisis?"
FABRICE COFFRINI/AFP/Getty Images
Development ideologues beware. NYU economist, aid skeptic, top intellectual, and FP contributor William Easterly has entered the blogosphere. His new blog, Aid Watch, aims to "be brutally honest when aid is not helping the poor, but also praising it when it is." His first post takes on World Bank President Robert Zoellick's call for $6 billion in addtional U.S. foreign aid.
This is troubling:
PARTS of the United Kingdom have become so heavily dependent on government spending that the private sector is generating less than a third of the regional economy, a new analysis has found.
The study of “Soviet Britain” has found the government’s share of output and expenditure has now surged to more than 60% in some areas of England and over 70% elsewhere. [...]
Across the whole of the UK, 49% of the economy will consist of state spending, while in Wales, the figure will be 71.6% – up from 59% in 2004-5. Nowhere in mainland Britain, however, comes close to Northern Ireland, where the state is responsible for 77.6% of spending, despite the supposed resurgence of the economy after the end of the Troubles.
The government now looms larger in the British economy than it did in Hungary and Slovakia in the immediate post-Communist period in the early 1990s.
Back in the U.S.S.R. indeed.
Unfortunately, Saletan's piece should have been called "How not to close the Gaza tunnels." It's really terrible advice -- almost a parody of the worst sort of technocentric thinking that military reformers like H.R. McMaster have been fighting against for decades.
Saletan examines the following nine options:
Seriously, I was waiting for the twist at the end where Saletan says, "See, none of this BS will work, which is why..." But instead, he concludes:
If Israel can't get a deal to block the tunnels with sensors or a barrier, it might have to resort to "statistical" bombing again. That could mean a bombing campaign along the border every three to six months—the length of time it takes diggers to complete new tunnels. An ugly prospect, to be sure. But not as ugly as what's going on right now in Gaza.
What ever happened to basic economics? If people want stuff, and people are willing to supply it at the demanded price -- whether it's illegal drugs, weapons, or televisions -- they will find a way to supply it, and they will take extreme risks if the expected payoff exceeds their expected costs. Full stop. (There's even a book about this phenomenon.)
The super-smart Michael Slackman looked into the smuggling issue in 2007, and he concluded (after actual reporting!) that "to stanch the flow of weapons, Egypt will ultimately have to address the economic and social concerns of the region, and not rely solely on its security forces":
In more than a dozen interviews shortly after Hamas solidified its grip on Gaza, locals said the Palestinian territory was a primary market for goods in a region short of jobs and other economic opportunities. They said, almost without exception, that the business of ferrying weapons was more about profit than ideology. [...]
In the last two years, since Israel withdrew its forces and settlers from Gaza, Egyptian officials said they had increased their policing of the border area, blowing up tunnels and arresting people connected with smuggling.
Israeli officials say that when they still had a presence in Gaza, they tried to foil the tunneling by installing a concrete or iron wall along the border that extended 3 meters, or 10 feet, underground. But the tunnels are typically 6 to 20 meters below ground.
Israel also used sonar and other sensors to hunt for the tunnels, occasionally setting off charges to cause undiscovered tunnels to collapse. They also urged the Egyptians to do more - which they did.
But no matter how much the authorities here tried to crack down on smuggling, people here said, the outlaw culture could never be overcome without economic development. Unemployment in the region is among the highest in Egypt.
While a percentage of the weapons smuggling is a function of solidarity with the Palestinians, people here said, weapons were also just one product that brought income. Many of the Bedouins said they also worked to smuggle people into Israel, often women from Eastern Europe looking to work in the sex industry. They talked of smuggling marijuana and cigarettes, too.
There's a sad history of people who don't understand -- or, for political reasons, pretend not to understand -- why technology won't solve their political, economic, and social problems. Take Robert McNamara, who in 1967 announced plans for a massive, ill-conceived "electronic anti-infiltration barrier" to stop inflitration of men and materiel from North Vietnam. Or take the moronic "virtual fence" that some in the U.S. government concoted to address illegal immigration because they didn't grasp what BusinessWeek's Keith Epstein, with more patience than I can muster, explains here:
The allure of a technology fix is understandable, given what federal agents are up against. Along nearly 2,000 miles of scorching desert, steep canyons, winding rivers, and urban mazes, they routinely strive for the unattainable—to stop the flow of people so desperate for better lives that they will climb, run, swim, tunnel, bribe, and even hide in car undercarriages to get into the U.S. The number of Border Patrol agents has almost doubled since 2000, to 14,900, supplemented now by up to 3,000 National Guard troops. Still, migrants continue to cross. And they'll continue to come, as long as Mexico's per capita income remains one-fifth that of the U.S. and employers in El Norte continue to welcome them.
So, wise guy, you ask, how do you shut down the Gaza tunnels?
My answer: You don't. Or, at least, not until you permit free trade in and out of Gaza, end the Israeli-Palestinian conflict, raise income levels in northern Sinai, and pay Egyptian officials high enough wages such that they don't feel the need to take bribes.
There is no technological solution, so best of luck with the rest of it.
Photo: Abid Katib/Getty Images
For the last several years, two things have helped keep the world informed of goings on inside Zimbabwe: the Internet, and mobile phones. Reports of protests, violence, and cholera have leaked over the borders through text messages and conversations with relatives abroad -- especially in South Africa.
Now, mobile phone companies will start charging customers in dollars in hopes of avoiding the burn from 231 million percent inflation (the country just intoduced a $50 billion note). That means the 94 percent of Zimbabweans who aren't employed will struggle to pay.
And reports will stop leaking out.
The world already struggles to find out what's really going on inside Robert Mugabe's police state. The local media has it rough. As Reporters without Borders put it in their 2008 report, "Since 2002, the daily lot of Zimbabwean journalists has consisted of permanent surveillance, police brutality and injustice." Foreign journalists rarely brave it (or are allowed) inside.
Not helping matters, on Jan. 9, Zimbabwe imposed new fees on all journalists -- between $1,000 and $3,000 for accreditation of local journalists, and $30,000 for foreigners. A temporary foreigner can get in for the bargain price of $1,500. Quite simply, "What it means is that they will no longer be able to report," Human Rights Watch analyst Tiseke Kasambala told me.
Perversly enough in both cases, it is Mugabe who is yet again cashing in. Journalist fees will go straight to the government And the country's reserve bank, says Kasambala, has been buying dollars on the black market. "They're making huge killings on the exchange rate." Add the press to the casualty list.
DESMOND KWANDE/AFP/Getty Images
Subprime lenders, reckless traders and lax regulators have all been blamed for the current financial mess. Then again, maybe it's all Beyoncé's fault.
According to findings by Phil Maymin, professor of finance and risk engineering at New York University, the more regular the beat on Billboard's top singles, the more volatile the American markets. After studying decades of Billboard's Hot 100 hits, Maymin found that songs with low "beat variance" had an inverse correlation with market turbulence. Which is to say, the more regular the song, the crazier the stock market.
And Single Ladies is very regular
I wonder what Maymin's NYU colleague Nouriel Roubini thinks of this. Personally I think that if the predictive power of pop songs were really this strong, Nickelback would have heralded a nuclear apocalypse years ago.
(Belated hat tip: Carolyn)
Photo: Scott Gries/Getty Images
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