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Friday, June 21, 2002

Germany Joins the Club

So in the run up to the weekend's European summit, Germany adopts a new immigration law.

Germany adopted a disputed immigration law Thursday that tightens rules for asylum seekers but aims to attract high-tech foreign workers, putting the issue squarely into September's election campaign.The law grew out of a long-running debate on how to balance anxiety about the growing number of immigrants with Germany's need for skilled foreign workers as the native-born population ages.

Opposition conservatives announced they will challenge the law, saying it flies in the face of efforts by European Union leaders to clamp down on illegal immigration out of concern about anti-immigrant sentiment. The conservatives claim the new law could flood Germany with foreigners.

The bill, which scraped through the upper house of parliament in March, puts more pressure on newcomers to integrate but sets no quotas on the number of immigrants that can be brought in................Schroeder's center-left government drew up the law after an expert commission said last year that Germany needs tens of thousands of new migrants each year to supplement its aging, shrinking population.The government had said its bill would allow Germany to admit workers needed by industry in areas such as the high-tech sector while also tightening asylum laws and requiring foreigners to assimilate.

European Union leaders expect to finalize some 50 proposals to lower the number of illegal immigrants to the 15-nation bloc at a weekend meeting in Seville, Spain — out of alarm at strong electoral scores for France's Jean-Marie Le Pen and other far-right politicians.

Germany's 7.3 million legal foreign residents currently account for about 9 percent of the population.
Source: Yahoo News LINK

If you believe your eyes, even the most cautious proposals are greeted by what by all accounts will be the next German government with cries of social alarm and fears of immigrant flooding! Everyone still convinced Europe will be capable of reform?

Thursday, June 20, 2002

Spain Starts Summer Holiday Two Days Early

So today is the 21 July, the summer solstice and the longest day in the year. I'll be celebrating by getting in the car and heading, not for Stonehenge, but for a quiet corner of the Spanish Pyrenees. I'll probably also find myself sitting in some of the years longest traffic jams as hundreds of thousands of other 'Barcelonins' all try to leave town at the same time to celebrate this long holiday weekend - Monday is Sant Joan (or John in English) and one of the highpoints of the festive year, a special and magic day when Catalans light bonfires, make a lot of noise with fireworks, eat a special Coca (or cake) and swill it all down with lashings of the local Cava.

But what makes this year different is that fact that for very many people here the party actually started not today, but on Wednesday night. This is due to the fact that yesterday there was a general strike in Spain. This strike was called by the Spanish Unions to protest at a new law being proposed by Jose Maria Aznar's Partido Popular government to reform the system of unemployment benefits and labour contracts. But for millions of young Spaniards it was the perfect excuse to start the party early, and all the disco's were working overtime. I happen to be able to confirm this personally as I was working into the early hours of Thursday morning trying to learn Blogger pro, and playing around with skins from Blogskins. And the cars kept roaring past my door, just like any other Saturday night. Of course, young people in Spain tend to live at home with their parents till they are nearly thirty these days. This means that they have more money than any previous generation to spend on cars, clothes, music and entertainment generally, and are an important factor behind Spain's consumer driven economic expansion. Of course they are also going to be asked to inter-generationally sacrifice on a big scale to pay for the massive population of old people Spain will have in ten to fifteen years. They are going to pay a lot into the pension funds, but, chances are, they will receive very little. So perhaps it is appropriate that they enjoy themselves now.

I'm not going to comment here on the actual issues behind the strike, except to point out that from the people I have spoken to it's not so much the substance of the reforms that is causing the problem as the way they are being presented. Most people accept the need for change, understand that Spain's future is going to be complicated, and are willing to make some sacrifices. But they don't like receiving orders. It's the governmental style here that is at the heart of the problem, and this is an issue which unites protesters about the proposed national water plan (an explosive issue in the rural areas of North West Spain), university teachers and now workers across Spanish industries. And in particular workers over fifty are nervous about this law. European labour market participation rates are down to about 25% by the time we get up to 60, and the recent Barcelona summit targeted participation rates of up to 75% at 65 (and later extension of working age up to 70) as part of the alternative to increased immigration in the face of population ageing. What this means is that if you have or take early retirement you may be asked to go to work in another occupation, and, of course, for less money. This may well have to happen. But it is important to remember that many who are in this group today started working in the 1960's, often as early as at 13 and 14, and often in physically challenging occupations. These people are tired, and the politicians need to understand that this situation needs to be handled with sympathy and understanding. This is not a circumstance which is present in today's Spain. My feeling is, that just like during the last years of Thatcher Britain, this government is surviving because the electors have no credible and coherent alternative.

On the other hand, most of the debate in Spain focuses on the ability of this society to mature in the way it handles information:

The Spanish government and the unions gave differing versions of the strike's effects.Finance Minister Rodrigo Rato said an average of 17 percent of workers honored the strike. "There has been nothing even approaching a generalized strike," Rato said. Labor federations said the figure of participation during the strike was a whopping 84 percent. They called on Aznar to withdraw his unemployment reforms, passed by decree last week. Source: Yahoo News LINK

These numbers are pathetic on both sides. For a modern society to function well, it's important that its citizens are able to trust the information they receive (Bush administration please note). For this to be the case numbers provided need to be at least half-way realistic. We can all see from Argentina what can happen in a critical situation if confidence in the veracity of a government is lost, even when there's really no money there, the people may still refuse to believe it.

IClone analyst says IDon't

The latest fracas involving Merrill Lynch stock analyst Hecht raises again the paucity of information available to ordinary garden variety investors. Hecht is being accused by some members of the House Energy Committee of using insider info as the basis of a stock recommendation

Merrill Lynch and Co. Inc. on Wednesday rejected suggestions from congressional investigators that its biotechnology analyst received and disseminated inside information when he issued a report on ImClone Systems Inc. a day before negative news sent the company's stock tumbling. Investigators are examining a research note issued by the investment bank's analyst Eric Hecht on Dec. 27, which drew attention to market speculation that the U.S. Food and Drug Administration might decline to review ImClone's experimental cancer drug, Erbitux. A day later the FDA did just that.

Apart from that fact that the so called 'lifestyle diva' Martha Stewart has already been tangled up in insider dealing scandal, what is interesting about what is going on is that it highlights just how important for 'stock analysis' are the internet chat-boards:

In pointing out that investors were speculating approval of Erbitux might be delayed, Hecht was stating the obvious. Investors had been discussing their concerns on Internet chat-boards as early as Dec. 18. They even speculated about possible insider trading as they watched the stock begin to slide two weeks ahead of the FDA's announcement on Dec. 28.

In the days leading up to the announcement, trading volume in ImClone's stock soared. On Dec. 27, more than 7.7 million shares changed hands, more than triple the average and the most in a single day since September 19, 2001, when Bristol-Myers Squibb Co. agreed to pay up to $2 billion for U.S. rights to Erbitux and a 20 percent stake in ImClone. That level of trading activity and a sharp drop in ImClone's stock price prompted questions from Merrill Lynch's trading desk, Merrill Lynch said. Hecht's report came in response to these questions.

Hecht was not the first to point out investor concern over potential negative news from the FDA. A full week before Hecht's note, Cory Kasimov, an analyst at Gruntal & Co., had also noted that some investors were concerned the FDA may request additional data from ImClone, potentially delaying the drug's acceptance. Kasimov's comments were distributed widely via the Dow Jones news agency. One day after Kasimov's comments, the online news organization The Street.com also published a report stating that "fears are rising that the FDA's acceptance of (ImClone's) application, expected by Dec. 31, could be delayed."
Source: Reuters on Yahoo News LINK

The defence seems reasonable given that you don't have to be a genius to fathom that, since the FDA has been tightening up a lot on drug permits lately, any pharma company with a product up for approval could get a negative result. But the more interesting detail is the attention paid to the quantity of information available on the chat boards, and then again just who exactly was doing the posting. It is widely assumed that some Enron employees were in fact using these boards to publicly blow the whistle and call attention to the dangers of the stock months before any 'official' analyst was willing to accept that there might be a problem. So in this environment, just exactly what is insider trading. When the Street's commentator states that 'fears are rising', they are presumably rising and being aired over the internet.

The lesson is clear, if you really could stand to wade your way daily through the type of stuff that's in these posts, then you could probably make yourself a lot of money, but in my book you'd have to do a hell of alot of tedious work to earn it. It wouldn't be my way to spend a nice sunny day.


So the French results are in, and Chirac has a bigger majority than ever. The part I don't get is how this is somehow all going to lead to accelerated reform.

Now it is going to be one of Bonobo's central tenets that we are not political, not in the normal partisan sense at any event. The issues at stake are too important for that. So in one sense a change in the political complexion of Europe's goverrnment seems - at the meta level - perfectly normal and healthy. If you believe in democracy, then democracy needs to be representative, and all the people need to feel represented, at least some of the time, ergo: goverments change hands. This is the bonobo view (which is whats sets us apart from the garden variety chimpanzee).

So on one level everything's fine. But then there's this reform bit, and it's here that I have the problem. If we look at the issues that are moving the European electorate at the moment it's the FEAR of change that is moving people, and not the desire for more. If we begin to think about why the left voters are staying at home, it's got more to do with a lack of enthusiasm for the reform process which the left parties are timidly advancing, than with a desire to accelerate this process, and if the voters of the right are looking to their traditional parties for protection from the processes of globalisation, and in particular from the convulsive movements of peoples that these are producing, it's in order to try to put a BRAKE on these processes. That is, these voters want more protection from their governments, not less.

What we are witnessing is a revival of NATIONALISM in Europe, and all of this is going to make the job of co-ordinating the EU a mighty difficult one. Keep your eyes on the Sevilla summit.

Which makes me a little out of sympathy with AP's Barry Renfrew:

Left-leaning governments across Europe are being kicked out by voters worried about ailing economies, crime, illegal migrants and a fear that traditional policies of state control don't work.Europeans are turning to conservative, and even far-right parties, for tough economic reforms and law-and-order policies. Many see the left as out of step with ordinary people........

This a far cry from the 1990s, when the left swept to office across Europe and ecstatic supporters talked of decades in power. The left believed it had the answers for post-Cold War Europe in a globalized economy - a blend of capitalism and traditional left-wing social policies to protect workers and fund generous welfare programs.There was also a strong belief that the left would speed up integration of the European Union ( news - web sites), turning it into a 15-nation power to rival, even eclipse, the United States.

But perhaps more than any other factor, the left has failed to tackle key law-and-order issues worrying many voters, especially illegal immigration and crime. Rightly or wrong, many voters link the two and feel threatened in their own homes. A growing number of Europeans are worried or feel threatened by the influx of hundreds of thousands of newcomers, legal and illegal, from the Middle East, Asia and Africa. Even in traditionally tolerant nations like the Netherlands and Denmark, populist outsider parties have made strong gains by capitalizing on fear of large ethnic minorities that show little sign of integrating."
Source: Yahoo News LINK

Perhaps the FT is a bit nearer the mark:

As the polls closed the abstention rate stood at a record high of almost 40 per cent among France's 41m electorate - well above the exceptional level in the first round of 35 per cent. The refusal by such a large segment of the electorate to go to the polls underlined French people's weariness with voting after two consecutive rounds of presidential and general elections in two months.

So come on, which is it, a dynamic and imaginative population, tired of the heavy hand of bureaucracy and chafing at the bit for reform, or an insecure and worried group of voters, locked in the safety of their own homes, and saying, in the immortal words of the Economist: 'if you're one of the planets tired and huddled masses, then clear off'.

Well at least Le Pen didn't get any seats.


It must be Marc's birthday or something, what with all this attention:

For some reason, popular waves of computer technology tend to be personified. The personal computer era had two faces: Steve Jobs and Bill Gates. In its boom years, the Internet, despite being decentralized technology with countless contributors, had a leading man: Marc Andreessen, co-founder of Netscape Communications, who wrote code and became rich, the first of the young Internet millionaires, smiling from the cover of Time magazine at 24, barefoot and wearing shorts.

What a difference six years make. Last month, Mr. Andreessen, 30, spoke to a group of potential customers at the Four Seasons Hotel in Manhattan. There were all of five people representing four companies: two investment banks, a media company and a consumer product marketer. Outnumbering the potential customers were Mr. Andreessen and his colleagues from Loudcloud Inc., an Internet company based in Sunnyvale, Calif...............
Source: New York Times LINK

It seems to me that someone's tryin to push the idea that Loudcloud's goin to be the 'next new big thing'.....


Worried about the effect of cell phone radiation on your childrens already warped brains? Well, if reports are confirmed, a group of scientists at a British University may have accidentally discovered something useful. Apparently there are also improvements for bue tooth thrown in for free.

Scientists at a British university, taking advantage of their research in GPS (global positioning system location-based technology, have reported a breakthrough in antenna design that could result in safer mobile phones.Engineers at Loughborough University's Centre for Mobile Communications Research (CMCR) say their work may yield a new antenna that will reduce cell phone radiation emissions absorbed into the body. The small-scale antenna initially was designed for devices receiving GPS signals from satellites, CMCR head Yiannis Vardaxoglou told NewsFactor. However, the researchers later discovered that the antenna had a low radiation SAR (specific absorption rate)......

A reduction in the SAR of up to 85 percent was accomplished, Vardaxoglou explained, by creating an antenna using helical, or spiral, copper tracks etched into a small ceramic cylinder. The antenna measures about one centimeter in diameter by one centimeter in length. The antenna also has applications for Bluetooth-enabled devices that use short-range wireless connections. Vardaxoglou said his technology would reduce the interference that often plagues Bluetooth networks that connect several devices in an office.
Source: News Factor LINK Discuss Do Mobile Phones Damage Your Health?


Japanese shares took a pounding on Monday and the Topix index made its biggest percentage drop this year after a weak performance in New York and London sparked a sell-off. Wall Street recovered some poise in Friday's late trade but on Monday foreign investors exited the Japanese market in droves.
The Nikkei 225 stock average fell 2.3 per cent to 10,644.11 and the more comprehensive Topix index fell 2.7 per cent, its worst one-day drop this year, underscoring the jitters that have hit Tokyo.

Foreign investors were net sellers on Monday, as all sectors declined.

The markets had appeared to ignore a two-notch downgrade of Japan's debt rating by Moody's and focused on expectations of a mild economic recovery. Foreign investors piled back into the Japanese market and were net buyers for eight consecutive weeks from the third week in April. This fed the notion that Japanese shares were no longer following the US lead.But doubts about the strength of the US economy after weak data last week and about a recovery in technology and telecoms stocks spread to Japan and darkened the outlook for the country's export-driven economy.

Disappointment with a government anti-deflation package also helped push shares lower on Monday. Traders said the market was sending a signal that Japan's second set of anti-deflation measures since February lacked effective plans to simulate domestic demand.Mr Lambert of JP Morgan added: "The Japanese market has peaked around May or June for eight of the past 10 years, so we may have seen the peak already, which doesn't bode well."
Source: Financial Times LINK

So, just when you thought it was over...........


I always had the feeling that the 'pelotazo' of Spain's national champions in Argentina would end badly, now the wrath of Argentina's angry masses seems to be reaching back into the belly of the would be behemoth:

Almost 1,000 Argentines have launched a class action suit in Madrid against Santander Central Hispano, Spain's leading bank, demanding the restitution of savings that have been frozen in Argentina since the devaluation of the peso in December.

The lawsuit, which will receive its first hearing next month, will seek to establish whether parent banks are legally responsible for their foreign subsidiaries. It is the first lawsuit of its kind in Spain, and as such, is likely to be followed closely by the country's fledgling multi-nationals."The customers of Banco Ro and Banco Francés thought they were putting their money into Spanish banks," Mr Hernandez (the lawyer presenting the suit)says. "Santander and BBVA made active use of their brands in order to generate confidence in their Argentine subsidiaries. Advertising for fixed-term deposits at Banco Francés carried the phrase 'with the backing of the BBVA Group', while Santander used its logo on Banco Ro products.

Mr Hernandez argues that as international banks, Santander and BBVA should be obliged to repay its Argentine depositors in Spain if they are prevented from doing so in Argentina. "This is a lawsuit about the scope of globalisation," the lawyer says. "It wants to establish the responsibilities of global companies towards their customers, wherever they may be."
Source: Financial Times LINK


SCIENCE is a cumulative, fairly collegial venture. But every so often a maverick, working in self-imposed solitude, bursts forth with a book that aims to set straight the world with a new idea. Some of these grand schemes spring from biology, some from physics, some from mathematics. But what they share is the same unnerving message: everything you know is wrong.

But for sheer audacity - and intellectual salesmanship - it would be hard to beat Stephen Wolfram, whose 1,263-page, self-published manifesto, ``A New Kind of Science,'' was holding its own last week atop Amazon's best-seller chart, along with ``Divine Secrets of the Ya-Ya Sisterhood'' and ``The Nanny Diaries."
Interesting ideas rarely spring up in isolation. The vision Dr. Wolfram has so meticulously laid out in such an arresting manner is part of a movement some call digital physics or digital philosophy - a worldview that has been slowly developing for 20 years.

Just last week, a professor at the Massachusetts Institute of Technology named Seth Lloyd published a paper in Physical Review Letters estimating how many calculations the universe could have performed since the Big Bang - 10120 operations on 1090 bits of data, putting the mightiest supercomputer to shame. This grand computation essentially consists of subatomic particles ricocheting off one another and ``calculating'' where to go.

As the researcher Tommaso Toffoli mused back in 1984, ``In a sense, nature has been continually computing the `next state' of the universe for billions of years; all we have to do - and, actually, all we can do - is `hitch a ride' on this huge ongoing computation.''
What the detractors are less likely to emphasize is the track record of traditional mathematical methods in forecasting, say, the recent gyrations in the stock market or the way a forest fire will burn. Here the usual methods of science are stretched to the limit - and that is where an influential minority of scientists quietly agree on the kind of cure Dr. Wolfram is so loudly prescribing: replacing equations with a different kind of mathematical device called algorithms, simple little computer programs.

THIS would represent a true upheaval. Mainstream science is rooted in the notion that space and time form a continuum: a perfectly smooth expanse that can be precisely described by what mathematicians call the real numbers, those that can have an endless string of digits after the decimal point. This kind of mathematics - the basis of calculus - is undeniably powerful. Physicists can predict the characteristics of a single subatomic particle with an accuracy equivalent to, as Richard Feynman liked to say, estimating the distance between New York and Los Angeles within the width of a human hair.
Had Dr. Wolfram been more demonstrative in parceling out credit to those who share his vision (many are mentioned, in passing, in the book's copious notes), they might be lining up to provide testimonials. It's the kind of book some may wish they had written.

Instead they were busy writing papers, shepherding them through the review process, presenting them in conferences, discussing them at seminars and workshops - going through the paces of normal science. That is how an idea progresses. But sometimes it takes a bombshell to bring it to center stage.
Source: New York Times LINK

So the problem, it seems is not so much what he's saying, it's how he says it. But when push comes to shove, things are about to change.

For one contrarian view you could try Cosma Rohilla Shalizi :

Stephen Wolfram, Cellular Automata and Complexity: Useful collection of Wolfram's papers on CAs. (Co-authors are listed in the smallest typeface legible without a magnifying glass.) He couldn't sell it, but he could give it away via comp.theory.cell-automata, which is where I got my copy. In fact, as of April 1997, the papers are available on-line. This does not mention Wolfram's patent on lattice gases. There are other stories about Wolfram which would probably get me in legal trouble if I related them.

Stephen Wolfram, A New Kind of Science: This is almost, but not quite, a case for the immortal ``What is true is not new, and what is new is not true''. The one new, true thing is a proof that the elementary CA rule 110 can support universal, Turing-complete computation. (One of Wolfram's earlier books states that such a thing is obviously impossible.) This however was shown not by Wolfram but by Matthew Cook (this is the ``technical content and proofs'' for which Wolfram acknowledges Cook, in six point type, in his frontmatter). In any case it cannot bear the weight Wolfram places on it. Watch This Space for a detailed critique of this book, a rare blend of monster raving egomania and utter batshit insanity."

What do I think? Well it's obvious isn't it:

then rule 110 said, let Wolfram be
and all was light


Over here in Spain perhaps the most noticable consequence of this process is the growing number of power cuts as people increasingly install and use air conditioning, but over in Alaska the effects are more pronounced.

To live in Alaska when the average temperature has risen about seven degrees over the last 30 years means learning to cope with a landscape that can sink, catch fire or break apart in the turn of a season. In Alaska, rising temperatures, whether caused by greenhouse gas emissions or nature in a prolonged mood swing, are not a topic of debate or an abstraction. Mean temperatures have risen by 5 degrees in summer and 10 degrees in winter since the 1970's, federal officials say.
While President Bush was dismissive of a report the government recently released on how global warming will affect the nation, the leading Republican in this state, Senator Ted Stevens, says that no place is experiencing more startling change from rising temperatures than Alaska.Among the consequences, Senator Stevens says, are sagging roads, crumbling villages, dead forests, catastrophic fires and possible disruption of marine wildlife......

Climate models predict that Alaska temperatures will continue to rise over this century, by up to 18 degrees.
LINK Discuss: Too Hot to Handle


It makes a lot of sense, in fact it was sitting there staring us in the face all the time, but it took this recent NYT piece to wake me up to the fact that it could actually become a reality.

Military cooperation between India and the United States has remarkably quickened since Sept. 11, with a burst of navy, air force and army joint exercises, the revival of American military sales to India and a blur of high-level visits by generals and admirals.....

From the start of President Bush's term, some influential officials in his administration saw India as a potential counterweight to that other Asian behemoth, China, whose growing power was seen as a potential strategic threat.But since Sept. 11, the priority has been terrorism. The United States is hoping its deeper military and political ties with India will give it some measure of leverage to prevent a war between India and Pakistan that could lead to a nuclear holocaust and would play havoc with the hunt for Al Qaeda in Pakistan.......

The military relationship has certainly accelerated in recent months. "We've moved from crawling to walking and we're preparing to run," said an American military official.
American warships have been docking in the Indian cities of Bombay, Cochin and Madras. The first major sale of military equipment to India — $140 million of artillery-finding radar made by Raytheon — has been approved by Congress. Aircraft engines, submarine combat systems and helicopter parts are in the pipeline.
In the largest-ever joint ground and air operations, American and Indian paratroopers jumped last month from the same aircraft over the city of Agra. Later this year, for the first time, Indian troops will venture to the United States for exercises in Alaska.....

Mr. Bush took office determined to bring the United States and India closer together, an undertaking that began under President Bill Clinton. The Bush administration's approach to India was conceived as part of a broader geopolitical strategy in Asia.Some senior officials saw a close American military relationship with India, a developing, democratic nation of a billion people with a million-member army, as a factor that would give pause to a rising, autocratic China, if not now, then a decade or two down the road when India has become richer and more powerful, American officials say......

In public remarks, American officials have been careful not to depict the warming relations with India as having anything to do with China for fear of alarming China or offending India.But the senior American defense official said in the interview on Thursday, "Given our strategy in Asia, the more sober view of China, and Russia no longer being a competitor, there were objective strategic reasons the India-U.S. relationship would improve."
LINK Discuss Geopolitical Changes in the Works?

Obviously this is going to really shake things up. And where does it leave poor old Europe, and Nato? It also makes you ask yourself what were the real motivating factors behind India's recent belicosity with Pakistan.

A More Reasoned Voice

Remember this from my June 14th post: Down and Down We Go:

The latest turn in sentiment about the US economy has encouraged speculators to bet that the Fed's policymaking Open Market Committee (FOMC) will make no significant changes at its June 25-26 meeting.

This has to be a joke doesn't it? But even so it's in poor taste.

Well LOUIS UCHITELLE from the NYT wades in today with a far more considered piece:

In his public statements, Alan Greenspan is upbeat. The recovery is happening, he says. Let's hope so. When an upturn seems in danger of fizzling, as this one does, the Fed normally keeps it on track by cutting interest rates.

This time, however, Mr. Greenspan is a spectator just as the rest of us are, unable for now to exercise his power.
A turning point may even be at hand, justifying a rate cut to prevent a slowing economy from deteriorating into another recession — the famous double dip that a few weeks ago appeared so unlikely. But this is one of those awkward moments in the annals of the Federal Reserve when acting to offset the next anticipated twist in the economy is not feasible. The Fed is boxed in. Raising rates, or lowering them right now, would be harmful.

The Fed has tied its own hands. Mr. Greenspan and his fellow policy makers have signed onto the proposition that the economy is expanding. That was the message in their statement after their last meeting, in early May. And nothing they have said in public since then has substantially amended that view. Some have also said that over the long run, interest rates cannot stay as low as they are.

Some economists contend that another rate cut, even if justified, would not be of much help. After all, the 30-year fixed-rate mortgage is already down to 6.71 percent; how much lower can it go? If the bottom has been reached, then the Fed is really in a fix. Others, however, say that with inflation edging down, the inflation-adjusted "real" cost of borrowing is gradually rising, just when it should not be.

This is exactly the point. Real interest rates may be rising. But the Fed has been far too upbeat, trying to talk the economy up. That is the job of politicians, or marketing people. A move down would be badly read, and could just as easily send confidence and markets down further. I'm afraid Mr Greenspan has been hoisted on his own petard, as my British father used to say. And remember there, just below us is that little zero bound. Let's say it one more time, the big US and global risk today is deflation, not inflation.


Well at least we're not losing our sense of humour!

"With more than one in six stocks in the Standard & Poor's 500 index at lows for the year, many people are worried that their investment portfolios might eventually move from the financial pages of newspapers to the comic pages. For investors, it's a scenario that reads a lot more like "Dilbert," the comic strip about the absurdities of cubicle life in Corporate America, than it does like "The Amazing Spider-Man.""

But the not so funny part is the following:

"What's scary is that despite the market's pullback, the price-to-earnings ratio of the S&P 500 remains very pricey at 40. A slump of about 80 percent in stock prices would be needed to bring the P/E ratio to its long-term average of 15. Indeed, it's difficult to be bullish on such a puffed-up market because historically, bullishness has topped out when the P/E ratio has stood at 25 and the bearishness leveled off when it sank to a measly 8"
Source: Yahoo News LINK Discuss Irrational Exuberance, Part Two

So just what should the P/E ratio be?

Andreessen Interviewed on 'browser war dangers'

MacCentral have run an interview with ex-Netscape developer, and current Loudcloud dynamiser, Marc Andressen:

"IDG: Some people are saying that the browser wars are reemerging.

Andreessen: Do you believe it?

IDG: That's my question for you.

Andreessen: Well, let's see. Microsoft is up to what in browser market share? Ninety-three percent?

IDG: Well, do you think if A! OL were able to distribute Netscape to its millions of Internet! subscribers that it would revive the war?

Andreessen: Internally at AOL, they don't think about browser market share. They think about getting AOL out to millions of people, so they'll do whatever is most expeditious in doing that. Now, if Microsoft cuts off Internet Explorer from them then, yeah, clearly they'll be able to switch to Netscape. They just don't have any internal motivation to get browser market share........

IDG: What kind of a role do you think the browser plays these days?

Andreessen: Good news, bad news. The bad news is the browser is kind of done. Essentially, nothing new has happened since it got adopted in the mainstream over the past four years. Microsoft releases a new version of Internet Explorer, and it's like, what exactly are the new features? There's probably three or four new features in there, but who cares? So that's the bad news.

The good news is, it's everywhere now. The concept is everywhere, the implementations are everywhere, everybody uses it, everybody understands the metaphor and the shift in the architecture of computing around the browser is very serious. Ten years ago, client-server (computing) meant having to use a centralized database, and it meant that all the applications were distributed on fat clients, which meant they couldn't change very often. It! meant applications were hard to use and it meant that they only could be really used by a limited number of people -- typically, your own employees. And so companies had no way of building applications that extended out to their customers and partners. The shift in the computing architecture when it went to a Web architecture was very serious, because now you've got a centralized distribution mechanism for applications. Put an application up on a central server or set of servers and anybody with a browser can access it, and it's easy to use. That's really a permanent swing in the industry."


The Economist Hits Out at 'Fortress Europe'

Every passing day leaves me more and more incredulous in the face of the cretinism currently being exhibited by Europe's political classes. Thank god I'm not the only one looking to breathe some fresh air. Under the header "Huddled masses please stay away" this week's Economist print edition contains this refreshing reflection:

“GIVE me your tired, your poor/ Your huddled masses, yearning to breathe free”, proclaims America's Statue of Liberty. If the European Union were to build a similar monument in Brussels, what message would it carry? Perhaps something like: “We have vacancies for a limited number of computer programmers and will reluctantly accept torture victims with convincing scars. Migrants looking for a better life can clear off.”

I have the horrible feeling that the run up to the Sevilla summit is going to be unbearable. It is pathetic to watch our leaders in a kind of Dutch auction to see who can win most votes by being most anti-immigrant. Pathetic, and also extremely stupid when you consider the positive effects immigration can have, and how much Europe's ageing population would benefit from it. Meanwhile, from the land built from immigration comes this interesting info on how you can learn to like and love each other.

9/11 Bridged the Racial Divide, New Yorkers Say, Gingerly

"Daniel Hook knows what it is like to be judged by the color of his skin. It would take no more than a ride on the subway to get the disapproving looks — the kind that screamed out: stay away. Mr. Hook is 25, black and a lifelong resident of Brooklyn. He wears baggy pants and a baseball cap and has a fondness for silver earrings. "Some people wouldn't even look at you," he said. "They didn't have to; you could feel it."

But these days, Mr. Hook does not worry about the subways or the people riding them. In fact, he seeks them out. Once a week, on a day off from work, he volunteers at New York City Transit, sweeping stations and giving directions. "People are polite to me," Mr. Hook said while on duty in Jackson Heights, Queens. "My skin color doesn't seem to matter."

According to a recent poll by The New York Times and CBS News, Mr. Hook is among a growing number of New Yorkers who say they have seen a remarkable change in race relations since the Sept. 11 terror attacks at the World Trade Center. People are more tolerant of different ethnic and racial groups, they say, and less likely to overreact to perceived injustices or prejudices."
Source: New York Times LINK Discuss Is Europe Shooting Itself in the Foot?

I love New york!


Apparently Nato and the Pentagon are joining the rush to open up information. Apparently anyone with a high-end sattelite dish can now enjoy a relaxed zap between Saturday afternoon football and the latest surveillance snaps.

"A satellite enthusiast said Thursday he had tried to warn NATO ( news - web sites) that surveillance pictures it took from spy planes over the Balkans could be watched by anyone with basic equipment.John Locker, the satellite enthusiast, said he stumbled across the images, which were beamed over an insecure satellite link and were not encrypted, while watching television in November. The set was hooked up to a satellite dish.

"I wasn't tapping into anything. The pictures were freely available and anyone could see them," Locker told British Broadcasting Corp. television.
"They were from a commercial satellite, sending pictures just as any commercial satellite would. In fact it was easier to see these pictures than pay-per-view films or even Saturday sports," said Locker, who's from the Liverpool area."The U.S. military moves unclassified video via commercial satellites on contract. The military does not send or transmit classified information or data by unsecure means," said Pentagon spokeswoman Cheryl Irwin."Raw video is information. Information does not equal intelligence. There is no evidence this video imagery has been used in any way that is harmful to the United States and NATO.""
Source: Yahoo News LINK

I'm glad to see that over there at the Pentagon they are finally getting the message that openness is good, but....is my life really in safe hands?


A top Koizumi adviser just said what must be in the back of every thinking economist's mind:

"Japan could be "bankrupt in 10 years" unless it raises taxes, one of the top financial advisers to Junichiro Koizumi, prime minister, has warned.

Hiromitsu Ishi, chairman of Japan's tax commission and the most senior adviser on tax issues to Mr Koizumi, on Thursday told the FT that tax cuts implemented between 1988 and 2000 were "excessive". Those cuts meant Japan now had the lowest tax burden of any G7 nation at a time when tax revenues were being undermined.
Mr Ishi's tough and politically unpalatable message will sit unhappily with the upbeat news Masajuro Shiokawa will present at the G8 finance minister's meeting this weekend, where he will seek to allay international concerns over Japan's economic future.

Japan's tax revenues will drop to Y46,800bn (€397bn, £257bn) this fiscal year compared to a peak in 1990 of Y60,100bn. At the same time, the government's general account expenditure will rise to Y81,200bn this fiscal year compared to Y69,300bn in 1990. While the government has financed the deficit with bond issues in the past, these now account for a third of all government spending. At the end of last month, to the fury of the Japanese government, Moody's Investors Service downgraded Japan's sovereign debt rating by two notches. Japan's commitment to cap bond issues at Y30,000bn this year and maintain fiscal prudence means "tax rises are inevitable," Mr Ishi said.

He added that the demographic pressure stemming from Japan's ageing population and declining number of tax payers, plus a rising debt service burden, would add to the pressure to increase taxes."
Source: Financial Times LINK

For more on this, see yesterday's post.

Down and Down We Go Again: New York: or Remember Amos Tversky

This has to be the quote of the week:

"When the sky is falling usually you try to duck," said Hugh Johnson, chief investment officer at First Albany Corp.


"We come in at 6:30 a.m. as optimists and we leave at 4 p.m. depressed," said Michael Palazzi, head of Nasdaq trading for SG Cowen Securities

Obviously the rest we're getting used to.

NEW YORK (Reuters) - Stocks were lower at midday on Friday after a deadly car bomb blast outside the U.S. consulate in Karachi, Pakistan, and a drop in consumer sentiment rattled investors already fretting over corporate profits and the U.S. economy.

A report showing that consumer sentiment fell sharply in early June raised fresh concerns about a pullback in consumer spending -- which underpins two-thirds of the economy -- and helped push the broad market and the technology-heavy Nasdaq Composite index to lows not seen since Sept. 27.
Source: Yahoo News LINK

or as the FT puts it:

US stocks tumbled in early trading on Friday after raft of downbeat news, including a revenue warning from Sprint, a car bombing in Pakistan and a sharp fall in consumer confidence.... Some traders called it the "perfect storm" of negative news: bad economic data, a profit warning and international tensions. Also adding to the market's slide was downgrades in the telecommunications sector by Merrill Lynch and JP Morgan, which crushed telecom stocks."

So now it's consumer confidence too. But how much weight should we really put on this (see yesterday's post).


The latest turn in sentiment about the US economy has encouraged speculators to bet that the Fed's policymaking Open Market Committee (FOMC) will make no significant changes at its June 25-26 meeting.

This has to be a joke doesn't it? But even so it's in poor taste. As the title indicates are we now approaching Amos Tversky time: ie is this the moment when the pain gets so acute, that all but the most hardy pack their bags and go home, or do we have to wait a little longer for this.

Even the economist is joining the chorus of US gloom and doom merchants:

Foreigners, worried about the size of America’s current-account deficit—4% of GDP and growing—have started to sell dollar assets. Partly as a result, the American currency hit a 17-month low against the euro, at $0.95, on June 12th, marking a decline of nearly 14% since last July. And, just when investors need reassurance, the continuing drip-drip of corporate and Wall Street scandals sends exactly the wrong signal. With investors feeling so bearish, stockmarket indices around the world have lost most of the gains made after a concerted round of interest-rate cuts followed the terrorist attacks on New York and Washington last September. This week the Nasdaq-100 index closed at its lowest level since January 1998. The Dow Jones Industrial Average fell by 3.4% last week alone and this week touched a seven-month low of just below 9,500. Markets in Europe and Asia were also effected. This week ended on a grim note, with markets everywhere in turmoil.

Plus the same old dollar story:

The dollar is very vulnerable to a change in sentiment about the relative attractions of American assets. In the past year, there has been a shift in the flows into the United States. Foreign direct investment financed 91% of America’s current-account deficit in 1999. By last year, that had fallen to 43%, having been supplanted by more fickle capital flows. Foreigners own no less than two-fifths of American Treasury bonds, a quarter of corporate bonds and 13% of American equities.

As you already know, I don't buy this part of the story, If America falters, then who takes the load? But for the other part, when will the pain really start to tell. Over a year ago, Stephen Roach was making drew our attention to the seminal work of the late lamented Amos Tversky. So now:

"Enter the late Amos Tversky -- the renowned Stanford psychologist largely credited for inventing the discipline of behavioral finance. A central tenet of this body of work is “prospect theory” -- the inarguable notion that consumers derive satisfaction from both current income and changes in their financial wealth positions. Through direct sampling of investor responses to hypothetical and real financial market situations, a powerful “loss aversion” motive can be identified: Consumers have been found to be far more sensitive to reductions in wealth rather than increases. The psychological angle is not hard to fathom. Tversky argued that the pain of loss is a far more powerful emotional response than the joy of gain. The issue for economists is when the pain begins to sink in......

America has just gone through the mother of all stock market bubbles. The average investor has not been willing to concede that the recent correction is for real. Up until very recently, dip-buying was considered the greatest opportunity of all in this secular bull market. Little wonder that mutual fund redemptions have been limited, at best. The behavioral psychologist in me would suggest that denial might well be the most powerful human emotion of all. The American individual investor simply did not want to accept the possibility that the magic was gone.

If that denial cracks -- and I fear that it will -- the negative wealth effect could be lethal on the downside. I have called this the “asymmetrical wealth effect” -- whereby a down stock market hurts the real economy by more than an up market helped it. This asymmetry is grounded in both theory and fact. The theory comes from Tversky -- the notion that once the pain finally sinks in, it could evoke a far more powerful response than expected. The facts rest on the lack of traditional saving for an aging and stock-market-dependent American population -- households who also lack the once secure safety net of defined-benefit pension arrangements. These are dangerous preconditions for an asymmetrical wealth effect, in my view -- one that could deal a lethal blow to the US economy."

Could it be that the moment Steven foresaw over a year ago is now, finally, approaching. I'm afraid I don't buy all the lethal dose stuff (and I'm non too sure about behavioral psychology), but the pain could be real enough, and its economic consequences important. After all, following the rage/bravado stage of the early 'war against terrorism', could it now finally be sinking in that we live in a dangerous, and unequal, world, and that we're not doing enough, or on enough fronts, to try to make it safer.

Really here I can't do better than the bard:

Surely some revalation is at hand;
Surely the second coming is at hand.
The second coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in the sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches toward Bethlehem to be born?
The Second Coming

Discuss This Time is it More Than a Stock Correction


Well here goes on my first couter consensus call. THE DOLLAR ISN'T GOING TO FALL THROUGH THE FLOOR. Got that. There isn't going to be a dramatic re-adjustment of the dollar, not any time soon anyway. The dynanics of currency movements are different from the terrestial dynamics which gives us Newton's Law of 'what goes up must come down'. You see in the universe of exchange rate movements, at least as we know it today, for one thing to go up, something else (or somethings else) must come down. And here we have the rub. As matters stand right now, there's just nothing else ready to come up (of course gives us 10 to 20 years and in Asia generally there could be lots of things). But right now, it ain't ready babe, so we're stuck with what we've got.

This of course is different from the universe of the 1930's, where everything could come down together - against gold (my thanks to my brother William David - the philosopher banker in the family - for pointing this one out to me).

So when we're asked:

"So what else could go wrong?

That is the question on many investors' minds as they assess what is keeping the stock market in the doldrums, despite positive outlooks for the economy, inflation and corporate earnings.

What appears to be holding the market back are more intangible concerns, including fears of another terrorist attack, distrust of corporate executives and worries about the accountants who have been reviewing their books.Now add to that list of fears a potential plunge in the value of the dollar. Since its high for the year at the end of January, the dollar has fallen 9.4 percent against the euro. The dollar is down 7 percent against the Japanese yen since its 2002 high in early February. So far, the decline has been orderly

But Stephen S. Roach, chief economist at Morgan Stanley, says the chance of a dollar plunge has grown recently — to a 15 percent probability from 5 percent. While the odds are low, the impact should be considered.Mr. Roach defines a plunge in the dollar as a decline of 20 percent or more in its value against the euro and the Japanese yen by the end of this year. Based on a starting date of May 24, that would put the dollar/euro rate at $1.15 and the dollar/yen rate at 100 yen to the dollar. In late trading Tuesday, the euro was worth 94.82 cents and there were 125.32 yen to the dollar."
Source: New York Times LINK

Now few can hold Stephen Roach in more admiration than I do His basic instinct that all is not well in the land of well being, is much nearer the mark than almost any other commentator in recent months. He has almost single handedly driven the ecnomic debate during the last 18 months into the areas where it had to go. But to err is human, while to err twice is unforgivable ( or almost).

Again, no one who reads this column on a regular basis could doubt that the two economists who I respect most are Stephen Roach and Paul Krugman (my top economist of the twentieth century was Zvi Griliches, who, well check him out here and note the cat and the bare feet), but I still think they're BOTH making the mistake of assuming the future is to much a re-run of the past. And here we have to part company (enter stage right my third favourite economist Brad de Long, this is the piece that woke IK from his dogmatic slumbers ). There is something NEW in the air. And what's more the little that is new, helps us understand a lot, lot more of what we thought we understood in the past.


What was that little ditty that brought instant fame to the Back Street Boys: 'Let's Get Down'. Well now it seems the message has spread to London:

"Britain's FTSE 100 index tumbled more than three percent to fresh eight-month lows on Friday as the prospect of further losses on Wall Street added to the gloom surrounding banking, telecom and oil shares.

Mobile giant Vodafone dived 4.8 percent to 90 pence, hurt by news its Japanese J-Phone unit had raised subsidies on about half the handsets in the Japanese market in response to competition.

By 6:40 a.m. EDT, the benchmark index <.FTSE> was down 149.3 points or 3.13 percent to 4,622.6, back to levels seen late in September last year when prices shot back up from a post-September 11 low of 4,220.

The index has now lost around 300 points or more than six percent over the week and market watchers see no respite as investors sink into gloom about the outlook for economic recovery and the prospects for UK interest rate rises."
Source: Yahoo News LINK

Actually the bonobos have been 'gettin down' for generations, but thats a story for another day.


The preoccupations of the industrialised world to protect it's agricultural interests continue to make a bad smell down in Rome. The main area of contention is that we just don't seem to give the problem of hunger the priority it deserves. Only two industrial world leaders, for example, attended, or visited the conference, in contrast to the 80 odd who attended from the developing world. We seem to have lost entirely the idea of partnership and dialogue with the third world countries, only calling on them, it seems, when we need help to combat terrorism.

In addition, while biotechnology may have far more to offer than its critics seem to recognise, it is also clear that in the short term it can do little to help small farmers in poor countries. On the contrary it can only really serve to industrialise agriculture further, and while mid-term this may be a good thing for feeding the world, it can only lead to short- and mid-term complications and social dislocation,

So while, as I pointed out yesterday, food production may be one of the recent 'success stories' in a world that's badly in need of some, the situation of the 46 or so poorest countries, or Less Developed Countries (LDCs) , as they're termed is a continuing source of extreme preoccupation, and our leaders would do much better in giving their plight a higher priority.

"Environmentalists and farmers dismissed the U.N. World Food Summit as a sham Wednesday, citing the presence of only two leaders from the industrialized world and a preordained outcome many say favors U.S. interests...........Many activists complained that the summit, which ends Thursday, was undermined from the start because only two heads of state from the developed world attended: host Premier Silvio Berlusconi and Spanish Prime Minister Jose Maria Aznar, representing the European Union.

Most wealthy countries, including the United States, sent agriculture ministers or similar-level officials. Britain didn't even do that, sending instead the head of the "Knowledge Sharing on Special Initiatives" branch of its department for international development.

There were few official explanations for the absences, but the general consensus was that wealthier countries didn't consider the summit a priority for their leaders.....Indian farming advocate Vandana Shiva said the absence of more high-level delegations from the wealthy countries "means a failure of democracy, a failure of responsibility."

"It's not that they have abandoned the food agenda, they are trying to hijack the food agenda in the wrong direction against the will of the people," said Shiva.

She was referring to efforts by the U.S. officials who did come to use the conference to promote Washington's pro-biotech agenda.

The United States, home to several major biotech corporations, hosted a biotech panel on the sidelines of the summit, announced a major biotech conference next year, and U.S. Agriculture Secretary Ann Veneman touted the benefits of biotech in agriculture in her speech"
Source: Yahoo News LINK


"Russian nationalist Vladimir Zhirinovsky marked the country's sovereignty holiday Wednesday by telling foreigners they don't belong in Russia.

"We must not keep uninvited guests. The Russian people have a right to be the master of their own country," he told a rally marking the holiday in the center of Moscow, the Interfax news agency reported. The holiday celebrates the day when Russia declared its sovereignty from the former Soviet Union.

"If you Asians and Africans are dying of hunger, Russia will take you, but we have the right to ask you to behave properly," Zhirinovsky, a prominent lawmaker, was quoted as saying. "You have seen how people live in a civilized country. Now go home, build more schools and hospitals and have one or two children, but no more."

Zhirinovsky's comments came while the country feels heightened fears of extremist violence. Russian skinheads have threatened a "war against foreigners," and last month a woman was injured by an anti-Semitic sign on the side of the road that blew up when she tried to remove it."
Source: Associated Press LINK

Russia's population, it will be recalled is set to DECLINE from 145 million to 104 million (approx) between now and 2050. No comment required.

"While most press responses to Japan's recent modest improvement have been to accept the sitaution at face value, there have been some more skeptical voices:

The Nikkei 225 benchmark index was subjected to a series of measures in the run-up to the end of the financial year in March that were designed to ensure it closed above 11,000 points, say senior international bankers interviewed by the Financial Times.Although government agencies insist their aim was only to enforce the law, bankers believe there was a widespread fear in government circles that there could be a "March crisis" as a result of depressed stock prices.

Observers have long suspected that the market was being manipulated. Overseas speculators with short positions were thought by officials to be responsible for the downward pressure on the market. Masajuro Shiokawa, finance minister, said in March that the market had become a "gambling den" for foreign speculators. The bankers believe the government initiated a process known as gyosei shido - or administrative guidance - in order to ensure the market closed above 11,000 points, which was considered the safe level at which the banks and companies could avert damaging losses."
Full Story: Financial TimesLINK

So on top of outlawing shorting, you also systematically fix the numbers. Who said Wall Street had it's credibility problems?

A good summary of the political backdrop to the ongoing drama in Japan is provided by Morgan Stanley's Robert Alan Feldman, which among others interesting ideas includes the following point:

"The first step in the fiscal reform debate is to determine just how much fiscal reform is needed. The most accessible yardstick is the primary balance -- the fiscal balance excluding interest costs. This yardstick is useful because it gives a guide to the fiscal surplus needed to stabilize the level of government debt to GDP. (For a discussion, see "One Step on a Long Journey," Global Economic Forum, June 29, 2001). The formula is quite simple. In order to stabilize the ratio of debt to GDP, the primary balance must exceed the difference of the interest rate on debt and nominal growth, multiplied by the debt ratio at the start of the calculation. In symbols, PB > (r - g)[D/Y]. The ratio of debt to GDP is about 130%. The average excess of the long-term bond yield over nominal GDP growth over the last four years has been about 2.5% points. These two figures imply that Japan must run a primary surplus of about 3.3% of GDP, in order to stabilize the debt/GDP ratio. Note that the required primary balance would rise over time, unless deficits were eliminated, because of the higher value of D/Y implied by continued deficits. Any rise of nominal interest rate exceeding an acceleration of GDP growth would make the debt dynamics that much worse.
How far away is Japan from a primary surplus of 3.3% of GDP? A very long way indeed, in our view. The latest calculations from the OECD suggest that the primary balance for general government in Japan (the consolidated balance of central government, local government, and social security funds) was a deficit of about 5.3% of GDP. This means that a swing of 8.6% points of GDP in the fiscal position would be necessary. In money terms, with nominal GDP of about ¥500 trillion, a swing of about ¥43 trillion of the fiscal position is needed."
Source: Morgan Stanley, Global Economic ForumLINK

So the reality is that to avoid government debt as a proportion of GDP spiraling out of control, Japan has to either make really hefty tax increases, or really hefty spending cuts, or a combination of the two. And if the US economy doesn't take of as expected?

Incidentally, is this 130% figure for real, it's been around for at least two years now, and I can't believe it hasn't gotten worse recently!!


According to the New York Times:

"Layne Holt and his business partner, John Furrier, both software engineers, have started a company with a shoestring budget and an ambitious target: the cable and phone companies that currently hold a near-monopoly on high-speed access for the "last mile" between the Internet and the home.

At the core of their plan is the inexpensive wireless data standard known as Wi-Fi or 802.11b, which is already shaking up the communications industry, threatening to undermine the business plans of cellular phone companies by offering a much cheaper method for mobile access to the Internet.The pair's company, known as Etherlinx, has taken the 802.11b standard and used it to build a system that can transmit Internet data up to 20 miles at high speeds — enough to blanket entire urban regions and make cable or D.S.L. connections obsolete.

Their secret weapon is a technology known as a "software-designed radio," which has permitted them to create an inexpensive repeater antenna that can be attached to the outside of a customer's home. The device, which the Etherlinx executives said they believe can be built in quantity for less than $150 each, would communicate with a central antenna and then convert the signals into the industry-standard Wi-Fi, or wireless fidelity, signal for reception inside the home."

This one's got everything. Two guys working from their garage. Using a part of the radio spectrum the US government decided not to regulate. They didn't even get venture capital backing, and just six blocks from the birthplace of the apple computer they are working at making cheap radio repeaters by tweaking the already inexpensive WiFi cards. So while the mobile phone industry has almost bankrupted itself going for the UMTS 3G structure, two unknowns may be about to change everything. The thing is so inexpensive that they already have had a trial running in Oakfield, California for a year now. Total development costs around $200,000, and another dynosaur industry down the shutes. Well, good luck to them, I hope it does proves successful, and if it doesn't, well there's surely more budding talent out there with more fresh ideas. When will the telecommunications industry learn that the internet is a bottom-up, not a top-down phenomenon.


"Summer camp season is approaching, conjuring images of kids sitting around the campfire, toasting marshmallows and exploring the wonders of ... computer programming and the Internet? These days designing Web sites is as popular a camp sport as hiking.

Despite some business casualties that coincided with the dot-com bust, computer camp operators such as Cybercamps) and iD Tech Campssay business is great......

More than two-thirds of the nation's 10,000 camps allow parents to communicate with their kids via e-mail, and about 60 percent have Web sites, said Connie Coutellier, director of professional development of the American Camping Association in Martinsville, Indiana.

"It's a good thing. Parents today want to maintain contact and make sure their child is safe," she said"
Source: Yahoo News LINK.


"Five years after the U.N. World Food Summit promised to halve the number of hungry people by 2015, the follow-up summit opens Monday with no significant change in that number — 800 million. Heads of state and ministers attending the four-day meeting are expected to recommit themselves to reducing the number of hungry to 400 million. But they also will be asked to make good on those promises this time around"
Source: Yahoo News LINK

In a world were so much attention is given to bad and depressing news, it's important to take note of some of the areas in which we are making progress. One of these areas is in the capacity of our planet to feed the ever growing number of its inhabitants. During the 60's and 70's a lot of attention was paid to the pessimistic scenarios surrounding our inability to feed ourselves. Since that time it seems, we have actually turned that particular corner. While there is still plenty to be done, and there is clearly little room for complacency, the fact is - due largely to important increases in agricultural productivity - that while world population continues to rise rapidly, the numbers in extreme need continue to deline.

What are the facts behind this meeting. Well, in 1996 at the World Food Summit, delegates from around the planet set the target of reducing the number of people in the world suffering from malnutrition from about 800 million to 400 million by 2015. At the present time, there is an annual reduction of about 6 million in the number of hungry people in the world.This does not appear to be a very large number, but you need to remember that the population is still RISING However the currect rate of reduction needs a significant increase to 22 million a year to meet the 1996 U.N. target by 2015.

Of course the problem is not principally one of the production of food. We have the capacity to produce it, the problem is distributing it. At the same time the controversy over whether or not genetically modified foods are a boon or a menace continues unabated.

According to the UN, at the present time:

About 12.8 million people in six southern African nations — Zimbabwe, Zambia, Malawi, Lesotho, Swaziland and Mozambique — are at risk of starvation because of drought, floods, depleted food stocks and economic instability.

Of the 9.5 million undernourished people living in former East European transition countries, nearly 60 percent live in Azerbaijan, Armenia, Georgia and Moldova.

UNAIDS estimates that more than half of the 28 million people who have HIV/AIDS in sub-Saharan Africa are in rural areas. The result is the devastion of thousands of farming communities with many families left struggling to produce enough food to survive.

About 54 million people suffer from chronic malnutrition in Latin America and the Caribbean.


UN Food and Agriculture Organisation
World Food Program


Is the envisaged EU enlargement going to take place on schedule, or at all? I have had my doubts on this for some time now, and this latest piece from the economist only confirms me in my scepticism. Is the old continent also becoming the tired one?

" EU officials have always insisted that what they call the reunification of Europe is an historic inevitability. Earlier this year, they announced an ambitious plan to close the deal with ten applicants at a summit in Copenhagen in December, with luck ensuring that the likes of Poland and the Czech Republic become fully fledged members of the club in 2004.

But doubts are creeping in. Günter Verheugen, the European commissioner in charge of enlargement, says that the “window of opportunity” is closing. Three specific problems are looming ever larger.

First, the candidate countries and the EU are still arguing over the financial implications of enlargement, particularly when it comes to the billions of euros the EU spends each year on agriculture and aid to poorer regions. Second, as Mr Verheugen puts it, there is a “new political climate” in Europe with the rise of populist anti-immigration parties in a string of EU countries. Third, there is a chance that Irish voters will again reject the EU's Nice treaty, which is deemed essential to give enlargement a green light. Taken alone, none of these problems needs be lethal. Combine them, however, and enlargement, the Union's biggest new project, might be in danger."

I can safely add one more, and potentially much bigger problem, population dynamics.

According to the UN Population Division, the ten countries in the World with the lowest fertility rates in the 2000 - 2005 period are:

1. Latvia 1.10
2. Armenia 1.10
3. Bulgaria 1.10
4. China, Macao SAR 1.10
5. Ukraine 1.10
6. Spain 1.13
7. Slovenia 1.14
8. Russian Federation 1.14
9. Czech Republic 1.16
10. China, Hong Kong SAR 1.17

Then if we look at the ten countries or areas with the lowest rates of population growth, 2000-2005:

1. Estonia -1.14
2. Bulgaria -0.98
3. Ukraine -0.94
4. Russian Federation -0.64
5. Latvia -0.56
6. Georgia -0.53
7. Hungary -0.50
8. Belarus -0.40
9. Kazakhstan -0.37
10. Republic of Moldova -0.26

You will note that all these countries show negative signs, ie the population is currently REDUCING. Now let's look at the top 15 countries in the league of population

This is the Table Caption
Country2000 millions 2050 millionsAbsolute Change% Change
Russia 149.5 104 -41.2 -28.3
Ukraine 49.5 29.9 -19.6 -39.6
Japan 127.1 109.2 -17.8 -14.1
Italy 57.5 42.9 -14.6 -25.3
Germany 82.0 70.8 -11.2 -13.7
Spain 39.9 31.2 -8.6 -21.6
Poland 38.6 33.4 -5.2 -13.6
Romania 22.4 18.1 -4.3 -19.1
Bulgaria 7.9 4.5 -3.4 -43.0
Hungary 9.9 7.5 -2.5 -24.9
Georgia 5.2 3.2 -2.0 -38.8
Belarus 10.2 8.3 -1.9 -18.5
Czech rep 10.3 8.2 -1.8 -17.9
Austria 8.1 6.5 -1.6 -20.1
Greece 10.6 9.0 -1.6 -15.3

Source:World Population Prospects: The 2000 Revision, Tables

This is not exactly an EU 15, but with the new aditions it will be getting pretty close to it. Any detailed examination of the numbers makes it pretty clear that the social impact of the fall of the Berlin wall have been well nigh disastrous for the Eastern European countries as a block. Faced with declining fertility, and EMMIGRATION of young people, the ageing problems in these countries are going to be severe, not to say acute. The big question then is: can an already ageing EU handle this type of problem?

All this seems so far from the US situation, where, as reported in last Thursday's post:

"The increase in the immigrant population, which many state officials believe was undercounted, surpassed the century's greatest wave of immigration, from 1900 to 1910, when the number of foreign-born residents grew by 31 percent........Demographers noted that for the first time in the 1990's, immigrants moved far beyond the big coastal cities and Chicago and Denver and Houston, into the Great Plains, the South and Appalachia.........
"These numbers represent an enormous social experiment with very high stakes," said Steven A. Camarota, director of research for the Center for Immigration Studies, which advocates stricter immigration control. "No country has ever attempted to assimilate and incorporate 31 million newcomers, and the experiment is not over."
Other analysts add, however, that immigrants helped propel the boom in the 90's, taking low-paid service jobs and vital assignments in medicine and in technology companies"
(Based on original article in NYT).

Meanwhile in Europe, as the Economist wryly observes:

"In a normal political climate, a compromise would be found. The trouble is that the rise of politicians like France's Jean-Marie Le Pen, Austria's Jörg Haider, Italy's Umberto Bossi, the late Pim Fortuyn's disciples in the Netherlands and the Danish People's Party, shows that populist and xenophobic movements are gathering strength in Western Europe. That will make it harder for mainstream politicians to sign a generous deal with the applicant countries as well as to accept other consequences of enlargement, in particular the free movement of workers from the east.....

All EU treaties have to be ratified by every member state, but Irish voters have already rejected Nice once in a referendum last year. Though the Irish government is gearing up for a second vote later this year, there is rising speculation in both camps that the Irish people may again say no. That, says Mr Verheugen glumly, would create a “very, very serious problem and I have no answer to the question of what we could do.”"

They sure aren't kiding.

Meantime in Poland, things don't look too good:

"These are hard times in Poland, which grew for nearly 10 straight years into a country of stocked shelves, giant malls and impressive self-confidence — a 40-million-strong symbol of Central Europe's post-Communist hopes.

Now, the will to continue privatization and other reforms, and even the desire to join the European Union, have flagged. The story is much the same around the region, as the transformation from gangly state economies has brought material comfort, but also insecurity and a new set of inequalities. In Poland, indeed, the very notion that Western-style capitalism will work in the eastern nation that embraced it perhaps most heartily is under attack

What is happening now is not economic collapse of the kind that engulfed Russia in the 1990's.

Many companies are doing well, and Poland appears set to move into the European Union in 2004. But there is a serious slowdown, compounded by what many experts say is political dawdling and disagreement about how to fix it.

Last year, growth dropped to just 1 percent. Unemployment this year hit 18 percent, the highest in the post-Communist era, and there are real worries of street disturbances and protests in the largest nation up for joining the European Union, if more people lose their jobs.

This downturn, Mr. Bledowski said, is "causing a lot of soul searching. People are revising a lot of assumptions and expectations.""
Source New York Times LINK


In the latest round of currency adjustments one thing is clear, none of them have strong positive reasons for buying. The halcyon days of the 1990's are clearly over for the time being. With the US as the world's main growth engine, if the dollar is falling due to a weak outlook for US growth, and doubts about the profitability of US companies, then it's hard to get too wound up about any of the dollar's rivals either. "It's a game of finding who has fewer negatives," according to Hideki Hayashi, who is global strategist at Shinko Securities.


The consumer confidence index, it seems, is not what it was. The index, which has formed the backbone of economic forecasting for more than 25 years, may not have the importance it was thought to have:

"A growing number of researchers and economists say that consumer confidence may be a phantom concept, an attempt to quantify a state of mind that does not exist. The much-watched indexes may not capture mood swings that lead to more or less spending, they argue, but only such down-to-earth concerns as how much the next pay check will be and whether it will still be arriving six months from now.

"The fact is there is just sheer randomness in consumer spending," said Sydney Ludvigson, a New York University economist and the co-author of one of the critical studies.........For those hoping for a quick economic recovery, that is disconcerting."

Complicating matters, American spending patterns are much more varied now than they were in the early years after World War II, when the first consumer confidence index was born at Michigan. That early index assumed the existence of a typical, average consumer, one whose mood and propensity to spend could be fathomed in a survey. That typical consumer was more likely to have existed in the 40's than today, Mr. Curtin said. "People were more focused on their jobs and wages."

Today all sorts of other factors figure into spending and interfere with consumer confidence as a national concept. Some people base their spending decisions on their wages, while others are governed by job security or the value of their stock portfolios and homes, or interest rate fluctuations, or their willingness to accumulate debt, particularly through credit cards, which did not exist in the 1940's.

And there is income inequality, which has increased since the 1970's and has affected the consumer confidence surveys, says Nicholas S. Souleles, an economist at the Wharton School of Business. Analyzing the Michigan survey data over 20 years, he found that low-income households constantly and optimistically overestimated their future incomes, while upper-income people swung from optimism in expansions to pessimism in downturns."
Source: New York Times LINK

So what are the the odds that all this could be a bit more complicated than we've been admitting?

And could help come from the study of ants? Last summer's number of the Bulletin of the Santa Fe Institute had an interesting summary of on-going work into the functioning of complex insect societies. In order to understand how social organization evolves among insects, for example, we need to try to understand the mechanisms that link the different levels of biological and social organization:

"One concept that helps us explore the mechanisms of complex behavioral interactions is the notion of response threshold. Neurons and individuals can respond to various stimuli. Responses are based on stimulus thresholds; stimuli below some threshold result in no response while stimuli above a threshold can elicit a reaction. This is evident at the level of neurons where an action potential is generated only when a stimulus sufficiently depolarizes the membrane. Once generated, the action potential propagates at full intensity. At the behavioral level of an individual, we find an analogous process. Individuals do not respond to a stimulus until it is stronger than some minimum threshold. Thus the response threshold is a fundamental organizing property of the behavior of neurons and individuals.

Because of the stimulus-threshold relationship of behavior division of labour, the hallmark of social organization, is an inescapable property of group living. This follows because of the correlation between the behavioral response and the effect of the behavior on the stimulus that caused it. For example, honey bee colonies thermoregulate, maintaining the brood chamber of the colony near 34.5¡Þ C. When the temperature exceeds this, cooling behavior begins, during which some bees circulate air through the nest by fanning their wings. The result of the response to the heat stimulus, fanning, reduces the stimulus, heat, below the temperature response threshold. This can lead to a division of labor with labor specialists, where group members have different response thresholds for temperature. Those with lower response thresholds respond first by fanning, reduce the stimulus, and thereby reduce the probability that others will perform that task."

Anyone spot the connection here?


Thousands of farmers took to the streets outside the European parliament in Strasbourg yesterday, to reject any idea of reform in European agriculture:

"The noisy demonstration which gathered farmers from across Europe demanded action to protect their livelihoods.Police estimated some 6,000 protesters took part, while organizers said more than 12,000 French farmers and 2,000 others attended.

"We categorically reject any idea of a new ... reform," said Gerd Sonnleitner, president of the Committee of Agricultural Organizations, which organized the march.Farmers drove tractors through the center of the historic city, and dumped grain and chicken feathers in front of the EU assembly.

The protest sought to influence farm reforms proposed by EU Agriculture Commissioner Franz Fischler.His proposals are expected to cut deeply into subsidies to farmers. Fischler says cuts are necessary ahead of the EU's expansion, arguing the Union cannot afford to maintain the same level of subsidies when poorer farmers from candidate countries like Poland or Hungary join."
Source Yahoo News: LINK

So the message we're sending the world is that nobody in Europe wants any changes. No immigrants, no restructuring, and now no agricultural reform. To be sure, George Bush, with his latest subsidy to US farmers, started the ball rolling. This will be a key test for FRance's new government. Remember in the latest round of negotiations for another round of trade expansion, the third world countries are looking for sacrifices from the EU and the US IN THE AREA OF AGRICULTURE, with les subsidies and better access to EU and US markets. In addition, if this reform does not go ahead this will deal another body blow to EU expansion to the East (see yesderday's post).

Meanwhile in Rome another argument is being made:

Led by Cuba, developing countries on Tuesday demanded greater access to international markets and an end to export subsidies, saying fairer free trade was the only way to end world hunger.
On the second day of the U.N. World Food Summit, leaders of the world's poorest countries called on the United States, European Union ( news - web sites) and other exporting nations to give poor farmers a competing chance to sell their wares.

"We are poor. You are rich. Level the playing field!" Teofisto Guingona, foreign minister of the Philippines, said. "Do not in the name of free trade deny us time to integrate our resources, and having integrated them deny us access to your rich markets."

Many poor countries say the current international trade framework leaves farmers in the developing world unable to compete with subsidized crops from richer countries."
Source Yahoo News LINK

And don't, please don't, mis this: "The European Union pushed for the summit to consider food a human right."

Oh, we are such hypocrites!

Wolfram Still Making Waves

The New York Times ran another piece on Stephen Wolfram yesterday:

"A New Kind of Science" may be the scientific publishing event of the season, but whether it is a revolution in science as well must await the judgment of Dr. Wolfram's peers.

In conversations over the last fews weeks, computer scientists and physicists expressed admiration for Dr. Wolfram's "engaging" and "beautifully written" exposition of ideas, like the power of algorithms, that they say are underappreciated by society.

Edward Fredkin, a physics professor at Boston University and the Massachusetts Institute of Technology's Media Laboratory and a longtime proponent of something called "digital physics," viewing nature as a computer, said: "For me this is a great event. Wolfram is the first significant person to believe in this stuff. I've been very lonely."
Dr. J. Doyne Farmer, a professor of computer science at the Santa Fe Institute and the University of New Mexico, called it "a well-written summary" of ideas that have been around for a long time.

"We've known for 50 years that complexity can come from simpler and simpler things," Dr. Farmer said, adding that it had been shown that even bouncing billiard balls could be a universal computer."