Saturday, February 28, 2009


The Futility Of Investment

There's always somebody who wants to know what investment strategies I recommend. These days, the person who asks that question is usually silver-haired, nicely dressed, and visibly worried. I wish I had a crisp reply for that question, or for that matter, some good advice to offer. I don't, because the question itself embodies a series of fatally flawed assumptions that reach right down to the nature of wealth itself. On its own terms, it's as unanswerable as a question about how to build a working perpetual motion machine.

Yes, someone at my Pantheacon talk asked about investment strategies, and yes, she was silver-haired, nicely dressed, and visibly worried. I fumbled through an answer, but the question deserves more than that, if only because it's on so many minds these days. Thus this week's post. I should caution those of my readers who have investments that they won't like what follows.

Let's start with fundamentals: the nature of wealth. Ask ten people on the street today for a definition of wealth, and every one of them will tell you that wealth consists of the possession of plenty of money. That's what nearly everyone thinks, but they're quite wrong, and it's easy enough to show the fallacy.

Imagine that a private jet full of politicians makes an emergency landing on an uninhabited island in the Pacific. Each of the politicians is carrying a briefcase containing $1 million – we'll be polite and say it's from campaign contributions. The island has a water supply and enough natural foodstuffs that the politicians don't have to worry about starving to death. Will the politicians on the island have a standard of living corresponding to their net worth of $1 million each? Of course not; their actual prosperity will be measured by the breadfruit they harvest, the fish they catch, the huts they make, and so on.

Money, in other words, is not wealth. It's a social mechanism for distributing wealth. It means nothing unless there's real wealth – actual, nonfinancial goods and services – to back it up. In a healthy market economy, there's a rough balance between the amount of money in circulation and the amount of real wealth produced annually, and so the confusion between money and wealth can slip by unnoticed. When money and wealth get out of sync with one another, problems sprout.

The economic history of the 19th century offers a good example. The rising industrial economy of the time drove a massive increase in the production of real wealth. Most industrial nations, though, inherited money systems backed by gold reserves that offered few options for expanding the money supply to match the supply of real wealth. The result was a deflationary spiral that brought major economic depressions every couple of decades for most of the century. In response, in the 20th century, nation after nation abandoned the gold standard's straitjacket and retooled their money systems to meet the needs of an expanding economy.

That's the context of the present crisis because, in terms of real wealth, we no longer have an expanding economy. The production of real wealth in the world's industrial nations has been in decline now for decades. Some of the deficit has been made up by importing real wealth from overseas, but not all; compare the lifestyle available to a single salary working class American family in 1969 to the lifestyle available to a similar family today and it's possible to get a glimpse of just how much impoverishment has taken place over the last forty years.

This impoverishment went unnoticed by most people because the money supply didn't follow suit. Until the economy came unglued in the second half of 2008, money had never been so abundant or readily available. Some of it got spent on real wealth, which is why real estate and other commodities soared to giddy heights, but most of it was diverted instead into various forms of abstract pseudo-wealth related to money in much the way that money relates to real wealth. Yes, I'm talking about your investments.

The confusion between money and wealth and the biases imposed by the long economic expansion of industrialism have made it almost impossible to talk sensibly about investments these days. It seems normal to most people that they should be able to invest their money and, as a matter of course, get back more than they put in. This reflects the dynamics of an expanding economy; if the production of real wealth is increasing, investments on average will increase in value over time to match the growth in real wealth, and the payback on investments reflects this. Outside of the special conditions of a growth economy, though, that logic no longer applies.

The long economic expansion of the industrial age has fostered the massive growth of what old-fashioned Marxists used to call a rentier class – a class whose money makes money for them. Even among people who work for a living, the idea of joining the rentier class on retirement, and living comfortably off investments, has become very popular in recent years. The problem, of course, is that the age of industrial expansion is over; it was made possible in the first place only by exponentially increasing the use of fossil fuels and other natural resources; like all exponential growth curves, it faced an inevitable collision with the limits of its environment – and that collision is happening around us right now.

We are thus entering a period of prolonged economic contraction – not a recession, or even a depression, but a change in the fundamental dynamic of the economy. Over the centuries just past, a rising tide of economic growth was interrupted by occasional periods of contraction; over the centuries ahead, the long decline of the industrial economy will doubtless be interrupted by occasional periods of relative prosperity. Just as a rising tide lifts all boats, a falling tide lowers them all, and if the tide goes out far enough, a great many boats will end up high and dry.

The desperate attempt by full-time and part-time members of the rentier class to avoid dealing with this unwelcome reality has had the ironic result of making the situation much worse than it had to be. As actual investments in productive economic activities stopped yielding a noticeable profit, more and more investors sought to make money via a menagerie of exotic financial livestock notable for their complete disconnection from the economy of goods and services. The result was a series of classic speculative bubbles, culminating in the crash of 2008 and the crisis still unfolding around us. In the process, eager investors who might have lost their money slowly over a period of years have, instead, lost it all at once.

Still, in a contracting economy, on average, all investments lose money. This is the hard reality with which all of us will have to deal. This is why, in the twilight years of the Roman world, a complex money economy that made heavy use of credit and investment gave way to purely local economies of barter and customary exchange, in which money played a very minor role and credit was unheard of. It is also why the two great religious movements that rose out of Rome's ruins, Christianity and Islam, both considered lending at interest a mortal sin – though Christianity managed to talk itself out of that useful teaching some centuries ago.

Thus the only investment advice I can offer is to get out of investments altogether, and put your money into something that will actually be useful: training in practical skills that will make you employable in a deindustrializing economy, for example, or extra insulation so you can keep your home livable with less energy. At this point in history, the belief that it's possible to have your money make your living for you is basically a delusion; it's likely to be a fairly persistent one, but those who can shake themselves free of it and adjust to life in a radically different economic reality are likely to do better than those who keep on chasing the prospects of an age that is ending around us.

Source - The Archdruid Report

Thursday, February 26, 2009


Japan Exports Plummet

Japan’s exports plunged 45.7 percent in January from a year earlier, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics.

The shortfall widened to 952.6 billion yen ($9.9 billion), the biggest since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The drop in shipments abroad eclipsed a record 35 percent decline set the previous month.

Exports to the U.S. tumbled an unprecedented 52.9 percent from a year earlier, and shipments to Asia and Europe also posted the largest-ever declines as the global recession deepened. The collapse is likely to force Japanese companies to keep firing workers and closing factories, worsening an economy that shrank the most in 34 years last quarter.

“The pressure on companies to cut jobs and investment is rising and that will make the recession deep and protracted,” said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo.

Shipments to Europe slid 47.4 percent in January from a year earlier, the Finance Ministry said. Exports to China fell 45.1 percent and those to Asia dropped 46.7 percent.

Imports fell 31.7 percent from a year earlier. The drop in exports was in line with economists’ estimates. Analysts predicted a 1.2 trillion yen trade deficit.

Yen Relief

The yen fell to 96.91 per dollar as of 12:28 p.m. in Tokyo from 96.72 before the report. The currency is at the lowest level against the dollar in three months as the weakening economy reduces its allure as a haven.

The yen’s 23 percent gain against the dollar in 2008 eroded the value of exporters’ overseas sales, exacerbating losses at companies including Nissan Motor Corp. and Toyota Motor Corp. The exchange rate has also made Japanese exporters less competitive than their rivals in South Korea, where the won’s 16 percent drop this year has helped to shield earnings of companies including Hyundai Motor Co.

Still, the Japanese currency has weakened 7.2 percent this month, offering some relief to exporters while indicating investors’ growing pessimism about the economic outlook.

“People are coming to realize that Japan is in deep trouble,” said Hiroshi Shiraishi, an economist at BNP Paribas Securities Japan Ltd. in Tokyo. “Considering what’s happening on the export side, and the implications that has for the domestic economy, the yen is clearly not a buy.”

Falling Stocks

Japanese stocks touched a 26-year low yesterday and the government is considering buying shares to support equity prices, the Nikkei newspaper reported today, without saying where it got the information. The Nikkei 225 Stock Average has lost 17 percent of its value this year. It rose 1.6 percent in morning trading.

The world’s second-largest economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, and analysts predict the slump will drag into next fiscal year. Japan may shrink a record 4 percent in the year starting April 1, according to economists surveyed. The worst contraction to date was fiscal 1998’s 1.5 percent drop.

Japan became more reliant on exports for growth in the past decade, making the economy more vulnerable to the global recession. Manufacturers shipped 21 percent of their goods abroad in 2008, up from 16 percent in 1998, according to the Bank of Japan.

Production Cuts

Companies cut production an unprecedented 9.8 percent in December from a month earlier and the jobless rate climbed the most in 41 years to 4.4 percent. Economists predict a report on Feb. 27 will show factory output dropped 10 percent in January.

Nissan said this month it will fire 20,000 workers and post its first loss in nine years as the global car demand plunges. Toyota, which is forecasting its first operating loss in seven decades, will halve production in the current quarter versus the same period last year.

Central bank Governor Masaaki Shirakawa said last week that the economy will remain in a “severe” state next quarter and companies will struggle to obtain financing as investors shun risk. The bank, which lowered the key overnight lending rate to 0.1 percent in December, last week said it will buy corporate bonds for the first time to stem the credit squeeze.

The government has been unable to pass a stimulus package that could help encourage domestic spending in the absence of export demand. Prime Minister Taro Aso is struggling to get approval from the opposition-controlled upper house to spend 10 trillion yen to aid companies and households, whose sentiment is near a record low.

Source - Bloomberg

Wednesday, February 25, 2009


Crumbling Globalization

The worldwide economic meltdown has sent the wheels spinning off the project of building a single, business-friendly global economy.

Worldwide, industrial production has ground to a halt. Goods are stacking up, but nobody's buying; the Washington Post reports that "the world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores." A Hong Kong-based shipping broker told The Telegraph that his firm had "seen trade activity fall off a cliff. Asia-Europe is an unmit­igated disaster." The Economist noted that one can now ship a container from China to Europe for free -- you only need to pick up the fuel and handling costs -- but half-empty freighters are the norm along the world's busiest shipping routes. Global airfreight dropped by almost a quarter in December alone; Giovanni Bisignani, who heads a shipping industry trade group, called the "free fall" in global cargo "unprecedented and shocking."

And while Americans have every reason to be terrified about their own econopocalypse, the New York Times noted that everything is relative:

In the fourth quarter of last year, the American economy shrank at a 3.8 percent annual rate, the worst such performance in a quarter-century. They are envious in Japan, where this week the comparable figure came in at negative 12.7 percent — three times as bad.

Industrial production in the United States is falling at the fastest rate in three decades. But the 10 percent year-over-year plunge reported this week for January looks good in comparison to the declines in countries like Germany, off almost 13 percent in its most recently reported month, and South Korea, down about 21 percent.

Chinese manufacturing declined in each of the last five months; according to the Financial Times, "More than 20 [million] rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis." The UN estimates that the downturn could claim 50 million jobs worldwide, prompting Dennis Blair, the U.S. National Intelligence Director, to warn Congress that, "instability caused by the global economic crisis had become the biggest security threat facing the United States, outpacing terrorism."

Riots, strikes and other forms of civil unrest have become widespread the world over; governments have fallen. In Europe, parties of the far right and left have seen their fortunes rise.

The model of economic globalization that's dominated during the past 40 years is, if not dead, at least in critical condition. Few progressives will mourn its demise -- it was both a proximate cause of the economic meltdown in which we find ourselves today, and one of its victims. But if we are reaching the end of an era, questions arise about not only what will replace it, but also how we'll finance the government spending that most economists agree will be required to stave off a long, painful depression.

Always a Flawed Model

For almost 40 years, smooth-talking snake-oil salesmen in well-tailored suits have pitched the wonders of a globalized economy. Politicians and pundits alike insisted that the wealthy states at the core of that worldwide economy could shift labor-intensive production to the poorer countries at the edges, in search of a cheaper pair of hands and less nettlesome regulations, and that ordinary working people would benefit. Whatever pain Americans might feel as a result of the project was merely temporary “displacement,” they argued, and anyway those cheap toys at Wal-Mart more than offset any problems that might come along with the decimation of America’s middle class. After all, a little lead never hurt anyone.

The same hucksters sold a similar bill of goods to the developing world. Look outward, they said, build export economies and turn those peasants into factory line workers. Sign treaties forcing governments to let multinationals move goods and capital freely, keep their regulators out of the way of Big Business’s profits and prosperity will surely follow. Most governments adhered to this pro-corporate orthodoxy, slashing taxes on foreign companies and scrapping various controls on foreign investment. Largely unregulated “free trade” zones proliferated along the world’s significant shipping routes.

The result was an explosion in international trade and a distinct increase in economic inequality in both poorer and richer countries.

Among the wealthy countries, nowhere was this truer than in the United States, with its fealty to a mythic “free market” and its elites’ scorn for a robust safety net. After union-busting, global trade deals have done the most damage to workers’ bargaining power. Whereas companies used to negotiate with their employees in relatively good faith, those negotiations are now overshadowed by the threat -- ubiquitous in labor disputes today -- to simply move the whole plant to Mexico or China.

The result was an illusion of prosperity. Corporate profits rose (in 2004, corporate profits took the largest share of national income since they started tracking the data in 1929 and wages took the smallest), and high earners did very well too. When the oil shock hit in 1973, those in the top one percent of the income ladder took in just over 9 percent of the nation’s income; by 2006, they grabbed almost 23 percent. In the intervening years, their average incomes more than tripled (Excel file).

The rest of us didn’t do as well. In 1973, the bottom 90 percent of the economic pile -- most of us -- shared two-thirds of the nation’s income; by 2006, we got half. If you take off the top ten percent of the income ladder, the rest of the country in 2006 earned, on average, 2 percent less than they did 30 plus years earlier, despite the fact that the economy as a whole had grown by 160 percent over that time.

But we continued to buy; it's become almost a cliché to say that American consumerism is the engine of the global economy.

How did we do it with incomes stagnating? First, women entered the workforce in huge numbers, transforming the “typical” single-breadwinner family into a two-earner household. (Between 1955 and 2002, the percentage of working-age women who had jobs outside the home almost doubled.)

After that, we started financing our lifestyles through debt -- mounds of it. Consumer debt blossomed; trade deficits (which are ultimately financed by debt) exploded and the government started running big budget deficits year in an year out. In the period after World War Two, while wages were rising along with the overall economy, Americans socked away over 10 percent of the nation’s income in savings. But in the 1980s, that began to decline -- the savings rate fell from 11 percent in the 1960s and ‘70s, to 7 percent in the 1980s, and by 2005, it stood at just one percent (household savings that year were actually in negative territory).

After the collapse of the dot-com bubble and the recession that followed it, the economic “expansion” of the Bush era was the first on record in which median incomes never got back to where they were before the crash. Fortunately for Wal-Mart shoppers, a massive housing bubble was rising. Americans started financing their consumption by taking chunks of equity out of their homes. The result: in 2005, long before the housing bubble crashed, the average amount of equity Americans had in their homes was already the lowest it had ever been.

We hear a lot of chatter about a “credit crunch” being at the root of our economic woes -- that banks aren’t lending to otherwise qualified individuals and businesses. The truth, however, is that before the housing (and stock) markets crashed, the average American household already had 20 percent more in debt than it earned in a year.

Already deeply in the hole, when the markets crashed, consumers stopped spending, and that's fueled millions of layoffs, led to a mountain of foreclosures, and left state budgets decimated. The connection between decades of false prosperity, the piles of household debt that resulted, and the degree to which that left American families vulnerable to the bubble’s crash is not difficult to see.

Global Illusion of Prosperity

During the “era of globalization," massive increases in trade created a similar illusion of prosperity, masking a long-term decline in real economic growth worldwide.

Much of Asia has become a huge production platform for the West. It’s been said, half-jokingly, that the modern global economy works something like this: the U.S. produces pieces of green paper, which it trades to China for the goods lining the shelves of Wal-Mart and Target, the Chinese trade those pieces of paper to the oil-producing states for energy, and the oil producers exchange them with Europe for Mercedes and foie gras.

Economist Robert Brenner described a "long downturn" in the world's wealthiest countries, noting that their economies grew by a steady rate of 5 percent or more each year from the end of World War II through the 1960s, but in the 1970s their growth fell to 3.6 percent, and it has averaged around 3 percent since 1980.

But as the social scientist Walden Bello pointed out, even those anemic numbers are misleading. “China's 8-10% annual growth rate has probably been the principal stimulus of growth in the world economy in the last decade,” he wrote. Without China’s (and to a lesser degree India’s) consistent growth rates, global economic expansion has been all but nonexistent.

China became an export engine by keeping wages down through repressive union-busting and by drawing on an almost endless supply of poor rural peasants to work its production lines.

While global trade flows have exploded, much of that trade has been between multinationals based in the advanced economies and their own offshore units. They ship production overseas, but the goods produced end up back in domestic markets; it’s a means of avoiding “first-world” wages, public interest regulations and environmental restrictions.

China and the U.S. have developed a precariously symbiotic relationship. As Walden Bello wrote, “With its reserve army of cheap labor unmatched by any country in the world, China became the ‘workshop of the world,’ drawing in $50 billion in foreign investment annually by the first half of this decade.” To survive, firms all over the world, "had no choice but to transfer their labor-intensive operations to China to take advantage of what came to be known as the ‘China price,’ provoking in the process a tremendous crisis in the advanced capitalist countries’ labor forces.”

It was always an unsustainable model; the United States’ annual trade deficit with China -- financed by debt -- was $6 billion as recently as the mid-1980s; by last year it had exploded to $266 billion.

Defenders of the global trade regime have long argued that China’s currency will rise in value against the dollar, the trade deficit will shrink, and there will be significant “decoupling” between the two economic powerhouses as a new generation of middle-class consumers in the East Asian countries begin demanding a greater share of all those manufactured goods.

On the surface, it appeared that at least the last part of that was indeed happening. As Bello noted, “To satisfy China's thirst for capital and technology-intensive goods, Japanese exports shot up by a record 44%, or $60 billion. Indeed, China became the main destination for Asia's exports, accounting for 31% while Japan's share dropped from 20% to 10%. China is now the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia.”

But Bello went on to describe that this "decoupling" was also an illusion:

Research by economists C.P. Chandrasekhar and Jayati Ghosh, underlined that China was indeed importing intermediate goods and parts from Japan, Korea, and ASEAN, but only to put them together mainly for export as finished goods to the United States and Europe, not for its domestic market. Thus, "if demand for Chinese exports from the United States and the EU slow down, as will be likely with a U.S. recession," they asserted, "this will not only affect Chinese manufacturing production, but also Chinese demand for imports from these Asian developing countries."

The collapse of Asia's key market has banished all talk of decoupling. The image of decoupled locomotives — one coming to a halt, the other chugging along on a separate track — no longer applies, if it ever had. Rather, U.S.-East Asia economic relations today resemble a chain-gang linking not only China and the United States but a host of other satellite economies. They are all linked to debt-financed middle-class spending in the United States, which has collapsed.

We often hear that U.S. consumer spending accounts for 70 percent of the economic activity in the country. Do the math: with 20 percent of the world’s economic activity, U.S. consumers -- most weighed down with stagnant wages and maxed-out credit -- make up about 14 percent of the planet’s economic demand. Add the other affluent countries (which were also heavily invested in our real estate market and related securities), and it’s easy to see why the economic meltdown has grown to global proportions. The dominoes are tumbling.

What’s Next?

International trade existed long before the era of economic globalization, and will continue after its demise. The so-called “free trade” agreements championed by both Democratic and Republican lawmakers, liberals and conservatives alike, for the past few decades was always less about trade than constraining the policy options of governments through treaty.

The one likely bright spot in all this is that the cookie-cutter, one-size-fits-all economic orthodoxy lies in ruins. What will replace it is a question for the long-term.

The more immediate question is two-fold. First, in a global economic crisis such as the one we’re experiencing today, where is the engine of rapid growth that might pull the world’s economy out of the doldrums? Recessions of recent years -- in the early 1980s, the early 1990s and the early 2000s -- weren’t global in nature; rapidly developing economies in Asia and Eastern Europe, and later the rise of the U.S. housing market, pulled the world out of the doldrums. It’s difficult to see where that kind of growth might be found today.

And then there is the question of how long foreign investors will continue to run our tab. As Americans’ demand for just about everything has tanked, economists from across the political spectrum have called on the government to take up the slack. So we got a big stimulus package -- probably the first in a series -- which will be tacked onto a budget that was already deeply in the red. The hole is cavernous, and we have little choice to dig deeper. In 2008, the official deficit was around $500 billion; the most optimistic projections are deficits averaging around $1.35 trillion in both 2009 and 2010.

In 2006, economist Barry Bosworth testified before Congress that “net foreign lending” had been almost $800 billion in the red -- a negative 7.2 percent of national income. “This degree of reliance on foreign financing is unprecedented,” he explained, “but has been achieved with relatively few strains because foreigners perceive the United States as offering safe and attractive investment opportunities.”

Right now, foreign investors are still snapping up American debt -- the dollar is seen as a safe haven in turbulent seas. But how long, and to what extent they will continue to do so are crucial questions.

China, with the world’s largest foreign currency holdings -- about 70 percent of which is in U.S. treasury bills -- is still buying, at least for the moment. Luo Ping, director-general of the China Banking Regulatory Commission, recently asked, "Except for US Treasuries, what can you hold? Gold? You don't hold Japanese government bonds or UK bonds. US Treasuries are the safe haven," he explained. "For everyone, including China, it is the only option."

But the Chinese are concerned about the stability of their investments. If the U.S. government needs to raise the interest rates on its securities to attract enough foreign investment to cover our shortfall, the value of those T-bills China and other central governments are holding will drop.

Last week, Secretary of State Hillary Clinton acknowledged that the world economy is anything but decoupled, all but begging the Chinese to continue to buy our debt. According to Agence France Presse, “Clinton and Chinese Foreign Minister Yang Jiechi largely agreed to disagree on human rights,” while “she focused on the need for China to help finance the massive 787-billion-dollar US economic stimulus plan by continuing to buy US Treasuries.”

In a moment of clarity -- one that shone a light on the rot of the global economic system that has prevailed for the past 40 years, Clinton explained to the Chinese media, "We have to incur more debt … the US needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products."

Source - Alternet

Sunday, February 22, 2009


Saturday, February 21, 2009

New Evidence Shows The Dangers Of Statin Drugs

A new paper cites nearly 900 studies on the adverse effects of HMG-CoA reductase inhibitors, also called statins, which are a class of drugs widely used to treat high cholesterol. The review provides the most complete picture to date of reported side effects of statins.

Muscle problems are the best known of statin drugs' adverse side effects, but cognitive problems and pain or numbness in the extremities are also widely reported. A spectrum of other problems, ranging from blood glucose elevations to tendon problems, can also occur as side effects.

The paper summarizes powerful evidence that statin-induced injury to the function of the body's energy-producing cells, called mitochondria, underlies many of the adverse effects that occur to patients taking statin drugs. Statins lower levels of coenzyme Q10, a compound central to the processes of making energy within mitochondria and eliminating dangerous compounds called free radicals.

Higher statin doses and more powerful statins are linked to greater risk of developing side effects.

Statins, which are a class of drugs used to lower your cholesterol, are among the most commonly prescribed medications in the world, and I believe, one of the most unnecessary drugs there are.

Use of statins rose by a whopping 156 percent between 2000 and 2005, rising from 15.8 million people to 29.7 million people. Spending on these drugs jumped from $7.7 billion to $19.7 billion annually over the same period. This is a travesty in light of the overwhelming evidence – nearly 900 studies compiled in the review listed above -- showing the damage statins inflict.

The Dangerous Side Effects of Cholesterol-Lowering Drugs

Statin drugs are some of the most unnecessary drugs on the market today.


Because their use is based on a misinformed notion that cholesterol is the nemesis of good health in the first place. I’ve said it before, but it bears repeating:
Cholesterol is not the cause of heart disease.

Making matters worse, statins are also some of the most dangerous and are fraught with side effects.

Confusing matters, however, is the fact that statin drugs oftentimes do not have any immediate side effects, and they are quite effective, capable of lowering cholesterol levels by 50 points or more. This makes it appear as though they’re benefiting your health, and health problems that appear down the line are frequently not interpreted as a side effect of the drug, but rather as brand new, separate health problems.

But there’s an ever-growing body of evidence showing that potentially serious side effects begin to manifest several months after the commencement of therapy.

For starters, some of the possible consequences of taking statins in strong doses, or for a lengthy period of time, include:

* Cognitive loss
* Neuropathy
* Anemia
* Acidosis
* Frequent fevers
* Cataracts
* Sexual dysfunction

Other serious and potentially life threatening side effects include, but are not limited to:

* An increase in cancer risk
* Immune system suppression
* Serious degenerative muscle tissue condition (rhabdomyolysis)
* Pancreatic dysfunction
* Hepatic dysfunction. (Due to the potential increase in liver enzymes, patients must be monitored for normal liver function)

According to the latest review published in the American Journal of Cardiovascular Drugs, adverse effects are dose dependent, and your health risks are also amplified by a number of factors, such as:

* Drug interactions that increase statin potency
* Metabolic syndrome
* Thyroid disease
* Other genetic mutations linked to mitochondrial dysfunction

How Statin Drugs Destroy Your Muscles

The most common side effect is muscle pain and weakness, a condition called rhabdomyolysis. Unfortunately, many older adults are likely unable to distinguish between muscle pain related to a statin effect versus an effect of aging, and therefore adverse effects of statins in older adults may be grossly under-reported.

Researchers have now discovered that there is more than one way this condition can arise as a result of taking statins, including:

* Depleting your body of Co-Q10, a nutrient that supports muscle function. In my view it is medical malpractice to prescribe a statin drug without recommending one take CoQ10, or better yet ubiquinol.

* Altering the ability of skeletal muscle to repair and regenerate due to the anti-proliferative effects of statins. In one recent study, the viability of proliferating cells was reduced by 50 percent at a dose equivalent to 40 milligrams of Simvastatin – the dose per day used in some patients. This could clearly have a negative effect on your skeletal muscles’ ability to heal and repair themselves, and could lead to eventually becoming more or less incapacitated.

* Activating the atrogin-1 gene, which plays a key role in muscle atrophy.

The breakdown of skeletal muscle tissue can in turn also lead to kidney failure.

The industry insists that only 2-3 percent of patients get muscle aches and cramps but according to one study, 98 percent of patients taking Lipitor and one-third of the patients taking Mevacor (a lower-dose statin) suffered from muscle problems!

Adding insult to injury, active people are actually more likely to develop problems from statin use than those who are sedentary. In a study carried out in Austria, only six out of 22 athletes with familial hypercholesterolemia were able to endure statin treatment. The others discontinued treatment because of muscle pain.

The Importance of CoQ10

There are no official warnings in the U.S. regarding CoQ10 depletion from taking statin drugs, and many physicians fail to inform you about this problem as well. Labeling in Canada, however, clearly warns of CoQ10 depletion and even notes that this nutrient deficiency “could lead to impaired cardiac function in patients with borderline congestive heart failure.”

Coenzyme Q10 is an antioxidant compound that is central to the process of energy production within your mitochondria, and in the quenching of free radicals.

Statins have been found to impair mitochondrial function, which leads to increased production of free radicals.

At the same time, statins also lower your CoQ10 levels by blocking the pathway involved in cholesterol production – the same pathway by which Q10 is produced. Statins also reduce the blood cholesterol that transports CoQ10 and other fat-soluble antioxidants.

The loss of CoQ10 leads to loss of cell energy and increased free radicals which, in turn, can further damage your mitochondrial DNA, effectively setting into motion an evil circle of increasing free radicals and mitochondrial damage.

This explains why statins are particularly dangerous if you have existing mitochondrial damage, as your body relies on ample CoQ10 to bypass this damage.

High blood pressure and diabetes are linked to higher rates of mitochondrial problems, so if you have either of these conditions your risk of statin complications increases, according to the authors of this latest review.

Additionally, since statins can cause progressive damage to your mitochondria over time, and your mitochondria tend to weaken with age anyway, new adverse effects can develop the longer you’re on the drug.

Said co-author Beatrice Golomb, MD, PhD:

"The risk of adverse effects goes up as age goes up, and this helps explain why. This also helps explain why statins' benefits have not been found to exceed their risks in those over 70 or 75 years old, even those with heart disease."

Source - Dr. Mercola


European Banking Sector At Risk

Central and eastern Europe (CEE) is "in the eye of the global economic storm", says Peter Garnham in the FT, as it is highly dependent on exports. What's more, large current-account deficits and short-term foreign debt obligations mean it is dependent on external financing just as capital flows are dwindling rapidly. So the plunge in capital inflows expected this year "won't just be a major blow to growth", but could potentially trigger "a regional financial crisis", says Nicholas Watson of Business New Europe.

The next challenge is refinancing a whopping $400bn this year, which is around a third of the region's GDP. Ukraine, Hungary and Latvia have already turned to the IMF to bolster their banking systems. Meanwhile, Capital Economics sees "submerging Europe's" economy shrinking by 3% in 2009.

The dismal outlook in CEE has also created a "ticking time bomb" for western Europe, says Parmy Olson on European banks are five times more exposed to emerging markets than their US and Japanese counterparts, and they have bet big on CEE over the past few years. More than 80% of emerging European bank assets are owned by western European banks, says Peter Attard Montalto of Monura. Eurozone banks' exposure to CEE is around €1.3trn; the countries with the largest exposure to the region by assets are Austria, Germany and Italy, with Austria's lending to the region comprising around 70% of GDP. By this measure, Sweden is also highly exposed, with lending worth 30% of GDP.

Unfortunately, much of that lending was in foreign currencies; around 60% of mortgages in Hungary are held in Swiss francs. And with local currencies tanking against harder currencies, these loans have become extremely expensive for locals to service, raising the spectre of a wave of loan defaults. According to Austria's Der Standard, a default rate of 10% could well mean the collapse of Austria's financial sector. Yet non-performing loans in the region may reach above 25%, says Attard Montalto. The world is going to discover that "Europe's financial system is sunk", concludes Ambrose Evans-Pritchard in The Sunday Telegraph.

So it's no surprise that Austria's finance minister last week tried to drum up support for a stabilisation package for CEE. Meanwhile, some of the most exposed banks, including Italy's Unicredit and Austria's Erste Bank and Raiffeisen, are being sold off. And the prospect of further state bail-outs for wounded eurozone banks is compounding jitters over default risks in some European countries.

Now that Europe's own subprime problem is in the spotlight, due to CEE weakness, the euro has become "tied to the risk of the European banking sector", says Geoffrey Yu of UBS. Currently at a ten-week low against the greenback, it is set to come under further downward pressure.

Source - Money Week

Tuesday, February 17, 2009


Turmeric; Miracle Spice

For more than 5,000 years, turmeric has been an important part of Eastern cultural traditions, including traditional Chinese medicine and Ayurveda. Valued for its medicinal properties and warm, peppery flavor, this yellow-orange spice has more recently earned a name for itself in Western medicine as well.

Turmeric comes from the root of the Curcuma longa plant, which is native to Indonesia and southern India, and is widely used as an ingredient in curry dishes and yellow mustard. As research into this powerful spice has increased, it has emerged as one of nature’s most powerful potential healers.

Said Dr. David Frawely, founder and director of the American Institute for Vedic Studies in Santa Fe, New Mexico:

“If I had only one single herb to depend upon for all possible health and dietary needs, I would without much hesitation choose the Indian spice Turmeric. There is little it cannot do in the realm of healing and much that no other herb is able to accomplish.

Turmeric has a broad spectrum of actions, mild but certain effects, and is beneficial for long term and daily usage. Though it is a common spice, few people, including herbalists know of its great value and are using it to the extent possible. It is an herb that one should get to know and live with.”

Turmeric’s Beneficial Effects in a Nutshell

Strengthens and improves digestion

-Reduces gas and bloating
-Assists in the digestion of protein and with rice and bean dishes
-Improves your body's ability to digest fats
-Promotes proper metabolism, correcting both excesses and deficiencies
-Maintains and improves intestinal flora
-Improves elimination of wastes and toxins

Supports healthy liver function and detox

-Turmeric helps increase bile flow making it a liver cleanser that can rejuvenate your liver cells and recharge their capability to break down toxins
-Helps to prevent alcohol and other toxins from being converted into compounds that may be harmful to your liver
-Supports formation of healthy tissue

Purifies your blood

-Stimulates formation of new blood tissue
-Anti-inflammatory: Helps to reduce irritation to tissues characterized by pain, redness, swelling and heat

Contains curcuminoids that fight cancer, arthritis, and Alzheimer’s

Curcuminoids are potent phytonutrients (plant-based nutrients) that contain powerful antioxidant properties:

-Counteract the damaging effects of free radicals in your body
-Relieve arthritis pain and stiffness, anti-inflammatory agent
-Anti-carcinogenic: “Curcumin has been shown to prevent a large of number of cancers in animal studies. Laboratory data indicate that curcumin can inhibit tumor initiation, promotion, invasion, angiogenesis and metastasis.”
-Supports treatment of Alzheimer’s disease: “Because Alzheimer's disease is caused in part by amyloid-induced inflammation, curcumin has been shown to be effective against Alzheimer's. Clinical trials are in progress at UCLA with curcumin for Alzheimer's.”

Curcumin: Turmeric’s Active Anti-Inflammatory “Ingredient”

Most notably turmeric is known for its potent anti-inflammatory properties, which come from curcumin -- the pigment that gives turmeric its yellow-orange color, and which is thought to be responsible for many of its medicinal effects. There are an estimated three to five grams of curcumin in 100 grams of turmeric.

Curcumin has been shown to influence more than 700 genes, and it can inhibit both the activity and the synthesis of cyclooxygenase-2 (COX2) and 5-lipooxygenase (5-LOX), as well as other enzymes that have been implicated in inflammation.

Turmeric’s Cancer-Fighting Properties

In India where turmeric is widely used, the prevalence of four common U.S. cancers -- colon, breast, prostate and lung -- is 10 times lower. In fact, prostate cancer, which is the most frequently diagnosed cancer in U.S. men, is rare in India and this is attributed, in part, to turmeric.

Numerous studies have looked into this potential cancer-fighting link, with promising results. For instance, curcumin has been found to:

-Inhibit the proliferation of tumor cells
-Inhibit the transformation of cells from normal to tumor
-Help your body destroy mutated cancer cells so they cannot spread throughout your body
-Decrease inflammation
-Enhance liver function
-Inhibit the synthesis of a protein thought to be instrumental in tumor formation
-Prevent the development of additional blood supply necessary for cancer cell growth

As for the results of research studies, a study in Biochemical Pharmacology found that curcumin can slow the spread of breast cancer cells to the lungs in mice.

"Curcumin acts against transcription factors, which are like a master switch," said lead researcher, Bharat Aggarwal. "Transcription factors regulate all the genes needed for tumors to form. When we turn them off, we shut down some genes that are involved in the growth and invasion of cancer cells."

A second study in Biochemical Pharmacology also found that curcumin inhibits the activation of NF-kappaB, a regulatory molecule that signals genes to produce a slew of inflammatory molecules (including TNF, COX-2 and IL-6) that promote cancer cell growth.

Turmeric’s Essential Role for Your Liver

Your liver’s primary role is to process and remove toxins carried in your bloodstream. When functioning at its peak, it can filter up to two liters of blood per minute and easily break apart toxic molecules to reduce their toxicity. Your liver is also a crucial part of vitamin, mineral, protein, fat, carbohydrate and hormonal metabolism.

However, poor diet, allergens, pollution and stress can cause your liver to become sluggish, and this can impair its vital functions. This is where turmeric can be a very useful part of your liver support system. Studies have shown that it:

-May increase important detoxification enzymes in your liver
-Induces the formation of a primary liver detoxification enzyme, glutathione S-transferase (GST) enzymes

Turmeric is also a natural cholagogue, a medicinal agent that promotes the discharge of bile from your system. Increased bile flow is important to help your liver detoxify and to help your body digest fats.

Turmeric for Your Heart, Brain and Overall Health

Turmeric inhibits free radical damage of fats, including cholesterol. When cholesterol is damaged in this way, or oxidized, it can then damage your blood vessels and lead to a heart attack or stroke. Therefore, research suggests that turmeric’s ability to prevent the oxidation of cholesterol may be beneficial for your heart. It’s also rich in vitamin B6, high intakes of which are associated with a reduced risk of heart disease.

Meanwhile, turmeric appears to be highly protective against neurodegenerative diseases. In fact, in India levels of neurological diseases such as Alzheimer’s are very low, and studies have shown that curcumin can slow the progression of Alzheimer’s in mice. The compound has also proven capable of blocking the progression of multiple sclerosis.

Further, Professor Moolky Nagabhushan from the Loyola University Medical Center, Chicago, IL, who has been studying turmeric for the last 20 years, believes that turmeric can protect against harmful environmental chemicals, and in so doing protect against childhood leukemia. The research showed that curcumin in turmeric can:

-Inhibit the toxicity of polycyclic aromatic hydrocarbons (PAHs) (cancer-causing chemicals in the environment)
-Inhibit radiation-induced chromosome damage
-Prevent the formation of harmful heterocyclic amines and nitroso compounds, which may result in the body when eating certain processed foods, such as processed meat products
-Irreversibly inhibit the multiplication of leukemia cells in a cell culture

Turmeric's volatile oils also have external anti-bacterial action. As such, they may help prevent bacterial wound infections and accelerate wound healing. Johnson & Johnson even sells a curcumin-containing Band-Aid in India!

And the therapeutic potential of turmeric and curcumin do not end there. Evidence suggests the spice may also be beneficial for:

-Cystic fibrosis
-Type 2 diabetes
-Crohn’s disease
-Rheumatoid arthritis
-Muscle regeneration
-Inflammatory bowel disease

Which Type of Turmeric is Best?

For use in cooking, choose a pure turmeric powder, rather than a curry powder. At least one study has found that curry powders tend to contain very little curcumin, compared to turmeric powder. Turmeric is also available in supplement form and for many this is a more convenient method to obtain these health benefits discussed above, especially if they are from a high-quality organic source and if one doesn’t particularly enjoy the taste of curry.

Source - Dr. Mercola

Thursday, February 05, 2009


Happy & Lucky

Why do some people have all the luck while others never get the breaks they deserve?

I set out to examine luck, 10 years ago. Why are some people always in the right place at the right time, while others consistently experience ill fortune? I placed advertisements in national newspapers asking for people who felt consistently lucky or unlucky to contact me.

Hundreds of extraordinary men and women volunteered for my research and over the years, have been interviewed by me. I have monitored their lives and had them take part in experiments. The results reveal that although these people have almost no insight into the causes of their luck, their thoughts and behaviour are responsible for much of their good and bad fortune. Take the case of seemingly chance opportunities. Lucky people consistently encounter such opportunities, whereas unlucky people do not.

I carried out a simple experiment to discover whether this was due to differences in their ability to spot such opportunities. I gave both lucky and unlucky people a newspaper, and asked them to look through it and tell me how many photographs were inside. I had secretly placed a large message halfway through the newspaper saying: 'Tell the experimenter you have seen this and win $50'.

This message took up half of the page and was written in type that was more than two inches high. It was staring everyone straight in the face, but the unlucky people tended to miss it and the lucky people tended to spot it.

Unlucky people are generally more tense than lucky people, and this anxiety disrupts their ability to notice the unexpected.

As a result, they miss opportunities because they are too focused on looking for something else. They go to parties intent on finding their perfect partner and so miss opportunities to make good friends. They look through newspapers determined to find certain types of job advertisements and miss other types of jobs.

Lucky people are more relaxed and open, and therefore see what is there rather than just what they are looking for. My research eventually revealed that lucky people generate good fortune via four principles. They are skilled at creating and noticing chance opportunities, make lucky decisions by listening to their intuition, create self-fulfilling prophesies via positive expectations, and adopt a resilient attitude that transforms bad luck into good.

I wondered towards the end of the work, whether these principles could be used to create good luck. I asked a group of volunteers to spend a month carrying out exercises designed to help them think and behave like a lucky person. Dramatic results! These exercises helped them spot chance opportunities, listen to their intuition, expect to be lucky, and be more resilient to bad luck. One month later, the volunteers returned and described what had happened. The results were dramatic: 80 per cent of people were now happier, more satisfied with their lives and, perhaps most important of all, luckier.

The lucky people had become even luckier and the unlucky had become lucky. Finally, I had found the elusive 'luck factor'. Here are four top tips for becoming lucky:

1) Listen to your gut instincts. They are normally right.

2) Be open to new experiences and breaking your normal routine.

3) Spend a few moments each day remembering things that went well.

4) Visualise yourself being lucky before an important meeting or telephone call.

Have a Lucky day and work for it.

The happiest people in the world are not those who have no problems, but those who learn to live with things that are less than perfect.

The author of `The Luck Factor' teaches at the University of Hertfordshire.

Source - Times Of India

Wednesday, February 04, 2009


Road Trip USA

"We will not apologize for our way of life...."

This unfortunate phrase from President Obama's otherwise sturdy inaugural address, echoed through my mind last week as I cruised the suburban outlands of Montgomery, Alabama. All the usual commercial furnishings of consumerist America hugged the flattish ochre and dusty-green landscape of played-out cotton fields where thirty feet of topsoil has washed away in the two hundred years since the mainly English settlers shoved out the native Alabamu, Coosa, and Tallapoosa. Along the low horizon, mall followed strip mall followed "lifestyle center," book-ending the "one house" failed subdivisions of otherwise empty unsold lots in a cavalcade of floundering enterprise. It seemed at times as if the terrain was a kind of sea-like expanse, and all the retail boxes ghost ships drifting to oblivion.

They say that the banks have stopped calling in their loans on the commercial real estate, even though the owners of the malls and strip malls have arrived firmly in default. Calling in the loans would only pin another horrifying liability on the banks' balance sheets. So all parties join in a game of "pretend," that nothing has really happened to the fundamental equations of business life. Something similar goes on at the next level down, where the tenants of the malls and strip malls sink deeper into rent arrears every month, and the eviction process is simply postponed, while the stores themselves put off paying their vendors and suppliers – as the whole system, the whole way of life, enters upon a circle-jerk of mutual denial in a last desperate effort to forestall the mandates of reality .

How long will these games go on? This is the primary question that haunts the republic as we wait for new TARPS, and "bad banks," economic stimulus packages, infrastructure renewal roll-outs, and other policy life-lines thrown out in guarded hopefulness to haul America out of a ditch.

The center of Montgomery was instructive, too. Not unlike any other city in the USA (pop. about 200,000), the former main artery of downtown commerce – Dexter Avenue, rolling out like a red carpet below the state capitol hill, where Martin Luther King's early career kicked off in a modest red brick church, and where Rosa Parks famously refused to move to the back of her bus – this "main street" presented a sad sequence of empty shopfronts interrupted here and there by rather creepy amateur murals depicting the cruelties of slavery, as if a remonstrance to the politicos up the hill. Most of the buildings lining the avenue still stood burdened by the clownish facade re-doos and ghastly claddings of the 1950s, which had replaced the ordered classical-vernacular decorum of the original 19th century frontages. Once the malls had landed in the old cotton fields, and MLK moved on to Atlanta, Dexter Avenue was just left to rot in the memory trunk.

Here and there around the rest of the downtown, other weird experiments in American post-war anti-urbanism presented themselves, most notably a "building" designed to look like a small-scaled Death Star, all black reflective glass, canted concrete and steel walls – which turned out to belong to Morris Dees' renowned Southern Poverty Law Center -- deployed directly across the street from the modest white clapboard-with-green-shutters house once occupied by Jefferson Davis after Richmond fell and the Confederate leadership skeedaddled further south. There were a few recently-built government towers that looked like Nascar trophies. But the rest of the downtown – the parts not dedicated to surface parking – was the ubiquitous array of muffler shops, or restaurants and churches that looked like muffler shops.

With the city center thus nearly dead, and the asteroid belt of malls and strips on their knees financially, this emblematic sunbelt metro area finds itself in a pickle. Cotton being well-past decline, and having wrecked the soil, the "new" economy of recent decades dedicated itself to building carbonation suburban sprawl – the perceived perfect antidote to a previous economic order based on serfdom, hook-worm, and inescapable heat. That now-not-so-new economy of sprawl, in turn, has come to a screeching halt, as a cruel destiny threw sand in the mechanisms of reliably cheap oil and revolving credit, and the gears seized up. A mood of ominous watching and waiting pervaded the city, but many of the movers-and-shakers had pinned their hopes on the chance that Mr. Obama's stimulus bill would allow them to commence building a new freeway to the ocean on the Florida panhandle.

My journey continued on the Jesus-haunted blue highways, to that selfsame place, Walton County, Florida, where some of the most famous experiments in the New Urbanism were conducted beginning in the 1980s with the new town of Seaside. I had been there many times over the years, and I was called down to get a prize in the service of the movement, but it was a little disconcerting to see how the build-out had progressed.

The Seaside experiment began very modestly as the idea for a bohemian village of architects and artists in what was then an almost empty quarter of piney woods owned by the St Joe timber company. Seaside was designed so beautifully that it attracted the attention of every thoracic surgeon and corporate lawyer between Nashville and New Orleans, and pretty soon Seaside became the Riviera of the sunbelt's economic elite – and came in for gales of criticism for becoming that. The newer houses and commercial structures grew ever grander, as a Boomer generation status competition ramped up into the new millennium. Several more, ever-grander New Urbanist towns sprouted along the adjacent beaches, some of the most recent composed of immense mansions embarrassing in their opulence. The outcome was a little scary, especially now that the fortunes behind many of these mansions may be threatened by the multiplying fiascos of finance and economy overspreading the nation like a vicious plague.

The New Urbanists had not set out to build monuments to Yuppie-Boomer consumerism, but a peculiar destiny shoved them into that role for a while – even while they toiled elsewhere around the nation to reform town planning laws and generally provide an antidote to the fatal cultural cancer of sprawl, that is, of a settlement pattern guaranteed to comprehensively bankrupt our society. Anyway, the collapse of the housing bubble has affected the New Urbanists' business, too, and this may turn out to be a very good thing because they can put aside the distractions of building very grand places to sop up ill-gotten wealth and focus on the issues that Mr. Obama's people should have been paying attention to all along, namely, how are we going to reform the way we live in this country and what will be the physical manifestation of how we live in the decades to come.

The New Urbanists have preached for years that conventional suburbia would fail America in the long run, and that we'd have to prepare for this failure by restoring traditional modes of occupying the landscape. So far, the Obama team has not been willing to identify the suburban system as the heart of our economic problem. They can't recognize it for what it truly is: a living arrangement with no future – and an economic, ecological, and spiritual disaster. It is, of course, the primary reason why we find ourselves in the deadly predicament of importing over two-thirds of the oil we use every day.

But then, more than half the population lives the suburban way of life, with its deadly mortgage traps, its mandatory motoring, and its civic disengagements. Nobody in power dares tell the truth: that we can't live this way anymore.

But there are scores of places like Montgomery, Alabama, and thousands of traditional main street small towns that are sitting out there waiting to be re-activated. We need to do this much more than we need to build new freeways to the beach. Suburbia is not going to be abandoned overnight (even if it fails logistically and economically !) but we have got to arrive at a consensus about rehabilitating our forsaken small cities and small towns. The New Urbanists have gathered, organized, and codified all the principle and methodology needed to carry out this campaign. This should be their moment. Mr. Obama and his team should get with the program.

Source - James Howard Kunstler


Shifting Geopolitics

The Kyrgyz government is planning to close a strategically important U.S. military base that Washington uses as a route for troops and supplies heading into Afghanistan, Russian media reported Tuesday.

Kyrgyz President Kurmanbek Bakiyev said Tuesday at a news conference in Moscow that "all due procedures" were being initiated to close Manas Air Base, the Russian news agency RIA-Novosti reported.

The announcement was made after news reports of a multimillion-dollar aid package from Russia to Kyrgyzstan.

Pentagon spokesman Geoff Morrell on Tuesday called Manas "a hugely important air base."

"It provides us with launching point to provide supplies in Afghanistan. We very much appreciate [Kyrgyz] support in using that base and we hope to continue," he said at his daily news briefing.

Gen. David Petraeus, who oversees U.S. operations in the Middle East and Central Asia, including Afghanistan, was in Kyrgyzstan last month, partly to lobby the government to allow the United States to keep using the base.

He said he and Kyrgyz leaders did not discuss "at all" the possible closure of the base and said local officials told him there was "no foundation" for news reports about the issue.

The mountainous former Soviet republic is Central Asia's second poorest country.

The United States pays about $63 million a year for use of the base and employs more than 320 Kyrgyz citizens there, Petraeus said. The base has been in operation since December 2001 under U.N. mandate

The Russian newspaper Kommersant reported Tuesday that Russia would offer Kyrgyzstan a $300 million, 40-year loan at an annual interest rate of 0.75 percent, and write off $180 million of Kyrgyz debt.

Kyrgystan is also home to a Russian military base, at Kant, that officially opened in 2003.

The United States is planning to send an additional 30,000 troops to Afghanistan to halt a resurgence of the Taliban. Petraeus described Manas as having "an important role in the deployment of these forces" and in refueling aircraft.

The relationship between the United States and Kyrgyzstan was damaged when a Kyrgyz citizen was killed by a U.S. airman in December 2006. The airman was transferred out of Kyrgyzstan and the dead man's family was offered compensation. Petraeus said in January the investigation was being reopened.

Bakiyev said in announcing the base closure Tuesday he was not satisfied with the inquiry into the accident and that his government's "inability to provide security to its citizens" was proving a serious concern.

Source - CNN

Tuesday, February 03, 2009


The Mood

The theme of the World Economic Forum’s annual meeting was “Shaping the Post-Crisis World.” Unfortunately, the assembled executives, policy makers and do-gooders were stuck in the here and now.

The search for scapegoats and the worst economic prospects since World War II resulted in a gathering marked by fear, anger and bitterness, a far cry from the usual search for consensus.

Turkish Prime Minister Recep Tayyip Erdogan stormed out of a panel discussion and Russian Prime Minister Vladimir Putin hectored the U.S. as the font of the world’s economic woes. Almost everyone blamed the few bankers who showed up for the near-collapse of the financial system.

Attendees were “less reluctant to criticize, and sometimes very vocally criticize, the U.S. and its capitalist system because of the problems we’re having,” said David Rubenstein, co-founder of the Carlyle Group, who first came to Davos a decade ago. “Maybe that’s deserved, but it’s a big change.”

“Everyone I spoke to says it’s the grimmest Davos they’ve ever been to,” said Kenneth Rogoff, professor of economics at Harvard University and a World Economic Forum regular since 2002. “The mood has been very depressed. It’s a low-burn depression.”

Another big change was the virtual absence of Wall Street figures among the 2,500 delegates at the conference, which ended yesterday.

‘Stupid Things’

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was the only U.S. banking chief who showed up. He made a concession to the mood of this year’s event by accepting some blame for the collapse that has led to more than $1 trillion of writedowns. He deflected the rest at regulators.

“God knows, some really stupid things were done by American banks and by American investment banks,” Dimon said. “To policy makers, I say: ‘Where were they?’”

That attitude was tough for some to swallow. At one session, a call for curbs on bankers’ bonuses was met with applause by sections of the audience.

“We should not trust these bankers,” said Nassim Nicholas Taleb, author of the best-selling book “The Black Swan.” “Look at their track record. The only way to stop the process is for the government to own those banks.”

With the world’s elite nursing a collective hangover after the greatest era of global prosperity came to an end, there was enough bile to go around.

Erdogan’s Walkout

Erdogan stunned a packed house on Jan. 29 by walking out on a debate on last month’s war in the Gaza Strip. He claimed that the session’s moderator didn’t give him equal time with Israeli President Shimon Peres and vowed never to return to Davos. By the time he met the press an hour later, he promised to reconsider.

Anyone who thought Barack Obama’s election as president would temper criticism of U.S. policies would have been disappointed. Economists questioned his $819 billion stimulus plan, urged him to deliver another rescue package for banks and fretted about soaring national debt.

“People are looking for the solution but don’t yet have the question formulated,” Arif Naqvi, chief executive officer of Abraaj Capital Ltd., which manages $7.5 billion, said.

The need for action wasn’t in debate. Away from the slopes, U.S. stocks capped their worst ever January, the International Monetary Fund forecast the weakest global growth in 60 years and companies from Starbucks Corp. to Caterpillar Inc. cut jobs.

Deepening Recession

That led many attendees to predict they’ll still be in a funk when they return in 2010.

“We’re in a multi-multi year problem,” Howard Lutnick, chief executive officer of Cantor Fitzgerald LP., said. “We’ve weathered horrible times before. That’s what lies ahead of us now.”

Delegates also took turns bashing America’s policies and its role in the world.

Chinese Premier Wen Jiabao and Putin cited the U.S. for leading the world into recession in back-to-back speeches on the opening day.

“Just a year ago, American delegates speaking from this rostrum emphasized the U.S. economy’s fundamental stability and its cloudless prospects,” Putin said.

To cap it off, Putin dismissed a query from audience member Michael Dell, head of personal-computer maker Dell Inc., about what the technology community could do to assist Russia.

“We don’t need any help. We are not invalids,” Putin said.

Balanced Tone?

The spats gave this year’s conference a more balanced tone, said Bahraini banker Khalid Abdulla-Janahi, who remembers then- Vice President Dick Cheney “hammering the Russians, the Iranians and many others” during his 2004 visit.

“This time, it was a two-way street,” said the chairman of Ithmaar Bank BSC. “We heard Putin hammering the West and Erdogan standing up to Peres. That’s how it should be.”

Those who made it to the five-day Alpine retreat insisted that they weren’t wasting their time or their money --and they really didn’t mind the muted tone of the event’s party circuit.

“People are conscious about throwing parties or even smiling this year,” said Martin Sorrell, chief executive of WPP Group Plc. “It’s become a little too big, but it’s never been more relevant.”

Source - Bloomberg


Violent Protest In China

Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.

The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.

While troubling for the Chinese government, this should strengthen the argument of Premier Wen Jiabao, who will say on a visit to London this week that his country faces enormous problems and cannot let its currency rise in response to American demands.

The new US Treasury secretary, Timothy Geithner, has alarmed Beijing and raised fears of a trade war by stating that China manipulates the yuan to promote exports.

However, a growing number of economists say the unrest proves that it is not the exchange rate but years of sweatshop wages and income inequality in China that have distorted global competition and stifled domestic demand. The influential Far Eastern Economic Review headlined its latest issue “The coming crack-up of the China Model”.

Yasheng Huang, a professor at the Massachusetts Institute of Technology, said corruption and a deeply flawed model of economic reform had led to a collapse in personal income growth and a wealth gap that could leave China looking like a Latin American economy.

Richard Duncan, a partner at Blackhorse Asset Management in Singapore, has argued that the only way to create consumers is to raise wages to a legal minimum of $5 (£3.50) a day across Asia – a “trickle up” theory.

The instability may peak when millions of migrant workers flood back from celebrating the Chinese new year to find they no longer have jobs. That spells political trouble and there are already signs that the government’s $585 billion stimulus package will not be enough to achieve its goal of 8% growth this year.

The American economist Nouriel Roubini said growth figures of 6.8% in the fourth quarter of 2008 masked the reality that China was already in recession – a view privately shared by many Chinese financial analysts who dare not say so in public.

Even security guards and teachers have staged protests as disorder sweeps through the industrial zones that were built on cheap manufacturing for multinational companies. Worker dormitory suburbs already resemble ghost towns.

In the southern province of Guangdong, three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.

The Communist party is so concerned to buy off trouble that in one case, confirmed by a local government official in Foshan, armed police forced a factory owner to withdraw cash from the bank to pay his workers.

“Hundreds of workers protested outside the city government so we ordered the boss to settle the back pay and sent police armed with machine-guns to take him to the bank and deliver the money to his workforce that very night,” the official said.

On January 15 there were pitched battles at a textile factory in the nearby city of Dongguan between striking workers and security guards.

On January 16, about 100 auxiliary security officers, known in Chinese as Bao An, staged a street protest after they were sacked by a state-owned firm in Shenzhen, a boom town adjoining Hong Kong.

About 1,000 teachers confronted police on the streets of Yangjiang on January 5, demanding their wages from the local authorities.

In one sample week in late December, 2,000 workers at a Singapore-owned firm in Shanghai held a wage protest and thousands of farmers staged 12 days of mass demonstrations over economic problems outside the city.

All along the coast, angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea.

In southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to stop creditors breaking in to seize equipment in lieu of debts.

In northern China, television journalists were punished after they prepared a story on the occupation of a textile mill by 6,000 workers. Furious local leaders in the city of Linfen said the news item would “destroy social stability” and banned it.

At textile companies in Suzhou, historic centre of the silk trade, sales managers told of a collapse in export orders. “This time last year our monthly output to Britain and other markets was 60,000 metres of cloth. This month it’s 3,000 metres,” said one.

She said companies dared not accept orders in pounds or euros for fear of wild currency fluctuations. Trade finance has all but ceased. Some 40% of the workforce had been laid off, she added.

Nearby, in the industrial hub of Changshu, all the talk was of Singapore-listed Ferro China, which exported steel products to customers in Britain, Germany, Korea and Japan. Last October its shares were suspended.

The company is reported to have been weighed down by $800m in debts and, according to the specialist business magazine Caijing, has started a court-or-dered restructuring.

A researcher found the gates closed and under tight guard, 2,000 employees out of work and witnesses who told of company vehicles being seized by impatient creditors. Holders of Ferro China debt include Credit Suisse and Citi-group.

Even in the city regarded as the most entrepreneurial in China, Wenzhou, the business community is reeling. “We estimate that foreign companies have defaulted on payments for 20 billion yuan (£20 billion) owed to Wenzhou firms,” said Zhou Dewen, chairman of the city’s association for small and medium-sized businesses.

“British businessmen are better than other customers because even if they owe money they can be contacted and promise to pay their bills if they can raise the cash but many other foreigners just disappear,” he said.

Slumping demand for consumer electronics in Britain has been blamed for the crisis engulfing the southern city of Shunde, in Guangdong, where a cluster of 3,000 electrical firms has grown up around big exporters like Kelon, a white-goods manufacturer.

“The impact on us from the slowdown in the British market will be huge,” said a manager at Kelon, who asked not to be named.

Shunde is one of the amazing one-industry Chinese towns that has come from nothing to generate 20% of China’s export production of domestic electrical appliances, making 60% of its sales to Europe.

Now the whole province is wrestling with sudden, sharp decline. A researcher who watched officials handling complaints at a local labour bureau reported “class hatred” among workers.

“Why did the boss cut your salary? You must be lazy or absent from work,” an official told one group of petitioners.

“What do you mean? Are you an official of the people’s government or a slave of the bosses?” demanded an irate worker.

Their claim dismissed, the group warned onlookers: “We are thinking of taking extreme action.”

A legal advocate for migrant workers, Xiao Qingshan, told a tale of violent intimidation by the state in collusion with unscrupulous businessmen.

On January 9, Xiao said, 14 security officers from the local labour bureau broke into his office, confiscated 600 legal case files, 160 law books, his computer, his photocopier, his television set and 100,000 yuan in cash.

“That evening I was ambushed near the office by five strangers who forced a black bag over my head and then threw me into a shallow polluted canal,” he said. His landlord has since given him notice to quit his rented home.

Xiao said he was defying bribery and threats to speak to the foreign media because he wants international businesses to know what is really happening in “the workshop of the world”.

Source - Times Online