Archive for November, 2010

Cancun Climate Change Meeting Likely Bust

Tuesday, November 30th, 2010

This is from Terraviva

CLIMATE CHANGE: Will Year of Extremes End with a Whimper?
By Stephen Leahy*

CANCÚN, Mexico, Nov 29, 2010 (IPS/TerraViva) - This year will likely be the warmest ever recorded, with soaring ocean temperatures resulting in a near record die-off of tropical corals, extreme heat and drought in Russia and massive flooding in Pakistan - all signs that climate change has taken hold.

But despite the ever more compelling science regarding the urgency and risks of climate change and growing public support for action, representatives from nearly 200 countries meeting here in Cancún for the next two weeks are unlikely to produce a new binding agreement.

At best, matters such as forestry, climate finance and mitigation commitments will be further developed in the faint hope that the next big meeting in South Africa might produce some kind of deal.

“Carbon emissions continue to climb despite the economic recession and yet I have never seen such low expectations for a COP (Conference of the Parties),” said Richard Somerville, an eminent climate scientist at the Scripps Institution of Oceanography in California.

“The science is quite compelling regarding the need for urgent action. We don’t have another five years to reach an agreement,” Somerville told TerraViva.

In 2009, Somerville and others co-authored an update on the latest climate science called ‘The Copenhagen Diagnosis’ which concluded that global carbon emissions had to peak and begin to decline before 2020 to have any hope of keeping global warming to less than 2.0 degrees C.

However, the negotiators in Cancún will mostly not be acting on the science but on their national interests as directed by their political leadership, who largely do not understand climate change, he said.

“Developed countries think they can adapt to warmer temperatures. I don’t see how we can keep warming below 2.0 degrees C.,” Somerville said.

Cancún is the 16th meeting of the Conference of Parties of the U.N. Framework Convention on Climate Change, an international body formed after the 1992 Rio Earth Summit to deal with the pressing global problem of climate change.

At that time, virtually all countries agreed that emissions of greenhouse gases, particularly carbon dioxide, had to decline. In Kyoto, Japan, industrialised countries promised to reduce their emissions by five percent from the 1990 base year.

However, global carbon dioxide emissions from fossil fuels in 2008 were 40 percent higher than those in 1990 primarily because northern countries like the United States failed to make reductions while emissions by some developing countries like China increased dramatically.

At the last COP in Copenhagen, industrialised countries agreed to keep the rise in global temperatures below 2.0 C. However, even if countries live up to their vague emission reduction pledges in the Copenhagen Accord, humanity is headed for 2.6-5C of warming by 2100 by most analyses.

This range is what most scientists call dangerous or catastrophic climate change, including the loss of coral reefs and other important ecosystems. Moreover, the northern latitudes will heat up much more than the global average - perhaps seven to 14 degrees C in the polar regions - almost certainly guaranteeing the release of vast quantities of methane from the Arctic permafrost.

“Potential methane release from northern permafrost and wetlands under future climate change is of great concern,” warned the World Meteorological Organisation in a bulletin last week. Methane is a greenhouse gas with 25 times more warming potential than carbon dioxide, and now has atmospheric levels 158 percent higher than pre-industrial times.

The Copenhagen Accord has so many loopholes countries can claim they’ve kept their promises while increasing their emissions, said Sivan Kartha, a climate scientist at the Stockholm Environment Institute, an independent international policy research institute.

“It should be exposed for the embarrassment that it is, the loopholes closed off and national reduction commitments increased,” Kartha told IPS.

The strong sense of common purpose at the Rio Earth Summit to meet the dangers of climate change has been lost and negotiations reduced to what seems to be just another trade negotiation, he said.

“In Copenhagen the open, transparent and democratic process that had been key to earlier negotiations vanished. It may be the same in Cancún where small groups of countries do deals behind closed doors,” he said.

Such deals nearly always tilt negotiations to just one perspective. What works for China and the U.S., for example, may be very bad for those countries most impacted by climate change, Kartha says. “The urgency we face should not justify a bad deal for some.”

The exclusion of the interests of small countries and civil society in Copenhagen prompted 35,000 members of the public and global civil society to meet in Bolivia for a parallel ‘people’s summit’ last April. They signed the Cochabamba People’s Accord calling for recognition of a ‘Universal Declaration of the Rights of Mother Earth’ and the creation of an International Climate and Environmental Justice Tribunal.

However, those proposals from Cochabamba have been excluded from the formal negotiations here in Cancún, according to La Via Campesina, an international peasant movement with millions of members.

“During the last moments of discussion, the proposals of the People’s Agreement signed in Cochabamba have been left aside,” said Alberto Gomez from La Via Campesina international coordination.

The organisation is mobilising thousands of supporters to march on Cancún to pressure governments to adopt the measures in the Cochabamba People’s Accord. A mass demonstration will be held Dec. 7 in Cancún and many other locations around the world. In Cancún, an estimated 6,000 heavily armed Mexican military and police are already on hand to meet them.

“We do not agree with false solutions such as the carbon market because, far from reducing greenhouse gases, it will sooner or later create a speculative system leading the world into another global financial crisis,” Gomez said in a statement.

“La Via Campesina mobilises to denounce the irresponsibility of most of the governments who choose to support capital rather than the interest of their nation and of humanity as a whole,” he said.

Economic Boom Did Not Help Least Developed Countries

Monday, November 29th, 2010

This is no supprise. It is what you would expect from neo-colonial capitalism.

This is from Terraviva

Economic Boom Worsened De-industrialisation of LDCs
By Isolda Agazzi

Food import dependence in LDCs worsened during economic boom, according to UNCTAD.

GENEVA, Nov 26, 2010 (IPS) - Least developed countries (LDCs) in Africa did not use the commodity export boom of the mid-2000s to diversify their economies from commodity dependence to manufacturing value-added products. Significantly, the agricultural sector has also not benefited, with the result that LDC reliance on imported food has become even worse.

These are some of the findings of the United Nations Conference on Trade and Development (UNCTAD), which released its 2010 report on least developed countries (LDCs), entitled “Towards a new international development architecture for LDCs”, on Nov 25.

Dr Supachai Panitchpakdi, UNCTAD secretary-general, referred at the launch of the report to the average growth rate of seven percent per year that least developed countries (LDCs) experienced during the boom period of 2002- 2007.

“But higher commodity prices — of mainly oil and gas — have not solved the issues of price fluctuation and dependence on commodity export,” he noted. This pattern of growth is “non-sustainable” and “non-inclusive”.

“Globalisation has not treated everyone equally,” added Zeljka Kozul-Wright, chief of the LDCs section at UNCTAD. “LDCs are on the losing side because of their dependence on commodities export. During the boom period, dependence on commodities export increased while manufacturing sectors declined.

“This issue of de-industrialisation is a major concern for us.”

Panitchpakdi pointed out that one of the reasons for LDCs’ economic woes has been excessively rapid market opening: “In order to benefit from full liberalisation, governments have to implement industrial policies.

“In Africa, countries under structural adjustment programmes could not have industrial policies and therefore there was no preparation of industries for them to benefit from liberalisation. In Zambia, for example, there has been a complete demise of the textile industry. Liberalisation must be (correctly) sequenced,” he added.

For Kozul-Wright, Asian LDCs have succeeded in diversifying more than African ones, especially with regards labour-intensive manufactures. But that approach also has its problems because today they cannot increase their value addition. “The promotion of a ‘one-size-fits-all’ development strategy has not helped,” she said.

The consequence of these problems has been an increase in poverty. The report estimates that the number of people in extreme poverty in LDCs increased by three million annually during the boom years, reaching an estimated 421 million in 2007 – twice as many as in 1980.

This figure represents 53 percent of the total population of the LDCs, where one billion people are expected to be living in 2017.

During the same time, “food import dependence has been devastating”, said Panitchpakdi, rising from nine billion dollars in costs in 2002 to 24 billion dollars in 2008.

Believing that “business as usual will not deliver inclusive growth in the LDCs”, UNCTAD proposes a “New International Economic Architecture” that goes beyond aid and trade to include technology, commodities and climate change.

In the area of finance, UNCTAD bemoans the shortfall of 23 billion dollars per year in official development assistance and advocates a balanced distribution of aid between social uses and productive capacity.

It proposes innovative ways of financing and supports co-financing initiatives with the private sector, particularly in the field of infrastructure. Debt relief programmes will have to be enhanced in the post-crisis situation, as the number of heavily indebted LDCs is on the rise.

Regarding trade, UNCTAD reiterated the call for “an early harvest in the Doha Round for LDCs, with measures such as 100 percent duty-free and quota-free market access and conditionalities being minimised”.

On the question of whether the Doha Round would not exacerbate de- industrialisation in LDCs, Panitchpakdi answered that it “depends on the ultimate composition of the final deal of the Round.

“In NAMA (the non-agricultural market access negotiations) we have to be able to maintain the (original) developmental perspective of the Round to help countries diversify; get value addition; deal with tariff peaks and escalation; and eliminate all trade distortions. We should not add and add agendas in NAMA.”

As for commodities, the report suggests rethinking the way counter-cyclical financing is done to cope with the adverse effects of fluctuating prices. Counter-cyclical financing is financing that does not follow the current predominant economic cycle.

There is a need for transaction tax on trade in commodity derivatives (financial instruments linked to future prices of underlying assets) and for more schemes to deal with the stabilisation of commodity prices. Panitchpakdi indicated concern over the excess of liquidity driving up the prices of maize and wheat in 2010.

In the field of technology, the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement should be carefully looked at, for it has not been implemented in a way that benefit developing countries.

Industrialised states have to adopt policies to incentivise technology transfer to LDCs. It is a moral obligation, not a legal one, but the agreement does not specify incentives, according to UNCTAD.

Finally, in the area of climate change — where LDCs contribute only one percent of total greenhouse emissions, but suffer most heavily from the consequences — an adequate financing of the already existing mechanisms is necessary.

“Cutting across all these measures is the need for LDCs to work more with fellow countries from the South,” Panitchpakdi reiterated, like many times before.

“They should benefit more from South-South cooperation and triangular cooperation with the North. The new global governance cannot be dominated by powerful countries, like in the Group of 20. LDCs must participate in global governance.” (END)

I am undergoing training in a new method of dialysis this week and won’t be posting as much of my own material.

Wikileaks Cablegate-US Government Cables

Sunday, November 28th, 2010

This is from Wikileaks site. They are publishing thousands of secret cables of the US government mostly from the State Department. You can go to their site and download the actual cables. They have downloaded sevearl

Secret US Embassy Cables
Wikileaks began on Sunday November 28th publishing 251,287 leaked United States embassy cables, the largest set of confidential documents ever to be released into the public domain. The documents will give people around the world an unprecedented insight into US Government foreign activities.

The cables, which date from 1966 up until the end of February this year, contain confidential communications between 274 embassies in countries throughout the world and the State Department in Washington DC. 15,652 of the cables are classified Secret.

The embassy cables will be released in stages over the next few months. The subject matter of these cables is of such importance, and the geographical spread so broad, that to do otherwise would not do this material justice.

The cables show the extent of US spying on its allies and the UN; turning a blind eye to corruption and human rights abuse in “client states”; backroom deals with supposedly neutral countries; lobbying for US corporations; and the measures US diplomats take to advance those who have access to them.

This document release reveals the contradictions between the US’s public persona and what it says behind closed doors – and shows that if citizens in a democracy want their governments to reflect their wishes, they should ask to see what’s going on behind the scenes.

Every American schoolchild is taught that George Washington – the country’s first President – could not tell a lie. If the administrations of his successors lived up to the same principle, today’s document flood would be a mere embarrassment. Instead, the US Government has been warning governments — even the most corrupt — around the world about the coming leaks and is bracing itself for the exposures.

The full set consists of 251,287 documents, comprising 261,276,536 words (seven times the size of “The Iraq War Logs”, the world’s previously largest classified information release).

The cables cover from 28th December 1966 to 28th February 2010 and originate from 274 embassies, consulates and diplomatic missions.

How to explore the data
Search for events that you remember that happened for example in your country. You can browse by date or search for an origin near you.

Pick out interesting events and tell others about them. Use twitter, reddit, mail whatever suits your audience best.

For twitter or other social networking services please use the #cablegate or unique reference ID (e.g. #66BUENOSAIRES2481) as hash tags.

Key figures:
•15, 652 secret
•101,748 confidential
•133,887 unclassified

•Iraq most discussed country – 15,365 (Cables coming from Iraq – 6,677)
•Ankara, Turkey had most cables coming from it – 7,918
•From Secretary of State office - 8,017

According to the US State Departments labeling system, the most frequent subjects discussed are:

•External political relations – 145,451
•Internal government affairs – 122,896
•Human rights – 55,211
•Economic Conditions – 49,044
•Terrorists and terrorism – 28,801
•UN security council – 6,532

You can also go to my blogroll and look up Wilkileaks.

This is From CNN

U.S. documents obtained by WikiLeaks posted despite site problemBy the CNN Wire Staff
November 28, 2010 3:01 p.m. EST

WikiLeaks editor-in-chief Julian Assange was warned that an expected new release of documents would be illegal.
The New York Times and four European media outlets post the documents
WikiLeaks says it is under cyber attack, but documents already distributed
The United States warns WikiLeaks the leak is illegal and may endanger lives

(CNN) — The whistleblower website WikiLeaks said Sunday that it was under cyber attack, preventing it from posting tens of thousands of classified U.S. diplomatic cables, it said via Twitter Sunday.

Despite the glitch, five international news outlets which had obtained the documents ahead of time published details of the leaked documents on their websites.

The announcement of the apparent attack came shortly after the United States warned WikiLeaks editor-in-chief Julian Assange that publishing the papers would be illegal and would endanger peoples’ lives.

The New York Times, The Guardian newspaper in England, and newspapers and magazines in three other European nations published portions of the new classified material on Sunday.

The site, meanwhile, was experiencing a distributed denial of service (DDOS) attack, it said. That’s an effort to make a website unavailable to users, normally by flooding it with requests for data.

As of 3 p.m. Sunday, the site was inaccessible.

The U.S. State Department’s legal adviser said Saturday that if any materials in the posting of documents by the site were provided by government officials without proper authorization, “they were provided in violation of U.S. law and without regard for the grave consequences of this action.”

Wall Street Ripping Off Economy

Sunday, November 28th, 2010

There is little good to say about Wall Street. I consider the entire industry to be essentially a blood sucking leech on the economic well being of the country. But we need some kind of capital formation
mechanism. Perhaps a strongly regulated market is worth having, but one that has been downsized and limited much more extensivly than what the new Finance Reform laws have in mind. Here are a few voices of concern as to the direction and intent of our capitalist financial mechanisms.

From Buddhist Quotes

“Greed, I say, is a great flood; it is a whirlpool sucking one down, a constant yearning, seeking a hold, continually in movement; difficult to cross is the morass of sensual desire. A sage does not deviate from truth, a brahmana stands on firm ground; renouncing all, he is truly called ‘calmed.’”

- Sutta Nipata

This is from the New Yorker

“What Good Is Wall Street?
Much of what investment bankers do is socially worthless.
by John Cassidy
November 29, 2010

For years, the most profitable industry in America has been one that doesn’t design, build, or sell a single tangible thing.

A few months ago, I came across an announcement that Citigroup, the parent company of Citibank, was to be honored, along with its chief executive, Vikram Pandit, for “Advancing the Field of Asset Building in America.” This seemed akin to, say, saluting BP for services to the environment or praising Facebook for its commitment to privacy. During the past decade, Citi has become synonymous with financial misjudgment, reckless lending, and gargantuan losses: what might be termed asset denuding rather than asset building. In late 2008, the sprawling firm might well have collapsed but for a government bailout. Even today the U.S. taxpayer is Citigroup’s largest shareholder.

Since the promulgation of Hammurabi’s Code, in ancient Babylon, no advanced society has survived without banks and bankers. Banks enable people to borrow money, and, today, by operating electronic-transfer systems, they allow commerce to take place without notes and coins changing hands. They also play a critical role in channelling savings into productive investments. When a depositor places money in a savings account or a C.D., the bank lends it out to corporations, small businesses, and families. These days, Bank of America, Citi, JPMorgan Chase, and others also help corporations and municipalities raise money by issuing stocks, bonds, and other securities on their behalf. The business of issuing securities used to be the exclusive preserve of Wall Street firms, such as Morgan Stanley and Goldman Sachs, but during the past twenty years many of the dividing lines between ordinary banks and investment banks have vanished.

When the banking system behaves the way it is supposed to… it is akin to a power utility, distributing money (power) to where it is needed and keeping an account of how it is used. Just like power utilities, the big banks have a commanding position in the market, which they can use for the benefit of their customers and the economy at large. But when banks seek to exploit their position and make a quick killing, they can cause enormous damage. It’s not clear now whether the bankers have really given up their reckless practices,… or whether they are merely lying low. In the past few years, all the surviving big banks have raised more capital and become profitable again. However, the U.S. government was indirectly responsible for much of this turnaround. And in the country at large, where many businesses rely on the banks to fund their day-to-day operations, the power still isn’t flowing properly. Over-all bank lending to firms and households remains below the level it reached in 2008.

The other important role of the banking industry, historically, has been to finance the growth of vital industries, including railroads, pharmaceuticals, automobiles, and entertainment. “Go back and pick any period in time,” John Mack, the chairman of Morgan Stanley, said to me recently. “Let’s go back to the tech boom. I guess it got on its feet in the late eighties, with Apple Computer and Microsoft, and really started to blossom in the nineteen-nineties, with Cisco, Netscape,, and others. These are companies that created a lot of jobs, a lot of intellectual capital, and Wall Street helped finance that. The first investors were angel investors, then venture capitalists, and to really grow and build they needed Wall Street.”

Yet Wall Street’s role in financing new businesses is a small portion of what it does. The market for initial public offerings (I.P.O.s) of stock by U.S. companies never fully recovered from the tech bust. During the third quarter of 2010, just thirty-three U.S. companies went public, and they raised a paltry five billion dollars. Most people on Wall Street aren’t finding the next Apple or promoting a green rival to Exxon. They are buying and selling securities that are tied to existing firms and capital projects, or to something less concrete, such as the price of a stock or the level of an exchange rate. During the past two decades, trading volumes have risen exponentially across many markets: stocks, bonds, currencies, commodities, and all manner of derivative securities. In the first nine months of this year, sales and trading accounted for thirty-six per cent of Morgan Stanley’s revenues and a much higher proportion of profits. Traditional investment banking—the business of raising money for companies and advising them on deals—contributed less than fifteen per cent of the firm’s revenue. Goldman Sachs is even more reliant on trading. Between July and September of this year, trading accounted for sixty-three per cent of its revenue, and corporate finance just thirteen per cent.

In effect, many of the big banks have turned themselves from businesses whose profits rose and fell with the capital-raising needs of their clients into immense trading houses whose fortunes depend on their ability to exploit day-to-day movements in the markets. Because trading has become so central to their business, the big banks are forever trying to invent new financial products that they can sell but that their competitors, at least for the moment, cannot. Some recent innovations, such as tradable pollution rights and catastrophe bonds, have provided a public benefit. But it’s easy to point to other innovations that serve little purpose or that blew up and caused a lot of collateral damage, such as auction-rate securities and collateralized debt obligations. Testifying earlier this year before the Financial Crisis Inquiry Commission, Ben Bernanke, the chairman of the Federal Reserve, said that financial innovation “isn’t always a good thing,” adding that some innovations amplify risk and others are used primarily “to take unfair advantage rather than create a more efficient market.”

Other regulators have gone further. Lord Adair Turner, the chairman of Britain’s top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as “socially useless activity”—a comment that suggests it could be eliminated without doing any damage to the economy. In a recent article titled “What Do Banks Do?,” which appeared in a collection of essays devoted to the future of finance, Turner pointed out that although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth—payments that economists refer to as rents. “It is possible for financial activity to extract rents from the real economy rather than to deliver economic value,” Turner wrote. “Financial innovation . . . may in some ways and under some circumstances foster economic value creation, but that needs to be illustrated at the level of specific effects: it cannot be asserted a priori.”

Turner’s viewpoint caused consternation in the City of London, the world’s largest financial market. A clear implication of his argument is that many people in the City and on Wall Street are the financial equivalent of slumlords or toll collectors in pin-striped suits. If they retired to their beach houses en masse, the rest of the economy would be fine, or perhaps even healthier.

Since 1980, according to the Bureau of Labor Statistics, the number of people employed in finance, broadly defined, has shot up from roughly five million to more than seven and a half million. During the same period, the profitability of the financial sector has increased greatly relative to other industries. Think of all the profits produced by businesses operating in the U.S. as a cake. Twenty-five years ago, the slice taken by financial firms was about a seventh of the whole. Last year, it was more than a quarter. (In 2006, at the peak of the boom, it was about a third.) In other words, during a period in which American companies have created iPhones, Home Depot, and Lipitor, the best place to work has been in an industry that doesn’t design, build, or sell a single tangible thing.

From the end of the Second World War until 1980 or thereabouts, people working in finance earned about the same, on average and taking account of their qualifications, as people in other industries. By 2006, wages in the financial sector were about sixty per cent higher than wages elsewhere. And in the richest segment of the financial industry—on Wall Street, that is—compensation has gone up even more dramatically. Last year, while many people were facing pay freezes or worse, the average pay of employees at Goldman Sachs, Morgan Stanley, and JPMorgan Chase’s investment bank jumped twenty-seven per cent, to more than three hundred and forty thousand dollars. This figure includes modestly paid workers at reception desks and in mail rooms, and it thus understates what senior bankers earn. At Goldman, it has been reported, nearly a thousand employees received bonuses of at least a million dollars in 2009.

Not surprisingly, Wall Street has become the preferred destination for the bright young people who used to want to start up their own companies, work for NASA, or join the Peace Corps. At Harvard this spring, about a third of the seniors with secure jobs were heading to work in finance. Ben Friedman, a professor of economics at Harvard, recently wrote an article lamenting “the direction of such a large fraction of our most-skilled, best-educated, and most highly motivated young citizens to the financial sector.”

Most people on Wall Street, not surprisingly, believe that they earn their keep, but at least one influential financier vehemently disagrees: Paul Woolley, a seventy-one-year-old Englishman who has set up an institute at the London School of Economics called the Woolley Centre for the Study of Capital Market Dysfunctionality. “Why on earth should finance be the biggest and most highly paid industry when it’s just a utility, like sewage or gas?” Woolley said to me when I met with him in London. “It is like a cancer that is growing to infinite size, until it takes over the entire body.”

At GMO, Woolley ran several funds that invested in stocks and bonds from many countries. He also helped to set up one of the first “quant” funds, which rely on mathematical algorithms to find profitable investments. From his perch in Angel Court, in the heart of the City, he watched the rapid expansion all around him. Established international players, such as Citi, Goldman, and UBS, were getting bigger; new entrants, especially hedge funds and buyout (private equity) firms, were proliferating. Woolley’s firm did well, too, but a basic economic question niggled at him: Was the financial industry doing what it was supposed to be doing? Was it allocating capital to its most productive uses?

At first, like most economists, he believed that trading drove market prices to levels justified by economic fundamentals. If an energy company struck oil, or an entertainment firm created a new movie franchise, investors would pour money into its stock, but the price would remain tethered to reality. The dotcom bubble of the late nineteen-nineties changed his opinion. GMO is a “value investor” that seeks out stocks on the basis of earnings and cash flows. When the Nasdaq took off, Woolley and his colleagues couldn’t justify buying high-priced Internet stocks, and their funds lagged behind rivals that shifted more of their money into tech. Between June, 1998, and March, 2000, Woolley recalled, the clients of GMO—pension funds and charitable endowments, mostly—withdrew forty per cent of their money. During the ensuing five years, the bubble burst, value stocks fared a lot better than tech stocks, and the clients who had left missed more than a sixty-per-cent gain relative to the market as a whole. After going through that experience, Woolley had an epiphany: financial institutions that react to market incentives in a competitive setting often end up making a mess of things. “I realized we were acting rationally and optimally,” he said. “The clients were acting rationally and optimally. And the outcome was a complete Horlicks.” Financial markets, far from being efficient, as most economists and policymakers at the time believed, were grossly inefficient. “And once you recognize that markets are inefficient a lot of things change.”

One is the role of financial intermediaries, such as banks. Rather than seeking the most productive outlet for the money that depositors and investors entrust to them, they may follow trends and surf bubbles. These activities shift capital into projects that have little or no long-term value, such as speculative real-estate developments in the swamps of Florida. Rather than acting in their customers’ best interests, financial institutions may peddle opaque investment products, like collateralized debt obligations. Privy to superior information, banks can charge hefty fees and drive up their own profits at the expense of clients who are induced to take on risks they don’t fully understand—a form of rent seeking. “Mispricing gives incorrect signals for resource allocation, and, at worst, causes stock market booms and busts,” Woolley wrote in a recent paper. “Rent capture causes the misallocation of labor and capital, transfers substantial wealth to bankers and financiers, and, at worst, induces systemic failure. Both impose social costs on their own, but in combination they create a perfect storm of wealth destruction.”

Many banks believe that trading is too lucrative a business to stop, and they are trying to persuade government officials to enforce the Dodd-Frank bill in the loosest possible way. Morgan Stanley and other big firms are also starting to rebuild their securitization business, which pools together auto loans, credit-card receivables, and other forms of credit, and then issues bonds backed by them. There have even been some securitizations of prime-mortgage loans. I asked John Mack if he could see subprime-mortgage bonds making a comeback. “I think in time they will,” he replied. “I hope they do. I say that because it gives tremendous liquidity to the markets.”

“Liquidity” refers to how easy or difficult it is to buy and sell. A share of stock in a company on the Nasdaq is a very liquid asset: using a discount brokerage such as Fidelity, you can sell it in seconds for less than ten dollars. A chocolate factory is an illiquid asset: disposing of it is time-consuming and costly. The classic justification for market-making and other types of trading is that they endow the market with liquidity, and throughout the financial industry I heard the same argument over and over. “You can’t not have banks, and you can’t not have trading,” an executive at a big private-equity firm said to me. “Part of the value in a stock is the knowledge that you can sell it this afternoon. Banks provide liquidity.”

But liquidity, or at least the perception of it, has a downside. The liquidity of Internet stocks persuaded investors to buy them in the belief they would be able to sell out in time. The liquidity of subprime-mortgage securities was at the heart of the credit crisis. Home lenders, thinking they would always be able to sell the loans they made to Wall Street firms for bundling together into mortgage bonds, extended credit to just about anybody. But liquidity is quick to disappear when you need it most. Everybody tries to sell at the same time, and the market seizes up. The problem with modern finance “isn’t just about excessive rents and a misallocation of capital,” Paul Woolley said. “It is also crashes and bad macroeconomic outcomes. The recent crisis cost about ten per cent of G.D.P. It made tackling climate change look cheap.”

In the upper reaches of Wall Street, talk of another financial crisis is dismissed as alarmism. Last fall, John Mack, to his credit, was one of the first Wall Street C.E.O.s to say publicly that his industry needed stricter regulation. Now that Morgan Stanley and Goldman Sachs, the last two remaining big independent Wall Street firms, have converted to bank holding companies, a legal switch that placed them under the regulatory authority of the Federal Reserve, Mack insists that proper supervision is in place. Fed regulators “have more expertise, and they challenge us,” Mack told me. Since the middle of 2007, Morgan Stanley has raised about twenty billion dollars in new capital and cut in half its leverage ratio—the total value of its assets divided by its capital. In addition, it now holds much more of its assets in forms that can be readily converted to cash. Other firms, including Goldman Sachs, have taken similar measures. “It’s a much safer system now,” Mack insisted. “There’s no question.”

That’s true. But the history of Wall Street is a series of booms and busts. After each blowup, the firms that survive temporarily shy away from risky ventures and cut back on leverage. Over time, the markets recover their losses, memories fade, spirits revive, and the action starts up again, until, eventually, it goes too far. The mere fact that Wall Street poses less of an immediate threat to the rest of us doesn’t mean it has permanently mended its ways.

Perhaps the most shocking thing about recent events was not how rapidly the big Wall Street firms got into trouble but how quickly they returned to profitability and lavished big rewards on themselves. Last year, Goldman Sachs paid more than sixteen billion dollars in compensation, and Morgan Stanley paid out more than fourteen billion dollars. Neither came up with any spectacular new investments or produced anything of tangible value, which leads to the question: When it comes to pay, is there something unique about the financial industry?

Thomas Philippon, an economist at N.Y.U.’s Stern School of Business, thinks there is. After studying the large pay differential between financial-sector employees and people in other industries with similar levels of education and experience, he and a colleague, Ariell Reshef of the University of Virginia, concluded that some of it could be explained by growing demand for financial services from technology companies and baby boomers. But Philippon and Reshef determined that up to half of the pay premium was due to something much simpler: people in the financial sector are overpaid. “In most industries, when people are paid too much their firms go bankrupt, and they are no longer paid too much,” he told me. “The exception is when people are paid too much and their firms don’t go broke. That is the finance industry.”

Given the code of silence that Wall Street firms impose on their employees, it is difficult to get mid-level bankers to speak openly about what they do. There is, however, a blog, The Epicurean Dealmaker, written by an anonymous investment banker who has for several years been providing caustic commentary on his profession. The biography on his site notes, “I facilitate, justify, and advise parties to M&A transactions, when I am not advising against them.” In March, 2008, when some analysts were suggesting that the demise of Bear Stearns would lead to a change of attitudes on Wall Street, TED—the shorthand appellation the author uses—wrote, “I, for one, think these bankers will be even more motivated to rape and pillage the financial system in order to rebuild their ill-gotten gains.” Seven months later, on the eve of the bank bailout, TED opined, “Let hundreds of banks fail. Let tens of thousands of financial workers lose their jobs and their personal wealth. . . . The financial sector has had a really, really good run for a lot of years. It is time to pay the piper, and I, for one, have little interest in using my taxpayer dollars to cushion the blow. After all, I am just another heartless Wall Street bastard myself.”

The Epicurean Dealmaker is right: Wall Street bankers create some economic value. But do they create enough of it to justify the rewards they reap? In the first nine months of 2010, the big six banks cleared more than thirty-five billion dollars in profits. “The cataclysmic events took place in the fall of 2008 and the early months of 2009,” Roger Altman, the chairman of Evercore, said to me. “In this industry, that’s a long time ago.”

Despite all the criticism that President Obama has received lately from Wall Street, the Administration has largely left the great money-making machine intact. A couple of years ago, firms such as Citigroup, JPMorgan Chase, and Goldman Sachs faced the danger that the government would break them up, drive them out of some of their most lucrative business lines—such as dealing in derivatives—or force them to maintain so much capital that their profits would be greatly diminished. “None of these things materialized,” Altman noted. “Reforms and changes came in, but they did not have a transformative effect.””

Read more

From Boomberg

“Proprietary Trading Goes Under Cover
By Michael Lewis - Oct 27, 2010 1:48 PM PT

A few weeks ago we asked a simple question: Why are the same Wall Street banks that lobbied so hard to dilute the passages in the Dodd-Frank financial overhaul bill banning proprietary trading now jettisoning their proprietary trading groups, without so much as a whimper?

The law directs regulators to study the prop trading ban for another 15 months before deciding how to enforce it: why is Wall Street caving now?

The many answers offered by Wall Street insiders in response boil down to a simple sentence: The banks have no intention of ceasing their prop trading. They are merely disguising the activity, by giving it some other name.

A former employee of JPMorgan, for instance, wrote to say that the unit he recently worked for, called the Chief Investment Office, advertised itself largely as a hedging operation but was in fact making massive bets with JPMorgan’s capital. And it would of course continue to do so. JPMorgan didn’t respond to a request for comment.”

This From Gulf Times

“The crooked path of financial reform
By Jean Pisani-Ferry/Brussels
Latest Update: Sunday28/11/2010November, 2010, 12:08 AM Doha Time

Two years ago, governments saved the necks of the world’s financial markets. Yet today, those same markets intimidate governments, or at least some of them.

In Europe, the market for Greek debt has frozen, and interest-rate spreads between Irish and German euro-denominated debt recently reached alarming levels. Spain has succeeded in reducing its own spread vis-à-vis Germany but only after a policy U-turn.

Portugal has announced a major austerity package, hoping for the same effect. But, even when they are not in danger of losing access to the bond market, most governments in the developed world nowadays anxiously await the pronouncements of the same rating agencies that they were recently vilifying.

This change of fortune is shocking. To public opinion, it looks as if arrogant financial-market professionals learned nothing from the crisis, feeding the impression that nothing has changed – except for the worse.

Governments with a mandate to domesticate financial markets appear to have produced a lot of sound and fury, but little reform.

Whether deliberately or not, regulators seem to have missed their chance to implement serious changes to the rules of global finance, and governments are now so weakened that they are at the mercy of those who, not long ago, were begging them for help.

This politically devastating sentiment fuels resentment against markets and financiers. Nevertheless, while no one is proclaiming, “mission accomplished”, it is not true that nothing has been done to reform finance.”

Running On Dialysis

Saturday, November 27th, 2010

Since I was a teenager there has been a problem with civilization being about ready to collapse. It was a big deal in the 1970’s and again in the 00’s. So that is about a 30-40 year cycle. We are now in the midst of a different world collapsing event the recession that temporarily masks the environmental, military and energy crisis.

Personally I have reached a new turning point in my dialysis. Today I finished my last Hemodialysis treatment and Monday I begin my training in Peritoneal dialysis. No more being hooked up to the machine. I will be semi-free having the ability to do dialysis at home. Ultimately I will be able to travel.

On a not so good note, my girlfriend seems to want to break up with me, but as usual she won’t say anything, refuses to talk and doesn’t want to see me. What does it mean? Who knows. I sure don’t. One time we were broken up for 9 months.

Today I didn’t find any of the news interesting enough to want to write about it. So today I am just writing about me. On the positive I finally got an LED digital TV, joining the 21st century. Its a Vizio, with internet access and I was able to hook up my cable, my roommates satellite TV and my old VCR. Whoopee, now I can be a total TV addict. At least I got a small one, 22″er. I know, another brick in the wall.

Permanent Emergency Leading To Dictatorship?

Friday, November 26th, 2010

Permanent state of emergency. That rings of a historical truth. During the late Roman Republic it was torn with sectarian violence that led to civil war, first between the forces of Marius and Sulla, and later between the forces of Caesar and Pompey. After the assassination of Caesar there was initiated a dictatorship of the Triumverate which ended up with the Imperium of Augustus. External forms of republican rule were kept but the real power was in the hands of the Imperator and the Senate became a mere rubber stamp and source of bureaucratic support for the imperial empire.

This was not the sort of crisis management the Romans were used to. When faced with an external threat or rebellion, a dictator would be selected for a short period, normally no more than six months and only within Italy. Sulla had the Senate create a new form of dictatorship for constitutional reform and held the post for a year. Later Caesar had himself selected as dictator for 10 consecutive years and then just before he was assassinated was nominated dictator in perpetuity.

This is from the Wikipedia Article on triumvirates.

“The Second Triumvirate was recognized as a triumvirate at the time. A Lex Titia formalized the rule of Octavian, Mark Antony, and Marcus Aemilius Lepidus. The legal language makes reference to the traditional triumviri. This “three-man commission for restoring the constitution of the republic” (triumviri rei publicae constituendae) in fact were given the power to make or annul law without approval from either the senate or the people; their judicial decisions were not subject to appeal, and they named magistrates at will. Although the constitutional machinery of the Republic was not irrevocably dismantled by the Lex Titia, in the event it never recovered. Lepidus was sidelined early in the triumvirate, and Antony was eliminated in civil war, leaving Octavian the sole leader.”

This is from Wikipedia article on Dictators.

“After Caesar’s murder on the Ides of March, his consular colleague Mark Antony introduced the lex Antonia which abolished the dictatorship. The office was later offered to Augustus, who declined it, and opted instead for tribunician power and consular imperium without holding any magisterial office other than imperator and princeps Senatus — a politic arrangement which left him as functional dictator without having to hold the controversial title. This novel - though not unconstitutional - arrangement of offices and powers would in time evolve into the office of Roman emperor. Thus, dictatorship, as defined by the republican institution, was not a feature of the principate or dominate.”

Could we be seeing the same happening now in our Republic? Are we becoming a sham democracy with an oligarchy ruling? Have we ever been anything else?

This is from Global Research.

“Continuity of Government: Is the State of Emergency Superseding our Constitution?

by Prof. Peter Dale Scott

Global Research, November 24, 2010

Is the State of Emergency Superseding our Constitution? Address to Commonwealth Club, San Francisco, November 23, 2010)

In July 1987, during the Iran-Contra Hearings grilling of Oliver North, the American public got a glimpse of “highly sensitive” emergency planning North had been involved in. Ostensibly North had been handling plans for an emergency response to a nuclear attack (a legitimate concern). But press accounts alleged that the planning was for a more generalized suspension of the constitution at the president’s determination.

As part of its routine Iran-contra coverage, the following exchange was printed in the New York Times, but without journalistic comment or follow-up:

[Congressman Jack] Brooks: Colonel North, in your work at the N.S.C. were you not assigned, at one time, to work on plans for the continuity of government in the event of a major disaster?

Both North’s attorney and Sen. Daniel Inouye, the Democratic Chair of the Committee, responded in a way that showed they were aware of the issue:

Brendan Sullivan [North’s counsel, agitatedly]: Mr. Chairman?

[Senator Daniel] Inouye: I believe that question touches upon a highly sensitive and classified area so may I request that you not touch upon that?

Brooks: I was particularly concerned, Mr. Chairman, because I read in Miami papers, and several others, that there had been a plan developed, by that same agency, a contingency plan in the event of emergency, that would suspend the American constitution. And I was deeply concerned about it and wondered if that was an area in which he had worked. I believe that it was and I wanted to get his confirmation.

Inouye: May I most respectfully request that that matter not be touched upon at this stage. If we wish to get into this, I’m certain arrangements can be made for an executive session.

Brooks was responding to a story by Alfonzo Chardy in the Miami Herald. about Oliver North’s involvement with the Federal Emergency Management Agency (FEMA) in planning for “Continuity of Government” (COG). According to Chardy, the plans envisaged “suspension of the Constitution, turning control of the government over to the Federal Emergency Management Agency, emergency appointment of military commanders to run state and local governments and declaration of martial law during a national crisis.”

Reagan had installed at FEMA a counterinsurgency team that he had already assembled as governor of California. The team was headed by Army Col. Louis Giuffrida, who had attracted Reagan’s attention by a paper he had written while at the US Army War College, advocating the forcible warrantless detention of millions of black Americans in concentration camps.“ Reagan first installed Giuffrida as head of the California National Guard, and called on him “to design Operation Cable Splicer. … martial law plans to legitimize the arrest and detention of anti-Vietnam war activists and other political dissidents.”[3] These plans were refined with the assistance of British counterinsurgency expert Sir Robert Thompson, who had used massive detention and deportations to deal with the 1950s Communist insurgency in what is now Malaysia.

At the time few people (including myself) attached much importance to the Chardy story about COG. Chardy himself suggested that Reagan’s Attorney General, William French Smith, had intervened to stop the COG plan from being presented to the President, and in 1985 Giuffrida was forced out of office for having spent government money to build a private residence. But COG planning not only continued, it expanded.

The Implementation of COG on 9/11

Clearly 9/11 met the conditions for the implementation of COG measures, and we know for certain that COG plans were implemented on that day in 2001, before the last plane had crashed in Pennsylvania. The 9/11 Report confirms this twice, on pages 38 and 326. It was under the auspices of COG that Bush stayed out of Washington on that day, and other government leaders like Paul Wolfowitz were swiftly evacuated to Site R, inside a hollowed out mountain near Camp David.

But the implementation of COG went beyond short-term responses, to the installation of what Professor Shirley Anne Warshaw calls a ninety-day alternative “shadow government” outside Washington.

Cheney jumped into action in his bunker beneath the east Wing to ensure continuity in government. He immediately began to create his shadow government by ordering one hundred mid-level executive officials to move to specially designated underground bunkers and stay there twenty-four hours a day. They would not be rotated out, he informed them, for ninety days, since there was evidence, he hinted, that the terrorist organization al-Qa’ida, which had masterminded the attack, had nuclear weapons. The shadow government, as a result, needed to be ready to take over the government from the bunkers.

These ninety days saw the swift implementation of the key features attributed to COG planning by Gelbspan and Chardy in the 1980s: warrantless detentions, warrantless deportations, and the warrantless eavesdropping that is their logical counterpart. The clearest example was the administration’s Project Endgame — a ten-year plan, initiated in September 2001, to expand detention camps, at a cost of $400 million in Fiscal Year 2007 alone. This implemented the central feature of the massive detention exercise, Rex 84, conducted by Louis Giuffrida and Oliver North in 1984.

On September 20, 2001, Bush launched the war on terror in a televised address to a joint session of congress, when he said, “Our ‘war on terror’ begins with al Qaeda, but it does not end there. It will not end until every terrorist group of global reach has been found, stopped and defeated.” Today we now have about 100,000 US troops in Afghanistan, to deal with an officially estimated 60 members of Al Qaeda. The predictable result has been an expansion of terrorist activities in Somalia, Yemen, and above all Pakistan.

The war on terror was administratively implemented in three National Security Presidential Directives, NSPDs 7, 8, and 9. All three are classified, and the topics of two of them are unknown. The third, NSPD 9 of October 25, 2001, directed the Secretary of Defense to plan military options against both Taliban and al Qaeda targets in Afghanistan.

The October date is misleading. A version of the directive calling for covert action in Afghanistan had been approved by principals on September 4, 2001, one week before 9/11. An enhanced plan for military action in Afghanistan, had been approved by Bush on September 17; and the same document “directed the Pentagon to begin planning military options for an invasion of Iraq.”

Perhaps the most significant domestic product from Cheney’s trimester mirabilis was the Patriot Act of October 25, 2001. Congress was given only one week to pass this 340-page bill, which in the opinion of researchers “was already written and ready to go long before September 11th.” In 2007 the Justice Department acknowledged that FBI agents had abused the Patriot Act more than 1000 times.

We should not forget that the Patriot Act was only passed after lethal weapons-grade anthrax letters were mailed to two crucial Democratic Senators – Senators Daschle and Leahy – who had initially questioned the bill. After the anthrax letters, however, they withdrew their initial opposition. Someone — we still do not know who – must have planned those anthrax letters well in advance. This is a fact most Americans do not want to think about.”

For more of this article see link below.

Thanks-Giving On Dialysis

Thursday, November 25th, 2010

This is the essence of the Gita’s message.

“They live in freedom who have gone beyond the dualities of life. Competing with no one, they are alike in success and failure and content with whatever comes to them. They are free, without selfish attachments; their minds are fixed in knowledge. They perform all work in the spirit of service, and their karma is dissolved.”

- Bhagavad Gita 4:22-23

I have to get Dialized today and then I will probably go over to the Hare Krishna temple for a tofu-turkey. I will have to avoid some of my favorites, sweet potatoes, yams and mashed potatoes. But I can have the string beans, and salad minus the tomatoes. Too much potassium in those items.

I like going to the temple, it seems that I only get over there on Thanksgiving. The rest of the year it is too far from Long Beach to make the hike up there to Culver City. I considered moving back there but the rentals were way too expensive in that part of Los Angeles. I have a good deal where I am, relativly speaking.

Yesterday I had dinner with my dad, we played cards and talked a little. We don’t have much to say, just enjoy one another’s company. He only gave me one of his famous lectures, this was about mixing pills. I tend to put all my pills in one bottle when I go out for dinner, he says I shouldn’t and then told me some story about a guy who died after taking too many diet pills. That guy used to mix his pills also and took them all at the same time. My dad believes in following instructions regarding pills to the letter. I didn’t laugh, or argue, I just said my pills were all to be taken with meals. I consider medicine to be a somewhat inexact science, although I have noticed that my binders work best if taken imediatly after a meal or in the middle of a meal.

What is a binder? From what I understand it is something that helps my body keep vitamin D and prevent parathyroid disease. At least that seems to be what it is about. There is very little on the internet explaining this and the doctors don’t tell you anything.

I went to dialysis, got our early and went to the Hare Krishna temple for the feast and realized that most of the stuff they had was made with things I could not eat. Potatoes, yams, tomatoes, whole wheat bread, beans with nuts mixed in. The only thing I could eat was some of the salad, minus the tomatoes, the string beans once I had removed the almond slivers, gravy, stuffing, tofu slices and one of the salad dressings, the other one was made with sesame and cashews, another no no for me. As it is I ate a tiny bit of potatoe and yam, I couldn’t resist and now I am feeling it. I think there might have been nuts in the stuffing but I could not tell because it was all mashed up. It was a wasted $15. Too bad, going to the temple for Thanksgiving has always been a highlight of my holiday, since my girlfriend would never let me go to her family events. Reverse racism, black people don’t like white folks showing up, or something like that since she would never tell me exactly why.

Wi Fi Makes Trees Sick, Childrens Meds Recalled, Forest Rescue

Wednesday, November 24th, 2010

Some eco-news for you all. I am a bit concerned about this Wi Fi problem. I have wondered for a while about radiation polution from all the technology. We could be zapping ourseleves to extinction. Another product recall and questions about the forest carbon rights trade have me wondering if we are solving the problems or if the rich and their henchment are just playing games with our lives and our planet.

Wi-Fi Makes Trees Sick, Study Says
City trees are becoming sick from wireless radiation from local area networks and mobile phones, according to a European study.
By René Schoemaker , IDG News Nov 19, 2010 1:09 pm

Radiation from Wi-Fi networks is harmful to trees, causing significant variations in growth, as well as bleeding and fissures in the bark, according to a recent study in the Netherlands.

All deciduous trees in the Western world are affected, according to the study by Wageningen University. The city of Alphen aan den Rijn ordered the study five years ago after officials found unexplained abnormalities on trees that couldn’t be ascribed to a virus or bacterial infection.

Additional testing found the disease to occur throughout the Western world. In the Netherlands, about 70 percent of all trees in urban areas show the same symptoms, compared with only 10 percent five years ago. Trees in densely forested areas are hardly affected.

Besides the electromagnetic fields created by mobile-phone networks and wireless LANs, ultrafine particles emitted by cars and trucks may also be to blame. These particles are so small they are able to enter the organisms.

The study exposed 20 ash trees to various radiation sources for a period of three months. Trees placed closest to the Wi-Fi radio demonstrated a “lead-like shine” on their leaves that was caused by the dying of the upper and lower epidermis of the leaves. This would eventually result in the death of parts of the leaves. The study also found that Wi-Fi radiation could inhibit the growth of corn cobs.

The researchers urged that further studies were needed to confirm the current results and determine long-term effects of wireless radiation on trees.

Benadryl and Motrin for Kids Recalled
Nearly 5 Million Packages Are Recalled Because of Manufacturing Issues
By Bill Hendrick
WebMD Health NewsReviewed by Laura J. Martin, MD Nov. 23, 2010 — Johnson & Johnson says it has ordered a voluntary recall of about 4.8 million packages of children’s medicines due to “insufficiencies” in the manufacturing process.

Company spokeswoman Bonnie Jacobs tells WebMD the company is recalling 4 million packages of Children’s Benadryl allergy tablets and 800,000 bottles of junior-strength Motrin caplets.

She says the medicines are not dangerous and that the recalls are being done at the wholesale and retail levels, including drugstores.

Consumers may keep taking the medications, she says.

Johnson & Johnson’s McNeil Consumer Healthcare unit says in a news release that the recall was ordered in consultation with the FDA for Children’s Benadryl Allergy Fastmelt Tablets in cherry and grape flavors.

The tablets were distributed in the U.S., Canada, Puerto Rico, St. Thomas, St. Martin, Barbados, and Belize, the company says.

The McNeil unit says the recall includes all product lots of Junior Strength Motrin Caplets, 24 count, distributed in the U.S. It says there is no sign the caplets don’t meet quality standards and that the recall, like the one for Benadryl, is not being initiated due to any reports of adverse events.

Products being recalled are Children’s Benadryl Allergy Fastmelt Tablets, cherry flavor, with a code number of 50580-347-18; Children’s Benadryl Allergy Fastmelt Tablets, grape flavor, code number 50580-348-18; and Junior Strength Motrin Caplets, 24 count, code number 50580-498-24.

The company says consumers with questions should call 888-222-6036 Monday through Friday between 8 a.m. and 8 p.m. and Saturday and Sunday between 9 a.m. and 5 p.m. Eastern time.

Forests Rescue Plan Riddled with Uncertainties
By Stephen Leahy

UXBRIDGE, Canada, Nov 23, 2010 (IPS) - Deforestation rates have slowed in Brazil and elsewhere in expectation of a windfall of green gold from billions of dollars of carbon credits being mobilised for climate protection, some experts believe.

Next week, at the United Nations climate conference in Cancun, Mexico, the final details of a new international market for buying and selling carbon rights to forests will be under intense negotiation by 200 countries.

This new financial tool called REDD (Reduced Emissions from Deforestation and Degradation) is widely touted as the only way to mobilise $10 to $30 billion annually to halt deforestation, which contributes 15 to 20 percent of global greenhouse gas emissions. Deforestation is also the primary driver of species extinctions and ecosystem destruction.

Under REDD, industrialised countries can offset their own emissions by paying to maintain forests in tropical regions. Forest owners offer carbon credits on an open market and a steel, cement or coal-fired power company in the developed world purchases those credits in lieu of reducing their own carbon emissions. It would also require a mandatory emissions reduction by developed countries.

Forests absorb carbon dioxide (CO2) during photosynthesis, reducing the amount in the atmosphere and helping cool the Earth. When a forest is cut, not only is this carbon absorption or sequestration function lost, but most of the carbon the forest had been storing is released - even if the timber is used for long-lasting products like furniture.

In theory, REDD saves the forest, protects biodiversity, reduces climate-warming carbon emissions and compensates local people. Win, win, win, win. In theory.

Natural forests are still not protected under REDD, or even the enhanced REDD+, which emphasises protecting biodiversity, says Peg Putt of the Wilderness Society, a U.S.-based conservation group.

“Safeguards to ensure intact forest systems are fully protected are not yet part of the understanding around REDD,” Putt told IPS earlier this month at the 10th Conference of the Parties to the Convention on Biological Diversity (CBD) in Nagoya, Japan.

“Many countries including the European Union and Canada define their industrial logging as sustainable forest management,” she said.

Intense debate persists about how to define a forest. Currently, if a region has 10 percent or more tree cover - 10 hectares of trees in a 100 hectare block - the entire block is considered a forest, says Toshinori Okuda of Japan’s Hiroshima University.

Many countries want plantation forests to be eligible for credits but don’t want to be penalised if they cut down existing forests to grow plantations. Few other species can live in plantation forests so they are essentially green deserts in terms of biodiversity.

On the ground, simply figuring out how much carbon is in a particular forest, the amount being sequestered as the forest grows, and for how long is not easy or cheap. There will be reporting requirements, land use negotiations and the costs of ongoing monitoring and forest management, notes Okuda.

“The revenue from carbon credits won’t be enough to pay for this to be done properly,” Okuda told IPS.

“The only way to cover the costs is for additional payments for ecosystem services that natural forests provide,” he said.

Forests provide a number of services, including producing oxygen, cleaning and filtering water, preventing flooding, providing habitat and food for many species and more. But how to value those services has yet to be determined, he says.

Irish Mess, Korean Bombing, FBI Raid Hedge Funds

Tuesday, November 23rd, 2010

I don’t have much to say about the Euromess other than to say the Irish people should rebel just as the Greeks have. The Stock Market is down due to fears of the Greek/Irish contagion spreading to Portugal and eventually to Spain. The German bankers are getting their pound of flesh and it is the turn of the Irish to pay. Will the Irish workers rebel or will they simply take it like Americans?

Korea, this is too much of a chess game for me to take seriously except that the USA claims it is following the South Korean lead, that sounds like a big mistake. What are we doing there anyway?

FBI finally has taken a step to go after some players in the financial disaster, about time!!! Hang the suckers. I grew up in southern Connecticut, the lair of most of these players and I remember the high and mighty financiers with their big houses looking down on us peons. Time for a little peasant revolt. Perhaps we can borrow a guillotine from the French.

This is from Comcast News

Portugal, Spain become market target after Ireland
November 23, 2010

LISBON, Portugal — Europe’s efforts to contain its debt crisis came under increasing strain Tuesday as bond market jitters shook Portugal and Spain, seen as the 16-nation eurozone’s next weakest links now that Ireland has followed Greece by accepting a massive international rescue.

The nations’ borrowing costs rose, suggesting investors are more worried about default, while Spain limited the size of a bond sale because traders demanded sharply higher premiums.

Stock traders panicked and dumped shares across all sectors, sending Portugal’s benchmark stock index down 2.2 percent by the close, while Spain’s sank 3.1 percent to a level not seen since July. The euro slid below $1.34 for the first time in two months.

Spooked by the scale of Greece’s bailout requirements in May and Ireland’s banking failures, international investors are looking much closer at the public finances of eurozone countries and they don’t like what they’re seeing, particularly in Portugal.

Traders are “looking for their next target” and Portugal fits the bill, said Emilie Gay, an analyst at Capital Economics in London. She predicts Portugal will have to ask for help by early next year, when it has to begin refinancing billions of euros (dollars) in government bonds. A bailout for Portugal would cost at least euro50 billion, according to Capital Economics.

European Union President Herman Van Rompuy insisted Portugal’s finances are sound because the country’s banks are well capitalized, they haven’t had to cope with a severe housing market bubble, and the government has a strong program to bring the deficit down.

Asked during a visit to Stockholm whether the Irish bailout package was big enough and whether it can prevent the crisis spreading, Van Rompuy said “there is no need for help in Portugal and of course the safety net is big enough to support Ireland.”

Portugal accounts for less than 2 percent of the eurozone’s total economy but a potential bailout would crank up pressure on Spain, the European Union’s fourth-largest economy, and entail possibly dramatic repercussions for the entire bloc.

For more of this

From Socialist Worker Online

posted: 6.26pm Tue 23 Nov 2010

A crisis that is far from over

The bailout of Ireland’s banks shows that the global economic crisis has not gone away. Alex Callinicos looks at why governments’ austerity plans are failing to fix the system

The global economic and financial crisis is now well into its fourth year. The desperate plight of the Irish economy, and the strains in the eurozone that it has exposed, show that the crisis has still got a long way left to run.

The latest twist in this tale represents the coming together of three factors —the imbalances in the world economy, the continuing banking crisis, and the effects of austerity.

The most important global economic imbalance is between creditor and debtor states.

China and Germany are the two biggest exporters of manufactured goods. They consequently tend to run large balance of payments surpluses.

Symmetrically, they are faced by states such as the US, Britain, and the weaker economies in the eurozone.

These import more goods and services than they export and borrow from the creditor states to cover the difference.

The flow of capital and goods from China to the US has underpinned the world economy for the past decade.

But this relationship has become increasingly conflict-ridden as the US has sought to devalue the dollar in order to make its exports cheaper.

At the recent G20 summit in Seoul, China successfully resisted American pressure to allow its currency to rise against the dollar.

In Europe, the conflict between creditor and debtor states takes place largely with the framework of the eurozone.

It is also much more unequal, since it pits Germany, economic powerhouse of the European Union, against much smaller and weaker states—above all, Greece, Portugal, southern Ireland, and Spain.

Indeed the whole project of European economic and monetary union (EMU) that led to the launch of the euro in 1999 had two main aims, as far as its mainly French architects were concerned.

The first was to help make the EU a counterweight to the US, the second to control German economic power and to harness it to common European objectives.

But EMU has completely failed to achieve these goals because of its inherent flaws. There were always deep economic divergences between the participants in the euro, and these have grown dramatically over the past decade.

German firms have succeeded in reorganising and raising their competitiveness at the expense of their workers.

Real wages stagnated during the 2000s, helping Germany to maintain its 9-10 percent share of world exports despite China’s explosive growth.

Elsewhere in the eurozone, real wages rose. This meant that Germany’s European partners were becoming less competitive, but they could no longer devalue their currencies to make their exports cheaper. Within a state, regional divergences of this kind can be contained. Government taxation and spending tends to shift resources from rich to poor areas.

For more of this

From CBS Moneywatch
Tuesday Market Note: Stocks Sell Off On Korean Bombing
By Jill Schlesinger | Nov 23, 2010 |

The North Korean bombing of South Korea added to an already-tense overseas session. Investors in Asia and Europe were already anxious about the spillover from Ireland’s bail out, causing investors to sell stocks. US stock futures are indicating a one percent sell-off in stocks on the news.

Yesterday, US stocks closed mixed as investors braced for details of a potential insider trader scandal and worried about further fallout from Ireland’s bailout. After being down nearly 150 points in the session, the Dow closed down 25 points to 11,178. The S&P 500 lost just under two points to 1197, led lower by bank stocks; and the NASDAQ bucked the trend, closing up 13 points to 2532 — the index is up 11.6 percent this year.

After Ireland agreed to an €80-90 billion ($110-123 billion) loan package, Prime Minister Brian Cowen said he would call for the dissolution of parliament in the New Year after a budget vote on December 7th. Political uncertainty and worries over other weak economies like Portugal and Spain put investors on the defensive.

Financial stocks fell after The Wall Street Journal reported that FBI agents raided the offices of three hedge funds, Diamondback Capital Management, Level Global Investors and Loch Capital Management, amid a far-reaching insider-trading investigation.

From DBKP Report

North Korea Bombed South Korea Hours After Report N. Korea Has Secret Uranium Enrichment Facility
November 23, 2010
N. Korean attempt to muck up another American holiday?

Was the recent North Korea attack on South Korea another Kim Jong Il attempt to play mind games with Americans during an important American holiday? This time it’s Thanksgiving, the last time, last year shortly before the Fourth of July. North Koreans launched short range missiles off their east coast raising fears of a North Korean long range missile attack on Hawaii. Was the recent attack a combination of mind games related to the rumors Kim Jong Il is about to name as his successor his son ‘Comrade Youth Captain’ Kim Jong Un? Or, a far more deadly scenario, the news which stunned ‘experts’ and the world, North Korea has a covert uranium enrichment facility? News which was reported ‘hours’ before North Korea lobbed ’100 shells’ at S. Korea’s Yeonpyeong Island.


Raids are a warning to area’s hedge industry, a warning sign to investors
Richard Lee, Staff Writer
Published: 09:24 p.m., Tuesday, November 23, 2010

Hedge fund investors are actually limited partners in a vehicle that’s supposed to make money, but after Monday’s FBI raids on funds headquartered in Stamford and Greenwich, those investors may not be happy how their general partners are operating.

In a hit to the area’s home-grown industry, the government investigations of alleged insider trading may send the limited partners heading for the doors.

“Investors have options to redeem and get out and go to another fund. It’s definitely the kind of publicity that makes it difficult to retain investors,” said attorney Victor Zimmermann Jr., managing partner in the Stamford office of Curtis, Mallet-Prevost, Colt & Mosle LLP.

The managers of both Diamondback Capital Management and Level Global Investors are former managers of Stamford-based SAC Capital Advisers, a hedge fund operated by Steven Cohen and are being investigated for allegations of insider trading.

Diamondback, founded by Richard Schimel and Lawrence Sapanski in 2005, is located at One Landmark Square in Stamford, and Level Global, operated by David Ganek, is at 537 Steamboat Road in Greenwich. Both firms appeared to be closed on Monday, and their management was unavailable for comment.

The next step could be the U.S. Justice Department issuing subpoenas to obtain testimony from employees of the two firms, said Zimmermann, partner in the law firm’s Investment Management group.

“They could be witnesses or targets of the investigation,” he said. “They’re using competitive agreements against higher-level targets. They’re casting a broad net.”

But it may be some time before any charges are filed, Zimmermann said, adding that the FBI typically conducts raids to prevent employees from destroying evidence.

Hedge funds across the country will be tightening their compliance policies to prevent insider trading and emphasize a culture of compliance, Zimmermann said, commenting that David Fein, the new U.S. Attorney for Connecticut, is focusing much of his time on financial services and hedge fund regulation.

Insider trading, which often involves firms receiving leaked proprietary information from sources at investment banks, is expected to be one of Fein’s targets.

CIA Secret Human Experiments To Be Disclosed

Monday, November 22nd, 2010

This is cool. CIA is ordered by Federal Cour to produce records on human experiments.

From Courthouse News

CIA Must Disclose Data on Human Experiments
(CN) - A federal magistrate judge in San Francisco ordered the CIA to produce specific records and testimony about the human experiments the government allegedly conducted on thousands of soldiers from 1950 through 1975.
Three veterans groups and six individual veterans sued the CIA and other government agencies, claiming they used about 7,800 soldiers as human guinea pigs to research biological, chemical and psychological weapons.
The experiments, many of which took place at Edgewood Arsenal and Fort Detrick in Maryland, allegedly exposed test subjects to chemicals, drugs and electronic implants. Though the soldiers volunteered, they never gave informed consent, because the government didn’t fully disclose the risks, the veterans claimed. They were also required to sign an oath of secrecy, according to the complaint.
The veterans filed three sets of document requests to find out who was tested, what substances they were given, and how it affected them. Between October and April, the government produced about 15,000 pages of heavily redacted records, most of which related to the named plaintiffs only.
The CIA argued that much of the information requested was protected under the Privacy Act and the Health Insurance Portability and Accountability Act.
U.S. Magistrate Judge James Larson acknowledged that some of the requests were too broad and ordered the veterans to be more specific and to reduce the total number of requests.
For example, Larson said the plaintiffs’ definition of “test program” is “overbroad,” as it not only named experimental programs like “Bluebird,” “Artichoke” and “MKUltra,” but also included “any other program of experimentation involving human testing of any substance, including but not limited to ‘MATERIAL TESTING PROGRAM EA 1729.’”
He ordered the veterans to provide a list of specific test programs and test substances.
But once the plaintiffs narrow their requests, Larson said, they are entitled to most of the information. Each government agency must respond individually to each request, he said, and if an agency denies any request, it must explain — in sufficient detail — why the records are purportedly privileged.
The CIA has already claimed that some documents are protected under the state-secrets privilege, but Larson said the agency needs to be more specific. He asked for a “supplemental declaration explaining with heightened specificity” why the documents are considered state secrets. Because these documents might contain sensitive information, the judge allowed the CIA to file the declaration under seal.
Larson rejected the government’s bid to limit the scope of discovery, saying doing so “removes the remaining hurdle” for the CIA to respond to the veterans’ sets of requests.
“Defendants should respond in earnest to Plaintiffs’ discovery requests, regardless of any ongoing or prior searches, investigations, or litigation,” Larson wrote. He said the government can’t limit disclosure to information about the six individual plaintiffs.
The CIA insisted discovery was unwarranted in its case, because it never funded or conducted drug research on military personnel.
Larson wasn’t convinced.
“[T]his court rejects the conclusion that the CIA necessarily lacks a nexus to Plaintiffs’ claims, and orders the CIA to respond in earnest” to the veterans’ requests, “particularly because defendants have presented evidence that would appear to cast doubt on that conclusion,” he wrote.
The government also tried to avoid deposition, claiming too much time had passed since the alleged experiments, and any witnesses familiar with the projects likely no longer work for the government. The CIA further argued, unsuccessfully, that the court should stay discovery until the Department of Defense completes its investigation of the experiments.
Larson reminded the CIA that it “cannot use the DoD investigation as an excuse to avoid discovery responsibilities.”
He then addressed which topics are fair game for deposition, saying the government must produce witnesses to testify about the following: communication between the VA and test subjects on their health care claims; a 1963 CIA Inspector General report on an experiment called MKUltra, and the basis for each redaction on that report; the scope and conduct of document searches; the doses and effects of substances administered to test subjects; any contract or research proposals concerning the experiments; a confidential Army memo about the use of volunteers in research; all government-led human experiments from 1975 to date, but only those that involve specific drugs; and whether the government secretly administered MKUltra materials to “the patrons of prostitutes” in safe houses in New York and San Francisco, as the veterans claimed.
Judge Larson ruled for the CIA on other issues, however, saying the agency’s not required to testify about test subjects who withdrew their consent or refused to participate; devices allegedly implanted into certain test subjects; the alleged use of patients at VA hospitals as guinea pigs in chemical and biological weapons experiments; or the drug research studies conducted by Dr. Paul Hoch, who was purportedly funded by the government and caused the death of a patient named Harold Blauer.
Though Larson declined to sanction the government, as the veterans sought, he warned that he would impose sanctions for any “future unjustifiable discovery recalcitrance.”
Named plaintiffs are the Vietnam Veterans of America, Swords to Plowshare, the Veterans Rights Organization, Bruce Price, Franklin D. Rochelle, Larry Meirow, Eric P. Muth, David C. Dufrane and Wray C. Forrest.

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