If anyone, and I mean anyone, is surprised at the state of the debt at Dubai World, it proves that some people just do not pay attention. The whipping boy for the recent world financial crisis has been the United States, and specifically our property fueled drunkenness. All the smart bankers around the world that invested in sub-prime debt instruments were mere dupes of the intellectually superior bubbas buying homes in Atlanta’s suburbs. And, of course, the dead-eyed subdivisions surrounding American cities were the only place where speculation happened.

Now the truth of the matter begins to seep through. The bubble in Dubai is merely the first major one to drop its trousers in public. What will everyone think when Shanghai or Beijing pops? What about Jakarta, Moscow, or Vancouver?

The reality is there are more shoes to drop. But I say, so what? Bubbles pop, people get hurt, but we survive and move on. The real danger is that the various political, theological, and monarchical classes will use these events as excuses to vest more power in the state and prolong whatever misery is created by the events. At no meaningful time in a century have the marktets been allowed to act without government intervention, often to the great harm of the people. See the U.S. in the thirties and Japan in the nineties for stark examples and bleak results. As scary as the Dubai World risk feels today, at least it is out of hiding and we can deal with it.

At no time since 1932 has a market bubble popped without some savior from the U.S. government intervening. In other words, it has been at least four generations since a market was allowed to heal itself, without a bailout. So how do we know that the markets would not function normally and recover? How could we ever know if fewer people would be harmed? The truth is, we do not. Our only experience is with government intervention before the fact (Fannie Mae and Freddie Mac) and after the fact in the form of the stimulus and the resolution trust, for example. Think about that before you feel the urge to call the government for help; you know, the same government that created the Freddie/Fannie bubble, monster deficits, and perpetually false risk premiums. Lately it feels like we are living inside the movie: “Dr. Strangelove, or How I Learned to Stop Worrying and Love the Bubble.”

Lazy Jack

© Edward Hunter and Thanks for the Laughs, 2009

Teléfono rojo,¿volamos hacia Moscú? de Stanley Kubrick [con música We'll Meet Again, de Vera Lynn]

Dubai o la historia de un castillo en el aire
Dubai es el máximo exponente de las burbujas inmobiliarias que se han sucedido por todo el mundo. La excentricidad de sus gestores ha convertido una ciudad en medio del desierto en un campo plagado de hoteles y rascacielos. Pero era la época dorada y cualquier cosa era poca para este emirato.

Pero la crisis ha golpeado con fuerza a Dubai. Las obras se han parado y el flujo de crédito se ha detenido. Hasta que el pasado 26 de noviembre se ha anunciado una moratoria en el pago de una deuda de 4.000 millones de dólares del holding estatal que ha construido las famosas Islas de las Palmeras. Esto no ha sentado muy bien en los mercados internacionales.

El problema es que el emirato debe 80.000 millones de dólares, y empieza a haber dudas sobre su solvencia. Ha sido pedir la moratoria del pago de dicha deuda y caer todos los mercados. Lo peor de la crisis financiera podría estar por llegar. Pero en lugar de suspender pagos los bancos podría ser peor. Ahora, podrían empezar a suspender pagos los Estados.

La emergencia de la burbuja especulativa
La política de la Reserva Federal de mantener los tipos de interés cercanos a cero está alimentando una ola de capital especulativo que puede causar la próxima crisis. Muchos advierten que se está incubando una nueva burbuja, y varios especialistas ven en este relajamiento cuantitativo la misma respuesta que Japón tuvo para su crisis de principios de los años 90. La baja tasa de interés de Japón habría contribuido al estallido de la crisis asiática de 1997.

Ben Bernanke, un estudioso de la Gran Depresión de los años 30, ha supervisado la más colosal inyección de liquidez en la economía más grande del planeta, comprometiéndose a no cometer el error de los años 30 cuando los funcionarios de la Fed aplicaron una política monetaria estricta y rigurosa que lo único que consiguió fue agravar la crisis. Se culpa a la falta de dinero disponible en 1930 que la crisis se prolongara por una década. La poca respuesta a las inyecciones de liquidez actuales demuestra que la situación no deja de ser delicada y que los nuevos límites de la política monetaria pueden alterar aún más los desequilibrios globales que la crisis dejó al descubierto.

Una de estas operaciones especulativas es el llamado carry trade, con inversores que se endeudan en dólares (al 0%) para invertir en otras monedas que ofrecen un interés más alto como es el caso de Australia, Brasil o Nueva Zelanda. Gran parte del flujo en los mercados de capitales sigue esa dirección. De ahí la valoración que están adquiriendo los activos de Asia y Oceanía versus los activos de Europa y Estados Unidos. Los activos de Corea, Taiwán, Hong Kong o Singapur están subiendo a niveles que son incompatibles con la realidad lo que replica la burbuja inmobiliaria de Japón en los 80 (cuando los jardines del Palacio Imperial de Tokio llegaron a costar más que todo el estado de Washington) y de Estados Unidos en los 90.

Pese a esto, el ex-gobernador de la Fed, Frederick Mishkin sostuvo que no se está consolidando una nueva burbuja especulativa, dado que no todas las burbujas presentan riesgos para la economía. Mishkin separa entre burbujas malas y buenas. Las primeras son provocadas por un auge del crédito, en el cual las expectativas dan lugar a un aumento de la demanda, lo que genera un alza en el precio de los activos, alentando los préstamos contra esos activos y retroalimentando positivamente el ciclo hasta que explota.

La segunda categoría de burbujas que Mishkin llama de “exuberancia irracional” son menos dañinas porque aquí no hay un auge del crédito, y si no hay un auge del crédito el estallido de la burbuja no puede hacer daño alguno al sistema. Cita como ejemplo la burbuja tecnológica de los 90 y la de las puntocom del 2000, que no tuvieron un impacto global. Para Mishkin es el auge del crédito el que desata las burbujas. Ahora bien: no hay un auge del crédito en la pequeña escala. Pero en la macro escala de los capitales especulativos, aquellos que mueven los miles de millones de dólares de los Fondos de Pensiones y juegan en las bolsas o especulan con el oro y el petróleo, a costa del dólar, hay creación de burbuja. Y todo lo que sea burbuja es malo para la economía. Es como pensar que una bomba atómica puede tener algún efecto positivo.

Historically, western economies today stem from the classical liberalist philosophy of “Laissez-faire”, a French phrase for “let do”. The central principal in this type of thought is the economy should be left alone to its own devices, with minimal interference from the government. Letting the “invisible hand” drum its own beat. The economy must be un-chained, in order to be a free-market. This attitude toward a financial system with minimalist traits affects all things within that economy, including the prices for rent.

Most economists today oppose the regulation of rents, or any type of cap on rent prices because, through intervention on the economy, rent regulation produces inferior housing and lowers the quantity of residences available for families. While many supporters of ceilings on rent prices claim that rent regulation would assist households, a large majority of economists strongly believe that an interventionist policy within the rent market would undermine families, instead of aiding them.

Gunnar Myrdal, an important architect of the Swedish Labour Party, once stated that “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.” The regulation of rent has been criticised by economists because of its negative domino effect on the economy. Assuming a market establishes a board to regulate the rents, publicly funded of course, it is natural to assume that the demand for cheaper apartments and condominiums will rise. It is also easy to perceive that rents were high. Too high for anyone one to pay, which would be the logical reason of why people would allow their rents to become regulated in the first place. So, we have enough people to complain about rent prices, and a board that would directly adjust rent prices to a value that the majority could afford. It doesn’t take an economist to know that demand for apartments and condos will rise, and quickly. The demand will rise so quickly that there wont be enough roofs for everyone. The supply, the apartments and condos, will decrease – creating a shortage. In an uncontrolled sector, prices would rise in a shortage to stimulate production and discourage demand for housing, but in a controlled economy prices couldn’t attain the prices that would clear a market, keeping it cheap, and continuing the perpetual shortage.

Keep in mind that there is a difference between shortage and scarcity. Scarcity can exist when there is a high demand for the goods that nature cannot supply. A shortage can be the result of prices being set below their equilibrium values, that is, the demand/supply balance – situations that can be avoided if prices are allowed to rise naturally.

Economists also show that investors, because of the punitive amount of money they would be able to generate, are discouraged to invest into economies that practice rent control. Rental units available for students at the University of California dropped by 31 percent in five years following the application of rent control in 1978. Rental units in Brookline, Massachusetts also fell by 8 to 12 percent in the eighties, following tough regulations on rent prices.

A combination of lack of investments and deficient funds make rent control disastrous for proper maintenance of housings. Landlords, because the ability to adjust prices with current market trends are gone due to rent control, cannot afford to pay the proper bills to keep a business running smoothly. The quality of buildings deteriorate due to the lack of funds contributed for maintenance. Granted, the tenet is paying less for rent, but receives no real bargain because of improper maintenance. The is especially evident in many parts of Boston and New York, where many areas are rent regulated.

The adverse affects of rent control often falls to upon the poor and the less well off. The poor is at a disadvantage when it comes to mobility. As opposed to a middle class family who can move freely because of their standing, it is very expensive for a family with little income to move. As a result these poor families must cope with the detereriorating housing available to them. In a market with demand for housing very high, landlords have little choice but to choose their tenets with discretion. These factors could be very bias – including income, gender, and race. This is a very large disadvatage for many poor families, many lower income families would never be accepted because of their salary. It is also not hard to believe discrimaination against women and minorities would not be out of the question, being that the income compared to a white male would be significantly less.

Rent control runs contary to its own philosophy. Admitially its intentions are noble, however economically, it’s a fact of greek tragedy. The regulation of rent prices in an economy, while lowering rent prices, produces inferior dwellings as opposed to the unregulated market, and fashions a housing shortage because of the high demand created. Rent control can also encourage sexism and racism because of landlords meticulous selection of potential candidates for tenets, as well as having a negative impact on lower income families. Swedish economics professor (and known socialist) Assar Lindbeck stated “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” Rent control is a failed housing policy. It does all the wrong thing to the wrong people. Rent regulation is a procedure we, as a democratic nation, cannot and should not let our governments allow to make law. The free market must remain free of intervention. In order to balance the demand/supply equilibrium – we must let do. As minimalists we must learn to trust, and respect, the invisible hand.

If there’s one proof that we judge people by what they wear it’s the dress code.

This is a dramatic example but back in the day, not being able to tie a windsor knot on a neck tie was and button a dress shirt was a way to prove to colonizers that certain people were uncivilized and therefore fit to be slaves. Nowadays, the suit is still the ultimate sign of civility. When asking people why you need an office dress code, they’ll often answer that its a question of cleanliness and respect.

Another dress code enforcer: the night club. This has always been a pet peeve of mine. The elements of a Guantanamo torture session (dark room, deafening music, inebriation and criminal drink prices) concerted in a crowded and sweaty evening and I’m supposed to show my respect for the establishment. You pay to let loose and have fun and you’re expected to impress the bouncer. Its bad enough you’re working for the Man and wearing your work uniform, now there’s the club uniform. If I’m gonna party at least let me wear something I can have fun in! Lame!

It seems to me that dress codes are still ways of measuring a person’s worth. They’re also an easy way of weeding out the ones who can’t afford to buy dress shoes. If you can’t afford dress shoes, you probably can’t afford to splurge on drinks. If you can’t afford a suit, you probably aren’t successful enough to close that business deal.

Of course, it’s just another regulation and the more rules you have, the easier it is to get penalized for a technicality. I’ve witnessed this many times at club lineups. Attractive women can stroll right in but heavier women can get thrown out for not wearing the right top or because they’re wearing sneakers. As if anyone would notice inside the terror box.

Smoke stacks at American Electric Power's coal power plant in New Haven, W.Va. Photo: Saul Loeb

Nov 26 Business Gets Ready for Emission Cuts
Much of corporate America has already been thinking about how to comply. Many businesses concluded years ago that such limits were inevitable, and they… [read more]

Nov 26 Thankful for U.S., China News on Climate?
After yesterday’s news that Obama will attend the international climate talks in Copenhagen and commit to near term targets (discussed by Cara here… [read more]

Nov 25 More on today’s White House announcement re Copenhagen
Dan writes immediately below about Obama’s announcement that he’ll attend the talks in Copenhagen in two weeks, and with a U.S. emissions… [read more]

Nov 25 Obama to Go to Copenhagen
The White House also confirmed today that Obama will propose that the United States plans to curb its emissions by 2020 in the range of 17 percent below… [read more]

Nov 24 The Climate “Partnership” with India
At least that’s what the White House is calling it.  (Okay, okay: technically, the White House calls it the “Green Partnership to Address… [read more]

Nov 24 California Air Resources Board releases draft cap-and-trade plan
The California Air Resources Board (CARB) today released the preliminary draft cap-and-trade regulation. CARB staff would like to have comments by January… [read more]

Nov 24 War Tax=Carbon Tax
Congressman David Obey yesterday called for a war tax to pay for troops in Afghanistan. While the idea of a war tax makes all the sense in the world (… [read more]

Nov 23 Readers’ Opinions About The Timing of Climate Legislation
[read more]

Nov 22 The Challenge of Regulating the Ordinary
The title is a play on a great paper of Holly’s about the converse challenge of saving the ordinary.  Whether the ordinary is good or bad, however… [read more]

Peter Wallison of the American Enterprise Institute has been one of the few sane voices in the fight over bailouts, regulation, and the financial sector. His new column in the Wall Street Journal exposes the White House’s misleading arguments for more government control of an already over-regulated financial sector:

…the government’s case for bailing out AIG has rested on the notion that the company was too big to fail. If AIG hadn’t been rescued, the argument goes, its credit default swap (CDS) obligations would have caused huge losses to its counterparties—and thus provoked a financial collapse. …The truth about the credit default swaps came out last week in a report by TARP Special Inspector General Neil Barofsky. It says that Treasury Secretary Tim Geithner, then president of the New York Federal Reserve Bank, did not believe that the financial condition of AIG’s credit default swap counterparties was “a relevant factor” in the decision to bail out the company. …The broader question is whether the entire regulatory regime proposed by the administration, and now being pushed through Congress by Rep. Barney Frank and Sen. Chris Dodd, is based on a faulty premise. …The administration’s unwillingness or inability to clearly define the problem of interconnectedness is not the only weakness in its rationale for imposing a whole new regulatory regime on the financial system. Another example is the claim—made by Mr. Geithner and President Obama himself—that predatory lending by mortgage brokers was one of the causes of the financial crisis. …At the end of 2008, there were about 26 million subprime and other nonprime mortgages in our financial system. Two-thirds of these mortgages were on the balance sheets of the Federal Housing Administration, Fannie Mae and Freddie Mac, and the four largest U.S. banks. The banks were required to make these loans in order to gain approval from the Fed and other regulators for mergers and expansions.

by Thomas McQuade

In looking back over the many excellent posts and comments that have graced ThinkMarkets in its first year, I was struck by the fact that, while many of the literary virtues have been displayed, there has been – surprisingly – nothing that could pass as poetry.  I hope to be forgiven the presumption of attempting to rectify that omission with the following submission, vile doggerel though it may be.

I have a tale to tell, O!  (A sad, sorry tale, O!) …
It is told in the hope there’s no slipp’ry slope
And that prudence can prevail, O!
Tells the cause of a crisis, cruelly cast
Hitting hard-won savings, thought amassed.
It involves good intentions gone astray,
And the misplaced myth that some experts may
By their brains and their brilliance brave the way
To ensure economic ease, O!

I have a tale to tell, O!  (Why such frustrations?) …
It’s the tale of a myth I debunk herewith –
The conceit that regulations
Are a sure-fire fix for faults perceived
And work just exactly as conceived.
Instead they have unforeseen effect
As they interact and redirect
In ways that their authors can’t suspect
To foster financial folly!

I have a tale to tell, O!  (What makes me fret thus?) …
It’s the tale of the bank that we have to thank
For the booms and the busts that beset us.
Mark the mandarins who man the Fed,
Who claim they can clearly call ahead
And invoke any interest rate thought best;
Who can more money make at their own behest
And can know who to help, where to reinvest –
Great gods of the guess, these gurus!

I have a wish to make, O!  (No grant is on offer!) …
It’s to wish we’d abjure the simplistic cure
Politicians promptly proffer;
That we’d understand we must separate
The economy from the grip of State,
So we’d not be conned by a cosy clique,
And big businessmen couldn’t favors seek –
Opportunity for both strong and weak:
It seems such a small thing to ask, O!

Apologies are due to the great W.S. Gilbert for parodying his duet “I have a song to sing, O!” from the opera “The Yeomen of the Guard”.

Fed Chairman Ben Bernanke has written an opinion piece for WashingtonPost.com attacking programs being supported by Rep Ron Paul and Sen Chris Dodd to strip the Federal Reserve of most of its power.

He writes “Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence.”

Bernanke would naturally defend the organization that he runs, but there is a persuasive case to be made in his favor even if it is a perverse one. Dodd and Paul have not come up with any reasonable alternatives to replace the Fed’s role.

Dodd’s legislation would combine the power and organization of the four major bank regulators into one. The new “super regulator” would control the actions of the huge majority of financial firms in the United State. Dodd’s proposal has essentially been written on the back of an envelop. He does not address how four politically charged government agencies which the credit crisis proved are each to some extent dysfunctional, can be mashed into a greater whole. The process, even if successful would take years and they are years when the economy and credit markets are still likely to be in periodic trouble. Dodd wants to rearrange a regulatory system that needs to function well and not be in the midst of a sea change in the way it is organized or run

Paul’s proposal could create more instability in the financial system than Dodd’s does. Paul wants the Fed to be audited and the results of those audits to be made public. The Fed does keep certain information about its monetary policy work secret, Bernanke writes in the Post “The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.” Paul wants to release data that is sensitive enough that it could cause huge disruptions in capital markets especially if taken out of the context of the Fed’s daily efforts to keep the monetary system stable.

Bernanke is right. The Fed as constituted now may not be perfect, but it has proved itself to be generally competent over a several decades many of which were periods of crisis.

Douglas A. McIntyre

When I was at Texas Instruments, we were told that nobody is indispensable. If Dimon leaves JP Morgan and the bank’s share drop, then he did not do a good enough a job at succession planning at the bank.

The real issue is the rumored replacing of Tim Geithner. We need to ask ourselves why the rumor. It is because unemployment has exceeded 10% and still increasing, and this can allegedly be a liability to the Obama Administration in the coming elections.

However, if we look at history, neither the Democratic nor the Republican Administrations have in the past recovered from a similar unempolyment spike at an average rate better than 0.06% per month. Therefore, what is required is a collective change to historically untried policies rather than a change in personalities.

The problem then is if Dimon cannot solve this unemployment problem (and he won’t if he does not do something radical), who are the Democrats going to blame next?

___________________________________________________________________

Disclosure: I’m a capitalist too, and my musings & opinions on this blog are for informational/educational purposes and part of my efforts to learn from the mistakes of other people. Hope you do, too. These musings are not to be taken as financial advise, and are based on data that is assumed to be correct. Therefore, my opinions are subject to change without notice. This blog is not intended to either negate or advocate any persons, entity, product, services or political position.

Contact: Ben Solomon, Managing Principal, QuantumRisk

___________________________________________________________________

Early in the morning on Thanksgiving eve, just a few miles from my house in Arlington County, Virginia,  Mr. James Bea, 59, was killed on the job.   Mr. Bea and his county-employee co-worker were working at the site of a water main break.  They were removing a set of temporary lights that had been erected to allow others workers to proceed through the night with the sewer line repairs.  Mr. Bea, who had been a county employee for 24 years, was electrocuted and his co-worker suffered serious burns.  

Arlington County issued a news release (11/25/09) and a video story through its AVNetwork  called ““Power Line Tragedy.”   The video release features Mr. James Bea’s boss, Bob Griffin, the director of the Department of Environmental Services (DES), reminding us that public sector employees are often hidden from view, unrecognized for the work they do, and working in conditions that most people would find “deplorable.”   From the county’s video release, I’ve posted at the end of this post the text of director Bob Griffin’s remarks.  

Mr. James Bea’s death is being investigated officially by the Virginia OSH, and hopefully they will help provide the Bea family and his co-workers some answers.  His death gave me the chance to explain to my husband, Jim, that the death of a public sector employee in 27 other States would not result in any official investigation. 

“That’s a big gap…a big loophole, isn’t it?” he said.

Indeed it is.  But the “Protecting America’s Workers Act” (S. 1580 and H.R. 2067) would correct this unfairness and ensure that 9 million workers have OSH protections.  This huge OSH gap affects workers and their families in: AL, AR, CO, DC, DE, FL, GA, ID, IL, KS, LA, MA, ME, MO, MS, MT, ND, NE, NH, OH, OK, PA, RI, SD, TX, WI,  and WV.

Several years ago, Casey Jones (whose husband Clyde worked for the City of Daytona Beach, Florida—not covered by OSHA) and the late Carolyn Merritt of the CSB tried to draw attention to the gap in H&S protection for state, county and local employees.   I’m counting on George Miller, Lynn Woolsey, Patty Murray, Tom Harkin and other Members of Congress to act on S. 1580 and H.R. 2067 early in 2010. 

In the meantime, I’ll listen again to the words of Arlington County DES director Bob Griffin on the death of long-term county employee James Bea, 59:

“He was the type of guy, like a lot of the folks that we have in  DES who are generally unrecognized for the work they do.  Working through the night, in conditions in which most people find deplorable.  Last night in the trench with water.  He ’s the the type of person who was plowing snow, also the type of person you’d not find complaining about the work.”

“He loved his family, he loved his coworkers, he loved working for the county.  It’s an enormous loss, it’s an  absolute enormous loss for us.”

“When you’re saying ‘thank you’ on Thanksgiving, remember the folks who are providing the service that people don’t think about.  The folks that are providing the water, and making sure the sewage is taken away, and the roads are safe to be on.”

“If nothing else, it’s a poignant reminder of how dangerous the job really is, and sometimes that gets forgotten.”

[Excerpt from Arlington County, Virginia's video news release]

November 27, 2009 – Europe has yet to come up with a unified approach to medical marijuana. The Dutch will tell you it is legal to use the drug to treat certain illnesses; while the Swedish don’t recognize any medical use for cannabis at all.

“European policy is not really changing at all and I don’t think this issue is even on the European agenda. The topic is too controversial and too political,” said Catherine Sandvos, a legal expert for the Hague-based Cannabis Bureau, a Dutch national agency aimed at providing high-quality cannabis for medical purposes.

Ms. Sandvos’s native Netherlands has led Europe when it comes to legalizing medical marijuana, which it treats separately from marijuana legally available at one of Amsterdam’s famous coffee shops. The Dutch police stopped enforcing laws against marijuana in 1976 following an overall tolerance policy in the country. “It’s hard when you try to explain to outsiders that it is illegal to grow cannabis in the Netherlands, but that it is tolerated to buy it,” she says.

But those who buy the drug on the streets are not getting the quality severely ill patients would need. The Dutch government set up the Cannabis Bureau — the only institution of its kind in the continent — in September 2003.

“The state realized that so many people wanted to use cannabis, so it said ‘why not give it to them via prescription instead of them accessing the drug illegally,’ ” Ms. Sandvos added.

The Cannabis Bureau ensures that patients who have a prescription from a doctor are getting marijuana that has been tested to make sure it doesn’t contain any pesticides or bacteria. Not only does the Cannabis Bureau sell cannabis across all pharmacies in the Netherlands through a prescription, but it also distributes the drug to Italy, Finland and Germany through the Ministry of Health of each country. According to the agency’s data, it sells around 100 kilos of cannabis every year.

The situation couldn’t be more different in the U.K., where it is unlawful to self-medicate cannabis regardless of the disease people suffer from. In 2005, Barry Quayle and Reay Wales, who were both afflicted by serious and chronic conditions, found no relief in prescription drugs and turned to cannabis to alleviate their pain. But a U.K. court ruled against them.

“The whole debate in relation to the use of cannabis for medical purposes is highly politicized,” said Daniel Godden, an associate solicitor for Hodge Jones & Allen LLP in London. Those who say marijuana is relatively safe can face severe political consequences. Last month, Professor David Nutt, the British government’s chief drug adviser, was removed from his post after he said the drug was less harmful than alcohol.

Favorable views toward cannabis face opposition from some local politicians and international lobbying groups. Jorgen Sviden, director of Stockholm-based European Cities Against Drugs, which represents 261 cities in 30 countries, isn’t convinced of the drug’s medical qualities.

“In principle, we don’t have an argument against cannabis as a treatment, but we haven’t seen any scientific evidence that provides a convincing argument for its medical use,” he said. “If in the future we come across proof that cannabis is a good treatment, then this is good.”

Some initiatives have managed to stay away from the political debate, however. The U.K. happens to be home to GW Pharmaceuticals PLC, which manufactures a drug based on marijuana extract — Sativex. Although it has some ingredients that derived from the actual drug, it has been treated by the U.K.’s regulators as a medicine like any other as it doesn’t contain the psychotropic substances marijuana does. The company is preparing to launch the drug into other parts of Europe, in partnership with Germany’s Bayer AG and Spain’s Almirall SA.

GW is hoping to sell its product, which will treat the symptoms of multiple sclerosis, across all countries in Europe but has initially filed for a license in the U.K. and Spain so far. Paul Cuddon, an analyst with KBC Peel Hunt in London, says he expects the drug to win approval in both countries in the first half of 2010 and then the firm will file for individual approval in each country.

“I’m not anticipating any legal problems in the rest of Europe at all,” Mr. Cuddon added. “This is a treatment that is highly different from raw cannabis and it has undergone rigorous chemical trials.”

Other countries have tough stances, however. Ireland, for example, doesn’t recognize marijuana as a drug with medical benefits. This means that manufacturing, producing, selling or possessing cannabis is unlawful for any purpose. The Ministry of Health is the only government branch that can grant an exception, but a spokesman said it never has.

Noel McCullagh, 34, has learned this the hard way. An Irish citizen, Mr. McCullagh lives in the Netherlands, where he uses cannabis medication to treat the severe effects of his muscular dystrophy. However, Irish authorities have warned him that he will be arrested if he enters his native country in possession if cannabis-based treatment.

In Sweden, the law doesn’t recognize the cannabis to have any medical use.

Beyond the debate of marijuana’s use, Dr. Willem Scholten, of the World Health Organization, believes patients should have access to high-quality medicine. So if cannabis has medical attributions, “there needs to be a system in place to ensure that patients get their medicine without any contamination and that they get the same content every time.”

Despite the radically different approaches in Europe, some believe the continent will eventually adopt it as a medical treatment.

“I can imagine European citizens will eventually think cannabis is a good medicine and that it should be accessible to people who suffer from serious pain as a result of HIV, multiple sclerosis or other grave illnesses,” said Brendan Hughes, senior legal analyst of the European Monitoring Centre for Drugs and Drug Addiction in Lisbon. By JAVIER ESPINOZA. Source.

Stanley Kubrick’s Dr. Strangelove [ The music is We'll Meet Again by Vera Lynn]

Versión en castellano

Dubai’s House of Cards
Dubai is the leading exponent of housing bubbles that have occurred worldwide.  Eccentricity of management has turned a city in the middle of the desert in a field full of hotels and skyscrapers. It was a time – the golden era – when anything was little for the Emirate.

But the crisis has beaten hard Dubai. Works have stopped and credit flow is dead blocked. Up to the point that, yesterday the state holding announced a moratorium on payment of $ 4 billion debt – the same holding that built the famous Jumeira Palm Island. This did not sit well with international markets.

The problem is that the Emirate owes $ 80 billion and markets begin to have doubts about its solvency. As soon as the moratorium on debt payment was announced markets felt down. The worst financial crisis could recur. But instead of banks’ cessation of payments we may now witness States’ suspension of payments.

Speculative Bubble Emerging
Meanwhile, in another part of the planet – the United States – the policy of the Federal Reserve to keep interest rates near zero is fuelling a wave of speculative capital that can initiate the next crisis. Many warn that a new bubble is brewing, and several specialists see in this quantitative easing an equivalent outcome Japan had for its crisis of the early 90s. Low Japanese interest rates did contribute definitely to the outbreak of the Asian crisis in 1997.

Ben Bernanke, an academic on the Great Depression, monitored the most massive injection of liquidity into the world’s largest economy, committing himself not to make the mistake of the 30s when the Fed officials pursued a strict and rigorous monetary policy that only aggravate the crisis further enough. The lack of available money in 1930 is regularly considered the reason why the crisis lengthened for a decade. The little response to current liquidity injections shows that the situation is all but comforting and that new limits of monetary policy may further alter the global imbalances that the crisis left uncovered.

One of these speculation operations is the so-called carry trade; investors borrow in $ (0%) headed for invest in other currencies that offer higher interest rates such as Australia, Brazil and New Zealand. Much of the flow in the capital markets moves ahead that direction. Hence the importance that Asian and Oceania assets are acquiring versus Europe and US assets. Korea, Taiwan, Hong Kong and Singapore assets are rising to levels that are incompatible with the reality that replicates the real estate bubble of US in the 90s and Japan in the 80s – when the Imperial Palace Gardens in Tokyo came to cost more than the entire US state of Washington.

Despite this, former Fed Governor Frederick Mishkin assumed that there is no evidence that a speculative bubble is emerging, since not all bubbles present risks to the economy. Mishkin split good from bad bubbles. The former are instigate by a credit boom, whereas expectations lead to increased demand, generating a rise in asset prices, encouraging lending against those assets and positive feedbacks cycle until it explodes.

The second category of bubbles what Mishkin calls “pure irrational exuberance bubble” is less harmful because there is no credit boom, and if no credit boom occurs the bursting of the bubble can not damage the system – e.g. the bubble in technology in the ’90s and the dotcom’s of 2000, had no global impact. For Myshkin the rise of the credit stirs the bubbles. Now, there is no credit boom in small scale. But bubble is building on the macro scale of speculative capitals, those who move billions of dollars of pension funds, the very same that play in the stock market or speculate on the gold and oil at the expense of the dollar. And at macro levels, everything where bubbles get involved presage awful signs for the economy. Otherwise, it’s like thinking that a bomb may have some positive effect.

Michael Giberson

From the Central Penn Business Journal, two views on electric utility industry restructuring in Pennsylvania:

First from Matt Brouillette:

Pennsylvania’s electricity rate caps have kept prices artificially low, preventing competitors from entering the marketplace and consumers from having choices. Now, when rate caps expire in 2010 in PPL territory, most of central Pennsylvania will see an increase in electricity prices.

… Rate caps expired in western Pennsylvania years ago, and today 20 percent of Duquesne Light customers have switched to other suppliers. The competition has forced Duquesne Light to offer more competitive prices and better services. The result: Electricity consumers are benefiting.

… Competition forces companies to serve their customers with the best prices and service, giving consumers more control. While it’s true that electricity prices in both monopoly structures and competitive markets have escalated over recent years, that is due to rising costs for generating fuels, not deregulation. Moreover, prices already have begun to drop in competitive markets — an effect not seen in monopoly delivery systems.

Case in point is PPL’s recent announcement of a 30 percent rate hike this January. … A number of companies already have announced their intention to compete for PPL customers, with one, Dominion Retail, guaranteeing a savings of 10 percent on PPL’s rates for the first 5,000 customers.

Rejoinder from Eric Epstein:

Gov. Tom Ridge predicted that electric competition would lead to job growth, economic expansion and decreased rates.

According to Ridge, “Pennsylvania’s national leadership in electric competition continues to bring dramatic savings and economic benefits to Pennsylvanians” (Aug. 4, 2000). The success of electric competition would shave business costs and give employers more money to invest, thereby creating multiplier effects on the state economy. “Competition” also would produce savings that would give consumers more money to spend.

… Could the deregulators have gotten it more wrong?

The reality is not so dreamy. Electric utilities are collecting $11.4 billion in stranded costs, increased taxes on ratepayers and dumped customers at record rates.

… Deregulation was a great bargain for PPL. Last year the company reported a profit of more than $1 billion on $6.5 billion in revenue and set records in consumer cruelty.

… A study published by Carnegie Mellon University’s Electricity Industry Center in 2008 found, “On average, power users in restructured states pay 2 to 3 cents per kilowatt hour more than customers in states that didn’t restructure.”

… Decide for yourself if electric deregulation has delivered on its bold promises or served as yet another corporate failure. But don’t take too long. PPL is set to jack up residential rates by 35 percent in 2010.

Brouillette is president and CEO of the Commonwealth Foundation; Epstein is chairman of Three Mile Island Alert Inc.

Mike Tolley, Principal Consultant at Cogent (fm) Solutions, looks at the issues that concern the CCTV industry. Today Mike looks at the importance of service and the need for wider industry regulation.

The CCTV security industry as a whole does nothing to support itself. It is slowly putting itself into a downward spiral to doom. The industry accreditation organisations allow anyone to join as part of a paid up membership club.

I believe that anyone offering services as a company involving the supply, installation and maintenance of electronic security systems must operate from a commercial premises, not their domestic garage; manufacturers must also be members of the UK organisations if they wish their products to be sold and supported in the UK and must also have a supply and service base in the UK.

When an end user makes a complaint about a failure of service or standard against accredited members, it is often seen as a threat to the integrity to the ‘club’; as a lost membership fee. The complaints should be followed up and people/companies kicked out, and this information shared, so that they don’t just become a member of another club.

I have to ask: Does the industry care or are there enough people in it to always blame someone else for it going wrong?

Let’s take some ownership of this industry we are in, or it will wither away to becoming nothing more than a car boot sale with an engineer tagged on to it. If you don’t care, please leave it now and go back to facia or window fitting!

As a final note, as part of the industry regulation, I believe that, like manned guarding companies have to do, it should be compulsory for sales, service and installation staff to permanently carry company ID cards when at work.

In the light of the current security risk levels, why do so many people still open their doors to anyone who says that they sell security and then proceed to tell them all about their business and their security weaknesses?

Do you agree with Mike? Let us know what you think below.

For more comment and insight about CCTV  click here to read CCTV articles.

An International Consultation

January 22 – 24, 2010, New Delhi

Sama is organizing an International Consultation that will look into the issues of Commercialization of Assisted Reproductive Technologies and its Ethical implications. The Consultation aims to bring together activists/scholars and researchers from different parts of the world particularly from regions that are experiencing the implications of these technologies.

Through this consultation, we intend to:

• Share and exchange information emanating from activism, research, practices, policies and regulatory mechanisms gathered from the ground from across the world and thereby enable the development of a framework for ethical norms and regulations;
• Further the emerging debates on ‘new’ reproductive and genetic technologies in the context of public health and policy, research, ethics and practic;
• Comprehend the advancements and debates around scientific research on infertility care, stem cells and cloning and examine the research priorities in the context of access to basic health care;
• Locate the discussions and debate on ARTs within the framework of women’s health, rights and social justice;

Participation is only by invitation from Sama.

Rising property prices have caused the real estate profession to come under the spotlight in recent months. This is expected, of course, because when a company or industry begins to report record prices or profits, then it risks being placed under the political microscope.

The Singapore government recently launched a public consultation exercise for a new regulatory framework for the real estate industry (which apparently received only 200 suggestions). One of the more popular suggestions was to require real estate agents to pass a standard test before they’re allowed to practice. That seems long overdue. While most people don’t expect their agents to be real estate geniuses, I’m sure they expect agents to have at least some comprehension of the industry. I mean, this is probably one of the more important decisions in your life, right?

But hopefully people won’t assume that just because the test will be covering ethics, they’ll suddenly be faced with an army of honest real estate agents. How well could you test someone’s conscience? Would it give you peace of mind if someone said, ‘I scored 90% during my ethics test, so yeah, you should trust me’? While ethics should be thought, assuming that an ethics test would produce honest agents is not only naive, but harmful. Why? For one thing, finding solutions that merely satisfice arrests further developments.

Hopefully the new regulatory framework for the real estate industry is not merely a legitimising exercise on the part of the government. Weeding out errant agents is a good thing for both the public and industry players. But maybe the spotlight should be placed on the machines that churn out such agents for a while?

Rising property prices have caused the real estate profession to come under the spotlight in recent months. This is expected, of course, because when a company or industry begins to report record prices or profits, then it risks being placed under the political microscope.

The Singapore government recently launched a public consultation exercise for a new regulatory framework for the real estate industry (which apparently received only 200 suggestions). One of the more popular suggestions was to require real estate agents to pass a standard test before they’re allowed to practice. That seems long overdue. While most people don’t expect their agents to be real estate geniuses, I’m sure they expect agents to have at least some comprehension of the industry. I mean, this is probably one of the more important decisions in your life, right?

But hopefully people won’t assume that just because the test will be covering ethics, they’ll suddenly be faced with an army of honest real estate agents. How well could you test someone’s conscience? Would it give you peace of mind if someone said, ‘I scored 90% during my ethics test, so you don’t have to worry about me cheating you’? While ethics should be thought, assuming that an ethics test would produce honest agents is not only naive, but harmful. Why? Finding solutions that merely satisfice arrests further developments.

Hopefully the new regulatory framework for the real estate industry is not merely a legitimising exercise on the part of the government. Weeding out errant agents is a good thing for both the public and industry players. But maybe the spotlight should be placed on the machines that churn out such agents for a while?

Via BBC:

China says it will cut the intensity of carbon dioxide emissions per unit of gross domestic product in 2020 by 40- 45% from 2005 levels, says state media.

The “carbon intensity” measurement is unique to China and analysts say it will not necessarily cut emissions.

It came ahead of December’s UN climate change summit in Copenhagen, which Chinese Premier Wen Jiabao will attend.