Wednesday, 20 February 2008

Wednesday, 20th February, 2008


Every year during its Lantern Festival, thousands of people in Taiwan light lanterns and send them skyward with prayers, a ritual that dates back centuries. And every year, environmentalists say the tradition unnecessarily sends garbage into the sky.
This year, if Taiwan's environmental groups have their way, thousands of people will release "virtual sky lanterns" on the Internet, without garbage.

According to the report, Kerviel began his unauthorized trades in 2005, shortly after he joined the bank's Delta One equity derivatives trading desk, buying options and warrants on individual stocks, including Allianz, Deutsche Bank and Porsche. Kerviel moved on in 2007 to take larger positions on stock index futures and forwards. Beginning in March of last year, he built up a short position in unspecified index futures that reached a notional value of €28 billion by June 30. That position was unwound in November, the report said, resulting in a profit of €1.5 billion.

INSIDE THE MARKETS: China banks could face credit crisis of their own
Banks in China seem to have dodged a bullet in the U.S. subprime mortgage crisis. Chinese lenders accumulated large amounts of that bad debt. But bankers have assured investors they are within manageable levels that won't greatly affect their profit, fattened by a domestic economy that is growing at double-digit rates.
But that doesn't mean China will be able to avert a credit crunch of its own making. In fact, risks are growing of a credit crisis with Chinese characteristics. A crisis like that could rock global markets, because China has been one of the few bright spots in the world economy.
With memories still fresh of Beijing's having injected more than $260 billion into its banks while shifting bad loans off their books, another huge bailout may become necessary if loose lending practices are not halted.
What could trigger such a turnaround in the Chinese credit market? A sudden sharp slowing of the Chinese economy. That's not as far-fetched as it might seem. Weaker overseas demand and the bursting of an asset bubble in China could result in defaults by droves of companies.
Sudden deflation of a bubble can lead to fast-deteriorating asset quality, cascading in a chain reaction through the financial system, as has happened in the United States.

Warning lights are already flashing. The nonperforming loan ratio for major Chinese banks rose for the first time in two years, to 6.72 percent in the fourth quarter from 6.63 percent in the previous quarter. That level is dwarfed by the 20 percent to 50 percent nonperforming loan ratios six years ago, but the trend is worrisome.
"History shows even the worst banking systems can appear decent during periods of robust GDP growth," said Charlene Chu, a senior director at Fitch Ratings. "Fitch remains concerned Chinese banks could well be underestimating potential future credit losses."

While reckless lending to home buyers brought some American banks to their knees, loans to exporters and property developers are threatening to do the same to Chinese banks.
Caught between an appreciating yuan, weaker global demand and rising costs at home, exporters are facing the toughest time in 20 years. In the Guangdong area near Hong Kong, about 12,000 exporters are likely to go bankrupt early this year, according to the Shenzhen OEM Association, an industry group.
Signs are also suggesting that loans to real estate developers may go awry. After investors got used to rising housing prices, they are suddenly falling by double digits in certain cities.
The recent sell-off in the Chinese stock market - down 25 percent in the past four months - could also hobble banks because a big chunk of their business comes from equity-related products. A fair amount of corporate lending found its way into the stock markets, and that money might have evaporated already.
Chinese banks have, though, raised billions of dollars from capital markets, and this would help them absorb any credit losses. But the question remains: What level of asset quality shock could Chinese banks absorb?
"Chinese banks are largely untested," said Alex Boggis, director at Aberdeen International Fund Managers. "They do not have much experience handling the stress and strains associated with open markets. That is why we do not like to own them."
Chinese banks dominate the list of the world's most valuable banks, thanks to strong demand for a limited amount of shares, which distorts their valuations. But judging by banks' ability to manage their risks, they are hopelessly small and far behind. If current trends continue, before long many of those mighty banks might have to ask Beijing again for billions of dollars in bailouts.

Global market turmoil took the shine off the earnings of two more European banks Wednesday.
BNP Paribas, one of the largest banks in France, reported a 42 percent decline in fourth-quarter profit after writing down the value of securities hurt by worsening credit markets.
And Alliance & Leicester of Britain warned that a big rise in financing costs would derail 2008 profit after a write-down on risky assets hit 2007 results.

BNP Paribas took €589 million worth of write-downs on leveraged loans and debt backed by bond insurers, and set aside €309 million linked to U.S. loans and securities.

Alliance & Leicester suffered a £185 million write-down on its exposure to assets that have been tarnished by the U.S. subprime housing crisis - in line with guidance three weeks ago.

KKR Financial Holdings, Kohlberg Kravis Roberts's only publicly traded fixed-income fund, has delayed repaying debt for a second time in six months after failing to find buyers for commercial paper backed by mortgages.
Lenders to the fund agreed to the delay as KKR Financial sought to restructure, the company, based in San Francisco, said in a regulatory filing Tuesday. KKR Financial, whose stock has fallen 50 percent in the past year, did not say how much debt is affected.
The announcement rekindled concerns that the decline in the market for short-term asset-backed debt, which totaled $1.2 trillion in August, would accelerate after a rebound early last month. Assets fell to $796 billion in the week ended Feb. 13, the third straight weekly drop. Standard & Poor's downgraded ratings on notes issued by KKR Pacific Funding Trust last week, citing uncertain pricing on the AAA-rated securities that support them.
"The picture is getting worse and worse," said Felix Freund at Union Investment in Frankfurt. KKR Financial's second repayment extension "shows there is still a lot of levered investments in the credit market that we can't see."

Plans for sweeping government bailouts and wholesale rewriting of mortgage terms that were unthinkable at the start of the U.S. housing crisis are gaining traction as other efforts to stabilize the market fall short.

But even those bold ideas might soon become outdated if the housing crisis worsens, said John Taylor, whose National Community Reinvestment Coalition first pitched a mortgage-buying project by the U.S. government early last year.
"When we first proposed this, it had little support," Taylor said. "Now it does, but it will also take 6 to 12 months to set up. I just don't think we have that kind of time."

LONDON: Investors already gearing up for more economic woes - next year
Six months after the turmoil began, the credit crunch has prompted a cut of 2.25 percentage points in the benchmark U.S. interest rate and the first coordinated action by the world's top central banks to calm money markets since the September 2001 terrorist attacks.
Yet, as the world economy slows, some stock indexes have fallen 20 percent from their peaks, dipping into the technical definition of a bear market. Many loan and bond markets remain squeezed shut, and insurance premiums on credit defaults have soared to record heights.

The crisis, which originated from a collapse in the U.S. subprime mortgage market, has to date cost the global banking sector well in excess of $100 billion in debt write-downs - around a third of the estimated total loss of $300 billion to $400 billion.

The upshot is that markets may not have discounted the full picture yet.
"We are in the early stages of a profit recession," David Rosenberg, North American economist for Merrill, wrote in a note.
"Those in the V-shaped recovery camp are going to look back on this whole post-bubble deleveraging period, surprised to see that" what looked like a series of Vs "was really just part of a string of 26 Ws in a row," Rosenberg wrote.
"The transition to the next economic cycle and bull market is going to be long and arduous."
U.S. rate cuts and Washington's fiscal package may help a recovery, but this is also threatening to push inflation higher at a time when commodity and energy prices are hitting record highs.
This is further complicating the 2009 outlook.

CABRA, Kosovo
On Wednesday, the European Union formally began its 1,800-strong legal and judicial mission in Kosovo, provoking sharp criticism from Moscow. Pieter Feith, the EU's special envoy, appealed to Serbs, who consider the mission "an occupying force," to stop demonstrating and to live side by side with ethnic Albanians.
But privately, EU diplomats expressed worries that Kosovo's Serbs could provoke ethnic Albanians, undermining whatever collective Serbian and Albanian authority remained in northern Kosovo, and entrenching Belgrade's control so that de facto partition became a political, if not legal, reality.
"The Serbs appear intent on provoking an Albanian reaction and to make the international community's mission here impossible, but we will not allow legal partition," said a senior EU diplomat, requesting anonymity. But another EU diplomat said that if Serbs pursued de facto division, "there is not a lot that could be done."

"This is my land and we must stay here to show Serbia that this is Kosovo," said Zuka Ilir, an unemployed 28-year-old. "But we are afraid. We don't know what will happen."
"I will stay here and fight if I have to," added Xhevadet Beka, a 26-year-old engineer. "For now we put our faith in NATO, the EU and the United States. But we are very, very afraid that the Serbs will try and take over northern Kosovo, and it is impossible. We will not allow it."

He [the secretary general of Odinga's Orange Democratic movement] called for Parliament to convene within a week to enact constitutional changes to restructure the government in a way that will divest some of the power from the presidency.
"If that does not happen, ODM hereby gives notice that we will call our supporters to mass action within one week," he said.
The information minister, Samuel Poghisio, decried Nyongo's comment as incendiary.
"You cannot threaten mass action in a nation that requires peace. It is a contradiction," Poghisio said.

COMMENTARY: Change you can believe in
Boris Tadic, the Serbian president, took this line at the United Nations this week, insisting that Kosovo's independence "annuls international law, tramples upon justice and enthrones injustice."
He's wrong. Let's set aside the fact that Kosovo held one of the eight seats in the rotating presidency of a defunct state, Yugoslavia, and other holders of those federal seats from Slovenia to Bosnia to Macedonia all become independent.
At a deeper level, the story of little Kosovo is the story of changing notions of sovereignty and the prising open of the world.
Which brings us to "R2P." That's not a rock band or a chemical compound.
In 2005, the World Summit adopted the
"responsibility to protect," known by that acronym. R2P formalized the notion that when a state proves unable or unwilling to protect its people, and crimes against humanity are perpetrated, the international community has an obligation to intervene - if necessary, and as a last resort, with military force.
The "territory of law" is now also the universal territory on which human life is protected. Westphalian principles meet R2P. An R2P generation is coming. The prising open of the world is slow work, but from Kosovo to Cuba it continues.

The executive director, Kenneth Roth, who is based in New York, addressed a news conference in Moscow by telephone, noting that this was the first time since the fall of the Soviet Union that the Russian government had refused a visa for an official of Human Rights Watch.
"This is an unfortunate illustration of precisely the kind of harassment of NGOs that we have documented," Roth said, referring to nongovernmental organizations.
The Russian Foreign Ministry would not comment on the denial of the visa.

Karol Sikora, a professor of cancer medicine at the Imperial College School of Medicine and one of Charlson's co-authors, said that co-payments were particularly prevalent in cancer care. Armed with information from the Internet and patients' networks, cancer patients are increasingly likely to demand, and pay for, cutting-edge drugs that the health service considers too expensive to be cost-effective.
"You have a population that is informed and consumerist about how it behaves about health care information, and an NHS that can no longer afford to pay for everything for everybody," he said.
As wrenching as it can be to administer more sophisticated drugs to some patients than to others, he said, "if you're a doctor working in the system, you should let your patients have the treatment they want, if they can afford to pay for it."
In any case, he said, the health service is riddled with inequities. Some drugs are available in some parts of the country and not in others. Waiting lists for treatment vary wildly from place to place. Some regions spend £140 per capita on cancer care, Sikora said, while others spend just £45.
Foreigners who live and work in Britain will have to wait longer, pay more and even carry out charity work if they want to become citizens under new laws proposed Wednesday.
Home Secretary Jacqui Smith said those who want citizenship, which allows them to live and work without a visa and gives them a vote, must prove their allegiance to Britain.

Whose Kremlin is it? Medvedev's economic plan rocks the boat
"There is a struggle of Byzantine proportions taking place inside the Kremlin," said Anders Aslund, a Russian expert at the Peterson Institute for International Economics in Washington. "Until this is resolved, there is no chance of implementing bold reforms."
If Medvedev is true to his word, he would have to resign from Gazprom on his election. It would also mean that other powerful and very wealthy individuals in the Kremlin who oppose Medvedev would have to relinquish their posts, too.
They make up a formidable list. It includes Viktor Ivanov, who is responsible for personnel in the Kremlin and is chairman of Almaz-Antei, the armaments company as well as Aeroflot, the Russian national airline. Then there is Andrei Fursenko, minister for education and chairman of Rosnanotekh, a corporation established last July to promote nanotechnology. Another Kremlin aide, Sergei Chemezov, a former KGB officer who worked with Putin in Dresden, is chief of Rosoboronexport, the arm trade export agency.
All of them owe their positions to Putin and most of them come from St. Petersburg, his political birthplace. Yet by anointing Medvedev as his successor, Putin may in fact be undermining the economic power they have accrued over the years. If so, Kremlin watchers say they will try and resist plans by Medvedev to change the direction of the Russian economy.

"This is what we needed. I hope to God people have more freedom - the freedom to have opinions and always speak their minds," said Lydis Perez, 37, said after dropping her son off at school.
"People talk in the hallways or the back rooms," she said, adding, "There's a lot of fear."

Secular political parties had the most success, while Islamic hard-line groups fared badly.
Voters in the troubled North West Frontier Province, which borders Afghanistan, rejected Islamist parties that have ruled there for five years, favouring instead parties that promised to pave the streets, create jobs and bring peace to the turbulent province through dialogue and economic incentives to the extremists.
"They didn't do anything for the people," Bokharis Shah, 65, said of the religous parties. "They have done nothing to help the people, and we are afraid to come out from our homes because of all these bomb blasts."

Security experts say no one believes that bin Laden is carrying a mobile phone or using technology that could leave a digital trail.
But with 65 million people using mobile phones each day in Pakistan, the country is much more wired together than it was when bin Laden disappeared, which may be bad news for terrorists in general.
When the World Trade Center and the Pentagon were attacked in September 2001, Pakistan had only a rudimentary fixed-line phone network operated by the government.
Today, five privately owned wireless operators owned by investors from Egypt, Norway, the United Arab Emirates, Abu Dhabi and Pakistan have crisscrossed the country with cell base stations. The operators, Khaliq said, spent a combined $8 billion in 2007 to expand their networks, which now reach 70 percent of the country's 160 million people.

EDITORIAL Twilight of the dictators: A chance for Pakistan...

The White House has long insisted that there was no choice but to look the other way as Musharraf jailed journalists and lawyers, dismissed the Supreme Court and declared emergency rule. Islamist extremists, we were told, would win any fair democratic fight. Instead, even with a rigged system, the moderates managed to win.

A popular boss, Rodriguez occasionally flashed the maverick spirit prized by clandestine officers. A former colleague recalls that while in Mexico he named his horse Business, instructing subordinates to tell the ambassador or CIA brass that he was "out on Business."

The former head of MI6 denied Wednesday that the British intelligence agency killed Princess Diana and her boyfriend, Dodi Fayed, in 1997.Sir Richard Dearlove, who was MI6's director of special operations at the time of Diana's Paris death, told a coroner's inquest that MI6 didn't assassinate anyone between 1994 and 1999, when he was director of special operations.

Assassination, he said, was contrary to government policy, and he was unaware of any such activity by the agency during his career. He also denied that MI6 mounted any operations directed at her or Fayed, including surveillance or bugging, and took no particular interest in her campaign against land mines.

Dearlove also testified that an operation by rogue agents would have been "impossible."

OPINION: Unforgivable behavior, inadmissible evidence

Twenty-Seven years ago, in the final days of the Iran hostage crisis, the CIA's Tehran station chief, Tom Ahern, faced his principal interrogator for the last time. The interrogator said the abuse Ahern had suffered was inconsistent with his own personal values and with the values of Islam and, as if to wipe the slate clean, he offered Ahern a chance to abuse him just as he had abused the hostages. Ahern looked the interrogator in the eyes and said, "We don't do stuff like that."
Today, Tom Ahern might have to say: "We don't do stuff like that very often." Or, "We generally don't do stuff like that."
That is a shame. Virtues requiring caveats are not virtues.

COMMENTARY: When the magic fades
Up until now The Chosen One's speeches had seemed to them less like stretches of words and more like soul sensations that transcended time and space. But those in the grips of Obama Comedown Syndrome began to wonder if His stuff actually made sense. For example, His Hopeness tells rallies that we are the change we have been waiting for, but if we are the change we have been waiting for then why have we been waiting since we've been here all along?

Advice to psychiatrists: Try some therapy
To be any good, a cardiologist should be an expert in the use of his instrument, whether the stethoscope or the cardiac catheter. But how does this principle apply to psychotherapists?
One way to think about it is that a therapist should not start exploring a patient's mind without really knowing what is in his own. Therapists, just like their patients, bring their own life experiences into treatment, which influence their feelings about their patients — a process called countertransference.
Therapists who do not understand their own countertransference run the risk not just of misunderstanding their patients, but of confusing their own hang-ups with those of their patients.

Gentlemen, 5 easy steps to living long and well
Living past 90, and living well, may be more than a matter of good genes and good luck. Five behaviors in elderly men are associated not only with living into extreme old age, a new study has found, but also with good health and independent functioning.
The behaviors are abstaining from smoking, weight management, blood pressure control, regular exercise and avoiding diabetes. The study reports that all are significantly correlated with healthy survival after 90.


"The mind-set in Liechtenstein is: we will cooperate on criminality and terrorism," Pieth said. "If you say 'terrorism' you'll get everything you need from Liechtenstein. But tax evasion is a different matter."
The British government is seeking to protect art investments from the potential side effects of a tax on foreigners who live in the country, the minister of state for culture, Margaret Hodge, said Wednesday.

I possess a fairly nice stereo and some 2,500 CDs but the biggest problem is the custom-built cabinet I commissioned to house my music. It sits on an astounding 20 percent of the usable space in our living room.

He cited as a cautionary tale the network's experience with "Kidnapped," a show from a season ago.
"That's a perfect example," Graboff said. "The pilot cost $7 million to produce. We put it on sale to advertisers in May, and they ran for the hills. If we had been able to sit down and have a two-way conversation about them and we told them we had a show about a 13-year-old boy who is kidnapped for the entire season, they would have told us, 'Good for you, but we're not putting our clients in it.' "
PERTH, Australia
The Western Force is seeking to end Matt Henjak's contract after the scrum half was found guilty of breaking a teammate's jaw.
A disciplinary committee found that Henjak "savagely punched" winger Haig Sare, who was sitting down aat the time, at a hotel in Perth this month. Sare, who is out for six weeks because of the injury, was also fined and suspended for eight matches. Henjak was sent home from an Australian tour in 2005 for fighting in a night club in Cape Town. He has not played for the Wallabies since. The Force, which is based in Perth, said it had taken Henjak's record into account and asked the Australian Rugby Union for permission to cancel his contract.
Two other force players, Scott Fava and Richard Brown, were fined and ordered to undergo counselling for alcohol absue after being found guilty of mishandling a rare marsupial during a preseason training camp in December.


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