Canada optimistic it will be exempted

Canada, America’s top trading partner, is cautiously optimistic it will be exempted from protectionist provisions in the economic stimulus bill moving through the senate that call on major public works projects to favor U.S. iron, steel and manufactured goods over imports, Canada’s international trade minister said Saturday.

Canada and other U.S. trading partners warn that favoring U.S. companies would breach Washington’s trade commitments and could set off a retaliatory trade war.

Canadian International Trade Minister Stockwell Day voiced strong objections when he met with interim U.S. trade representative Peter Allgeier at the World Economic Forum in Davos, Switzerland, this weekend.

U.S. President Barack Obama does not have a trade representative yet, but was represented by Allgeier, a Bush administration holdover who served as ambassador to the World Trade Organization. Former Dallas Mayor Ron Kirk, Obama’s nominee for U.S. trade representative, is awaiting Senate confirmation.

“Following the discussions I’ve had, and with the interventions we’ve made on a number of levels I’m cautiously optimistic that something can be worked out,” Day said in a conference call with reporters on Saturday.

Day said Allgeier was very much aware how big of a concern it is to Canada. He said the president has certain abilities to waive parts of the legislation if they go against the obligations of the North American Free Trade Agreement — which links the U.S., Canada and Mexico — and other international pacts aimed at liberalizing world trade.

“They are looking for ways to handle our concerns,” Day said. “The administration is very aware. There seems to be a desire to do something to mitigate the effects of the legislation going through, if it does go through.”

Asked about the protectionist provisions Friday, White House press secretary Robert Gibbs would say only that the administration was reviewing them.

The provisions are likely to find support among Americans outraged that money from a stimulus package likely to top $800 billion could go to foreign competitors of U.S. companies.

The U.S. House of Representatives passed the $819 billion stimulus bill on Wednesday that included “buy American” provisions that would call on major public works projects to favor U.S. steel and iron.

Canada’s trade minister noted the Senate is considering expanding the measure to include manufactured goods, a more far-reaching provision. The proposed Senate provision states that none of the funds may be used for a project “unless all of the iron, steel and manufactured goods used in the projects are produced in the United States.”

Day said the provisions in the stimulus bill are similar to the U.S. Smoot-Hawley Act of 1930, a tariff law which he said had exacerbated the Great Depression of the 1930s.

“In a time of global downturn countries should not be lapsing backwards into protectionist activity. That only results in other countries then wanting to put up barriers and the last thing we need now is a retaliatory trade war,” Day said.

U.S. trade with Canada totaled about $560 billion in the first 11 months of last year, well ahead of trade with second-place China, which was about $379 billion in the January-November period.

Canada and the EU are waiting to see if the measure is included in the final economic-recovery package that is expected to emerge from the Senate next week. Democratic leaders have pledged to deliver it to the White House for Obama’s signature by mid-February.

Obama is scheduled to make his first foreign trip as president to Canada on Feb. 19. Day said it is a major issue for Canadian Prime Minister Stephen Harper.

“If it’s not resolved by the time the president arrives here, I just know how concerned our PM is on this,” Day said.


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A bidding war and a row over ethics: how the octuplets story turned sour

It was a heart-warming tale of a young Californian mother who gave birth to eight babies. But now, as more details emerge, public reaction has turned from from joy to shock to anger.

It was a midwinter miracle; eight babies born to a single mother and every one of them delivered alive. For a nation enduring its deepest economic crisis since the Great Depression, the tale was a welcome relief from bail-outs and bankruptcies. But this weekend, as the journalistic pack chases an altogether darker dimension to the story of Nadya Suleman, the feel-good factor has suddenly vanished.

The birth of Suleman’s eight babies – six boys and two girls – was clearly an extraordinary event. Only one previous case of eight surviving babies had ever been recorded in the US. Yet as the eccentricity of Suleman’s background and biography emerges, America is suddenly recoiling in shock. Far from being a heart-warming tale of wonder, the more that becomes known about the Suleman family, the more it seems something very disturbing has occurred. Public reaction has quickly turned from joy to shock and anger.

By last night, it was clear that Suleman is not an infertile woman who sought medical help to have children. The 33-year-old Californian already has six children. She is single and has no visible means of support for her current family, let alone the additional eight babies that now give her enough offspring to field a football team with three substitutes.

In fact, Suleman still lives with her parents. Her family has revealed that she may have serious mental-health problems and be addicted to having children. Her own mother, Angela Suleman, told one Associated Press reporter: “[She] is not evil, but she is obsessed with children. She loves children, she is very good with children, but obviously she overdid herself.”

Angela Suleman also revealed that her daughter’s obsession with children caused her considerable stress, and led her to seek help from a psychologist, who had told her to order her daughter out of the house.

“Maybe she wouldn’t have had so many kids then, but she is a grown woman,” Angela said. “I feel responsible and I didn’t want to throw her out.”

The case of the Suleman octuplets is now sending shockwaves through the medical fertility community. Few reputable doctors can understand how a healthy mother-of-six could have been allowed to have fertility treatment that resulted in octuplets without serious questions arising about the mother’s mental health, her capacity to raise such a large family or the huge medical dangers involved in giving birth to so many babies at once.

The family has now taken refuge behind the curtains of its modest three-bedroom suburban home in Whittier, a town near Los Angeles. Usually in these situations, the proud parents parade before the cameras, appear on talk shows and land lucrative sponsorship deals with baby-products firms.

But when Nadya Suleman’s father, Edward, briefly emerged, he did not appear full of the joys of enlarging his family with more grandchildren. “I wish it happens to you people, so you go through hell,” he snapped at the media throng as he unloaded bags of shopping from his car. It was later revealed that Edward was considering going back to his native Iraq – where he has worked as a contractor – in order to raise some cash for the family. As the bidding war begins for Suleman’s story, the quickest and most likely route to financial security is likely to be a publishing contract.

The money seems to be desperately needed. Details of the family’s finances suggest that the Sulemans are already struggling with the load of looking after six children and are ill-prepared for the arrival of eight more.

Court records in nearby San Bernardino show that Suleman’s mother filed for bankruptcy last year, claiming $1m in liabilities as a result of a bad housing investment. At the same time, the records hint at an unusual personal history for the family. They show that Suleman – who changed her name from Nadya Doud in 2001 – divorced her husband, Marcos Gutiérrez, a year ago. Gutiérrez, however, may not be the father of her first six children, because the divorce filing indicates no children were produced from the marriage.

In fact, birth certificates name one “David Solomon” as the father of her eldest four children. It also seems that Suleman had been living with her parents, not her husband, for the past eight years, at a variety of addresses. However, her own parents, who still live together, are also divorced, having legally separated in Las Vegas in 1999.

Suleman herself seems to have little employment history. Neighbours have reported that she worked as a psychiatric technician before she began having children. After that, she attended college, studying child development. She graduated with a bachelor of science degree and returned to do a masters. She last went to a classroom in the spring of 2008.

But even more mysterious than the family’s history are the details of how Suleman became impregnated. Officials at Kaiser Permanente, where a 46-strong medical team delivered her eight children, have said she first appeared there when she was already three months pregnant. Yet it seems that the fertility clinic that implanted Suleman with so many embryos was going against current medical practice. Leaving aside the wisdom of treating a single mother with six children, it is dangerous to implant so many embryos in a woman so young. The likelihood of all those embryos taking hold is much higher in younger mothers and so most doctors would only implant one or two embryos.

Then there is the question of why doctors allowed Suleman to keep all eight embryos once they took hold in her womb, despite the enormous risks to her: even having triplets puts a woman and her babies at huge risk of death or serious injury.

Medical experts across America have queued up to express their rage. “If this resulted from an IVF treatment, we can say that transferring eight embryos in an IVF cycle is well beyond our guidelines,” said Dale McClure, president of the American Society for Reproductive Medicine.

Meanwhile, Arthur Wisot, a fertility doctor in Los Angeles, raised a further prospect. “I cannot imagine that any of the mainstream practices in the Los Angeles area were involved in this. I would guess… she either went out of the country or went to a practice that flies below the radar,” he told a TV reporter.

All the drama has left many questions still unanswered as the eight babies at the centre of the controversy recover in hospital.

They are all doing well. But if the American public was looking for hope and inspiration in the face of tough times, the Suleman octuplets will have provided little in the way of light relief.


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Bullying at school ‘can be good for you’


Being a victim of schoolyard thugs can help pupils learn how to manage disputes and boost their ability to interact with others

According to official figures, almost half of children claim they are bullied at school.

One of the biggest studies of its kind by Ofsted showed 48 per cent of young people had been verbally or physically abused in the last year.

It comes despite a raft of Government initiatives designed to crack down on attacks and intimidation.

Writing on the website Spiked, Dr Guldberg said: “Teachers are increasingly lumbered with the task of looking after children’s health and wellbeing rather than being allowed to get on with the task of educating them.

“Children are encouraged to assume their relationships with other children are damaging, and tacitly encouraged to look upon their peers with trepidation and suspicion.”

She added: “If we treat children as if they cannot possibly cope with hurtful experiences, then we will likely undermine their confidence and make them less likely to cope with difficult events in the future. In effect, we will prevent them from growing up.”

The comments echo remarks made by teachers in recent years who claim the education system has been too focused on developing children’s social skills at the expense of academic learning.

But Sue Steel, national manager of the Anti-Bullying Alliance, said: “Children who are being bullied often find it difficult to tell anyone. Teachers can help by maintaining an appropriate level of vigilance.”


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More on Nonprofit Newspapers

The sad irony of the predicaments facing newspapers today is that their troubles are not a function of loss of audience. In fact, the total readership of the content of the New York Times and the Washington Post has grown more than fivefold since the emergence of the World Wide Web. My statistics are not up to date, but the Washington Post and New York Times Web sites combined have in excess of twenty-five million unique monthly users. Several million of these readers live overseas. The problem is that the business model that created the newsrooms that made this journalism so popular has been shattered at the same time. New readers are, per capita, less profitable than the old ones. That is hardly a reason to allow the destruction of the journalism that attracted them to these newsrooms in the first place.

Second, the sheer scale of legacy newsrooms creates strength—an independence of mind, an imperviousness to deep pockets and political pressure. At the height of the Washington Post’s powers, I was working as an investigative reporter in London and got into a dispute over my reporting with an exiled Russian, er, businessman. The Post’s lawyers never blinked. They shelled out in the range of a million bucks of cash and insurance to defend our reporting, sent private investigators to Russia to acquire files that proved our case, and handled the matter without ever breaking a sweat. The powerful institutions, whether private or public, that journalism should report on simply dwarf those smaller entities that will emerge in the coming era of self-publishing and philanthropic journalism. We need a few big dogs with enough money to choose principle even when it does not make economic sense.

Third, and perhaps obviously, ambitious reporting is expensive. Foreign bureaus are expensive. Investigative projects can take a year or more. You have to be willing to drill dry holes. Some of this sort of reporting can be replicated on a smaller scale by groups like Voice of San Diego. The deep, sustained international reporting that crosses borders and travels to refugee camps and civil wars without an advocacy agenda; multifaceted investigative reporting disciplined by continuous contact with audiences; expert beat reporting where the writers’ instincts about what matters and how to document difficult, hidden facts has built over many years—all of this is now in jeopardy unless it is endowed.

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A Long-Lived Privilege?


Rove was instructed by then White House counsel Fred Fielding to exert executive privilege if subpoenaed.

Just four days before he left office, President Bush instructed former White House aide Karl Rove to refuse to cooperate with future congressional inquiries into alleged misconduct during his administration.

On Jan. 16, 2009, then White House Counsel Fred Fielding sent a letter (.pdf) to Rove’s lawyer, Robert Luskin. The message: should his client receive any future subpoenas, Rove “should not appear before Congress” or turn over any documents relating to his time in the White House. The letter told Rove that President Bush was continuing to assert executive privilege over any testimony by Rove—even after he leaves office.

A nearly identical letter (.pdf) was also sent by Fielding the day before to a lawyer for former White House counsel Harriet Miers, instructing her not to appear for a scheduled deposition with the House Judiciary Committee. That letter reasserted the White House position that Miers has “absolute immunity” from testifying before Congress about anything she did while she worked at the White House—a far-reaching claim that is being vigorously disputed by lawyers for the House of Representatives in court.

The letters set the stage for what is likely to be a highly contentious legal and political battle over an unresolved issue: whether a former president can assert “executive privilege”—and therefore prevent his aides from testifying before Congress—even after his term has expired.

“To my knowledge, these [letters] are unprecedented,” said Peter Shane, an Ohio State University law professor who specializes in executive-privilege issues. “I’m aware of no sitting president that has tried to give an insurance policy to a former employee in regard to post-administration testimony.” Shane likened the letter to Rove as an attempt to give his former aide a ‘get-out-of-contempt-free card’.”

The issue arose this week after House Judiciary Committee Chairman John Conyers announced that he had subpoenaed Rove to be deposed under oath next Monday to answer questions about his alleged role in the firing of U.S. attorneys and the prosecution of the former Democratic governor of Alabama, Don Siegelman. Conyers, whose panel extensively investigated both matters last year, signaled that he has no intention of dropping them now just because Bush has left office. “After two years of stonewalling, it’s time for him [Rove] to talk,” Conyers said in a press release.

But it is unclear whether Rove—or Miers, who was found in contempt of Congress last year when she refused to honor an earlier subpoena—is close to doing so. Luskin said he did not solicit the letter from Fielding, but maintains that its contents give his client little choice in the matter.

Fielding’s letter cited the aggressive position of the Bush Justice Department on executive-privilege issues. That doctrine essentially held that White House aides not only did not have to answer specific questions before Congress about their presidential duties, they didn’t even have to show up in response to subpoenas because they had “absolute immunity.”

“We anticipate that one or more committees of the United States Congress might again seek to compel Mr. Rove’s appearance, testimony or documents on the subject of the U.S. attorneys matter,” Fielding wrote. “Please advise Mr. Rove … that the President continues to direct him not to provide information (whether in the form of testimony or documents) to the Congress in this matter …”

Reached Wednesday afternoon, Fielding declined to comment. But a former presidential aide, who asked not to be identified talking about sensitive matters, said that the letter to Rove was “basically the same” as the one sent to Miers (and a third letter sent to former White House chief of staff Josh Bolten). “If the president was going to assert privilege,” this source said, he had to do it before he left office on Jan. 20.

Luskin said that he forwarded a copy of Fielding’s letter, as well as the subpoena he got from Conyers, to Obama’s White House counsel, Greg Craig, and essentially asked for the new president’s position on these matters.

So far, he said, Craig hasn’t responded; Luskin also says he has asked the House Judiciary Committee to postpone its deposition of Rove until he hears back. The committee has agreed to put off the deposition—but only for a few weeks.

The issue is likely to come to a head soon. The Justice Department is due to state its position on executive privilege to the U.S. Court of Appeals in a few weeks in response to the House’s attempt to enforce its previous subpoenas for Miers and Bolten, who were subpoenaed to turn over documents relating the U.S. attorneys firings. Both refused to comply, or even show up—relying on the Bush Justice Department’s sweeping position on “absolute immunity” from testifying before Congress.

Few legal observers expect the Obama Justice Department to endorse that position, but it remains an open question how the new administration will define the scope of presidential privilege. Bush’s attempt to assert privilege even after he leaves office throws a new wrinkle into the dispute.

“We’re in uncharted territory,” Luskin said to NEWSWEEK when asked whether a former president can still assert executive privilege after he leaves office. He added that Rove has no personal objection to testifying and will cooperate with an ongoing Justice Department inquiry into the U.S. attorneys firing—although Luskin says he has not yet been contacted. (Rove is an occasional contributor to Newsweek).

A White House aide said Wednesday afternoon that Craig’s office was still reviewing the issue.


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Judge rejects Obama bid to stall Gitmo trial

A military judge at Guantanamo on Thursday rejected a White House request to suspend a hearing for the alleged mastermind of the USS Cole bombing, creating an unexpected challenge for the Obama administration as it reviews the U.S. war-crimes trials process.

The judge, Army Col. James Pohl, said his decision was difficult but necessary to protect “the public interest in a speedy trial.” The ruling came in the case against Abd al-Rahim al-Nashiri. The bombing of the Navy destroyer in 2000 in the harbor of Aden, Yemen, killed 17 U.S. sailors.

It seemed to take the Pentagon completely by surprise.

“The Department of Defense is currently reviewing Judge Pohl’s ruling,” said Navy Cmdr. Jeffrey Gordon, a Pentagon spokesman. “We will be in compliance with the President’s orders regarding Guantanamo.”

Obama has ordered the detention center in Cuba to be closed within a year. The administration asked last week for a 120-day suspension in proceedings against some 20 detainees as it considers whether to continue trying alleged terrorists in the military commissions, revamp them or try suspects in other courts.

On Jan. 22, Obama signed an executive order directing Defense Secretary Robert Gates to ensure that “all proceedings of such military commissions to which charges have been referred but in which no judgment has been rendered … are halted.”

But Pohl wrote in his ruling that “on its face, the request to delay the arraignment is not reasonable.”

Navy Lt. Cmdr. Stephen Reyes, the Pentagon-appointed attorney for Abd al-Rahim al-Nashiri, said the decision gives the Obama administration few options.

“The next step, if the government wants to halt the proceedings, is to withdraw the charges,” Reyes said. “Now it’s in the government’s hands,” he said. “I have no idea what they’re going to do.”

Pohl is the chief judge at the tribunals at the U.S. Navy base in Guantanamo Bay, Cuba. At least two other judges have already granted the continuance sought by the president, with the defense and prosecution agreeing in both cases that they should be suspended.

Pohl noted that no substantive legal issues would be litigated at al-Nashiri’s arraignment, scheduled for Feb. 9, meaning that “nothing will be mooted or necessary for relitigation” if Obama scraps the tribunals.

The war crimes court came to an abrupt halt Jan. 21 after two other military judges granted Obama’s request to suspend proceedings while he reviews former President Bush’s strategy for prosecuting terrorists. Obama’s executive order came the following day in Washington.

Those proceedings were against a Canadian accused of killing a U.S. soldier in Afghanistan and five men charged in the Sept. 11 attacks.

In all, war crimes charges are pending against 21 men at Guantanamo. Before Obama became president, the U.S. said it planned to try dozens of detainees in a system that was created by Bush and Congress in 2006 and has faced repeated challenges.

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Plight of the humble bee


Native British bees are dying out — and with them will go flora, fauna and one-third of our diet. We may have less than a decade to save them and avert catastrophe. So why is nothing being done?

Think of summer. Meadows and gardens daubed with so much colour it looks as if some giant hand has gone berserk with a paintbrush. Now expunge that picture and think of another. This time the giant hand has mislaid every pigment save brown and olive. There are no blooms, no insects, no birds. No visible wildlife of any kind. No fruit. No sound other than the mechanistic din of humankind harvesting fungi and the approaching cries of battle.

The first picture is a poetic fiction, a received vision of England as it never was, an idyllic land of apple-cheeked rustics singing in harmony with a bountiful Nature. The second is a piece of bleak futurology that assumes the process of environmental degradation will be irreversible, leaving hollow-cheeked starvelings to follow the rest of the world’s fauna across the Styx. The creature that links the two visions — by its abundance in the first and absence from the second — is the same that now buzzes unseasonably among the dripping foliage of our winter gardens. The bee.

“The” bee, of course, is a gross oversimplification. There are many species of bumble as well as of honeybee. Or there were. In the bounteous days of teeming hedgerows and fields of clover, Britain had 25 kinds of bumble, all merrily gathering nectar and pollinating plants and trees. Three of these already have vanished, and seven more are in the government’s official Biodiversity Action Plan (Uk Bap) as priorities for salvation.

It’s the same right across Europe, and the reasons everywhere are the same — changes in agricultural practice that have replaced historic mixed farmscapes with heavily industrialised monocultures in which wild animals and plants are about as welcome as jackals in a pie factory. Insects in particular have been targets of intense chemical warfare. We are, at the eleventh hour, learning from our mistakes, but patching nature back together again is exponentially more difficult than blowing it apart.

Most people do now get the point about honeybees. Following the multiple crises that continue to empty the hives — foulbrood, varroa mites, viral diseases, dysfunctional immune systems, and now the mysterious but globally devastating colony-collapse disorder (CCD) — it is understood that the true value of Apis mellifera lies not so much in the sticky stuff that gives our favourite insect its name as in the service it provides as a pollinator of farms and gardens. If you add retailers’ profit to farm gate prices, their value to the UK economy is in the region of £1 billion a year, and 35% of our diet is directly dependent on them. It is an equation of stark simplicity. No pollination: no crops. There is nothing theoretical about it. The reality is in (or, more accurately, not in) the hives. The US has lost 70% of its honeybee colonies over the past two winters. Losses in the UK currently are running at 30% a year — up from just 6% in 2003.

But fewer people realise that bumbles, too, are important not just to some remote, bug-ridden process called “ecology”, of interest only to bearded men in anoraks. Growers of beans, oilseed rape and fruit especially have reason to feel alarm at their disappearance. So vital are they to the productivity of the fields, and so lethal the pressures on them, that farmers are having to import captive-bred reinforcements, many of them southern-European species raised in Slovakia. The total annual influx is reckoned at some 100,000 nests, each containing a queen and 200 workers, priced around £50 a time.

As the example of honeybees shows, this is a strategy of literally incalculable risk. International trade in honeybees has spread pests and diseases that imminently threaten their survival. In November 2007 the then food-and-farming minister, Lord Rooker, declared in the House of Lords that if things went on as they were, the honeybee in the UK would be extinct within 10 years. The situation since then has worsened, so at the best estimate the 10 years have shrunk to eight.

For bumbles, too, time is running out, and nobody knows whether the introduction of alien bees will delay the end or bring it closer. The signs are not encouraging. In the US, wild-bumblebee numbers have collapsed dramatically since the 1990s — they have been killed by parasites carried by European species brought in to pollinate greenhouse crops such as tomatoes and peppers.

“There is a high likelihood of interaction between wild and commercially reared bees at flowers,” says Dave Goulson, professor of biological sciences at the University of Stirling and a world expert on bumblebees. This creates the ideal conditions for what ecologists call “pathogen spillover”. Nor is disease the only risk. There is also the “grey-squirrel effect”, in which native species are driven out by more aggressive foreigners. This is happening in Japan, where, ironically, imports of Bombus terrestris — the same bumblebee now humming in southern England — have escaped and are outbreeding the locals. And it may already be happening in the UK.

As in Japan, the aliens are better foragers and breed more rapidly than the natives, whose health and territory they threaten, while there is no guarantee that the immigrants themselves will not be poleaxed by local infections. This is bad news for more than just the bees themselves. In the complex world of inter-species relationships developed over millennia, small changes can have massive effects. In addition to his general theory of relativity, Albert Einstein had a specific theory about the relativity of man and bee. “If the bee disappears off the surface of the globe,” he is supposed to have said, “then man would only have four years of life left.”

If other scientists are more cautious, it is only in terms of the timescale.

On the face of it, the midwinter appearance of Bombus terrestris looks encouraging — a harbinger of the all-year summers that optimists look forward to. But this is precisely the problem. Contrary to what one might expect, says Goulson, a warming climate will not set the hedgerows buzzing. “Bumblebees evolved in the Himalayas. They are unusual among insects in that they don’t like warm weather.” Their thick fur coat is an aid to survival in a cool climate but an energy-sapping body-broiler in the heat. “This is why the southern hemisphere has no bumblebees.”

Once upon a time, for example, the great yellow bumblebee, Bombus distinguendus, which thrives in the cold and wet, was common throughout Britain. Now it has been driven so far northwards that it occurs on the mainland only within half a mile of the extreme north coast of Caithness and Sutherland. “So,” says Goulson, “it can go no further. It is probably doomed as a result of climate change.” Other species, too, are shrinking into local redoubts. The shrill carder bee, Bombus sylvarum, is now limited to the Somerset Levels, Salisbury Plain and the Thames Estuary, where much of its habitat is on brownfield sites and impossible to protect. Since 1980, the formerly common large garden bumblebee, Bombus ruderatus, has been recorded at fewer than 10 sites in the UK.

And so it goes on. As the entire insect world is being forced inexorably northwards, it may be hoped that other pollinators from southern Europe may be sucked into the vacuum behind them. Hoped, but not expected. Bumblebees are not like migrating birds — they do not fly for hundreds of miles between remote habitats. They are more like mammals, needing a continuous corridor of suitable habitats to move through. Without a linked route up through France, they are more likely to die out where they are.

Even if new species did arrive, they would be unable to take on all the work of the old. Many bumblebees, including all those under threat, are specialist feeders that depend upon — and pollinate — particular groups of plants. By the miracle of evolution, some species have developed long tongues, with which they can reach the nectar of deep-throated flowers. Without them, the plants could not reproduce. The incomers can offer no solution: their tongues are too short. The first casualties of the bumblebee exodus, therefore, will be some of the best-loved British wild flowers such as foxgloves, irises, red clover, comfrey, toadflax, tufted vetch… Soft fruit, oilseed and bean crops would also take a hit.

And that is the thin end of the long-term catastrophe that now stares us in the face. You take one brick out of the ecological wall, others crumble around it. Then more crumble, on and on until the edifice collapses. Ecologists call it an extinction vortex. You lose bees, you lose plants. You lose plants, you lose more bees. Then more plants, then other insects, then the birds and animals that depend on them and on each other, all the way up the food chain. But never mind animals — if you stretch the process far enough, you’re talking about humans.

The more extravagant, ocean-boiling scenarios of climate science have drama on their side, but the entomologists in their quiet way are just as scary. In his book The Creation, the world’s most celebrated biologist, E O Wilson, has spelt out what would happen if the vortex swallowed insects. “People need insects,” he says, “but insects do not need us. If all humankind were to disappear tomorrow, it is unlikely that a single insect species would go extinct, except three forms of human body and head lice… In two or three centuries, with humans gone, the ecosystems of the world would regenerate back to the rich state of near-equilibrium that existed ten thousand or so years ago… But if insects were to vanish, the terrestrial environment would soon collapse into chaos.”

Flowering plants would go first, then herbaceous plants, then insect-pollinated shrubs and trees, then birds and animals and, finally, the soil. Wilson corrects the generally held misapprehension that the principal “turners and renewers” of the soil are worms. That distinction more properly belongs to insects and their larvae. Without them, bacteria and fungi would feast on the decaying plant and animal remains, while — for as long as it was able to support them — the land would be recolonised by a small number of fern and conifer species. The human diet would be wind-pollinated grasses and whatever remained to be harvested from a fished-out sea. It would not be enough. Widespread starvation would shrink the population to a fraction of its former size.

“The wars for control of the dwindling resources, the suffering, and the tumultuous decline to dark-age barbarism would be unprecedented in human history.” Wilson concedes that we might survive quite happily without body lice and malarial mosquitoes. Otherwise, he says: “Do not give thought to diminishing the insect world. It would be a serious mistake to let even one species of the millions on Earth go extinct.”

But here again is a parallel with global warming. Changes have taken place that cannot be reversed, and further change is unstoppable. Unlike global warming, however, loss of insects has not inspired national governments or the UN to take expensive action to forestall it. The plight of the honeybee has been well documented if not well understood. The causes of colony-collapse disorder, in which bees disappear without trace from their hives, are debated as fiercely as the causes of climate change, with opinion dividing along very similar fault-lines determined often by vested interests.

Bee farmers and the European parliament blame arable farmers for killing or poisoning their bees with GM crops and careless use of insecticides. The arable farmers say their critics don’t know what they are talking about. Others suspect viruses, parasites or fungi. Some even blame radiation from mobile telephones for disrupting the insects’ navigational systems. Many think it likely that a combination of factors is at work — pesticides perhaps weakening the bees’ immune systems and rendering them defenceless against common pests and diseases (though again the arable boys won’t have it). Tim Lovett, president of the British Beekeepers’ Association (BBKA), suspects a combination of varroa mites, viruses and a vicious parasite called Nosema ceranae, a microsporidium that occupies some strange biological niche between animal and plant.

What all outside the government are agreed upon is that more money is needed for research. Until recently the UK government committed only £1.2m a year to the bee industry, most of which was spent by Defra’s own National Bee Unit on site inspections, though in January it announced another £400,000 a year for research.

“The government blames poor beekeeping,” says Lovett. “But there is absolutely no reason to suppose that standards in the last few years have got worse. On the contrary, they have got better because beekeepers are aware of the problems.” The BBKA argues that effective research into prophylactics and treatments for bee disease would cost £8m over five years — which, given the economic returns from improved crop yields and the knock-on benefits of jobs and taxation on profit, has all the hallmarks of a bargain. But nothing is certain. The economic cavalry may or may not arrive before the last honeybee flops onto its back, and it may or may not do the trick if it does.

With bumblebees the situation is even worse. Beyond their inclusion in the Biodiversity Action Plan, where they are just seven among 1,149 listed species ranging from mosses to whales, the government offers no direct funding for their protection. Artificial nitrogen fertilisers mean there is no need for the old-fashioned rotation crops, most importantly clover, that they used to forage on, and herbicides have eliminated most of the wild alternatives. Their nesting sites have gone too. Some species live in dense grass above ground; others prefer underground cavities — typically abandoned rodents’ nests. The removal of hedgerows and unploughed field margins has put paid directly to the upstairs bees and indirectly to the downstairs ones by starving out the voles and mice that create their homes. Any that do find nesting places are likely to have them smashed by farm machinery or zonked by pesticides.

Even that is not the end of it. Many surviving populations of bumblebees are small and isolated. This results in inbreeding, which weakens the gene pool and increases the threat of extinction. Goulson reports that the highly virulent small hive beetle, Aethina tumida, whose larvae have devastated tens of thousands of honeybee colonies in the US and Canada, has spread into bumblebee nests, along with deformed-wing virus (which has the effect implicit in its name and is carried by mites). The small hive beetle has not yet appeared in the UK but it has reached other parts of Europe, and its transmission here via imported bees is a matter of “when”, not “if”.

Good news? There is a little. Government subsidies are available to farmers who replant hedgerows, restore grassland or sow wildflower strips. This is for “biodiversity”, but bees will get some benefit. But it is nowhere near enough. “Most bumblebees,” says Goulson, “cannot be conserved by managing small protected islands of habitat within a sea of intensively farmed land. Large areas of suitable habitat are needed to support viable populations in the long term.”

If the worst happens and Lord Rooker’s requiem for the honeybee reaches its solemn conclusion some time around 2017, the burden of responsibility heaped upon the bumblebee will be unsupportable. Bookmakers would give very long odds against the survival of long-tongued bumblebees and the plants that depend on them, and even longer odds against their short-tongued cousins filling the void left by honeybees. Given that a bumblebee nest contains only a few hundred insects, while a honeybee hive contains thousands, it would require a population explosion on the scale of a biblical plague.

Already, says Goulson, crop yields are beginning to suffer. Bald spots are appearing at the centres of bean fields where bumblebees are failing to penetrate. As in so many other aspects of global life, it is China that lights the way ahead. In Sichuan province, the most important crop is pears, which depend on pollination by bees. But there are no bees. A blunderbuss approach to pesticides has all but wiped them out. Result: thousands of villagers have to turn out with paintbrushes to pollinate the trees by hand. “It’s just about possible in a country where labour is cheap,” says Goulson, “but it wouldn’t work in Europe.”

Bombus terrestris meanwhile chugs happily along the Channel coast, following its scrambled instincts and ignoring the calendar. Not since the sirens tempted Odysseus has a mellifluous sound raised such a lethal echo.

Full article and photo:

Latin America’s Quiet Revolution

An unprecedented political and economic transformation is under way in most of the region

The Mexican government is locked in a vicious war against powerful drug cartels which assassinate public officials seemingly at will. Bolivian President Evo Morales’s constitutional rewrites threaten to push the country toward civil war. Venezuelan President Hugo Chávez persecutes his political opposition, supports the FARC rebels in Colombia and is training a civilian militia supposedly designed to defend against an impending U.S. invasion.

A report by the U.S. Joint Forces Command released earlier this month calls Mexico a potential failing state, likening it to Pakistan. This assessment is particularly striking in light of the $400 million per year that the United States provides in military and security assistance to Mexico. It also adds urgency to the U.S. government’s plans to complete a 700-mile-long border fence and dramatically expand the number of Border Patrol agents, to over 20,000 by the end of 2009 from 11,000 in 2004 — both of which have opened a rift between Washington and Mexico City. Our relationship to Venezuela is even more strained. In 2004 the Bush administration refused to continue our policy of selling military hardware and spare parts to the Venezuelans, prompting the Chávez government to not only purchase fighter-bombers, helicopters and 100,000 assault rifles from Russia, but to invite the Russian navy for joint naval maneuvers.

[Venezuela's President Hugo Ch[aacute]vez.]

Venezuela’s President Hugo Chávez.

It is no mystery why so many people think that Latin America is plunging headlong into chaos. There is, of course, a group of troubled countries that includes Venezuela, Bolivia, Argentina, Ecuador and Nicaragua. The governments in these countries are hostile to the U.S., and act arbitrarily against their own citizens. What is taking place in these countries is not, however, a departure from a gloried past of rule of law, strong property rights and economic success. Rather, it is a continuation of a long history of mismanagement, overlaid with a thin patina of anti-imperialist rhetoric.

Most of Latin America is, however, undergoing a period of unprecedented political and economic transformation. In Chile, Brazil, Peru, Uruguay, Costa Rica, El Salvador, Panama, the Dominican Republic and, yes, Mexico — which is most decidedly not a failing state — there has been a quiet but substantial movement toward the creation of societies that are characterized by increased economic opportunity, social mobility and political democracy. This is not to say that Brazilians have achieved the same standard of living as the Dutch, or that the rule of law operates in Mexico as it does in Canada. It is to say, however, that these countries have undertaken a series of economic and political reforms that make them vastly different places than they were two decades ago.

The most obvious manifestations of this change are sound macroeconomic policies that have held down inflation, opened markets and encouraged investment, but these policies are often undergirded by changes in much deeper institutions, such as electoral rules that give rise to governments with centrist agendas or constitutional amendments that provide for independent central banks.

Chile provides perhaps the most obvious example of a country that has been undergoing dramatic changes — and its success has served as a model for the rest of the region. Beginning in the 1970s, a series of reforms reshaped the economic playing field. Analysts often point to Chile’s sound macroeconomic policies — and rightly so. But these policies are the result of parliamentary rules that create incentives for legislators to converge on balanced budgets and of electoral rules that favor the two largest parties — one of which is center-right and the other center-left, thereby minimizing the probability of a return to populist economic policies.


Chilean President Michelle Bachelet delivers her annual message to the nation at the National Congress in 2007.

Other institutional reforms changed the nature of regulation and the enforceability of property rights. Under the Chilean constitution, the government can only expropriate private property if Congress enacts a specific law, and even then compensation must be paid in cash at market prices; all economic activities are legal, unless Congress passes specific laws regulating them; and citizens can protect themselves from arbitrary government actions that reduce their rights to life, liberty and property by obtaining an injunction from an appellate court — in which they need not be represented by legal counsel. Chilean gross domestic product per capita has doubled over the past 18 years, the fastest sustained expansion in the country’s history. Poverty rates have fallen precipitously. Young Chileans from humble families are attending college and buying homes. Indeed, Chile has a homeownership rate roughly equal to that of the United States, about 70%.

Mexico provides a similar example. From 1929 to 2000 a single party, the Institutional Revolutionary Party (PRI), monopolized political power. After decades of corruption, economic mismanagement and arbitrary actions against the property rights of citizens — which included the expropriation of the entire banking system — the PRI was finally forced from power in 2000, when voters elected Vicente Fox, the presidential candidate of the center-right National Action Party (PAN). Voters again elected a PAN candidate, Felipe Calderón, in 2006.

Since 2000, PAN governments have enacted reforms that have enhanced the rule of law by establishing the legal principle of innocent until proven guilty, mandated government transparency through a freedom of information act, eased access to credit by increasing competition in financial services and encouraged homeownership via reforms to contract and banking law. Some sense of Mexico’s transformation can be gleaned from one fact: In order to run competitively in the 2006 election, leftist Andres Manuel López Obrador had to jettison most of his left-wing stances during the campaign in order to be competitive with the PAN — and he lost anyway.

[Felipe Calderon, president of Mexico, whose PAN party has introduced many reforms since 2000.]

Felipe Calderón, president of Mexico, whose PAN party has introduced many reforms since 2000.

Many of Mexico’s reforms are of a variety that only a CPA might find exciting. Not surprisingly, they have gone unnoticed in the foreign press. A 2001 reform allows banks to write mortgage contracts as bilateral trusts, in which the bank is both trustee and beneficiary, instead of as liens on property. This new form of contract means that a mortgagee can no longer default on a loan and prevent repossession for years on end by using the country’s notoriously inefficient bankruptcy courts, because the assets being collateralized are held by the trust and are not part of an individual’s bankruptcy estate. As a result, banks are more likely to make housing loans in the first place. Coupled to additional reforms that created a system of private housing accounts financed by payroll taxes, and that created a federal mortgage society that operates in a manner similar to Fannie Mae, homeownership has been placed within reach of millions of Mexican families.

Recent reforms have also encouraged competition in financial services. As a first step, the government allocated charters to nonbank financial intermediaries that could make housing and automobile loans. As a second step, it granted bank charters to retail giants, including American-owned Wal-Mart, thereby allowing families of modest means to open accounts and obtain credit to finance the purchase of consumer goods. The bottom line: Living standards, as measured by infant mortality rates, life expectancy and years of education, have all improved in Mexico over the past decade.

The Mexican state is weak when compared to the U.S., but incredibly strong when compared to places in Central Asia or Africa that are usually called failing states. There are no foreign troops on Mexican soil. There is no martial law. Garbage is picked up, streets are swept and children go to school. Middle-class couples take weekend getaways, and drive there on highways as good as those in the United States. After falling for a decade, Mexico’s homicide rate increased in 2008, because the Calderón government courageously decided to take on the drug traffickers. If it keeps rising, it may soon be as high as that of…Louisiana.

costa rica

People strolling in San José, Costa Rica.

Chile and Mexico are not isolated cases. Recent Brazilian governments have brought an end to the country’s long history of hyper-inflation, privatized inefficient and corrupt state-owned banks and created a social welfare system based on the premise that families can only obtain public assistance if they keep their children in school. In Peru, recent governments have not only practiced sound economic and fiscal policies, they have taken the advice of reform-minded economists like Hernando de Soto seriously, granting title to some 1.2 million poor families between 1988 and 1995. The country has grown at better than 6% per year over the past decade.

The quiet nature of the changes occurring in most of the region tend to be lost among the din created by bombastic leaders such as Bolivia’s Mr. Morales and Venezuela’s Mr. Chávez, and to a lesser extent by Argentina’s Cristina Fernández, Ecuador’s Rafael Correa and Nicaragua’s Daniel Ortega. These leaders do not represent a break with a mythic past of strong private property rights, government accountability and sound economic policies. The 20th-century history of all five countries was characterized by fiscal profligacy and property expropriations.

Argentina’s Ms. Fernández is a case in point. For all her ability to make headlines by pronouncing her friendship with Mr. Chávez, she is not very radical by Argentine standards. Her predecessors partially expropriated the bank deposits of Argentine citizens — on two different occasions within an 11-year period. Thus, her recent nationalization of the pension funds of millions of Argentines a new twist on an old story.


A street scene in Valparaiso, Chile. Chile has undergone dramatic changes recently, including a series of economic reforms.

Mr. Chávez’s expropriations of domestic and foreign companies, as well as Chavista seizures of farm land and urban real estate, are also making a bad situation worse. Venezuela should have been a major beneficiary of the oil price hikes that began in 1973, but systematic mismanagement meant that, during the two decades preceding Mr. Chávez’s election in 1998, Venezuelan per capita GDP actually shrank by a staggering 21%.

Seen in this light, Mr. Chávez’s rise to power is easily understood. His regime is based on a simple principle: direct oil revenues toward the creation of public employment, subsidized food and other policies that benefit the country’s poor, who, in turn, provide him with electoral support. Indeed, the civil militias he has created have nothing to do with defending the country against a foreign invasion, and everything to do with putting $50 per month in the pocket of an unemployed young voter.

Every country in the region is now being hit by falling commodities prices and the contraction of credit. The economic and institutional modernizers have sound economic fundamentals and popular political support. That will not make them immune from calls from some quarters to return to populism — and to cover that populism with anti-imperialist rhetoric and anti-American foreign policies. If that happens, we will have a difficult time stemming drug trafficking and combating terrorism. These economic and institutional modernizers are our natural partners; we need to be able to offer them more than border fences and platitudes about free trade. They will likely need technical and financial assistance — and it is in our national security interest that they receive it.


Mexico City’s Stock Exchange Building.

The countries that have chosen leaders who think that bombast is a substitute for property rights are going to find that they have painted themselves into very tight corners. The most bombastic, Mr. Chávez, will, in fact, find himself in the tightest corner of all. He has created a set of powerful expectations among Venezuela’s poor that were difficult to satisfy even when oil prices seemed to have no end in sight. Now, as oil prices collapse, the mismatch between what his constituents have come to expect and what he can deliver grows larger by the week. In the short run, he has two options: print money or curtail imports. The outcome of both policies will be observationally equivalent: the very group that provides him with electoral support, Venezuela’s poor, will see its standard of living fall dramatically.

If the history of Latin America’s earlier populist regimes is any guide, the end will be predictable. As his base of support erodes, Mr. Chávez will be forced to increase repression, but that requires the absolute loyalty of the armed forces, something that he does not have. Mr. Chávez’s situation, along with the deteriorating political futures of other populists, most particularly Ms. Fernández, is not lost on political elites in the rest of the region. They are, in short, becoming far less consequential to the rest of Latin America — and to us.

Stephen Haber is a senior fellow of the Hoover Institution and a professor of political science at Stanford University.


Full article and photos:

Hijacked on the High Seas


A French sailor aboard the navy frigate Jean de Vienne guards merchant ships against pirates near the coast of Somalia.

When Somali Pirates Attacked, They Kicked Off 56 Days of Drama Over the Fate of a Ship and 28 Crewmen

A few hours after dawn on the Friday after Thanksgiving, a speedboat carrying five men with AK-47s and rocket-propelled grenades raced toward a massive tanker in the Gulf of Aden. They fired at the ship as they approached, denting the hull.

The skinny, barefoot men wearing T-shirts and shorts hitched an aluminum ladder to the railing and scampered up to the deck. They shot through a window of the bridge, which the crew had locked. The ship’s captain hit the distress button.

At 12:05 a.m. that day, James Christodoulou awoke to the ringing of the bedside phone in his New Jersey apartment. Pirates had captured his company’s tanker, the MV Biscaglia, a company security official told him.

“Say that again?” Mr. Christodoulou replied.

The news thrust the 48-year-old chief executive of Industrial Shipping Enterprises Corp., a tiny Stamford, Conn.-based company, and the crew of 28 men onto the front lines of a rash of piracy targeted at huge ships sailing off the coast of Somalia en route to the Suez Canal.

ChritodoululJames Christodoulou, the owner of the Biscagilia which was captured in the Gulf of Aden by Somali pirates two months ago greets Karan Dinesh Sharma

For the next 56 days, the ship’s crew of Indians and Bangladeshis were held by armed Somali pirates. Mr. Christodoulou talked daily by phone with Somali negotiators demanding a hefty ransom. He traveled to India to beg the grandmother of one of his crewmen to end a hunger strike she had begun to protest the hijacking.

During the ordeal, he befriended a competing ship owner whose vessel also had been hijacked. That friendship played a crucial role in Mr. Christodoulou’s efforts to raise a $1 million-plus ransom, which was dropped last week in a watertight container into the ocean to secure the release of his crew and ship.

On Friday, the ship’s crew members were reunited with their families at Mumbai’s international airport, all of them safe. What they and Mr. Christodoulou have lived through since late November offers a rare glimpse into the machinations of modern-day piracy on the high seas, and shows how Somali pirates have turned hijacking international vessels into a well-calibrated and lucrative business.

The coast off Somalia has become a hotbed of piracy as the Somalian state has collapsed, offering safe haven for pirates targeting the nearby Gulf of Aden, one of the world’s busiest shipping lanes. Some 18,000 ships sail through the gulf every year, delivering Saudi oil and China-made iPods to Europe and Porsches to Dubai and French wine to China. Over the past year, as the attacks succeeded and ransoms were paid, “it turned into a rampage,” says Michael Howlett, division director of the London-based International Maritime Bureau, a monitoring group that tracks piracy.

World-wide, there were 293 incidents of piracy in 2008, up 11% from 2007, according to the IMB. There were 889 crew members taken hostage, another 32 were hurt, 11 killed and 21 reported missing, probably dead. In the Gulf of Aden alone, there were 50 attacks in the last three months of 2008, though in many cases the assaults were repelled. In all of 2008, 32 vessels were hijacked in the gulf, compared to one in 2007, according to the IMB.

Officials from various governments have criticized shipping companies for paying ransoms, which are often covered by insurance companies, arguing that they encourage further hostage taking. Shipping-company executives respond that while they don’t approve of the process, they have little choice. So far, experts estimate, tens of millions of dollars in ransoms have been paid in Somali hijackings.

Because the Gulf of Aden is in international waters, it doesn’t fall under any one country’s jurisdiction to police. Moreover, ships often are owned by a company in one country, registered in another, with a crew from somewhere else, so it’s difficult to determine whose responsibility it is to protect them.

Last summer, the United Nations passed a resolution authorizing force against Gulf of Aden pirates. In December, the European Union and North Atlantic Treaty Organization deployed seven ships to patrol the Gulf. Twenty warships from 14 countries are now there, according to the IMB. Every merchant ship is given a recommended route, near a military escort. Nevertheless, there have been 17 attacks and three hijackings in January.

Mr. Christodoulou, a shipping-company veteran, was well aware of the dangers that lay in the gulf. In November, he considered routing his 27,300-ton, double-hull tanker around Africa instead of through the gulf as it sailed from Indonesia to Spain with 25,000 tons of palm oil.

But the global financial crisis has caused cargo rates to plunge. Re-routing the ship around Africa would have added two weeks and cost his firm an extra $250,000, which was unaffordable, Mr. Christodoulou said in an interview Friday. He also figured that, despite the increase in piracy, less than 1% of vessels in the gulf are hijacked.

Instead, he hired three unarmed security guards, at a cost of $25,000, and directed his ship to follow a convoy being guarded by a French navy ship. But as the convoy proceeded through the gulf, the Biscaglia, traveling at 13 knots, fell behind.

By the time the pirates struck, the French ship was two hours away, says a spokesman for the French armed forces, who adds that the French had not been assigned to guard the Biscaglia.

The captain’s distress signal alerted the tanker’s owners and the military in the area. Then the captain capitulated to the armed men. “Everybody, come to the bridge and show yourselves,” he called out to his crew, the crewmen recall.

Crew member Asif Azam Khan, 28 years old, says he emerged from below deck with his arms above his head. The other crewmen also came out of hiding. The Somalis led them into the wheelhouse, where they would eat, sit and sleep for their entire captivity, the crewmen say.

A few minutes later, French and German helicopters appeared overhead. Two Somalis trained their weapons on Hanif Kapade, the ship’s chief engineer, and the ship’s captain, both of whom were in the wheelhouse. Other Somalis pulled two crewmen onto the deck and pointed guns at them, signaling they would shoot if the helicopters attacked, recalls Mr. Kapade.

As the helicopters hovered, distracting the Somalis, the three unarmed security guards, who were British, jumped overboard, several crewmen say. They were later rescued.

Once the helicopters retreated, the Somalis tried to reassure the terrified crew they wouldn’t be hurt.

“No problems. We want only money, money, money,” one of the attackers said, gesturing as if counting money with his hand, recalls Mr. Khan.

The Somalis directed the crew to steer the ship south, the crewmen say. Over the next two days, the assailants changed their destination several times. They finally dropped anchor a few miles off a deserted, sandy stretch of Somali coast.

At home in Hoboken, N.J., Mr. Christodoulou decided to take on the role of intermediary. He pretended to the pirates that he was a midlevel employee assisting his boss. He bought a new Motorola phone and taped the handwritten name “Gus” on top — a reminder that he should answer by that pseudonym.

On Dec. 4, a fax arrived on his computer.

“Mr. Gus First Greetings From US,” began the ransom note, written by hand in capital letters. The note outlined demands.

Mr. Christodoulou declines to disclose the exact ransom they demanded, for fear of jeopardizing negotiations by other vessel owners. He says it was less than $10 million. “Received your fax,” Mr. Christodoulou wrote back. “Please call between 1800 and 1900 GMT.”

That evening, Mr. Christodoulou and three others — a media adviser, a lawyer and a piracy expert from a crisis management company — sat around a table at the Sheraton Suites Hotel in Weehawken, N.J., waiting for the call.

Late that evening, the phone rang. The four men froze. Then Mr. Christodoulou lunged for it. In his haste, he dropped it. A few minutes later, it rang again.

“This is Gus,” he answered.

“We have your ship,” said a distant voice muffled by static, Mr. Christodoulou recalls. It was a negotiator for the pirates. “We want money for the safe release of the ship.”

“First let me ask: How are the crew?” Mr. Christodoulou responded, in a dialogue he had practiced in his head many times in the preceding days. “Are they eating? Are they sleeping? Are they safe?”

“They are all very fine, Mr. Gus,” came the polite reply.

Mr. Christodoulou says he thought about how the doctors and nurses at the hospital where his elderly mother had once stayed seemed to appreciate his questions about their well-being. So he asked the same of the captors in a bid to build a trust.

“How are the Somali gentlemen?” he asked. “Do they need any medical care?”

“No, Mr. Gus. All good. The Somali gentlemen just need money,” said the negotiator in a matter-of-fact tone.

They agree to talk again the next day.

In India and Bangladesh, the families of the crewmen were trying to come to grips with the news.

Rashmi Sharma, mother of Karan Sharma, a 20-year-old crew member on his first voyage, heard the news from an officer from Ishima International Shipmanagement. The Singapore firm provides technical support to cargo ships. The official assured her that Karan was safe and being fed. “I felt like the ground shook,” Mrs. Sharma says, speaking in Hindi.

As days went by, the crewmen on the Biscaglia settled into a routine. They spent their days on the floor in wheelhouse. Breakfast was corn flakes with milk, at about 10 a.m. Dinner was curry made from goats that the Somalis brought by speedboat every few days.

Back in New Jersey, the negotiations were progressing slowly — something Mr. Christodoulou was told to expect, because the average hijacking lasts about 60 days.

Mr. Christodoulou made an initial offer, which he declines to reveal. The Somali negotiators — first a man named Hussein, then another who called himself Abbas — took the offer to the pirates. They called back the next day with a response.

“Hey Mr. Gus, the Somali gentlemen say the money is very less,” Abbas said, according to Mr. Christodoulou. “They need more money.”

Mr. Christodoulou didn’t budge. The Somalis needed to feel they had squeezed every dollar out of the ship’s owners, he had been advised, so he shouldn’t increase his offer early.

“We want you to get the money and move onto another project,” Mr. Christodoulou recalls saying. “But you have to understand, we have our limitations.”

The conversations continued daily through December, with little progress. By the end of the month, the families in India were feeling desperate.

Karan Sharma’s grandmother, 76-year-old Savitri, began a hunger strike. “I couldn’t bear to eat anything knowing my Karan was in grave danger,” she said.

Tom Rozycki, Mr. Christodoulou’s public-relations adviser, says he decided a new approach was needed to keep the families hopeful — and away from the media. Publicity could empower the captors and delay the hostages’ release, he believed. It would also be embarrassing for the company, making it even more difficult to face the families.

On Jan. 6, at the Hyatt Regency Hotel near Mumbai’s international airport, Mr. Christodoulou met with the families of the crewmen.

Seeing Mr. Sharma’s hunger-striking grandmother in the front row, he knelt beside her and held her hand. “Granny, your grandson is going to get out. And we want him to get out and come back to the healthy loving family that he left,” he said, according to Mrs. Sharma and Mr. Christodoulou. That night, Mrs. Sharma ate some strawberry ice cream, her son recalls.

By mid-January, the pirates on the Biscaglia were growing frustrated. “They told us they were going to take us off the ship and hide us in the mountains,” Mr. Khan, the crewman, says. The pirates gave him and the others a mobile phone to call home. “We all told our families that unless the company gave more money, we would be killed,” Mr. Khan says.

Mr. Kapade, the chief engineer, says he realized the pirates were trying to pressure the company by terrifying the crew. When he spoke to his wife on Jan. 14, he lowered his voice and spoke in Hindi. “Pass on to others that we’re fine,” he whispered.

By then, Mr. Christodoulou says, he thought it was time to raise his offer. He declines to say what he offered, but says it was close to what he thought the Somalis would accept based on the range provided to him by experts: $700,000 to $3 million.

He set about trying to raise the money. He approached his own company’s biggest investor, Regent Private Capital LLC, a private-equity firm based in Tulsa, Okla. Lawrence Field, Regent Private Capital’s managing director, declined to discuss the conversation with Mr. Christodoulou. “Regent does not negotiate with terrorists or pirates or any kind of criminal,” he said on Friday.

That evening, Mr. Christodoulou called Per Gullestrup, the Danish chief executive officer of Clipper A/S, a larger competitor in the chemical-transport industry. The two men hadn’t known one another until both had vessels hijacked by Somalis. They had often commiserated.

Mr. Christodoulou told Mr. Gullestrup he was struggling to raise the funds. A few days later, Mr. Gullestrup called back. “We’d be happy to advance the money if that’s what it takes,” he said. That promise allowed Mr. Christodoulou to secure a loan for the purpose.

Buoyed by that success, Mr. Christodoulou decided to apply some pressure. He raised his offer slightly, he says, and told the negotiator: “You have 24 hours to accept this offer, or we have to retract it.”

Over the next 24 hours, the two sides exchanged at least 20 phone calls. “Mr. Gus, this isn’t enough money for the Somali gentlemen,” the negotiator said several times, according to Mr. Christodoulou.

The next day, Mr. Christodoulou went a little higher, he says. At 12:30 p.m. on Jan. 16, Abbas called back: “The Somalis accept your offer. Thank you very much. It’s really been a pleasure to work with you on this project.”

On Thursday, Jan. 22, Clipper sent a plane to London to pick up an 80-pound airtight container stuffed with new, $100 bills totaling more than $1 million. The container was transferred to another plane that specializes in airdrops in the Gulf of Aden.

The Biscaglia crewmen, having washed their faces and put on fresh clothes, followed the pirates’ directions to wait together in the ship’s smoke room.

Overhead, the pilot dropped the container, via parachute, into the ocean. The Somalis retrieved it in the speed boat, brought it aboard to count and divide, then returned to the room where the crew was waiting.

“You guys are free,” the head pirate said, speaking in Arabic, according to Mr. Khan. “You won’t be harmed. We’re leaving.”

Then the pirates escaped.

Full article and photos:

Law Like Love

Law, say the gardeners, is the sun,
Law is the one
All gardeners obey
To-morrow, yesterday, to-day.

Law is the wisdom of the old,
The impotent grandfathers feebly scold;
The grandchildren put out a treble tongue,
Law is the senses of the young.

Law, says the priest with a priestly look,
Expounding to an unpriestly people,
Law is the words in my priestly book,
Law is my pulpit and my steeple.

Law, says the judge as he looks down his nose,
Speaking clearly and most severely,
Law is as I’ve told you before,
Law is as you know I suppose,
Law is but let me explain it once more,
Law is The Law.

Yet law-abiding scholars write:
Law is neither wrong nor right,
Law is only crimes
Punished by places and by times,
Law is the clothes men wear
Anytime, anywhere,
Law is Good morning and Good night.

Others say, Law is our Fate;
Others say, Law is our State;
Others say, others say
Law is no more,
Law has gone away.

And always the loud angry crowd,
Very angry and very loud,
Law is We,
And always the soft idiot softly Me.

If we, dear, know we know no more
Than they about the Law,
If I no more than you
Know what we should and should not do
Except that all agree
Gladly or miserably
That the Law is
And that all know this
If therefore thinking it absurd
To identify Law with some other word,
Unlike so many men
I cannot say Law is again,

No more than they can we suppress
The universal wish to guess
Or slip out of our own position
Into an unconcerned condition.
Although I can at least confine
Your vanity and mine
To stating timidly
A timid similarity,
We shall boast anyway:
Like love I say.

Like love we don’t know where or why,
Like love we can’t compel or fly,
Like love we often weep,
Like love we seldom keep


W.H. Auden

Time for a new world order: Australia PM


Kevin Rudd, Australia’s Labor Party leader, addresses the national press club in Canberra, Australia, Nov. 21, 2007

KEVIN RUDD has denounced the unfettered capitalism of the past three decades and called for a new era of “social capitalism” in which government intervention and regulation feature heavily.

In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.

“The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes,” he writes of those who placed their faith in the corrective powers of the market.

“Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself.”

Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day “social democrats” such as himself and the US President, Barack Obama, must do the same again. But he argues that “minor tweakings of long-established orthodoxies will not do” and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.

“A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate,” he writes.

He urges “a new contract for the future that eschews the extremism of both the left and right”.

He mocks neo-liberals “who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse”.

He advocates tighter regulation and policing of global finances, and identifies the immediate challenge as restoring global growth by 3 per cent of gross domestic product, the amount it is expected to fall in 2009. Next week, as Parliament resumes, his Government will chip in with a second economic stimulus package.

Mr Rudd commits to keeping budgets in surplus “over the cycle”, meaning deficits should be temporary. In a further sign the Government is not contemplating additional tax cuts, which would deliver a permanent hit to revenue, he stresses that stimulus measures have to be paid for when the economy recovers.

Mr Rudd singles out Thatcherism as a culprit, as well as the former Howard government. His essay implicitly attacks the Opposition Leader, Malcolm Turnbull, who this week urged the free market be allowed to dictate commercial property values as he slammed a Government measure to prop them up.

Mr Rudd’s essay follows the blast Mr Obama gave Wall Street bankers yesterday for awarding themselves $28 billion in bonuses last year at the same time as they were being bailed out by taxpayers.

In a message to Mr Obama and the US Congress, Mr Rudd counselled against erecting trade barriers. “Soft or hard, protectionism is a sure-fire way of turning recession into depression as it exacerbates the collapse in global demand.”

The message was reinforced in Davos yesterday when the Trade Minister, Simon Crean, described the “buy American” provisions of the new Obama stimulus package as “very worrying”. “On the face of it, it looks like it contravenes commitments made to the World Trade Organisation,” he said.


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Photo: Time

Iran says Obama’s offer to talk shows US failure


 Iran’s president has responded to an overture by the new US president by demanding an apology for past US “crimes” committed against Iran.

US President Barack Obama’s offer to talk to Iran shows that America’s policy of “domination” has failed, the government spokesman said on Saturday.

“This request means Western ideology has become passive, that capitalist thought and the system of domination have failed,” Gholam Hossein Elham was quoted as saying by the Mehr news agency.

“Negotiation is secondary, the main issue is that there is no way but for (the United States) to change,” he added.

After nearly three decades of severed ties, Obama said shortly after taking office this month that he is willing to extend a diplomatic hand to Tehran if the Islamic republic is ready to “unclench its fist”.

In response, Iranian President Mahmoud Ahmadinejad launched a fresh tirade against the United States, demanding an apology for its “crimes” against Iran and saying he expected “deep and fundamental” change from Obama.

Iranian politicians frequently refer to the US administration as the “global arrogance”, “domineering power” and “Great Satan”.

Tensions with the United States have soared over Iran’s nuclear drive and Ahmadinejad’s vitriolic verbal attacks against Washington’s close regional ally Israel.

Former US president George W. Bush refused to hold talks with the Islamic republic — which he dubbed part of an “axis of evil” — unless it suspended uranium enrichment, and never took a military option to thwart Tehran’s atomic drive off the table.

The new administration of Obama has also refused to rule out any options — including military strikes — to stop Tehran from acquiring a nuclear weapon.

Iran denies any plans to build the bomb and insists its nuclear programme is solely aimed at peaceful ends.


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Photo:  BBC

Physics of ‘the Hit’


Baltimore running back Willis McGahee was seriously injured after a collision with the Steelers’ Ryan Clark in the A.F.C. championship game.

Sunday’s Super Bowl could very well ride on how well the Steelers’ defense — known as perhaps the most fearsome and bone-clattering in the N.F.L. — can tackle the Arizona Cardinals’ fast and evasive wide receivers. From angles and acceleration to speed and centers of gravity, players might not understand the physics of tackling, but they know how to wield it.

“It’s all about timing and leverage,” Cardinals safety Adrian Wilson said. “Being able to time the hit the right way, and the leverage you’ve got to have once you make impact so the other player goes back, and not you.”

Trying to trip up or throw down a ball carrier with only one’s arms can be a risky maneuver. Barreling straight into him with 200-plus pounds of muscle at 20 miles an hour is a more reliable impediment.

From there, Newton’s second law of motion (force equals mass times acceleration) and conservation of momentum take over. Mass is the players’ weight, which in the N.F.L. grows higher every decade. Acceleration is not that of the incoming tackler, as is often assumed, but how quickly both the defender and runner slow down through impact.

It is this duration of impact, between one- and two-tenths of a second by many estimates, that has tremendous effect on the force of a football collision. Hard objects repel each other quickly; equally heavy but softer objects have “give” that allows their contact to last longer and accept the force less jarringly. It’s the difference between being hit by a baseball and being hit by an overripe peach.

“The tackler doesn’t want his body to be a big spring — these players lower their shoulder and tense up and launch to make their force go up,” said Stefan Duma, a professor of mechanical engineering at Virginia Tech who has studied the similarities between football collisions and car crashes. “It’s like trying to break down a door — you try to get all your mass behind you and drive it through one point. You want to get all your mass to act as one mass, one missile.”

Reaching the ball carrier at full speed is crucial, as any deceleration before impact saps force from the hit. This is where angles come in, said Timothy Gay, a professor of physics at the University of Nebraska-Lincoln and the author of “Football Physics: The Science of the Game.” Football instincts allow the best safeties to anticipate where the runner or receiver will be and then take the shortest route to him, maintaining speed and even allowing for one final push.

“Jack Tatum was vicious — that helps — but he had a way of popping with the perfect angle and timing,” Gay said of the former Oakland Raiders safety called the Assassin in both reverence and fear. “The best hitters accelerate at the last instant. That final jolt of speed allows them to apply a bigger force to their victim.”

Ask a physicist and a coach where that force should be applied, and they can answer differently. Gay said that the hit should be applied at the runner’s center of mass — just below the rib cage in the center of the chest — to direct all the force into stopping his forward motion. Missing that spot by too much, Gay said, “Causes the ball carrier to rotate around his center of mass, and he might not go down. The announcer would say, ‘He bounced off him.’ ”

But Ray Horton, the Steelers’ defensive backs coach, preaches a different approach. He is all for the ball carrier rotating, as long as he does so violently enough to wind up on the turf.

“We teach you tackle at the knees — if you tackle at the thigh to the shoulders, that’s his power box,” Horton said. “If I want something to tip over, I don’t want to hit it in its center of gravity, because it might go straight back and stay upright. If I want it to go down, I want to hit below the center of gravity, and that’s why we hit by the knees.”

Horton added: “Low man wins. If you hit him too high, he’s going to run you over because of the physics of how big these guys are.”

Which is why trying to run over the most massive running backs, from Earl Campbell to Brandon Jacobs, is asking for your action to get an equal and opposite (not to mention embarrassing) reaction, with you on the ground and the runner continuing onward. Because momentum — defined as mass times velocity — is conserved in all collisions, Jacobs moving at any decent speed is almost impossible to stop by an outweighed defender’s merely running into him. Tripping him or wrapping him up and waiting for help is a far better option, as long as you are not under him when he finally falls.

Running backs do not sustain the hardest shots in football, though. Few plays get more oohs and aahs than when a lithe receiver crosses the middle and, with or without the ball, gets hit squarely by an oncoming safety.

Duma suggested imagining the body as a primary mass (the torso) in the middle with several other masses connected by springs (the limbs and neck) attached to it. When the tense and intent defender hits the center of this object, the torso accelerates back while the head and feet stay behind temporarily, before flopping back. These are the hits that make the highlights.

Duma said that in his experience — he watches dozens of N.F.L. games each season — these hits are more frequent at the end of games already in hand.

“When you’re up, your defense hits harder,” Duma said. “They take more risks. If you come across the middle on the slant, they’re going to go after you and not worry about missing the tackle and giving up the touchdown.”

He added: “I think that’s what you saw on the Clark-McGahee hit at the end of the last game. I saw it a lot in these playoffs. Baltimore against the Dolphins, they were just leveling people. Ed Reed could run all over the backfield, and if he was out of position, they wouldn’t lose the game.”

Clark appeared to concur. On Wednesday, he said: “The McGahee hit, that was a point where I probably could have stopped and waited and tried to tackle him, but it’s sad to say I think I closed my eyes and I was praying that I’d wake up when I hit the ground.”

In the end, players leave physics out of their own definitions of hard hits. Anquan Boldin, the Cardinals’ receiver who was hit so high and hard by a Jets defender earlier this season that he now has 7 plates and 40 screws in his face, said he defined the perfect hit as “when you get hit hard enough to make you rethink about having anything to do with the ball,” which apparently the Jets hit still was not. Clark said, “What makes a good hit is not getting fined.”

Clark said he was not particularly familiar with Newton’s laws — but then offered his own theory of momentum, one he plans to use in Sunday’s Super Bowl.

“A good hit can change the momentum of the game,” he said. “If we come out there and hit them, be physical with them, and get a good hit early, I think they might go back to the quarterback and say, ‘How ’bout you not throw the ball in there?’ ”


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Justices Step Closer to Repeal of Evidence Ruling

In 1983, a young lawyer in the Reagan White House was hard at work on what he called in a memorandum “the campaign to amend or abolish the exclusionary rule” — the principle that evidence obtained by police misconduct cannot be used against a defendant.

The Reagan administration’s attacks on the exclusionary rule — a barrage of speeches, opinion articles, litigation and proposed legislation — never gained much traction. But now that young lawyer, John G. Roberts J., is chief justice of the United States.

This month, Chief Justice Roberts, writing for the majority in Herring v. United States, a 5-to-4 decision, took a big step toward the goal he had discussed a quarter-century before. Taking aim at one of the towering legacies of the Warren Court, its landmark 1961 decision applying the exclusionary rule to the states, the chief justice’s majority opinion established for the first time that unlawful police conduct should not require the suppression of evidence if all that was involved was isolated carelessness. That was a significant step in itself. More important yet, it suggested that the exclusionary rule itself might be at risk.

The Herring decision “jumped a firewall,” said Kent Scheidegger, the general counsel of the Criminal Justice Legal Foundation, a victims’ rights group. “I think Herring may be setting the stage for the Holy Grail,” he wrote on the group’s blog, referring to the overruling of Mapp v. Ohio, the 1961 Warren Court decision.

Justice Samuel A. Alito Jr. joined the Herring decision and has been a reliable vote for narrowing the protections afforded criminal defendants since he joined the court in 2006. In applying for a job in the Reagan Justice Department in 1985, he wrote that his interest in the law had been “motivated in large part by disagreement with Warren Court decisions, particularly in the areas of criminal procedure,” religious freedom and voting rights.

Justice Alito replaced Justice Sandra Day O’Connor, who was considered a moderate in criminal procedure cases.

“With Alito’s replacement of O’Connor,” said Craig M. Bradley, a law professor at Indiana University, “suddenly now they have four votes for sure and possibly five for the elimination of the exclusionary rule.”

The four certain votes, in the opinion of Professor Bradley and other legal scholars, are Chief Justice Roberts, Justice Alito, Justice Antonin Scalia and Justice Clarence Thomas, who is also an alumnus of the Reagan administration.

The fate of the rule seems to turn on the views of Justice Anthony M. Kennedy, who has sent mixed signals on the question. As in so many areas of the law, there are indications that the court’s liberal and conservative wings are eagerly courting him. They are also no doubt looking for the case that, with Justice Kennedy’s vote, will settle the issue once and for all.

The United States takes a distinctive approach to the exclusionary rule, requiring automatic suppression of physical evidence in some kinds of cases. That means, in theory at least, that relatively minor police misconduct can result in the suppression of conclusive evidence of terrible crimes.

Other nations balance the two interests case by case or rely on other ways to deter police wrongdoing directly, including professional discipline, civil lawsuits and criminal prosecution.

In Herring, Chief Justice Roberts seemed to be advocating those kinds of approaches. “To trigger the exclusionary rule,” he wrote, “police conduct must be sufficiently deliberate that exclusion can meaningfully deter it, and sufficiently culpable that such deterrence is worth the price paid by the justice system.”

That price, the chief justice wrote, “is, of course, letting guilty and possibly dangerous defendants go free.”

The Herring decision can be read broadly or narrowly, and its fate in the lower courts is unclear. The conduct at issue in the case — in which an Alabama man, Bennie D. Herring, was arrested on officers’ mistaken belief that he was subject to an outstanding arrest warrant — was sloppy recordkeeping in a police database rather than a mistake by an officer on the scene. Since the misconduct at issue in Herring was, in the legal jargon, “attenuated from the arrest,” the decision may apply only to a limited number of cases.

But the balance of the opinion is studded with sweeping suggestions that all sorts of police carelessness should not require, in Chief Justice Roberts’s words, that juries be barred from “considering all the evidence.”

A broad reading of the decision by the lower courts, Professor Bradley said, means “the death of the exclusionary rule as a practical matter.”

In one of the first trial court decisions to interpret Herring, a federal judge in New Jersey took the broader view, refusing to suppress evidence obtained from computer hard drives under a search warrant based on false information supplied by a Secret Service agent. The agent had told the judge that DVDs found during an earlier search contained child pornography.

This was false: other law enforcement officials had reviewed the DVDs and had found no child pornography. The agent, who was leading the investigation, testified that he did not know of that review when he made his statement.

“This conduct,” Judge Stanley R. Chesler wrote a week after Herring was decided, “while hardly qualifying as a model of efficient, careful and cooperative law enforcement, does not rise to the level of culpability that the Supreme Court held in Herring must be apparent for the exclusionary rule to serve its deterrent purpose and outweigh the cost of suppressing evidence.”

Constitutional adjudication is not a science experiment, and it is often hard to say for sure what difference a change in personnel makes. In the case of the exclusionary rule, though, you can get pretty close.

On Jan. 9, 2006, just months after Chief Justice Roberts joined the court, the justices heard arguments in Hudson v. Michigan. The police in Detroit had violated the constitutional requirement that they knock and announce themselves before storming the home of Booker T. Hudson, and the question in the case was whether the drugs they found should be suppressed under the exclusionary rule

Justice O’Connor, in her last weeks on the court while the Senate considered Justice Alito’s nomination, was almost certainly the swing vote, and she showed her cards.

“Is there no policy protecting the homeowner a little bit and the sanctity of the home from this immediate entry?” she asked a government lawyer, her tone sharp and flinty.

David A. Moran, who argued the case for Mr. Hudson, was feeling good after the argument. “I was pretty confident that I’d won,” he said in a recent interview. “O’Connor had pretty clearly spoken on my side.”

Three months later, the court called for reargument, signaling a 4-to-4 deadlock after Justice O’Connor’s departure. Justice Alito was on the court now, and the tenor of the second argument was entirely different.

Now Justice Stephen G. Breyer, who seemed to have been at work on a majority opinion in favor of Mr. Hudson, saw a looming catastrophe. The court, Justice Breyer said, was about to “let a kind of computer virus loose in the Fourth Amendment.”

Justice Breyer had reason to be wary. When the 5-to-4 decision was announced in June, the court not only ruled that violations of the knock-and-announce rule do not require the suppression of evidence but also called into question the exclusionary rule itself.

In a law review article later that year, Mr. Moran went even further. “My 5-4 loss in Hudson v. Michigan,” he wrote, “signals the end of the Fourth Amendment as we know it.”

Justice Scalia, writing for the majority, said that much had changed since the Mapp decision in 1961. People whose rights were violated may now sue police officers, and police departments are more professional. In light of these factors, he wrote, “resort to the massive remedy of suppressing evidence of guilt is unjustified.”

Justice Scalia cited the work of a criminologist, Samuel Walker, to support his point about increased police professionalism. Professor Walker responded with an opinion article in The Los Angeles Times saying that Justice Scalia had misrepresented his work. Better police work, Professor Walker said, was a consequence of the exclusionary rule rather than a reason to do away with it.

Justice Kennedy signed the majority decision, adopting Justice Scalia’s sweeping language. Oddly, though, he also wrote separately to say that “the continued operation of the exclusionary rule, as settled and defined by our precedents, is not in doubt.”

Another important Warren Court decision on criminal procedure, Miranda v. Arizona, appears to remain secure. Miranda, as anyone with a television set knows, protected a suspect’s right to remain silent and the right to a lawyer by requiring a warning not found in the Constitution. The decision, like Mapp, was the subject of much criticism in the Reagan years.

But in a pragmatic 7-to-2 decision in 2000, the Rehnquist Court refused to revisit the issue. Miranda warnings, Chief Justice William H. Rehnquist wrote for the majority, had “become embedded in routine police practice” and had “become part of the national culture.” Justices Scalia and Thomas dissented.

Defenders of the exclusionary rule breathed a sigh of relief in November

“From the point of view of a liberal concerned about criminal procedure,” said Yale Kamisar, a law professor at the University of San Diego, “we were saved by Barack Obama in the nick of time. If ever there was a court that was establishing the foundations for overthrowing the exclusionary rule, it was this one.”

For now, said Pamela Karlan, a law professor at Stanford, “they don’t have five votes to disavow the exclusionary rule by name.”

At the same time, Professor Karlan said, “you are not going to see any dimension along which there is going to be an expansion of defendants’ rights in this court.”

Adam Liptak, New York Times


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German town plans dog DNA database to stop fouling


The scheme will involve taking either fur or saliva from each of the 420 registered hounds in town.

The German town of Volkach is to DNA test every dog so it can fine owners when their pets foul public spaces.

Officials in the small Bavarian town are to begin DNA testing every dog so they can fine their owners when they foul public spaces.

Peter Kornell, the local mayor, said the scheme would involve taking either fur or saliva from each of the 420 registered hounds in town.

“Unfortunately, we have to do it voluntarily because there is nothing in the constitution about a dog DNA databank being enforceable,” he said. “But we are proceeding and hope to log every pooch.

“Any person who has trodden in their muck because their owners were too lazy or indifferent to clean up after them will know how distasteful and infuriating it is. So we aim to end it.”

The town council meets to approve the dog watch plan in February and the mayor is confident the 20-strong council chamber will pass the law although he admits the £78,000 cost could prove “tricky” in the current climate.

The plan also calls for a dog warden whose job it will be to collect errant canine ordure and match it with the databank – or put out an alert for a stray that must be stopped.

Residents in districts of Berlin where the footpaths sometimes resemble open dog sewers have demanded DNA testing for years. But with the city broke to the tune of billions, it will need a small town like Volkach to pioneer it.

It is against the law for dogs to foul footpaths and play areas, nursery grounds, railway and bus stations, and there are fines when the authorities can be bothered to implement them.

Yet dog-fouling and cigarette smoking in pubs where new laws stipulate a total ban are two rare examples where the mass of Germans are happy to break the rules every day.

Even as towns across Germany eagerly await the outcome of the Volkach experiment, there are warnings from DNA boffins that the chromosomes of a dog may prove a problem in identifying whodunnit on the High Street.

Professor Christoph Meissner of the Institute of Legal Medicine at the University of Wuerzburg said: “It is possible that dogs of the same race could have the same DNA profile. And from that it could be that the wrong dog will be held accountable for the ‘crime’ of fouling the footpath.”

In Volkach, the debate rages on ahead of the February 20 vote. Some councillors want a 20 euro reward offered to people who squeal on dirty dogs while others favour abandoning the database idea for a leaflet drop around town reminding dog owners of their responsibilities.

“We have to do something,” added the mayor. “The stink is really awful at times.” The baroque eastern city of Dresden contemplated introducing a simple genetic test for the 12,000 dogs registered in it a few years ago but dropped the idea on the grounds of costs and bureaucracy.

In Berlin an avant garde artist who tried to clean up the streets by baking dog turds in a kiln in his flat to use as briquettes in solid fuel stoves was forced to stop because the smell was “intolerable” for neighbours.

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Thousands of Russians march in protest over Vladimir Putin and the economy


The head of the National Bolshevik Party, Eduard Limonov, is arrested by police in Moscow

The biggest display of public disaffection with Russia’s normally popular prime minister prompted a violent response in Moscow, the capital.

Pro Kremlin youths brutally beat some protestors, while others were detained, including Eduard Limonov, a prominent Kremlin critic and leader of the outlawed National Bolshevik Party.

But the largest turnout was in Vladivostok, the focal point of anti-government protests over the past six weeks.

A protest march led by Communist party officials and civil rights leaders was allowed to go ahead at the last minute in an apparent change of heart by the Kremlin. A rally last month was violently dispersed by riot police, and over 200 people were detained.

The march was sanctioned on the condition that demonstrators kept off the road, carried no banners and chanted no slogans.

The marchers blithely ignored the restrictions. Marching down the city’s main street, they chanted “Putin resign!”. Some banners compared even compared the prime minister to Hitler.

Although only several hundred began the march, ordinary passersby applauded in encouragement as they passed and many even joined them. By the time the demonstrators reached their finishing point in a square dominated by a statue of Lenin, their number had swelled to nearly 2,000.

It might not seem like a huge number, but the government has reason to be worried. Russia is a country where most dissenters — save for a small hardcore group led by former chess champion Garry Kasparov – have been cowed into submission.

As Russia’s economy implodes after years of energy-fuelled growth, the Kremlin has reacted in panic to the possibility of growing social discontent. Commentators warn that anger over the economy, which is expected to shrink by up to three per cent this year, could reverse Mr Putin’s popularity and undermine his ambitions to cling to power.

Nearly all in Vladivostok were marching for economic reasons: a raise in import duties on imports of second-hand foreign cars, the mainstay of the regional economy, a 25 percent hike in utility tariffs and rising unemployment. But they were all united in their belief that Mr Putin was responsible for the crisis and that he must go.

Most had never been on a mach before, yet fear was not the prevalent emotion despite the violence used to disperse last month’s rally.

“I was furious when I heard Putin speaking fairy tales in Davos about how our economy is under control,” said Yeygeny Antipov, a 21-year-old student, insisting that he was not afraid to be marching against the government for the first time.

“It is my duty to stand up for my rights,” he said. “I want to live in a good place, I want my children to grow up in a free country not a gulag.”

Even more worrying for the government, the rally was led by the Communist party — which has been wary of criticising Mr Putin in the past — and a new grassroots movement called Tiger, which draws together a range of disaffected residents from Russia’s far east.

Tiger is the kind of organisation that the Kremlin particularly fears, a civil rights movement with no political allegiance.

Only formed last month, the movement has spread rapidly across eastern Russia. A 14-point manifesto released earlier this month demanded that the new tariffs on foreign car imports be dropped. But it also called for the resignation of Mr Putin, the restoration of free speech and government respect for the constitution.

The authorities responded forcefully, shutting down Tiger’s website, arresting two prominent members and sending the feared FSB, the KGB’s successor, to interrogate youngsters who had posted messages on the organisation’s website.

In another part of Vladivostok, the ruling United Russia party held a pro-Putin rally, attended by some 4,000 people including local officials who last month opposed the government’s hike on import duties. The change of heart came after United Russia’s leader in Vladivostok was sacked by Mr Putin.


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‘He had sex with me in the marital bed and sex with her on Facebook’



Georgina Hobbs: ‘Their lusty emails touched on poetry, but were infused with textspeak.’

My mother emailed me last week to tell me she had joined Facebook. We don’t chat on the phone; we email. Soon I expect she will want to poke me, write on my wall and, worse still, tag me in photographs of my wedding last May. Well, not if I can help it, mama. I love you too much to expose you to my online self.

You see, she doesn’t yet know that I, her 24-year-old daughter, am about to divorce. She can’t see my Facebook status, so why would she?

Mummy, how do I tell you I’m a Facebook divorcee? That the son-in-law you try so hard to like cheated on your only daughter using the social networking site you so adore? That your daughter learnt of her imminent divorce via Google Mail’s free chatting facility, Gchat?

Prince Harry may know how I feel. Would he even have known that he was single again if Chelsy Davy hadn’t flagged it up on Facebook? Her recently changed status cascaded through her friends’ newsfeeds to inform all that she was no longer in a relationship. Snap went the trademark red heart, sending gossip rocketing offline and on to the printing presses, neatly bypassing Clarence House. Headline: “Chelsy Davy: A change of heart on Facebook.”

Oh Prince Harry, yours is a state I know too well. You, me, all of us, we’re helpless to defend ourselves once our partners rush to Facebook our misery over a thousand flickering screens. The sad truth is that, once you announce your relationship on Facebook, and for as long as you are linked to one another by html, your status – hell, your love life – is on show to all. Even though I’ve opted to delete my relationship status rather than modify it Chelsy-style (she, like my husband, distastefully rushed to invite comment on fresh singledom), people will see the photographs of my wedding and draw obvious conclusions.

Not that many people take relationship statuses to heart. Even if they should, they do not read “X is married to Y” and immediately write off the object of their affection as unobtainable. My divorce is proof of that.

It began with a woman he met at a party. But it was within the sticky web of Facebook where they really got to know each other, despite the photos of us and our “married to…” status. I know this because my husband once logged on to Facebook and foolishly left the room. I began to use his Mac, only to find myself blasted into the middle of a sizzling cyber romance.

And once I was in, I was hooked. Their lusty emails touched on bad Beat poetry, but were infused with textspeak, their coy cyberflirts rife with emoticons. It felt like I was stuck in a hyper-reality where Douglas Coupland wrote Danielle Steel novels. “Could this really be happening six months into my marriage?” I wanted to comment on my own Facebook wall.

And whatever Facebook was before that – a relatively innocuous way to keep up with friends, I suppose – it has since taken on a more demonic intent.

Most infuriating is my near-constant Facebook-style method of internal communication that I cannot switch off. Whenever I do something, I narrate internally. Something like: “Georgie is hacking into her husband’s Facebook account just to see if she knows the password… Georgie is pleased she knows the password!… Georgie is disturbed to find her husband chatting to a very pretty 19-year-old rather a lot… Georgie is furthermore disturbed to discover her husband is partaking in cybersex with said 19-year-old!… Georgie is slowly realising that while she has been Facebook-chatting with her husband, he has simultaneously been sending the 19-year-old dirty messages!!… Georgie is considering divorce.” That’s pretty much how it went.

Actually, I didn’t get round to asking for a divorce. Pathetically, I did feel somewhat vindicated when my husband, once caught, deleted the 19-year-old at my request. And what did her status read? “Someone deleted me! I know who you are!” Scary stuff.

So, divorce. I don’t know anything about getting a divorce after you have caught your husband having real sex, let alone text sex. If a poke is slang for fornication in real life, but polite in social networking terms, where do I stand?

Instead, I asked him to fly back to his home country so we could take a break from one another. I still wasn’t sure how fatal a crime two-timing online was – me and her duped by the same typist; sex with me in the marital bed, sex with her via keyboard.

I received a curt Facebook message from him a few months later asking to “book some Skype time”. This was serious. Skype, the videophone software that allows you to talk face to face to anyone in the world with an internet connection, was not used lightly between us. When we courted but lived in different countries, it was through Skype that we would have our most intimate conversations, eye to eye. Almost.

Playing cool, I demurred: “Just email your concerns.” But before he’d got a chance, we found ourselves on Google chat. Here is a transcript of the conversation: Me: “why cant u just email some of what u want to chat via skype?”

He: “i think we need to get divorced, and move on from this point in our life, I still love you, but our marriage has failed and needs to be over.”

The typing is appalling – but not unusually so. It’s also inaccurate. The marriage didn’t fail. It’s just that he couldn’t resist typing things that he thought would have no consequence in the flesh and blood world. But no longer. The two worlds are on a collision course. The question is, which will take precedence – the Facebook hyperbole where all and nothing can be summed up with a “?” and a “!”, a world where self-promotion cuts out the middle man and you’re the last to know if your own daughter is married? Looks like it.

I know divorce was never nice, but wasn’t there a time when communication, on the whole, was romantic? Painfully slow, granted, but perhaps a chance to reflect is what we need. Where once it was smoke signals across the American plains, homing pigeons over chimney tops or calling cards plucked from silver trays, we now have the puerile, typically misspelt, Facebook status update. With all the charm of an overbearing town crier on a caffeine overload, the monster of Facebook feeds off our ids, leaving us bored office workers and near-royalty wrecked after a day of reading between the comments. 

Now single and unable to delete my husband from my list of friends (I am paralysed every time I try), I’m acutely aware that he can see my every move, just as I can see his. Foolishly, I fiddled with my settings and ramped up the amount of information I am fed about him. When he adds a friend or pretentiously quotes the vacuous Bret Easton Ellis in his status updates, it makes me want to vomit. And still I ramp it up.

This perverse circumstance has seen me go the way of the online bunny-boiler. I’ve added more friends than I care to mention just to infuriate him. I’ve got buddies I’ve never met in New York and Australia, a Canadian spammer who believes that raw food cures cancer and – worst of all – people I dislike in real life. I even tried adding Chelsy Davy since, from hard-nosed appearances at least, she’s doing pretty well.

The pursuit of letting endless idiots become my friends is draining. Having to then show off about it with a wall comment, more so. “Georgie is wondering what is happening to her, her friends and the man she married? Txt bak!”

No, Facebook is not for you, mother; it is for the bored, the boring, the unfulfilled. Install it on your BlackBerry or iPhone at will (my husband just did), but don’t let it fool you. Just because you’re mobile and telling us about it doesn’t mean you’re going anywhere interesting fast.

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Barack Obama’s half-brother arrested for drug possession in Kenya

georgebodyreuters226-1Kenyan police say the half-brother of President Barack Obama has been arrested for alleged possession of marijuana.

Area police chief Joshua Omokulongolo told the Associated Press George Obama was picked up today and was being held at the Huruma police post in the capital. Omokulongolo said officers found one joint of marijuana on him. “He is not a drug peddler … But it’s illegal, it’s a banned substance,” Omokulongolo said.

He is due to appear in court on Monday morning.

George Obama and the president had the same father, who died in a car crash in 1982, but barely know each other.

CNN said George Obama, speaking from behind bars at the jail where he was being held, denied the allegations.

“They took me from my home,” he told a correspondent for the network. “I don’t know why they are charging me.”

George Obama is the youngest child of Barack Senior, the Kenyan economist who was briefly married to the president’s mother, Ann Dunham, while living in Hawaii as an overseas student.

George, aged 25, was tracked down last year by the Italian edition of Vanity Fair living in a 6ft by 9ft shack on the outskirts of Nairobi. He told the magazine that he was so ashamed of his impoverished circumstances, living on less than a dollar a month, that he never mentions the fact that his half-brother could soon become the most powerful person on earth.

However, he later told the Associated Press: “I’m proud of how I live…. (The media) are tarnishing the family name.”

He also said he was studying to be a mechanic and works with a local youth group in Huruma.

Several of President Obama’s Kenyan relatives went to Washington DC, for his inauguration, but George was not among them.

In President Obama’s book “Dreams From My Father,” he describes George Obama as “a handsome, roundheaded boy with a wary gaze.”


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Photo: BBC News

Re-evaluating the risk of concussions


For teenager Samantha Yurechuk, it started as just another scramble for the puck. She collided with a player, hit her head on the ice and suffered a concussion – unaware the injury put her at risk of mental decline decades later.

As the 14-year-old opened her eyes under the glare of the arena lights two weeks ago today, the trainer of the Brampton Canadettes bantam AA team rushed over, leaned down and asked: “What city are you in?”

“What’s a city?” she replied.

“I started to feel nervous,” said the Grade 9 student from Orangeville, Ont., about an hour northwest of Toronto. “I started to think there was something wrong.”

Samantha, who has fully recovered, is one of the estimated 10 per cent of hockey players who suffer a concussion every year.

On hockey rinks, soccer pitches, toboggan hills and other sporting arenas across Canada, concussions are a known risk of the game. Conventional thinking used to be that athletes who suffer a single concussion bounce back unscathed.

But Canadian research published in the online journal Brain this week found that even one major concussion can haunt sufferers into midlife and beyond through memory decline, poorer motor skills and slower reaction time.


The research is a warning that should prompt hockey parents to re-evaluate the risk they allow their children to take for a game deeply entwined with Canadian identity.

“The effects of concussions have been ignored for the last 40 years,” said Louis De Beaumont, the study’s author and a clinical neuropsychologist at the University of Montreal.

Adam Wolman, a Toronto real estate broker, didn’t wait for a study to tell him that concussions could be dangerous. He was concerned about their effects after his 14-year-old son, Sam, suffered two of them, one severe.

After seeing a specialist, the family adopted the cautious approach and took Sam, who has fully recovered, out of contact hockey a year ago. He now plays house league for fun.

“We didn’t want to risk Sam having problems later in life,” Mr. Wolman said. “Most of the kids playing select and hockey in the A levels today will continue to play when they are in their 20s. The majority of them will probably play in non-contact leagues and pick-up games. It’s unfortunate that there isn’t a higher level non-contact option for kids in their teens.”

Most parents aren’t like Mr. Wolman. Despite the risks, the vast majority keep their children in the game, even after a couple of concussions.

“I’m amazed at what risks people will take in the name of sports. It is mind-boggling,” said Brian Webster, a brain injury lawyer based in Vancouver, who hears from parents who want to sue after their children have suffered concussions from sports. “… When you put your children in sports, you should really seriously try and understand the risks and the benefits, and try to minimize the risks without losing the benefits. But don’t pretend they’re not there.”

The ‘scientific facts’

The University of Montreal researchers managed to quantify these risks by first tracking down athletic and alumni associations to find subjects: 19 healthy former Canadian university athletes who had suffered at least one concussion in early adulthood and 21 former athletes who had never had a concussion.

The researchers tested the former athletes’ motor control, long-term memory and how well they followed simple verbal and written commands. The results were compelling: Those who had concussions had poorer performance in memory tests, delayed responses to unpredictable events and were slower at hand-control tests than those who never had a concussion.

Further research on more patients and the passage of time is required to determine whether concussions cause the more sinister effect of Alzheimer’s disease, which leaves a tangled mass of fatty proteins inside a shrunken brain.

Since the study was based on a concussion grading system most Canadian doctors no longer use, some believe the findings may apply only to those who suffered more severe concussions. Still, experts say the study must be taken seriously.

“We had come to think that concussions were a rather benign trauma, but that is not the case,” said physician Charles Tator, founder of ThinkFirst, a non-profit organization that educates coaches, parents and children about safe sporting practices. “…Unfortunately, there is no drug, no exercise that has been discovered that has any beneficial effect on concussion. Those are the scientific facts.”

To compound matters, Dr. Tator said, physicians aren’t always aware of the best way to manage concussions. Wanting to brush off the injury, sufferers may go back on the ice – or the football field or the toboggan slope – unaware they risk a second injury.

“If you have a continuing headache, feel abnormally fatigued, you are not ready to go back,” said Dr. Tator, a neurosurgeon at Toronto Western Hospital. “Any one of those lingering symptoms means you have not recovered.”

The study results have prompted renewed calls for changes to competitive hockey. Playing four on four, insisting on well-fitting, tightly buckled helmets and wearing softer shoulder and elbow pads – instead of the hard plastic ones – would go a long way toward reducing the number of collisions, injuries and concussions, Dr. Tator said.

“Concussion is a good word,” he said. “So long as people make the jump that concussion equals brain injury.”

Each year, an estimated 45,000 Canadians suffer a concussion, said Peter Rumney, physician director of the brain injury rehab program at Bloorview Kids Rehab.

What no one can predict, however, is which ones will be left with long-lasting effects.

“Some people get away quite well, others don’t,” Dr. Rumney said. “We don’t have any method right now to know who is going to be lucky.”

Dr. Rumney has suffered three concussions: at age 4, when he took a sharp turn on his wagon; at 11, when he was playing defence in hockey; and at 13, when he was tobogganing with his brothers.

Today, he wonders whether those concussions have had any ill effects.

“I’m terrible on names, maybe it was just the way I was built,” Dr. Rumney said. “Or maybe it was made a bit worse by the concussions.”

Since concussions are an invisible injury – no abnormality typically shows up on a CT scan – and doctors are left to diagnose them through symptoms relayed by their sufferers.

Many patients are not even aware that they’ve suffered a concussion, wrongly believing losing consciousness is the key requirement. In fact, unconsciousness occurs in 5 per cent of concussions – the remaining 95 per cent include any one of about 20 symptoms, including confusion, headache, dizziness, feeling dazed, vomiting and poor concentration.

‘It’s not worth it’

Marty Cairns saw his 16-year-old son, Ryan, go flying into the boards at full speed last summer.

“I was the coach at the time, I was up in the stands watching,” said Mr. Cairns of his son, who has fully recovered. “I cringe every time he goes into the boards or gets hit. It’s a concern to everybody, especially after Sanderson died.”

Don Sanderson, a 21-year-old rookie defenceman for the senior AAA Whitby Dunlops of the Ontario Hockey Association, died this month after hitting his unprotected head – his helmet came off – on the ice during a fight.

But William Trudell, a 23-year-old who used to play AAA hockey in Winnipeg, said head injuries have always been a risk of the sport.

“It’s a hazard of the game,” said Mr. Trudell, who has had 13 concussions from hockey and football, and who suffers from migraines. “You can’t have a contact game without somebody getting hurt.”

Now a carpenter in Toronto, he suffered his last concussion when he was 21 and playing competitive hockey.

“It was one of those where I am standing up and I thought, ‘Wow, this sucks. It’s not worth it,’ ” he said. He now plays house league for fun.

Similarly, 35-year-old Stephen Lepper of Brandon estimates he has had four concussions after skiing and hockey accidents, not including a couple of “blackouts” he experienced playing hockey in his youth.

In June of 2005, he had his last concussion; six months later, he had a seizure. His doctor said the seizure may have been caused by that final concussion.

“I’d probably change a few things if I knew more about the potential consequences of concussions, like how aggressively I played,” said Mr. Lepper, who takes medication for seizures. “You can’t put yourself in a bubble; you have to kind of accept potential consequences.”

Indeed, Mr. Lepper, a sales representative, is keen for his three-year-old son, Luke, to get into the game when he is ready.

Paul Comper, a neuropsychologist and researcher at Toronto Rehab, has seen parents who want advice about whether to pull their children, who have suffered concussions, out of sports.

“My job is to advise that there may be implications cognitively,” Dr. Comper said. “It could produce problems emotionally and psychologically because we know there’s a propensity for emotional and psychological difficulties following concussion such as depression, personality changes and irritability.”

Still, more often than not, parents decide to forge ahead, particularly if there is only one concussion and there has been a full recovery, such as the case with Samantha Yurechuk.

“I feel fine now,” said Samantha, hours before her Thursday night practice. “I was so lightheaded; I couldn’t get up and walk around too much.”

She followed doctors’ orders, taking a week off the ice and waiting until she was symptom-free during activity before returning to play.

Others have had much longer periods away from the ice, suggesting that her concussion is far more mild.

Her mother, Judy Yurechuk, sees the concussion as an accident – it was two teammates crashing into one other – and it’s the only injury her daughter has suffered in a decade of playing hockey.

But she does have an issue with her daughter snowboarding without a helmet, the wearing of which is apparently deemed uncool by the teenage set.

“I have more fear of her injuring herself that way,” Ms. Yurechuk said.

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Cops order removal of shoe-thrower monument


Children unwrap a monument recognizing the shoes thrown by an Iraqi journalist at former U.S. President George W. Bush, in Tikrit, Iraq, on Friday.

A sculpture honoring an Iraqi journalist who threw his shoes at former President George W. Bush has been removed, the director of an Iraqi orphanage said Saturday.

Fatin al-Nassiri said Iraqi police told her the statue had to be removed from the orphanage in Tikrit because government property should not be used for something with a political bias.

She said the sofa-sized statue of a shoe was taken down on Saturday after being unveiled on Thursday.

Iraqi journalist Muntadhar al-Zeidi threw his shoes during a Dec. 14 news conference in Baghdad.

Throwing shoes at someone is a sign of extreme contempt in Arab culture.


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When a Ponzi scheme becomes a movement


AMONG the elite here, David Murcia Guzmán is often disparaged as the Madoff of Colombia, after Bernard L. Madoff, the New York financier accused of creating a $50 billion investment fraud. But to some in the lower classes in one of Latin America’s most stratified of countries, he is a folk hero, and his government-shaking arrest recently was just another example of the extent to which the rich will go to keep the poor in their place.

In some ways, the rise and fall of Mr. Murcia, a child of Bogotá’s slums who clawed his way into Colombia’s elite, may be even more exceptional than Mr. Madoff’s. Nowadays, Mr. Murcia ponders the events that delivered him to a cell at La Picota, a prison situated amid the shantytowns of this city’s southern fringe.

At 28, Mr. Murcia has been charged with creating a hydra-headed enterprise based in Panama that laundered money and enticed thousands of Colombians into a pyramid scheme known by his own initials, D.M.G.

The accusations are common enough in these times of bewildering international financial ruses. But only in Colombia, perhaps, with its history of charismatic outlaws who chafe at the conservative status quo, could Mr. Murcia emerge not as a Madoff-like villain but a folk hero with a legion of followers from coca-growing regions.

Mr. Murcia revels in this transformation into an anti-establishment idol. “My only flaw was that I dared to dream,” he said in a meandering interview at La Picota under the gaze of three guards armed with machine guns. “What is criminal about dreaming?” Just a couple of months ago, Mr. Murcia was wining and dining provincial governors. He flew to different cities aboard a private jet. Visitors to his home in Panama marveled at his fleet of exotic cars, including a Ferrari, a Maserati and a Lamborghini.

Then it all collapsed as the global financial and economic crisis pinched the markets. Several pyramid schemes in Colombia collapsed in November. The authorities here shut down D.M.G. while the Panamanian police rounded up Mr. Murcia. He was quickly extradited to Colombia, where a prison barber awaited at La Picota to cut off his trademark ponytail.

But there was a twist to this Icarus-like story: many of the small investors in D.M.G. saw Mr. Murcia not as a swindler but as their savior and protested his capture in almost a dozen cities. They claim the government’s intervention in D.M.G., not the nature of its activities, caused the loss of their savings. A hunger strike by his most die-hard supporters, who want his release and the reopening of D.M.G., persisted well into January in the colonial heart of Bogotá.

“David Murcia was only trying to redistribute the wealth a little in Colombia,” said Norberto Escobar, 47, an impoverished D.M.G. investor from Putumayo, the southern coca-growing department, or province, where Mr. Murcia’s investment schemes first gathered speed about four years ago.

“He was simply too much of a threat to the system,” said Mr. Escobar, interviewed recently alongside others clamoring for Mr. Murcia’s release at a hunger strike here. For a visitor, they broke into a chant: “Crea en Dios y en David Murcia” (“Believe in God and in David Murcia”).

The mixture of popular outrage and scandal that followed Mr. Murcia’s capture has shaken Colombia. Claims surfaced that D.M.G. tried to curry favor with President Álvaro Uribe’s allies in the Colombian Congress; others said officials moved against Mr. Murcia because his power was coming to rival that of the country’s established banking families.

ALL this opened a rare window of dissent in a war-weary society against a president whose success against leftist rebels had shielded him from earlier scandals. A plan by Mr. Uribe’s supporters to let him run for another term unraveled, as the D.M.G. collapse did what no other crisis had done before: make Mr. Uribe, Colombia’s most powerful president in recent memory, tremble.

“Not since the time of Pablo Escobar, when he acted like a philanthropist and won popular acclaim, has Colombia seen such an enigmatic and controversial figure as David Murcia Guzmán,” the respected weekly news magazine Semana said.

It all seems a bit much for a man not yet 30, who with his goatee and black turtleneck looks more like a denizen of the Lower East Side of Manhattan than the instigator of an anti-establishment movement in what may be South America’s most establishment-obsessed country.

In the interview, he described a childhood marked by grinding poverty and the early death of his father, a groundskeeper for rich families. Before he was a teenager, he said, he found work scrubbing restaurant floors and selling cakes for a baking company.

By the time he dropped out of high school, he aspired to attain fame as an actor. He never did, but his capacity to entrance people would come in handy later on. He tried his hand at different jobs, shooting wedding videos and casting actors to appear in commercials.

He says he became so obsessed with his work that his personal life suffered.

When he and his wife separated several years ago, he said, he contemplated suicide as he stood at the top of a waterfall in Tolima, in central Colombia. But as he closed his eyes and asked God for forgiveness, he said, “I began to appreciate, more than money, more than companies, my life.”

At least that is how Mr. Murcia explains it. After his epiphany, he wandered around a Colombia at war, ending up in a flophouse in the coca-growing south. While there, he devoured the biographies of Donald Trump and Warren Buffett, and learned the story of a billionaire Arizonan named Rex Maughan.

Mr. Maughan, a Mormon originally from Idaho, founded Forever Living Products, a multilevel marketing company that features health and beauty aids and that was one of the first to push the virtues of aloe vera.

Soon, Mr. Murcia said, he was going door to door in small towns peddling items made by Mr. Maughan’s company. Mr. Murcia said he grew fascinated by Mr. Maughan’s ability to piece together a brand covering a wide range of products, and to convince an army of independent contractors that they could grow rich selling them.

“I soon realized that I wanted my own brand,” Mr. Murcia said, “and that this brand could be based on myself.”

WITH D.M.G., he devised a business model of selling prepaid debit cards to customers who were also its salespeople. They could use the cards to buy items like electronics, or they could redeem points on different cards for cash in a few months’ time — provided they signed up new salespeople who would also buy the cards.

That was the catch, prosecutors say. A sales network becomes a pyramid, or Ponzi scheme, if it relies solely on attracting new victims, whose investment is used to pay off earlier investors.

Investigators here say the venture also benefited from a vast underground economy of cocaine trafficking, creating a new way to launder profits through D.M.G. and the dozens of related companies created by Mr. Murcia and Panama-based business associates from Belarus and Brazil.

Prosecutors see in Mr. Murcia a manifestation of the lawlessness that was allowed to fester in areas of Colombia where private armies wield far more power than bureaucrats from Bogotá. But the theories about what made his venture possible miss something crucial in Mr. Murcia’s mercurial story: the force of his personality.

Even now, as he settles into a new identity as an imprisoned, populist idol, he adamantly claims innocence of any wrongdoing, insisting he was simply building a brand — around himself, of course. “What keeps me active and full of energy,” he said as the guards ended the interview, “are the people who want my freedom.”

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Photo: Yahoo Spain

Good or bad design?



The mayor of London, Boris Johnson, launched a competition to design a new bus for the city. The winning design, above, by the architects Foster + Partners and the sports car maker Aston Martin, was unveiled late last year.

Not only does “good design” mean different things to different people, it also changes at different times and in different contexts.

Some of the world’s leading designers were challenged to define what “good design” means now in a debate at the annual meeting of the World Economic Forum in Davos last week. At the debate, which I moderated, each designer was asked to identify one example of “good” and one example of “bad” design, and to explain the reasons for their choices. What did they come up with?

Everyone agreed that “good design” had to fulfill its function efficiently. Tim Brown, president of the IDEO design group in San Francisco, used the examples of the Flip video camera and Microsoft’s electronic book, the Kindle. “The Flip is a great example of design simplification,” he explained. “Every step of the process of taking, downloading, editing and distributing video has been made simple and seamless. Whereas the Kindle is a great idea, poorly executed. The accidental operation of buttons happens constantly, and it’s uncomfortable to hold, which for a book is a very bad idea. My Kindle sits unused on my desk whereas the Flip goes everywhere.”

Inefficient design can have grave consequences. Brian Collins, chairman of the Collins creative consultancy in New York, told the cautionary tale of the prescription pill bottles doled out by pharmacies. Traditional prescription bottles often look so similar and their labels are so badly printed that people can easily take the wrong medicine by mistake. That’s what happened to the grandmother of the American designer Deborah Adler, who decided to find a solution. She designed clear, legible prescription labels for bottles that can be customized by adding colored plastic rings so you can spot a particular type of pill at a glance. Adler’s design is now used by the Target retail group for its ClearRX pharmacy range.

But sometimes efficiency isn’t enough. Paola Antonelli, senior curator of design and architecture at the Museum of Modern Art, New York, contrasted the “cheap and efficient, but ugly” Jersey traffic barriers with the “graceful, elegant, playful” version on the streets of Milan. The Milanese have nicknamed them “panettone,” after the traditional cakes whose shape they share. Designed by the great Italian architect Enzo Mari, they can be moved around the city as the traffic flow changes, and double as impromptu seats.

A similar emotion vs. efficiency debate has erupted over the design of London’s buses, as Hilary Cottam, the social designer and founding director of Participle, explained. Londoners still reminisce fondly about the Routemaster doubledecker bus, which was withdrawn from service in 2005. Popular though the Routemaster was, it was very difficult for small children, elderly people, or parents with strollers to get on and off, and virtually impossible for anyone in a wheelchair. Those problems were solved by the design of one of its successors, the articulated or “bendy” bus, which is easily accessible but widely loathed by Londoners. “The bendy bus is very easy to get on to and can carry twice as many passengers and more people can sit down,” said Cottam. “My question is, what is good design? The old Routemaster, which looks great, but is hard for most people to use? Or the new bendy bus, which has improved travel for the majority?”

The rational answer would, of course, be the bendy bus, but can something be “good design” if no one enjoys using it? That’s why London’s new(ish) mayor, Boris Johnson, launched a competition to design a new bus which, he hoped, would be as endearing as the Routemaster, as accessible as the “bendy” but environmentally responsible too. The winning design, by the architects Foster + Partners and the sports car maker Aston Martin, was unveiled late last year as a neo-Routemaster sporting solar panels. It is now navigating the treacherous waters of London’s transport politics.

The London mayor was right to insist that the new bus be environmentally responsible, because that’s another non-negotiable component of “good design,” albeit one that has attained the status relatively recently. As the environmental crisis has deepened, it has become impossible to ignore the ecological implications of everything we consume. However gorgeous, witty, ingenious and even useful something is, we can no longer consider it to be a design success unless it is also ethically and environmentally responsible.

Occasionally a project embraces all of those qualities. Take the Tubercle Technology wind turbine blades chosen by Kigge Mai Hvid, chief executive of the Index: Design to Improve Life awards in Copenhagen. Developed for the Canadian company WhalePower, the blades are shaped like the scalloped flippers of humpback whales. The scalloping helps to lift the whales out of the water, and the blades to rotate smoothly. “It has a simple, functional beauty that you almost only find in nature,” noted Hvid. “Also it’s a great example of how design can positively impact our environment.”

Scoring sustainability points is now so important that it can compensate for other shortcomings. The industrial designer Yves Béhar, president of fuseproject in San Francisco, cited the example of the Smart car. Conceived as a compact, fuel-efficient city car, it was launched in 1997 to rave reviews, but poor sales. The Smart’s progress was then bedeviled by financial problems, technical squabbles and snipes about its styling. Béhar reckons that even the gas-guzzling Hummer beat it on aesthetics.

But the case for the Smart has strengthened as the market for fuel-efficient cars has expanded, and an all-electric version is to be launched next year. “The Smart car is a great idea, compromised at first, but now getting a second chance,” said Béhar. “What makes the Smart win is its respectful, responsible and efficient concept, adding value to the world.”

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Humbled Masters At Davos


 A general view of the Swiss Alpine resort of Davos on January 26. The annual Davos political and business summit has started with new warnings over the gravity of the global recession and the impact of the damage already done.

“How could we have been so stupid?” That was the refrain of several experts at a session of the World Economic Forum last week about “What Went Wrong” to produce the global financial crisis. Not that they had been wrong, mind you. It being Davos, the chosen commentators had mostly been right in warning several years ago of disaster ahead. But there was at least a note of collective chagrin.

Davos doesn’t do humility, normally. These are the masters of the universe, after all, whose gathering each winter has come to symbolize the process of economic globalization. But this year, with the global economy in the tank, there is a kind of corporate self-examination. Beyond the panel discussions, you could hear a collective sigh of “Oops!” and a plaintive “Now what?”

One reason for the tone of self-reflection this year is that U.S. officials, who can’t seem to resist being pitchmen at such global gatherings, have mostly stayed away. The Obama administration’s absence gave a “post-American” feel to the session, but that’s deceiving. Barack-o-mania is as strong among the global titans as it is everywhere else.

The most upbeat presentations here were from the capitalist “newbies,” Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin. Wen said that he saw small signs of “hope” in China’s increased bank lending and domestic consumption. Putin talked like a born-again capitalist, saying that Russia had seen the damage caused by too much government control of the economy and that it would never go back to the policies of the Soviet Union. He sounded most enthusiastic when he talked about tax cuts in Russia.

Putin couldn’t resist taking a few shots at the United States for creating the “perfect storm” that hit the global economy — citing the happy talk from U.S. officials at Davos a year ago and the “low quality of management” at U.S. banks. “Such a pyramid of expectations should collapse,” said the former communist, now a true believer in free-market discipline.

Wen and Putin appeared entirely at home in the Davos CEO club. The Chinese leader, dressed in a dark blue suit, even seemed to have mastered the modern chief executive’s vocabulary of warm insincerity, sprinkling his remarks with phrases such as “I just want to tell you frankly” and “from the bottom of my heart.” He talked several times of China’s “openness and transparency,” qualities not often ascribed to the People’s Republic.

Putin, dressed in a red tie and a sharply tailored suit, displayed an ex-KGB man’s prickliness at questions from business leaders. He blew off a well-meaning offer from Michael Dell to help Russia market its computer skills with a surly: “We are not invalids. . . . Pensioners should be helped. Developing countries should be helped.” Putin and Wen talked like men who, if anything, are more confident now than a few years ago that the world is moving their way.

How could the giants of capitalism have been so stupid? That was the question that ran through Davos all week, and the bluntness of the discussions was, in its way, reassuring. The global economy may have gone to hell, but people haven’t lost the ability to think critically about it. One of the most articulate critiques came from Niall Ferguson, a professor of history at Harvard, who repeated an argument he has made in several recent books that the American “debtosaurus” is following Britain down the path of imperial exhaustion and decline.

The rock stars here this year, surrounded by adoring fans, were two economic analysts, Nouriel Roubini and Nassim Nicholas Taleb, who saw the disaster coming before most everyone else.

Roubini argued that the skewed incentives of the old system had almost guaranteed the eventual crackup. Mortgage companies had offered dubious subprime mortgages, for a fee; banks had underwritten them, for a fee; investment banks had turned them into exotic securities, for a fee; rating agencies had given them artificially high marks, for a fee. The system “worked,” you might say.

Taleb, a former trader who wrote the book “The Black Swan,” argued that Wall Street’s models — supposed to prevent bankers from taking excessive risks — were actually a big part of the problem, since they created a false sense of confidence about the future. Rather than seeking reassurance in models, he advised anxious traders to go have a drink or take up religion.

“It’s easier to say ‘God knows’ than ‘I don’t know,’ ” said Taleb, in what might be a motto for this year’s Davos meeting.

David Ignatius, Washington Post

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Photo: Yahoo UK

The Link: the first british paper for lonely hearts dating ads








classifieds_776466a-1In 1915, a publication was founded for personal ads. For the first time, through its carefully coded classifieds, anyone, whatever their sexual preference, could find like-minded souls.

These days, friendship, sex or even love is seemingly only a click away. With the internet, it’s never been easier or more convenient to meet those who share your interests, however bizarre or mundane, and even to find the man or woman of your dreams. From Facebook and MySpace to and Dating Direct, we, at least in the industrialised West, and increasingly elsewhere, are all advertisers now.

At one time, all ads were in the form of short, pithy paragraphs of text, the first of which – a statement of ecclesiastical rules governing the Easter festival – was printed in 1477 by William Caxton. However, ads like these only began to be used to find husbands and wives in the 1690s, around 50 years after the invention of the modern newspaper – the first reference is in the agony column of a periodical called The Athenian Mercury in 1692. By the early 18th century, however, matrimonial advertising was booming.

At first glance, the early advertisements do not seem so different from those that became common in the 20th century. Men looked for wives, women for husbands, and some even looked for unspecified “arrangements”. Such was the popularity of these columns that one young lady in 1777 could even complain that “the mode of advertising is become too general” – although that did not prevent her from placing her own ad, seeking “a man of fashion, honour, and sentiment, blended with good nature, and a noble spirit, such a one she would chuse for her guardian and protector”.

As they have done ever since, these advertisements catered for those slightly at odds with traditional forms of courtship and morality, sometimes women just beyond the customary age of marriage or those distanced from the usual connections of family.

Yet although there were thousands of devotees, the anonymity involved – not to mention the necessity of giving chapter and verse on income and prospects in each ad – lent a mercenary air to the whole enterprise and ensured that it was not quite the done thing in polite society.

At the end of the 19th century, however, the matrimonial ad gained a new prominence and respectability. With much of Britain’s population living in cities by the 1890s, social commentators were becoming concerned that traditional courtship was increasingly outdated. Modern workers, they feared, were spending all their time at the office or in distant suburban lodgings and were finding it hard to meet suitable partners, with the result that some were resorting to the social life of the street and all its illicit temptations. Some respectable journalists, philanthropists and thinkers therefore began to argue that the small ad might be a solution to the difficulties of marriage and the anonymity of modern life.

By the First World War, things had progressed a step further. One journalist, Alfred Barrett, realised that small ads need not serve only those who wanted to marry but also those who were simply looking for companionship. In 1915 he founded The Link, which sought to make this sort of “companionship” advertising stylish and lighthearted rather than earnest, solemn and intellectual. Inevitably, his lonely hearts ads attracted criticism from those worried they were a threat to conventional morality and in a landmark case Barrett’s paper was suppressed in 1921 for “corrupting public morals”.

Looking for a manly Hercules

Alfred Barrett naturally argued that his paper, whose masthead proclaimed it to be “helpful, clean, and straight”, was nothing but honest and safe. But R.A. Bennett, editor of the muck-raking newspaper Truth, and his moralising ilk clearly thought otherwise. He studiously went through The Link’s ten pages with a green pencil and marked what he thought were the most dangerous advertisements, underlining the key words and phrases for the benefit of the police.

The section devoted to women was, he wrote, “frank enough”, as it seemed to promise adventure with all sorts of “sporty” or “jolly” girls, such as the one from “Bohemian Girl, 24”, who was “interested in most things”, and wanted a “man pal”. Ads such as this, Bennett said, looked foolish, but were probably harmless, unlike a number of those placed by men that seemed to be of rather dubious morality and legality. There was, for example, one from “Iolaus…24”, who described himself as “intensely musical” and of a “peculiar temperament”. He had, he said, been “looking for many years for [a] tall, manly Hercules”. Another came from an “Oxonian…26”, also seeking a man pal, who was “brilliant, courteous, humorous, [a] poet, future novelist, in love with beauty despite cosmic insignificance, [and] masculine”.

These coded words, Bennett argued, “speak for themselves as plainly as such an advertisement could”. As he hardly needed to point out, these advertisers were breaking the law, since not only was sex between men illegal at this time, but so too were any attempts to arrange it. Indeed Bennett had felt prompted to send the paper to the police after hearing about a youth who had made, he said, “various acquaintances of which his mother strongly disapproves”.

The court case

In spite of these objections, The Link might have continued and even prospered if it hadn’t been for an unfortunate coincidence. Shortly after the police received Bennett’s highlighted copy of The Link in September 1920, a self-styled bohemian named Walter Birks was arrested in Carlisle on a charge of fraud, and was found to be carrying love letters from one William Ernest Smyth, a 22-year-old clerk living in Belfast. When a police officer visited Smyth’s rooms, he discovered evidence of a passionate and lengthy correspondence between the two men, and hundreds of letters from other people. It soon emerged that the correspondence between Smyth and Birks, as well as their subsequent love affair, had been initially arranged via the pages of The Link.

Some of Smyth’s letters were from another clerk – an ex-serviceman named Geoffrey Smith, from Enfield, near London. All three advertisers were arrested and charged with conspiring to commit “gross indecency”. As for Barrett, he was charged with aiding and abetting his advertisers, conspiring to enable the commission of such unnatural acts, and also with the offence of “corrupting public morals by introducing men to women for fornication”.

If that was not enough to persuade a jury of what was going on behind the pages of The Link, evidence could be produced of a Major Lombard (“artistic, musical and literary”), who had asked for introductions to 12 men, and had also sent in a photo of himself dressed as a woman. The connection between The Link and homosexuality seemed clear enough. But was it, as the prosecution argued, also an “advertisement pimp” which encouraged heterosexual “fornication” and the prostitution of women?

The evidence for that was much thinner. Most of the advertisements placed by women were, on the face of it, tame to say the least. To modern eyes, it would seem that few could have had any objections to the “Gentlewoman (London, S. W), young widow, very good standing…[who] would like to meet cultured man, 30–40”. Still less could moral panic be inspired by the “Catholic lady (Abroad)”, who “would appreciate letters from gentlemen anywhere in England or Rhine Army”.

However, the prosecution argued that amid the sea of notices placed by innocuous widows, there were definitely ads that were pernicious, some of which even seemed to have been placed by married women. One ad introduced at the trial was placed by a “Young Grass Widow”, who frankly admitted that she wished “to meet [a] straightforward man” in what seemed to be an adulterous quest.

Some of the more obvious heterosexual advertisements were placed by men, such as the “Lothario, London West, 30”, who wanted “cuddlesome girls”, and who was “fond river, dancing, pleasure”. But other ads were apparently connected to much more serious matters than straightforward seduction, and the prosecution used them to insinuate that women had been put in harm’s way and the public’s morals corrupted by the promiscuous mixing of the sexes. One ad from 1921 placed by a “Widow, (London W), greatly interested in discipline”, and who wanted to “hear from others, both sexes”, was linked to a woman named Alice Vezey with two convictions for brothel keeping dating back to 1912.

Epidemic of loneliness

In court, Barrett admitted that he had been careless with some of the ads, but hadn’t realised their “true character” at the time. The fact was, though, that the very nature of Barrett’s business itself put him in an awkward position. Matrimonial advertising, The Link’s close relation, had never had a good reputation. Ever since its earliest days, it had been seen as the last resort of the old, sad and ugly, who were, it was assumed, all vulnerable to the depredations of dishonest marriage brokers.

To some observers, Barrett was even worse than his predecessors because his major innovation was to make The Link strictly non-matrimonial. Accordingly, The Link masthead proudly announced it to be “Social – Not Matrimonial”. It was emphatically not a vehicle for husband-hunting, but was instead “A Monthly Social Medium for Lonely People”. According to its editor, the purpose of the paper was not necessarily to facilitate marriage, but “to provide a medium by which lonely people can escape from their loneliness, and those in want of friends can be brought in communication with other friendless beings”. That, then, was the essence of his defence: The Link was a wholly respectable enterprise founded as a solution to the epidemic of loneliness which had engulfed modern society.

In his own account, Barrett had founded The Link because he had heard of a friend who was returning to Britain after 20 years spent on an Australian ranch. This man’s difficulty in meeting members of the opposite sex prompted Barrett to help him out, and led to the thought that “there must be… thousands of such in London alone, to say nothing of the feminine portion of humanity”. The Link was therefore not an opportunistic response to the lax wartime moral climate, but was instead fulfilling a long-felt want throughout society.

As his barristers pointed out, apart

from the disciplinarian Alice Vezey and the innuendoes of the press, the police had failed to provide any evidence of The Link’s alleged connection to white slavery. Barrett himself was presented by his defence team as the very essence of a respectable editor and novelist. This was, ostensibly at least, what he was. He seemed an unlikely whiteslaver.

By the time of the trial he was 51 years old and had had a long career as a comic novelist and editor of magazines as respectable as The Christian World, Family Circle, the comic journal Scraps, and the women’s paper Mary Bull, which he had left to set up The Link. On the surface, he lived a blameless suburban life in Balham, from where he took the train every day to his office in Fleet Street. In dedicating a book to his wife, “whose comfortable and encouraging appreciation has made me alive to the unsuspected advantages of having a critic on the hearth”, he conjured up the very image of companionable domesticity, but when the police raided his house in the spring of 1921, they discovered an interesting cache.

Under Barrett’s bed lay not only about 100 indecent photographs, but also a collection of French pornography relating to “abominable practices”, a ponderous Victorian euphemism for homosexual acts. Mr Justice Darling had no doubt that Barrett had more than a professional interest in his paper, and conjured up a lurid vision of the depraved corrupter of public morals poring over his private collection, lost in homosexual reverie.

In spite of all the evidence testifying to the popularity of the lonely hearts ad, the laws punishing male homosexuality were emphatically against them. On June 8, 1921, Barrett was found guilty of corrupting public morals, and of aiding and abetting his advertisers in a conspiracy to procure acts of gross indecency. The other men were found guilty of conspiring to commit the acts of gross indecency. There could be no greater attack on the morals of the country, Mr Justice Darling told Barrett, than to “establish a paper as you did for the purpose of allowing men and women to commit immorality”.

Regretting bitterly that he could not dispatch the defendants to penal servitude, Darling settled for the scarcely less onerous maximum sentence: two years’ imprisonment with hard labour. Barrett, who had done so much to make the lonely hearts ad a feature of modern life, was lost to history. His hour in the limelight was over, but the personal ad (and its modern cousin, the internet profile) would go on to become one of the defining features of modern social life and contemporary romance.

Breaking the code: the language of classifieds

All personals have their own codes, and those in The Link were no different. The first clear indicator of sexual preference was to establish that you wanted to “meet chum own sex”, as ‘Bachelor, 39…affectionate disposition, fond of things in general”, put it in 1921. Further, if you described yourself as “affectionate”, “amiable”, “sincere” or even “beautiful without vanity”, you would certainly catch the eye. You could even, like “Otherwise Normal”, say that you were seeking “young friends who do not chase girls”. Some of the code words employed were practically clichés. As the police had learnt, “artistic”, “musical”, and “unconventional” all acted as glaring indications of homosexual interest. If the penny still hadn’t dropped, a list of authors, playwrights and composers who belonged to a sort of queer artistic canon could be cited in the ads to act as clear statements of intent. Writers such as the Edwardian socialist Edward Carpenter, who had written a number of books about what he called “the intermediate sex”, the American poet of manly comradeship Walt Whitman, and above all Oscar Wilde were consistently mentioned in The Link’s pages in order to remove any doubt as to one’s interests.

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Obama prepares to unveil plan to rescue US banking industry from $2 trillion hole

President Obama is preparing to unveil a rescue plan for Wall Street next week which will dig the world’s biggest banking industry out of a $2 trillion hole.

His plan, which has yet to be finalised and signed off, is expected to include the creation of a “bad bank” that will buy some of lenders’ distressed debt and underwrite the remaining billions of dollars worth of troubled assets. It is also believed to include caps on executive pay for banks benefiting from federal help.

It is believed that President Obama has estimated that total losses among America’s lenders could cost the US up to $2 trillion.

As President Obama and his economic team raced towards a self-imposed deadline of next week, new evidence of the severity of the American recession emerged.

Yesterday, the US Commerce Department revealed that the world’s biggest economy had contracted at an annual rate of 3.8 per cent between October and December, marking the fastest decline for 26 years. The US economy, which has been in a recession since December 2007, contracted faster than at any time since 1982 as American families, fearful of losing their jobs and anxious about the falling value of their homes, stopped spending on all but essential items such as food and petrol.

Commenting on the growth numbers, President Obama said that the flailing US economy had turned Americans’ lives upside down and was “like the American dream in reverse”.

Mr Obama said: “This isn’t just an economic concept – this is a continuing disaster for America’s working families. The recession is deepening, and the urgency of our economic crisis is growing.”

He pledged to place poor, working families at the “front and centre” of his economic policy to create middle-class jobs that help Americans aspire to a higher standard of living, and the chance to save. Unveiling his Middle Class Working Families Task Force, to be headed by Joe Biden, the Vice-President, Mr Obama said: “We’re not forgetting the poor. They are going to be front and centre, because they, too, share our American dream. And we’re going to make sure that they can get a piece of that American dream if they’re willing to work for it.”

Mr Obama’s remarks represent part of his vision of economic populism, echoed this week when he criticised the $18.4 billion in bonuses paid to Wall Street bankers in 2008, as the lenders were bailed out by US taxpayers. Senator Claire McCaskill of Missouri, a Democrat, yesterday said she would introduce legislation that capped pay at $400,000 a year for any worker employed by a company that had received government bailout funds.

Alongside trying to stem the sharp rise in unemployment – about 7.2 per cent of the US workforce is out of a job – Mr Obama is also under pressure to make public next week his plans to rescue America’s financial system. It is understood that the White House now believes losses on Wall Street might cost Americans as much as $2 trillion (£1.38 trillion).

On Wednesday, Mr Obama, Tim Geithner, the Treasury Secretary, Ben Bernanke, the Federal Reserve chairman, and Sheila Bair, the head of the Federal Deposit Insurance Corp, met in Washington to discuss a new bailout for Wall Street. It is believed that want to unveil a plan next week.

One of the main threads of the proposal is to create a so-called “bad bank”, run by the FDIC, which would buy troubled mortgage-backed securities which are stagnating on the books of Wall Street’s big lenders. These troubled assets would be those that have already been heavily discounted, so the purchase by the bad bank would not trigger a large writedown by the lender.

A similar plan for a German national bad bank was rejected yesterday when Angela Merkel, the German Chancellor, proposed that each lender split itself into a good and bad bank.

In America, the US Treasury would also guarantee lenders’ remaining distressed debt which has, as yet, been unvalued. The dual measures would allow the lenders to either dump or underwrite their troubled debt, without crystallising a new loss. It is hoped that such a bailout, whose cost would be met by the American taxpayer, would encourage banks to lend again.

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Coca-Cola to drop ‘Classic’ label in U.S.


After 24 years, one of the most famous blunders in marketing history is quietly coming to an end.

Coca-Cola is dropping the “Classic” from its red labels in some southeast regions of the United States, and the word will be gone from the name on all of its packaging by the summer, the company said Friday.

The “Classic” designation – which appears under the “Coca-Cola” script on labels – was added to the packaging in 1985, to distinguish the original formula from a sweeter, wildly unpopular new version of Coke.

New Coke has long since disappeared from shelves, making the “Classic” qualification unnecessary. The font size of the “Classic” has been shrinking in the past decade, and the company removed it from labels in Canada in 2007.

“When people think Coke, they think classic, so more than two decades after introducing the word classic, the reason for being – quote unquote – for that word as a descriptor has disappeared,” said Scott Williamson, a Coca-Cola spokesman.

With the introduction of a new global advertising campaign, called “Open Happiness,” Coca-Cola decided it was time to make its American product match what it was called elsewhere. (The language on the side of the label where it now says “Coke original formula” will change to say “Coke Classic original formula.”)

“Every place else in the world it is called Coca-Cola, except for in North America,” Williamson said.

The introduction of the new Coke was one of the more noteworthy debacles in marketing history. Coca-Cola had concocted a sweeter formula for its soft drink, and it replaced the original formula in April 1985.

It had spent four years testing the new recipe and conducting taste tests with more than 190,000 people. Coca-Cola found people chose the new formula 55 percent of the time, and the original one 45 percent of the time.

But Coca-Cola forgot to ask how people would feel about losing the traditional soda.

“It’s been, probably, one of the most talked-about case studies ever,” said Paul Worthington, the head of strategy for the branding company Wolff Olins. “They failed to understand the emotional significance to people that messing with Coke would have, and that’s gone down in history.”

As soon as new Coke was introduced, Coca-Cola began getting hammered. Employees had to work overtime on its complaints hotline, where it was receiving an average of 1,500 calls a day. People started hoarding containers of the classic formula, formed groups like the Old Cola Drinkers of America, and even boycotted the company in protest.

Ten weeks after introducing the new Coke, and after publicly vowing that the original formula was gone for good, company executives brought it back.

They added a “Classic” underneath the script Coca-Cola lettering to distinguish it from the new formula. Coca-Cola Classic began to outsell new Coke almost immediately, and revived the company’s sales.

It was “a humbling experiment,” Donald Keough, Coca-Cola’s president, said at the time. “Some cynics say we planned the whole thing. The truth is, we’re not that dumb, and we’re not that smart.”


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A Birthday

My heart is like a singing bird
    Whose nest is in a watered shoot;
My heart is like an apple-tree
    Whose boughs are bent with thickset fruit;
My heart is like a rainbow shell
    That paddles in a halcyon sea;
My heart is gladder than all these,
    Because my love is come to me.

Raise me a dais of silk and down;
    Hang it with vair and purple dyes;
Carve it in doves and pomegranates,
    And peacocks with a hundred eyes;
Work it in gold and silver grapes,
    In leaves and silver fleurs-de-lys;
Because the birthday of my life
    Is come, my love is come to me.


Christina Rossetti, (1830-1894)

Throwing the Book at Salt


DR. THOMAS R. FRIEDEN invited some of the biggest names in food processing to lunch last October. Grilled salmon and green salad were on the menu, but the subject was salt.

After a string of victories over smoking, trans fats and calories, Dr. Frieden, the commissioner of New York City’s Department of Health and Mental Hygiene, is waging a new campaign: to lower the amount of sodium America eats.

But don’t go hiding your saltshakers. The city isn’t going after the seasoning people add at the table or in the kitchen. That makes up only about 11 percent of the salt people eat, Dr. Frieden says.

His targets are packaged foods and mass-produced restaurant meals, which contribute 80 percent of the sodium in the average American diet.

When the food company executives had finished lunch, Dr. Frieden made his pitch: Over the next five years, identify the foods that are contributing the most sodium to people’s diets and cut the level of salt by 25 percent. In a decade, cut it by another 25 percent. And do it in unison with your competitors.

If they refuse?

“If there’s not progress in a few years, we’ll have to consider other options, like legislation,” he said in an interview last week.

The last two times Dr. Frieden stepped into the nutrition wars, he gave muscle to nationwide moves to ban trans fats and post calorie counts on restaurant menus. That means you could soon be hearing more about salt than you have in a long time.

“The one thing that’s disturbing is that he seems to be able to do just about anything he wants in New York City, and New York City serves as a model for the rest of the world,” said E. Charles Hunt of the New York Restaurant Association and a veteran of legal wars over Dr. Frieden’s food policies.

This war, however, is likely to be more difficult for Dr. Frieden, both practically and politically, than were his efforts to get restaurant chains to post calorie counts on menus and stop cooking with trans fat.

First, salt is harder to scrub from the food supply, and its connection to cardiovascular disease is less understood. Besides, the food industry says it’s already dealing with sodium levels. And then there is the scope of Dr. Frieden’s plan. He wants to get most of the major food and restaurant companies to do the same thing at the same time.

Lowering salt consumption, along with stopping smoking, are two areas in which a broad public health effort can have the most impact on the most people, Dr. Frieden said.

Key to the plan is a gradual reduction in sodium levels. The theory is that if the salt disappears slowly enough, consumers will not notice.

Dr. Sonia Angell, director of cardiovascular health for the city, said: “We’ve created a whole society of people accustomed to food that is really, really salty. We have to undo that.”

Because other nutritional culprits have gotten more attention lately, salt and the case against it has faded into the background. Most of the nation’s heart researchers agree that high blood pressure is a leading factor in the incidence of heart attack and stroke. And in some people, but not everyone, salt causes high blood pressure. While drugs can treat hypertension, not everybody has access to medication. And although doctors have been telling people to watch their salt for years, it hasn’t been working.

That’s why Dr. Frieden says a quiet, mass reduction in sodium levels — stealth health, they like to call it around the department — might be more effective. Lower sodium levels by 50 percent, and 150,000 American lives a year might be saved, he said.

Under his plan, which is based on one in the United Kingdom, targets for sodium reduction will be set for certain food categories. The prime suspects include cheese, breakfast cereals, bread, macaroni and noodle products, cake mixes, condiments and soups. The final list of sodium targets will be based on a formula that takes into account the amount of sodium in a product as well as how much food in that category people eat.

The idea isn’t to force small bakers or high-end chefs to salt less liberally. Health officials believe it’s the big companies that can have the biggest effect on sodium.

“If they bring it down by 5 percent, that is going to do more than Danny Meyer bringing it down by 50 percent,” said Geoffrey Cowley, an associate commissioner of the Health Department, referring to the New York restaurateur.

Although he has jurisdiction over only New York City, Dr. Frieden is presenting the plan as a “national salt-reduction initiative” that includes support from a half-dozen other health departments around the country and organizations like the American Medical Association.

To take his idea beyond the city, Dr. Frieden convened his series of salt talks. The first was in late October, when he asked companies like Unilever, PepsiCo and Goya to Gracie Mansion. In February, he and a team from the Health Department will meet with the leaders of chain restaurants.

People in the Health Department thought the lunch was such a success they celebrated over drinks later that day. Some industry leaders had a different perspective.

“I would say the invitations to come to Gracie Mansion weren’t very inviting,” said an executive with a food manufacturer who was not authorized to speak for the company about the New York Health Department. “There was definitely a feeling of ‘Don’t make us shame you.’ ”

Robert Earl, vice president for science policy, nutrition and health of the Grocery Manufacturers Association, said his members would prefer a national sodium strategy that included a wider range of players, including consumer and advocacy groups.

There are other problems, he said. Getting many companies to do something at the same time might have antitrust implications. And more research is needed to understand what consumers want and the complex health implications of sodium reduction.

“We need to look at these things more holistically and over the long term,” said Mr. Earl, whose association issued its own policy paper on sodium Jan. 12.

The federal government has been trying to wrangle sodium levels for decades. In the 1980s, the federal dietary guidelines included an admonishment against excess sodium, and shortly thereafter the Food and Drug Administration called on the food industry to reduce sodium levels in processed foods voluntarily.

It didn’t work. By the year 2000, according to the most recent data from a large national study, men were consuming 48 percent more salt than they did in the early 1970s, and women, 69 percent more.

That’s in part because food got saltier, but also because people were consuming more calories.

Michael Jacobson, executive director of the Center for Science in the Public Interest and a longtime adversary of the producers of high-sodium food, became so frustrated that in 2005 he issued a report entitled “Salt: The Forgotten Killer.”

The federal Institute of Medicine is expected to issue a comprehensive study on sodium intake later this year that could affect the national dietary guidelines.

Currently, the guidelines suggest people eat no more than 2,300 milligrams of sodium a day (although on food labels the upper limit of sodium for a 2,000 calorie diet is 2,400 milligrams). That’s about a teaspoon of salt, and half of what many people actually eat. Those more prone to high blood pressure, like African-Americans and older people, are advised to eat much less.

The food industry, too, has taken up sodium reduction with new energy. The grocery manufacturers’ group and the National Restaurant Association each held sodium conferences recently. At both gatherings, how to find a good salt substitute was a central topic.

“It’s frankly been one of those holy grails in the food industry for a number of years,” said Todd Abraham, a senior vice president for Kraft foods.

Kraft alone has spent $20 million on sodium reduction research, studying chemicals that block taste receptors and experimenting with yeast or potassium as substitutes.

It’s relatively easy to reduce salt that is applied topically, like that on potato chips. But those chips, while they may taste saltier, usually contain less sodium than items like muffins. That’s because salt’s role in processing packaged foods goes beyond flavor. It helps create structure in breads and encourages browning in baked goods. Salt helps emulsify the ingredients in bologna and American cheese, and keeps pathogens at bay.

Still, sodium levels can vary greatly within one category of products. Sam’s Choice Thick and Chunky salsa, for example, has about double the sodium of Muir Glen organic salsa.

Beyond the technical hurdles, Dr. Frieden might encounter resistance on scientific grounds. Some medical researchers question whether a mass reduction in sodium is the best way to spend public-health resources when losing weight and quitting cigarettes would do more for the country’s heart health.

Genetics dictate that different people have different reactions to sodium. Some people are more sensitive to high levels of salt. For others, low levels of sodium can be unhealthy.

But public health officials say there is a strong consensus that salt leads to higher rates of heart attacks and strokes.

That consensus alarms Dr. Michael Alderman, editor in chief of the American Journal of Hypertension, who thinks more clinical studies need to be done. And, he says, wild swings in dietary regulation haven’t always worked out.

Even trans fat, in the form of margarine, was once promoted by health officials as healthier than butter. It turns out that trans fats were worse for heart health than saturated fats.

“Diet is an incredibly complicated business,” Dr. Alderman said.


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As jungles grow, a new debate on rain forests


Marta Ortega de Wing once raised pigs in Chilibre, Panama, on land now reverting to brush and trees. Such regrowth is now being measured against untouched forest.

The land where Marta Ortega de Wing raised hundreds of pigs until 10 years ago is being overtaken by galloping jungle – palms, lizards and ants.

Instead of farming, she now shops at the supermarket, and her grown children and grandchildren live in places like Panama City and New York.

Here, and in other tropical countries around the world, small holdings like Ortega de Wing’s – and much larger swaths of farmland – are reverting back to nature, as people abandon their land and move to the cities in search of better livings.

These new “secondary” forests are emerging in Latin America, Asia and other tropical regions at such a fast pace that the trend has set off a serious debate about whether saving primeval rain forest – an iconic environmental cause – may be less urgent than once thought. By one estimate, for every half a hectare of rain forest cut down each year, more than 20 hectares, or 50 acres, of new forest are growing in the tropics on land that was once farmed, logged or ravaged by natural disaster.

“There is far more forest here than there was 30 years ago,” said Ortega de Wing, 64, who remembers fields of mango trees and banana plants.

The new forests, the scientists argue, could blunt the effects of rain forest destruction by absorbing carbon dioxide, the leading heat-trapping gas linked to global warming, one crucial role that rain forests play. They could also, to a lesser extent, provide habitat for endangered species.

The idea has caused outrage among environmentalists who believe that vigorous efforts to protect native rain forest should remain a top priority. But the notion has gained currency in mainstream organizations like the Smithsonian Institution and the United Nations, which in 2005 concluded that new forests were “increasing dramatically” and “undervalued” for their environmental benefits.

The United Nations is undertaking the first global catalogue of the new forests, which vary greatly in their stage of growth. “Biologists were ignoring these huge population trends and acting as if only original forest has conservation value, and that’s just wrong,” said Joe Wright, a senior scientist at the Smithsonian Tropical Research Institute here, who set off a firestorm last year by suggesting that the new forests could substantially compensate for rain forest destruction.

“Is this a real rain forest?” Wright asked, walking the land of a former American cacao plantation that was abandoned about 50 years ago, and pointing to fig trees and vast webs of community spiders and howler monkeys.

“A botanist can look at the trees here and know this is regrowth,” he said. “But the temperature and humidity are right. Look at the number of birds! It works. This is a suitable habitat.”

Wright and others say the overzealous protection of rain forests not only prevents poor local people from profiting from the rain forests on their land but also robs financing and attention from other approaches to fighting global warming, like eliminating coal plants.

But other scientists, including some of Wright’s closest colleagues, disagree, saying that forceful protection of rain forests is especially important in the face of threats from industrialized farming and logging.

The issue has also set off a debate over the true definition of a rain forest. How do old forests compare to new ones in their environmental value? Is every rain forest sacred?

“Yes, there are forests growing back, but not all forests are equal,” said Bill Laurance, another senior scientist at the Smithsonian, who has worked extensively in the Amazon.

He scoffed as he viewed Ortega de Wing’s overgrown land: “This is a caricature of a rain forest!” he said. “There’s no canopy, there’s too much light, there are only a few species. There is a lot of change all around here whittling away at the forest, from highways to development.”

While new forests may absorb carbon emissions, he says, they are unlikely to save most endangered rain-forest species, which have no way to reach them.

Everyone, including Wright, agrees that large-scale rain-forest destruction in the Amazon or Indonesia should be limited or managed. Rain forests are the world’s great carbon sinks, absorbing the emissions that humans send into the atmosphere, and providing havens for biodiversity.

At issue is how to tally the costs and benefits of forests, at a time when increasing attention is being paid to global climate management and carbon accounting.

Just last month, at climate talks held by the United Nations in Poznan, Poland, the world’s environment ministers agreed to a new program through which developing countries will be rewarded for preventing deforestation. But little is known about the new forests – some of them have never even been mapped – and they were not factored into the equation at the meetings.

Wright and other scientists say they should be. About 15 million hectares of original rain forest are being cut down every year, but in 2005, according to the most recent State of the World’s Forests Report by the UN Food and Agriculture Organization, there were an estimated 850 million hectares of potential replacement forest growing in the tropics – an area almost as large as the United States.

Globally, one-fifth of the world’s carbon emissions come from the destruction of rain forests, scientists say. It is unknown how much of that is being canceled out by forest that is in the process of regrowth. It is a crucial but scientifically controversial question, the answer to which may depend on where and when the forests are growing.

Although the United Nations’ report noted the enormous increase of secondary forests, it is unclear how to describe or define them. The 850 million hectares of secondary forests includes a mishmash of land that has the potential to grow into a vibrant faux rain forest and land that may never become more than a biologically shallow tangle of trees and weeds.

Wright – an internationally respected scientist – said he knew he was stirring up controversy when he suggested to a conference of tropical biologists that rain forests might not be so bad off. Having lived in Panama for 25 years, he is convinced that scientific assessments of the rain forests’ future were not taking into account the effects of population and migration trends that are obvious on the ground.

In Latin America and Asia, birth rates have dropped dramatically; most people have two or three children. New jobs tied to global industry, as well as improved transportation, are luring a rural population to fast-growing cities. Better farming techniques and access to seed and fertilizer mean that marginal lands are no longer farmed because it takes fewer farmers to feed a growing population.

Gumercinto Vásquez, a stooped casual laborer who was weeding a field in Chilibre in the blistering sun, said it had become hard for him to find work because so many farms had been abandoned.

“Very few people around here are farming these days,” he said.

Wright, looking at a new forest, sees possibility. He says new research suggests that 40 to 90 percent of rain-forest species can survive in new forest.

Laurance focuses on what will be missing, ticking off species like jaguars, tapirs and a variety of birds and invertebrates.

While he concedes that a regrown forest may absorb some carbon, he insists, “This is not the rich ecosystem of a rain forest.”

Still, the fate of secondary forests lies not just in biology. A global recession could erase jobs in cities, driving residents back to the land.

“Those are questions for economists and politicians, not us,” Wright said.

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Can Countries Really Go Bankrupt?


 Great Britain is on the brink of financial ruin.

The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?

“There’s a rumor going around that states cannot go bankrupt,” German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. “This rumor is not true.”

Of course she’s right. Countries can go bankrupt if they allow their deficit spending to spin out of control and are no longer able to service their interest payments. Merkel’s comments can be read as a warning that countries need to keep their deficit spending in check. The message is: If governments go too far in trying to bail out companies and the economy, they could face insolvency themselves.

And so far, national governments have gone very far. Be it in the United States or in Europe, the sums governments are having to cough up to prevent the financial system from collapse are staggering.

Germany alone has already provided credit guarantees of €42 billion ($52.28 billion) to prevent the collapse of Munich’s Hypo Real Estate, a bottomless pit that most now believe will have to be fully nationalized. The only thing holding up such a move is a legal provision in Germany that limits state holdings in banks to 33 percent. Meanwhile, Germany’s second-largest consumer bank, Commerzbank, has been bailed out, with the state taking a one-quarter stake in the company. And the recent fourth-quarter loss of €4.8 billion at Germany’s leading financial institution, Deutsche Bank, suggests that it too may ultimately require state assistance.

From Inconceivable to Inevitable

The image is even bleaker in the United States, where economist Nouriel Roubini estimates that losses in the financial sector will total $3.6 trillion. In the United Kingdom, the government has partially nationalized the Royal Bank of Scotland and Lloyds TSB — and many experts see a full nationalization as inevitable.

There are few who would disagree with such moves. Should large systemically-vital banks go bust, the global financial system would collapse. But how much can countries afford to pay before the deficit-spending bubble bursts? An unimaginable scenario? Less than a year ago, a nationalization of banks in the US, Germany and Britain would have been inconceivable. Today, even the US — the home of unbridled capitalism — sees these moves as inevitable.

The borrowing being done by countries to finance the bailouts, economic stimulus programs and shortfalls in tax revenues will create a lasting burden. Worse, with the decline in the banking sector continuing, it is unclear that such massive spending will be effective. Especially when other, less economically stabile countires surrounding Germany have gone into a tailspin.

Take the example of Great Britain. The country is on the brink of financial ruin. Real estate is overvalued, private households are overly indebted and its vast financial sector has been badly hit by the crisis. Confidence in Britain’s ability to overcome the economic turmoil is sinking by the day, as evidenced by the precipitous decline of the pound, which has almost reached parity with the euro. Just 13 months ago, it was worth €1.40.

A Second Iceland

“I wouldn’t invest any more money in Great Britain,” says American investor Jim Rogers. And economist Willem Buiter, a former consultant to the Bank of England, warns of the “risk that Great Britain will become a second Iceland.”

One can also look to the example of Italy, which is on track to join a rather exclusive — and undesirable — club. At 106 percent of gross domestic product, Italy will have the third-largest national deficit in the world.

In a country that has long had a solid savings rate, deficit spending hasn’t proven to be a huge problem in the past. The greatest challenge the government had was luring people to buy bonds at a set interest rate. The country’s finance minister has described these investments as the “most solid and secure thing available.” Of course, not everyone shares that opinion at the moment — particularly not the Italians themselves. One bond that was floated in mid-January only found takers after the government markedly increased the interest rate offered.

This year, Rome has to pay back €220 billion in short-term bonds. Finance officials have been quoted as saying that were a single bond issue to find no takers, it “would be a disaster for the state.” In December, Italian Labor Minister Maurzio Sacconi warned that Italy could go bankrupt if the country were no longer able to sell public bonds because of the glut of offers in other countries. “It would create a liquidity problem for paying salaries and pensions and we would end up like Argentina.”Great Britain as a second Iceland, Italy as a second Argentina. Iceland today is as a good as bankrupt, and Argentina actually became insolvent in 2001. It’s no wonder then, that quotes like that from government officials are making people nervous. There has been no other time in history since the end of the Great Depression that the risk of national bankruptcies was this great in Europe as it is right now.

The national budgets in most of the European Union member states are in a miserable state. Finance experts at the European Commission in Brussels estimate that, this year alone, deficit spending in the 16-member euro zone will total 4 percent of GDP, with that figure rising to 4.4 percent next year. The euro Stability Pact, however, only allows 3 percent. The Commission estimates that in 2010, 17 EU states will surpass this total. The list includes countries like Germany (4.2 percent), France (5 percent), Spain (5.7 percent) and Britain (9.6 percent). Ireland is expected to top the list with deficit spending of an anticipated 13 percent.

These predictions, of course, exist only on paper for the moment. But Austrian Finance Minister Josef Pröll warns that “someday, payment day will come.”

Euro Bonds?

Last week, Pröll and his colleagues formulated a call for a change of course, saying a coordinated fiscal stimulus was needed and that it must include a “coordinated budget consolidation” across Europe. Just how that might happen, though, is unclear.

In a hearing before the economic affairs committee of the European Parliament last week, EU Economics and Currency Commissioner Joaquin Almunia was showered with questions for which he had few answers. As a first step, he suggested that six to eight countries should reduce their deficits. But he didn’t suggest how they might go about doing that.

For some governments, budget consolidation is the furthest thing from their minds at the moment. Instead these countries are doing everything they can to find ways of securing credit, which is getting increasingly difficult. “Smaller countries are being pushed out of the credit markets because the larger countries are borrowing billions,” members of parliament told Almunia. His response: That’s true, but you still can’t “do away with capital markets.”

In order to solve the problem, Luxembourg Prime Minister Jean-Claude Juncker, who is also his country’s finance minister, proposed that the 16-member euro zone states should create common “Euro Bonds.” Smaller countries praised the proposal, but it met with instant rejection in Berlin.

Germany, so far, has been able to borrow cheaply because it still has an excellent credit rating. If the country were to fill its coffers by floating Euro Bonds, it would have to pay €3 billion more this year. Austrian Finance Minister Pröll also seemed uninterested, dismissing the Euro Bonds as giving carte blanche for creating new debt at the expense of others.

Many European leaders have been critical of Germany’s approach to the financial crisis — it was slow to implement an economic stimulus package and some derided Chancellor Angela Merkel as “Madame Non.” But in Germany, the government has been concerned about the risk of over-borrowing and burdening future generations with debt. The government has already abandoned its plan for a balanced budget by 2011, and Merkel has warned of the limits of Berlin’s role in any bailout.

Merkel is concerned that the bailouts will overstrain the government. After all, if the government’s debt continues to rise, at some point it will no longer be capable of paying the interest. Already, 2009’s planned borrowing of €18.5 billion is higher than the previous year, and this week the government is now in the process of approving a second economic stimulus package that, combined with other borrowing, could push 2009 deficit spending past the €50 billion mark. No German government has ever had to borrow that much money.

To ensure that future generations aren’t saddled with massive debt, the plan contains a provision that will funnel €1 billion a year in revenues from Germany’s central bank, the Bundesbank, that previously went into the government budget starting in 2011. Currently, the Bundesbank pumps €3.5 billion a year into the budget. Until 2012, any profits at the bank exceeding €3.5 billion would go toward paying down the growing national debt.

Most experts believe the German government still has room to maneuver, but further deficit spending may be inevitable and few know how much will be needed. Berlin may soon have to establish one or more so-called “bad banks” where troubled financial institutions can park their bad loans — a program that would require yet further government borrowing.

A Real Test for the Euro Zone

The government has exercised a degree of caution in deficit spending in recent years that has often been lacking in some other EU states. And politicians in Berlin have been reluctant to push through massive economic stimulus programs that might encourage others to abandon any sense of fiscal responsibility.

In the past, a handful of EU member states borrowed and borrowed without giving it a second thought. Now, they’ve been hard hit by the current downturn because their credit ratings have been lowered and they are being forced to borrow at higher interest rates. Spain, Italy, Ireland and Greece have been particularly hard hit.

Countries that have to borrow so expensively are threatened with constantly rising interest rates that in turn increase their debt. In response, credit ratings agencies further lower ratings, pushing interest rates even higher in what becomes a vicious circle.

Market speculators create additional pressures. The tensions could escalate even further and create a real test for the euro zone.

The Euro Safety Net

Prior to their adoption of the euro, countries like Italy, Greece or Spain simply devalued their currencies in troublesome times and lowered their interest rates to increase the export opportunities for their economies. As members of the euro zone today, however, this option is no longer available because of stringent budget rules in place to ensure the common currency’s stability.

The potential collapse of the euro zone has been a hot topic in financial market circles recently. One problem is that the euro treaty doesn’t have provisions aimed at allowing highly indebted countries to voluntarily exit the common currency. Even if it did, though — any countries to leave the euro zone would simply exacerbate their problems. Their credit ratings would plummet further, loans would get more expensive. And old debts would have to be repayed in euros. If their own currency devaluated, that would get even more expensive. Germany’s EU commissioner, Günter Verheugen, considers the debate over exiting the euro to be “purely cheap propaganda against the euro from speculators in the Anglo-American capital markets.”

But what would actually happen if a euro zone member state went bankrupt? During the next 24 months, for example, Greece will have to come up with €48 billion in order to service old debts, while at the same time plugging holes in its budgets.If a country like Greece became insolvent, it would be initially be spared of the worst consequences of bankruptcy because of its membership in the euro zone. The euro would lose some of its value, certainly, but the Greek economy doesn’t play huge role in Europe and the depreciation would be limited.

The consequences for Greece would also be limited. Because the currency would remain relatively strong, there would be no crisis in the retail sector, there wouldn’t be any consumer hoarding and no black market — in other words, it wouldn’t create an economic crisis any greater than the one that would already exist. Nor would it lead to an increase in unexmployment.

Under the protective shield of the European Union, life in a bankrupt state would be relatively comfortable. The more important question, though, is how the EU would react.

Worst-Case Scenario

One scenario is that it could declare Greece to be an exceptional case and provide bridge loans in order to prevent the bankruptcy. But it would have disastrous consequences. After all, why would weak countries make any effort to balance their budgets if they knew the EU would bail them out in the worst-case scenario.

If the EU remained firm against Greece, that would certainly be fair to the member states who have practiced balanced budget discipline in the past. But that would also be politically untenable because it would drive investors away from any country that showed even the slightest signs of not being able to service its debt. They would have to continue raising the interest rates on bonds, and eventually the Greek virus would spread further, driving other countries into bankruptcy.

In this highly theoretical scenario, the euro would, indeed, collapse. The currency could survive the bankruptcy of one member state, but it couldn’t sustain a series of them.

Euro-skeptics have long warned that tension inside the euro zone could destroy the currency one day. They now feel their convictions have been affirmed — even if the aforementioned scenarios remain far from reality.

Germany itself has little trouble getting money. But even here, in light of the multibillion euro shortfalls in the national budget, investors are slowly starting to get nervous about German bonds. Many uncertain investors are starting to ask “what the future looks like for countries with AAA ratings,” says Moody’s analyst Alexander Kockerbeck. Experts at the US ratings company are already feeding worst-case scenarios into their computers. In one, they input test data for 2010 and 2011 assuming the economy would shrink by 3 percent each year. In that model, the national deficit rose quickly from today’s close to 70 percent to 80 percent of GDP.”The interest burden would be around 7 percent of government revenues,” Kockerbeck said, saying Germany could still manage to preserve its high credit rating. But if that figure got up to 10 percent, the country might lose the best rating, causing its financing costs to soar.

Competing ratings agency Standard & Poors, which last week cut Spain’s rating, holds a similar view. Analyst Kair Stukenbrock last week confirmed Germany’s AAA rating. He also said he currently “assumes that the German economy and government budget can weather the current financial crisis without losing its credit worthiness.”

Strangled by Interest Payments

In normal times, assuming a country has a solid credit rating and a good economy, borrowing is routine. Germany routinely floats short- and long-term bonds that pay interest. They can have a duration from anywhere between one day and 30 years. But some other countries, including Spain and France, even issue 50-year bonds. They are mostly sold through auctions — and the higher the price, the cheaper it is for countries to borrow, but that also reduces profits for investors.

Repaying that debt is far more complicated. In the simplest case, the country just pays back the debt. It’s extremely rare, of course, for a country to do that. In most cases countries renew their debt rather than repay it — and by doing so they create new debt. Already today, the German government must pay €43 billion a year in interest. It’s the second-biggest chunk in the federal budget after social expenditures.

But that could quickly change. If, for example, interest rates were to rise to their 1995 levels, the country would be faced with an additional €20 billion in payments, and that’s without factoring in any new debt. Of course, given the nature of the current crisis, the debt burden will rise. Nobody knows how high, nor how the country can eliminate that debt before it starts to get strangled by interest payments.

One way to pay down debt, of course, is massive spending cuts and austere savings probrams. That, though, is difficult. Much more attractive is the inflation route. The state can just print money and pay its bills. Or the central bank prints money and pumps it into the economy. The currency becomes devalued, but the state doesn’t care because that makes it easier to pay off its debts.

No matter how a country elects to pay down its debt, it’s the taxpayers who are left to foot the bill in the end. Indeed, the only time it is possible to repay the deficit by government savings is during boom phases, periods when the government can increase taxes, or if it can reduce its expenditures.The people also pay the price of inflation because as the currency get devaluated, prices increase.Up until now, the process has been subtle. Since the end of the 1990s, the major central banks in the US and Europe have trippled the volume of money in circulation. In recent months, the volume of money in circulation in the US and Europe has increased by almost half.

Universal Phenomenon

Central banks are trying to use the flood of liquidity to prevent a collapse of the global financial system and, as a result, of economies. At the same time, they may also be laying the path for the next crisis. Money is already insanely cheap: the US Federal Reserve has sunk its key interest rates to almost zero, and the European Central Bank is already down to 2 percent. It is extremely likely that interest rates will be lowered even further.But if the bailout packages take effect and the economy starts to rebound, then central banks will again raise interest rates — otherwise we would be threatened with a massive wave of inflation and the next, even worse crisis, would be inescapable. But the move may also lead many highly indebted countries to go bankrupt.In a study for the International Monetary Fund, US economists Carmen Reinhart and Kenneth Rogoff researched financial crises of the last 800 years and concluded that state bankruptcies were a “universal phenomenon.” Many countries have, in fact, gone bankrupt more than once.Between 1500 and 1800, France became insolvent eight times. Spain went bankrupt seven times during the 19th century. Insolvency is a common phenomenon in every period of history, they concluded, and it would be erroneous to think that state bankruptcies are a “distinctive feature of the modern financial world.

Nothing Is Unimaginable Anymore

In most cases the country’s coffers were wiped out by war. But in each case, the countries managed to bring themselves back from ruin. They proved to be incredibly resourceful in using their connections to banks, companies and, especially, the people.The simplest solution was for states to just outright refuse to pay back their debts. In 1557, Spain’s King Philipp II refused to pay his country’s debts after its expensive military battles against the Dutch and the Ottomans. It was a decision that seriously damaged lender banks in Augsburg, Germany, and they never fully recovered.Even after the Revolution, France’s new regents had an even more extreme answer. They expropriated property from churches, major landowners and executed some lenders.A similarly brutal option was to go to war to in order to plunder occupied areas. But such methods of budget consolidation tended to only happen when things started to collapse. Even in the old days, inflation was the preferred method of dealing with debt. They created more money and devaluated it. It’s a method that was adopted as early as ancient Rome, where the Romans devaluated their coins by using fewer precious metals in them. It became a standard practice. In Vienna, the silver content in the Kreuzer coin was reduced by 60 percent between 1500 and 1800 and the Ausgburg pfennig lost more than 70 percent of its value.Once paper money was introduced, the process was further simplified, since you could just print it. The first country to start printing money on a grand scale was France in the 18th century, when it needed to pay off the mountain of debt accrued by Louis XIV. In times of crisis, French governments ever since have fallen for this temptation.

The Warning of Hyper-Inflation

In 1914, with the start of World War I, the German Reich also began to unpeg its currency from gold. Until then, anyone could trade paper money for precious medals. Unpegging the currency meant that the amount of money in circulation rose from 13 to 60 billion marks by the end of the war, while the products on offer were reduced by one-third. Prices skyrocketed.The disastrous development reached its peak in 1923 with hyperinflation. The exchange rate at the time was 4.2 trillion marks to the dollar. Bank notes were printed in 130 private printing presses, often on one side only to save ink. The only thing that could stop the mass devaluation was to change currencies.In November 1923, the government issued the so-called Rentenmark. The previous currency could be exchanged at a rate of 1 trillion marks for 1 Rentenmark. Inflation quickly stopped. People spoke of the “miracle of the Rentenmark.” But the truth is that it wiped out the savings and investments of large swaths of the German middle class as well as wealthy people who had been forced to finance the war by buying government bonds that had now been rendered worthless. Banks and insurance companies also lost their capital. The greatest winner, besides people who had loans or mortgages they no longer had to pay back, was the government. Its war debt shrank into insignificance.These traumatic events remain a part of the Germany’s collective memory and they fuel a latent fear of hyperinflation here today. Should people be afraid?For the moment they don’t need to be. Compared to many other countries, Germany is well positioned to ride out the crisis. The economy in recent years has been a lot stronger than other EU members and it is not as dependent on the financial sector as Great Britain. And unlike the United States, it isn’t dependent on foreign lenders.Iceland, for its part, is already as good as bankrupt. In Eastern Europe, a number of countries are wobbling — Latvia has already had to request aid from the IMF and the Eastern European Development Bank. In the capital city of Riga, 40 people were injured in a violent protest that took place on Jan. 13.Great Britain is also in trouble. And if it weren’t for the protection that their membership in the common currency provides them with, some euro zone countries would be fighting for financial survival right now. America, on the other hand, is banking on the fact that it is still considered stabile despite it’s enormous problems — and that the Chinese still hold a huge chunk of their currency reserves in US bonds.So will things get better? It would be an illusion to believe that countries have learned from their past mistakes, US economists Reinhart and Rogoff warn. In fact, another state could go bankrupt at anytime and take its people down with it.

In this crisis, nothing is unimaginable anymore.


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