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An article from nytimes.com
Stop the Bailouts
By WILLIAM POOLE
Published: February 28, 2009 Full article here
The self-correcting nature of markets will ultimately prevail....
Federal policy is damaging the economy's prospects. It fails to provide the needed tax incentives for investment in factories and equipment, incentives that were central to efforts to revive the economy during the Kennedy-Johnson era and under Ronald Reagan. But government spending can't lead the way to sustained recovery, because its stimulating effect will be offset by anticipated higher taxes and the need to finance the deficit.
Heavy-handed federal intervention into the management of companies from banks to auto makers will also delay recovery. And misguided efforts to help distressed homeowners by permitting courts to rewrite the terms of mortgages will cause banks to limit mortgage lending, which will prevent housing from contributing to the recovery.
Instead of more bailouts, we need a clear and consistent path to fundamental
reform of our financial system.
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From Our Archive
An article from the News on Business Forum, Shout99.com
Another Planet
By MikeM Published: October 3, 2008
There has never been a more difficult time to be a small business. You are being shot at from all angles and taxed to death. there is a mass of conflicting regulation which makes it very difficult to operate legally and profitably. Employment protection law is now so biased in favour of the employee that it is difficult to effectively discipline your staff or to get rid of an employee who is incompetent - or even dangerous. The need to consult legal advisers at every step warps the relationship between the employer and the employees and means that you can't use commonsense methods to resolve issues.
Having said that - every coin has two sides and there has never been a better time to be a lazy, workshy, bolshy, incompetent, insubordinate worker.
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An article from nytimes.com
The Prime Minister's Pyrrhic Victory
By OLIVER KAMM Published: September 28, 2008
For more than a decade, British politics has been dominated by the fractious personal rivalry between Tony Blair and Gordon Brown. In succeeding Mr. Blair as prime minister in June 2007, Mr. Brown presented himself almost as an anti-Blair: sober rather than populist, and stressing “the need for change.”
Last week, Mr. Brown's project ended with a whimper. Buffeted by economic crisis and dismal poll ratings, he spoke at the annual Labor Party conference in unusually personal and emotive terms. He had discovered the potency of Tony Blair's style of politics, and he won plaudits from the press for his performance. He also protected himself against the possibility of a party coup to replace him. Yet there was a cruel paradox: In shoring up his own embattled leadership with a more effective speech than any he had previously given, Mr. Brown merely made more certain that his party and much of what he has worked for over the last decade will be overwhelmingly rejected by voters in the next election.
It all looked different 15 months ago. Having served as finance minister since Labor took office in 1997, Mr. Brown had built a reputation for successful economic management and policy expertise. He was seen as a commanding political presence of intellectual depth. But his premiership has now become a torment. Staring at defeat, Labor politicians display alternately the qualities of panic and despair.
Hence the prime minister's attempt to present a softer and more human side to his character, while stressing his qualifications to cope with the gathering economic storm. At his conference speech he was introduced by his talented wife, Sarah, and he referred to personal hardships he had borne (he lost the sight of one eye in his youth). His most memorable line was to scorn the notion of trusting government to a “novice” — ostensibly an allusion to David Cameron, the Conservative Party leader, but clearly a warning to his own potential challengers in Labor's ranks.
It is an audacious appeal, possibly even a cynical one. Labor's defensive explanation for its unpopularity is that the economy is suffering from the global credit crisis, and the government is always an inevitable focus of voter discontent. But the economic problems include failings for which Mr. Brown bears direct responsibility. Britain faces a recession. Public finances are in a mess. Inflation is accelerating. The housing market is collapsing.
These are not the product of impersonal global forces. They are the result of the Labor government's failure to constrain the credit bubble that built up in the early years of this decade. The system of financial regulation that Mr. Brown created as finance minister has also proved inadequate; last year saw the first run on a British bank for more than a century.
As finance minister, Mr. Brown had a compulsion to micromanage. One intervention — eliminating the lowest rate of personal income tax, which pushed low-income workers into a higher bracket — came back to bite him. The change threatened the living standards of the very people whose interests Labor is supposed to champion. The government had to find additional funds to compensate them, and in terms of symbolism it was a fiasco.
In truth, Gordon Brown was never the colossus his press supporters believed him to be. He has a magpie eye for intellectual ideas, but is far from being a master of them. He relies on a tight circle of advisers of highly varying quality. His capacity for bearing personal grudges — most explosively in the case of Tony Blair — is immense.
By all accounts, Mr. Blair is distraught at what has happened. If Labor fails, then his own political legacy will be eroded. Mr. Blair's popular manner eventually came to be seen by voters as superficial. In fact, he was a world-class statesman with personal qualities Gordon Brown sorely needs. But as British politics has become an arena for more “empathetic” qualities, it is the Tories who are on course for a landslide victory, having elected a leader in Mr. Cameron who is more Blair-like in manner and presentation than anything the party has seen before.
While the policy mix that Mr. Blair brought to an apparently unelectable Labor Party in the 1990s — economic growth, internationalism and social justice — retains its potency, there is scant prospect that Labor will now be able to advance it. Gordon Brown may have finally found his inner Blair, but it is far too late for him to escape electoral retribution.
An article from nytimes.com
What's All This Stuff Worth?
Author: VIKAS BAJAJ & culled from an article published: September 24, 2008. Full article here
What would you pay, sight unseen, for a house that nobody wants, on a hard-luck street where no houses are selling?
The troubled investments are not traded on any exchange; many of these instruments are extremely complex. Consider the Bear Stearns Alt-A Trust 2006-7, a $1.3 billion drop in the sea of risky loans. Here's how it worked:
As the credit bubble grew in 2006, Bear Stearns, then one of the leading mortgage traders on Wall Street, bought 2,871 mortgages from lenders like the Countrywide Financial Corporation.
The mortgages, with an average size of about $450,000, were Alt-A loans — the kind often referred to as liar loans, because lenders made them without the usual documentation to verify borrowers' incomes or savings. Nearly 60 percent of the loans were made in California, Florida and Arizona, where home prices rose — and subsequently fell — faster than almost anywhere else in the country.
Bear Stearns bundled the loans into 37 different kinds of bonds, ranked by varying levels of risk, for sale to investment banks, hedge funds and insurance companies.
If any of the mortgages went bad — and, it turned out, many did — the bonds at the bottom of the pecking order would suffer losses first, followed by the next lowest, and so on up the chain. By one measure, the Bear Stearns Alt-A Trust 2006-7 has performed well: It has suffered losses of about 1.6 percent. Of those loans, 778 have been paid off or moved through the foreclosure process.
But by many other measures, it's a toxic portfolio. Of the 2,093 loans that remain, 23 percent are delinquent or in foreclosure, according to Bloomberg News data. Initially rated triple-A, the most senior of the securities were downgraded to near junk bond status last week. Valuing mortgage bonds, even the safest variety, requires guesstimates: How many homeowners will fall behind on their mortgages? If the bank forecloses, what will the homes sell for? Investments like the Bear Stearns securities are almost certain to lose value as long as home prices keep falling.
“Under the current circumstances it's likely that you are going to take a loss on these loans,” said Chandrajit Bhattacharya, a mortgage strategist at Credit Suisse, the investment bank.
The Bear Stearns bonds are just one example of the kind of assets the government could buy, and they are by no means the most complicated of the lot. Wall Street took bonds like those of Bear Stearns and bundled and rebundled them into even trickier investments known as collateralized debt obligations, or C.D.O.'s
Published: February 15, 2008
Astronomers said Wednesday that they had found a miniature version of our own solar system 5,000 light-years across the galaxy — the first planetary system that really looks like our own, with outer giant planets and room for smaller inner planets.
“It looks like a scale model of our solar system,” said Scott Gaudi, an assistant professor of astronomy at Ohio State University. Dr. Gaudi led an international team of 69 professional and amateur astronomers who announced the discovery in a news conference with reporters.
Their results are being published Friday in the journal Science. The discovery, they said, means that our solar system may be more typical of planetary systems across the universe than had been thought.
In the newly discovered system, a planet about two-thirds of the mass of Jupiter and another about 90 percent of the mass of Saturn are orbiting a reddish star at about half the distances that Jupiter and Saturn circle our own Sun. The star is about half the mass of the Sun.
Neither of the two giant planets is a likely abode for life as we know it. But, Dr. Gaudi said, warm rocky planets — suitable for life — could exist undetected in the inner parts of the system.
“This could be a true solar system analogue,” he said.
Sara Seager, a theorist at the Massachusetts Institute of Technology who was not part of the team, said that “right now in exoplanets we are on an inexorable path to finding other Earths.” Dr. Seager praised the discovery as “a big step in finding out if our planetary system is alone.”
Since 1995, around 250 planets outside the solar system, or exoplanets, have been discovered. But few of them are in systems that even faintly resemble our own. In many cases, giant Jupiter-like planets are whizzing around in orbits smaller than that of Mercury. But are these typical of the universe?
Almost all of those planets were discovered by the so-called wobble method, in which astronomers measure the gravitational tug of planets on their parent star as they whir around it. This technique is most sensitive to massive planets close to their stars.
The new discovery was made by a different technique that favors planets more distant from their star. It is based on a trick of Einsteinian gravity called microlensing. If, in the ceaseless shifting of the stars, two of them should become almost perfectly aligned with Earth, the gravity of the nearer star can bend and magnify the light from the more distant one, causing it to get much brighter for a few days.
If the alignment is perfect, any big planets attending the nearer star will get into the act, adding their own little boosts to the more distant starlight.
That is exactly what started happening on March 28, 2006, when a star 5,000 light-years away in the constellation Scorpius began to pass in front of one 21,000 light-years more distant, causing it to flash. That was picked up by the Optical Gravitational Lensing Experiment, or Ogle, a worldwide collaboration of observers who keep watch for such events.
Ogle in turn immediately issued a worldwide call for continuous observations of what is now officially known as OGLE-2006-BLG-109. The next 10 days, as Andrew P. Gould, a professor of mathematical and physical sciences at Ohio State said, were “extremely frenetic.”
Among those who provided crucial data and appeared as lead authors of the paper in Science were a pair of amateur astronomers from Auckland, New Zealand, Jennie McCormick and Grant Christie, both members of a group called the Microlensing Follow-Up Network, or MicroFUN.
Somewhat to the experimenters' surprise, by clever manipulation they were able to dig out of the data not just the masses of the interloper star and its two planets, but also rough approximations of their orbits, confirming the similarity to our own system. David P. Bennett, an assistant professor of astrophysics at the University of Notre Dame, said, “This event has taught us that we were able to learn more about these planets than we thought possible.”
As a result, microlensing is poised to become a major new tool in the planet hunter's arsenal, “a new flavor of the month,” Dr. Seager said.
Only six planets, including the new ones, have been discovered by microlensing so far, and the Scorpius event being reported Friday is the first in which the alignment of the stars was close enough for astronomers to detect more than one planet at once. Their success at doing just that on their first try bodes well for the future, astronomers say.
Alan Boss, a theorist at the Carnegie Institution of Washington, said, “The fact that these are hard to detect by microlensing means there must be a good number of them — solar system analogues are not rare.”
"Not Flash, Just Gordon"
An article from |
the New York Times |
Brown's British Blues
Published: December 20, 2007
A few weeks ago, Jonathan Freedland published a long piece in The New York Review of Books that caught Gordon Brown mania. As the antithesis of Tony Blair, whom Britain's liberal-left chattering classes came to loathe with herdlike unanimity, Brown would likely “confound the skeptics again.”
With approval, Freedland, a columnist for The Guardian, noted the new prime minister's deft distancing of himself from President Bush, his “breaking from the culture of spin” and his appointment of competent ministers. “Those qualities once deemed weaknesses — his lack of glitz and sparkle — have come to seem like strengths,” he wrote.
Ill-timed articles are nothing unusual, although this was a conspicuous one from a journalist of conspicuous gifts — which is precisely what makes it so interesting. Freedland's encomium to the diligent Brown captured the capacity of accumulated, Iraq-driven Blair aversion to deliver the delusional.
In fact, Brown's lack of glitz and sparkle has come to seem precisely what it is in the modern political age: a drawback. The impact of France's flamboyant president, Nicolas Sarkozy — like Blair's in 1997 — is sufficient reminder of that. More important, Brown's problem with decision-making is proving crippling.
As a successful chancellor of the Exchequer over Blair's decade, Brown loved to tinker with the tax code. The tinkerer is a good name for him. Since taking office in June, he has scarcely found a controversial issue not worthy of lengthy review. The only committee his cabinet lacks is one on decision-making.
He took the country to the brink of a snap election in the fall, only to pull back and claim opinion polls had not influenced him. The British electorate is no exception to the rule that nobody likes to be taken for a fool.
He withdrew some, not all, troops from Iraq, bequeathing confusion in Basra and distancing Britain from the first positive turn in Iraqi events in a long time.
Last week, he took his Hamlet-like hesitations to a new level. (Shakespearean allusions haunt Brown because brooding ambition and blatant flaws so evidently shape his fate.) Invited to a signing ceremony for the European Union's Treaty of Lisbon, an event attended by every other E.U. leader, he chose to skip the spectacle, a silly sop to Britannia's Euro-skeptics that succeeded only in looking rude.
After six months in office, Brown has comforted rather than confounded the skeptics. He has alienated both Washington and Brussels, an unusual achievement. Far from breaking with Blair's rule by coterie — sometimes known as “sofa government” — he has proved a dour centralizer: sofa rule without the sofa.
His recent extension of the time terror suspects can be held without charge illustrated his capacity to disappoint the left while losing Blair's magnetism over the center. Add to this the huge bailout of the mortgage lender, Northern Rock, and a scandal surrounding Labor Party donations and you have the elements of one of the most spectacular falls from grace of recent political history. Brown now trails his Conservative rival, David Cameron, by 10 points in opinion polls.
I'd say this debacle was near inevitable.
Brown arrived, without his own mandate, at the tail end of the 10-year phenomenon of New Labor. His fraught but fecund relationship with Blair drove that success, leaving Brown bereft. He is still prone to questions about Blair — “Why did he give up his seat in Parliament anyway?” — that bewilder aides in the midst of unrelated policy discussions.
In an age where people realize the limits of what politicians can deliver, he offers little of the hope and distraction they seek. As Rachel Sylvester noted in The Daily Telegraph, Brown faces some of the problems Hillary Clinton has with Barack Obama.
He and Clinton are both “emerging from the shadow of more charismatic partners” and trying to position themselves as the “embodiment of experience” against a “puppyish symbol of hope” (read Cameron or Obama). For now, the heart-stirring pups have momentum.
That could still change, of course. What will not change is that Brown faces the tough task of following one of the most gifted and successful British prime ministers of the past century, a man who gave the country peace in Northern Ireland, sustained prosperity and renewed confidence. The fact is, by the end, Iraq had induced feverish blindness to Blair's achievements among Britain's left-liberal, Guardian-reading establishment.
Of Afghanistan and Iraq, Blair once said: “I am proud — was proud and remain proud — of this country and the part it played, especially our magnificent armed forces, in removing two vile dictatorships and giving people oppressed, almost enslaved, the prospect of democracy and liberty.”
He stood, without equivocation, on the right side of history. Where Brown stands on most things remains a mystery.
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