CHINESE Premier Wen Jiabao is now engaged in the fight of his life - forestalling the revival of Maoism, which he argues has stifled political reform in China.
Recently, Mr Wen stuck his neck out by disclosing that two forces within the ruling Chinese Communist Party (CCP) have prevented people from speaking the truth.
By Ching Cheong, Senior Writer
In a private meeting last Saturday with Mr Ng Hong Man, an ex-delegate to the National People's Congress (NPC) from Hong Kong, he pinpointed the 'remnants of feudalism' and the 'evil legacies of the Cultural Revolution' as the two forces.
In the political context of present-day China, the terms are codes that refer to two things respectively: Mao Zedong and the basic political system he bequeathed, and the opponents of Deng Xiaoping's reform and open-door policy.
Due to these two forces, people are indulged in telling lies or speaking in very high-sounding but empty terms,' the Premier told Mr Ng in their one-on-one meeting at the Premier's Zhongnanhai office. The meeting lasted 90 minutes.
In other words, he put the blame squarely on Maoism for the lack of political reform, identifying it as the main stumbling block.
Although it is common for the CCP leaders to disclose policy direction to visitors, it is rare for them to reveal intra-party differences on such occasions. It is even more rare for their visitors - Mr Ng in this case - to later reveal contents of the 'private' meetings.
In fact, Mr Wen is taking a calculated gamble. One of the reasons that led to the downfall of former party secretaries Hu Yaobang and Zhao Ziyang was allegedly their disclosures of party discord to visitors.
In this sense, Mr Wen is risking his own political career by discussing the taboo topic with Mr Ng and giving his tacit approval for the meeting's contents to be released in a press statement in Hong Kong this week. Several photos of the meeting were also released.
The high-profile manner in which the 'private' meeting is being disclosed suggests that Premier Wen may want to use this occasion to marshal support for his own political reform agenda.
Mr Ng, 85, is the former headmaster of Pui Kiu Middle School, a pro-CCP college that had churned out countless number of 'patriotic graduates' in Hong Kong and South-east Asia. He was therefore widely respected by the pro-Beijing circle in Hong Kong. He had been an NPC delegate since 1974 until his retirement in 2003.
After the June 4, 1989 crackdown on the student movement in Beijing, Mr Ng gradually became a strong critic of CCP policies and openly advocated political reform. His writings caught the attention of the Premier, who decided to have a rendezvous with him.
In his comments to Mr Ng, Premier Wen cited 'remnants of feudalism' and the 'evil legacies of the Cultural Revolution' as stumbling blocks to telling the truth. This reminds one that, in recent years, Maoism has made a strong comeback, as epitomised by the so-called 'Chongqing Model'.
Spearheaded by Mr Bo Xilai, the Chongqing model sought to revive Maoist tradition, claiming that it was the best panacea to solve China's looming political and social problems.
To do so, Mr Bo built the tallest Mao Zedong statue in China. He also started a 24-hour radio service dedicated to spreading 'red songs, Marxism-Leninism-Maoism classics, revolutionary stories, and socialist maxims'.
Of the nine members of the Politburo Standing Committee (PSC) - the apex of political power in China - five have visited Mr Bo's turf to show their personal endorsement of the model, which is fast spreading to other parts of China.
The other four, including President Hu Jintao, Premier Wen, Vice-Premier Li Keqiang and fourth-ranking Mr Jia Qinglin, have, until now, not made any trip to Chongqing.
From what Mr Wen told Mr Ng, one could infer that this latter batch of PSC members did not endorse the Chongqing model.
Yet the potent revival of Maoism is a phenomenon that politicians in China have to handle with great care.
This revival has led to the building of a huge mausoleum dedicated to the late CCP leader Hua Guofeng, Mao's hand-picked successor who was disgraced after the re-emergence of Deng Xiaoping following Mao's death.
Standing on 10ha of land, equivalent in size to 14 standard soccer fields, the mausoleum is almost twice the size of Mao's own memorial hall in Tiananmen Square, which measures only 5.72ha.
This is a vivid testimony to the strong opposition to Deng's reform and open-door policy, which is said to have created all the social vices that are besieging Chinese society.
Maoist revival has also nurtured three splinter parties in recent years. Unlike the right-wing pro-democracy parties which are summarily banned the moment they surface, these Maoist parties are tolerated.
The first one, called the Maoism Communist Party, was set up in December 2008. It held its first national congress right at the Tiananmen Square. The venue by itself is telling of its strong backing.
The second one, the Workers' Communist Party, was set up in August 2009. Among its 56 founding members, 76 per cent were concurrent CCP members. This also shows its close connection with the mainstream CCP.
The third one, the Marxism-Leninism-Maoism Workers Party, was set up just last month.
They all share the same goal: to bring back Maoism to solve China's burning social problems.
It is also interesting to note that, thanks to this strong revival of Maoism, the Confucius statue that stood in the Tiananmen Square since Jan 11 this year was removed on April 21.
Mao had dealt the most devastating blow to Confucius and the two can never co-exist in Tiananmen Square.
This revival of Maoism deserves close monitoring as it is going to affect China's political development in the years to come.
Saturday, April 30, 2011
Friday, April 29, 2011
I need your urgent advice
I need your urgent advice about employing a maid. As a busy mother, I need someone reliable to help out at home.
My maid is from Profits Agency Pte (PAP) and she has worked for me for a long time. Her mother worked for my parents and did an excellent job, so I had faith in her. For several years her performance has been very good, but recently she has become arrogant and insensitive, and is making lots of mistakes.
For example:
1) She flooded my kitchen – she told me that the drain pipe has blocked (she was supposed to clear it once a month but didn’t). Then she assured me that it is very rare and won’t happen again in the near future. Guess what? It flooded again within a year!
2) She didn’t close a window and my terrier dog escaped. I was so worried cos he is dangerous and could bite lots of people. After the incident, she didn’t apologise and just shrugged her shoulders saying “What to do, it has happened.” Fortunately my neighbor found the dog and we locked it up again.
3) Without consulting me, she has been bringing in strangers for my house's maintenance work. She says they charge low wages and keep costs down, but they eat my food, make a lot of noise and rest on my bed. I think they even tried to seduce my husband. It stopped feeling like my home, more like a cheap hotel, and I don’t always want to come back at the end of the day.
4) When she first came to work for me, I instructed her to clean the different parts of the house at least once a week. But for some time she has stopped taking care of the bedrooms of PP and H; they are now dirty and messy. I asked why and she told me that the kids had been disobedient, so she was neglecting their bedrooms as a punishment (she has forgotten that she is paid to clean all the rooms).
Even though my maid has worked for me for many years and I value what she has done in the past, I think she is now getting complacent. Her attitude is imperious and dismissive. She ignores my comments and basically treats my feedback as "noise". I wrote to the agency about her behavior; they assured me that they are the best agency around and all their maids are “Commited to Serve” – but I think it is just rhetoric and I don’t see that in her actions. Her salary is much higher than maids in other countries, but the agency say this is to keep her honest and stop her moving to another employer. They say there is a limited supply of maids, and Singapore isn’t big enough for more than one good maid agency, so I should not trust their competitors.
I have to decide whether to renew my maid’s 5-year employment contract. When we discussed this she said that she is now part of a team, and if I want her I must also accept her friends doing part-time work for me. One friend is very inexperienced, can't do basic tasks or explain what she intends to do. I suspect that she is actually underage. When interviewed, she only seemed interested in her days-off and visiting Universal Studios. When she couldn't answer my questions she stomped her foot and exclaimed, "I don't know what to say!" But I am still expected to pay her a high salary.
Now there happen to be a few other maid agencies - Workhard Pte (WP), New Solutions Pte (NSP), Super Personnel Pte (SPP) and Star Domestica Pte (SDP) - that offered me some helpers who seem sincere, genuine and intelligent. They are keen to work, willing to assist me and have a good attitude. I know that they may take a bit of time to learn how everything works, but frankly I am inclined to give them a chance.
People say that the devil you know is better than one you don’t. But I feel that I can’t tahan my current maid anymore. Do you think I should sack my current maid and try out a new one? Appreciate your advice.
Footnote: I live in Tanjong Pagar GRC and it seems like I have no choice about my maid agency afterall - I will have to stick with my current maid. For those of you who are fortunate enough to have a choice, celebrate your blessed privilege and exercise your choice wisely. My best wishes to you.
My maid is from Profits Agency Pte (PAP) and she has worked for me for a long time. Her mother worked for my parents and did an excellent job, so I had faith in her. For several years her performance has been very good, but recently she has become arrogant and insensitive, and is making lots of mistakes.
For example:
1) She flooded my kitchen – she told me that the drain pipe has blocked (she was supposed to clear it once a month but didn’t). Then she assured me that it is very rare and won’t happen again in the near future. Guess what? It flooded again within a year!
2) She didn’t close a window and my terrier dog escaped. I was so worried cos he is dangerous and could bite lots of people. After the incident, she didn’t apologise and just shrugged her shoulders saying “What to do, it has happened.” Fortunately my neighbor found the dog and we locked it up again.
3) Without consulting me, she has been bringing in strangers for my house's maintenance work. She says they charge low wages and keep costs down, but they eat my food, make a lot of noise and rest on my bed. I think they even tried to seduce my husband. It stopped feeling like my home, more like a cheap hotel, and I don’t always want to come back at the end of the day.
4) When she first came to work for me, I instructed her to clean the different parts of the house at least once a week. But for some time she has stopped taking care of the bedrooms of PP and H; they are now dirty and messy. I asked why and she told me that the kids had been disobedient, so she was neglecting their bedrooms as a punishment (she has forgotten that she is paid to clean all the rooms).
Even though my maid has worked for me for many years and I value what she has done in the past, I think she is now getting complacent. Her attitude is imperious and dismissive. She ignores my comments and basically treats my feedback as "noise". I wrote to the agency about her behavior; they assured me that they are the best agency around and all their maids are “Commited to Serve” – but I think it is just rhetoric and I don’t see that in her actions. Her salary is much higher than maids in other countries, but the agency say this is to keep her honest and stop her moving to another employer. They say there is a limited supply of maids, and Singapore isn’t big enough for more than one good maid agency, so I should not trust their competitors.
I have to decide whether to renew my maid’s 5-year employment contract. When we discussed this she said that she is now part of a team, and if I want her I must also accept her friends doing part-time work for me. One friend is very inexperienced, can't do basic tasks or explain what she intends to do. I suspect that she is actually underage. When interviewed, she only seemed interested in her days-off and visiting Universal Studios. When she couldn't answer my questions she stomped her foot and exclaimed, "I don't know what to say!" But I am still expected to pay her a high salary.
Now there happen to be a few other maid agencies - Workhard Pte (WP), New Solutions Pte (NSP), Super Personnel Pte (SPP) and Star Domestica Pte (SDP) - that offered me some helpers who seem sincere, genuine and intelligent. They are keen to work, willing to assist me and have a good attitude. I know that they may take a bit of time to learn how everything works, but frankly I am inclined to give them a chance.
People say that the devil you know is better than one you don’t. But I feel that I can’t tahan my current maid anymore. Do you think I should sack my current maid and try out a new one? Appreciate your advice.
Footnote: I live in Tanjong Pagar GRC and it seems like I have no choice about my maid agency afterall - I will have to stick with my current maid. For those of you who are fortunate enough to have a choice, celebrate your blessed privilege and exercise your choice wisely. My best wishes to you.
Thursday, April 28, 2011
'everything is fake except the swindler'
At a recent meeting, he said declining moral standards in Chinese society, as evidenced by a spate of food safety scandals, had to do with the absence of political reform.
Wen's lonely fight for political reform
By Ching Cheong, Senior Writer
Mr Wen pointed to tainted milk powder, the use of illegal additives and dyed steamed buns to show how low moral standards had plunged in China.
'A country cannot be truly great and respected by others unless it improves the quality of (its) people and moral standards,' he told a meeting of the Cabinet's new advisory team as well as members of the Central Research Institute of Culture and History.
'We must deepen political and economic reforms... to punish lawbreakers and immoral people,' he said.
It was the first time a senior leader had commented on moral degeneration in China.
The official Xinhua news agency, which censored his previous calls for political reform, published his speech in full three days later.
Mr Wen told the meeting that the solution lies in political reform to help weed out corruption, which he sees as the root of declining morality and integrity.
'As I said in the press conference (following the annual National People's Congress session last month), eradicating corruption requires systemic and structural reform, so as to allow people to criticise and supervise the government and to keep its power in check,' he said.
Political reform is needed - together with economic, cultural and legal reforms - to raise credibility and moral standards. However, reform in the political space is by far the most important.
Mr Wen urged the advisers to speak the truth, but conceded that to do so, 'there ought to be an environment for hearing the truth'.
In order to create such an environment, he called for greater tolerance. 'A country will not be great unless it is open and tolerant,' he stressed.
Knowing full well how difficult it can be to speak the truth, he said: 'Any country would need to have people who have the public's interest at heart and the courage to speak the truth regardless of the consequences to themselves.'
Mr Wen cited three food scandals as examples of moral degeneration, but these were only the more recent ones. There are many more examples, involving cereals, dairy products, vegetables, fruit, poultry and seafood.
Netizens documented more than 15 major food safety crises in the past two years, or one every two months.
Food safety scandals are only one aspect of declining credibility and moral standards.
According to a report released at the 2011 Sixth Summit on China's Quality and Credibility, economic losses resulting from a lack of credibility have amounted to 585.5 billion yuan (S$110.8 billion), or about 1.5 per cent of China's gross domestic product of 37 trillion yuan. About 200 billion yuan was due to fake products.
Fakery is found not only in the manufacture of food and goods. The Chinese saying - 'everything is fake except the swindler' - only underscores the gravity of the problem.
There are 'fakes' in academic circles as well.
Last year's Jan 12 issue of Nature magazine cited a government study as saying that a third of the 6,000 scientists at China's top six institutions had admitted to plagiarising or fabricating research data.
According to another study by the China Association for Science and Technology, more than half - 55 per cent - of 32,000 scientists said they knew of someone who had committed academic fraud.
Even celebrities have been outed for faking their academic credentials. The list includes former Microsoft China president Tang Jun and prominent TV network operator and anchor Yang Lan.
At the height of Mr Tang's fake doctorate scandal last year, a reference to Chinese Vice-President Xi Jinping's doctorate from Tsinghua University was removed from his official webpage.
A People's Daily report in 2009 cited a survey on perceptions of credibility, which turned out some interesting, albeit embarrassing, findings.
Most people interviewed said they considered government officials and property developers to be the least credible - with the latter being labelled 'money-driven devils'. In contrast, they found farmers, religious leaders - and even sex workers - the most credible.
Scientific or not, the survey gives a glimpse into China's ethical status quo, wrote People's Daily journalist Li Hongmei. It marks a time for 'seeking short-term successes and quick profits and reflecting a social context contrary to reason', she added.
It is doubtful if Mr Wen can single-handedly reverse the decline. At the very least, however, it shows he's single-minded when it comes to political reform.
chingcheong@gmail.com
It's me, me, me in songs of today
Lyrics now tend towards the individual and his anger, from group harmony in 80s: Study
NEW YORK: In the 1960s, songs about universal brotherhood filled the air. 'Come on people now, smile on your brother. Everybody get together try to love one another right now,' sang The Youngbloods' Jesse Colin Young
In the early 1980s, Paul McCartney and Stevie Wonder joined voices to sing about people of all races living together in 'perfect harmony' in Ebony And Ivory.
Today, the times are a-changin', and so are the tunes. Many seem more about me than us, more self-absorbed and angry.
Alternative rock group Weezer, for instance, borrowed the melody from a 19th-century hymn of the pacifist Shaker religion to sing 'I'm the greatest man that ever lived', over and over.
The band's lead singer and guitarist Rivers Cuomo tossed out the hymn's lyrics - ''Tis the gift to be simple, 'tis the gift to be free' - and replaced them with 'I'm the meanest in the place, step up, I'll mess with your face'.
When University of Kentucky psychologist Nathan DeWall first heard the Weezer track, subtitled Variations On A Shaker Hymn, a few years ago, he wondered whether America had taken a turn for the narcissistic.
Through a computer analysis of three decades of hit songs, Dr DeWall and other psychologists report finding what they were looking for: modern song lyrics seem to reveal that the young are more interested in their own lives and problems than those of others, as well as their own appearance and self-image.
'Late adolescents and college students love themselves more today than ever before,' said Dr DeWall.
His study covered song lyrics from 1980 to 2007. But they were controlled to prevent the results from being distorted by the growing popularity of new genres such as rap and hip-hop.
It found a statistically significant trend towards narcissism and hostility in popular music. As expected, the words 'I' and 'me' appear more frequently along with anger-related words. At the same time, there has been a corresponding decline in 'we' and 'us' and the expression of positive emotions.
Defining the personality of a generation with song lyrics may seem a bit of a reach, but Dr DeWall points to research done by his co-authors that showed people of the same age scoring higher in measures of narcissism on some personality tests.
The extent and meaning of this trend have been hotly debated by psychologists, some of whom question the usefulness of such tests and say young people today are not any more self-centred than those of earlier generations.
The new study of song lyrics certainly will not end the debate, but it does offer another way to gauge self-absorption: the Billboard Hot 100 chart.
The researchers find that hit songs in the 1980s, such as Ebony And Ivory, were more likely to emphasise happy togetherness. Group exuberance was promoted by Kool & The Gang: 'Let's all celebrate and have a good time.' Diana Ross and Lionel Richie sang of 'two hearts that beat as one'. John Lennon's '(Just Like) Starting Over' emphasised that 'our life together' was precious.
Today's songs, according to the researchers' linguistic analysis, are more likely be about one very special person: the singer.
'I'm bringing sexy back,' Justin Timberlake proclaimed in 2006.
The year before, Beyonce exulted in how hot she looked while dancing: 'It's blazin', you watch me in amazement.'
In an analysis published last year in Social Psychological and Personality Science, Dr Joshua Twenge, one of Dr DeWall's co-authors, and Mr Joshua Foster looked at data from nearly 50,000 students - including the new data from critics - and concluded that narcissism has increased significantly in the past three decades.
Their song-lyrics analysis shows a decline in words related to social connections and positive emotions (like 'love' or 'sweet') and an increase in words related to anger and anti-social behaviour (like 'hate' or 'kill').
'In early 80s lyrics, love was easy and positive, and about two people,' said Dr Twenge, a psychologist at San Diego State University. 'The recent songs are about what the individual wants, and how she or he has been disappointed or wronged.'
NEW YORK TIMES
An analysis of the lyrics shows a decline in words related to social connections and positive emotions (like 'love' or 'sweet') and an increase in words related to anger and anti-social behaviour (like 'hate' or 'kill').
NEW YORK: In the 1960s, songs about universal brotherhood filled the air. 'Come on people now, smile on your brother. Everybody get together try to love one another right now,' sang The Youngbloods' Jesse Colin Young
In the early 1980s, Paul McCartney and Stevie Wonder joined voices to sing about people of all races living together in 'perfect harmony' in Ebony And Ivory.
Today, the times are a-changin', and so are the tunes. Many seem more about me than us, more self-absorbed and angry.
Alternative rock group Weezer, for instance, borrowed the melody from a 19th-century hymn of the pacifist Shaker religion to sing 'I'm the greatest man that ever lived', over and over.
The band's lead singer and guitarist Rivers Cuomo tossed out the hymn's lyrics - ''Tis the gift to be simple, 'tis the gift to be free' - and replaced them with 'I'm the meanest in the place, step up, I'll mess with your face'.
When University of Kentucky psychologist Nathan DeWall first heard the Weezer track, subtitled Variations On A Shaker Hymn, a few years ago, he wondered whether America had taken a turn for the narcissistic.
Through a computer analysis of three decades of hit songs, Dr DeWall and other psychologists report finding what they were looking for: modern song lyrics seem to reveal that the young are more interested in their own lives and problems than those of others, as well as their own appearance and self-image.
'Late adolescents and college students love themselves more today than ever before,' said Dr DeWall.
His study covered song lyrics from 1980 to 2007. But they were controlled to prevent the results from being distorted by the growing popularity of new genres such as rap and hip-hop.
It found a statistically significant trend towards narcissism and hostility in popular music. As expected, the words 'I' and 'me' appear more frequently along with anger-related words. At the same time, there has been a corresponding decline in 'we' and 'us' and the expression of positive emotions.
Defining the personality of a generation with song lyrics may seem a bit of a reach, but Dr DeWall points to research done by his co-authors that showed people of the same age scoring higher in measures of narcissism on some personality tests.
The extent and meaning of this trend have been hotly debated by psychologists, some of whom question the usefulness of such tests and say young people today are not any more self-centred than those of earlier generations.
The new study of song lyrics certainly will not end the debate, but it does offer another way to gauge self-absorption: the Billboard Hot 100 chart.
The researchers find that hit songs in the 1980s, such as Ebony And Ivory, were more likely to emphasise happy togetherness. Group exuberance was promoted by Kool & The Gang: 'Let's all celebrate and have a good time.' Diana Ross and Lionel Richie sang of 'two hearts that beat as one'. John Lennon's '(Just Like) Starting Over' emphasised that 'our life together' was precious.
Today's songs, according to the researchers' linguistic analysis, are more likely be about one very special person: the singer.
'I'm bringing sexy back,' Justin Timberlake proclaimed in 2006.
The year before, Beyonce exulted in how hot she looked while dancing: 'It's blazin', you watch me in amazement.'
In an analysis published last year in Social Psychological and Personality Science, Dr Joshua Twenge, one of Dr DeWall's co-authors, and Mr Joshua Foster looked at data from nearly 50,000 students - including the new data from critics - and concluded that narcissism has increased significantly in the past three decades.
Their song-lyrics analysis shows a decline in words related to social connections and positive emotions (like 'love' or 'sweet') and an increase in words related to anger and anti-social behaviour (like 'hate' or 'kill').
'In early 80s lyrics, love was easy and positive, and about two people,' said Dr Twenge, a psychologist at San Diego State University. 'The recent songs are about what the individual wants, and how she or he has been disappointed or wronged.'
NEW YORK TIMES
An analysis of the lyrics shows a decline in words related to social connections and positive emotions (like 'love' or 'sweet') and an increase in words related to anger and anti-social behaviour (like 'hate' or 'kill').
Wednesday, April 27, 2011
A call for help at Chernobyl, 25 years after
A man grieving at the monument to Chernobyl victims in Slavutych, 50km from the accident site, and where many of the power station's personnel used to live, during a memorial ceremony early yesterday. -- PHOTO: AGENCE FRANCE-PRESSE
Kiev had been left alone to fight the fallout for too long, said Prime Minister Mykola Azarov, noting that Ukraine's total economic losses from the disaster amounted to US$180 billion (S$222 billion).
In some years, state spending on overcoming Chernobyl amounted to 10 per cent of the budget.
'Despite difficult economic circumstances, Ukraine for the last 20 years has been financing on its own the expenses on overcoming the disaster,' Mr Azarov said.
'We are sure that the solidarity of nations and states, the humanism of modern civilisation will not leave Ukraine without help from outside.'
Yesterday's 25th anniversary of the Chernobyl disaster has gained an eerily contemporary resonance after the March11 earthquake and tsunami in Japan which damaged reactors at the Fukushima Daiichi power plant and prompted leaks of radiation.
It all began in the early hours of April 26, 1986, when workers at the Chernobyl atomic power station in the then Soviet republic were carrying out a test on reactor four. Operating errors and design flaws sparked successive explosions.
Radioactive debris landed around the reactor, creating an apocalyptic scene in the surrounding area, while material also blew into the neighbouring Soviet republics of Belarus and Russia and further into Western Europe.
Two workers were killed by the explosion and 28 other rescuers and staff died of radiation exposure in the following months. Tens of thousands needed to be evacuated and fears remain of the scale of damage to people's health.
Moscow stayed silent on the Chernobyl disaster for three days, with the official news agency Tass reporting an accident there only on April 28, after the Forsmark nuclear plant in Sweden recorded unusually high radiation.
Ukraine's post-independence leaders have long complained of the scale of the problem they inherited after the collapse of the USSR.
Mr Azarov said that in Ukraine alone, 2.2 million people are designated as victims of Chernobyl, 255,000 of whom are officially recognised as 'liquidators' who were involved in the clean-up effort.
The death toll related to the disaster has ranged as high as 93,000 fatal cancer cases, Greenpeace said in 2006 when it accused the United Nations agencies of grossly underestimating the toll.
Mr Azarov said: 'Chernobyl left behind social and economic problems which will not go away for years' including massive payments for medical assistance, relocation and compensation for victims.
Ukraine also needs funds to build a new shelter over the destroyed reactor, which is still covered by a Soviet-era sarcophagus.
The European Bank for Reconstruction and Development (EBRD), which is running the project, has yet to win full funding. A conference last week secured €550 million (S$993 million) in new pledges, short of the €740 million still needed.
'For too long, unfortunately, Ukraine remained alone in the Chernobyl disaster,' President Viktor Yanukovych said in a statement to mark the anniversary of the disaster.
In a reference to Japan's disaster, he added: 'Today we are not alone.'
Russian President Dmitry Medvedev made a landmark visit to Chernobyl yesterday to take part in memorial ceremonies at the stricken plant, joined by Mr Yanukovych.
At a night service on Monday led by Russian Orthodox Patriarch Kirill in Kiev, a bell struck at 1.23am - the moment when the explosion went off - and tolled 25 times for the years that passed since the disaster.
Inhabitants of the new city of Slavutych, built to house workers safely after the disaster, lit candles beneath a memorial containing pictures of the rescue workers and plant workers who died in the disaster.
Mr Medvedev said before visiting Chernobyl that he will propose a plan to boost safety at the world's nuclear power plants at the Group of Eight summit next month.
He said: 'Chernobyl will forever remain a symbol of huge human grief.' AGENCE FRANCE-PRESSE
Tamil Tigers, govt troops 'both guilty of war crimes'
A file picture (above) supplied by the pro-rebel organisation www.WarWithoutWitness.com shows what it says are injured Tamil civilians at a makeshift hospital inside the 'no fire zone' in northern Sri Lanka. The photo was taken in May 2009. A UN report says both sides may have been guilty of war crimes in the final stages of the civil war in Sri Lanka two years ago. -- PHOTOS: REUTERS, AGENCE FRANCE-PRESSE
The government 'systematically shelled' hospitals in the front lines, and 'systematically deprived people in the conflict zone of humanitarian aid, in the form of food and medical supplies, particularly surgical supplies, adding to their suffering', the report said.
The separatist Tamil Tigers, on the other hand, refused civilians permission to leave areas under their control, 'using them as hostages', conscripted civilians, including children as young as 14 years old, and forced civilians to perform labour. The rebels also shot dead civilians trying to escape the conflict zone and fired artillery from near the civilians, provoking retaliatory fire, the report said.
'Tens of thousands lost their lives from January to May 2009, many of whom died anonymously in the carnage of the final few days,' said the report prepared by a three-member panel led by former Indonesian attorney-general Marzuki Darsman.
'Most civilian casualties in the final phases of the war were caused by government shelling,' it added.
The UN panel, which gathered evidence for 10 months, urged UN Secretary-General Ban Ki Moon to proceed to establish 'an independent international mechanism' to investigate the war's final stages.
But Mr Ban said he lacked the authority to personally order a probe into the mass killings of the civilians.
'In regard to the recommendation that he establish an international investigation mechanism, the secretary-general is advised that this will require host country (Sri Lankan) consent or a decision from member states through an appropriate intergovernmental forum,' Mr Ban's spokesman Martin Nesirky said.
In other words, without the consent of the Sri Lankan government or a decision by the UN Security Council, the UN General Assembly, Human Rights Council or other international body, Mr Ban will not move to set up a formal investigation into the civilian deaths.
Sri Lanka had asked the UN not to publish its findings, saying the report could damage reconciliation efforts on the island.
The government in Colombo has consistently denied allegations that it targeted civilians, and has rejected the report's findings as biased and fraudulent. Publication of the UN report was repeatedly delayed as the government urged the secretary-general not to publish its findings.
The UN experts said there were 'credible allegations, which if proven indicate that a wide range of serious violations of international humanitarian law and international rights law was committed both by the government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE), some of which would amount to war crimes and crimes against humanity'.
The report criticised UN officials for not pressing the Sri Lankan government hard enough to exercise restraint and for not going public with high casualty figures which, it said, would have put more pressure on the government.
The UN panel urged the Sri Lankan government to issue a formal and public recognition of its role in responsibility for the extensive civilian casualties in the final stages of the conflict.
The panel also recommended that the government should respond to the serious allegations 'by initiating an effective accountability process beginning with genuine investigations' which would meet international standards.
Mr Ban urged Sri Lanka to pursue its own 'genuine investigations'.
But UN officials concede that Colombo would never consent to such an investigation.
Sri Lanka is not a member of the International Criminal Court (ICC), which means the Hague-based court would require a referral by the UN Security Council to investigate any possible war crimes there.
Veto powers Russia and China, as well as India, are among the council members opposed to formal Security Council involvement in the case of Sri Lanka, diplomats told Reuters.
The council has only referred two previous situations to the ICC: the conflict in Sudan's western Darfur region, and Libya's violent crackdown against anti-government rebels.
AGENCE FRANCE-PRESSE, REUTERS, ASSOCIATED PRESS
Tuesday, April 26, 2011
Decline and fall
PART of the job description of the US treasury secretary is to declare at every opportunity that it is in the country's interest to maintain a strong dollar and preserve it as the world's reserve currency. To do otherwise would risk triggering a run on the dollar and a tidal wave of political denunciation.
If, however, you were to administer truth serum to the recent occupants of 1500 Pennsylvania Avenue, my guess is that they would acknowledge that the dollar is in a long-term decline that is inevitable and economically desirable. The question is whether the retreat of the dollar will be gradual and orderly, or sudden and disorderly.
Why inevitable? To begin, it is worth remembering that the hegemony of the dollar was a result of two world wars that left most of America's competitors in ruins and part of the world in thrall to a communist ideology that turned out to be folly.
Nearly a century later, a peaceful and revitalised Europe has begun to integrate into a large, unified economy. Its currency and financial markets are finally in a position to rival America's.
Just as significantly, developing countries in Asia and South America are in the midst of an unprecedented economic catch-up that will mean their output and productivity will grow much faster than those of advanced countries. Economic theory and history suggest that their currencies will rise as well.
Those unmistakable trends explain why just about every big corporation and lots of smart investors are busy shifting money to developing economies. Americans will profit two ways: the success of their investments, plus the bump they'll get when converting those profits into deflated dollars.
In the nearer term, it's a good bet that the dollar will decline as the global economy finally corrects for the massive imbalance that developed over the past 15 years between the United States and China, Taiwan and other Asian economies that artificially pegged their currencies to the dollar. The result of this currency manipulation and mispricing is too much debt- fuelled consumption in the US and too much production and reserve accumulation in the China bloc.
Now these macroeconomic imbalances have reached a tipping point. Here in the US, they are generating intense deflationary pressures that manifest in falling real estate prices, stagnant wages and high unemployment, which require huge amounts of fiscal and monetary stimuli to offset. In Asia, it is the opposite - strong inflationary pressures are driving up wages, prices and real estate values and other financial assets, requiring increasingly heavy-handed regulation of lending and investment.
The practical effect of all this deflation and inflation is to accomplish what a straightforward exchange-rate adjustment would: raise the relative price of Chinese goods while lowering the price of American goods. The side effects from this type of backdoor adjustment, however, have become so distorting and risky that it is only a matter of time before the dollar is allowed to fall against these Asian currencies.
I realise that these kinds of discussions about currencies and macroeconomic imbalances can make your head hurt if you dwell on them for very long. But it turns out they are at the heart of most of the economic issues we're dealing with, from budget battles in the US to the euro zone crisis to the rising price of petrol.
'All these discrete national problems are really manifestations of a global financial crisis and the failure to manage the global economy,' former British prime minister Gordon Brown said in a brilliant speech this month at Bretton Woods.
It was at Bretton Woods in 1944 when Britain's John Maynard Keynes and America's Harry Dexter White conjured up the financial architecture for the global economy that served the world rather well from the end of World War II through the early 1980s.
Since then, its shortcomings have been revealed by a series of financial crises that have become more severe and more frequent, with the fixes for one planting the seeds for the next.
Despite the best efforts of world leaders, a new and better architecture has proven elusive. At the centre of that 1944 architecture, of course, was the US dollar, which since has been the overwhelming currency of choice for central banks worldwide for settling international obligations and managing exchange rates.
The preference for the dollar reflects not only confidence that it is a reliable store of value but also that it can easily be invested in a government bond market big enough that large amounts of cash can be moved in and out quickly, reliably and cheaply.
The dollar is used worldwide as the agreed-upon unit of exchange by producers and traders to price oil, minerals and other commodities. Ditto illicit dealers in drugs, weapons and other contraband.
Because it is the currency most easily exchanged, the dollar is on one side or the other of 85 per cent of the transactions on global currency exchanges. When Indians buy Chilean wine, the transaction is usually conducted by converting rupees into dollars and then dollars into pesos.
And when foreign companies, foreign governments or foreign banks want to raise capital from foreign investors, they can often do so more cheaply and easily by issuing bonds denominated in dollars rather than in their own currencies.
Being home to the world's reserve currency confers great advantages on the US economy. Because of it, the US government, American companies and households can borrow money more easily and cheaply. And because all that demand for dollars artificially raises its value, the US can import goods at a cheaper price than other countries.
But as economic historian Barry Eichengreen argues in a new book, this 'exorbitant privilege' is a double-edged sword. When half of the world's currency is pegged to the dollar, the US winds up handing over control of its currency to foreigners who have become quite clever at using it to their economic advantage. And by making it so cheap and easy to borrow money, Americans have been enabled and encouraged to live beyond their means, taking on so much debt that the dollar's role as reserve currency is now called into question.
Given the trillions of dollars piling up in foreign central banks as a result of this spending spree, and given the long-term prospects for the decline in the value of those dollars, it is likely no surprise that foreign officials have been looking to diversify their portfolios. Indeed, that was just what they were doing in 2007 and 2008, until the euro crisis raised doubts about the next-likely alternative.
'The dollar has been dominant for nearly 100 years for one simple reason - it has had no competition,' says Mr C. Fred Bergsten, director of the Peterson Institute for International Economics.
Mr Bergsten expects that will change over the next decade as Europe and China adopt policies and structures that will make diversification possible. In the meantime, the global system is forced to rely on the currency of a once-dominant economy that has piled up too much debt and can't quite figure out how to deal with it.
There are two ways this dollar story can play out.
In the optimistic scenario, a credible budget deal is reached in Washington, the US Federal Reserve manages to sop up all the excess liquidity it has created, and the long-term slide in the dollar remains gradual enough for the world to muddle through until a new order and a new architecture can emerge.
In the darker scenario, hinted at last week by the leading credit-rating agency, the failure to adopt a budget deal triggers a US credit crisis that spawns a dollar crisis, which sets off another global financial crisis - one that makes the last one look like child's play.
In Washington, there's a widespread belief that what is at stake in the coming negotiations over the budget and the debt limit is nothing less than the outcome of the next election. What Washington needs to understand is that there's a lot more at stake than that.
By Steven Pearlstein
WASHINGTON POST
The practical effect of all this deflation and inflation is to accomplish what a straightforward exchange-rate adjustment would: raise the relative price of Chinese goods while lowering the price of American goods. The side effects from this type of backdoor adjustment, however, have become so distorting and risky that it is only a matter of time before the dollar is allowed to fall against these Asian currencies.
If, however, you were to administer truth serum to the recent occupants of 1500 Pennsylvania Avenue, my guess is that they would acknowledge that the dollar is in a long-term decline that is inevitable and economically desirable. The question is whether the retreat of the dollar will be gradual and orderly, or sudden and disorderly.
Why inevitable? To begin, it is worth remembering that the hegemony of the dollar was a result of two world wars that left most of America's competitors in ruins and part of the world in thrall to a communist ideology that turned out to be folly.
Nearly a century later, a peaceful and revitalised Europe has begun to integrate into a large, unified economy. Its currency and financial markets are finally in a position to rival America's.
Just as significantly, developing countries in Asia and South America are in the midst of an unprecedented economic catch-up that will mean their output and productivity will grow much faster than those of advanced countries. Economic theory and history suggest that their currencies will rise as well.
Those unmistakable trends explain why just about every big corporation and lots of smart investors are busy shifting money to developing economies. Americans will profit two ways: the success of their investments, plus the bump they'll get when converting those profits into deflated dollars.
In the nearer term, it's a good bet that the dollar will decline as the global economy finally corrects for the massive imbalance that developed over the past 15 years between the United States and China, Taiwan and other Asian economies that artificially pegged their currencies to the dollar. The result of this currency manipulation and mispricing is too much debt- fuelled consumption in the US and too much production and reserve accumulation in the China bloc.
Now these macroeconomic imbalances have reached a tipping point. Here in the US, they are generating intense deflationary pressures that manifest in falling real estate prices, stagnant wages and high unemployment, which require huge amounts of fiscal and monetary stimuli to offset. In Asia, it is the opposite - strong inflationary pressures are driving up wages, prices and real estate values and other financial assets, requiring increasingly heavy-handed regulation of lending and investment.
The practical effect of all this deflation and inflation is to accomplish what a straightforward exchange-rate adjustment would: raise the relative price of Chinese goods while lowering the price of American goods. The side effects from this type of backdoor adjustment, however, have become so distorting and risky that it is only a matter of time before the dollar is allowed to fall against these Asian currencies.
I realise that these kinds of discussions about currencies and macroeconomic imbalances can make your head hurt if you dwell on them for very long. But it turns out they are at the heart of most of the economic issues we're dealing with, from budget battles in the US to the euro zone crisis to the rising price of petrol.
'All these discrete national problems are really manifestations of a global financial crisis and the failure to manage the global economy,' former British prime minister Gordon Brown said in a brilliant speech this month at Bretton Woods.
It was at Bretton Woods in 1944 when Britain's John Maynard Keynes and America's Harry Dexter White conjured up the financial architecture for the global economy that served the world rather well from the end of World War II through the early 1980s.
Since then, its shortcomings have been revealed by a series of financial crises that have become more severe and more frequent, with the fixes for one planting the seeds for the next.
Despite the best efforts of world leaders, a new and better architecture has proven elusive. At the centre of that 1944 architecture, of course, was the US dollar, which since has been the overwhelming currency of choice for central banks worldwide for settling international obligations and managing exchange rates.
The preference for the dollar reflects not only confidence that it is a reliable store of value but also that it can easily be invested in a government bond market big enough that large amounts of cash can be moved in and out quickly, reliably and cheaply.
The dollar is used worldwide as the agreed-upon unit of exchange by producers and traders to price oil, minerals and other commodities. Ditto illicit dealers in drugs, weapons and other contraband.
Because it is the currency most easily exchanged, the dollar is on one side or the other of 85 per cent of the transactions on global currency exchanges. When Indians buy Chilean wine, the transaction is usually conducted by converting rupees into dollars and then dollars into pesos.
And when foreign companies, foreign governments or foreign banks want to raise capital from foreign investors, they can often do so more cheaply and easily by issuing bonds denominated in dollars rather than in their own currencies.
Being home to the world's reserve currency confers great advantages on the US economy. Because of it, the US government, American companies and households can borrow money more easily and cheaply. And because all that demand for dollars artificially raises its value, the US can import goods at a cheaper price than other countries.
But as economic historian Barry Eichengreen argues in a new book, this 'exorbitant privilege' is a double-edged sword. When half of the world's currency is pegged to the dollar, the US winds up handing over control of its currency to foreigners who have become quite clever at using it to their economic advantage. And by making it so cheap and easy to borrow money, Americans have been enabled and encouraged to live beyond their means, taking on so much debt that the dollar's role as reserve currency is now called into question.
Given the trillions of dollars piling up in foreign central banks as a result of this spending spree, and given the long-term prospects for the decline in the value of those dollars, it is likely no surprise that foreign officials have been looking to diversify their portfolios. Indeed, that was just what they were doing in 2007 and 2008, until the euro crisis raised doubts about the next-likely alternative.
'The dollar has been dominant for nearly 100 years for one simple reason - it has had no competition,' says Mr C. Fred Bergsten, director of the Peterson Institute for International Economics.
Mr Bergsten expects that will change over the next decade as Europe and China adopt policies and structures that will make diversification possible. In the meantime, the global system is forced to rely on the currency of a once-dominant economy that has piled up too much debt and can't quite figure out how to deal with it.
There are two ways this dollar story can play out.
In the optimistic scenario, a credible budget deal is reached in Washington, the US Federal Reserve manages to sop up all the excess liquidity it has created, and the long-term slide in the dollar remains gradual enough for the world to muddle through until a new order and a new architecture can emerge.
In the darker scenario, hinted at last week by the leading credit-rating agency, the failure to adopt a budget deal triggers a US credit crisis that spawns a dollar crisis, which sets off another global financial crisis - one that makes the last one look like child's play.
In Washington, there's a widespread belief that what is at stake in the coming negotiations over the budget and the debt limit is nothing less than the outcome of the next election. What Washington needs to understand is that there's a lot more at stake than that.
By Steven Pearlstein
WASHINGTON POST
The practical effect of all this deflation and inflation is to accomplish what a straightforward exchange-rate adjustment would: raise the relative price of Chinese goods while lowering the price of American goods. The side effects from this type of backdoor adjustment, however, have become so distorting and risky that it is only a matter of time before the dollar is allowed to fall against these Asian currencies.
The grief of losing $100
What are some of the principles in Behavioural Economics that you would suggest to businesses - such as department stores - that seek to increase profits?
BEHAVIOURAL economics (BE) is a branch of economics that studies the interaction between human emotions and decision-making. Two concepts in BE might be of value to managers in serving their customers: loss aversion and mental accounting.
Loss aversion refers to a person's tendency to be overly or disproportionately averse to losses. Studies have shown that the grief of losing $100 is greater than the joy you would get from receiving the same amount. A corollary to the loss aversion concept is that of aggregating losses and disaggregating gains. The total grief you feel from losing $10 10 times is more than the grief of a one-time $100 loss, even though in both instances, the total amount of loss is the same. Similarly, you get more joy in receiving $10 in 10 instalments than receiving $100 at one go. This is one reason why stores like Daiso are popular: buying 10 things costing $2 each may give more pleasure to someone than buying one thing costing $20. For retail managers, this means providing many small positive experiences to their customers and limiting the occurrence of negative experiences.
Conversely, disaggregating losses means you may prefer to suffer a one- time loss of $100 rather than suffer 10 losses of $10. So, for example, a shop may want to offer customers the full version of the product with downgrade options, rather than a basic product with upgrade options, since customers would not want to have to pay small sums periodically to keep upgrading the product.
The common practice of offering package prices for spa and beauty services is a good example of how to apply loss aversion and disaggregation of losses. In this case, it is easier to persuade a customer to fork out one big sum at once - say, $1,000 for 10 treatments - than to persuade her to pay $100 10 times. Many businesses will offer a discounted price or free gift to sweeten - and seal - the deal. This approach also heightens the sense of value for money, as the joy of receiving $1,000 in benefits is separated into 10 treatments.
Another related concept linked to loss aversion is called endowment effect and status quo bias. Endowment effect is when one asks more than one is willing to pay for an object in one's possession. You may have paid $5 for a pen, but you will not let go of it for $5. You want to be compensated extra for losing the pen you already have. You may suggest that this is due to the emotional value attached to the object in possession. But it has been shown in laboratory experiments that the same effect happens even when people are given a coffee mug just moments before they trade it; they are not likely to develop any emotional attachment to a mug in just a few minutes.
Status quo bias is when a person has a bias towards remaining at the status quo even when a change would appear to make him better off. Consider car purchases. One car is sold with a CD player bundled in. Another car is sold without, but can be fitted with the CD player with an extra charge. The price of each car, when the latter is fitted with the CD player, is the same.
Standard economic theory would suggest that the demand for the car with the CD player as the default option should be the same as the one with the CD player included as an optional choice, since the total cost of each is the same. In other words, one should not expect any difference in demand for CD players, whether a car fitted with a CD player is the default option with a downgrade possibility, or a car without a CD player is the default option with an upgrade possibility.
In reality, more CD players are sold when a car with a CD player is offered as the default, than when a car without a CD player is offered as a default.
By Chong Juin Kuan
The writer is from the department of marketing at the NUS Business School.
Studies have shown that the grief of losing $100 is greater than the joy you would get from receiving the same amount.
BEHAVIOURAL economics (BE) is a branch of economics that studies the interaction between human emotions and decision-making. Two concepts in BE might be of value to managers in serving their customers: loss aversion and mental accounting.
Loss aversion refers to a person's tendency to be overly or disproportionately averse to losses. Studies have shown that the grief of losing $100 is greater than the joy you would get from receiving the same amount. A corollary to the loss aversion concept is that of aggregating losses and disaggregating gains. The total grief you feel from losing $10 10 times is more than the grief of a one-time $100 loss, even though in both instances, the total amount of loss is the same. Similarly, you get more joy in receiving $10 in 10 instalments than receiving $100 at one go. This is one reason why stores like Daiso are popular: buying 10 things costing $2 each may give more pleasure to someone than buying one thing costing $20. For retail managers, this means providing many small positive experiences to their customers and limiting the occurrence of negative experiences.
Conversely, disaggregating losses means you may prefer to suffer a one- time loss of $100 rather than suffer 10 losses of $10. So, for example, a shop may want to offer customers the full version of the product with downgrade options, rather than a basic product with upgrade options, since customers would not want to have to pay small sums periodically to keep upgrading the product.
The common practice of offering package prices for spa and beauty services is a good example of how to apply loss aversion and disaggregation of losses. In this case, it is easier to persuade a customer to fork out one big sum at once - say, $1,000 for 10 treatments - than to persuade her to pay $100 10 times. Many businesses will offer a discounted price or free gift to sweeten - and seal - the deal. This approach also heightens the sense of value for money, as the joy of receiving $1,000 in benefits is separated into 10 treatments.
Another related concept linked to loss aversion is called endowment effect and status quo bias. Endowment effect is when one asks more than one is willing to pay for an object in one's possession. You may have paid $5 for a pen, but you will not let go of it for $5. You want to be compensated extra for losing the pen you already have. You may suggest that this is due to the emotional value attached to the object in possession. But it has been shown in laboratory experiments that the same effect happens even when people are given a coffee mug just moments before they trade it; they are not likely to develop any emotional attachment to a mug in just a few minutes.
Status quo bias is when a person has a bias towards remaining at the status quo even when a change would appear to make him better off. Consider car purchases. One car is sold with a CD player bundled in. Another car is sold without, but can be fitted with the CD player with an extra charge. The price of each car, when the latter is fitted with the CD player, is the same.
Standard economic theory would suggest that the demand for the car with the CD player as the default option should be the same as the one with the CD player included as an optional choice, since the total cost of each is the same. In other words, one should not expect any difference in demand for CD players, whether a car fitted with a CD player is the default option with a downgrade possibility, or a car without a CD player is the default option with an upgrade possibility.
In reality, more CD players are sold when a car with a CD player is offered as the default, than when a car without a CD player is offered as a default.
By Chong Juin Kuan
The writer is from the department of marketing at the NUS Business School.
Studies have shown that the grief of losing $100 is greater than the joy you would get from receiving the same amount.
Warning signs of future asset bubbles
STABILITY in the world financial system is a valuable international public good. Like peace and a stable climate, its benefits are largely taken for granted until they are lost. Legislators, regulators and central bankers are guardians of this public good. Their collective responsibility is to implement standards that preserve it.
Leading financial representatives have sought conditions to promote a stable framework of world banking - beginning with the Basel I Accord of 1988, followed by the Group of 10 and Group of 20 leading economies, and now a wider set of 27 country jurisdictions in Basel III.
The global financial crisis drew attention to the complexity of the task of modern banking regulation and surveillance. The explosion of new financial products, skilful packaging of assets, and creative new trading milieus in the increasingly sophisticated financial industry have left regulators to play catch-up.
Can anything be done to avert such crises in the future? Have the seeds of future crises already been sown, with impending sovereign debt defaults in the European periphery, booming commodity prices, asset price inflation in Asia, and global trade imbalances that pose long-term structural and exchange rate adjustment problems?
Amid this global scenario, central bankers, regulators and policymakers convened in Sydney on March 24 and 25 to discuss Basel III and the future of international banking.
On Thursday next week, Singapore will be the venue for a major financial symposium that will follow up on these themes and explore their relevance in this region. It will convene central bankers, leading commercial bankers, finance industry specialists and academics to discuss the financial future and the role of regulation, governance and central banks in ensuring financial stability.
To avert future crises, many central bankers have expressed concerns about escalating asset prices and indicated the need for more pro-active policy in combating asset bubbles.
Former US Federal Reserve vice-chairman Donald Kohn indicated in a speech last year that 'policymakers should deepen their understanding about how to combat speculative bubbles to reduce the chances of another financial crisis'.
In his Basel III speech, Reserve Bank of New Zealand governor Alan Bollard flagged various tools to help dampen future asset and credit bubbles and maintain the stability of his country's financial system.
In Singapore and Hong Kong, governments have introduced several measures to curb real estate bubbles, including stamp duties and lower mortgage percentages.
An important presumption in this strategy to combat speculative bubbles is that they must be spotted as they emerge, not just after they have collapsed. The common mantra of 'you cannot define it but you know it when you see it' has long been applied to pornography. While this may suffice for obscenity, a quantitative standard of evaluation is needed in the case of financial bubbles. That topic is now an active arena of academic research.
We have developed a statistical diagnostic tool that signals the presence of an asset bubble in data. We used this diagnostic tool to assess evidence of financial exuberance on Nasdaq in the 1990s. That work shows statistical evidence of exuberance 15 months prior to former US Fed chairman Alan Greenspan's December 1996 speech, which famously introduced the term 'irrational exuberance' and flagged an emerging problem.
To illustrate the detection mechanism, we applied the same technology to real estate prices in Singapore.
In the chart, the blue line shows the monthly Singapore Residential Price Index. The green line which tracks market exuberance is derived from the blue line by using a sophisticated statistical tool. The red line is the threshold. When the green line crosses above the red line, the diagnostic test signals the presence of market exuberance.
As shown in the chart, there was real estate exuberance for most of 2007 and 2008 (the first shaded area). Interestingly, some evidence of another bubble emerged in late 2009 (the second shaded area) and was still ongoing in January this year. The latest reports indicate some market softening following the new stamp duty charges and loan to valuation limitations introduced on Jan 14. We expect the empirical effects of these changes to become evident in our test indicator when the data is available.
These diagnostics help predict the temperature of the prevailing real estate market. As the chart shows, in May 2007 we would have been alerted to emergent bubble conditions in real time. A similar alert would have occurred in October 2009.
In this way, the methods provide early warning diagnostics for financial asset bubbles. They may be used by policymakers in timing the measures that are being considered by central bankers to dampen financial asset and credit bubbles.
By Peter C.B. Phillips & Jun Yu, FOR THE STRAITS TIMES
Peter C.B. Phillips is sterling professor of economics at Yale University and distinguished term professor of economics at Singapore Management University (SMU). Jun Yu is professor of economics and professor of finance at SMU and director of the Sim Kee Boon Institute for Financial Economics. They are co-chairs of the Annual Conference on Financial Economics: A New Global Financial Landscape to be held on Thursday next week.
Leading financial representatives have sought conditions to promote a stable framework of world banking - beginning with the Basel I Accord of 1988, followed by the Group of 10 and Group of 20 leading economies, and now a wider set of 27 country jurisdictions in Basel III.
The global financial crisis drew attention to the complexity of the task of modern banking regulation and surveillance. The explosion of new financial products, skilful packaging of assets, and creative new trading milieus in the increasingly sophisticated financial industry have left regulators to play catch-up.
Can anything be done to avert such crises in the future? Have the seeds of future crises already been sown, with impending sovereign debt defaults in the European periphery, booming commodity prices, asset price inflation in Asia, and global trade imbalances that pose long-term structural and exchange rate adjustment problems?
Amid this global scenario, central bankers, regulators and policymakers convened in Sydney on March 24 and 25 to discuss Basel III and the future of international banking.
On Thursday next week, Singapore will be the venue for a major financial symposium that will follow up on these themes and explore their relevance in this region. It will convene central bankers, leading commercial bankers, finance industry specialists and academics to discuss the financial future and the role of regulation, governance and central banks in ensuring financial stability.
To avert future crises, many central bankers have expressed concerns about escalating asset prices and indicated the need for more pro-active policy in combating asset bubbles.
Former US Federal Reserve vice-chairman Donald Kohn indicated in a speech last year that 'policymakers should deepen their understanding about how to combat speculative bubbles to reduce the chances of another financial crisis'.
In his Basel III speech, Reserve Bank of New Zealand governor Alan Bollard flagged various tools to help dampen future asset and credit bubbles and maintain the stability of his country's financial system.
In Singapore and Hong Kong, governments have introduced several measures to curb real estate bubbles, including stamp duties and lower mortgage percentages.
An important presumption in this strategy to combat speculative bubbles is that they must be spotted as they emerge, not just after they have collapsed. The common mantra of 'you cannot define it but you know it when you see it' has long been applied to pornography. While this may suffice for obscenity, a quantitative standard of evaluation is needed in the case of financial bubbles. That topic is now an active arena of academic research.
We have developed a statistical diagnostic tool that signals the presence of an asset bubble in data. We used this diagnostic tool to assess evidence of financial exuberance on Nasdaq in the 1990s. That work shows statistical evidence of exuberance 15 months prior to former US Fed chairman Alan Greenspan's December 1996 speech, which famously introduced the term 'irrational exuberance' and flagged an emerging problem.
To illustrate the detection mechanism, we applied the same technology to real estate prices in Singapore.
In the chart, the blue line shows the monthly Singapore Residential Price Index. The green line which tracks market exuberance is derived from the blue line by using a sophisticated statistical tool. The red line is the threshold. When the green line crosses above the red line, the diagnostic test signals the presence of market exuberance.
As shown in the chart, there was real estate exuberance for most of 2007 and 2008 (the first shaded area). Interestingly, some evidence of another bubble emerged in late 2009 (the second shaded area) and was still ongoing in January this year. The latest reports indicate some market softening following the new stamp duty charges and loan to valuation limitations introduced on Jan 14. We expect the empirical effects of these changes to become evident in our test indicator when the data is available.
These diagnostics help predict the temperature of the prevailing real estate market. As the chart shows, in May 2007 we would have been alerted to emergent bubble conditions in real time. A similar alert would have occurred in October 2009.
In this way, the methods provide early warning diagnostics for financial asset bubbles. They may be used by policymakers in timing the measures that are being considered by central bankers to dampen financial asset and credit bubbles.
By Peter C.B. Phillips & Jun Yu, FOR THE STRAITS TIMES
Peter C.B. Phillips is sterling professor of economics at Yale University and distinguished term professor of economics at Singapore Management University (SMU). Jun Yu is professor of economics and professor of finance at SMU and director of the Sim Kee Boon Institute for Financial Economics. They are co-chairs of the Annual Conference on Financial Economics: A New Global Financial Landscape to be held on Thursday next week.
Monday, April 25, 2011
Teach people to detect baloney online
IGNORANCE is the root of all evil, according to Plato, who also famously gave us a still-current definition of its opposite: knowledge. For Plato, knowledge is 'justified true belief'. That definition is worthy of consideration as we reflect on the perils of ignorance in the 21st century.
Plato thought three conditions must be met in order for us to 'know' something: the notion in question must actually be true; we must believe it (because if we do not believe something that is true, we can hardly claim that we know it); and, most subtly, it must be justifiable - there must be reasons why we believe the notion to be true.
Consider something we all think we know: the Earth is (approximately) round. This is as true as astronomical facts can be, particularly because we have sent artificial satellites into orbit and seen that our planet is indeed roundish. Most of us (except a lunatic fringe of flat-Earthers) also believe this to be the case.
What about the justification of that belief? How would you answer if someone asked you why you believe the Earth is round?
The obvious place to begin is to point to the aforementioned satellite images, but then our sceptical interlocutor could reasonably ask if you know how those images were obtained. Unless you are an expert on space engineering and imaging software, you may have some trouble at that point.
Of course, you could fall back on more traditional reasons to believe in a round Earth, like the fact that our planet projects a round-looking shadow on the moon during eclipses. Naturally, you would have to be in a position to explain - if challenged - what an eclipse is and how you know that. You see where this could easily go: If we push far enough, most of us do not actually know, in the Platonic sense, much of anything. In other words, we are far more ignorant than we realise.
Socrates, Plato's teacher, famously goaded the Athenian authorities by maintaining that he was wiser than the Oracle at Delphi, who claimed to be the wisest, because he (Socrates), unlike most people (including the Athenian authorities), knew he did not know anything. Whether Socrates' humility was sincere or a secret joke at the expense of the powers-that-be (before said powers put him to death after tiring of his irreverence), the point is that the beginning of wisdom lies in the recognition of how little we really know.
Which brings me to the paradox of ignorance in our era: On the one hand, we are constantly bombarded by expert opinion, by all sorts of people - with or without PhD after their name - who tell us exactly what to think (though rarely why we should think it). On the other hand, most of us are woefully inadequate to practise the venerable and vital art of baloney detection (or, more politely, critical thinking), which is so necessary in modern society.
You can think of the paradox in another way: We live in an era when knowledge - in the sense of information - is constantly available in real time through computers, smartphones, electronic tablets and book readers. Yet we still lack the basic skills of reflecting on such information, of sifting through the dirt to find the worthy nuggets. We are ignorant masses awash in information.
Of course, it may be that humanity has always been short on critical thinking. That is why we keep allowing ourselves to be talked into supporting unjust wars (not to mention actually dying in them), or voting for people whose main job seems to be to amass as much wealth for the rich as they can get away with. It is also why so many people are duped by exceedingly costly sugar pills sold to them by homeopathic 'doctors', and why we follow the advice of celebrities (rather than real doctors) about whether to vaccinate our children.
But the need for critical thinking has never been as pressing as in the Internet era. At least in developed countries - but increasingly in underdeveloped ones as well - the problem is no longer one of access to information, but of the lack of ability to process and make sense of that information.
Unfortunately, colleges, high schools, and even elementary schools are unlikely to mandate introductory courses in critical thinking on their own. Education has increasingly been transformed into a commodity system, in which the 'customers' (formerly students) are kept happy with personalised curricula while being prepared for the job market (rather than being prepared to be responsible human beings and citizens).
This can and must change, but it requires a grassroots movement that uses blogs, online magazines and newspapers, book clubs and meet-up clubs, and anything else that might work to promote educational opportunities to develop critical thinking skills. After all, we do know it is our future.
By Massimo Pigliucci
The writer is professor of philosophy at the Graduate Centre of the City University of New York.
PROJECT SYNDICATE
Plato thought three conditions must be met in order for us to 'know' something: the notion in question must actually be true; we must believe it (because if we do not believe something that is true, we can hardly claim that we know it); and, most subtly, it must be justifiable - there must be reasons why we believe the notion to be true.
Consider something we all think we know: the Earth is (approximately) round. This is as true as astronomical facts can be, particularly because we have sent artificial satellites into orbit and seen that our planet is indeed roundish. Most of us (except a lunatic fringe of flat-Earthers) also believe this to be the case.
What about the justification of that belief? How would you answer if someone asked you why you believe the Earth is round?
The obvious place to begin is to point to the aforementioned satellite images, but then our sceptical interlocutor could reasonably ask if you know how those images were obtained. Unless you are an expert on space engineering and imaging software, you may have some trouble at that point.
Of course, you could fall back on more traditional reasons to believe in a round Earth, like the fact that our planet projects a round-looking shadow on the moon during eclipses. Naturally, you would have to be in a position to explain - if challenged - what an eclipse is and how you know that. You see where this could easily go: If we push far enough, most of us do not actually know, in the Platonic sense, much of anything. In other words, we are far more ignorant than we realise.
Socrates, Plato's teacher, famously goaded the Athenian authorities by maintaining that he was wiser than the Oracle at Delphi, who claimed to be the wisest, because he (Socrates), unlike most people (including the Athenian authorities), knew he did not know anything. Whether Socrates' humility was sincere or a secret joke at the expense of the powers-that-be (before said powers put him to death after tiring of his irreverence), the point is that the beginning of wisdom lies in the recognition of how little we really know.
Which brings me to the paradox of ignorance in our era: On the one hand, we are constantly bombarded by expert opinion, by all sorts of people - with or without PhD after their name - who tell us exactly what to think (though rarely why we should think it). On the other hand, most of us are woefully inadequate to practise the venerable and vital art of baloney detection (or, more politely, critical thinking), which is so necessary in modern society.
You can think of the paradox in another way: We live in an era when knowledge - in the sense of information - is constantly available in real time through computers, smartphones, electronic tablets and book readers. Yet we still lack the basic skills of reflecting on such information, of sifting through the dirt to find the worthy nuggets. We are ignorant masses awash in information.
Of course, it may be that humanity has always been short on critical thinking. That is why we keep allowing ourselves to be talked into supporting unjust wars (not to mention actually dying in them), or voting for people whose main job seems to be to amass as much wealth for the rich as they can get away with. It is also why so many people are duped by exceedingly costly sugar pills sold to them by homeopathic 'doctors', and why we follow the advice of celebrities (rather than real doctors) about whether to vaccinate our children.
But the need for critical thinking has never been as pressing as in the Internet era. At least in developed countries - but increasingly in underdeveloped ones as well - the problem is no longer one of access to information, but of the lack of ability to process and make sense of that information.
Unfortunately, colleges, high schools, and even elementary schools are unlikely to mandate introductory courses in critical thinking on their own. Education has increasingly been transformed into a commodity system, in which the 'customers' (formerly students) are kept happy with personalised curricula while being prepared for the job market (rather than being prepared to be responsible human beings and citizens).
This can and must change, but it requires a grassroots movement that uses blogs, online magazines and newspapers, book clubs and meet-up clubs, and anything else that might work to promote educational opportunities to develop critical thinking skills. After all, we do know it is our future.
By Massimo Pigliucci
The writer is professor of philosophy at the Graduate Centre of the City University of New York.
PROJECT SYNDICATE
It's no longer cheap
Prices in February soared 11 per cent from a year ago, surpassing the peak during the boom days before the global financial crisis, latest data showed.
Chinese goods are expected to get even more expensive this year, with some companies reportedly forecasting at least a 10 per cent hike.
All this has even set some Chinese officials warning that the country's days as the world's lowest-cost factory are drawing to an end.
Rising production costs have become an 'irreversible trend' for small businesses, said Mr Quan Zhezhu, party secretary of the All-China Federation of Industry and Commerce, last Friday.
He told a forum held by Peking University that the time of low labour and raw materials prices enjoyed by China's 10 million-odd small and medium enterprises (SMEs) is over.
From 2005 to last year, the average wage per month for migrant workers jumped 14 per cent to 1,690 yuan (S$321).
This year, rising inflation has become an even bigger headache, according to another official, Mr Zhu Hongren.
'The quantitative easing monetary policies of major developed nations to weather the global financial crisis have caused fast price rises of commodities such as energy, raw materials and crops,' Mr Zhu, chief engineer of the Ministry of Industry and Information Technology, told a press conference in Beijing.
China's consumer price index rose to a 32-month high of 5.4 per cent in March from a year ago.
Meanwhile, the Chinese currency has appreciated roughly 1 per cent against the US dollar so far this year. It is expected by many analysts to rise as much as 6 per cent for the full year, further hurting price competitiveness.
Besides consumers, small Chinese exporters have been the worst-hit.
Losses by SMEs, which provide jobs for roughly 80 per cent of the urban work force in China, jumped 22 per cent in the first two months of this year compared with a year ago.
To cope with this, some SMEs have had to cut staff. Ms Li Jingjing's family business, a garment factory in Shandong, has had to pare staff by a fifth this year.
'We expect to raise the prices of our clothes by 10 per cent this year at least. Even so, our profit margins are already so thin that we can hardly keep afloat,' said Ms Li, who is in her 50s.
With the minimum wage targeted to increase by at least 13 per cent a year over the next five years, businesses will have to adapt by restructuring, the government says. Premier Wen Jiabao stressed this during last month's top political meetings, when he said that 'China's economy needs to be quickly put on the path of endogenous growth driven by innovation'.
However, the government's incentives to accelerate restructuring will largely benefit state-owned companies and industries that already have significant state support, say analysts.
The SMEs' best bet for survival for now may be to move some of their operations to the western and central regions, where costs are cheaper.
But 'so far, this has been difficult to achieve on a large scale', noted Royal Bank of Scotland China analyst Li Cui.
'Over the years, the share of exports from coastal cities has risen to near 80 per cent of the country's total, and the trend shows no sign of reversing,' he pointed out.
These coastal hubs are still the preferred location for operations since they are more accessible to ports and suppliers. So 'cost pressures will likely persist in the near future'.
Ms Li is prepared for this: 'In the short term, we are thinking of moving some of our manufacturing to Sichuan province.
'In the longer term, we will probably have to buy new technology to produce better products more efficiently. But first, we need to survive this year.'
graceng@sph.com.sg
Saturday, April 23, 2011
Lenin gets a wash for his 141st birthday
Workers washing and cleaning a statue of Vladimir Lenin, founder of the Soviet state and creator of the Soviet Communist Party, in central Krasnoyarsk city in Russia ahead of the 141st anniversary of his birth in 1870 yesterday 22 Apr. PHOTO: REUTERS
Student gets death for silencing accident victim
BEIJING: A Chinese court sentenced a university student to death yesterday for killing a waitress to cover up a hit-and-run accident, in a case that sparked uproar over the perceived indifference of the rich to the less well-off.
China has been struggling to address anger at a yawning rich-poor gap,
and there have been several widely publicised cases of affluent young people thumbing their noses at authority after traffic accidents with pedestrians, cyclists or farmers.
In this case, Yao Jiaxin, 21, a student at the Xian Conservatory of Music, said he killed the victim in the capital of the north-western province of Shaanxi last October to prevent her from reporting the hit-and-run to police.
He also knocked down two pedestrians when he fled the scene of the crime.
The Xian Intermediate People's Court yesterday also ordered him to pay about 45,500 yuan (S$8,600) in compensation to the family of Ms Zhang Miao, a university cafeteria worker.
There was an outpouring of online sympathy for the 26-year-old victim, the mother of a two-year-old boy, though Yao's classmates had packed the courtroom and demanded leniency.
Accompanied by his parents, Yao surrendered to police two days after the murder. Xinhua news agency quoted the student as saying he killed his victim because he feared 'the peasant woman would be hard to deal with' and demand a lot in compensation.
Police said she suffered a leg fracture and minor injuries from the accident.
The case aroused widespread public fury and suspicion over whether Yao's parents might use their influence to secure a lighter sentence.
It attracted even more attention after the state media was perceived to be defending Yao.
Chinese media had interviewed a psychologist who said Yao was forced to learn the piano by his parents and used to smash piano keys to vent his anger.
The psychologist went on to say his behaviour of stabbing the victim eight times may have been a 'mechanical repetition' of him smashing piano keys.
During the trial, Yao's lawyer argued that his client committed the killing 'in the heat of passion' and pleaded for leniency, saying he had turned himself in.
But the mitigation plea was dismissed by the judges who said in their verdict that the motive for the killing was 'extremely despicable'.
REUTERS, XINHUA
China has been struggling to address anger at a yawning rich-poor gap,
and there have been several widely publicised cases of affluent young people thumbing their noses at authority after traffic accidents with pedestrians, cyclists or farmers.
In this case, Yao Jiaxin, 21, a student at the Xian Conservatory of Music, said he killed the victim in the capital of the north-western province of Shaanxi last October to prevent her from reporting the hit-and-run to police.
He also knocked down two pedestrians when he fled the scene of the crime.
The Xian Intermediate People's Court yesterday also ordered him to pay about 45,500 yuan (S$8,600) in compensation to the family of Ms Zhang Miao, a university cafeteria worker.
There was an outpouring of online sympathy for the 26-year-old victim, the mother of a two-year-old boy, though Yao's classmates had packed the courtroom and demanded leniency.
Accompanied by his parents, Yao surrendered to police two days after the murder. Xinhua news agency quoted the student as saying he killed his victim because he feared 'the peasant woman would be hard to deal with' and demand a lot in compensation.
Police said she suffered a leg fracture and minor injuries from the accident.
The case aroused widespread public fury and suspicion over whether Yao's parents might use their influence to secure a lighter sentence.
It attracted even more attention after the state media was perceived to be defending Yao.
Chinese media had interviewed a psychologist who said Yao was forced to learn the piano by his parents and used to smash piano keys to vent his anger.
The psychologist went on to say his behaviour of stabbing the victim eight times may have been a 'mechanical repetition' of him smashing piano keys.
During the trial, Yao's lawyer argued that his client committed the killing 'in the heat of passion' and pleaded for leniency, saying he had turned himself in.
But the mitigation plea was dismissed by the judges who said in their verdict that the motive for the killing was 'extremely despicable'.
REUTERS, XINHUA
China battles use of illegal additives
BEIJING: The Chinese government has ordered a nationwide battle against illegal food additives for fear that recent tainted food scandals are but the tip of a problem that could lead to social panic and upheaval.
So far this year, the authorities have uncovered sales of drug-tainted pork, bean sprouts treated with carcinogenic chemicals, and old bread treated with sweeteners and dyed to make it look fresh.
The announcement by the State Council, China's Cabinet, on Thursday said food inspections should be stepped up and violators must be severely punished.
China will publish upgraded national guidelines for the safe use of food additives by the end of the year, according to the circular.
'At present, the misuse of the food additives and non-edible substances in food production has become a prominent issue affecting our overall food safety,' the notice said.
The State Food and Drug Administration also issued a statement on Thursday prohibiting the use of any food additive or flavouring that is uncertified or bears no required information, such as who the manufacturer is, as well as the overuse of such materials.
Chinese Vice-Premier Li Keqiang, who is responsible for food safety, revealed the depth of the government's worry when he pledged at a teleconference on Thursday that the government would take 'iron hand' measures against the use of illegal food additives.
Such food cases have an 'extensive social impact' and can easily cause 'a ripple effect', Mr Li was quoted as saying by the official Xinhua news agency.
Those who violate China's laws on food additives should 'pay dearly', Mr Li said.
The latest food additive case happened on Wednesday in southern Guangdong, when the local authorities announced that 16 tonnes of pork tainted with 'colourings' made from sodium borate, bean flour and other additives had been seized in the province.
The toxic chemicals are believed to have been injected to make the meat look like beef, which sells at a higher price.
Sodium borate is widely used in producing detergents, cosmetics and enamel glazes, and to make buffer solutions in biochemistry. It is banned as a food additive, as 5g of the chemical can kill a child.
The Legal Daily also reported recently that the authorities in north-east China's Shenyang city had seized 40 tonnes of bean sprouts that were tainted with sodium nitrate, urea, antibiotics and a plant hormone. The chemicals were used to make the vegetables grow faster and look shinier.
Another case occurred early this month, when a company based in central China's Henan province was accused of buying pigs fed with clenbuterol, an illegal additive. The banned supplement, which is used by unethical farmers to produce leaner meat, can cause heart palpitations and dizziness in human beings.
The worst food scandal in recent years happened in 2008, when at least six infants were killed and more than 300,000 others fell ill after consuming dairy products tainted with the industrial chemical melamine.
China on Wednesday published a regulation stipulating that infant food products with levels of melamine higher than 1mg per kilogram of food are prohibited from sale in the country.
ASSOCIATED PRESS, XINHUA, CHINA DAILY/ASIA NEWS NETWORK
So far this year, the authorities have uncovered sales of drug-tainted pork, bean sprouts treated with carcinogenic chemicals, and old bread treated with sweeteners and dyed to make it look fresh.
The announcement by the State Council, China's Cabinet, on Thursday said food inspections should be stepped up and violators must be severely punished.
China will publish upgraded national guidelines for the safe use of food additives by the end of the year, according to the circular.
'At present, the misuse of the food additives and non-edible substances in food production has become a prominent issue affecting our overall food safety,' the notice said.
The State Food and Drug Administration also issued a statement on Thursday prohibiting the use of any food additive or flavouring that is uncertified or bears no required information, such as who the manufacturer is, as well as the overuse of such materials.
Chinese Vice-Premier Li Keqiang, who is responsible for food safety, revealed the depth of the government's worry when he pledged at a teleconference on Thursday that the government would take 'iron hand' measures against the use of illegal food additives.
Such food cases have an 'extensive social impact' and can easily cause 'a ripple effect', Mr Li was quoted as saying by the official Xinhua news agency.
Those who violate China's laws on food additives should 'pay dearly', Mr Li said.
The latest food additive case happened on Wednesday in southern Guangdong, when the local authorities announced that 16 tonnes of pork tainted with 'colourings' made from sodium borate, bean flour and other additives had been seized in the province.
The toxic chemicals are believed to have been injected to make the meat look like beef, which sells at a higher price.
Sodium borate is widely used in producing detergents, cosmetics and enamel glazes, and to make buffer solutions in biochemistry. It is banned as a food additive, as 5g of the chemical can kill a child.
The Legal Daily also reported recently that the authorities in north-east China's Shenyang city had seized 40 tonnes of bean sprouts that were tainted with sodium nitrate, urea, antibiotics and a plant hormone. The chemicals were used to make the vegetables grow faster and look shinier.
Another case occurred early this month, when a company based in central China's Henan province was accused of buying pigs fed with clenbuterol, an illegal additive. The banned supplement, which is used by unethical farmers to produce leaner meat, can cause heart palpitations and dizziness in human beings.
The worst food scandal in recent years happened in 2008, when at least six infants were killed and more than 300,000 others fell ill after consuming dairy products tainted with the industrial chemical melamine.
China on Wednesday published a regulation stipulating that infant food products with levels of melamine higher than 1mg per kilogram of food are prohibited from sale in the country.
ASSOCIATED PRESS, XINHUA, CHINA DAILY/ASIA NEWS NETWORK
Filling in the gaps in KL's history
KUALA LUMPUR: Every morning, Ms Erina Loo sets out from Kuala Lumpur's historic Central Market with a group of eager tourists in search of the hidden sights of the capital city's old quarters.
Old temples, hidden shops, quirky stories and even the romantic haunts of the last century are part of her heritage trail.
It is a side of KL that many locals do not know.
Ms Loo's free walks start with the tucked-away Sin Sze Si Ya temple built by one of KL's famed Chinese leaders, tin miner Yap Ah Loy, meandering up to the Jamek Mosque and through the Indian quarter.
If that sounds very 1Malaysia, it is.
She is mindful of the political sensitivities surrounding KL's history which has become entangled with Malaysia's messy and divisive race politics.
Her answer to this is: 'Forget about politics.' She will neither comment nor answer questions on this issue.
But she said that she has taken great care to keep her tours balanced, and to collect the information from a variety of sources with different views.
Telling the story of the city is a delicate task after it became the subject of political tussle in recent years.
Historian Ranjit Singh Malhi said in a forum this month that non-Malay leaders were not duly recognised in history books, including their role in building KL. 'The current Form 2 history textbook has downplayed the role of Yap Ah Loy in developing Kuala Lumpur. It has just one sentence on him,' he was quoted as saying by news reports.
Yap Ah Loy was one of the Kapitan Cina, or Chinese Captains, in the last century. 'Yap Ah Loy is why Kuala Lumpur became what it is today. He established the township,' he said.
This is not a new complaint. It is one that resurfaced after the government said it will be compulsory to pass history in the school-leaving exam from 2013.
It triggered concerns that a narrow version of history may be taught in schools.
At its congress last year, the Malaysian Chinese Association - a Barisan Nasional component - also called for the history curriculum to reflect the contributions of all races fairly.
Mr Loh Seng Kok, the party's publicity officer, said he is still pursuing the matter. 'There have been no changes till now. It's still the same syllabus,' he said.
Writer Kam Raslan, who is writing a book on Selangor history, said official interpretations of Malaysian history seem to change over time. 'But my interpretation is pretty much standard.'
He said it is a fact that Yap Ah Loy is part of the story of 19th-century KL, and should remain so. 'The man was no hero. You wouldn't want to meet him today, but he was the kind of character needed in that world,' he said.
Mr Kam, who also leads free occasional tours of KL's heritage area, said he tells the stories as he knows them. To him, it is important to know these stories to undercut racist views.
He tells his visitors about how Chinese tin miners, forced to flee brutal wars in their homeland, kept arriving in KL in the late 19th century despite horrific death rates due to diseases. He pointed out that the Chinese had a big role in building KL.
'But I do not think that it's because they are naturally more hardworking. I would also look at the desperate reasons that drove them from their homes to come here,' he said. 'If you don't, you can fall into racist views.'
He said the stories of Malay-Chinese cooperation in those days are hardly told today. 'Our history should not be used to divide us for political purposes,' he said.
To the tourists, such political undercurrents hardly matter. Ms Eva Langegger, 28, an Austrian backpacker, was just happy to discover a hidden side of KL during Ms Loo's tour.
By Carolyn Hong, Malaysia Bureau Chief
From the Straits Times
carolynh@sph.com.sg
Old temples, hidden shops, quirky stories and even the romantic haunts of the last century are part of her heritage trail.
It is a side of KL that many locals do not know.
Ms Loo's free walks start with the tucked-away Sin Sze Si Ya temple built by one of KL's famed Chinese leaders, tin miner Yap Ah Loy, meandering up to the Jamek Mosque and through the Indian quarter.
If that sounds very 1Malaysia, it is.
She is mindful of the political sensitivities surrounding KL's history which has become entangled with Malaysia's messy and divisive race politics.
Her answer to this is: 'Forget about politics.' She will neither comment nor answer questions on this issue.
But she said that she has taken great care to keep her tours balanced, and to collect the information from a variety of sources with different views.
Telling the story of the city is a delicate task after it became the subject of political tussle in recent years.
Historian Ranjit Singh Malhi said in a forum this month that non-Malay leaders were not duly recognised in history books, including their role in building KL. 'The current Form 2 history textbook has downplayed the role of Yap Ah Loy in developing Kuala Lumpur. It has just one sentence on him,' he was quoted as saying by news reports.
Yap Ah Loy was one of the Kapitan Cina, or Chinese Captains, in the last century. 'Yap Ah Loy is why Kuala Lumpur became what it is today. He established the township,' he said.
This is not a new complaint. It is one that resurfaced after the government said it will be compulsory to pass history in the school-leaving exam from 2013.
It triggered concerns that a narrow version of history may be taught in schools.
At its congress last year, the Malaysian Chinese Association - a Barisan Nasional component - also called for the history curriculum to reflect the contributions of all races fairly.
Mr Loh Seng Kok, the party's publicity officer, said he is still pursuing the matter. 'There have been no changes till now. It's still the same syllabus,' he said.
Writer Kam Raslan, who is writing a book on Selangor history, said official interpretations of Malaysian history seem to change over time. 'But my interpretation is pretty much standard.'
He said it is a fact that Yap Ah Loy is part of the story of 19th-century KL, and should remain so. 'The man was no hero. You wouldn't want to meet him today, but he was the kind of character needed in that world,' he said.
Mr Kam, who also leads free occasional tours of KL's heritage area, said he tells the stories as he knows them. To him, it is important to know these stories to undercut racist views.
He tells his visitors about how Chinese tin miners, forced to flee brutal wars in their homeland, kept arriving in KL in the late 19th century despite horrific death rates due to diseases. He pointed out that the Chinese had a big role in building KL.
'But I do not think that it's because they are naturally more hardworking. I would also look at the desperate reasons that drove them from their homes to come here,' he said. 'If you don't, you can fall into racist views.'
He said the stories of Malay-Chinese cooperation in those days are hardly told today. 'Our history should not be used to divide us for political purposes,' he said.
To the tourists, such political undercurrents hardly matter. Ms Eva Langegger, 28, an Austrian backpacker, was just happy to discover a hidden side of KL during Ms Loo's tour.
By Carolyn Hong, Malaysia Bureau Chief
From the Straits Times
carolynh@sph.com.sg
Call for China to curb forex reserves
BEIJING: China must rein in its foreign exchange reserves to help curb inflation, through moves such as making the yuan more flexible and gradually opening its capital account, a senior foreign exchange official said in published remarks.
But Mr Guan Tao, head of the international payment department at the State Administration of Foreign Exchange, warned against sharp currency rises.
'If we cannot slow the rise in foreign exchange reserves, our work to control consumer prices and property prices will be greatly undermined,' he wrote in the latest edition of China Finance.
'Even if the property prices can be curbed, we cannot stop liquidity from shifting to other markets, brewing other forms of asset bubbles,' he added.
China's foreign exchange reserves swelled by nearly US$200 billion (S$247 billion) in the first quarter to more than US$3 trillion, indicating hefty capital inflows given that China had a US$1.02 billion trade deficit during the first three months.
The persistent increase in foreign exchange reserves has been fuelling inflationary pressures in China, Mr Guan said.
The rapid reserve build-up means the People's Bank of China keeps pumping out large amounts of yuan liquidity into the economy - the root course of domestic inflation - as the central bank has to buy most incoming dollars to slow the yuan's gains.
Mr Guan said Beijing's bid to boost the yuan's international status by expanding the currency's use in trade may lead to more money inflows initially.
China is pressing ahead with attempts to reduce its reliance on dollars in international trade. But the yuan is used more often to pay for China's imports than its exports, so the central bank ends up accumulating even more foreign reserves - mostly US dollars - because few trade partners now have enough yuan on hand to pay for Chinese goods.
This factor added roughly US$40 billion to foreign exchange purchases in the first quarter, according to estimates by Mr Mark Williams, China economist at Capital Economics.
Since October, China's central bank has raised benchmark interest rates four times and tightened lenders' reserve requirements seven times as it seeks to rein in loan growth and keep a lid on inflation.
Greater yuan flexibility will help rebalance the economy and curb bets on one-way yuan appreciation, Mr Guan said. But he saw no basis for sharp yuan appreciation, given that China's current account surplus has been narrowing.
The yuan has gained 25 per cent against the US dollar since the 2.1 per cent landmark revaluation in July 2005. Chinese officials have repeatedly ruled out another one-off revaluation despite foreign pressures.
REUTERS
But Mr Guan Tao, head of the international payment department at the State Administration of Foreign Exchange, warned against sharp currency rises.
'If we cannot slow the rise in foreign exchange reserves, our work to control consumer prices and property prices will be greatly undermined,' he wrote in the latest edition of China Finance.
'Even if the property prices can be curbed, we cannot stop liquidity from shifting to other markets, brewing other forms of asset bubbles,' he added.
China's foreign exchange reserves swelled by nearly US$200 billion (S$247 billion) in the first quarter to more than US$3 trillion, indicating hefty capital inflows given that China had a US$1.02 billion trade deficit during the first three months.
The persistent increase in foreign exchange reserves has been fuelling inflationary pressures in China, Mr Guan said.
The rapid reserve build-up means the People's Bank of China keeps pumping out large amounts of yuan liquidity into the economy - the root course of domestic inflation - as the central bank has to buy most incoming dollars to slow the yuan's gains.
Mr Guan said Beijing's bid to boost the yuan's international status by expanding the currency's use in trade may lead to more money inflows initially.
China is pressing ahead with attempts to reduce its reliance on dollars in international trade. But the yuan is used more often to pay for China's imports than its exports, so the central bank ends up accumulating even more foreign reserves - mostly US dollars - because few trade partners now have enough yuan on hand to pay for Chinese goods.
This factor added roughly US$40 billion to foreign exchange purchases in the first quarter, according to estimates by Mr Mark Williams, China economist at Capital Economics.
Since October, China's central bank has raised benchmark interest rates four times and tightened lenders' reserve requirements seven times as it seeks to rein in loan growth and keep a lid on inflation.
Greater yuan flexibility will help rebalance the economy and curb bets on one-way yuan appreciation, Mr Guan said. But he saw no basis for sharp yuan appreciation, given that China's current account surplus has been narrowing.
The yuan has gained 25 per cent against the US dollar since the 2.1 per cent landmark revaluation in July 2005. Chinese officials have repeatedly ruled out another one-off revaluation despite foreign pressures.
REUTERS
Politics in the time of fiscal crises
'SHORTING' is a tactic well known among the financial cognoscenti. It means betting against an asset with borrowed money in the expectation of making a profit when its value goes down.
A speculator can 'short' a government by borrowing its debt at its current price, in the hope of selling it later at a lower price and pocketing the difference. For example: on Jan 1, 2010, I think to myself that the game will soon be up for the Greeks. I borrow, at face value, ? 10 million of the Greek government's 2016 bond, which is then trading at ? 0.91, from Goldman Sachs for six months. For this, I have to pay Goldman Sachs the yield that it would receive from the bond - around 5 per cent annually at that price, so about 2.5 per cent, or ? 250,000 - during the six-month term.
I immediately sell that bond in the market, for ? 0.91, so I get ? 9.1 million (? 0.91 x ? 10 million at face value). Fortunately, my bearish view comes to fruition in May, when the full extent of the country's fiscal problems becomes clear. By June 30, when I am due to return the ? 10 million in face-value Greek 2016 bonds to Goldman Sachs, the bond is trading at only around ? 0.72. So I go into the market, buy ? 10 million at face value for at ? 0.72, or ? 7.2 million, and return the bond certificates to Goldman Sachs as per our agreement.
My profit for correctly taking this bearish view is ? 1.65 million - the ? 9.1 million I got by selling the bonds when I borrowed them on Jan 1, minus the ? 7.2 million that I had to pay to repurchase them on June 30, minus the ?250,000 in interest that I had to pay Goldman Sachs for the six-month loan. Voil� - a successful 'short' trade.
Of course, a single short seller cannot 'make' the price of an asset (unless he is George Soros, whose famous bet against the British pound in 1992 made him a billionaire and forced Britain out of the European exchange-rate mechanism). But if a bunch of speculators decide (rightly or wrongly) that a government's debt is overpriced, they can force down its price, thereby forcing up its yield (the interest rate that the government must pay).
If the attack persists, speculators can force a government to default on its debt, unless it can find a way to finance its borrowing more cheaply. The bailout fund created last year by the International Monetary Fund and the European Central Bank to enable Greece and other distressed sovereigns, like Ireland and now Portugal, does exactly that, but on the condition that they implement austerity programmes to eliminate their deficits over a short period of time.
'Eliminating the deficit' means, quite simply, eliminating a lot of jobs, in both the public and private sectors, whose existence depends on the deficit. The economic and human costs of deficit reduction in a weak economy are appalling, and the targets won't be met, either, because the spending cuts will erode the government's revenue as aggregate demand falls.
So what is the role of elected politicians in the face of a speculative attack? Is it simply to accept the market's will and impose the requisite pain on their people? This would be a reasonable conclusion if financial markets always, or even usually, priced assets correctly.
But they do no such thing. The financial collapse of 2007-09 was the result of a massive mispricing of assets by private banks and rating agencies. So why should we believe that the markets have been correctly pricing the risk of Greek, Irish or Portuguese debt?
The truth is that these prices are 'made' by herd behaviour. John Maynard Keynes pointed out the reason many decades ago: 'The extreme precariousness of the basis of knowledge on which our estimates of prospective yield have to be made.' When you don't know what to do, you do what the next person does.
This is not to deny that some governments have been living beyond their means, and that shorting their debt is how financial markets hold them accountable. But, in the last resort, it is voters, not markets, which hold governments to account. When these two accounting standards diverge, the popular standard must prevail if democracy is to survive.
The tension between democracy and finance is at the root of today's rising discontent in Europe. Popular anger at budget cuts imposed at the behest of speculators and bankers has toppled leaders in Ireland and Portugal, and is forcing the Spanish prime minister into retirement.
Of course, there are other targets: Muslim immigrants, ethnic minorities, bankers' bonuses, the European Commission, the European Central Bank. Nationalist parties are gaining ground.
But so far none of this has shaken democracy, but when enough people become vexed at several things simultaneously, one has the makings of a toxic political brew. Nationalism is the classic expression of thwarted democracy.
For politicians, the important thing is not to avoid taking hard decisions, but to do so of their own volition and at their own pace. When an elected government is under assault from the bond markets, it is essential for the political class to remain united.
It is natural for opposition politicians to want to exploit a government's difficulties to win power. But a fiscal crisis calls for political self-restraint. Opposition parties should refrain from shorting their government politically at a time when markets are doing so financially.
Ideally, there should be a time-limited all-party agreement on a plan of action, which would represent the limit of what is politically feasible. Unfortunately, political disunity in the face of financial pressure always ends up being far more damaging to democracy and the economy than instinctive patriotism.
By Robert Skidelsky
The writer, a member of the British House of Lords, is Professor Emeritus at Warwick University.
PROJECT SYNDICATE
A speculator can 'short' a government by borrowing its debt at its current price, in the hope of selling it later at a lower price and pocketing the difference. For example: on Jan 1, 2010, I think to myself that the game will soon be up for the Greeks. I borrow, at face value, ? 10 million of the Greek government's 2016 bond, which is then trading at ? 0.91, from Goldman Sachs for six months. For this, I have to pay Goldman Sachs the yield that it would receive from the bond - around 5 per cent annually at that price, so about 2.5 per cent, or ? 250,000 - during the six-month term.
I immediately sell that bond in the market, for ? 0.91, so I get ? 9.1 million (? 0.91 x ? 10 million at face value). Fortunately, my bearish view comes to fruition in May, when the full extent of the country's fiscal problems becomes clear. By June 30, when I am due to return the ? 10 million in face-value Greek 2016 bonds to Goldman Sachs, the bond is trading at only around ? 0.72. So I go into the market, buy ? 10 million at face value for at ? 0.72, or ? 7.2 million, and return the bond certificates to Goldman Sachs as per our agreement.
My profit for correctly taking this bearish view is ? 1.65 million - the ? 9.1 million I got by selling the bonds when I borrowed them on Jan 1, minus the ? 7.2 million that I had to pay to repurchase them on June 30, minus the ?250,000 in interest that I had to pay Goldman Sachs for the six-month loan. Voil� - a successful 'short' trade.
Of course, a single short seller cannot 'make' the price of an asset (unless he is George Soros, whose famous bet against the British pound in 1992 made him a billionaire and forced Britain out of the European exchange-rate mechanism). But if a bunch of speculators decide (rightly or wrongly) that a government's debt is overpriced, they can force down its price, thereby forcing up its yield (the interest rate that the government must pay).
If the attack persists, speculators can force a government to default on its debt, unless it can find a way to finance its borrowing more cheaply. The bailout fund created last year by the International Monetary Fund and the European Central Bank to enable Greece and other distressed sovereigns, like Ireland and now Portugal, does exactly that, but on the condition that they implement austerity programmes to eliminate their deficits over a short period of time.
'Eliminating the deficit' means, quite simply, eliminating a lot of jobs, in both the public and private sectors, whose existence depends on the deficit. The economic and human costs of deficit reduction in a weak economy are appalling, and the targets won't be met, either, because the spending cuts will erode the government's revenue as aggregate demand falls.
So what is the role of elected politicians in the face of a speculative attack? Is it simply to accept the market's will and impose the requisite pain on their people? This would be a reasonable conclusion if financial markets always, or even usually, priced assets correctly.
But they do no such thing. The financial collapse of 2007-09 was the result of a massive mispricing of assets by private banks and rating agencies. So why should we believe that the markets have been correctly pricing the risk of Greek, Irish or Portuguese debt?
The truth is that these prices are 'made' by herd behaviour. John Maynard Keynes pointed out the reason many decades ago: 'The extreme precariousness of the basis of knowledge on which our estimates of prospective yield have to be made.' When you don't know what to do, you do what the next person does.
This is not to deny that some governments have been living beyond their means, and that shorting their debt is how financial markets hold them accountable. But, in the last resort, it is voters, not markets, which hold governments to account. When these two accounting standards diverge, the popular standard must prevail if democracy is to survive.
The tension between democracy and finance is at the root of today's rising discontent in Europe. Popular anger at budget cuts imposed at the behest of speculators and bankers has toppled leaders in Ireland and Portugal, and is forcing the Spanish prime minister into retirement.
Of course, there are other targets: Muslim immigrants, ethnic minorities, bankers' bonuses, the European Commission, the European Central Bank. Nationalist parties are gaining ground.
But so far none of this has shaken democracy, but when enough people become vexed at several things simultaneously, one has the makings of a toxic political brew. Nationalism is the classic expression of thwarted democracy.
For politicians, the important thing is not to avoid taking hard decisions, but to do so of their own volition and at their own pace. When an elected government is under assault from the bond markets, it is essential for the political class to remain united.
It is natural for opposition politicians to want to exploit a government's difficulties to win power. But a fiscal crisis calls for political self-restraint. Opposition parties should refrain from shorting their government politically at a time when markets are doing so financially.
Ideally, there should be a time-limited all-party agreement on a plan of action, which would represent the limit of what is politically feasible. Unfortunately, political disunity in the face of financial pressure always ends up being far more damaging to democracy and the economy than instinctive patriotism.
By Robert Skidelsky
The writer, a member of the British House of Lords, is Professor Emeritus at Warwick University.
PROJECT SYNDICATE
Treasury Secretary's optimism indefensible
FOX Business reporter Peter Barnes began his televised interview with US Treasury Secretary Tim Geithner on Tuesday with this question: 'Is there a risk that the United States could lose its AAA credit rating? Yes or no?'
Mr Geithner's response: 'No risk of that.'
'No risk?' Mr Barnes asked.
'No risk,' Mr Geithner said.
It's enough to make you wonder: How could Mr Geithner know this to be true? The short answer is he couldn't.
All you have to do is read the research report Standard & Poor's published on Monday about its sovereign-credit rating for the US: 'We believe there is at least a one-in-three likelihood that we could lower our long-term rating on the US within two years,' said S&P, which reduced its outlook on the US government's debt to 'negative' from 'stable'.
There you have it: Mr Geithner says the chance of a downgrade is zero. S&P says the odds it will cut its rating might be greater than one out of three. So who are you going to believe? Mr Geithner? Or the people at S&P who will actually be deciding what S&P will do about its rating of US sovereign debt?
It would be one thing to express the view that a downgrade would be unwarranted, or that the chance of it happening is remote. Either of these positions would be defensible. Mr Geithner went beyond that and staked out an absolutist stance that reeks of raw arrogance: There is no risk a rating cut will occur. He left no room for a trace of a possibility, ever.
The mystery is why he would say such a thing. What's he going to do if S&P or some other rating company winds up disagreeing with him?
The problem for leaders who make indefensible claims like this one is that, after a while, nobody knows whether to believe anything they say. Just remember all those government officials in Greece, Ireland and Portugal who kept saying their countries didn't need bailouts, long after it became clear they did.
This was the same answer Mr Geithner gave during an ABC News interview in February last year, when asked if the US might lose its AAA rating. 'Absolutely not,' he said. 'That will never happen to this country.' So, an asteroid could destroy the entire Eastern Seaboard 100 years from now. And, in the world according to Mr Geithner, we're supposed to believe America's top rating would be safe.
Perhaps the Treasury Secretary would be well positioned to make such assessments if he were the only person on the planet with the authority to grade sovereign debt - and if there were zero risk that he would ever die. Not only is Mr Geithner mortal, but he also doesn't even work for a nationally recognised statistical rating organisation.
In one of the great errors of financial history, the US long ago bestowed that vaunted designation on the likes of S&P and Moody's Investors Service. The raters showed they could be corrupted when they put their AAA marks on countless sub-prime mortgage bonds that quickly turned sour. Unlike the companies that bought those labels, though, the US government didn't solicit S&P's ranking of its debt. Trying to predict with certainty what the raters may do next is a fool's game.
Sure, it's conceivable the government might threaten to strip the raters of their officially recognised franchise as retaliation if they dared to downgrade the US. We can only hope this isn't what Mr Geithner had in mind when he made his bold prediction. A move like that would risk a major scandal, and it might not even work.
Nothing the raters say should matter, of course. The markets are well aware the US debt is on its way to surpassing the country's annual gross domestic product, and that few in Washington are willing to get spending under control again.
The least Mr Geithner could have done was take a page from Mr Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs, and throw in a wiggle word or two. While testifying last year at a hearing, Mr Blankfein said 'we didn't have a massive short against the housing market', notwithstanding that Goldman made about US$500 million shorting the housing market in 2007.
Mr Blankfein, of course, included the word 'massive' in his statement, whatever that's supposed to mean. Mr Geithner could have done something similar. Yet for some inexplicable reason, he didn't, which, if nothing else, should tell us he probably wouldn't have much of a future as a top executive at Goldman Sachs.
No risk at all? If Mr Geithner is really as smart as his friends say he is, he doesn't believe it either.
BLOOMBERG
Mr Geithner's response: 'No risk of that.'
'No risk?' Mr Barnes asked.
'No risk,' Mr Geithner said.
It's enough to make you wonder: How could Mr Geithner know this to be true? The short answer is he couldn't.
All you have to do is read the research report Standard & Poor's published on Monday about its sovereign-credit rating for the US: 'We believe there is at least a one-in-three likelihood that we could lower our long-term rating on the US within two years,' said S&P, which reduced its outlook on the US government's debt to 'negative' from 'stable'.
There you have it: Mr Geithner says the chance of a downgrade is zero. S&P says the odds it will cut its rating might be greater than one out of three. So who are you going to believe? Mr Geithner? Or the people at S&P who will actually be deciding what S&P will do about its rating of US sovereign debt?
It would be one thing to express the view that a downgrade would be unwarranted, or that the chance of it happening is remote. Either of these positions would be defensible. Mr Geithner went beyond that and staked out an absolutist stance that reeks of raw arrogance: There is no risk a rating cut will occur. He left no room for a trace of a possibility, ever.
The mystery is why he would say such a thing. What's he going to do if S&P or some other rating company winds up disagreeing with him?
The problem for leaders who make indefensible claims like this one is that, after a while, nobody knows whether to believe anything they say. Just remember all those government officials in Greece, Ireland and Portugal who kept saying their countries didn't need bailouts, long after it became clear they did.
This was the same answer Mr Geithner gave during an ABC News interview in February last year, when asked if the US might lose its AAA rating. 'Absolutely not,' he said. 'That will never happen to this country.' So, an asteroid could destroy the entire Eastern Seaboard 100 years from now. And, in the world according to Mr Geithner, we're supposed to believe America's top rating would be safe.
Perhaps the Treasury Secretary would be well positioned to make such assessments if he were the only person on the planet with the authority to grade sovereign debt - and if there were zero risk that he would ever die. Not only is Mr Geithner mortal, but he also doesn't even work for a nationally recognised statistical rating organisation.
In one of the great errors of financial history, the US long ago bestowed that vaunted designation on the likes of S&P and Moody's Investors Service. The raters showed they could be corrupted when they put their AAA marks on countless sub-prime mortgage bonds that quickly turned sour. Unlike the companies that bought those labels, though, the US government didn't solicit S&P's ranking of its debt. Trying to predict with certainty what the raters may do next is a fool's game.
Sure, it's conceivable the government might threaten to strip the raters of their officially recognised franchise as retaliation if they dared to downgrade the US. We can only hope this isn't what Mr Geithner had in mind when he made his bold prediction. A move like that would risk a major scandal, and it might not even work.
Nothing the raters say should matter, of course. The markets are well aware the US debt is on its way to surpassing the country's annual gross domestic product, and that few in Washington are willing to get spending under control again.
The least Mr Geithner could have done was take a page from Mr Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs, and throw in a wiggle word or two. While testifying last year at a hearing, Mr Blankfein said 'we didn't have a massive short against the housing market', notwithstanding that Goldman made about US$500 million shorting the housing market in 2007.
Mr Blankfein, of course, included the word 'massive' in his statement, whatever that's supposed to mean. Mr Geithner could have done something similar. Yet for some inexplicable reason, he didn't, which, if nothing else, should tell us he probably wouldn't have much of a future as a top executive at Goldman Sachs.
No risk at all? If Mr Geithner is really as smart as his friends say he is, he doesn't believe it either.
BLOOMBERG
Friday, April 22, 2011
EU gropes in vain for China lifeline
So, the dialogue of the deaf between Europe and China is set to continue, with the Chinese seeming to offer help while real salvation remains a mirage.
LONDON: China sits on massive foreign currency reserves which it wishes to diversify away from the falling United States dollar.
The Europeans, meanwhile, need all the cash they can get to service their mounting debts.
Politically, Beijing wants to be helpful to Europe, its single biggest export market.
But if the Europeans are banking on China to ride to their rescue, they are likely to be in for disappointment.
Most recently, Spain was forced to backtrack on claims that China had agreed to help it overcome its financial crisis.
As Spanish Prime Minister Jose Luis Rodriguez Zapatero toured China and Singapore last week, his officials back home announced with jubilation that China's sovereign wealth fund was 'committed' to 'inject' €9.3 billion (S$16.7 billion) into Spain's ailing banks.
However, they were quickly forced to swallow their words when a spokesman for China Investment Corporation denied the existence of any agreement.
'We talked about investment in the Spanish bank sector,' she told Western news agencies, 'but there was no mention of investment figures.'
The embarrassing episode was put down to a simple 'communication error'.
But it is not the first time that extravagant European claims about Chinese financial help ended with little or no cash changing hands.
The common snag: What Europe offers, the Chinese do not find interesting, while the assets which China really wants to buy, the Europeans are unwilling to sell.
Because of their dire financial situation, some European countries can borrow only at extortionate interest rates. On Monday, credit rating agencies downgraded Ireland's debts to junk status. Countries such as Ireland, Greece and Portugal - all of which had to be bailed out from bankruptcy - would love to borrow from China on better terms. But China is not inclined to lend on anything other than normal market rates in such an uncertain environment.
The Chinese also face huge risks if they accede to such proposals as an appeal for cash by Mr Zapatero. Spain is grappling with the problem of its 'cajas', small local savings banks which are paralysed by bad property loans.
Madrid's claims that the total amount stands at only €20 billion is believed by nobody; even Spain's biggest banks refuse to touch the cajas.
The idea that China would consent to bankroll about half of this bad debt - as Spain is hoping - remains fanciful.
China is not averse, however, to extracting maximum political advantage from Europe's predicament, by holding out the promise of future financial help.
In June last year, Greek Prime Minister George Papandreou claimed to have obtained a pledge from Beijing to invest in his country.
Last November, Chinese President Hu Jintao promised during a visit to Portugal that he would 'look favourably' upon purchases of that country's debt.
And in January, Vice-Premier Li Keqiang toured Spain with a promise to 'play a key role' in that country's financial stabilisation.
Small amounts of Chinese cash trickled through. But none made the slightest bit of difference to Europe's predicament.
Beijing's true opinion of Europe was revealed last Saturday by Mr Lou Jiwei, the boss of China Investment Corporation, the country's sovereign wealth fund.
Addressing the Boao Forum for Asia, a gathering of regional business and political leaders held on Hainan island, he said that 'from the investment perspective', he was 'not very optimistic about Europe'.
This did not mean that China would not like to invest in Europe, he added. 'There are still opportunities in Europe, such as infrastructure sectors,' he said.
But, as Beijing knows only too well, these sectors are out of bounds to foreigners, and the European Union is now examining the introduction of even more restrictions on the purchase of assets in what are deemed as Europe's 'strategic industries'.
By Jonathan Eyal, Europe Correspondent
From the Straits Times
LONDON: China sits on massive foreign currency reserves which it wishes to diversify away from the falling United States dollar.
The Europeans, meanwhile, need all the cash they can get to service their mounting debts.
Politically, Beijing wants to be helpful to Europe, its single biggest export market.
But if the Europeans are banking on China to ride to their rescue, they are likely to be in for disappointment.
Most recently, Spain was forced to backtrack on claims that China had agreed to help it overcome its financial crisis.
As Spanish Prime Minister Jose Luis Rodriguez Zapatero toured China and Singapore last week, his officials back home announced with jubilation that China's sovereign wealth fund was 'committed' to 'inject' €9.3 billion (S$16.7 billion) into Spain's ailing banks.
However, they were quickly forced to swallow their words when a spokesman for China Investment Corporation denied the existence of any agreement.
'We talked about investment in the Spanish bank sector,' she told Western news agencies, 'but there was no mention of investment figures.'
The embarrassing episode was put down to a simple 'communication error'.
But it is not the first time that extravagant European claims about Chinese financial help ended with little or no cash changing hands.
The common snag: What Europe offers, the Chinese do not find interesting, while the assets which China really wants to buy, the Europeans are unwilling to sell.
Because of their dire financial situation, some European countries can borrow only at extortionate interest rates. On Monday, credit rating agencies downgraded Ireland's debts to junk status. Countries such as Ireland, Greece and Portugal - all of which had to be bailed out from bankruptcy - would love to borrow from China on better terms. But China is not inclined to lend on anything other than normal market rates in such an uncertain environment.
The Chinese also face huge risks if they accede to such proposals as an appeal for cash by Mr Zapatero. Spain is grappling with the problem of its 'cajas', small local savings banks which are paralysed by bad property loans.
Madrid's claims that the total amount stands at only €20 billion is believed by nobody; even Spain's biggest banks refuse to touch the cajas.
The idea that China would consent to bankroll about half of this bad debt - as Spain is hoping - remains fanciful.
China is not averse, however, to extracting maximum political advantage from Europe's predicament, by holding out the promise of future financial help.
In June last year, Greek Prime Minister George Papandreou claimed to have obtained a pledge from Beijing to invest in his country.
Last November, Chinese President Hu Jintao promised during a visit to Portugal that he would 'look favourably' upon purchases of that country's debt.
And in January, Vice-Premier Li Keqiang toured Spain with a promise to 'play a key role' in that country's financial stabilisation.
Small amounts of Chinese cash trickled through. But none made the slightest bit of difference to Europe's predicament.
Beijing's true opinion of Europe was revealed last Saturday by Mr Lou Jiwei, the boss of China Investment Corporation, the country's sovereign wealth fund.
Addressing the Boao Forum for Asia, a gathering of regional business and political leaders held on Hainan island, he said that 'from the investment perspective', he was 'not very optimistic about Europe'.
This did not mean that China would not like to invest in Europe, he added. 'There are still opportunities in Europe, such as infrastructure sectors,' he said.
But, as Beijing knows only too well, these sectors are out of bounds to foreigners, and the European Union is now examining the introduction of even more restrictions on the purchase of assets in what are deemed as Europe's 'strategic industries'.
By Jonathan Eyal, Europe Correspondent
From the Straits Times
Chernobyl and the lessons from cult of secrecy
Greenpeace activists marking the 25th anniversary of the Chernobyl disaster on April 26 in front of the Russian Nuclear Ministry in Moscow on Tuesday. -- PHOTO: AGENCE FRANCE-PRESSE
IT BEGAN as a grey and muddy spring day, like so many others in my homeland. It ended in dread and mourning.None of us knew the precise moment when catastrophe struck at Chernobyl 25 years ago. Back then, we lived under a system that denied ordinary people any right to know about even essential facts and events. So we were kept in the dark about the radiation leaking from the shattered reactor at Chernobyl - and blowing in the winds over northern Europe.
But the more bizarre fact about the Chernobyl disaster, as we now know, is that Mr Mikhail Gorbachev, then General Secretary of the Communist Party of the Soviet Union, was also kept in the dark about the magnitude of the disaster. Indeed, it may be this very fact that finally condemned the old system to the dustbin of history a mere five years later. No regime built on limitless self-delusion is capable of retaining a shred of legitimacy once the scale of its self-deception is exposed.
Because only fragments of reliable information reached ordinary Ukrainians at the time, my memories of Chernobyl are necessarily sketchy. I recall now only the first hushed, frightened whispers of disaster from a family friend. I remember the abject fear I felt for my young daughter. A virtual torrent of near-hysterical hearsay and trickle-down stories about the disaster soon followed.
Today, the Chernobyl meltdown is judged severely in both moral and metaphysical terms. It cast a dark shadow over humanity, one unseen since the atomic bombings of Hiroshima and Nagasaki in 1945.
But unlike Japan's Fukushima nuclear crisis, Chernobyl's real lesson is not about nuclear plant safety. It is about official arrogance and indifference to suffering, and a cult of secrecy that allowed information to be shared only among a narrow elite obsessed with stability. Ukrainians are being reminded of the consequences of this mindset right now - by a government that has slashed health benefits for the men who heroically fought to contain the Chernobyl disaster.
So, what was the source of the carelessness with which the Chernobyl crisis was handled? What caused such arrogant unconcern for the health of those who lived near the plant, for those heroic men and women who tried to limit the damage (whom officials still treat as pawns), and for the millions who lived beneath the radioactive cloud as it spread?
Government indifference is a strange and unnatural state of mind, in which the lines between crime and punishment, cruelty and compassion, and good and evil blur. Having grown up in the then Union of Soviet Socialist Republics, I know that Soviet leaders practically made contempt for suffering and moral concerns a foundation of their philosophy of rule. Unaccountable governments are almost inevitably unconcerned about the fate of their citizens.
Can indifference ever be a virtue? Of course, in times of horror such as the Holocaust and Ukraine's Holodomor (the famine-genocide of 1932-1933), isolated and powerless individuals may swaddle themselves in indifference simply to retain some shred of sanity. But even then, it can never be justified fully, and the nameless, nagging guilt, of which author Primo Levi wrote so movingly, invariably follows.
But it is official indifference that is truly unpardonable, perhaps because indifferent officials never feel the guilt of which Mr Levi wrote. Indeed, for some political leaders, indifference is seductive. It is so much easier to avert your eyes from citizens than to grapple with their plight. It is so much easier - and often less costly - to avoid individuals' tragic circumstances than it is to adjust your policies to their needs.
For the state official who turns his back on suffering, his country's citizens lack consequence. Their lives are meaningless. Their hidden or even visible anguish is worthless, a cipher's despair.
Such indifference is more dangerous than anger and hatred. Anger can actually be artistically and politically creative. Author Alexander Pushkin wrote some of his greatest poems as a result of anger, and composer Ludwig van Beethoven's great symphonies were written in the grip of overpowering emotions. Former presidents Nelson Mandela and Vaclav Havel, and Nobel laureate Aung San Suu Kyi all endured imprisonment because they were angry at the injustice they had witnessed.
Indifference, by contrast, is never creative, for it means that no response to injustice, and no help for the suffering, will ever come. It is the tool of governments that are, in fact, the enemies of their people, for it benefits only the ruler - never the victim, whose pain is magnified by neglect.
Political prisoners, hungry children, the homeless Chernobyl refugees, or the irradiated workers in need of a lifetime of medical help - to dismiss their plight, to refuse to offer some spark of hope, is to exile them to a netherworld of helplessness. Government officials who deny human solidarity in this way deny their own humanity.
From his prison cell, awaiting his execution by Adolf Hitler's Gestapo, theologian Dietrich Bonhoeffer declared that we must all 'share in God's suffering'. Indifference for him was not only a sin, but also a type of punishment.
This is perhaps the central lesson of Chernobyl: Governments that systematically turn a blind eye to their citizens' fate ultimately condemn themselves.
The writer was twice prime minister of Ukraine.
PROJECT SYNDICATE
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