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Biodun-Iginla@the Economistcom
Friday, 23 April 2010
New or updated articles on the Economist.com by Biodun Iginla, BBC News and the Economist
Topic: the economist, biodun iginla, bb
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April 23rd 2010


An extreme necessity
Greece's request for aid from the euro zone and the IMF will provide only temporary relief
Full article

Playing for time
If North Korea did deliberately destroy a South Korean warship, what next?
Full article

Hu, Wen—what, why and how
China's prime minister Wen Jiabao praises Hu Yaobang, a former Communist Party chief
Full article

KAL's cartoon

Full article

Winners and losers
Normal politics, and hard questions, loom in Poland
Full article

Hydrogen tries again
Has the lightest and most abundant stuff in the universe found a new role in energy?
Full article

Live online debate: GDP
How do you define "living standards"? Are they limited to material comfort, or do they cover broader, less tangible concepts, not least happiness? Vote now and tell us what you think.
Full article


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Posted by biginla at 6:16 PM BST
Ne'er the twain
Topic: the economist, biodun iginla, bb

Cyber-crime

by Tamara Kachelmeier, Tech Analyst for the BBC and the Economist, for the BBC's Biodun Iginla

International efforts to police the net remain deadlocked

Apr 22nd 2010 | From The Economist print edition

WHEN people talk about the digital divide, they usually mean the gap between people who are benefiting from the information revolution, and those who through lack of education or money are missing out. But at a United Nations conference in Brazil that concluded on April 19th, a different (though related) sort of divide was on show, and ten days’ chatter by over 100 countries failed to bridge it.

If there was one thing on which almost everybody agreed, it was that criminals are mastering computer technology much faster than most governments are learning to foil them. Rich countries say they are beset by fraudsters, pornographers and hackers operating from poor places where they will never be caught—because their “host” governments can’t or won’t stop them.

One response is the Budapest Convention, an accord launched at the Council of Europe in 2001, and ratified by the United States in 2006. One of its aims is to let authorities in one country give chase, at least electronically, to criminals in another.

But Russia has opposed the principle of “transborder access”, especially since 2000, when American agents hacked into the computers of two Russians who were defrauding American banks. Instead, Russia is backing a UN treaty which would be respectful of borders while also giving police more powers to shut down websites dealing in “propaganda.” Many countries like that idea—but not enough to push it through. For now, the only winners are the criminals.

Readers' comments

The Economist welcomes your views.


Posted by biginla at 5:38 PM BST
Article Alert: Economics, World Bank and World Trade Organisation - 23rd April 2010
Topic: the economist, biodun iginla, bb

 
To:biginla@bbcnews.com 

Economist.com: Articles-by-subject e-mail alert #cg_msg_content A:hover {color:CC0033;} Articles-by-subject alert: Economics, World Bank and World Trade Organisation
From Economist.com, Friday April 23rd 2010

The following have been newly published on Economist.com:

Reversing current-account surpluses
What would happen if China revalued the yuan? The past offers some clues ... more

Portugal's economy
A government desperate to persuade markets that it is better than they fear ... more

The IMF and taxing the banks
Proposals to tax the world's financial firms will be popular, but are incomplete ... more

After the volcano
Disasters are about people and planning, not nature's pomp ... more

Posted by biginla at 5:23 PM BST
Thursday, 22 April 2010
Politics this week by Biodun Iginla, BBC News and the Economist
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Politics this week | The Economist online

Apr 22nd 2010
From The Economist print edition


 
 

Aircraft returned to the skies over Europe after the cancellation of almost 100,000 flights and the biggest-ever disruption to Europe’s commercial airspace, caused by a volcanic eruption in Iceland. Some carriers criticised the almost week-long shutdown, which had effects worldwide, arguing that safety concerns may have been overdone. The International Air Transport Association, an industry body, said that the flying ban cost airlines around $1.7 billion in revenue. See article

A strong performance by Nick Clegg, leader of the Liberal Democrats, in Britain’s first ever televised prime ministerial election debate on April 15th led to an extraordinary surge in support for the party. Yet questions remained over the Lib Dems' ability to transform their bounce into votes. The prospect of a hung parliament loomed larger. See article

After the plane crash that killed President Lech Kaczynski, who was buried this week, Poland fixed a presidential election for June 20th. Early polls found strong support for Bronislaw Komorowski, the acting president and parliamentary speaker.

A presidential election in north Cyprus was won by Dervish Eroglu, a hardliner who favours independence, dimming hopes for the reunification of Cyprus, which has been split between a Greek-Cypriot south and a Turkish-Cypriot north since 1974. See article

The French government moved ahead with plans to ban the burqa, which is worn by a small number of Muslim women, in all public places. It will submit a draft law to parliament in May.

One of the most controversial issues in Ukrainian-Russian relations was apparently settled when the two countries signed a deal to extend the leasing rights of Russia’s Black Sea Fleet in Sebastopol, a Ukrainian port, for 25 years. In exchange Russia will provide Ukraine with cheaper gas.


The Democrats pulled legislation that would have given Washington, DC, a seat in the House of Representatives. The bill, which would have also created an extra seat for Utah, had passed the Senate but with an amendment that would have repealed the city’s strict gun-control laws. See article

America’s Supreme Court overturned, by 8-1, a law that had banned images of dogfighting and other depictions of cruelty to animals because the legislation restricted free speech. It is the second decision by the court this year that expands the notion of free speech under the constitution; the other ruling lifted restrictions on campaign spending.


 
 

Hugo Chávez, Venezuela’s president, said that China had promised to lend $20 billion to build power plants and highways in return for oil. The two countries also signed an agreement for a joint venture to produce up to 400,000 barrels of oil a day in the Orinoco belt.

A consortium led by Chesf, a state-owned electricity generator, won a contract to build the world’s third-largest hydroelectric dam on the Xingu river in the Brazilian Amazon. Although the project has been scaled down, green and indigenous groups object to its environmental impact, but failed to persuade the courts to block the contract auction. See article

The International Court of Justice ruled that although Uruguay should have consulted Argentina before allowing a cellulose factory on their border river, the plant did not pollute and could continue to operate. Uruguayans will hope that their neighbour will end a more than three-year blockade of a border bridge.

Argentina unveiled the terms of its long-awaited offer to creditors who chose not to participate in its first debt restructuring in 2005. The proposal is almost identical to the prior exchange, and is seen as relatively favourable to investors. Analysts expect most bondholders to accept.


Three leaders of extremist Sunni groups in Iraq that are affiliated to al-Qaeda were reportedly killed in joint Iraqi-American operations: Abu Ayyub al-Masri, who was said to head “al-Qaeda in Iraq”; Abu Omar al-Baghdadi, who ran a still more shadowy outfit; and Ahmed al-Obeidi, who organised attacks around Mosul. It is too soon to say if the recent spate of suicide-bombings against Iraqi government targets will now end.

Israel’s president, Shimon Peres, accused Syria of supplying Scud missiles to Lebanon’s Shia party-cum-militia, Hizbullah, raising the possibility of a pre-emptive attack by Israel. The claim has yet to be independently verified and Syria denied the claim.

The authorities in Rwanda arrested Victoire Ingabire, a leading opposition politician, and accused her of, among other things, helping a rebel group whose members perpetrated the genocide in 1994. Mrs Ingabire, a Hutu, returned from abroad earlier this year and says she will run for president against the incumbent, Paul Kagame, a Tutsi.

Jacob Zuma, South Africa’s president, chastised Julius Malema, the leader of the Youth League of the ruling African National Congress, for using threatening language against white South African farmers and for praising President Robert Mugabe on a visit to Zimbabwe. But Mr Malema seemed loth to back down, suggesting a struggle for authority within the ANC.


 
 

A tense stand-off gripped Thailand. The army occupied Bangkok’s financial district and threatened to use live ammunition against opposition demonstrators, who barricaded their makeshift camp but called off a march. Government supporters increased pressure on the regime to crack down by threatening a counter-demonstration. But Abhisit Vejjajiva, the prime minister, put the army commander-in-chief, an advocate of a political solution, in charge of national security. See article

The death toll from the recent earthquake that struck China’s Qinghai province rose to more than 2,000.

Relations between the Koreas deteriorated over the mysterious sinking last month of a South Korean warship. After an international investigation ruled out an on-board explosion as the cause, Lee Myung-bak, South Korea’s president, vowed, in an emotional television address, that the response would be “unwavering and resolute”. Military analysts reportedly think a North Korean torpedo sank its ship. See article


Posted by biginla at 6:50 PM BST
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Business this week | The Economist online
Business this week
Apr 22nd 2010
From The Economist print edition


Wall Street was stunned as civil-fraud charges were brought against Goldman Sachs. The Securities and Exchange Commission alleges that the bank deceived investors in a synthetic collateralised-debt obligation built on mortgage assets, by not disclosing that Paulson, a hedge fund that had some say in choosing which securities went into the product, would profit if the CDO performed poorly. Goldman vigorously denied the allegations. See article

Goldman found comfort in announcing a $3.5 billion quarterly profit. Staff compensation costs rose to $5.5 billion, but as a share of net revenue this fell to 43%, from 50% in the same quarter last year.


Citigroup reported $4.4 billion in net income for the first three months of 2010, its best profit in almost three years (it made a $4.3 billion profit in the second quarter of 2009 only after selling its Smith Barney unit). With net credit losses declining further, the bank declared that it had “turned the corner”, but remained cautious about its outlook. Citi lost some $30 billion during the credit crisis.

Bank of America posted a net profit for the first quarter of $3.2 billion, a drop of 24% compared with a year earlier. And in its first earnings release since James Gorman became chief executive in January, Morgan Stanley’s quarterly net income was $1.8 billion.

Credit Suisse had a good three months, in which it recorded the biggest gain in new assets from wealthy clients for five years, a sharp contrast to the Swiss bank’s bigger rival, UBS, which has been hurt by net outflows of customers’ cash.

The IMF proposed a scheme for co-ordinated global taxes on banks’ balance-sheets and profits to help pay for the cost of bail-outs. A worldwide bank levy is being mooted by the G20. The fund said that taxpayer-funded rescues during bad times, leaving shareholders and employees to gain during good times, “misallocates resources”.

Congressmen investigating the banking crisis heard testimony about the downfall of Lehman Brothers. The SEC was criticised by a court-appointed examiner for its supervision of the bank. Dick Fuld, Lehman’s boss at the time of its bankruptcy (who was also admonished by the examiner), insisted that the SEC and the Federal Reserve “were privy to everything as it was happening”.


General Motors announced it had repaid in full the $8.4 billion in loans it received from the American, Canadian and Ontario governments, five years ahead of schedule. The American government still holds a majority stake in the carmaker, but could start selling the shares later this year.

The Bank of Canada hinted that it might raise interest rates in June, which would make it the first central bank in the G7 to do so. Forecasting that Canada’s economy will grow by 3.7% this year (but by less in 2011 and 2012) the bank thinks it is now “appropriate to begin to lessen the degree of monetary stimulus”.

The yield on ten-year Greek government bonds rose sharply again, to well above 8%, just as negotiators from the European Union and IMF began working on the details of a bail-out for Greece.


 
 

Google provided data for the first time on the number of requests it gets from governments to remove content from its sites. The requests mostly relate to criminal matters, and the figures do not cover filtering or blocking of content. Brazil tops the list, for example, but Google’s Orkut social-networking site is one of the most popular in the country. Google reckons that more transparency on the issue will lead to less censorship.

Arriva, one of Britain’s biggest train and bus operators, agreed to a £1.6 billion ($2.5 billion) takeover from Deutsche Bahn, Germany’s state-owned rail company. More mergers are expected in Europe as transport markets are opened to competition.

EADS, the European aerospace and defence company that owns Airbus, decided to submit a fresh bid to build flying tankers for the American air force. The company’s American partner in the project, Northrop Grumman, pulled out of the process in March claiming the terms favour Boeing. The competition for the $35 billion contract has rumbled on for years, though EADS will raise its profile in America with a new bid.

Work on the next James Bond film, due for release by 2012, was “suspended indefinitely” by the producers because of the uncertainty surrounding the auction of MGM, the studio that owns the Bond franchise. MGM, which has had numerous owners over the years, is grappling with $3.7 billion of debt and its creditors are seeking a buyer. See article


Posted by biginla at 6:42 PM BST
Earthly powers
Topic: the economist, biodun iginla, bb

After the volcano

by Biodun Iginla of the BBC and the Economist

Disasters are about people and planning, not nature’s pomp

Apr 22nd 2010 | From The Economist print edition

IT IS a peculiar, if blessed, sort of natural disaster in which nobody dies. The Icelandic volcano Eyjafjallajokull produced a thrilling show—and may continue to do so—but did most of its damage simply by shutting down air traffic in and out of large parts of Europe for nearly a week. Rather than bereavement, it brought the eeriness, and sometimes the joy, of displacement. Colleagues were absent from their desks, and teachers and pupils from their classrooms; the clear blue skies were bereft of the silver needles that sew the world together. Birdsong made loud the silence of the jets, florists’ vases missed the bright blooms of far-off fields, and far-off farmers missed the cash those blooms would have brought. But, this time, almost all that went missing will be returned.

Two arguments spout up from this demonstration of earthly power. The first is immediate and practical: was all this chaos man-made—an immense and costly overreaction by regulators to a spectacle that posed only a minor and manageable risk? The second is more philosophical: what does this say about man’s apparent inability to control nature?

To fly or not to fly

The initial position of Europe’s regulators was that the safe level of volcanic ash was, in effect, zero, thus grounding all flights in the broad swathes of sky which computer models said could be tainted. The fact that this regulatory stance changed in the face of an affluent cadre of displaced people, airlines feeling the pinch, a looming threat to some supply chains and (in Britain) an election, makes it all the more suspicious. Areas with low concentrations of dust and ash are now suddenly deemed navigable, and aircraft passing through them will be given thorough post-flight engine inspections (see article).

How exactly the new safety threshold came to be set at 2,000 micrograms of dust or ash per cubic metre is not clear; the figure appears to have come from engine manufacturers, but the evidence on which it is based has not yet been made public. Regulations without a clear and open argument behind them are worrisome. But that doesn’t mean the threshold, equivalent to about 100 times the typical level of dust in the atmosphere at ground level, is necessarily a bad one (test flights found patches of dust of up to 20 times normal levels). And the previous position that there was no safe level clearly lacked any sort of evidence base at all.

Had better policies been in place beforehand, much inconvenience might have been avoided. But it is wrong to dismiss the week’s woes as an over-precautionary fuss over nothing. Northern Europe has many hub airports downwind of one of the most volcanic countries in the world, and the emergence of the global aviation industry just happened to coincide with a period of relative inactivity there. Some of Iceland’s volcanoes can shoot hundreds of times as much gunk into the atmosphere as Eyjafjallajokull has, and over long periods. There are other volcanoes, notably in the American north-west and Japan, capable of disrupting a lot of airspace around big cities. The fact that the long-distance risks posed by volcanoes are not, for the most part, insurable seems to have led to them being less well studied than other kinds of natural disaster. A wake-up call was needed, and it has been sounded. The new regulatory approaches now need to be openly justified, and perhaps taken further.

With great power comes great responsibility

But the week of absences also offers a less obvious lesson. One of the things that went missing in the shadow of that volcanic dust was a sense of human power. And as with the quiet skies, this absence found a welcome in many hearts. The idea that humans, for all their technological might, could be put in their place by this volcano—this obscure, unpronounceable, C-list volcano—was strangely satisfying, even thrilling.

Such pleasure in the face of overpowering nature, as seen from a place of safety, was at the heart of the idea of “the sublime” as expressed by the great conservative Edmund Burke 250 years ago, and its aesthetic and spiritual allure remains strong. The sublime offers solace and inspiration, but it makes a poor guide to policy. For humans are not completely powerless in the face of nature: rather the reverse.

There is no technology to plug volcanoes which pierce the earth’s crust, or to bind the faults which cause earthquakes. There is not yet even a science for predicting when faults and volcanoes will let loose. To that extent, mankind is still vulnerable to the vagaries of the planet. But the story of human development is one of becoming better at coping with them.

Death by disaster is in many ways a symptom of economic underdevelopment: witness the very different consequences of the earthquakes in Haiti and Chile. In general, richer places and richer people are better able to survive and rebound. More interconnections provide more ways to mobilise resources and explore alternatives when things go wrong. If the Eyjafjallajokull plume had been as risky as it first appeared and long-lived to boot, such interconnectedness would undoubtedly have provided ways to keep Europe supplied, though probably at substantial cost and with a fair bit of lasting disruption. The apparently sublime power of the volcano was largely the result of an initially supine reaction.

Very few events are able to perturb an increasingly globalised world. The Indian Ocean tsunami of 2004 was a murderous event, but the world pushed on and many areas recovered quickly (see Buttonwood). For a natural disaster to represent a global threat, it has to act on a global scale. An eruption of hot plasma from the sun, called a coronal mass ejection, which could do damage to electricity grids over an entire continent, might fit the bill. The largest volcanoes might cause short-term climate change profound enough to reduce agricultural production precipitously in many places at once. A large asteroid strike would do yet more damage.

These are, though, rare events. Very large coronal mass ejections are thought to happen every 500 years or so (the most recent was in 1859). Volcanoes that change climate enough to affect agriculture round the world are perhaps 100 times rarer than that, and cataclysmic asteroids rarer still. What is more, such asteroids could, in principle, be identified and, with plausible technology, nudged aside. Here Burke’s sublime is turned on its head, and human capability seems to humble nature.

This is worth applying to climate change. Many of Burke’s descendants find it difficult to believe that something as big as the earth’s climate could really be at risk from human activity, and even harder to think you could do something about it. But the risk, if not full certainty about its consequences, is there. Moreover, the idea of a counterbalancing, “geoengineered” cooling to counteract some aspects of climate change is worthy of study and discussion. Large volcanic eruptions spread cooling palls through the stratosphere. Techniques for doing something similar in a less dramatic way are plausible.

When people talk about the charms of powerlessness in the face of nature, part of what they are saying is that they don’t want to be bothered with facing up to what humans can do, and to what they might have at risk. The business of looking after a planet requires being bothered in advance—and not just about little matters like volcanoes.

Readers' comments

The Economist welcomes your views.


Posted by biginla at 5:54 PM BST
Wednesday, 21 April 2010
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April 21st 2010


Synthetic, derivative
Democrats and Republicans in America's Senate are playing chicken over reforming finance
Full article

Decapitation is not yet victory
Killing guerrilla leaders will not, on its own, bring peace
Full article

Asia sunny, Europe cloudy
The IMF becomes more optimistic about the outlook for GDP growth this year and next
Full article

Thirty years on
Zimbabwe's 30th birthday is not much of a celebration
Full article

Back into the clouds
The threat to air travel from Icelandic volcanos is still troubling
Full article

Rug rave
Prices fly for a Persian carpet
Full article

Live online debate: GDP
For decades economists have turned to GDP when they want an estimate of how well off people are. It may capture material wealth, broadly, but is that enough? Vote and express your view.
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Posted by biginla at 6:36 PM BST
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April 21st 2010

 
 

Business.view column: Not up in the air
Risk-management lessons from the volcanic ash cloud
 More »






From the archive: An interview with C.K. Prahalad

The renowned strategy professor has died aged 68. In this interview from 2004 he explains the win-win relationship between business and the poor
 More »

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Special report: Innovation in emerging markets
The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation
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Schumpeter column: An emerging challenge
Antoine van Agtmael thinks that firms in the rich world have not fully digested the rise of the emerging markets
 More »

Book review: Bursting a balloon
David Bolchover's new book says the myth of talent is a smokescreen for corporate plunder
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Posted by biginla at 6:00 PM BST
Tuesday, 20 April 2010
Business-travel news from the Economist--by Biodun Iginla of the BBC and the Economist
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Business-travel news
  Highlights of the past week's postings on our business-travel blog
Tuesday April 20th 2010

 
Trouble from the north
Volcanic ash has paralysed European aviation, creating the worst chaos since the second world war, according to one newspaper. We have reports from correspondents stuck in Berlin and New York, as well as an item considering what ash does to planes and an initial assessment of the mess.

Will the new rule on tarmac delays work?
America's airlines must pay up to $27,500 per passenger if they keep them on the runway for longer than three hours. read more»

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What a carry-on
Two senators take on Spirit Airlines and its new baggage fees. read more»

Will work for food
A Copenhagen hotel entices its guests to exercise, with the lure of free dining. read more»

Air Canada Jazzzzz
One surprised passenger wakes up in the hangar. read more»

And also…
We've written about unexpected improvements in airline performance and how to police a Canadian airport.


 

Posted by biginla at 5:30 PM BST
New or updated articles on the economist.com, by Biodun Iginla of the BBC and the economist
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April 19th 2010


Outlook: cloudy
Why so little is known about the effects of erupting volcanos on air travel
Full article

Eruptions and disruptions
Volcanic ash continues to disrupt European flights
Full article

The week ahead
Britain's party leaders discuss foreign policy in a televised debate
Full article

Upcoming online debate: GDP
GDP growth, adjusted for changes in population and prices, is the most common measure of changes in living standards. But is it a good one? Our debate starts tomorrow. Sign up for debate alerts.
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Posted by biginla at 5:09 PM BST

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