Gambling against the Dollar – NYTimes

•November 1, 2006 • Leave a Comment

Gambling Against the Dollar

By DAVID LEONHARDT
Published: November 1, 2006

A couple of years ago, Robert E. Rubin — éminence grise at Citigroup and the Democratic Party’s economic wise man — decided that the United States dollar was headed for a fall.
Nearly everyone who spends time thinking about the American economy believes that the value of the dollar has to fall at some point.

The United States has been borrowing enormous sums of money from other countries, largely so that American consumers can turn around and buy the computers, clothing and other goods those countries make. Like all borrowing booms, this one will eventually subside. When it does — and foreign investors stop buying so many dollars to lend back to us — the dollar will drop.

With this chain of events in mind, a former colleague of Mr. Rubin’s at Goldman Sachs had been whispering in his ear that anybody who didn’t have 20 or 30 percent of his holdings tied to other currencies was “out of his mind.”

Yet as Mr. Rubin told me last week, his finances at the time were “totally dollar-based.” (As are yours, in all likelihood.) So he decided to bet against the dollar by buying options on other currencies. It turned out to be a very bad bet.

This is a column about why Mr. Rubin’s logic made perfect sense — why it still does, in fact — yet why most people who have made similar bets in recent years have taken a bath. Warren E. Buffett cost Berkshire Hathaway almost $1 billion last year shorting the dollar. On the opposite end of the investing spectrum, I put a small amount of my retirement savings last year into a T. Rowe Price mutual fund that is linked more directly to foreign currencies than most foreign-stock funds are. It has delivered a return of negative 7 percent.

But it really is worth trying to understand what’s going on. In the end, the value of the dollar will go a long way toward determining how well Americans live: which food we can afford to eat, which cars we can buy, which foreign policy we can pursue. As Mr. Rubin says: “It is vitally important. It has the potential to affect all of us.”

The simplest way to explain the problem is to say that the United States has been living beyond its means. Both the federal government and American families have been spending more money than they take in, leaving both in debt. To close the gap between our resources and our spending habits, we have borrowed from abroad. It’s the only option.

The net amount of money leaving the United States — that is, the amount of money we need to borrow back to support our lifestyle — has soared to $800 billion a year. “It’s just stunning,” said Kenneth S. Rogoff, former chief economist of the International Monetary Fund. “It’s unprecedented.”

The big question now is how will the situation reverse itself. It could happen gradually, with other countries slowly reducing their purchase of dollars. This wouldn’t be horrible, as Americans discovered when the dollar dropped in the 1980s. But most of us would be worse off for the simple reason that foreign loans would no longer be letting us live beyond our means.

The other possibility is that an unexpected event — a spike in oil prices, say — could cause foreign investors to cut their dollar purchases sharply, bringing all sorts of economic havoc. Edwin M. Truman, an economist who spent a quarter-century at the Federal Reserve, compares the situation to a merry-go-round that is moving too fast for its underlying mechanics. It gradually loses speed, leaving its riders disappointed but unscathed, or it stops suddenly and throws some of them off their horses.

Whatever the outcome, a decline in the dollar will probably be part of it. That’s why Mr. Rubin made his bet. But the dollar didn’t cooperate. While no longer at the highs it reached in 2002, it has stayed strong. Mr. Rubin ended up losing more than $1 million (which, certainly, he can afford) before getting out of the currency market.

Throughout his career — as an arbitrage trader at Goldman, as the Treasury secretary who led the 1995 bailout of Mexico — he has argued that decisions should not be judged solely on the outcome. Somebody could do a perfectly good job of weighing the relevant risks, make a call that maximizes the chances of success and still not succeed, because the world is a messy, unpredictable place.

Mr. Rubin and the other dollar bears look a little like the skeptics of the real estate boom back in 2005. For years, those skeptics warned that things had gotten out of hand and that reality would soon reassert itself. And for years, they were wrong. The longer they were wrong, the more out of touch they sound.

How is that housing boom going, anyway?

Email: leonhardt@nytimes.com

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Throw the Satellite into orbit!!

•October 10, 2006 • Leave a Comment

Huge ‘launch ring’ to fling satellites into orbit

  • 16:00 03 October 2006
  • NewScientist.com news service
  • David Shiga

 

A ring of superconducting magnets fires a projectile off a ramp at 8 kilometres per second, fast enough to reach orbit (Artist’s conception: J Fiske/LaunchPoint)

Enlarge image

A ring of superconducting magnets fires a projectile off a ramp at 8 kilometres per second, fast enough to reach orbit (Artist’s conception: J Fiske/LaunchPoint)

A cone-shaped shell would protect the payload during its passage through the atmosphere into space, and includes a rocket at the back end to adjust its trajectory (Illustration: J Fiske/LaunchPoint Technologies)

Enlarge image

A cone-shaped shell would protect the payload during its passage through the atmosphere into space, and includes a rocket at the back end to adjust its trajectory (Illustration: J Fiske/LaunchPoint Technologies)

 

An enormous ring of superconducting magnets similar to a particle accelerator could fling satellites into space, or perhaps weapons around the world, suggest the findings of a new study funded by the US air force.

Proponents of the idea say it would be much cheaper than conventional rocket launches. But critics warn that the technology would be difficult to develop and that the intense g forces experienced during launch might damage the very satellites being lofted into space.

Previous studies have investigated the use of magnets to accelerate satellites to the high speeds required for launch. But most have focused on straight tracks, which have to gather speed in one quick burst. Supplying the huge spike of energy needed for this method has proven difficult.

The advantage of a circular track is that the satellite can be gradually accelerated over a period of several hours. And the setup is technologically feasible and cost effective, suggests a recent, preliminary study of the idea funded by the air force’s Office of Scientific Research.

The air force has now given the go-ahead for more in-depth research of the idea. The two-year study will begin within a few weeks and be led by James Fiske of LaunchPoint Technologies in Goleta, California, US.

The launch ring would be very similar to the particle accelerators used for physics experiments, with superconducting magnets placed around a 2-kilometre-wide ring.

Mach 23

The satellite, encased in an aerodynamic, cone-shaped shell that would protect it from the intense heat of launch, would be attached to a sled designed to respond to the forces from the superconducting magnets.

When the sled had been accelerated to its top speed of 10 kilometres per second, laser and pyrotechnic devices would be used to separate the cone from the sled. Then, the cone would skid into a side tunnel, losing some speed due to friction with the tunnel’s walls.

The tunnel would direct the cone to a ramp angled at 30° to the horizon, where the cone would launch towards space at about 8 kilometres per second, or more than 23 times the speed of sound. A rocket at the back end of the cone would be used to adjust its trajectory and place it in a proper orbit.

Anything launched in this way would have to be able to survive enormous accelerations – more than 2000 times the acceleration due to gravity (2000g). This would seem to be an obstacle for launching things like communications satellites, but Fiske points out that the US military uses electronics in laser-guided artillery, which survive being fired out of guns at up to 20,000g.

Long-range weapons

The US air force’s interest stems from the ring’s potential to launch small, 10-kilogram satellites into orbit, though the team says it has not been told what kind of satellites these are. Aeronautics researcher Alan Epstein at MIT in Cambridge, US, who is not on the team, says the ring could potentially be used as a weapon.

Aside from microsatellites, the launch ring would be ideal for delivering supplies to support human spaceflight, such as food and water, which are not sensitive to such high accelerations, Fiske says. “Nearly all of this materiel could be shipped via launch rings, resulting in major reductions in the cost of manned space activities,” he told New Scientist.

Such a launch ring is technologically possible, but getting the projectile safely through the atmosphere would be challenging, says Epstein.

Among other things, it would be difficult to keep it from overheating and to make sure it follows the desired trajectory when subjected to winds and friction from the atmosphere, he says: “None of these challenges are trivial at all.”

Team member Michael Ricci, also at LaunchPoint, thinks these difficulties can be overcome. “They’re certainly not issues that can just be discounted, but we believe both of those are solvable,” he told New Scientist, citing previous research on nuclear warheads, which are designed to move through the atmosphere at hypersonic speeds.

Cheaper by the dozen

If the ring launched hundreds of satellites a year, it would be cheaper than conventional rocket launches. With 300 launches per year, the team estimates the ring could put payloads into orbit for $745 per kilogram. If the launch rate reached 3000 launches per year, they calculate that would drop to $189 per kilogram. Today, it costs more than 100 times that to send payloads into space.

However, Epstein says he cannot imagine a demand for that many launches in the foreseeable future. Ricci counters that demand is currently being held back by the high cost of rocket launches: “If you had orbital launch capabilities at one-tenth or one-hundredth the cost, there’d be a lot more demand.”

If the results of the team’s upcoming, more detailed design study are promising, the team would like to proceed by building a small test version of the ring, measuring 20 to 50 metres across, although no funding has been promised for this as yet.

If everything went well with the test ring, the team would hope to attract funding to build a full-scale version, which would take about four years to build, Ricci estimates.

Although Epstein is sceptical about the prospects for such a ring, he cautions that if built, the ring itself could become a target for attacks. This is because of its potential for use as a weapon, launching missiles that could reach anywhere in the world. “The ring then becomes one of the most important targets on the planet,” he told New Scientist.

The end of West Ham?

•October 6, 2006 • Leave a Comment

Duo’s arrival is tip of the iceberg

http://www.teamtalk.com/football/story/0,16368,2483_1573708,00.html

TEAMtalk feels the unsettling arrivals of Carlos Tevez and Javier Mascherano at West Ham are part of a much bigger picture.

It was touted in some quarters as West Ham’s answer to the coup which brought Ricky Villa and Ossie Ardiles to Spurs back in the late 1970s.

Five weeks on, the arrival of Argentinians Carlos Tevez and Javier Mascherano threatens to break one of football’s proudest clubs.

West Ham have lost their last five games, including two in the UEFA Cup against Palermo.

They have not scored while Tevez has been on the field and Mascherano was dropped last weekend.

The club lurches from defeat to board meetings as takeover speculation mounts.

Like a good old pro, and the decent person he is, manager Alan Pardew attempts to steady the ship.

Then comes the ultimate proof of West Ham’s folly in the words of Argentina coach Alfio Basile, who said: “I hope they leave the club as soon as possible. They are half-hearted and I’m worried about that.”

If Tevez and Mascherano are ‘half-hearted’ – and Basile knows them better than most – then the decision to bring them to the Premiership in the first place was half-baked.

It is football’s ultimate marriage of inconvenience.

And a salutary lesson of what can happen when clubs are tempted by the lure of foreign money and the promise of opportunists who know the price of everything to do with land and location and nothing about the value of an old and revered football institution.

After all, the Israeli businessman linked with the bid to buy the Hammers, Eli Papouchado, admits he knows nothing about football.

“I don’t even know how many players there are in each team,” he says. “But I do understand that in every business transaction there is a real estate opportunity.”

It was as honest and direct as it was scary for English football.

Whatever you say about Roman Abramovich, he has thrown himself into the running and the tradition of Chelsea. He turns up at just about every match, his delight at his huge investment obvious in his pumping fists and broad grin.

For Abramovich, Chelsea is a whim which turned into a hobby which turned into a passion.

For the men at the gates of Upton Park football is a business vehicle, pure and simple. It is there, not to swell their hearts, but their bank accounts. They do not care about tradition but the pounds that roll in. They do not see fans among the Upton Park faithful, they only see potential clients.

Tevez and Mascherano did not arrive at West Ham from Brazilian club Corinthians because Pardew saw the need for a flamboyant striker and an accomplished defensive midfielder. Pardew had built a balanced squad, one which had reached last season’s FA Cup final and qualified for Europe. Pardew certainly did not need them but just caved into the temptation of having at his disposal two World-class stars.

The Argentinians came in a move apparently engineered by prospective buyer Kia Joorabchian.

Rather than the excitement and kudos which accompanied Keith Burkinshaw’s capture of Villa and Ardiles all those years ago, these Argentinians brought with them bewilderment.

How exactly do you get two World Cup stars for nothing?

There is an old adage that if things seem to be too good to be true then they usually are and at no time has anyone been convinced that they actually wanted to play for West Ham.

The suspicion is that they were part of a grander plan, the catalysts in the takeover shenanigans, West Ham merely a stepping stone on their path elsewhere.

Meanwhile, their presence does as much for West Ham harmony in the dressing room as a grenade with the pin taken out.

For now Pardew battles on, maintaining he has never threatened to quit, insisting his priority is “getting West Ham up the Premiership table”.

West Ham has flourished under Pardew. It was the ideal example of an English club; traditional and produced its own set of players from an academy among the best in the game itself. It played an attacking 4-4-2 and Pardew’s idea was to make West Ham play entertaining football for the fans. But make no mistake, as long as the current predators are around, the threat to a club rooted in the community, with an academy system the envy of the game and a history boasting Bobby Moore, Martin Peters, Sir Geoff Hurst, as well as Frank Lampard, Joe Cole and Rio Ferdinand, is real.

English football should ignore it at its peril.

Break the Chain letters

•October 6, 2006 • Leave a Comment

 http://www.breakthechain.org/exclusives/natalie.html

Most sick child chain letters are variations on the same hoax, often borrowing text from earlier versions. This one illustrates a disturbing new trend of using a picture to tell a thousand lies.

SAMPLE CHAIN LETTER TEXT

Subject: help out aight

Hello, My name is Krista Marie and I have a new born baby named Natalie. She means the world to me, and just resently, the doctors have discovered that my little Natalie has Brain Cancer. Unfortunatly my husband and I don't have the money to pay for the bill. But my husband and I have worked out a deal with AOL and they have agreed to give us 5 cents to each person that recived this e-mail. So please, forward this to everyone you know, and help out my little Natalie and I.

Natalie?

END CHAIN LETTER TEXT

If you’ve received a few “help a sick child” chain letters over time, you probably thought this one was familiar when you first saw it. It bears a strong resemblance to the Rachel Arlingon chain letter. As in that case, someone has attached a photo of an infant – this time in a hospital cradle – to give the story undue credibility and emotional appeal. We’re to assume the child is little Natalie, though no such identification is given in the note.

In reality, the baby in the picture has nothing to do with this chain aside from the fact that some sicko thought the hoax would be more convincing with an actual kid to look at. Her real name is Megan Olivia Cronce and she is not suffering from “brain cancer.” She’s a healthy baby girl whose proud parents posted a picture of her on the ‘net.


 

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What chain letters like these suggest is impossible. AOL does not and will not make a charitable contribution contingent on strangers forwarding a poorly written chain letter. And even if they wanted to, there is no way they can track how many people receive it. No one is collecting signatures and there is no technology that could send such information back to AOL.

The urge to forward chains like this one is strong, especially when we believe that a small child’s life is at stake. They tug at our hear strings and pit our emotions against our common sense. Even when we doubt them, we pass them on “just in case.” Besides, it can’t hurt anything, can it? Well, maybe it can.

Ever wonder why someone would start a chain like this? There could be many reasons. The most obvious reason is as a joke to humiliate those inexperienced enough to fall for it. But there’s another, somewhat more sinister, possibility. When you forward a chain letter, your e-mail address, and those of the people to which you send it, are attached to the message. Spammers and scammers often collect chain letters as a means to building their mailing lists. So, this message (and others like it) do no good and could actually do harm. That’s reason enough for me to break this chain!

What Do You Think?

Fausta’s reflections on Paul Vallely’s article

•October 6, 2006 • Leave a Comment

Sigmund, Carl and Alfred sent this article by Paul Vallely, who’s asking Has the West been silenced by Islam?

(Vallely, by the way, is the guy that came up with the absurd list of top 20 Muslim inventions that I debunked last March.)

In the current article Vallely doesn’t understand the concept of Papal infallibility,

The Vatican moved into withdrawal mode, with the Pope’s spokesman, then the Pope himself, on two separate public occasions, saying he did not endorse the emperor’s words, and that he was “very sorry” for the misunderstanding.

Such corrections were damaging to the Pope’s image among Catholics of infallibility.

Maybe only in Vallely’s mind. In fact, the Pope is considered infallible only on proclamations of issues of dogma, when speaking ex cathedra, and in any case, the point of what Pope Benedict was saying is that

Not to act in accordance with reason is contrary to God’s nature.

I speculate that Vallely didn’t bother reading the Pope’s speech. And, by the way, it was a speech, not a sermon.

Vallely may or may not be correct in pointing out that

This is not so much a clash of civilisations as one between religious and secular fundamentalists.

Too bad Vallely essentially says we should stay silent:

in many places there is a growing realisation that freedom of expression is not absolute but needs to be governed by a sense of social responsibility. To elevate one right above all others is the hallmark of the single-issue fanatic. Sometimes it is wise to choose not to exercise a right.

Forgive my snarkiness, Paul, but rights are a matter of “use it or lose it”.

While on a religous matters, Michael Medved ponders Religion, madness and secular paranoia

Why, then, the blatant loathing of Christian believers in so many books and columns and manifestos from non-believers on the left? None of the volumes decrying Christian influence suggest that religious families engage in violence more frequently than atheists, or unravel the fabric of society through criminality, selfishness or greed. When I’ve interviewed the authors on my radio show, they freely admit that they’d be pleased to live next door to an Evangelical, or even a Fundamentalist household, because such people are likely to be law-abiding, hard-working, neighborly, stable and considerate. This contradiction demonstrates the irrational essence of the hatred and fear of a group of citizens who do more than their share at feeing the hungry, housing the homeless, keeping families together, educating their children, serving in the military, giving to charity, maintaining their homes, nursing the sick, promoting adoption and building vibrant communities. What, exactly, do conservative Christians do that in any way harms or damages their non-Christian neighbors?

But back to the opera: Germany opens major Islam summit

The German government has met Muslim community leaders in Berlin amid a row over the cancellation of a Mozart opera deemed offensive to Muslims.
The Islam conference was a landmark initiative to improve the integration of Germany’s three million Muslims.

It was overshadowed by the row over the opera Idomeneo. In one scene it was to show the severed heads of the Prophet Muhammad, Jesus Christ and Buddha.

Chancellor Angela Merkel condemned “self-censorship out of fear”.

“We must take care that we do not retreat out of a fear of potentially violent radicals,” she said.

She was speaking after the Deutsche Oper in Berlin decided to call off November’s production of Idomeneo, citing “incalculable” security risks.

Integration drive
Interior Minister Wolfgang Schaeuble also attacked the opera company’s decision as “crazy”.

He hosted the conference on Wednesday – the start of a two-year campaign for improved integration of Muslims in Germany, most of whom are of Turkish origin.

After the meeting, Mr Schaeuble said he and his guests all wanted the opera staged and would go together to see it, to send a signal.

Let’s hope they do

How does religion affect mankind?

•October 6, 2006 • Leave a Comment

Things I need to find out.

1. Why do we need religion?

2. Why do people propagate religion? Why are there so many Christian Missionaries under expensive funding to convert people to their religion? What purpose does it serve/What are the motives behind it?

Should the Pope speak the truth or be politically correct? – New York Post

•October 6, 2006 • Leave a Comment

ISLAM, THE POPE & THE OPERA

MOST EURO MUSLIMS SICK OF EXTREMISTS MICHAEL MEYER

By MICHAEL MEYER

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Benedict: If he listened, he’d find surprising agreement.

October 2, 2006 — ONCE again, Europe is grappling with explosive questions. How to deal with the religious sensitivities of Islam? Where does free speech and open debate leave off, and offense begin?

Consider the controversies of recent days. In Rome, Pope Benedict XVI apologized to those who may have “misunderstood” a speech he recently gave during a visit to his native Germany, where he quoted a 14th-century Byzantine emperor condemning Muhammad for the “evil he spread by the sword.” Violence, Benedict insisted, “is incompatible with the nature of God and soul.” Days later, in Berlin, the venerable Deutsche Oper opted not to stage a production of Mozart’s “Idomeno” – featuring a scene with the severed heads of Jesus, Buddha and the Prophet – for fear of inflaming Muslim sensibilities.

Angry fingers quickly pointed. “Appeasement,” the pope’s critics howled – the pontiff was merely stating an obvious truth, they argued, and shouldn’t retreat in the face of political correctness. German Chancellor Angela Merkel said much the same on the opera affair: “Self-censorship out of fear is intolerable,” she declared. “Violent radicals” must be confronted, not coddled.

Two important points were all but lost in the uproar. First: Benedict’s “apology” was, in fact, not one at all. Muslim leaders from across Europe were summoned to the Vatican for a “summit,” only to hear the pope read a prepared statement affirming his respect for Islam. Photos of the event told the real story. There sat the leader of Christendom, resplendent on a golden throne and separated from the assembled dignitaries by a vast expanse of polished white-and-black marble floor. He did not take questions.

If this was hardly appeasement, neither was it the “dialogue” the pope had promised. If he had invited conversation (or, better, simply listened), he’d have heard something other than criticism – for the majority of the Muslim leaders gathered there agreed with him, al most entirely. (As, for the record, did Merkel.) They, too, decry extremism. There is no place in civilized life for violence, they would have said, let alone terrorism.

The pope can be forgiven his reticence. After all, “Cartoon-gate” – the bloody riots that erupted last spring after a Danish magazine published caricatures of the Prophet Muhammad – was fresh in his mind. So it was as well for the Berlin opera producers, who cancelled their performance after receiving an anonymous bomb threat. (They’re now reconsidering, depending on whether sufficient security arrangements are practical.)

This raises the second neglected point: Yes, Germany’s more radical Islamic activists welcomed the opera company’s move (suggesting it had headed off potentially ugly protests) – but a vastly larger number of moderates took a different view.

The day after the opera announced the scrubbing of its production, a conference of German Muslims happened to convene in Berlin. Rather than spouting condemnations, they called on Deutsche Oper to restore its program. Some even suggested the entire group attend, en masse.

Kenan Kolat, leader of the country’s 2.1-million Turkish community, spoke for most when he declared that it was high time for Muslims of all ethnic stripes to accept principles of free speech and other tenets of European democracy. “This is about art, not politics,” he told Bavarian radio, adding that anything else represented a retreat to “the Middle Ages.” Shades of Pope Benedict?

The lesson in both incidents, perhaps, is to recognize that Islam is no monolith, in Europe or anywhere else. What’s more, moderates represent an overwhelming majority of Muslims living in Europe – a majority that’s increasingly unhappy with the radicals in their midst.

So, if the pope could be faulted, it had little to do with anything he said: The mistake was his failure to engage with Muslims who would otherwise be allies.

The Berlin opera erred, too – by playing to the wrong audience. The anonymous hot-head who called in his terror threat was an enemy not only of the West but also the multitude of fellow Muslims who largely embrace a German way of life.

Merkel and the pope are right. We should not coddle extremists, let alone kowtow to them.

Michael Meyer is Europe/Middle East editor for Newsweek International and a member of Benador Associates.