Smarter Ways to Discipline Children. By Andrea Petersen
Research Suggests Which Strategies Really Get Children to Behave; How Timeouts Can Work BetterWSJ, December 24, 2012
http://online.wsj.com/article/SB10001424127887323277504578189680452680490.html
When it comes to disciplining her generally well-behaved kids, Heather Henderson has tried all the popular tricks. She's tried taking toys away. (Her boys, ages 4 and 6, never miss them.) She's tried calm explanations about why a particular behavior—like hitting your brother—is wrong. (It doesn't seem to sink in.) And she's tried timeouts. "The older one will scream and yell and bang on walls. He just loses it," says the 41-year-old stay-at-home mother in Syracuse, N.Y.
What can be more effective are techniques that psychologists often use with the most difficult kids, including children with attention deficit hyperactivity disorder and oppositional defiant disorder. Approaches, with names like "parent management training" and "parent-child interaction therapy," are backed up by hundreds of research studies and they work on typical kids, too. But while some of the approaches' components find their way into popular advice books, the tactics remain little known among the general public.
The general strategy is this: Instead of just focusing on what happens when a child acts out, parents should first decide what behaviors they want to see in their kids (cleaning their room, getting ready for school on time, playing nicely with a sibling). Then they praise those behaviors when they see them. "You start praising them and it increases the frequency of good behavior," says Timothy Verduin, clinical assistant professor of child and adolescent psychiatry at the Child Study Center at NYU Langone Medical Center in New York.
This sounds simple, but in real life can be tough. People's brains have a "negativity bias," says Alan E. Kazdin, a professor of psychology and child psychiatry at Yale University and director of the Yale Parenting Center. We pay more attention to when kids misbehave than when they act like angels. Dr. Kazdin recommends at least three or four instances of praise for good behavior for every timeout a kid gets. For young children, praise needs to be effusive and include a hug or some other physical affection, he says.
According to parent management training, when a child does mess up, parents should use mild negative consequences (a short timeout or a verbal reprimand without shouting).
Giving a child consequences runs counter to some popular advice that parents should only praise their kids. But reprimands and negative nonverbal responses like stern looks, timeouts and taking away privileges led to greater compliance by kids according to a review article published this month in the journal Clinical Child and Family Psychology Review.
"There's a lot of fear around punishment out there," says Daniela J. Owen, a clinical psychologist at the San Francisco Bay area Center for Cognitive Therapy in Oakland, Calif. and the lead author of the study. "Children benefit from boundaries and limits." The study found that praise and positive nonverbal responses like hugs and rewards like ice cream or stickers, however, didn't lead to greater compliance in the short term. "If your child is cleaning up and he puts a block in the box and you say 'great job,' it doesn't mean the child is likely to put another block in the box," says Dr. Owen.
But in the long run, regular praise does make a child more likely to comply, possibly because the consistent praise strengthens the parent-child relationship overall, Dr. Owen says. The article reviewed 41 studies looking at discipline strategies and child compliance.
Parents who look for discipline guidance often find conflicting advice from the avalanche of books and mommy blogs and the growing number of so-called parent coaches. (In 2011, 3,520 parenting books were published or distributed in the U.S., up from 2,774 in 2007, according to Bowker Books In Print database.)
"Many of the things that are recommended we know now to be wrong," says Dr. Kazdin, a leading expert on parent management training. "It is the equivalent of telling people to smoke a lot for their health."
Parents often torpedo their discipline efforts by giving vague, conditional commands and not giving kids enough time to comply with them, says Dr. Verduin, who practices parent-child interaction therapy. When crossing the street, "A bad command would be, 'be careful.' A good command would be 'hold my hand,' " he says. He also instructs parents to count to five to themselves after giving a child a directive, like, for example, "Put on your coat." "Most parents wait a second or two," he says, before making another command, which can easily devolve into yelling and threats.
The techniques are applicable to all ages, but psychologists note that starting early is better. Once kids hit about 10 or 11, discipline gets a lot harder. "Parents don't have as much leverage" with tweens and teens, says Dr. Verduin. "Kids don't care as much what the parents think about them."
Some parents try and reason with young children, which Dr. Kazdin says is bound to fail to change a kid's behavior. Reason doesn't change behavior, which is why stop-smoking messages don't usually work, Dr. Kazdin says. Overly harsh punishments also fail. "One of the side effects of punishment is noncompliance and aggression," he says.
Spanking, in particular, has been linked to aggressive behavior in kids and anger problems and increased marital conflict later on in adulthood. Still, 26% of parents "often" or "sometimes" spank their 19-to-35-month-old children, according to a 2004 study in the journal Pediatrics, which analyzed survey data collected by the federal government from 2,068 parents of young children.
At the Yale Parenting Center, psychologists have found that getting kids to "practice" temper tantrums can lessen their frequency and intensity. Dr. Kazdin recommends that parents have their kids "practice" once or twice a day. Gradually, ask the child to delete certain unwanted behaviors from the tantrum, like kicking or screaming. Then effusively praise those diluted tantrums. Soon, for most children, "the real tantrums start to change," he says. "From one to three weeks, they are kind of over." As for whining, Dr. Kazin recommends whining right along with your child. "It changes the stimulus. You will likely end up laughing," he says.
Researchers noted that not every technique is effective for every child. Some parents find other creative solutions that work for their kids.
Karen Pesapane has found yelling "pillow fight," when her two kids are arguing can put a halt to the bickering. "Their sour attitudes change almost immediately into silliness and I inevitably become their favorite target," said Ms. Pesapane, a 34-year-old from Silver Spring, Md., who works in fundraising for a nonprofit and has a daughter 10, and a son, 6.
Dayna Even has found spending one hour a day fully focused on her 6-year-old son, Maximilian, means "he's less likely to act out, he's more likely to play independently and less likely to interrupt adults," says the 51-year-old writer and tutor in Kailua, Hawaii.
Parents need to take a child's age into account. Benjamin Siegel, professor of pediatrics at the Boston University School of Medicine notes that it isn't until about age 3 that children can really start to understand and follow rules. Dr. Siegel is the chair of the American Academy of Pediatrics' committee that is currently reworking the organization's guidelines on discipline, last updated in 1998.
Tuesday, December 25, 2012
Monday, December 24, 2012
A case study in the dangers of the Law of the Sea Treaty
Lawless at Sea. WSJ Editorial
A case study in the dangers of the Law of the Sea Treaty.
The Wall Street Journal, December 24, 2012, on page A12
http://online.wsj.com/article/SB10001424127887324407504578187523862827016.html
The curious case of the U.S. hedge fund, the Argentine ship and Ghana is getting curiouser, and now it has taken a turn against national sovereignty. That's the only reasonable conclusion after a bizarre ruling this month from the International Tribunal for the Law of the Sea in Hamburg.
The tribunal—who knew it existed?—ordered the Republic of Ghana to overrule a decision of its own judiciary that had enforced a U.S. court judgment. The Hamburg court is the misbegotten child of the 1982 United Nations Convention on the Law of the Sea. Sold as a treaty to ensure the free movement of people and goods on the high seas, it was rejected by Ronald Reagan as an effort to control and redistribute the resources of the world's oceans.
The U.S. never has ratified the treaty, despite a push by President Obama, and now the solons of Hamburg have demonstrated the wisdom of that decision. While debates on the treaty have centered around the powers a country might enjoy hundreds of miles off its coast, many analysts have simply assumed that nations would still exercise control over the waters just offshore.
Now the Hamburg court has trampled local law in a case involving a ship sitting in port, and every country is now on notice that a Hamburg court is claiming authority over its internal waters.
Specifically, Hamburg ordered Ghana to release a sailing ship owned by the Argentine navy. On October 2, a subsidiary of U.S. investment fund Elliott Management persuaded a Ghanaian judge to order the seizure of the vessel. The old-fashioned schooner, used to train cadets, was on a tour of West Africa.
U.S. hedge funds don't normally seize naval ships, but in this case Elliott and the Ghanaian court are on solid ground. Elliott owns Argentine bonds on which Buenos Aires has been refusing to pay since its 2001 default. Elliott argues that a contract is a contract, and a federal court in New York agrees. Argentina had freely decided to issue its debt in U.S. capital markets and had agreed in its bond contracts to waive the sovereign immunity that would normally prevent lenders from seizing things like three-masted frigates.
To his credit, Judge Richard Adjei-Frimpong of Ghana's commercial court noted that Argentina had specifically waived its immunity when borrowing the money and that under Ghanaian law the ship could therefore be attached by creditors with a valid U.S. judgment registered in Ghana. He ordered the ship held at port until Buenos Aires starts following the orders of the U.S. court.
But in its recent ruling, which ordered Ghana to release the ship by December 22, the Hamburg court claimed that international law requires immunity for the Argentine "warship," as if Argentina never waived immunity and as if this is an actual warship. On Wednesday, Ghana released the vessel, and the ship set sail from the port of Tema for its trans-Atlantic voyage.
So here we have a case in which a small African nation admirably tried to adhere to the rule of law. Yet it was bullied by a global tribunal serving the ends of Argentina, which has brazenly violated the law in refusing to pay its debts and defying Ghana's court order. The next time the Senate moves to ratify the Law of the Sea Treaty, Ghana should be exhibit A for opponents.
A case study in the dangers of the Law of the Sea Treaty.
The Wall Street Journal, December 24, 2012, on page A12
http://online.wsj.com/article/SB10001424127887324407504578187523862827016.html
The curious case of the U.S. hedge fund, the Argentine ship and Ghana is getting curiouser, and now it has taken a turn against national sovereignty. That's the only reasonable conclusion after a bizarre ruling this month from the International Tribunal for the Law of the Sea in Hamburg.
The tribunal—who knew it existed?—ordered the Republic of Ghana to overrule a decision of its own judiciary that had enforced a U.S. court judgment. The Hamburg court is the misbegotten child of the 1982 United Nations Convention on the Law of the Sea. Sold as a treaty to ensure the free movement of people and goods on the high seas, it was rejected by Ronald Reagan as an effort to control and redistribute the resources of the world's oceans.
The U.S. never has ratified the treaty, despite a push by President Obama, and now the solons of Hamburg have demonstrated the wisdom of that decision. While debates on the treaty have centered around the powers a country might enjoy hundreds of miles off its coast, many analysts have simply assumed that nations would still exercise control over the waters just offshore.
Now the Hamburg court has trampled local law in a case involving a ship sitting in port, and every country is now on notice that a Hamburg court is claiming authority over its internal waters.
Specifically, Hamburg ordered Ghana to release a sailing ship owned by the Argentine navy. On October 2, a subsidiary of U.S. investment fund Elliott Management persuaded a Ghanaian judge to order the seizure of the vessel. The old-fashioned schooner, used to train cadets, was on a tour of West Africa.
U.S. hedge funds don't normally seize naval ships, but in this case Elliott and the Ghanaian court are on solid ground. Elliott owns Argentine bonds on which Buenos Aires has been refusing to pay since its 2001 default. Elliott argues that a contract is a contract, and a federal court in New York agrees. Argentina had freely decided to issue its debt in U.S. capital markets and had agreed in its bond contracts to waive the sovereign immunity that would normally prevent lenders from seizing things like three-masted frigates.
To his credit, Judge Richard Adjei-Frimpong of Ghana's commercial court noted that Argentina had specifically waived its immunity when borrowing the money and that under Ghanaian law the ship could therefore be attached by creditors with a valid U.S. judgment registered in Ghana. He ordered the ship held at port until Buenos Aires starts following the orders of the U.S. court.
But in its recent ruling, which ordered Ghana to release the ship by December 22, the Hamburg court claimed that international law requires immunity for the Argentine "warship," as if Argentina never waived immunity and as if this is an actual warship. On Wednesday, Ghana released the vessel, and the ship set sail from the port of Tema for its trans-Atlantic voyage.
So here we have a case in which a small African nation admirably tried to adhere to the rule of law. Yet it was bullied by a global tribunal serving the ends of Argentina, which has brazenly violated the law in refusing to pay its debts and defying Ghana's court order. The next time the Senate moves to ratify the Law of the Sea Treaty, Ghana should be exhibit A for opponents.
Saturday, December 22, 2012
Novel Drug Approvals Strong in 2012
Novel Drug Approvals Strong in 2012
Dec 21, 2012
http://www.innovation.org/index.cfm/NewsCenter/Newsletters?NID=208
Over the past year, biopharmaceutical researchers' work has continued to yield innovative treatments to improve the lives of patients. In fiscal year (FY) 2012 (October 1, 2011 – September 30, 2012), the U.S. Food and Drug Administration (FDA) approved 35 new medicines, keeping pace with the previous fiscal year’s approvals and representing one of the highest levels of FDA approvals in recent years.[i] For the calendar year FDA is on track to approve more new medicines than any year since 2004.[ii]
A recent report from the FDA highlights the groundbreaking medicines to treat diseases ranging from the very common to the most rare. Some are the first treatment option available for a condition, others improve care for treatable diseases.
Notable approvals in FY 2012 include:
Building on these noteworthy approvals, we look to the new year where continued innovation is needed to leverage our growing understanding of the underpinnings of human disease and to harness the power of scientific research tools to discover and develop new medicines.
To learn more about the more than 3,200 new medicines in development visit http://www.innovation.org/index.cfm/FutureOfInnovation/NewMedicinesinDevelopment.
Dec 21, 2012
http://www.innovation.org/index.cfm/NewsCenter/Newsletters?NID=208
Over the past year, biopharmaceutical researchers' work has continued to yield innovative treatments to improve the lives of patients. In fiscal year (FY) 2012 (October 1, 2011 – September 30, 2012), the U.S. Food and Drug Administration (FDA) approved 35 new medicines, keeping pace with the previous fiscal year’s approvals and representing one of the highest levels of FDA approvals in recent years.[i] For the calendar year FDA is on track to approve more new medicines than any year since 2004.[ii]
A recent report from the FDA highlights the groundbreaking medicines to treat diseases ranging from the very common to the most rare. Some are the first treatment option available for a condition, others improve care for treatable diseases.
Notable approvals in FY 2012 include:
- A breakthrough personalized medicine for a rare form of cystic fibrosis;
- The first approved human cord blood product;
- A total of ten drugs to treat cancer, including the first treatments for advanced basal cell carcinoma and myelofibrosis and a targeted therapy for HER2-positive metastatic breast cancer;
- Nine treatments for rare diseases; and
- Important new therapies for HIV, macular degeneration, and meningitis.
Building on these noteworthy approvals, we look to the new year where continued innovation is needed to leverage our growing understanding of the underpinnings of human disease and to harness the power of scientific research tools to discover and develop new medicines.
To learn more about the more than 3,200 new medicines in development visit http://www.innovation.org/index.cfm/FutureOfInnovation/NewMedicinesinDevelopment.
Thursday, December 20, 2012
IMF's "European Union: Financial Sector Assessment," Preliminary Conclusions
"European Union: Financial Sector Assessment," Preliminary Conclusions by the IMF Staff
Press Release No. 12/500
Dec 20, 2012
http://www.imf.org/external/np/sec/pr/2012/pr12500.htm
A Financial Sector Assessment Program (FSAP) team led by the Monetary and Capital Markets Department of the International Monetary Fund (IMF) visited the European Union (EU) during November 27–December 13, 2012, to conduct a first-ever overall EU-wide assessment of the soundness and stability of the EU’s financial sector (EU FSAP). The EU FSAP builds on the 2011 European Financial Stability Exercise (EFFE) and on recent national FSAPs in EU member states.
The mission arrived at the following preliminary conclusions, which are subject to review and consultation with European institutions and national authorities:
The EU is facing great challenges, with continuing banking and sovereign debt crises in some parts of the Union. Significant progress has been made in recent months in laying the groundwork for strengthening the EU’s finacial sector. Implementation of policy decisions is needed. Although the breadth of the necessary agenda is significant, the details of the agreed frameworks need to be put in place to avoid delays in reaching consensus on key issues.
The present conjuncture makes management of the situation particularly difficult. The crisis reveals that handling financial system problems at the national level has been costly, calling for a Europe-wide approach. Interlinkages among the countries of the EU are particularly pronounced, and the need to provide more certainty on the health of banks has led to proposals for establishing a single supervisory mechanism (SSM) associated with the European Central Bank (ECB), initially for the euro area but potentially more widely in the EU.
The mission’s recommendations include the following:
Steps toward banking union
The December 13 EU Council agreement on the SSM is a strong achievement. It needs to be followed up with a structure that has as few gaps as possible, including with regard to the interaction of the SSM with national authorities under the prospective harmonized resolution and deposit guarantee arrangements. The SSM is only an initial step toward an effective Banking Union—actions toward a single resolution authority with common backstops, a deposit guarantee scheme, and a single rulebook, will also be essential.
Reinvigorating the single financial market in Europe
Harmonization of the regulatory structure across Europe needs to be expedited. EU institutions should accelerate passage of the Fourth Capital Requirements Directive, the Capital Requirements Regulation, the directives for harmonizing resolution and deposit insurance, as well as the regulatory regime for insurance Solvency II at the latest by mid–2013, thus enabling the issuance of single rulebooks for banking, insurance, and securities. Moreover, the European Commission should increase the resources and powers of the European Supervisory Authorities as needed to successfully achieve those mandates, while also enhancing their operational independence.
Improved and expanded stress testing
European stress testing needs to go beyond microprudential solvency, and increasingly serve to identify other vulnerabilities, such as liquidity risks and structural weaknesses. Confidence in the results of stress tests can be enhanced by an asset quality review, harmonized definitions of non-performing loans, and standardized loan classification, while maintaining a high level of disclosure. Experience suggests that the benefits of a bold approach outweigh the risks.
Splitting bank and sovereign risk
Measures must be pursued to separate bank and sovereign risk, including by making the ESM operational expeditiously for bank recapitalizations. Strong capital buffers will be important for the banks to perform their intermediating role effectively, to stimulate growth, and so safeguard financial stability.
Effective crisis management framework to minimize costs to taxpayers
Taxpayers’ potential liability following bank failures can be reduced by resolution regimes that include statutory bail-in powers. A common deposit insurance fund, preferably financed ex ante by levies on the banking sector, could also reduce the cost to taxpayers, even if it takes time to build up reserves. Granting preferential rights to depositor guarantee schemes in the creditor hierarchy could also reduce costs, particularly while guarantee funds are being built.
The European Commission and member states should assess the costs and benefits of the various plans for structural measures aimed at reducing banks’ complexity and potential taxpayer liability with a view towards formulating a coordinated proposal. If adopted, it would be important to ensure that such measures are complementary to the international reform agenda, not cause distortions in the single market, and not lead to regulatory arbitrage.
Lastly, the mission would like to extend their thanks to European institutions for close cooperation and assistance in completing this FSAP analysis.
Press Release No. 12/500
Dec 20, 2012
http://www.imf.org/external/np/sec/pr/2012/pr12500.htm
A Financial Sector Assessment Program (FSAP) team led by the Monetary and Capital Markets Department of the International Monetary Fund (IMF) visited the European Union (EU) during November 27–December 13, 2012, to conduct a first-ever overall EU-wide assessment of the soundness and stability of the EU’s financial sector (EU FSAP). The EU FSAP builds on the 2011 European Financial Stability Exercise (EFFE) and on recent national FSAPs in EU member states.
The mission arrived at the following preliminary conclusions, which are subject to review and consultation with European institutions and national authorities:
The EU is facing great challenges, with continuing banking and sovereign debt crises in some parts of the Union. Significant progress has been made in recent months in laying the groundwork for strengthening the EU’s finacial sector. Implementation of policy decisions is needed. Although the breadth of the necessary agenda is significant, the details of the agreed frameworks need to be put in place to avoid delays in reaching consensus on key issues.
The present conjuncture makes management of the situation particularly difficult. The crisis reveals that handling financial system problems at the national level has been costly, calling for a Europe-wide approach. Interlinkages among the countries of the EU are particularly pronounced, and the need to provide more certainty on the health of banks has led to proposals for establishing a single supervisory mechanism (SSM) associated with the European Central Bank (ECB), initially for the euro area but potentially more widely in the EU.
The mission’s recommendations include the following:
Steps toward banking union
The December 13 EU Council agreement on the SSM is a strong achievement. It needs to be followed up with a structure that has as few gaps as possible, including with regard to the interaction of the SSM with national authorities under the prospective harmonized resolution and deposit guarantee arrangements. The SSM is only an initial step toward an effective Banking Union—actions toward a single resolution authority with common backstops, a deposit guarantee scheme, and a single rulebook, will also be essential.
Reinvigorating the single financial market in Europe
Harmonization of the regulatory structure across Europe needs to be expedited. EU institutions should accelerate passage of the Fourth Capital Requirements Directive, the Capital Requirements Regulation, the directives for harmonizing resolution and deposit insurance, as well as the regulatory regime for insurance Solvency II at the latest by mid–2013, thus enabling the issuance of single rulebooks for banking, insurance, and securities. Moreover, the European Commission should increase the resources and powers of the European Supervisory Authorities as needed to successfully achieve those mandates, while also enhancing their operational independence.
Improved and expanded stress testing
European stress testing needs to go beyond microprudential solvency, and increasingly serve to identify other vulnerabilities, such as liquidity risks and structural weaknesses. Confidence in the results of stress tests can be enhanced by an asset quality review, harmonized definitions of non-performing loans, and standardized loan classification, while maintaining a high level of disclosure. Experience suggests that the benefits of a bold approach outweigh the risks.
Splitting bank and sovereign risk
Measures must be pursued to separate bank and sovereign risk, including by making the ESM operational expeditiously for bank recapitalizations. Strong capital buffers will be important for the banks to perform their intermediating role effectively, to stimulate growth, and so safeguard financial stability.
Effective crisis management framework to minimize costs to taxpayers
Taxpayers’ potential liability following bank failures can be reduced by resolution regimes that include statutory bail-in powers. A common deposit insurance fund, preferably financed ex ante by levies on the banking sector, could also reduce the cost to taxpayers, even if it takes time to build up reserves. Granting preferential rights to depositor guarantee schemes in the creditor hierarchy could also reduce costs, particularly while guarantee funds are being built.
The European Commission and member states should assess the costs and benefits of the various plans for structural measures aimed at reducing banks’ complexity and potential taxpayer liability with a view towards formulating a coordinated proposal. If adopted, it would be important to ensure that such measures are complementary to the international reform agenda, not cause distortions in the single market, and not lead to regulatory arbitrage.
Lastly, the mission would like to extend their thanks to European institutions for close cooperation and assistance in completing this FSAP analysis.
Wednesday, December 19, 2012
The future of financial globalisation - BIS Annual Conference
The future of financial globalisation
http://www.bis.org/publ/bppdf/bispap69.htm
The BIS 11th Annual Conference took place in Lucerne, Switzerland on 21-22 June 2012. The event brought together senior representatives of central banks and academic institutions, who exchanged views on the conference theme of "The future of financial globalisation". This volume contains the opening address of Stephen Cecchetti (Economic Adviser, BIS), a keynote address from Amartya Sen (Harvard University), and the available contributions of the policy panel on "Will financial globalisation survive?". The participants in the policy panel discussion, chaired by Jaime Caruana (General Manager, BIS), were Ravi Menon (Monetary Authority of Singapore), Jacob Frenkel (JP Morgan Chase International) and José Dario Uribe Escobar (Banco de la Repubblica).
The papers presented at the conference and the discussants' comments are released as BIS Working Papers 397 to 400:
1 Financial Globalisation and the Crisis, BIS Working Papers No 397
by Philip R. Lane
Comments by Dani Rodrik
The global financial crisis provides an important testing ground for the financial globalisation model. We ask three questions. First, did financial globalisation materially contribute to the origination of the global financial crisis? Second, once the crisis occurred, how did financial globalisation affect the incidence and propagation of the crisis across different countries? Third, how has financial globalisation affected the management of the crisis at national and international levels?
2 The great leveraging, BIS Working Papers No 398
by Alan M. Taylor
Comments by Barry Eichengreen and Dr. Y V Reddy
What can history can tell us about the relationship between the banking system, financial crises, the global economy, and economic performance? Evidence shows that in the advanced economies we live in a world that is more financialized than ever before as measured by importance of credit in the economy. I term this long-run evolution "The Great Leveraging" and present a ten-point examination of its main contours and implications.
3 Global safe assets, BIS Working Papers No 399
by Pierre-Olivier Gourinchas and Olivier Jeanne
Comments by Peter R Fisher and Fabrizio Saccomanni
Will the world run out of 'safe assets' and what would be the consequences on global financial stability? We argue that in a world with competing private stores of value, the global economic system tends to favor the riskiest ones. Privately produced stores of value cannot provide sufficient insurance against global shocks. Only public safe assets may, if appropriately supported by monetary policy. We draw some implications for the global financial system.
4 Capital Flows and the Risk-Taking Channel of Monetary Policy, BIS Working Papers No 400
by Valentina Bruno and Hyun Song Shin
Comments by Lars E O Svensson and John B Taylor
This paper examines the relationship between low interests maintained by advanced economy central banks and credit booms in emerging economies. In a model with crossborder banking, low funding rates increase credit supply, but the initial shock is amplified through the "risk-taking channel" of monetary policy where greater risk-taking interacts with dampened measured risks that are driven by currency appreciation to create a feedback loop. In an empirical investigation using VAR analysis, we find that expectations of lower short-term rates dampen measured risks and stimulate cross-border banking sector capital flows.
http://www.bis.org/publ/bppdf/bispap69.htm
The BIS 11th Annual Conference took place in Lucerne, Switzerland on 21-22 June 2012. The event brought together senior representatives of central banks and academic institutions, who exchanged views on the conference theme of "The future of financial globalisation". This volume contains the opening address of Stephen Cecchetti (Economic Adviser, BIS), a keynote address from Amartya Sen (Harvard University), and the available contributions of the policy panel on "Will financial globalisation survive?". The participants in the policy panel discussion, chaired by Jaime Caruana (General Manager, BIS), were Ravi Menon (Monetary Authority of Singapore), Jacob Frenkel (JP Morgan Chase International) and José Dario Uribe Escobar (Banco de la Repubblica).
The papers presented at the conference and the discussants' comments are released as BIS Working Papers 397 to 400:
1 Financial Globalisation and the Crisis, BIS Working Papers No 397
by Philip R. Lane
Comments by Dani Rodrik
The global financial crisis provides an important testing ground for the financial globalisation model. We ask three questions. First, did financial globalisation materially contribute to the origination of the global financial crisis? Second, once the crisis occurred, how did financial globalisation affect the incidence and propagation of the crisis across different countries? Third, how has financial globalisation affected the management of the crisis at national and international levels?
2 The great leveraging, BIS Working Papers No 398
by Alan M. Taylor
Comments by Barry Eichengreen and Dr. Y V Reddy
What can history can tell us about the relationship between the banking system, financial crises, the global economy, and economic performance? Evidence shows that in the advanced economies we live in a world that is more financialized than ever before as measured by importance of credit in the economy. I term this long-run evolution "The Great Leveraging" and present a ten-point examination of its main contours and implications.
3 Global safe assets, BIS Working Papers No 399
by Pierre-Olivier Gourinchas and Olivier Jeanne
Comments by Peter R Fisher and Fabrizio Saccomanni
Will the world run out of 'safe assets' and what would be the consequences on global financial stability? We argue that in a world with competing private stores of value, the global economic system tends to favor the riskiest ones. Privately produced stores of value cannot provide sufficient insurance against global shocks. Only public safe assets may, if appropriately supported by monetary policy. We draw some implications for the global financial system.
4 Capital Flows and the Risk-Taking Channel of Monetary Policy, BIS Working Papers No 400
by Valentina Bruno and Hyun Song Shin
Comments by Lars E O Svensson and John B Taylor
This paper examines the relationship between low interests maintained by advanced economy central banks and credit booms in emerging economies. In a model with crossborder banking, low funding rates increase credit supply, but the initial shock is amplified through the "risk-taking channel" of monetary policy where greater risk-taking interacts with dampened measured risks that are driven by currency appreciation to create a feedback loop. In an empirical investigation using VAR analysis, we find that expectations of lower short-term rates dampen measured risks and stimulate cross-border banking sector capital flows.
Tuesday, December 18, 2012
The rise of the older worker
The rise of the older worker, by Jim Hillage, research director
Institute for Employment Studies
December 12, 2012
http://www.employment-studies.co.uk/press/26_12.php
There are more people working in the UK today than at anytime in our history. Today's labour market statistics show another increase in the numbers employed taking the total to 29,600,000, up 40,000 on the previous quarter and 500,000 on a year ago.
Almost half of the rise has been among people aged 50 or over, with the fastest rate of increase occurring among those 65 or over, particularly among older women.
There are now almost a million people aged 65 or over in jobs, double the number ten years ago and up 13 per cent over the past year. Although these older workers comprise only three percent of the working population, they account for 20 per cent of the recent growth in employment. However this group has a very different labour market profile to the rest of the working population, particularly younger people, and there is no evidence to suggest older workers are gaining employment at the expense of the young generation. For example:
Institute for Employment Studies
December 12, 2012
http://www.employment-studies.co.uk/press/26_12.php
There are more people working in the UK today than at anytime in our history. Today's labour market statistics show another increase in the numbers employed taking the total to 29,600,000, up 40,000 on the previous quarter and 500,000 on a year ago.
Almost half of the rise has been among people aged 50 or over, with the fastest rate of increase occurring among those 65 or over, particularly among older women.
There are now almost a million people aged 65 or over in jobs, double the number ten years ago and up 13 per cent over the past year. Although these older workers comprise only three percent of the working population, they account for 20 per cent of the recent growth in employment. However this group has a very different labour market profile to the rest of the working population, particularly younger people, and there is no evidence to suggest older workers are gaining employment at the expense of the young generation. For example:
- 30 per cent of older workers (ie aged 65+) work in managerial and professional jobs, compared with only nine per cent of younger workers (aged 16 to 24). Conversely 34 per cent of young people work in sales, care and leisure jobs, compared with only 14 of their older counterparts.
- Nearly four in ten older workers are self-employed, compared with five per cent of younger workers.
- Most (69 per cent) of 65 plus year olds work part-time, compared with 39 per cent of young workers (and 27 per cent of all those in work).
‘There are a number of reasons why older workers are
staying on in work. In some cases employers want to retain their skills
and experience and encourage them to stay on, albeit on a part-time
basis, and most older employees have been working for their employer for
at least ten years and often in smaller workplaces. Conversely, some
older people have to stay in work as their pensions are inadequate and
it is interesting to note that employment of older workers is highest in
London and the South East, where living costs are highest. Finally,
there is also a growing group of self-employed who still want to retain
their work connections and interests.’
2012 © Institute for Employment Studies
---
Update: Long-Term Jobless Begin to Find Work. By Ben Casselman
The Wall Street Journal, January 11, 2013, on page A2
http://online.wsj.com/article/SB10001424127887323442804578233390580359994.html
The epidemic of long-term unemployment, one of the most pernicious and persistent challenges bedeviling the U.S. economy, is finally showing signs of easing.
The long-term unemployed—those out of work more than six months—made up 39.1% of all job seekers in December, according to the Labor Department, the first time that figure has dropped below 40% in more than three years.
[http://si.wsj.net/public/resources/images/P1-BJ893_ECONOM_NS_20130110190005.jpg]
The problem is far from solved. Nearly 4.8 million Americans have been out of work for more than six months, down from a peak of more than 6.5 million in 2010 but still a level without precedent since World War II.
The recent signs of progress mark a reversal from earlier in the recovery, when long-term unemployment proved resistant to improvement elsewhere in the labor market.
Total unemployment peaked in late 2009 and has dropped relatively steadily since then, while the number of long-term unemployed continued to rise into 2010 and then fell only slowly through much of 2011.
More recently, however, unemployment has fallen more quickly among the long-term jobless than among the broader population. In the past year, the number of long-term unemployed workers has dropped by 830,000, accounting for nearly the entire 843,000-person drop in overall joblessness.
When Michael Leahy lost his job as a manager at a Connecticut bank in 2010, the state had already shed about 10,000 financial-sector jobs in the previous two years and he had difficulty even landing an interview. By the time banks started hiring again, Mr. Leahy, now 59, had been out of work for more than a year and found himself getting passed over for candidates with jobs or ones who had been laid off more recently.
In July, however, Mr. Leahy was accepted into a program for the long-term unemployed run by the Work Place, a local workforce development agency. The program helped Mr. Leahy improve his resume and interviewing skills, and ultimately connected him with a local bank that was hiring.
Mr. Leahy began a new job in December. The chance to work again in his chosen field, he said, was more than worth the roughly 15% pay cut from his previous job.
"The thing that surprised me is this positive feeling I have every day of getting up in the morning and knowing I have a place to go to and a place where people are waiting for me," Mr. Leahy said.
[http://si.wsj.net/public/resources/images/NA-BU523B_ECONO_D_20130110211902.jpg]
The decline in long-term unemployment is good news for the broader economy. Many economists, including Federal Reserve Chairman Ben Bernanke, feared that many long-term unemployed workers would become permanently unemployable, creating a "structural" unemployment problem akin to what Europe suffered in the 1980s. But those fears are beginning to recede along with the ranks of the long-term unemployed.
"I don't think it's the case that the long-term unemployed are no longer employable," said Omair Sharif, an economist for RBS Securities Inc. "In fact, they've been the ones getting the jobs."
Not all the drop in long-term joblessness can be attributed to workers finding positions. In recent years, millions of Americans have given up looking for work, at which point they no longer count as "unemployed" in official statistics.
The recent drop in long-term unemployment, however, doesn't appear to be due to such dropouts. The number of people who aren't in the labor force but say they want a job has risen by only about 400,000 in the past year, while the number of Americans with jobs has risen by 2.4 million. That suggests at least much of the improvement is due to people finding jobs, not dropping out, Mr. Sharif said.
The average unemployed worker has now been looking for 38 weeks, down from a peak of nearly 41 weeks and the lowest level since early 2011.
The long-term unemployed still face grim odds of finding work. About 10% of long-term job seekers found work in April, the most recent month for which a detailed breakdown is available, compared with about a quarter of more recently laid-off workers. The ranks of the short-term jobless are more quickly refreshed by newly laid-off workers, however. As a result, the total number of short-term unemployed has fallen more slowly in recent months, even though individual workers still stand a far better chance of finding work early in their search.
And when the long-term unemployed do find work, their new jobs generally pay less than their old ones—often much less. A recent study from economists at Boston University, Columbia University and the Institute for Employment Research found that every additional year out of work reduces workers' wages when they do find a job by 11%.
Moreover, the recent gains have yet to reach the longest of the long-term unemployed: While the number of people unemployed for between six months and two years has fallen by 12% in the past year, the ranks of those jobless for three years or longer has barely budged at all.
Patricia Soprych, a 51-year-old widow in Skokie, Ill., recently got a job as a grocery-store cashier after more than a year of looking for work. But the job is part-time and pays the minimum wage, which she finds barely enough to make ends meet.
"You say the job market's getting better. Yeah, for these $8.25-an-hour jobs," Ms. Soprych said.
Economists cite several reasons for the drop in long-term unemployment. Most significant is the gradual healing of the broader labor market, which has seen the unemployment rate drop to 7.8% in December from a high of 10% in 2009. After initially benefiting mostly the more recently laid-off, that progress is now being felt among the longer-term jobless as well.
The gradual strengthening in the housing market could lead to more improvement. Many of the long-term unemployed are former construction workers who lost jobs when the housing bubble burst. Rising home building has yet to lead to a surge in construction employment, but many experts expect hiring to pick up in 2013.
Another possible factor behind the recent progress: the gradual reduction in emergency unemployment benefits available to laid-off workers. During the recession, Congress extended unemployment benefits to as long as 99 weeks in some states. Today, benefits last 73 weeks at most, and less time in many states. Research suggests that unemployment payments lead some recipients not to look as hard for jobs, and the loss of benefits may have pushed some job seekers to accept work they might otherwise have rejected, said Gary Burtless, an economist at the Brookings Institution.
---
Update: Long-Term Jobless Begin to Find Work. By Ben Casselman
The Wall Street Journal, January 11, 2013, on page A2
http://online.wsj.com/article/SB10001424127887323442804578233390580359994.html
The epidemic of long-term unemployment, one of the most pernicious and persistent challenges bedeviling the U.S. economy, is finally showing signs of easing.
The long-term unemployed—those out of work more than six months—made up 39.1% of all job seekers in December, according to the Labor Department, the first time that figure has dropped below 40% in more than three years.
[http://si.wsj.net/public/resources/images/P1-BJ893_ECONOM_NS_20130110190005.jpg]
The problem is far from solved. Nearly 4.8 million Americans have been out of work for more than six months, down from a peak of more than 6.5 million in 2010 but still a level without precedent since World War II.
The recent signs of progress mark a reversal from earlier in the recovery, when long-term unemployment proved resistant to improvement elsewhere in the labor market.
Total unemployment peaked in late 2009 and has dropped relatively steadily since then, while the number of long-term unemployed continued to rise into 2010 and then fell only slowly through much of 2011.
More recently, however, unemployment has fallen more quickly among the long-term jobless than among the broader population. In the past year, the number of long-term unemployed workers has dropped by 830,000, accounting for nearly the entire 843,000-person drop in overall joblessness.
When Michael Leahy lost his job as a manager at a Connecticut bank in 2010, the state had already shed about 10,000 financial-sector jobs in the previous two years and he had difficulty even landing an interview. By the time banks started hiring again, Mr. Leahy, now 59, had been out of work for more than a year and found himself getting passed over for candidates with jobs or ones who had been laid off more recently.
In July, however, Mr. Leahy was accepted into a program for the long-term unemployed run by the Work Place, a local workforce development agency. The program helped Mr. Leahy improve his resume and interviewing skills, and ultimately connected him with a local bank that was hiring.
Mr. Leahy began a new job in December. The chance to work again in his chosen field, he said, was more than worth the roughly 15% pay cut from his previous job.
"The thing that surprised me is this positive feeling I have every day of getting up in the morning and knowing I have a place to go to and a place where people are waiting for me," Mr. Leahy said.
[http://si.wsj.net/public/resources/images/NA-BU523B_ECONO_D_20130110211902.jpg]
The decline in long-term unemployment is good news for the broader economy. Many economists, including Federal Reserve Chairman Ben Bernanke, feared that many long-term unemployed workers would become permanently unemployable, creating a "structural" unemployment problem akin to what Europe suffered in the 1980s. But those fears are beginning to recede along with the ranks of the long-term unemployed.
"I don't think it's the case that the long-term unemployed are no longer employable," said Omair Sharif, an economist for RBS Securities Inc. "In fact, they've been the ones getting the jobs."
Not all the drop in long-term joblessness can be attributed to workers finding positions. In recent years, millions of Americans have given up looking for work, at which point they no longer count as "unemployed" in official statistics.
The recent drop in long-term unemployment, however, doesn't appear to be due to such dropouts. The number of people who aren't in the labor force but say they want a job has risen by only about 400,000 in the past year, while the number of Americans with jobs has risen by 2.4 million. That suggests at least much of the improvement is due to people finding jobs, not dropping out, Mr. Sharif said.
The average unemployed worker has now been looking for 38 weeks, down from a peak of nearly 41 weeks and the lowest level since early 2011.
The long-term unemployed still face grim odds of finding work. About 10% of long-term job seekers found work in April, the most recent month for which a detailed breakdown is available, compared with about a quarter of more recently laid-off workers. The ranks of the short-term jobless are more quickly refreshed by newly laid-off workers, however. As a result, the total number of short-term unemployed has fallen more slowly in recent months, even though individual workers still stand a far better chance of finding work early in their search.
And when the long-term unemployed do find work, their new jobs generally pay less than their old ones—often much less. A recent study from economists at Boston University, Columbia University and the Institute for Employment Research found that every additional year out of work reduces workers' wages when they do find a job by 11%.
Moreover, the recent gains have yet to reach the longest of the long-term unemployed: While the number of people unemployed for between six months and two years has fallen by 12% in the past year, the ranks of those jobless for three years or longer has barely budged at all.
Patricia Soprych, a 51-year-old widow in Skokie, Ill., recently got a job as a grocery-store cashier after more than a year of looking for work. But the job is part-time and pays the minimum wage, which she finds barely enough to make ends meet.
"You say the job market's getting better. Yeah, for these $8.25-an-hour jobs," Ms. Soprych said.
Economists cite several reasons for the drop in long-term unemployment. Most significant is the gradual healing of the broader labor market, which has seen the unemployment rate drop to 7.8% in December from a high of 10% in 2009. After initially benefiting mostly the more recently laid-off, that progress is now being felt among the longer-term jobless as well.
The gradual strengthening in the housing market could lead to more improvement. Many of the long-term unemployed are former construction workers who lost jobs when the housing bubble burst. Rising home building has yet to lead to a surge in construction employment, but many experts expect hiring to pick up in 2013.
Another possible factor behind the recent progress: the gradual reduction in emergency unemployment benefits available to laid-off workers. During the recession, Congress extended unemployment benefits to as long as 99 weeks in some states. Today, benefits last 73 weeks at most, and less time in many states. Research suggests that unemployment payments lead some recipients not to look as hard for jobs, and the loss of benefits may have pushed some job seekers to accept work they might otherwise have rejected, said Gary Burtless, an economist at the Brookings Institution.
Monday, December 17, 2012
Optimal Oil Production and the World Supply of Oil
Optimal Oil Production and the World Supply of Oil. By Nikolay Aleksandrov, Raphael Espinoza, and Lajos Gyurko
IMF Working Paper No. 12/294
Dec 2012
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40169.0
Summary: We study the optimal oil extraction strategy and the value of an oil field using a multiple real option approach. The numerical method is flexible enough to solve a model with several state variables, to discuss the effect of risk aversion, and to take into account uncertainty in the size of reserves. Optimal extraction in the baseline model is found to be volatile. If the oil producer is risk averse, production is more stable, but spare capacity is much higher than what is typically observed. We show that decisions are very sensitive to expectations on the equilibrium oil price using a mean reverting model of the oil price where the equilibrium price is also a random variable. Oil production was cut during the 2008–2009 crisis, and we find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries whose governments’ finances are less dependent on oil revenues. However, the net present value of a country’s oil reserves would be increased significantly (by 100 percent, in the most extreme case) if production was cut completely when prices fall below the country's threshold price. If several producers were to adopt such strategies, world oil prices would be higher but more stable.
Excerpts:
In this paper we investigate the optimal oil extraction strategy of a small oil producer facing uncertain oil prices. We use a multiple real option approach. Extracting a barrel of oil is similar to exercising a call option, i.e. oil production can be modeled as the right to produce a barrel of oil with the payoff of the strategy depending on uncertain oil prices. Production is optimal if the payoff of extracting oil exceeds the value of leaving oil under the ground for later extraction (the continuation value). For an oil producer, the optimal extraction path corresponds to the optimal strategy of an investor holding a multiple real option with finite number of exercises (finite reserves of oil). At any single point in time, the oil producer is also limited in the number of options he can exercise, because of capacity constraints.
Our first contribution is to present the solution to the stochastic optimization problem as an exercise rule for a multiple real option and to solve the problem numerically using the Monte Carlo methods developed by Longstaff and Schwartz (2001), Rogers (2002), and extended by Aleksandrov and Hambly (2010), Bender (2011), and Gyurko, Hambly and Witte (2011). The Monte Carlo regression method is flexible and it remains accurate even for high-dimensionality problems, i.e. when there are several state variables, for instance when the oil price process is driven by two state variables, when extraction costs are stochastic, or when the size of reserves is a random variable.
We solve the real option problem for a small producer (with reserves of 12 billion barels) and for a large producer (with reserves of 100 bilion barrels) and compute the threshold below which it is optimal to defer production. In our baseline model, we find that the small producer should only produce when prices are high (higher than US$73 per barrel at 2000 constant prices), whereas for the large producer, full production is optimal as soon as prices exceed US$39. Optimal production is found to be volatile given the stochastic process of oil prices. As a result, we show that the net present value of oil reserves would be substantially higher if countries were willing to vary production when oil prices change. This result has important implications for oil production policy and for the design of macroeconomic policies that depend on inter-temporal and inter-generational equity considerations. It also implies that the world supply curve would be very elastic to prices if all countries were optimizing production as in the baseline model—and as a result, prices would tend to be higher but much less volatile.
We investigate why observed production is not as volatile as what is predicted by the baseline calibration of the model. One possible explanation is that producers are risk averse. Under this assumption, production is accelerated and is more stable, but a risk averse producer should also maintain large spare capacity, a result at odds with the evidence that oil producers almost always produce at full capacity. A second potential explanation is that producers are uncertain about the actual size of their oil reserves. Using panel data on recoverable reserves, we show however that, historically, this uncertainty has been diminishing with time and therefore this explanation is incomplete, since even mature oil exporters maintain low spare capacity. A third explanation may be that the oil price process, and in particular the equilibrium oil price, is unknown to the decision makers. Indeed, the optimal reaction to an increase in oil prices depends on whether the price increase is perceived to be temporary or to reflect a permanent shift in prices. If shocks are known to be primarily temporary, production should increase in the face of oil price increases. But if shocks are thought to be accompanied by movements in the equilibrium price, the continuation value jumps at the same time as the immediate payoff from extracting oil. In that case an increase in price may not result in an increase in production. Faced with uncertain views on the optimal strategy, the safe decision might well be to remain prudent with changes in production.
In practice, world oil production is partially cut in the face of negative demand shocks. The last section of the paper investigates whether the reduction in oil production during the 2008–2009 crisis can be explained by the determinants predicted by the model. We find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries with government finances less dependent on oil revenues.
IMF Working Paper No. 12/294
Dec 2012
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40169.0
Summary: We study the optimal oil extraction strategy and the value of an oil field using a multiple real option approach. The numerical method is flexible enough to solve a model with several state variables, to discuss the effect of risk aversion, and to take into account uncertainty in the size of reserves. Optimal extraction in the baseline model is found to be volatile. If the oil producer is risk averse, production is more stable, but spare capacity is much higher than what is typically observed. We show that decisions are very sensitive to expectations on the equilibrium oil price using a mean reverting model of the oil price where the equilibrium price is also a random variable. Oil production was cut during the 2008–2009 crisis, and we find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries whose governments’ finances are less dependent on oil revenues. However, the net present value of a country’s oil reserves would be increased significantly (by 100 percent, in the most extreme case) if production was cut completely when prices fall below the country's threshold price. If several producers were to adopt such strategies, world oil prices would be higher but more stable.
Excerpts:
In this paper we investigate the optimal oil extraction strategy of a small oil producer facing uncertain oil prices. We use a multiple real option approach. Extracting a barrel of oil is similar to exercising a call option, i.e. oil production can be modeled as the right to produce a barrel of oil with the payoff of the strategy depending on uncertain oil prices. Production is optimal if the payoff of extracting oil exceeds the value of leaving oil under the ground for later extraction (the continuation value). For an oil producer, the optimal extraction path corresponds to the optimal strategy of an investor holding a multiple real option with finite number of exercises (finite reserves of oil). At any single point in time, the oil producer is also limited in the number of options he can exercise, because of capacity constraints.
Our first contribution is to present the solution to the stochastic optimization problem as an exercise rule for a multiple real option and to solve the problem numerically using the Monte Carlo methods developed by Longstaff and Schwartz (2001), Rogers (2002), and extended by Aleksandrov and Hambly (2010), Bender (2011), and Gyurko, Hambly and Witte (2011). The Monte Carlo regression method is flexible and it remains accurate even for high-dimensionality problems, i.e. when there are several state variables, for instance when the oil price process is driven by two state variables, when extraction costs are stochastic, or when the size of reserves is a random variable.
We solve the real option problem for a small producer (with reserves of 12 billion barels) and for a large producer (with reserves of 100 bilion barrels) and compute the threshold below which it is optimal to defer production. In our baseline model, we find that the small producer should only produce when prices are high (higher than US$73 per barrel at 2000 constant prices), whereas for the large producer, full production is optimal as soon as prices exceed US$39. Optimal production is found to be volatile given the stochastic process of oil prices. As a result, we show that the net present value of oil reserves would be substantially higher if countries were willing to vary production when oil prices change. This result has important implications for oil production policy and for the design of macroeconomic policies that depend on inter-temporal and inter-generational equity considerations. It also implies that the world supply curve would be very elastic to prices if all countries were optimizing production as in the baseline model—and as a result, prices would tend to be higher but much less volatile.
We investigate why observed production is not as volatile as what is predicted by the baseline calibration of the model. One possible explanation is that producers are risk averse. Under this assumption, production is accelerated and is more stable, but a risk averse producer should also maintain large spare capacity, a result at odds with the evidence that oil producers almost always produce at full capacity. A second potential explanation is that producers are uncertain about the actual size of their oil reserves. Using panel data on recoverable reserves, we show however that, historically, this uncertainty has been diminishing with time and therefore this explanation is incomplete, since even mature oil exporters maintain low spare capacity. A third explanation may be that the oil price process, and in particular the equilibrium oil price, is unknown to the decision makers. Indeed, the optimal reaction to an increase in oil prices depends on whether the price increase is perceived to be temporary or to reflect a permanent shift in prices. If shocks are known to be primarily temporary, production should increase in the face of oil price increases. But if shocks are thought to be accompanied by movements in the equilibrium price, the continuation value jumps at the same time as the immediate payoff from extracting oil. In that case an increase in price may not result in an increase in production. Faced with uncertain views on the optimal strategy, the safe decision might well be to remain prudent with changes in production.
In practice, world oil production is partially cut in the face of negative demand shocks. The last section of the paper investigates whether the reduction in oil production during the 2008–2009 crisis can be explained by the determinants predicted by the model. We find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries with government finances less dependent on oil revenues.
Gérard Depardieu's letter to the French Prime Minister
Gérard Depardieu's letter to the French Prime Minister
Dec 16, 2012
Minable, vous avez dit << minable >>? Comme c’est minable.
Je suis né en 1948, j’ai commencé à travailler à l’âge de 14 ans comme imprimeur, comme manutentionnaire puis comme artiste dramatique. J’ai toujours payé mes taxes et impôts quel qu’en soit le taux sous tous les gouvernements en place.
À aucun moment, je n’ai failli à mes devoirs. Les films historiques auxquels j’ai participé témoignent de mon amour de la France et de son histoire.
Des personnages plus illustres que moi ont été expatriés ou ont quitté notre pays.
Je n’ai malheureusement plus rien à faire ici, mais je continuerai à aimer les Français et ce public avec lequel j’ai partagé tant d’émotions!
Je pars parce que vous considérez que le succès, la création, le talent, en fait, la différence, doivent être sanctionnés.
Je ne demande pas à être approuvé, je pourrais au moins être respecté.
Tous ceux qui ont quitté la France n’ont pas été injuriés comme je le suis.
Je n’ai pas à justifier les raisons de mon choix, qui sont nombreuses et intimes.
Je pars, après avoir payé, en 2012, 85% d’impôt sur mes revenus. Mais je conserve l’esprit de cette France qui était belle et qui, j’espère, le restera.
Je vous rends mon passeport et ma Sécurité sociale, dont je ne me suis jamais servi. Nous n’avons plus la même patrie, je suis un vrai Européen, un citoyen du monde, comme mon père me l’a toujours inculqué.
Je trouve minable l’acharnement de la justice contre mon fils Guillaume jugé par des juges qui l’ont condamné tout gosse à trois ans de prison ferme pour 2 grammes d’héroïne, quand tant d’autres échappaient à la prison pour des faits autrement plus graves.
Je ne jette pas la pierre à tous ceux qui ont du cholestérol, de l’hypertension, du diabète ou trop d’alcool ou ceux qui s’endorment sur leur scooter : je suis un des leurs, comme vos chers médias aiment tant à le répéter.
Je n’ai jamais tué personne, je ne pense pas avoir démérité, j’ai payé 145 millions d’euros d’impôts en quarante-cinq ans, je fais travailler 80 personnes dans des entreprises qui ont été créées pour eux et qui sont gérées par eux.
Je ne suis ni à plaindre ni à vanter, mais je refuse le mot "minable".
Qui êtes-vous pour me juger ainsi, je vous le demande monsieur Ayrault, Premier ministre de monsieur Hollande, je vous le demande, qui êtes-vous? Malgré mes excès, mon appétit et mon amour de la vie, je suis un être libre, Monsieur, et je vais rester poli.
Gérard Depardieu
http://www.lejdd.fr/Politique/Actualite/Gerard-Depardieu-Je-rends-mon-passeport-581254
Dec 16, 2012
Minable, vous avez dit << minable >>? Comme c’est minable.
Je suis né en 1948, j’ai commencé à travailler à l’âge de 14 ans comme imprimeur, comme manutentionnaire puis comme artiste dramatique. J’ai toujours payé mes taxes et impôts quel qu’en soit le taux sous tous les gouvernements en place.
À aucun moment, je n’ai failli à mes devoirs. Les films historiques auxquels j’ai participé témoignent de mon amour de la France et de son histoire.
Des personnages plus illustres que moi ont été expatriés ou ont quitté notre pays.
Je n’ai malheureusement plus rien à faire ici, mais je continuerai à aimer les Français et ce public avec lequel j’ai partagé tant d’émotions!
Je pars parce que vous considérez que le succès, la création, le talent, en fait, la différence, doivent être sanctionnés.
Je ne demande pas à être approuvé, je pourrais au moins être respecté.
Tous ceux qui ont quitté la France n’ont pas été injuriés comme je le suis.
Je n’ai pas à justifier les raisons de mon choix, qui sont nombreuses et intimes.
Je pars, après avoir payé, en 2012, 85% d’impôt sur mes revenus. Mais je conserve l’esprit de cette France qui était belle et qui, j’espère, le restera.
Je vous rends mon passeport et ma Sécurité sociale, dont je ne me suis jamais servi. Nous n’avons plus la même patrie, je suis un vrai Européen, un citoyen du monde, comme mon père me l’a toujours inculqué.
Je trouve minable l’acharnement de la justice contre mon fils Guillaume jugé par des juges qui l’ont condamné tout gosse à trois ans de prison ferme pour 2 grammes d’héroïne, quand tant d’autres échappaient à la prison pour des faits autrement plus graves.
Je ne jette pas la pierre à tous ceux qui ont du cholestérol, de l’hypertension, du diabète ou trop d’alcool ou ceux qui s’endorment sur leur scooter : je suis un des leurs, comme vos chers médias aiment tant à le répéter.
Je n’ai jamais tué personne, je ne pense pas avoir démérité, j’ai payé 145 millions d’euros d’impôts en quarante-cinq ans, je fais travailler 80 personnes dans des entreprises qui ont été créées pour eux et qui sont gérées par eux.
Je ne suis ni à plaindre ni à vanter, mais je refuse le mot "minable".
Qui êtes-vous pour me juger ainsi, je vous le demande monsieur Ayrault, Premier ministre de monsieur Hollande, je vous le demande, qui êtes-vous? Malgré mes excès, mon appétit et mon amour de la vie, je suis un être libre, Monsieur, et je vais rester poli.
Gérard Depardieu
http://www.lejdd.fr/Politique/Actualite/Gerard-Depardieu-Je-rends-mon-passeport-581254
Sunday, December 16, 2012
Leszek Balcerowicz on America's mistakes and the better way to heal from a financial crisis
Leszek Balcerowicz: The Anti-Bernanke. By Matthew Kaminski
Leszek Balcerowicz, the man who saved Poland's economy, on America's mistakes and the better way to heal from a financial crisis.The Wall Street Journal, December 15, 2012, on page A15
http://online.wsj.com/article/SB10001424127887323981504578179310418828782.html
Warsaw
As an economic crisis manager, Leszek Balcerowicz has few peers. When communism fell in Europe, he pioneered "shock therapy" to slay hyperinflation and build a free market. In the late 1990s, he jammed a debt ceiling into his country's constitution, handcuffing future free spenders. When he was central-bank governor from 2001 to 2007, his hard-money policies avoided a credit boom and likely bust.
Poland was the only country in the European Union to avoid recession in 2009 and has been the fastest-growing EU economy since. Mr. Balcerowicz dwells little on this achievement. He sounds too busy in "battle"—his word—against bad policy.
"Most problems are the result of bad politics," he says. "In a democracy, you have lots of pressure groups to expand the state for reasons of money, ideology, etc. Even if they are angels in the government, which is not the case, if there is not a counterbalance in the form of proponents of limited government, then there will be a shift toward more statism and ultimately into stagnation and crisis."
Looking around the world, there is no shortage of questionable policies. A series of bailouts for Greece and others has saved the euro, but who knows for how long. EU leaders closed their summit in Brussels on Friday by deferring hard decisions on entrenching fiscal discipline and pro-growth policies. Across the Atlantic, Washington looks no closer to a "fiscal cliff" deal. And the Federal Reserve on Wednesday made a fourth foray into "quantitative easing" to keep real interest rates low by buying bonds and printing money.
As a former central banker, Mr. Balcerowicz struggles to find the appropriate word for Fed Chairman Ben Bernanke's latest invention: "Unprecedented," "a complete anathema," "more uncharted waters." He says such "unconventional" measures trap economies in an unvirtuous cycle. Bankers expect lower interest rates to spur growth. When that fails, as in Japan, they have no choice but to stick with easing.
"While the benefits of non-conventional [monetary] policies are short lived, the costs grow with time," he says. "The longer you practice these sorts of policies, the more difficult it is to exit it. Japan is trapped." Anemic Japan is the prime example, but now the U.S., Britain and potentially the European Central Bank are on the same road.
If he were in Mr. Bernanke's shoes, Mr. Balcerowicz says he'd rethink the link between easy money and economic growth. Over time, he says, lower interest rates and money printing presses harm the economy—though not necessarily or primarily through higher inflation.
First, Bernanke-style policies "weaken incentives for politicians to pursue structural reforms, including fiscal reforms," he says. "They can maintain large deficits at low current rates." It indulges the preference of many Western politicians for stimulus spending. It means they don't have to grapple as seriously with difficult choices, say, on Medicare.
Another unappreciated consequence of easy money, according to Mr. Balcerowicz, is the easing of pressure on the private economy to restructure. With low interest rates, large companies "can just refinance their loans," he says. Banks are happy to go along. Adjustments are delayed, markets distorted.
By his reading, the increasingly politicized Fed has in turn warped America's political discourse. The Lehman collapse did help clean up the financial sector, but not the government. Mr. Balcerowicz marvels that federal spending is still much higher than before the crisis, which isn't the case in Europe. "The greatest neglect in the U.S. is fiscal," he says. The dollar lets the U.S. "get a lot of cheap financing to finance bad policies," which is "dangerous to the world and perhaps dangerous to the U.S."
The Fed model is spreading. Earlier this fall, the European Central Bank announced an equally unprecedented plan to buy the bonds of distressed euro-zone countries. The bank, in essence, said it was willing to print any amount of euros to save the single currency.
Mr. Balcerowicz sides with the head of Germany's Bundesbank, the sole dissenter on the ECB board to the bond-buying scheme. He says it violates EU treaties. "And second, when the Fed is printing money, it is not buying bonds of distressed states like California—it's more general, it's spreading it," he says. "The ECB is engaging in regional policy. I don't think you can justify this."
"So they know better," says Mr. Balcerowicz, about the latest fads in central banking. "Risk premiums are too high—according to them! They are above the judgments of the markets. I remember this from socialism: 'We know better!'"
Mr. Balcerowicz, who is 65, was raised in a state-planned Poland. He got a doctorate in economics, worked briefly at the Communist Party's Institute of Marxism-Leninism, and advised the Solidarity trade union before the imposition of martial law in 1981. He came to prominence in 1989 as the father of the "Balcerowicz Plan." Overnight, prices were freed, subsidies were slashed and the zloty currency was made convertible. It was harsh medicine, but the Polish economy recovered faster than more gradual reformers in the old Soviet bloc.
Shock or no, Mr. Balcerowicz remains adamant that fixes are best implemented as quickly as possible. Europe's PIGS—Portugal, Italy, Greece, Spain—moved slowly. By contrast, Mr. Balcerowicz offers the BELLs: Bulgaria, Estonia, Latvia and Lithuania.
These EU countries went through a credit boom-bust after 2009. Their economies tanked, Latvia's alone by nearly 20% that year. Denied EU bailouts, these governments were forced to adopt harsher measures than Greece. Public spending was slashed, including for government salaries. The adjustment hurt but recovery came by 2010. The BELL GDP growth curves are V-shaped. The PIGS decline was less steep, but prolonged and worse over time.
The systemic changes in the BELLs took a while to work, yet Mr. Balcerowicz says the radical approach has another, short-run benefit. He calls it the "confidence effect." When markets saw governments implement the reforms, their borrowing costs dropped fast, while the yields for the PIGS kept rising.
Greece focused on raising taxes, putting off expenditure cuts. They got it backward, says Mr. Balcerowicz. "If you reduce through reform current spending, which is too excessive, you are far more likely to be successful with fiscal consolidation than if you increase taxes, which are already too high."
He adds: "Somehow the impression for many people is that increasing taxes is correct and reducing spending is incorrect. It is ideologically loaded." This applies in Greece, most of Europe and the current debate in the U.S.
During his various stints in government in Poland, the name Balcerowicz was often a curse word. In the 1990s, he was twice deputy prime minister and led the Freedom Union party. As a pol, his cool and abrasive style won him little love and cost him votes, even as his policies worked. At the central bank, he took lots of political heat for his tight monetary policy and wasn't asked to stay on after his term ended in 2007.
Mr. Balcerowicz admits he was an easy scapegoat. "People tend to personalize reforms. I don't mind. I take responsibility for the reforms I launched." He says he "understands politicians when they give in [on reform], but I do not accept it." It's up to the proponents of the free market to fight for their ideas and make politicians aware of the electoral cost of not reforming.
On bailouts, Mr. Balcerowicz strikes an agnostic note. They can mitigate a crisis—as long as they don't reduce the pressure to reform. The BELL vs. PIGS comparison suggests the bailouts have slowed reform, but he notes recent movement in southern Europe to deregulate labor markets, privatize and cut spending—in other words, serious steps to spur growth.
"Once the euro has been created," Mr. Balcerowicz says, "it's worth keeping it." The single currency is no different than the gold standard, "which worked pretty well," he says. In both cases, member countries have to keep their budget deficits in check and labor markets flexible to stay competitive. Which makes him cautiously optimistic on the euro.
"It's important to remember that six, eight, 10 years ago Germany was like Italy, and it reformed," he says. Before Berlin pushed through an overhaul of the welfare state, Germany was called the "sick man of Europe." "There are no European solutions for the Italians' problem. But there are Italian solutions. Not bailouts, but better policies."
Why do some countries change for the better in a crisis and others don't? Mr. Balcerowicz puts the "popular interpretation of the root causes" of the crisis high on the list.
"There is a lot of intellectual confusion," he says. "For example, the financial crisis has happened in the financial sector. Therefore the reason for the crisis must be something in the financial sector. Sounds logical, but it's not. It's like saying the reason you sneeze through your nose is your nose."
The markets didn't "fail" but were distorted by bad policies. He mentions "too big to fail," the Fed's easy money, Fannie Mae FNMA 0.00% and the housing boom. Those are the hard explanations. "Many people like cheap moralizing," he says. "What a pleasant feeling to condemn greed. It's popular."
"Generally in the West, intellectuals like to blame the markets," he says. "There is a widespread belief that crises occur in capitalism mostly. The word crisis is associated with the word capitalism. While if you look in a comparative way, you see that the largest economic and also human catastrophes happen in non-market systems, when there's a heavy concentration of political power—Stalin, Mao, the Khmer Rouge, many other cases."
Going back to the 19th century, industrializing economies recovered best after a crisis with no or limited intervention. Yet Keynesians continue to insist that only the state can compensate for the flaws of the market, he says.
"This idea that markets tend to fall into self-perpetuating crises and only wise government can extract the country out of this crisis implicitly assumes that you have two kinds of people. Normal people who are operating in the markets, and better people who work for the state. They deny human nature."
Gathering the essays for his new collection, "Discovering Freedom," Mr. Balcerowicz realized that "you don't need to read modern economists" to understand what's happening today. Hume, Smith, Hayek and Tocqueville are all there. He loves Madison's "angels" quote: "If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary."
This Polish academic sounds like he might not feel out of place at a U.S. tea party rally. He takes to the idea.
"Their essence is very good. Liberal media try to demonize them, but their instincts are good. Limited government. This is classic. This is James Madison. This is ultra-American! Absolutely."
Mr. Kaminski is a member of the Journal's editorial board.
Leszek Balcerowicz, the man who saved Poland's economy, on America's mistakes and the better way to heal from a financial crisis.The Wall Street Journal, December 15, 2012, on page A15
http://online.wsj.com/article/SB10001424127887323981504578179310418828782.html
Warsaw
As an economic crisis manager, Leszek Balcerowicz has few peers. When communism fell in Europe, he pioneered "shock therapy" to slay hyperinflation and build a free market. In the late 1990s, he jammed a debt ceiling into his country's constitution, handcuffing future free spenders. When he was central-bank governor from 2001 to 2007, his hard-money policies avoided a credit boom and likely bust.
Poland was the only country in the European Union to avoid recession in 2009 and has been the fastest-growing EU economy since. Mr. Balcerowicz dwells little on this achievement. He sounds too busy in "battle"—his word—against bad policy.
"Most problems are the result of bad politics," he says. "In a democracy, you have lots of pressure groups to expand the state for reasons of money, ideology, etc. Even if they are angels in the government, which is not the case, if there is not a counterbalance in the form of proponents of limited government, then there will be a shift toward more statism and ultimately into stagnation and crisis."
Looking around the world, there is no shortage of questionable policies. A series of bailouts for Greece and others has saved the euro, but who knows for how long. EU leaders closed their summit in Brussels on Friday by deferring hard decisions on entrenching fiscal discipline and pro-growth policies. Across the Atlantic, Washington looks no closer to a "fiscal cliff" deal. And the Federal Reserve on Wednesday made a fourth foray into "quantitative easing" to keep real interest rates low by buying bonds and printing money.
As a former central banker, Mr. Balcerowicz struggles to find the appropriate word for Fed Chairman Ben Bernanke's latest invention: "Unprecedented," "a complete anathema," "more uncharted waters." He says such "unconventional" measures trap economies in an unvirtuous cycle. Bankers expect lower interest rates to spur growth. When that fails, as in Japan, they have no choice but to stick with easing.
"While the benefits of non-conventional [monetary] policies are short lived, the costs grow with time," he says. "The longer you practice these sorts of policies, the more difficult it is to exit it. Japan is trapped." Anemic Japan is the prime example, but now the U.S., Britain and potentially the European Central Bank are on the same road.
If he were in Mr. Bernanke's shoes, Mr. Balcerowicz says he'd rethink the link between easy money and economic growth. Over time, he says, lower interest rates and money printing presses harm the economy—though not necessarily or primarily through higher inflation.
First, Bernanke-style policies "weaken incentives for politicians to pursue structural reforms, including fiscal reforms," he says. "They can maintain large deficits at low current rates." It indulges the preference of many Western politicians for stimulus spending. It means they don't have to grapple as seriously with difficult choices, say, on Medicare.
Another unappreciated consequence of easy money, according to Mr. Balcerowicz, is the easing of pressure on the private economy to restructure. With low interest rates, large companies "can just refinance their loans," he says. Banks are happy to go along. Adjustments are delayed, markets distorted.
By his reading, the increasingly politicized Fed has in turn warped America's political discourse. The Lehman collapse did help clean up the financial sector, but not the government. Mr. Balcerowicz marvels that federal spending is still much higher than before the crisis, which isn't the case in Europe. "The greatest neglect in the U.S. is fiscal," he says. The dollar lets the U.S. "get a lot of cheap financing to finance bad policies," which is "dangerous to the world and perhaps dangerous to the U.S."
The Fed model is spreading. Earlier this fall, the European Central Bank announced an equally unprecedented plan to buy the bonds of distressed euro-zone countries. The bank, in essence, said it was willing to print any amount of euros to save the single currency.
Mr. Balcerowicz sides with the head of Germany's Bundesbank, the sole dissenter on the ECB board to the bond-buying scheme. He says it violates EU treaties. "And second, when the Fed is printing money, it is not buying bonds of distressed states like California—it's more general, it's spreading it," he says. "The ECB is engaging in regional policy. I don't think you can justify this."
"So they know better," says Mr. Balcerowicz, about the latest fads in central banking. "Risk premiums are too high—according to them! They are above the judgments of the markets. I remember this from socialism: 'We know better!'"
Mr. Balcerowicz, who is 65, was raised in a state-planned Poland. He got a doctorate in economics, worked briefly at the Communist Party's Institute of Marxism-Leninism, and advised the Solidarity trade union before the imposition of martial law in 1981. He came to prominence in 1989 as the father of the "Balcerowicz Plan." Overnight, prices were freed, subsidies were slashed and the zloty currency was made convertible. It was harsh medicine, but the Polish economy recovered faster than more gradual reformers in the old Soviet bloc.
Shock or no, Mr. Balcerowicz remains adamant that fixes are best implemented as quickly as possible. Europe's PIGS—Portugal, Italy, Greece, Spain—moved slowly. By contrast, Mr. Balcerowicz offers the BELLs: Bulgaria, Estonia, Latvia and Lithuania.
These EU countries went through a credit boom-bust after 2009. Their economies tanked, Latvia's alone by nearly 20% that year. Denied EU bailouts, these governments were forced to adopt harsher measures than Greece. Public spending was slashed, including for government salaries. The adjustment hurt but recovery came by 2010. The BELL GDP growth curves are V-shaped. The PIGS decline was less steep, but prolonged and worse over time.
The systemic changes in the BELLs took a while to work, yet Mr. Balcerowicz says the radical approach has another, short-run benefit. He calls it the "confidence effect." When markets saw governments implement the reforms, their borrowing costs dropped fast, while the yields for the PIGS kept rising.
Greece focused on raising taxes, putting off expenditure cuts. They got it backward, says Mr. Balcerowicz. "If you reduce through reform current spending, which is too excessive, you are far more likely to be successful with fiscal consolidation than if you increase taxes, which are already too high."
He adds: "Somehow the impression for many people is that increasing taxes is correct and reducing spending is incorrect. It is ideologically loaded." This applies in Greece, most of Europe and the current debate in the U.S.
During his various stints in government in Poland, the name Balcerowicz was often a curse word. In the 1990s, he was twice deputy prime minister and led the Freedom Union party. As a pol, his cool and abrasive style won him little love and cost him votes, even as his policies worked. At the central bank, he took lots of political heat for his tight monetary policy and wasn't asked to stay on after his term ended in 2007.
Mr. Balcerowicz admits he was an easy scapegoat. "People tend to personalize reforms. I don't mind. I take responsibility for the reforms I launched." He says he "understands politicians when they give in [on reform], but I do not accept it." It's up to the proponents of the free market to fight for their ideas and make politicians aware of the electoral cost of not reforming.
On bailouts, Mr. Balcerowicz strikes an agnostic note. They can mitigate a crisis—as long as they don't reduce the pressure to reform. The BELL vs. PIGS comparison suggests the bailouts have slowed reform, but he notes recent movement in southern Europe to deregulate labor markets, privatize and cut spending—in other words, serious steps to spur growth.
"Once the euro has been created," Mr. Balcerowicz says, "it's worth keeping it." The single currency is no different than the gold standard, "which worked pretty well," he says. In both cases, member countries have to keep their budget deficits in check and labor markets flexible to stay competitive. Which makes him cautiously optimistic on the euro.
"It's important to remember that six, eight, 10 years ago Germany was like Italy, and it reformed," he says. Before Berlin pushed through an overhaul of the welfare state, Germany was called the "sick man of Europe." "There are no European solutions for the Italians' problem. But there are Italian solutions. Not bailouts, but better policies."
Why do some countries change for the better in a crisis and others don't? Mr. Balcerowicz puts the "popular interpretation of the root causes" of the crisis high on the list.
"There is a lot of intellectual confusion," he says. "For example, the financial crisis has happened in the financial sector. Therefore the reason for the crisis must be something in the financial sector. Sounds logical, but it's not. It's like saying the reason you sneeze through your nose is your nose."
The markets didn't "fail" but were distorted by bad policies. He mentions "too big to fail," the Fed's easy money, Fannie Mae FNMA 0.00% and the housing boom. Those are the hard explanations. "Many people like cheap moralizing," he says. "What a pleasant feeling to condemn greed. It's popular."
"Generally in the West, intellectuals like to blame the markets," he says. "There is a widespread belief that crises occur in capitalism mostly. The word crisis is associated with the word capitalism. While if you look in a comparative way, you see that the largest economic and also human catastrophes happen in non-market systems, when there's a heavy concentration of political power—Stalin, Mao, the Khmer Rouge, many other cases."
Going back to the 19th century, industrializing economies recovered best after a crisis with no or limited intervention. Yet Keynesians continue to insist that only the state can compensate for the flaws of the market, he says.
"This idea that markets tend to fall into self-perpetuating crises and only wise government can extract the country out of this crisis implicitly assumes that you have two kinds of people. Normal people who are operating in the markets, and better people who work for the state. They deny human nature."
Gathering the essays for his new collection, "Discovering Freedom," Mr. Balcerowicz realized that "you don't need to read modern economists" to understand what's happening today. Hume, Smith, Hayek and Tocqueville are all there. He loves Madison's "angels" quote: "If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary."
This Polish academic sounds like he might not feel out of place at a U.S. tea party rally. He takes to the idea.
"Their essence is very good. Liberal media try to demonize them, but their instincts are good. Limited government. This is classic. This is James Madison. This is ultra-American! Absolutely."
Mr. Kaminski is a member of the Journal's editorial board.
Japan - Major political parties and their pledges
Japan - Major political parties and their pledges
Japan Today, Dec 16, 2012
http://www.japantoday.com/category/politics/view/major-political-parties-and-their-pledges
TOKYO — A dozen political parties and many independents will contest Sunday’s election. Here is a list of major parties and their campaign promises:
The Democratic Party of Japan is a centrist group that has governed Japan since 2009 after ousting long-governing conservatives from power.
Prime Minister Yoshihiko Noda serves as party president.
The DPJ is promising to:
—phase out nuclear power generation by the end of the 2030s.
—promote the Trans-Pacific Partnership free trade deal, along with a trilateral free trade pact with China and South Korea.
—work with the Bank of Japan to try to end deflation in fiscal 2014.
—boost measures to protect Japanese territory, including islands in disputes with neighbouring nations.
The Liberal Democratic Party is Japan’s main conservative force which ruled the nation almost continuously from 1955 to 2009.
LDP president Shinzo Abe is a hawkish ideologue who was prime minister in 2006-7.
The LDP has pledged to:
—review all nuclear reactors in three years to decide whether to restart them.
—decide within 10 years Japan’s new energy mix, which may or may not include nuclear power generation.
—achieve three-percent nominal economic growth.
—set an inflation target of two percent and may review the Bank of Japan law to push the central bank to take further easing measures.
—strengthen Japan’s administration of islands that China claims.
—expand the Self Defense Forces and rename them National Defense Forces.
—cut more than 2.8 trillion yen in public spending by reducing welfare and government personnel costs.
—conduct a 10-year program to make infrastructure disaster-resistant.
The Japan Restoration Party was launched this year, originally under reformist Osaka mayor Toru Hashimoto. It is now headed by controversial ex-governor of Tokyo Shintaro Ishihara.
The JRP was born out of a coalition of small parties with varying ideological backgrounds, and is united in its aim to take power from established parties.
The JRP has promised to:
—draft a new constitution to replace the current one written by the United States shortly after World War II.
—achieve three percent nominal growth and two percent inflation.
—join negotiations for the Trans-Pacific Partnership free trade talks.
—reduce parliamentarians’ salary and seats.
—end reliance on nuclear power.
—aggressively push for decentralisation of power.
The Japan Future Party was launched after the election was called in mid-November. It is headed by Shiga prefecture governor Yukiko Kada on an anti-nuclear platform.
Many pundits say Kada is a figurehead for a party that is really run by veteran backroom deal-maker Ichiro Ozawa.
Among its pledges, the party promises to:
—end nuclear power generation in 10 years.
—stop the consumption tax hike.
—offer special allowances to families with children.
The New Komeito is a party of lay Buddhists that enjoys a narrow but loyal support base. It advocates pacifist policies and social programs to help the vulnerable.
It formed a coalition government with the LDP between 1999 and 2009 and has worked with it in opposition.
The party has pledged to:
—phase out nuclear power “as soon as possible” by not approving plans to build new reactors.
—expand scholarships for high school and college students and freeze fees for pre-schools and nursery schools.
—get Japan out of deflation within two years, achieving nominal 3-4 percent growth.
—boost diplomacy to protect Japanese territory including islands in disputes with neighbouring nations.
—seeks to build a Free Trade Area of Asia-Pacific (FTAAP) through making free trade deals.
© 2012 AFP
Japan Today, Dec 16, 2012
http://www.japantoday.com/category/politics/view/major-political-parties-and-their-pledges
TOKYO — A dozen political parties and many independents will contest Sunday’s election. Here is a list of major parties and their campaign promises:
The Democratic Party of Japan is a centrist group that has governed Japan since 2009 after ousting long-governing conservatives from power.
Prime Minister Yoshihiko Noda serves as party president.
The DPJ is promising to:
—phase out nuclear power generation by the end of the 2030s.
—promote the Trans-Pacific Partnership free trade deal, along with a trilateral free trade pact with China and South Korea.
—work with the Bank of Japan to try to end deflation in fiscal 2014.
—boost measures to protect Japanese territory, including islands in disputes with neighbouring nations.
The Liberal Democratic Party is Japan’s main conservative force which ruled the nation almost continuously from 1955 to 2009.
LDP president Shinzo Abe is a hawkish ideologue who was prime minister in 2006-7.
The LDP has pledged to:
—review all nuclear reactors in three years to decide whether to restart them.
—decide within 10 years Japan’s new energy mix, which may or may not include nuclear power generation.
—achieve three-percent nominal economic growth.
—set an inflation target of two percent and may review the Bank of Japan law to push the central bank to take further easing measures.
—strengthen Japan’s administration of islands that China claims.
—expand the Self Defense Forces and rename them National Defense Forces.
—cut more than 2.8 trillion yen in public spending by reducing welfare and government personnel costs.
—conduct a 10-year program to make infrastructure disaster-resistant.
The Japan Restoration Party was launched this year, originally under reformist Osaka mayor Toru Hashimoto. It is now headed by controversial ex-governor of Tokyo Shintaro Ishihara.
The JRP was born out of a coalition of small parties with varying ideological backgrounds, and is united in its aim to take power from established parties.
The JRP has promised to:
—draft a new constitution to replace the current one written by the United States shortly after World War II.
—achieve three percent nominal growth and two percent inflation.
—join negotiations for the Trans-Pacific Partnership free trade talks.
—reduce parliamentarians’ salary and seats.
—end reliance on nuclear power.
—aggressively push for decentralisation of power.
The Japan Future Party was launched after the election was called in mid-November. It is headed by Shiga prefecture governor Yukiko Kada on an anti-nuclear platform.
Many pundits say Kada is a figurehead for a party that is really run by veteran backroom deal-maker Ichiro Ozawa.
Among its pledges, the party promises to:
—end nuclear power generation in 10 years.
—stop the consumption tax hike.
—offer special allowances to families with children.
The New Komeito is a party of lay Buddhists that enjoys a narrow but loyal support base. It advocates pacifist policies and social programs to help the vulnerable.
It formed a coalition government with the LDP between 1999 and 2009 and has worked with it in opposition.
The party has pledged to:
—phase out nuclear power “as soon as possible” by not approving plans to build new reactors.
—expand scholarships for high school and college students and freeze fees for pre-schools and nursery schools.
—get Japan out of deflation within two years, achieving nominal 3-4 percent growth.
—boost diplomacy to protect Japanese territory including islands in disputes with neighbouring nations.
—seeks to build a Free Trade Area of Asia-Pacific (FTAAP) through making free trade deals.
© 2012 AFP
Saturday, December 15, 2012
Principles for financial market infrastructure: disclosure framework and assessment methodology
Principles for financial market infrastructure: disclosure framework and assessment methodology
December 2012
http://www.bis.org/publ/cpss106.htm
The Committee on Payment and Settlement Systems (CPSS) and the
International Organization of Securities Commissions (IOSCO) have
published a disclosure framework and assessment methodology for their Principles for financial market infrastructures (PFMIs), the new international standards for financial market infrastructures:
The disclosure framework and the assessment methodology promote consistent disclosures of information by FMIs and consistent assessments by international financial institutions and national authorities. The assessment methodology is primarily intended for use by external assessors at the international level, in particular the International Monetary Fund and the World Bank. It also provides a baseline for national authorities to assess observance of the principles by the FMIs under their oversight or supervision and to self-assess the way they discharge their own responsibilities as regulators, supervisors, and overseers.
The PFMIs are new international standards for payment, clearing and settlement systems, including central counterparties, that were published in April as Principles for financial market infrastructures (PFMIs). The PFMIs are designed to ensure that the infrastructure supporting global financial markets is robust and thus well placed to withstand financial shocks.
December 2012
http://www.bis.org/publ/cpss106.htm
- the disclosure framework is intended to promote consistent and comprehensive public disclosure by FMIs in line with the requirements of the PFMIs; and
- the assessment methodology provides guidance for monitoring and assessing observance with the PFMIs.
The disclosure framework and the assessment methodology promote consistent disclosures of information by FMIs and consistent assessments by international financial institutions and national authorities. The assessment methodology is primarily intended for use by external assessors at the international level, in particular the International Monetary Fund and the World Bank. It also provides a baseline for national authorities to assess observance of the principles by the FMIs under their oversight or supervision and to self-assess the way they discharge their own responsibilities as regulators, supervisors, and overseers.
The PFMIs are new international standards for payment, clearing and settlement systems, including central counterparties, that were published in April as Principles for financial market infrastructures (PFMIs). The PFMIs are designed to ensure that the infrastructure supporting global financial markets is robust and thus well placed to withstand financial shocks.
Tuesday, December 11, 2012
The financial cycle and macroeconomics: What have we learnt?
The financial cycle and macroeconomics: What have we learnt? By Claudio Borio
BIS Working Papers No 395
December 2012
http://www.bis.org/publ/work395.htm
It is high time we rediscovered the role of the financial cycle in macroeconomics. In the environment that has prevailed for at least three decades now, it is not possible to understand business fluctuations and the corresponding analytical and policy challenges without understanding the financial cycle. This calls for a rethink of modelling strategies and for significant adjustments to macroeconomic policies. This essay highlights the stylised empirical features of the financial cycle, conjectures as to what it may take to model it satisfactorily, and considers its policy implications. In the discussion of policy, the essay pays special attention to the bust phase, which is less well explored and raises much more controversial issues.
JEL classification: E30, E44, E50, G10, G20, G28, H30, H50
Keywords: financial cycle, business cycle, medium term, financial crises, monetary economy, balance sheet recessions, balance sheet repair
BIS Working Papers No 395
December 2012
http://www.bis.org/publ/work395.htm
It is high time we rediscovered the role of the financial cycle in macroeconomics. In the environment that has prevailed for at least three decades now, it is not possible to understand business fluctuations and the corresponding analytical and policy challenges without understanding the financial cycle. This calls for a rethink of modelling strategies and for significant adjustments to macroeconomic policies. This essay highlights the stylised empirical features of the financial cycle, conjectures as to what it may take to model it satisfactorily, and considers its policy implications. In the discussion of policy, the essay pays special attention to the bust phase, which is less well explored and raises much more controversial issues.
JEL classification: E30, E44, E50, G10, G20, G28, H30, H50
Keywords: financial cycle, business cycle, medium term, financial crises, monetary economy, balance sheet recessions, balance sheet repair
Sunday, December 9, 2012
Mobilizing Resources, Building Coalitions: Local Power in Indonesia
Mobilizing Resources, Building Coalitions: Local Power in Indonesia, by Ryan Tans
Honolulu: East-West Center, 2012
Policy Studies, No. 64
ISBN: 978-0-86638-220-5
http://www.eastwestcenter.org/publications/mobilizing-resources-building-coalitions-local-power-in-indonesia
What have been the local political consequences of Indonesia's decentralization and electoral reforms? Some recent scholarship has emphasized continuity with Suharto's New Order, arguing that under the new rules, old elites have used money and intimidation to capture elected office. Studies detail the widespread practice of "money politics," in which candidates exchange patronage for support from voters and parties. Yet significant variation characterizes Indonesia's local politics, which suggests the need for an approach that differentiates contrasting power arrangements.
This study of three districts in North Sumatra province compares local politicians according to their institutional resource bases and coalitional strategies. Even if all practice money politics, they form different coalition types that depend on diverse institutions for political resources. The three ideal types of coalitions are political mafias, party machines, and mobilizing coalitions. Political mafias have a resource base limited to local state institutions and businesses; party machines bridge local and supra-local institutions; and mobilizing coalitions incorporate social organizations and groups of voters. Due to contrasting resource bases, the coalitions have different strategic option "menus," and they may experiment with various political tactics.
The framework developed here plausibly applies in other Indonesian districts to the extent that similar resource bases--namely local state institutions, party networks, and strong social and business organizations--are available to elites in other places.
About the Author: Ryan Tans is a doctoral student in political science at Emory University. Previously, he received a Master of Arts in Southeast Asian Studies from the National University of Singapore.
Honolulu: East-West Center, 2012
Policy Studies, No. 64
ISBN: 978-0-86638-220-5
http://www.eastwestcenter.org/publications/mobilizing-resources-building-coalitions-local-power-in-indonesia
What have been the local political consequences of Indonesia's decentralization and electoral reforms? Some recent scholarship has emphasized continuity with Suharto's New Order, arguing that under the new rules, old elites have used money and intimidation to capture elected office. Studies detail the widespread practice of "money politics," in which candidates exchange patronage for support from voters and parties. Yet significant variation characterizes Indonesia's local politics, which suggests the need for an approach that differentiates contrasting power arrangements.
This study of three districts in North Sumatra province compares local politicians according to their institutional resource bases and coalitional strategies. Even if all practice money politics, they form different coalition types that depend on diverse institutions for political resources. The three ideal types of coalitions are political mafias, party machines, and mobilizing coalitions. Political mafias have a resource base limited to local state institutions and businesses; party machines bridge local and supra-local institutions; and mobilizing coalitions incorporate social organizations and groups of voters. Due to contrasting resource bases, the coalitions have different strategic option "menus," and they may experiment with various political tactics.
The framework developed here plausibly applies in other Indonesian districts to the extent that similar resource bases--namely local state institutions, party networks, and strong social and business organizations--are available to elites in other places.
About the Author: Ryan Tans is a doctoral student in political science at Emory University. Previously, he received a Master of Arts in Southeast Asian Studies from the National University of Singapore.
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