Holy War! Researchers say EEs have a 'terrorist mindset'
Junko Yoshida
(01/28/2008 10:07 AM EST)
URL: http://www.eetimes.com/showArticle.jhtml?articleID=205920319
MANHASSET, N.Y. " Is there a thread that ties engineers to Islamic terrorism?
There certainly is, according to Diego Gambetta and Steffen Hertog at Oxford University, who recently published a paper titled, "Engineers of Jihad." The authors call the link to terrorism "the engineer's mindset."
The sociology paper published last November, which has been making rounds over the Internet and was recently picked up by The Atlantic, uses illustrative statistics and qualitative data to conclude that there is a strong relationship between an engineering background and involvement in a variety of Islamic terrorist groups. The authors have found that graduates in subjects such as science, engineering, and medicine are strongly overrepresented among Islamist movements in the Muslim world. The authors also note that engineers, alone, are strongly over-represented among graduates who gravitate to violent groups.
However, contrary to popular speculation, it's not technical skills that make engineers attractive recruits to radical groups. Rather, the authors pose the hypothesis that "engineers have a 'mindset' that makes them a particularly good match for Islamism," which becomes explosive when fused by the repression and vigorous radicalization triggered by the social conditions they endured in Islamic countries.
But what is the engineer's mindset?
The authors call it a mindset that inclines them to take more extreme conservative and religious positions.
A past survey in the United States has already shown that the proportion of engineers who declare themselves to be on the right of the political spectrum is greater than any other disciplinary groups--such as economists, doctors, scientists, and those in the humanities and social sciences.
The authors note that the mindset is universal.
Whether American, Canadian or Islamic, they pointed out that a disproportionate share of engineers seem to have a mindset that makes them open to the quintessential right-wing features of "monism" (why argue where there is one best solution) and by "simplism" (if only people were rational, remedies would be simple).
30 January 2008
27 January 2008
Bush Order Expands Network Monitoring
Bush Order Expands Network Monitoring
Intelligence Agencies to Track Intrusions
By Ellen Nakashima
Washington Post Staff Writer
Saturday, January 26, 2008; Page A03
President Bush signed a directive this month that expands the intelligence community's role in monitoring Internet traffic to protect against a rising number of attacks on federal agencies' computer systems.
The directive, whose content is classified, authorizes the intelligence agencies, in particular the National Security Agency, to monitor the computer networks of all federal agencies -- including ones they have not previously monitored.
Until now, the government's efforts to protect itself from cyber-attacks -- which run the gamut from hackers to organized crime to foreign governments trying to steal sensitive data -- have been piecemeal. Under the new initiative, a task force headed by the Office of the Director of National Intelligence (ODNI) will coordinate efforts to identify the source of cyber-attacks against government computer systems. As part of that effort, the Department of Homeland Security will work to protect the systems and the Pentagon will devise strategies for counterattacks against the intruders.
There has been a string of attacks on networks at the State, Commerce, Defense and Homeland Security departments in the past year and a half. U.S. officials and cyber-security experts have said Chinese Web sites were involved in several of the biggest attacks back to 2005, including some at the country's nuclear-energy labs and large defense contractors.
The NSA has particular expertise in monitoring a vast, complex array of communications systems -- traditionally overseas. The prospect of aiming that power at domestic networks is raising concerns, just as the NSA's role in the government's warrantless domestic-surveillance program has been controversial.
"Agencies designed to gather intelligence on foreign entities should not be in charge of monitoring our computer systems here at home," said Rep. Bennie Thompson (D-Miss.), chairman of the House Homeland Security Committee. Lawmakers with oversight of homeland security and intelligence matters say they have pressed the administration for months for details.
The classified joint directive, signed Jan. 8 and called the National Security Presidential Directive 54/Homeland Security Presidential Directive 23, has not been previously disclosed. Plans to expand the NSA's role in cyber-security were reported in the Baltimore Sun in September.
According to congressional aides and former White House officials with knowledge of the program, the directive outlines measures collectively referred to as the "cyber initiative," aimed at securing the government's computer systems against attacks by foreign adversaries and other intruders. It will cost billions of dollars, which the White House is expected to request in its fiscal 2009 budget.
"The president's directive represents a continuation of our efforts to secure government networks, protect against constant intrusion attempts, address vulnerabilities and anticipate future threats," said White House spokesman Scott Stanzel. He would not discuss the initiative's details.
The initiative foreshadows a policy debate over the proper role for government as the Internet becomes more dangerous.
Supporters of cyber-security measures say the initiative falls short because it doesn't include the private sector -- power plants, refineries, banks -- where analysts say 90 percent of the threat exists.
"If you don't include industry in the mix, you're keeping one of your eyes closed because the hacking techniques are likely the same across government and commercial organizations," said Alan Paller, research director at the SANS Institute, a Bethesda-based cyber-security group that assists companies that face attacks. "If you're looking for needles in the haystack, you need as much data as you can get because these are really tiny needles, and bad guys are trying to hide the needles."
Under the initiative, the NSA, CIA and the FBI's Cyber Division will investigate intrusions by monitoring Internet activity and, in some cases, capturing data for analysis, sources said.
The Pentagon can plan attacks on adversaries' networks if, for example, the NSA determines that a particular server in a foreign country needs to be taken down to disrupt an attack on an information system critical to the U.S. government. That could include responding to an attack against a private-sector network, such as the telecom industry's, sources said.
Also, as part of its attempt to defend government computer systems, the Department of Homeland Security will collect and monitor data on intrusions, deploy technologies for preventing attacks and encrypt data. It will also oversee the effort to reduce Internet portals across government to 50 from 2,000, to make it easier to detect attacks.
"The government has taken a solid step forward in trying to develop cyber-defenses," said Paul B. Kurtz, a security consultant and former special adviser to the president on critical infrastructure protection. Kurtz said the initiative's purpose is not to spy on Americans. "The thrust here is to protect networks."
One of the key questions is whether it is necessary to read communications to investigate an intrusion.
Ed Giorgio, a former NSA analyst who is now a security consultant for ODNI, said, "If you're looking inside a DoD system and you see data flows going to China, that ought to set off a red flag. You don't need to scan the content to determine that."
But often, traffic analysis is not enough, some experts said. "Knowing the content -- that a communication is sensitive -- allows proof positive that something bad is going out of that computer," said one cyber-security expert who spoke on the condition of anonymity because of the initiative's sensitivity.
Allowing a spy agency to monitor domestic networks is worrisome, said James X. Dempsey, policy director of the Center for Democracy and Technology. "We're concerned that the NSA is claiming such a large role over the security of unclassified systems," he said. "They are a spy agency as well as a communications security agency. They operate in total secrecy. That's not necessary and not the most effective way to protect unclassified systems."
A proposal last year by the White House Homeland Security Council to put the Department of Homeland Security in charge of the initiative was resisted by national security agencies on the grounds that the department, established in 2003, lacked the necessary expertise and authority. The tug-of-war lasted weeks and was resolved only recently, several sources said.
Staff researcher Richard Drezen contributed to this report.
Intelligence Agencies to Track Intrusions
By Ellen Nakashima
Washington Post Staff Writer
Saturday, January 26, 2008; Page A03
President Bush signed a directive this month that expands the intelligence community's role in monitoring Internet traffic to protect against a rising number of attacks on federal agencies' computer systems.
The directive, whose content is classified, authorizes the intelligence agencies, in particular the National Security Agency, to monitor the computer networks of all federal agencies -- including ones they have not previously monitored.
Until now, the government's efforts to protect itself from cyber-attacks -- which run the gamut from hackers to organized crime to foreign governments trying to steal sensitive data -- have been piecemeal. Under the new initiative, a task force headed by the Office of the Director of National Intelligence (ODNI) will coordinate efforts to identify the source of cyber-attacks against government computer systems. As part of that effort, the Department of Homeland Security will work to protect the systems and the Pentagon will devise strategies for counterattacks against the intruders.
There has been a string of attacks on networks at the State, Commerce, Defense and Homeland Security departments in the past year and a half. U.S. officials and cyber-security experts have said Chinese Web sites were involved in several of the biggest attacks back to 2005, including some at the country's nuclear-energy labs and large defense contractors.
The NSA has particular expertise in monitoring a vast, complex array of communications systems -- traditionally overseas. The prospect of aiming that power at domestic networks is raising concerns, just as the NSA's role in the government's warrantless domestic-surveillance program has been controversial.
"Agencies designed to gather intelligence on foreign entities should not be in charge of monitoring our computer systems here at home," said Rep. Bennie Thompson (D-Miss.), chairman of the House Homeland Security Committee. Lawmakers with oversight of homeland security and intelligence matters say they have pressed the administration for months for details.
The classified joint directive, signed Jan. 8 and called the National Security Presidential Directive 54/Homeland Security Presidential Directive 23, has not been previously disclosed. Plans to expand the NSA's role in cyber-security were reported in the Baltimore Sun in September.
According to congressional aides and former White House officials with knowledge of the program, the directive outlines measures collectively referred to as the "cyber initiative," aimed at securing the government's computer systems against attacks by foreign adversaries and other intruders. It will cost billions of dollars, which the White House is expected to request in its fiscal 2009 budget.
"The president's directive represents a continuation of our efforts to secure government networks, protect against constant intrusion attempts, address vulnerabilities and anticipate future threats," said White House spokesman Scott Stanzel. He would not discuss the initiative's details.
The initiative foreshadows a policy debate over the proper role for government as the Internet becomes more dangerous.
Supporters of cyber-security measures say the initiative falls short because it doesn't include the private sector -- power plants, refineries, banks -- where analysts say 90 percent of the threat exists.
"If you don't include industry in the mix, you're keeping one of your eyes closed because the hacking techniques are likely the same across government and commercial organizations," said Alan Paller, research director at the SANS Institute, a Bethesda-based cyber-security group that assists companies that face attacks. "If you're looking for needles in the haystack, you need as much data as you can get because these are really tiny needles, and bad guys are trying to hide the needles."
Under the initiative, the NSA, CIA and the FBI's Cyber Division will investigate intrusions by monitoring Internet activity and, in some cases, capturing data for analysis, sources said.
The Pentagon can plan attacks on adversaries' networks if, for example, the NSA determines that a particular server in a foreign country needs to be taken down to disrupt an attack on an information system critical to the U.S. government. That could include responding to an attack against a private-sector network, such as the telecom industry's, sources said.
Also, as part of its attempt to defend government computer systems, the Department of Homeland Security will collect and monitor data on intrusions, deploy technologies for preventing attacks and encrypt data. It will also oversee the effort to reduce Internet portals across government to 50 from 2,000, to make it easier to detect attacks.
"The government has taken a solid step forward in trying to develop cyber-defenses," said Paul B. Kurtz, a security consultant and former special adviser to the president on critical infrastructure protection. Kurtz said the initiative's purpose is not to spy on Americans. "The thrust here is to protect networks."
One of the key questions is whether it is necessary to read communications to investigate an intrusion.
Ed Giorgio, a former NSA analyst who is now a security consultant for ODNI, said, "If you're looking inside a DoD system and you see data flows going to China, that ought to set off a red flag. You don't need to scan the content to determine that."
But often, traffic analysis is not enough, some experts said. "Knowing the content -- that a communication is sensitive -- allows proof positive that something bad is going out of that computer," said one cyber-security expert who spoke on the condition of anonymity because of the initiative's sensitivity.
Allowing a spy agency to monitor domestic networks is worrisome, said James X. Dempsey, policy director of the Center for Democracy and Technology. "We're concerned that the NSA is claiming such a large role over the security of unclassified systems," he said. "They are a spy agency as well as a communications security agency. They operate in total secrecy. That's not necessary and not the most effective way to protect unclassified systems."
A proposal last year by the White House Homeland Security Council to put the Department of Homeland Security in charge of the initiative was resisted by national security agencies on the grounds that the department, established in 2003, lacked the necessary expertise and authority. The tug-of-war lasted weeks and was resolved only recently, several sources said.
Staff researcher Richard Drezen contributed to this report.
'Iran producing 300 tons of UF
Jan 27, 2008 15:14 | Updated Jan 27, 2008 17:40
'Iran producing 300 tons of UF6'
By ASSOCIATED PRESS
TEHERAN, Iran
An Iranian official said Sunday that the Islamic republic has increased its production to more than 300 tons of a gas used for uranium enrichment, a semi-official news agency reported.
The announcement comes as the UN Security Council is deciding whether to impose new economic sanctions against Iran for refusing to roll back its nuclear activities.
"The Isfahan uranium conversion facility is active, and it has produced more than 300 tons of UF6," otherwise known as uranium hexaflouride gas, the Fars news agency quoted Javad Vaidi, deputy of Iran's Supreme National Security Council, as saying in meeting to members of the Revolutionary Guards. The Fars news agency is considered close to the elite branch of Iran's military.
The central Iranian cities of Isfahan and Natanz house the heart of the Iran's nuclear program.
In Isfahan, a conversion facility reprocesses raw uranium, known as yellowcake, into uranium hexaflouride gas. The gas is then taken to Natanz and fed into the centrifuges for enrichment.
Centrifuges spin uranium gas into enriched material, which at low levels is used to produce nuclear fuel to generate electricity. But further enrichment makes it suitable for use in building nuclear weapons.
A report by UN nuclear watchdog in November confirmed that Iran had stockpiled nearly 270 metric tons of the precursor gas used in enrichment.
The UN Security Council has been trying to pressure Iran to freeze uranium enrichment. But Iran has repeatedly refused, and officials from the International Atomic Energy Agency have privately said Teheran is expanding the program.
The Security Council is considering a new draft resolution that calls for additional sanctions against Iran, including bans on travel. Two sets of sanctions have already been imposed on Iran for refusing to halt enrichment.
The five veto-wielding members of the council - the US, Britain, France, China and Russia - along with Germany, agreed last week on the basic terms of the new resolution. Diplomats have said the full, 15-nation Security Council will likely approve it next month.
Iran insists its enrichment activities are intended only to produce fuel for nuclear reactors that would generate electricity, but the US and others suspect Teheran's real aim is to produce nuclear bombs. A US intelligence report released last month concluded Teheran had stopped its nuclear weapons program in late 2003 and had not resumed it since.
Iranian officials have said they plan to generate 20,000 megawatts of electricity through nuclear energy in the next two decades.
'Iran producing 300 tons of UF6'
By ASSOCIATED PRESS
TEHERAN, Iran
An Iranian official said Sunday that the Islamic republic has increased its production to more than 300 tons of a gas used for uranium enrichment, a semi-official news agency reported.
The announcement comes as the UN Security Council is deciding whether to impose new economic sanctions against Iran for refusing to roll back its nuclear activities.
"The Isfahan uranium conversion facility is active, and it has produced more than 300 tons of UF6," otherwise known as uranium hexaflouride gas, the Fars news agency quoted Javad Vaidi, deputy of Iran's Supreme National Security Council, as saying in meeting to members of the Revolutionary Guards. The Fars news agency is considered close to the elite branch of Iran's military.
The central Iranian cities of Isfahan and Natanz house the heart of the Iran's nuclear program.
In Isfahan, a conversion facility reprocesses raw uranium, known as yellowcake, into uranium hexaflouride gas. The gas is then taken to Natanz and fed into the centrifuges for enrichment.
Centrifuges spin uranium gas into enriched material, which at low levels is used to produce nuclear fuel to generate electricity. But further enrichment makes it suitable for use in building nuclear weapons.
A report by UN nuclear watchdog in November confirmed that Iran had stockpiled nearly 270 metric tons of the precursor gas used in enrichment.
The UN Security Council has been trying to pressure Iran to freeze uranium enrichment. But Iran has repeatedly refused, and officials from the International Atomic Energy Agency have privately said Teheran is expanding the program.
The Security Council is considering a new draft resolution that calls for additional sanctions against Iran, including bans on travel. Two sets of sanctions have already been imposed on Iran for refusing to halt enrichment.
The five veto-wielding members of the council - the US, Britain, France, China and Russia - along with Germany, agreed last week on the basic terms of the new resolution. Diplomats have said the full, 15-nation Security Council will likely approve it next month.
Iran insists its enrichment activities are intended only to produce fuel for nuclear reactors that would generate electricity, but the US and others suspect Teheran's real aim is to produce nuclear bombs. A US intelligence report released last month concluded Teheran had stopped its nuclear weapons program in late 2003 and had not resumed it since.
Iranian officials have said they plan to generate 20,000 megawatts of electricity through nuclear energy in the next two decades.
18 January 2008
Modeling Urban Panic
“The goal of this project is to develop a reusable and behaviorally founded computer model of pedestrian movement and crowd behavior amid dense urban environments, to serve as a test-bed for experimentation,” says Torrens. “The idea is to use the model to test hypotheses, real-world plans and strategies that are not very easy, or are impossible to test in practice.”
Such as the following: 1) simulate how a crowd flees from a burning car toward a single evacuation point; 2) test out how a pathogen might be transmitted through a mobile pedestrian over a short period of time; 3) see how the existing urban grid facilitate or does not facilitate mass evacuation prior to a hurricane landfall or in the event of dirty bomb detonation; 4) design a mall which can compel customers to shop to the point of bankruptcy, to walk obliviously for miles and miles and miles, endlessly to the point of physical exhaustion and even death; 5) identify, if possible, the tell-tale signs of a peaceful crowd about to metamorphosize into a hellish mob; 6) determine how various urban typologies, such as plazas, parks, major arterial streets and banlieues, can be reconfigured in situ into a neutralizing force when crowds do become riotous; and 7) conversely, figure out how one could, through spatial manipulation, inflame a crowd, even a very small one, to set in motion a series of events that culminates into a full scale Revolution or just your average everyday Southeast Asian coup d'état -- regime change through landscape architecture.'
Use the link in the title to get some more info. or......
click here: www.geosimulation.org/crowds/
which is the better site
Such as the following: 1) simulate how a crowd flees from a burning car toward a single evacuation point; 2) test out how a pathogen might be transmitted through a mobile pedestrian over a short period of time; 3) see how the existing urban grid facilitate or does not facilitate mass evacuation prior to a hurricane landfall or in the event of dirty bomb detonation; 4) design a mall which can compel customers to shop to the point of bankruptcy, to walk obliviously for miles and miles and miles, endlessly to the point of physical exhaustion and even death; 5) identify, if possible, the tell-tale signs of a peaceful crowd about to metamorphosize into a hellish mob; 6) determine how various urban typologies, such as plazas, parks, major arterial streets and banlieues, can be reconfigured in situ into a neutralizing force when crowds do become riotous; and 7) conversely, figure out how one could, through spatial manipulation, inflame a crowd, even a very small one, to set in motion a series of events that culminates into a full scale Revolution or just your average everyday Southeast Asian coup d'état -- regime change through landscape architecture.'
Use the link in the title to get some more info. or......
click here: www.geosimulation.org/crowds/
which is the better site
China is allowing its currency to rise more rapidly. Why?
CHINA'S ECONOMY
Jan 10th 2008
China is allowing its currency to rise more rapidly. Why?
IN 2005 two American senators introduced a bill into Congress that threatened to slap a tariff of 27.5% on all Chinese imports unless the yuan was revalued by the same amount (their estimate of how much the currency was undervalued). That legislation was dropped, but several other China-bashing bills are still working their way through Congress and accusations about "unfair" Chinese competition will surely play a big role in this year's presidential election. Many American politicians and economists talk as if the yuan was still fixed against the dollar. Yet on current trends, by the time the next president enters the White House the yuan could be within spitting distance of the magic figure demanded in 2005.
Since the beginning of October the yuan has climbed at an annual rate of 13% against the dollar--its fastest pace since China stopped pegging to the dollar in July 2005 (see chart). Since 2005 it has appreciated by a total of 14%. The offshore forward market is pricing in another 8% increase over the next 12 months; several economists are betting on a rise of 10% or more.
It may appear as if Beijing has caved in to Washington's demands. But the main reason why China is allowing the yuan to rise faster is because its policymakers believe the benefits to China from a rising currency now outweigh the costs. Beijing's top concern today is inflation, which rose to 6.9% in November. On January 9th the government announced tighter price controls on a range of products. The People's Bank of China (PBOC) increased interest rates six times in 2007, but this is unlikely to squeeze inflation, which has been driven largely by a jump in food prices caused by supply-side shocks. A faster pace of currency appreciation offers a more powerful weapon: it will help to reduce imported inflation, especially of food and raw
materials. By reducing the need to intervene to hold down the currency, it will also curb the build-up of foreign-exchange reserves and hence monetary growth.
Another reason for the shift in policy is that the costs of holding down the yuan are rising. The PBOC has so far succeeded in "sterilising" most foreign-exchange inflows--printing yuan to buy incoming dollars and then selling bonds to banks in order to mop up the resulting excess liquidity. It has even made a profit on this activity, because the return on its dollar reserves exceeded the rate it paid out on sterilisation bonds. Now, however, the PBOC is losing money. Thanks to falling interest rates in America and rising rates in China, Chinese rates are now higher than those in America and the gap is likely to widen this year. Since the shrinking yuan value of China's dollar reserves also has to be reported as a loss, the cost of currency
intervention is higher still.
Higher yields in China than in America are also likely to mean bigger inflows of foreign capital. The PBOC would then have to buy even more foreign exchange to hold down the yuan, increasing the required amount of sterilisation. On January 3rd the one-year dollar LIBOR rate (the cost of funding a carry trade using dollars) fell below the Chinese one-year deposit rate for the first time since China abandoned the dollar peg. Add in the expected appreciation over the next year, and investing in yuan is highly attractive.
China's capital controls give it some protection from speculative inflows, but they are leaky. Businesses can build up positions in yuan by over-invoicing exports and under-invoicing imports. Some economists argue that a big one-off revaluation would help to stem inflows by reducing the expected future appreciation of the yuan. But Chinese policymakers have stressed the need for gradual adjustment. To show that the currency is not just a one-way bet, the PBOC may try to nudge the yuan a bit lower in coming days.
The yuan's rise is unlikely to silence flag-waving American Congressmen or economists. The slide in the dollar since 2005 means the yuan has risen by only 5% in trade-weighted terms, according to the Bank for International Settlements. China's current-account surplus has risen from 4% of GDP in 2004 to 11% last year, so any gauge that defines the equilibrium exchange rate as the rate that would eliminate the surplus would suggest the yuan is now even more undervalued. In 2005 Morris Goldstein and Nicholas Lardy at the Peterson Institute for International Economics estimated the yuan was 20-25% undervalued. By late 2007 they thought it was at least 30-40% undervalued despite its gain over the previous two years.
But other economists say it is wrong to define the yuan's correct value by the size of the current-account surplus. In particular, it is unclear how a revaluation would correct China's savings-investment imbalance, which underlies that surplus. A recent report from the Conference Board, an American business-research organisation, argued that: "Although an undervalued currency contributes to China's trade surplus, it is not a primary cause of it and has very little to do with the bilateral United States-China trade deficit."
Most Congressmen believe otherwise. The problem with China's appreciation by stealth is that it gets no credit from its critics for doing so. If China had delivered the past two years' currency appreciation in one go it might now be getting less flak from its detractors in America.
Jan 10th 2008
China is allowing its currency to rise more rapidly. Why?
IN 2005 two American senators introduced a bill into Congress that threatened to slap a tariff of 27.5% on all Chinese imports unless the yuan was revalued by the same amount (their estimate of how much the currency was undervalued). That legislation was dropped, but several other China-bashing bills are still working their way through Congress and accusations about "unfair" Chinese competition will surely play a big role in this year's presidential election. Many American politicians and economists talk as if the yuan was still fixed against the dollar. Yet on current trends, by the time the next president enters the White House the yuan could be within spitting distance of the magic figure demanded in 2005.
Since the beginning of October the yuan has climbed at an annual rate of 13% against the dollar--its fastest pace since China stopped pegging to the dollar in July 2005 (see chart). Since 2005 it has appreciated by a total of 14%. The offshore forward market is pricing in another 8% increase over the next 12 months; several economists are betting on a rise of 10% or more.
It may appear as if Beijing has caved in to Washington's demands. But the main reason why China is allowing the yuan to rise faster is because its policymakers believe the benefits to China from a rising currency now outweigh the costs. Beijing's top concern today is inflation, which rose to 6.9% in November. On January 9th the government announced tighter price controls on a range of products. The People's Bank of China (PBOC) increased interest rates six times in 2007, but this is unlikely to squeeze inflation, which has been driven largely by a jump in food prices caused by supply-side shocks. A faster pace of currency appreciation offers a more powerful weapon: it will help to reduce imported inflation, especially of food and raw
materials. By reducing the need to intervene to hold down the currency, it will also curb the build-up of foreign-exchange reserves and hence monetary growth.
Another reason for the shift in policy is that the costs of holding down the yuan are rising. The PBOC has so far succeeded in "sterilising" most foreign-exchange inflows--printing yuan to buy incoming dollars and then selling bonds to banks in order to mop up the resulting excess liquidity. It has even made a profit on this activity, because the return on its dollar reserves exceeded the rate it paid out on sterilisation bonds. Now, however, the PBOC is losing money. Thanks to falling interest rates in America and rising rates in China, Chinese rates are now higher than those in America and the gap is likely to widen this year. Since the shrinking yuan value of China's dollar reserves also has to be reported as a loss, the cost of currency
intervention is higher still.
Higher yields in China than in America are also likely to mean bigger inflows of foreign capital. The PBOC would then have to buy even more foreign exchange to hold down the yuan, increasing the required amount of sterilisation. On January 3rd the one-year dollar LIBOR rate (the cost of funding a carry trade using dollars) fell below the Chinese one-year deposit rate for the first time since China abandoned the dollar peg. Add in the expected appreciation over the next year, and investing in yuan is highly attractive.
China's capital controls give it some protection from speculative inflows, but they are leaky. Businesses can build up positions in yuan by over-invoicing exports and under-invoicing imports. Some economists argue that a big one-off revaluation would help to stem inflows by reducing the expected future appreciation of the yuan. But Chinese policymakers have stressed the need for gradual adjustment. To show that the currency is not just a one-way bet, the PBOC may try to nudge the yuan a bit lower in coming days.
The yuan's rise is unlikely to silence flag-waving American Congressmen or economists. The slide in the dollar since 2005 means the yuan has risen by only 5% in trade-weighted terms, according to the Bank for International Settlements. China's current-account surplus has risen from 4% of GDP in 2004 to 11% last year, so any gauge that defines the equilibrium exchange rate as the rate that would eliminate the surplus would suggest the yuan is now even more undervalued. In 2005 Morris Goldstein and Nicholas Lardy at the Peterson Institute for International Economics estimated the yuan was 20-25% undervalued. By late 2007 they thought it was at least 30-40% undervalued despite its gain over the previous two years.
But other economists say it is wrong to define the yuan's correct value by the size of the current-account surplus. In particular, it is unclear how a revaluation would correct China's savings-investment imbalance, which underlies that surplus. A recent report from the Conference Board, an American business-research organisation, argued that: "Although an undervalued currency contributes to China's trade surplus, it is not a primary cause of it and has very little to do with the bilateral United States-China trade deficit."
Most Congressmen believe otherwise. The problem with China's appreciation by stealth is that it gets no credit from its critics for doing so. If China had delivered the past two years' currency appreciation in one go it might now be getting less flak from its detractors in America.
14 January 2008
A lackluster report card for Bush's Middle East junket
A lackluster report card for Bush's Middle East junket
by EDWARD M. GOMEZ
January 14 2008
Apparently, George W. Bush's handlers, desperate to improve his international image in the waning months of his period in the White House, were hoping to win more bang for the American taxpayers' bucks they spent last week sending their man to the Middle East to talk about making peace after many years of making non-stop war. However, in politics, stuff happens. Bush was upstaged in the news by the headline-making drama of the New Hampshire primary, by the growing tide of worry about a recession that has developed on his watch, and even by the antics of French President Nicolas Sarkozy and his fashion-model/pop-singer girlfriend.
Unfortunately for Bush's team, despite the considerable expense of his public-relations junket to Israel and several Arab countries, many news media in the region - and even some major news outlets beyond it - did not give the Republican pol's trip high marks.
Bush appears to be hoping against hope that, for the sake of his reputation, the Israelis and Palestinians will make peace before he leaves the White House, thereby allowing the glow of the resolution of their long conflict to rub off on Bush himself. However, in a news-analysis piece on the even of Bush's trip, Britain's Times pointed out: "The Bush administration believes that a Palestinian state can be born by the end of 2008 if the two parties now engage seriously in negotiating the thorny issues of future borders, Jewish settlements, the status of Jerusalem and the fate of Palestinian refugees." But the "reality on the ground, in places the presidential cortège will not be visiting, is very different. The Palestinian lands, which would form the future state, are divided by Jewish settlements and the Israeli security wall. Their inhabitants are trapped in a no-man's-land that can barely support a poor rural economy, let alone become the foundation for a thriving sovereign state." Meanwhile, the Gaza Strip "is now completely in the hands of the Islamic militant movement Hamas, whose fighters are engaged in daily rocket duels with the Israeli military. It is far more likely that the two sides will go to war in this crowded strip before it becomes part of a stable future Palestine."
» The Herald Sun, apparently somewhat surprised by the intensity of the criticism, pointed out that numerous "Arab commentators poured scorn on...Bush's vision of an Israeli-Palestinian peace deal [emerging] within a year." Noting that, in Israel, Bush had urged both sides of the Israeli-Palestinian conflict to make "difficult choices," the Australian newspaper reported: "But in Egypt, the first Arab country to sign a peace treaty with Israel, [the] liberal-opposition newspaper Al-Wafd described Bush as 'the most hateful visitor' and a 'war criminal.'" The Egyptian paper observed: "After all the destruction you have caused and which your country continues to cause, you have wished to end your rule by playing the role of peacemaker....But you are lying as you have lied before to the people of the Middle East and to your own people."
Syria's official Ath-Thawra intoned: "Before and during his visit to Israel and the Palestinian territories,...Bush more than once urged Israel to stop settlement expansion and called for the creation of an independent Palestinian state....These are only beautiful words of peace." Rami Khouri, a Palestinian-Jordanian and U.S. citizen, and journalist and editor associated with Lebanon's Daily Star, "said Washington's refusal to accept the verdict when groups like the Islamist Palestinian group Hamas were elected to power, left Bush open to accusations of hypocrisy." Khouri commented: "If you preach majority rule and the rule of law as a desirable global norm but refuse to respect it when Israeli interests are concerned, you come across as a hypocrite, at best, and a deceitful cheat, at worst...." (Cited by the Herald Sun)
» Saudi Arabia's Arab News, in an editorial headlined "Cynicism with Reason," noted: "We ought to be celebrating...Bush's declaration that a Palestinian state is 'long overdue.'...We should be excited by his call for an end to the Israeli occupation, all the more because 'occupation' is a word so rarely used by the Americans in relation to the Israelis. But there will be no dancing in the streets of Ramallah or Jericho or any other Palestinian town - or any Arab one....It is impossible to feel any excitement about Bush's words - because no Palestinian, no Arab believes he will, or can, deliver....[T]here are good reasons - the most powerful being that we have been here, heard it all, too many times before, and to no effect."
Arabs are cautious or doubtful in response to Bush's latest pronouncements, Arab News added, for "two specific reasons." "The first is Washington's historic alliance with Israel, which despite the ringing words about a Palestinian state, Bush himself fully re-endorsed during his visit [last] week. We can be absolutely certain that Washington is not going to exert the pressure needed to force the Israelis into making the necessary concessions for there to be a fully sovereign Palestinian state. Even if Bush wanted to (which has to be seriously questioned), Congress would not let him; certainly not in the limited time available." Arab News said many Arabs' second concern about Bush "is the man himself. He has proved a disaster of a president - for the U.S., for the Middle East, for the world. Everything he touches turns to dust and ashes." (See also the Hindu)
» In the United Arab Emirates, the Gulf News published an editorial called "Letter to George W. Bush." Citing a litany of Bush's controversial accomplishments and events or people that have indelibly marked his period in office, it stated: "Dear Mr. President: Lest you forget[:] Invasion of Iraq. Thousands of dead. Looting the National Museum. Disbanding the Iraqi army. Donald Rumsfeld. Shock and awe. Jay Garner. Paul Bremer. Inciting sectarianism. Abu Ghraib. Thousands of detainees without charges. Torture. Oil. Ghost WMDs. The Niger connection. Halliburton. Blackwater. Deadly security contractors. Mercenaries. Fallujah. Haditha massacre. Blind support of Israel. Instigating the suffering of Gaza. Ignoring the expansion of illegal colonies. Defying United Nations resolutions. Securing 'a Jewish State.' Allowing Israelis to extend the destruction of Lebanon in the 2006 war. Providing Israel with new bunker-buster bombs to attack Lebanese towns. The War on Terror. 'The Crusade.' Clash of civilizations. Where is Osama Bin Laden? Afghanistan. Bagram massacre. Bombing media offices. Guantánamo Bay. Kangaroo courts. Indefinite detention. Presidential orders to ignore Geneva Conventions. 'Unlawful enemy combatants.' Illegal National Security Agency wiretapping. Fingerprinting visitors. Black prisons. Kidnapping foreign citizens on foreign lands. Khalid Al Masri. Abu Omar. Maher Arar. Central Intelligence Agency. 'Aggressive interrogation techniques.' Destroying the torture tapes....Denial of global warming. Rejecting Kyoto Protocol. Marginalization of the United Nations. John Bolton. Paul Wolfowitz and the World Bank. Karl Rove. Alberto Gonzales. Firing attorneys. Nepotism. False democracy promises. Dick Cheney, Dick Cheney and Dick Cheney....The list goes on."
The Gulf News editorial continued: "Mr. President[,]...It has been reported that you are here to 'lecture' us on democracy and human rights. But with a record like yours, you will not be very convincing....Regional peace...will not be achieved by escalating tension and threatening to change regimes. And most importantly, it will not be achieved by supporting Israel, which continues to defy international law, occupy Arab lands, oppress the Palestinians and rebuff peace initiatives....We hope you have enjoyed the trip so far. The scenery is great. The food is exotic. As for the more 'serious' things, it is unlikely you will make any difference."
Posted By: Edward M. Gomez (Email) | January 14 2008 at 07:51 AM
Edward M. Gomez, a former U.S. diplomat and staff reporter at TIME, has lived and worked in the U.S. and overseas, and speaks several languages. He has written for The New York Times, the Japan Times and the International Herald Tribune.
by EDWARD M. GOMEZ
January 14 2008
Apparently, George W. Bush's handlers, desperate to improve his international image in the waning months of his period in the White House, were hoping to win more bang for the American taxpayers' bucks they spent last week sending their man to the Middle East to talk about making peace after many years of making non-stop war. However, in politics, stuff happens. Bush was upstaged in the news by the headline-making drama of the New Hampshire primary, by the growing tide of worry about a recession that has developed on his watch, and even by the antics of French President Nicolas Sarkozy and his fashion-model/pop-singer girlfriend.
Unfortunately for Bush's team, despite the considerable expense of his public-relations junket to Israel and several Arab countries, many news media in the region - and even some major news outlets beyond it - did not give the Republican pol's trip high marks.
Bush appears to be hoping against hope that, for the sake of his reputation, the Israelis and Palestinians will make peace before he leaves the White House, thereby allowing the glow of the resolution of their long conflict to rub off on Bush himself. However, in a news-analysis piece on the even of Bush's trip, Britain's Times pointed out: "The Bush administration believes that a Palestinian state can be born by the end of 2008 if the two parties now engage seriously in negotiating the thorny issues of future borders, Jewish settlements, the status of Jerusalem and the fate of Palestinian refugees." But the "reality on the ground, in places the presidential cortège will not be visiting, is very different. The Palestinian lands, which would form the future state, are divided by Jewish settlements and the Israeli security wall. Their inhabitants are trapped in a no-man's-land that can barely support a poor rural economy, let alone become the foundation for a thriving sovereign state." Meanwhile, the Gaza Strip "is now completely in the hands of the Islamic militant movement Hamas, whose fighters are engaged in daily rocket duels with the Israeli military. It is far more likely that the two sides will go to war in this crowded strip before it becomes part of a stable future Palestine."
» The Herald Sun, apparently somewhat surprised by the intensity of the criticism, pointed out that numerous "Arab commentators poured scorn on...Bush's vision of an Israeli-Palestinian peace deal [emerging] within a year." Noting that, in Israel, Bush had urged both sides of the Israeli-Palestinian conflict to make "difficult choices," the Australian newspaper reported: "But in Egypt, the first Arab country to sign a peace treaty with Israel, [the] liberal-opposition newspaper Al-Wafd described Bush as 'the most hateful visitor' and a 'war criminal.'" The Egyptian paper observed: "After all the destruction you have caused and which your country continues to cause, you have wished to end your rule by playing the role of peacemaker....But you are lying as you have lied before to the people of the Middle East and to your own people."
Syria's official Ath-Thawra intoned: "Before and during his visit to Israel and the Palestinian territories,...Bush more than once urged Israel to stop settlement expansion and called for the creation of an independent Palestinian state....These are only beautiful words of peace." Rami Khouri, a Palestinian-Jordanian and U.S. citizen, and journalist and editor associated with Lebanon's Daily Star, "said Washington's refusal to accept the verdict when groups like the Islamist Palestinian group Hamas were elected to power, left Bush open to accusations of hypocrisy." Khouri commented: "If you preach majority rule and the rule of law as a desirable global norm but refuse to respect it when Israeli interests are concerned, you come across as a hypocrite, at best, and a deceitful cheat, at worst...." (Cited by the Herald Sun)
» Saudi Arabia's Arab News, in an editorial headlined "Cynicism with Reason," noted: "We ought to be celebrating...Bush's declaration that a Palestinian state is 'long overdue.'...We should be excited by his call for an end to the Israeli occupation, all the more because 'occupation' is a word so rarely used by the Americans in relation to the Israelis. But there will be no dancing in the streets of Ramallah or Jericho or any other Palestinian town - or any Arab one....It is impossible to feel any excitement about Bush's words - because no Palestinian, no Arab believes he will, or can, deliver....[T]here are good reasons - the most powerful being that we have been here, heard it all, too many times before, and to no effect."
Arabs are cautious or doubtful in response to Bush's latest pronouncements, Arab News added, for "two specific reasons." "The first is Washington's historic alliance with Israel, which despite the ringing words about a Palestinian state, Bush himself fully re-endorsed during his visit [last] week. We can be absolutely certain that Washington is not going to exert the pressure needed to force the Israelis into making the necessary concessions for there to be a fully sovereign Palestinian state. Even if Bush wanted to (which has to be seriously questioned), Congress would not let him; certainly not in the limited time available." Arab News said many Arabs' second concern about Bush "is the man himself. He has proved a disaster of a president - for the U.S., for the Middle East, for the world. Everything he touches turns to dust and ashes." (See also the Hindu)
» In the United Arab Emirates, the Gulf News published an editorial called "Letter to George W. Bush." Citing a litany of Bush's controversial accomplishments and events or people that have indelibly marked his period in office, it stated: "Dear Mr. President: Lest you forget[:] Invasion of Iraq. Thousands of dead. Looting the National Museum. Disbanding the Iraqi army. Donald Rumsfeld. Shock and awe. Jay Garner. Paul Bremer. Inciting sectarianism. Abu Ghraib. Thousands of detainees without charges. Torture. Oil. Ghost WMDs. The Niger connection. Halliburton. Blackwater. Deadly security contractors. Mercenaries. Fallujah. Haditha massacre. Blind support of Israel. Instigating the suffering of Gaza. Ignoring the expansion of illegal colonies. Defying United Nations resolutions. Securing 'a Jewish State.' Allowing Israelis to extend the destruction of Lebanon in the 2006 war. Providing Israel with new bunker-buster bombs to attack Lebanese towns. The War on Terror. 'The Crusade.' Clash of civilizations. Where is Osama Bin Laden? Afghanistan. Bagram massacre. Bombing media offices. Guantánamo Bay. Kangaroo courts. Indefinite detention. Presidential orders to ignore Geneva Conventions. 'Unlawful enemy combatants.' Illegal National Security Agency wiretapping. Fingerprinting visitors. Black prisons. Kidnapping foreign citizens on foreign lands. Khalid Al Masri. Abu Omar. Maher Arar. Central Intelligence Agency. 'Aggressive interrogation techniques.' Destroying the torture tapes....Denial of global warming. Rejecting Kyoto Protocol. Marginalization of the United Nations. John Bolton. Paul Wolfowitz and the World Bank. Karl Rove. Alberto Gonzales. Firing attorneys. Nepotism. False democracy promises. Dick Cheney, Dick Cheney and Dick Cheney....The list goes on."
The Gulf News editorial continued: "Mr. President[,]...It has been reported that you are here to 'lecture' us on democracy and human rights. But with a record like yours, you will not be very convincing....Regional peace...will not be achieved by escalating tension and threatening to change regimes. And most importantly, it will not be achieved by supporting Israel, which continues to defy international law, occupy Arab lands, oppress the Palestinians and rebuff peace initiatives....We hope you have enjoyed the trip so far. The scenery is great. The food is exotic. As for the more 'serious' things, it is unlikely you will make any difference."
Posted By: Edward M. Gomez (Email) | January 14 2008 at 07:51 AM
Edward M. Gomez, a former U.S. diplomat and staff reporter at TIME, has lived and worked in the U.S. and overseas, and speaks several languages. He has written for The New York Times, the Japan Times and the International Herald Tribune.
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